Sunday, October 31, 2010

Monthly Review Oct 2010

The benchmark index of the Bombay Stock Exchange (BSE) posted its first monthly decline in five months, but closed 0.5% higher on Friday, propped up by a late surge in ICICI Bank, which soared after posting better-than-expected quarterly earnings.

Investors await an eventful week — marked by US Federal Reserve’s two-day meet ending Wednesday, the Reserve Bank of India’s policy review on Tuesday and Coal India’s listing on bourses on Thursday — for directional cues. Most economists in a Reuters poll on Thursday expected the central bank to raise rates by at least 25 basis points to rein in stubbornly high inflation in the fastgrowing economy. It would be the sixth increase since mid-March.

Top private lender ICICI Bank rose 6.5%, its best single-day gain in more than 15 months, as it beat forecasts with a 19% rise in quarterly net profit, helped by robust credit growth and fewer bad debts.

The stock rose as much as 7.7% to Rs 1,174, its highest level since February 2008. The 30-share BSE index edged up 0.46%, or 91.30 points, to 20,032.34, with only nine of its components closing in the green.

“There is not much to read in this month’s decline. There were just bouts of profit sales after the rally we saw in September,” said Rakesh Rawal, head of private wealth management at broking firm Anand Rathi. It declined 0.2% this month, first monthly drop after May. The benchmark index had gained 11.7% in September which was its best gain in 16 months. “It is not a panic situation or a sign of big worry,” said Mr Rawal, adding he expected the Sensex to test a new record high by end-December. The 30-share index is still up 14.7% year to date, as foreign funds have invested $24.7 billion in Indian equities in the period. It is around 1,200 points away from its alltime high witnessed in January 2008.

Though most earnings did not disappoint the street, they lacked big positive surprises, which investors had started to factor in the price, Rawal said. India along with Singapore, Indonesia, Thailand and Phil-ippines slowed in terms of earnings momentum in the last three months from the previous three months while Hong Kong, China and Malaysia showed an improvement, UBS said in a note on Thursday. Cigarette-to-hotel business ITC firmed 2.3% as its September quarter net profit rose 23.5%.

Metals pack lost sheen as base metals fell across the board ahead of US GDP data later in the day and the Fed meeting next week. Non-ferrous metals producer Sterlite Industries and aluminium producer Hindalco dropped 1.1% and 2.8%, respectively, and Tata Steel , world’s seventh-largest maker of the alloy shed 2.4%.

Source ET

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