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Markets extend gains
This week, the Indian stock market extended the gains it had made during
the previous weeks, with the Sensex and Nifty rising by 1.1% each. The
week was again marked by volatile sessions. On the global front, US
annualised GDP growth rate for 3QCY2010 came in at 2.6%, which was
slightly below expectations. On the domestic front, food inflation for the
week ended December 11, which was earlier showing signs of abating,
rose to 12.1%, compared to 9.5% in the prior period. The primary reason
for the increase in food inflation can be attributed to lower crop production
in the country. BSE mid-cap index underperformed the large-cap indices
this week, growing by only 0.8%, while BSE small-cap index outperformed,
rising by 1.9%. On the sectoral front, the BSE metal index was the biggest
gainer, up 3.9%, followed by the BSE IT index, which rose by 1.8%. BSE
capital goods index was the biggest loser during the week, losing 0.9%.
Metal stocks rally
The BSE metal index gained 3.9% over the previous week, outperforming
the Sensex by 2.8% as metal prices remained firm. As per media reports,
domestic steel companies are planning to hike steel prices by `1,000-1,500
per tonne in January 2011. During the week, JSW Steel announced that it
will acquire a 41.3% controlling stake in Ispat. Tata Steel surged 1.9% as Rio
increased the takeover bid for Riversdale to AUD3.9bn from AUD3.5bn, in
which Tata Steel holds a 24.2% stake. However, SAIL lost 1.8% on reports
that the company's FPO may be priced lower. Sesa Goa and NMDC gained
7.5% and 3.0%, respectively, as contract iron ore prices for 4QFY2011 are
expected to increase by 7.5-8%. In the non-ferrous pack, Sterlite led the
rally by surging 7.1%, followed by Hindalco (up 6.8%), Hindustan Zinc
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