A recovery in Chinese shares triggered a strong intraday rebound on the domestic bourses in early afternoon trade. US index futures also cut losses. Index heavyweight Reliance Industries (RIL) trimmed losses in volatile trade. The market breadth was weak. Capital goods stocks rose. But, auto and consumer durables stocks fell. The BSE 30-share Sensex was down 45.97 points or 0.23%, up close to 170 points from the day's low and off close to 100 points from the day's high.

Year-end profit taking by foreign funds may continue to weigh on the domestic bourses in the near term. The market has come off soon after hitting a record closing high early this month.

Intraday volatility was high as traders rolled over positions in the derivatives segment from the near-month November 2010 series to December 2010 ahead of the expiry of the November 2010 contracts on Thursday, 25 November 2010. The market slipped into the red after a firm start as Chinese stocks fell on rate-hike worries. The market trimmed losses after hitting a fresh intraday low in morning trade. The key benchmark indices came off lows after hitting fresh intraday lows in mid-morning trade. The intraday recovery gathered steam in early afternoon trade as Chinese stocks and US index futures came off lows.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was up 0.14% at 20.65. The index had lost 2.41% to 20.62 on Thursday, 18 November 2010. The index had risen 4.34% to 21.13 on Tuesday, 16 November 2010. The index had lost 6.38% to 20.25 on Monday, 15 November 2010, a day after Friday's (12 November 2010) sharp surge. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.

Chinese stocks recovered from initial losses triggered by reports Beijing might raise interest rates as early as Friday, 19 November 2010, to cool inflation. The key benchmark indices in China and Hong Kong fell by between 0.22% to 0.6%. The key benchmark indices in Indonesia, Japan, South Korea and Taiwan were up by between 0.27% to 0.68%. Singapore's Straits Times fell 0.14%.

US shares surged on Thursday, 18 November 2010, as a closely watched gauge of US jobless benefits hit a two-year low last week and factory activity in the country's Mid-Atlantic region accelerated in November, suggesting the economy's recovery was gaining speed. News that Ireland is closer to accepting financial assistance from the European Union and Great Britain also aided sentiment. Concerns about Ireland's mounting debt had dragged down shares in recent days.

Trading in US index futures indicated that the Dow could fall 6 points at the opening bell on Friday, 19 November 2010. US index futures cut initial losses.

Closer home, Prime Minister Manmohan Singh has been forced to explain to the Supreme Court his failure to probe a huge telecoms scam, in a widening scandal. Solicitor general Gopal Subramanium, representing Singh, will appear before the court by Saturday. Telecoms Minister Andimuthu Raja was sacked at the weekend over accusations he sold telecoms licenses too cheaply, potentially losing the state up to $31 billion in revenues, according to a government audit. On Tuesday, the Supreme Court took the rare step of publicly criticising Singh's slowness in deciding if Raja could be charged and investigated.

On the macro front, the wholesale price index rose 8.58% in October 2010, a touch slower than 8.62% increase in September 2010, data released by the government Monday, 15 November 2010, showed. The annual reading for August 2010 was upwardly revised to 8.82% from 8.5%.

The food price index rose 10.30% while the fuel price index climbed 10.57% in the year to 6 November 2010, government data on Thursday showed. In the prior week, annual food and fuel inflation stood at 12.30% and 10.67% respectively. The primary articles price index was up 13.30% in the latest week compared with an annual rise of 14.87% a week earlier.

Industrial output in September 2010 rose at a much slower-than-expected 4.4% in September 2010 from 8.2% a year ago, government data released on Friday, 12 November 2010, showed. The September IIP data is the lowest in 15 months. Meanwhile, the index of industrial production for August was revised upwards from 5.6% to 6.9%.

The Reserve Bank of India (RBI) at its second quarterly monetary policy review on 2 November 2010 hiked its lending and borrowing rates by a quarter point each, as expected, to tackle inflationary pressures. The central bank signaled a pause in its policy tightening drive that began in October 2009. Based purely on current growth and inflation trends, the Reserve Bank of India (RBI) believes that the likelihood of further rate actions in the immediate future is relatively low, RBI governor D Subbarao said in a monetary policy statement. "However, in an uncertain world, we need to be prepared to respond appropriately to shocks that may emanate from either the global or domestic environment," he added.

The RBI said it will continue to closely monitor both global and domestic macroeconomic conditions. "We will take action as warranted with a view to mitigating any potentially disruptive effects of lumpy and volatile capital flows and sharp movements in domestic liquidity conditions, consistent with the broad objectives of price and output stability", the policy statement said. The Reserve Bank of India (RBI) next reviews monetary policy on 16 December 2010.

Foreign funds have made heavy purchases of Indian stocks this year. Net equity inflow in 2010 stands at $28.64 billion, above last year's $17.45 billion. The annual inflows are at record levels this year.

While global liquidity remains ample, a section of the market is worried that a strong equity issuance pipeline over the next six months will soak liquidity from the secondary equity markets. Indian companies are estimated to raise about Rs 80000 crore from equity and debt issue over the next three to six months. Steel Authority of India and Indian Oil Corp are some of the other state-run firms that are planning large share sales in coming months. The $1.7 billion follow-on public offer of state-run Power Grid Corporation received strong response. The issue was subscribed 14.88 times.

Meanwhile, share sales by the Indian government in state run firms Manganese Ore India (MOIL) and Shipping Corporation of India are likely to hit the market by end-November, while an offer by Hindustan Copper is likely in December, Disinvestment Secretary Sumit Bose said.

Chairman of the prime minister's Economic Advisory Council C. Rangarajan, last week, said that the Indian economy has the capacity to absorb capital inflows of up to $70 billion annually without government intervention. "The quantitative easing by the US Federal Reserve may have implications in terms of capital inflows, but as I had indicated earlier, India's current-account deficit will be around 3% of gross domestic product" this fiscal year, C. Rangarajan said.

On the corporate front, the Q2 September 2010 corporate results have been encouraging. The combined net profit of a total of 3414 firms surged 45.2% to Rs 104408 crore on 19.8% growth in sales to Rs 934573 crore in Q2 September 2010 over Q2 September 2009.

At 12:20 IST, the BSE 30-share Sensex was down 45.97 points or 0.23% to 19,884.57. The Sensex rose 52.11 points at the day's high of 19,982.75 in early trade. The Sensex fell 214.42 points at the day's low of 19,716.22 in mid-morning trade.

The S&P CNX Nifty was down 24.45 points or 0.41% to 5,974.35.

The BSE Mid-Cap index fell 0.42% and the BSE Small-Cap index fell 0.1%.

The market breadth, indicating the health of the market, was weak, in contrast with a positive breadth in early trade. On BSE, 1753 shares fell while 1053 shares rose. A total of 80 shares remained unchanged.

From 30 share Sensex pack, 24 fell and rest rose. Reliance Communications, Reliance Infrastructure, HDFC, Hindalco Industries and DLF fell by between 1.35% to 1.77%.

Index heavyweight Reliance Industries (RIL) fell 0.93% to Rs 1022.95, extending recent losses. However, the stock came off the day's low of Rs 1016.20.

Some capital goods stocks rose on bargain hunting. BEML, Larsen & Toubro, Praj Industries and SKF India rose by between 0.29% to 1.41%.

Auto stocks fell on profit taking. Tata Motors, India's largest auto maker by sales, fell 0.74%. The company's global sales rose 18% to 86,705 units in October 2010 over October 2009. Sales growth was led by 20% and 17% growth in the commercial and passenger vehicle segments, respectively. Sales of luxury brands Jaguar and Land Rover (JLR) posted 12% growth to 18,845 units in October 2010 over October 2009. While Jaguar sales declined by 19% to 3,219 units, Land Rover sales continued to see a strong traction, growing by 22% to 15,626 units.

India's top small car maker by sales Maruti Suzuki India fell 1.57%. The company's total sales rose 39.2% to 1.18 lakh vehicles in October 2010 over October 2009.

Bajaj Auto fell 0.72%. The company reported 32% surge in total sales to a 3.7 lakh units in October 2010 over October 2009. The company clocked record motorcycle and commercial vehicle sales in October 2010.

India's largest tractor maker by sales Mahindra & Mahindra fell 2.76%. The stock hit record high of Rs 826.40 on Thursday, 11 November 2010. The company's auto sales rose 34% to 34,495 units in October 2010 as against 25,670 units during October 2009.

But, India's largest bike maker by sales Hero Honda Motors rose rose 0.27%, extending Thursday's 5.46% surge. The company reported its highest ever monthly sales at 5,05,553 units in October 2010, registering a jump of 42.75% over the same month last year.

Car sales in India rose an annual 37.9% in October, an industry body said last week. Firms sold 1,82,992 cars in the month, data from the Society of Indian Automobile Manufacturers (SIAM) showed. Sales of trucks and buses, a barometer of economic activity, rose 18.17% to 50,835 units in October, SIAM said.

Consumer durables stocks fell on profit taking. Blue Star, Lloyd Electric, Rajesh Exports and Videocon Industries fell by between 0.06% to 6.32%.

Bharti Airtel jumped 4.34%, extending Thursday's 3.77% gains. The company added 3 million users in October 2010.

LGS Global rose 0.89%, extending gains for the second day, after the company secured a contract from Ariba Inc, for integrating Ariba products to an SAP based ERP solutions.

Tulsi Extrusions jumped 6.06%, after the company's board approved bonus issue in the ratio of 1:10.