Benchmark indices recover after their mid day sell-off

The local equity indices have recovered from the day's low and are now trading near the day's high in the late afternoon session. On the back strong short covering with huge volumes as global cues were strong and Indian Planning Commission expects FY11 IIP growth at 10%. All the regional peers closed on green note and Europe Markets were trading positive, Dow future was also showing an up-tick in screen trade at this point of time. Back home the Sensex was trading 237.57 points higher at 19,433.91 and the Nifty rose 74.95 points to 5829.05. On the sectoral front, Realty ( up 2.20%), Metal up (2.06%), Consumer Durables (up 1.93%), IT (up 1.80%) and TECk (up 1.70% )stocks  have gained the maximum interest of the investors, while stocks from Capital Goods sector was still witnessing selling pressure on the back of dismal IIP numbers. Meanwhile some of the heavy heavyweights gained maximum and helped the markets to move forward. Index biggies like ICICI surged 3.13% on the back of ICICI Bank, the country's largest private sector bank and Vodafone Essar, one of the largest mobile network operators, entering into a joint venture (JV) to drive financial inclusion in the country. According to the terms of the said JV, both entities will offer a bouquet of financial products such as savings accounts, pre-paid instruments and credit products through a mobile phone based platform. SBI and Bharti Airtel also gained 1.04% and 2.45% respectively as the two entities joined hands to provide banking services to India's unbanked millions, the JV incorporation between SBI and Airtel will be concluded by March 31, 2011. Meanwhile Tata Motors zoomed 4.54% on the reports that the company has entered into business deals worth around $4 billion with British and Chinese governments. The Tata Motors-owned Jaguar Land Rover (JLR) has signed a deal with China to sell 40,000 cars in 2011. The deal, said to be worth more than $2 billion, comes on the back of an order the company had bagged in 2009 for 13,000 cars valued at that time at around $1 billion. Sale of Indian automaker's Jaguar and Land Rover vehicles in China will boost profits and help reduce its debt. Meanwhile, broader indices are also trading positive. The market breadth on the BSE was positive; the gainers thrashed the losers in a ratio of 1562:1254 while 117 shares remained unchanged. Total Markets volume is more than Rs1,71,000 crore at this point of time.

The BSE Sensex gained 237.57 points or 1.24% at 19,433.91. The index touched a high and a low of 19,469.94 and 19,048.56 respectively.

The BSE Mid-cap and small cap was up by 0.93% and 0.70% respectively.

The main gainers in the BSE sectoral space were Reality up 2.20%, Metal up 2.06%, Consumer Durables up 1.93% , IT up 1.80% and TECk up 1.70%

On the other hand, Capital Goods (CG) down 0.49% was the only loser in the BSE sectoral space.

The top gainers on the Sensex were Sterlite Industries up 5%, Tata Motors up 4.54%, TCS up 4.11%, ICIC Bank up 3.13% and Bharti Airtel up 2.45%

Bajaj Auto down 1.80%, L&T down 1.63%, HUL down 0.97%, Reliance Communication down 0.69% and ONGC down 0.67% were the top losers on the index.

India's Planning Commission said on Wednesday that growth in the index of industrial production (IIP) over the current financial year was likely to be around 10%. Earlier, data released by ministry of statistics showed that industrial growth in November 2010 slowed down sharply to 2.7% compared with 10.3% in the previous month.

Given the fact that cumulative growth in the IIP over the April-November period has come down to 9.5% after the latest reported data, achieving an average of 10% over the fiscal would require over 10% expansion during rest of the months in current fiscal (Dec-Mar). This however looks very difficult given that the manufacturing has shown some slowdown in recent months and also base effect will be rising.

In fact, most economists agree that over rest of the current fiscal, IIP growth will continue to be around 4-7% range. This is because the index was growing at extremely strong pace over the same months of the previous fiscal. This will automatically make the year-on-year growth look smaller. For instance, growth in IIP in December was close to 18%. Such a high growth means that even if production is reasonably strong in Dec this year, growth in comparison to Dec last year will be rather small. Even a 5% growth in Dec 2010 would require strong industrial expansion on sequential basis.

Independent research organizations have already lowered their estimates of IIP growth for the fiscal. Most researchers now expect 2010-11 average IIP to show a growth of 8-9% from last year's level. This figure can be achieved even if the IIP grows at a more reasonable pace of say around 5-7% over next four months. While growth in December is expected to be lower owing to base effect, analysts expect things to improve somewhat in January and February.

The S&P CNX Nifty increased 74.95 points or 1.30% to 5829.05. The index touched a high and a low of 5842.10 and 5,711.30, respectively. 

The top gainers on the Nifty were Suzlon up 7.37%, Sterlite up 5.82%, Tata Motors up 4.87%, TCS down 4.20% and Cairn Indian up 3.54%.

The top losers on the index were Bajaj Auto down by 1.92%, L&T down 1.38%,Tata Power down 0.76%, HUL down 0.76% and Reliance Communication down 0.51%

All the regional peers settled in green, Jakarta Composite incresed  2.88% , KLSE  composite surged 0.23%, Nikkei advanced  0.02%,Hang Seng increased by1.54%, Straits Times inched 0.08% and Taiwan Weighted advanced 0.38%

The European markets were trading in green. CAC-40 increased 1.19%, FTSE 100 advanced 0.56% and DAX surged 1.25%.

Unit-8, 3rd Floor, First Mall, The Mall, Ludhiana-141001, Punjab (INDIA).

To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?TJzsLEwstCyc7OysHMyctEa0HOwcDGyMDA==