Sensex, Nifty in uncharted terrain

The key indices set their second record in as many sessions. The Sensex hit 14,500, while the Nifty hit 4,200 for the first time. Telecom shares extended gains, as auto shares rose on renewed buying. Metal shares, however, retreated. The rally on the domestic bourses materialised amid a mixed trend in Asian and European shares.

The 30-share BSE Sensex gained 112.13 points (0.78%), to settle at a lifetime closing high of 14,515.90. It also struck a lifetime high of 14,526.51, surpassing its earlier all-time high of 14,462.77 from Friday (2 February 2007).

The S&P CNX Nifty gained 31.85 points (0.76%), to settle at a lifetime closing high of 4215.35. The Nifty hit an all-time high of 4,219.

The market-breadth was strong. For 1,529 shares rising on BSE, 1,135 declined. As many as 60 shares were unchanged. Gainers outpaced losers by a ratio of 1.34:1.

The BSE clocked a turnover of Rs 4694 crore, much lower than Friday’s Rs 5630 crore.

Barring IT and metal sector indices, the rest of the sectoral indices ended in the green. The BSE Auto index gained 114.73 points (2%), to settle at 5,712.79. The BSE’s Capital Goods index rose 97.16 points (1%), to end at 9,920.97. The BSE Metal index lost 111.55 points (1.1%), to 9,345.74. The BSE IT index shed 5.24 points, to 5,387.05.

The BSE Small-Cap gained 94.93 points (1.2%), to 7,655.65. The BSE Mid-Cap index advanced 37.04 points (0.61%), to end at 6,155.24.

With today’s rise, the Sensex has gained 424.98 points (3%) in the past three trading sessions from 14,090.92 on 31 January 2007. The market sentiment is firm due to US Federal Reserve keeping interest rates steady at its 31 Jan 2007 meeting. Sentiment was also boosted by the RBI, on the same day, raising fiscal 2006-07 GDP growth forecast upwards to 8.5% to 9% from earlier 8%. The barometer index is up 5.2% in calendar 2007 thus far.

Market men feel that a pre-budget rally has started. Market men expect the finance ministry to give a big impetus to agriculture and infrastructure in the budget. There are also expectations that a surcharge on corporate tax will be abolished.

Auto shares rose on renewed buying. Car major Maruti Udyog rose 2% to Rs 965, while Tata Motors gained 1% to Rs 920. Bajaj Auto rose 1.7% to Rs 2827 and Horo Honda gained 1.2% to Rs 724.90. There are hopes that auto industry may get tax sops in the budget. Expectations are that the excise duty on small cars may be cut further from 16% to 8%. Last week, top automakers reported good vehicle sales numbers for January 2007.

Reliance Communications surged 5% to Rs 515.75. The scrip hit a lifetime high of Rs 518.40. As many as 33.2 lakh shares changed hands in the counter on BSE. Bharti Airtel was up 1% to Rs 779.40, off an all-time high of Rs 797, struck earlier during the day.

Mobile service majors continued in Friday's buoyant vein. The Telecom Regulatory Authority of India (TRAI) decided to lower port charges, allowing cellular operators to connect to BSNL and MTNL lines by up to 29%, a move which is expected to result in tariff cuts on Friday. A race for India's fourth-largest mobile firm, Hutchison Essar, is also expected to boost the valuation of telecom stocks. Suitors for Hutch also include Britain's Vodafone.

Housing finance major, HDFC, gained 4% to Rs 1818, extending Friday’s surge. The stock also hit an all-time high of Rs 1821.95. The company continues to benefit from a strong demand for housing loans.

Reliance Energy rose 2.8% to Rs 549.50, amid reports that the company will bid for the global power assets of a British power investment company, Globeleq, by mid-February.

Tata Steel gained 1.7% to Rs 471.05. The stock plunged last week after winning Anglo-Dutch steel maker, Corus Group, in an auction held in London. The Tatas will pay $12.1 billion for Europe's leading steel producer. The price is said to be expensive and may put under strain Tata Steel's finances, at least in the short term.

Index heavyweight Reliance Industries (RIL) 1.3% to Rs 1390. In January, the company reported robust Q3 December 2006 results. The State Bank of India (SBI) was up 1.2% to Rs 1196, after the bank's chief said domestic interest rates have peaked for the fiscal year ending March 2007.

Metal shares lost, responding to a fall in base metal prices, on the London Metal Exchange (LME) on Friday. Hindustan Zinc lost 5.7% to Rs 653.50, Sterlite Industries shed 6.6% to Rs 485.50 and Hindalco lost nearly 3% to Rs 177.80. Fund-liquidation, triggered by a report of heavy losses at a hedge fund, had caused the fall of metal prices on LME.

Media shares were in demand. Shree Ashtavinayak Cine Vision jumped 19.5% to Rs 370.70, UTV Software gained 12% to Rs 321.50, Balaji Telefilms rose 10% to Rs 140.20, Pritish Nandy Communications gained 5% to Rs 55.10, Pyramid Saimira Theatre rose 5% to Rs 421.35, and Adlabs Films gained 4% to Rs 487.

Real estate developer Ansal Properties & Infrastructure jumped 5% to Rs 799.60, after it said its board will meet on 12 February 2007 to consider a bonus issue of shares.

Oil and gas services company, Deep Industries, dropped 4.4% to Rs 57.50 despite the firm winning two contracts of total worth Rs 26.07 crore.

Federal-Mogul Goetze (India) lost 2.6% to Rs 364. The company informed on Monday that ABN Amro Bank N.V. had acquired an additional 2.53%, taking its holding in the company to 5.18%.

Eicher Motors rose nearly 3% to Rs 382.65, after the company said on Monday that its sales rose 7% to 2,713 units in January 2007. Domestic sales rose 8% to 2,612 vehicles, while exports fell 14% to 101 units.

Gujarat Gas Company lost 1.2% to Rs 1332. The company said on Friday its board will meet on 23 February 2007 to consider a sub-division of equity shares.

Global Vectra Helicorp was up nearly 12% to Rs 317. The stock recovered after losing as much as 4.8% to Rs 270 earlier during the day. Volumes in the stock were substantial at 20.2 lakh shares on BSE.

Shringar Cinemas jumped 10% to Rs 73.45, after the company said its FAME Multiplex, at Aurangabad, was exempted from paying entertainment tax. Under the entertainment tax exemption policy, this multiplex will enjoy 100% exemption for the first three years and 75% exemption of the prescribed rate for the subsequent two.

Indiabulls Financial Services (IBFSL) jumped 8% to Rs 453.95, after the company said it was considering various restructuring options, including the transfer of its stock-broking business, in favour of a separate company. The new company will then be listed on the stock exchanges. IBFSL has three businesses: stock-broking, consumer finance and housing finance. The real estate venture, Indiabulls Real Estate (IBREL), was demerged in December 2006.

Rain Commodities jumped 9% to Rs 183.25, after the company said its US subsidiary will buy the assets of Great Lakes Carbon Income Fund, giving the cement maker an indirect control over GLC Carbon USA. Rain will acquire the fund's wholly-owned Canadian subsidiary, Carbon Canada, which has 73.56% stake in GLC Carbon USA. Rain already owns 20.23% in GLC Carbon, the world's largest producer of anode and industrial grade calcined petroleum coke.

ABB rose 1.2% to Rs 3799. The company announced Q4 December 2006 results on 16 February 2007.

Jain Irrigation gained 6% to Rs 425, after it said Citigroup Global Markets acquired an additional 13.3 lakh shares on 31 January 2007 from the secondary market, raising its holding in the company to 5.83%.

Battery maker Eveready Industries rose 5.4% to Rs 79.25 after prices of zinc, a major raw material for batteries, fell.

FIIs were net sellers to the tune of Rs 470 crore last Thursday (1 February 2007), the day when the Sensex had jumped 176 points. But as per provisional data, FIIs were net buyers to the tune of a huge Rs 947 crore on Friday (2 February 2007), the day when the Sensex gained 137 points, settling at a lifetime closing high of 14,403.77. The Nifty also struck a lifetime high the same day.

FIIs were net buyers to the tune of Rs 546 crore in index-based futures on 2 February. They were net buyers to the tune of Rs 19 crore in individual stock futures the same day.

European markets were little changed in early trade. London’s FTSE 100 index was up 0.07%. Asian markets were mixed. Japan’s Nikkei 225 average was down 1.1% as Japanese automakers tumbled after Nissan Motor slashed its earnings forecast. Hong Kong’s Hang Seng was down 0.5%. Key benchmark indices in South Korea, Singapore and Taiwan were up between 0.08 - 0.34%.

US blue-chips eased on Friday after data showed a moderate job creation in January, suggesting that the Federal Reserve will not cut interest rates yet, while the S&P 500 and the Nasdaq had edged higher. The Dow Jones industrial average fell 20.19 points, or 0.16%, to 12,653.49, while the Standard & Poor's 500 Index rose 2.45 points, or 0.17%, to 1,448.39. The Nasdaq Composite Index gained 7.50 points, or 0.30%, to 2,475.88.

Finance Minister P Chidambaram said earlier on Monday that last week's upgrade to investment grade of the country's credit rating by Standard & Poor's will lead to increased foreign investment. "Thanks to the upgrading of our ratings to investment grade, I am confident more investments will come to India," the finance minister told a conference. Last Tuesday, S&P raised India's rating, citing the country's strong economic prospects and external balance sheet.

Prime Minister Manmohan Singh said on Saturday that inflation reduction, which spiked over 6% last week, remains a top priority for his government.