Sensex gains 186 points in a breath-taking session

Renewed buying in blue-chips hoisted the market to a record high closing today. In contrast to the recent trend, the participation in the rally was broad-based, which was evident in the strong market breadth, and an advance-decline ratio of 2.4:1 on BSE. The market-sentiment was bright following a strong debut of Internet firm Info Edge (India), and due to a steady-to-firm trend in Asian stocks.

The BSE Sensex jumped 186.06 points (1.3%), to a lifetime closing high of 13,616.77. The S&P CNX Nifty rose 62.10 points (1.6%), to a lifetime closing high of 3,918.25. The market held firm throughout the day. The key indices took off in the second half of the trading session.

BSE Small Cap Index rose 118.12 points (1.8%), to 6,416.61. The BSE Mid Cap Index added 92.43 points (1.6%), to 5,546.86. The small-cap and mid-cap indices have underperformed the Nifty and Sensex in the last few weeks.

The BSE clocked a turnover of Rs 4,041 crore, compared to Monday’s Rs 4,260 crore.

Select small-caps and mid-caps surged today. Top gainers in the small-cap and mid-cap space were Sika Interplant Systems (up 20% to Rs 103.90), Shrachi Securities (up 20% to Rs 63.70), Development Credit Bank (up 20% to Rs 63.20), Mount Shivalik Industries (up 20% to Rs 56), HOV Services (up 13.9% to Rs 161.60), DMC Vaults (up 14% to Rs 17.95), Yuken India (up 13.6% to Rs 166) and Vaibhav Gemes (up 13% to Rs 267).

Stronger-than-expected Q2 September 2006 results, and sustained FII-inflows have boosted the bourses of late. The BSE Sensex is up 44.8% in calendar 2006, so far.

FIIs have stepped up buying notwithstanding apprehension of stretched valuations. FII-inflows in 2006 have reached $8.1 billion (till 20 November). Most of the money streaming in belongs to long-term pension funds and insurance firms. Funds are also pouring in from hedge funds. Strong global liquidity has aided the fund flow.

Another factor that has contributed to the surge in foreign investment is the ever growing number of FIIs getting registered with Sebi everyday. In this calendar year, there has been an addition of over 170 FIIs, the aggregate now standing at 993. There are expectations that foreign funds will buy more in December 2006, as allocations are made for the New Year.

However, foreign brokerage Merrill Lynch expects a slowdown in earnings growth of Sensex firms in FY 2008 (year ending 31 March 2008). `Excluding Reliance Communications, earnings in FY 2008 should rise only 11.2% versus the 27.5% forecast for FY 2007 (year ending 31 March 2007). If so, it would be the slowest earnings growth since FY 2002’, the brokerage stated in a Q2 earnings review released early this month. It, however, expects strong earnings growth to continue in Q3 December 2006.

Volatility is likely in the near term as traders square off, or carry forward, their outstanding contracts for November futures ahead of the expiry of contracts next Thursday (30 November).

The market staged a solid intra-day rebound on Monday (20 November) after the Sensex had plunged over 200 points at one point of time scared by an RBI circular on Friday (17 November), which capped banks’ exposure to the capital market.

In today’s trade, Bharti Airtel rose nearly 3% to Rs 622.35. The stock hit a lifetime high of Rs 625.70. Rival Reliance Communications rose 1.8% to Rs 416.70. The stock also attained a lifetime high of Rs 418. Both cellular services providers turned bullish amid reports that the Department of Telecom (DoT) will make available, additional radio frequency for cellular service providers.

IT pivotals were in demand for the second day in a row today, following reports that top Indian IT firms were chasing over a dozen deals on an average, the sizes of which range between $50 - $100 million. Satyam Computer gained 3.2% to Rs 455, HCL Tech rose 3% to Rs 647, TCS rose 2.8% to Rs 1,148 and Wipro added 2.6% to Rs 569.

Infosys edged slightly lower in volatile trade. The scrip shed 0.3% to Rs 2,246. The software giant today priced its sponsored ADR issue at $53.30 per ADR, a 3.2% discount to Monday’s closing price of $55.2. The company said the aggregate size of the ADR offer exceeds $1.6 billion. As part of this offering, 5,000,000 ADRs representing 5,000,000 equity shares, will be placed with Japanese investors through a public offer without listing (POWL).

Cigarette maker ITC gained 3.3% to Rs 184.35, and giant Hindustan Lever advanced 2.2% to Rs 248.35.

Tata Steel gained nearly 3% to Rs 476.85. Tata Steel has reportedly called an unscheduled board meeting on Thursday, to discuss the fallout of CSN’s 475 pence per share counter-bid for Anglo-Dutch steelmaker Corus. Tata Steel had bid at 455 pence per share for Corus. Tata Steel's board is likely to discuss various options including the possibility of a revised offer for Corus. Media reports also indicated that Tata Steel might win the takeover battle if it matched CSN's bid, given that Corus' management approved the Indian firm's bid last month. Tata Steel may, however, be reluctant to get involved in a hostile bid.

Shares in Info Edge (India), which runs web sites for job search and matrimony, closed at Rs 593.20, a premium of 85.3% over the IPO price (Rs 320). The scrip clocked a massive volume of 78 lakh shares on BSE.

ICICI Bank rose 1.4% to Rs 872, on reports that the largest private sector bank is slated to raise $1 billion through an issue of yen-denominated bonds. Other bank shares rose after RBI Deputy Governor, Rakesh Mohan, said on Tuesday that greater price stability will make it possible to have lower interest rates in the medium term. State Bank of India gained 2% to Rs 1,233. 30, Bank of India rose 1.6% to Rs 190, and Bank of Baroda rose 1% to Rs 258.20.

Auto shares gained while trying to keep themselves abreast of the market. Car major Maruti Udyog rose 1.7% to Rs 885.25, Tata Motors gained 2% to Rs 819, Ashok Leyland rose 3% to Rs 43.45 and Bajaj Auto gained 0.4% to Rs 2,576. Auto shares were underperformers in the recent market surge.

Cement shares rose on firm cement prices. ACC gained 1.3% to Rs 1,071, Gujarat Ambuja Cements gained 1.9% to Rs 136, and UltraTech Cement rose 1.3% to Rs 895.25.

Construction and real estate firms were in demand on reports that the finance ministry is expected to come out with enhanced limits for bank exposure to corporate groups, projects and sectors, to boost credit flow to the infrastructure sector. L&T gained 1.7% to Rs 1,350, IVRCL Infrastructures rose 8% to Rs 379, Madhucon Projects advanced 6.8% to Rs 310, Jaiprakash Associates rose 11% to Rs 675, Simplex Infrastructure rose 6% to Rs 393 and Unitech gained 5% to Rs 485.75.

MTNL rose nearly 3% to Rs 134.20, after the company launched pre-paid services on its Garuda mobile offering.

Mahindra & Mahindra gained 2.7% to Rs 841, after the company said on Monday it had signed a deal with Global Vehicles, US, to distribute Mahindra's sports utility vehicle and a pick-up in the US.

Balmer Lawrie & Company rose 2.7% to Rs 394.90, amid reports that Ministry of Petroleum & Natural Gas has upgraded the status of the public sector firm to Mini Ratna Category 1, which will enable the company to enjoy greater managerial and commercial autonomy in respect of capital expenditure, join ventures, creating subsidiaries, merger and acquisitions.

Aditya Birla Nuvo rose 3.7% to Rs 1,107, after the company said a meeting of the special committee constituted by the board will be held on 23 November 2006, for deciding various matters in connection with the proposed rights issue.

Mercator Lines gained 4% to Rs 37.50, after the company said on Tuesday it had executed an agreement to buy a double-hulled tanker of 1,10,000 dead-weight tonnage. The tanker is expected to join the company's fleet next month.

BPL rose 5% to Rs 58.45, after it said its board will meet on 23 Nov 2006, to consider transfer/leasing of its alkaline battery business, to an equal joint venture. The board will also consider investing in the venture.

Development Credit Bank jumped 20% to Rs 63.20, on a high volume of 1.55 crore shares on BSE. On Monday, the company’s board approved an increase in FII-ceiling substantially; from 24% to 49%. The board also approved up to Rs 225 crore placement to qualified institutional buyers.

i-flex solutions rose nearly 5% to Rs 1,593.70, after Interbank, one of Peru’s leading commercial banks, opted for Reveleus Operational Risk as its enterprise-wide operational risk management platform.

Sterlite Optical Technologies jumped 8% to Rs 211.50, after the company bagged a contract worth $ 5 million from Qatar's Q-Tel, for manufacturing and supply of copper telecom cables. The deliveries, to be spread over the next three years, will start in December 2006.

Hindustan Zinc rose 2.4% to Rs 865, after zinc closed 3% higher on Monday, on the London Metal Exchange. Zinc, for delivery in three months, ended at $4,169 a tonne, up 3.4%.

Garware Wall Ropes dropped 0.5% to Rs 65.30. The company said on Tuesday it will raise up to $10 million through various means including a possible overseas issue.

Gitanjali Gems gained nearly 1% to Rs 213.55, after the company today said it has entered into a Memorandum of Understanding (MOU) to form a 50:50 joint venture with Sulieman Al Othaim of Saudi Arabia, one of the leading retail chains in the Middle East. The venture will help Gitanjali's entry into mainstream retail in Saudi Arabia, the company said in a statement.

Birla VXL was trading at Rs 48.30, against Monday’s closing at Rs 63.35. The stock today turned ex-rights. The company’s rights issue is in the ratio of 4:7, and was priced at par.

India and China will work to raise their bilateral trade to $40 billion by 2010, Prime Minister Manmohan Singh said on Tuesday after talks with visiting Chinese President Hu Jintao. Bilateral trade has climbed from just $260 million in 1990 to a projected $20 billion in 2006/07.

On Monday, Commerce and Industry Minister Kamal Nath said New Delhi was seeking comprehensive economic cooperation with China but a free-trade agreement with Beijing was not on the cards.