Sensex ends with modest gains after wild gyrations in late trade

Immense volatility was witnessed in late trade as the key benchmark indices rebounded sharply from lower levels to end with modest gains. The barometer index, the S&P BSE Sensex, was provisionally up 76.06 points or 0.38%, up 148.75 points from the day's low and off 55.93 points from the day's high. The government's decision on Tuesday, 16 July 2013, to relax overseas-investment rules for a number of sectors boosted sentiment.

Shares of FMCG major Hindustan Unilever surged on reports that the company has raised prices of several personal care products. Many other FMCG stocks gained as a bountiful rainfall this year has prepared the ground for bumper harvest. ITC, Dabur India and Nestle India hit record high. Shares of liquor major United Spirits scaled record high. Opto Circuits plunged on high volume in highly volatile trade.

Shares of private sector oil & gas, refinery and gas utility stocks rose after the government on Tuesday, 16 July 2013, said foreign investors won't have to seek government approval for up to 49% ownership in petroleum, natural gas and refining sectors. Bank stocks fell for second day in a row as RBI's recent measures to tighten liquidity in the banking system will make it costlier for banks and financial companies to raise short-term funds. Private sector HDFC Bank fell after announcing Q1 results.

Key benchmark indices edged higher in early trade boosted by the government's decision on Tuesday, 16 July 2013, to relax overseas-investment rules for a number of sectors. The market retained positive zone in morning trade. A bout of volatility was witnessed as key benchmark indices pared gains after hitting fresh intraday high in mid-morning trade. Key benchmark indices pared gains in early afternoon trade. Key benchmark indices hit fresh intraday high in afternoon trade, tracking strength in European market. Key benchmark indices reversed direction and slipped into the red in mid-afternoon trade as European stocks reversed initial gains. Key benchmark indices rebounded sharply from lower levels to end with modest gains in immense volatility late trade.

Foreign institutional investors (FIIs) sold shares worth a net Rs 357.40 crore on Tuesday, 16 July 2013, as per provisional data from the stock exchanges.

As per provisional closing, the S&P BSE Sensex was up 76.06 points or 0.38% to 19,927.29. The index jumped 131.99 points at the day's high of 19,983.22 in mid-afternoon trade, its highest level since 15 July 2013. The index fell 72.69 points at the day's low of 19,778.54 in late trade.

The CNX Nifty was up 10 points or 0.17% to 5,965.25. The index hit a high of 5,989.80 in intraday trade, its highest level since 15 July 2013. The index hit a low of 5,926.75 in intraday trade.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1,324 shares declined and 1,053 shares gained. A total of 149 shares were unchanged.

The total turnover on BSE amounted to Rs 2002 crore, higher than Rs 1888 crore on Tuesday, 16 July 2013.

Among the 30-share Sensex pack, 16 stocks gained and rest of them declined.

FMCG stocks gained across the board as a bountiful rainfall this year has prepared the ground for bumper harvest. India's monsoon is so far progressing well across the country and if the rains continue as expected, this could boost rural incomes. FMCG companies derive substantial revenue from rural India.

Shares of FMCG major Hindustan Unilever surged on reports that the company has raised prices of several personal care products. The stock jumped 9.04% to Rs 679.65 after scaling a record high of Rs 698.95 in intraday trade today, 17 July 2013.

Separately some media reports suggested that current float of HUL shares in MSCI India Index will come down to 30% from 40% effective today, 17 July 2013, while the float will rise to 33% from 24% in FTSE Index with effect from 19 July 2013. HUL's parent Unilever PLC on 11 July 2013 said that pursuant to the voluntary open offer to increase its stake in HUL, the shareholders of HUL tendered a total of 31.99 crore shares, out of which 31.95 crore shares have been accepted by Unilever PLC on completion of the verification of the shares tendered. Based on the shares tendered which represent 14.78% of HUL, the Unilever Group will increase its stake in HUL from 52.48% to 67.26%.

Dabur India gained 4.44% to Rs 166 after hitting a record high of Rs 167.55 in intraday trade today, 17 July 2013.

Nestle India rose 1.37% to Rs 5,769.95, after striking a record high of Rs 5,795 in intraday trade today, 17 July 2013.

Colgate-Palmolive (India) (up 2.65%), Godrej Consumer Products (up 1.74%), Marico (up 1.28%) gained.

Index heavyweight and cigarette major ITC rose 2.18% to Rs 368 after striking a record high of Rs 370.20 in intraday trade today, 17 July 2013. The company announces Q1 results on 25 July 2013.

United Spirits rose 0.51% to Rs 2,700.40 after striking a record high of Rs 2,735 in intraday trade today, 17 July 2013.

Shares of private sector oil & gas, refinery and gas utility stocks rose after the government on Tuesday, 16 July 2013, said foreign investors won't have to seek government approval for up to 49% ownership in petroleum, natural gas and refining sectors.

Index heavyweight Reliance Industries (RIL) rose 1.7% at Rs 916.20. The stock hit a high of Rs 918.70 and low of Rs 903. Oil Secretary Vivek Rae today, 17 July 2013, said that natural gas output from RIL's' KG-D6 block off India's east coast has fallen to about 14 million cubic metres per day (mmscmd). Output from the D6 block has been declining steadily after reaching 60 mmscmd in 2010.

The Cabinet Committee on Economic Affairs (CCEA) on 27 June 2013 approved new gas pricing formula from 1 April 2014. The price of gas as per the formula is likely to be about $8.4 mmBtu as opposed to $4.2 mmBtu currently.

Essar Oil fell 1.35%.

Among gas utility stocks, Indraprastha Gas (up 5.86%) and Gujarat Gas Company (up 3.69%) gained. Gujarat State Petronet dropped 1.73%.

Bank stocks fell for second day in a row as RBI's recent measures to tighten liquidity in the banking system will make it costlier for banks and financial companies to raise short-term funds. Among private sector bank stocks ICICI Bank (down 1.68%), Axis Bank (down 3.32%), Kotak Mahindra Bank (down 0.41%) and Yes Bank (down 6.1%) declined.

Among PSU bank stocks, State Bank of India (down 0.95%), Canara Bank (down 3.15%), Union Bank of India (down 7.07%), Bank of India (down 2.92%), Bank of Baroda (down 3.51%) and Punjab National Bank (down 0.46%) declined.

The Reserve Bank of India (RBI) early this week announced a slew of measures to address exchange rate volatility. RBI raised the Marginal Standing Facility (MSF) rate and Bank Rate each by 200 bps to 10.25% while capped the amount up to which banks can borrow or lend under its daily liquidity window at Rs 75000 crore. Furthermore, RBI will additionally sell Rs 12000-crore of government bonds on Thursday, 18 July 2013, to mop up liquidity from the system, it said. The RBI said it will continue to closely monitor the markets, the liquidity situation and the macroeconomic developments and will take such other measures as may be necessary, consistent with the growth-inflation dynamics and macroeconomic stability.

Private sector banking major HDFC Bank fell 2.53%. The bank during market hours today, 17 July 2013 reported 30.08% rise in net profit to Rs 1843.86 crore on 17.94% growth in total income to Rs 11588.56 crore in Q1 June 2013 over Q1 June 2012. The growth in HDFC Bank's bottom line was in line with market expectations. The private sector maintained its run rate of about 30% growth in bottom line which it has consistently reported for many quarters now.

The bank's net interest income (NII) rose 21% to Rs 4418.70 crore in Q1 June 2013 over Q1 June 2012. The net interest margin (NIM) remained unchanged at 4.6% in Q1 June 2013, same as in Q4 March 2013 and Q1 June 2012.

HDFC Bank's ratio of net non-performing assets (NPAs) to net advances increased to 0.3% as on 30 June 2013, from 0.2% as on 31 March 2013 and 0.2% as on 30 June 2012. The ratio of gross NPAs to gross advances remained at the same level at 1% as on 30 June 2013 from the levels as on 31 March 2013 and as on 30 June 2012. Total restructured loans (including applications received and under process for restructuring) were at 0.2% of gross advances as of 30 June 2013, as against 0.3% as of 30 June 2012. Total floating provisions stood at Rs 1865 crore as on 30 June 2013, as against Rs 1680 crore as on 30 June 2012.

Opto Circuits dropped 10.02% to Rs 25.60 on high volume of 1.18 crore shares. The stock was volatile. The stock rose as much as 14.76% at the day's high of Rs 32.65 and lost as much as 22.14% at the day's low of Rs 22.15.

European stocks reversed initial gains on Wednesday, 17 July 2013, as minutes from the Bank of England's July policy meeting showed all members voted in favor of keeping asset purchases unchanged, marking a shift from recent meetings when three out of the nine members preferred to boost the easing program. Key benchmark indices in UK, France and Germany were down by 0.44% to 0.7%.

Asian shares were mostly higher on Wednesday, 17 July 2013. Key benchmark indices in China, Taiwan and Singapore were down 0.01% to 1.01%. Key benchmark indices in Japan, Hong Kong, South Korea and Indonesia were up 0.11% to 1.13%.

The latest data showed that foreign-direct-investment flows into China jumped more than 20% in June 2013.

Meanwhile, the Xinhua news service, the official press agency of the People's Republic of China, reported that profit at Chinese state-owned companies outside the financial sector rose 7% in the first half of the year, accelerating from a 6.5% increase in the first five months of 2013.

Trading in US index futures indicated that the Dow could fall 33 points at the opening bell on Wednesday, 17 July 2013. US stocks fell on Tuesday, 16 July 29013, with Coca-Cola Co. and Goldman Sachs Group Inc. losing ground after their quarterly results, and as investors considered Kansas City Fed President Esther George's comment that the Federal Reserve should pare its bond purchases sooner rather than later.

Federal Reserve Chairman Ben Bernanke kicks off his two-day testimony on monetary policy in Washington today, 17 July 2013. In comments last week, Bernanke had eased concerns that the Fed would quickly unwind its monetary stimulus.

The minutes of the Fed's June meeting released on 10 July 2013 showed that while several members judged that a reduction in asset purchases would likely soon be warranted, many want to see further improvement in the labor market before reducing the central bank's $85 billion-a-month quantitative easing program. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth. At a press conference following the June 18-19 meeting, Bernanke said the central bank could start reducing its $85 billion in monthly bond purchases later this year if the economy continues to improve in line with its forecasts.

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