Sensex vaults 346 points in broad rebound

The market staged a remarkable comeback, taking cue from firm Asian markets, a strong responce to the IPO of Idea Cellular and overnight gains in Indian ADRs. Short-covering in derivatives ahead of next week’s expiry of February 2007 derivative contracts also aided the surge.

The recovery was broad-based with stocks across segments - small-caps, mid-caps and large-caps - bouncing back. The market also shrugged off data showing a surge in inflation to its highest level in more than two years.

The 30-share BSE Sensex jumped 345.65 points (2.4%), to settle at 14,355.55. This is the biggest single-day gain in terms of points for the Sensex in a little over a month. The Sensex had spurted 425.82 points to 14,056.53 on 12 January 2007, at the onset of the Q3 December 2006 earnings season, as Infosys unveiled strong numbers on that day.

The S&P CNX Nifty gained 99.10 points (2.4%), to 4,146.20. Nifty February 2007 futures settled at 4,168 compared to the spot closing of 4,146.20. The market is closed on Friday (16 February 2007) for a holiday.

The market-breadth was quite strong. Against 2,121 shares rising on BSE, 525 declined. Just 33 shares were unchanged. Gainers outpaced losers by a ratio of 4:1. The BSE Small-Cap index gained 222.44 points (3.1%), to 7,290.26. The BSE Mid-Cap index advanced 152.99 points (2.64%), to close at 5,953.01.

The BSE clocked a turnover of Rs 5029 crore, compared to Wednesday’s Rs 4247 crore.

Concerns about rising interest rates and a number of IPOs lined up over the next few weeks, had triggered a sharp correction recently. The benchmark Sensex had tumbled to 14,009.90 on 14 February 2007 from a lifetime closing high of 14,652.09 on 8 February 2007. There were heavy FII sales in index-based futures during this market fall.

The near-term trend on the bourses will be driven by budget expectations. The focus of the market will be more on sectors, which are expected to benefit from the budget proposals.

There are also concerns that a short-term capital gains tax on sale of shares, which is currently at 10%, may get hiked. Another concern is that the securities transaction tax (STT) may also go up further. The previous budget had increased STT. The removal of a 10% corporate surcharge may be offset by removal of certain open ended exemption.

In today’s trade, auto shares held firm after the government announced a cut of Rs 2 per litre in petrol price and Re 1 per litre in diesel. Ashok Leyland surged 5.4% to Rs 46.20, M&M surged 5% to Rs 900, Maruti Udyog gained 4% to Rs 892 and Hero Honda gained 3.8% to Rs 740.

Tata Motors rose 1.8% to Rs 866. Tata Motors and Fiat on Wednesday unveiled a $80 million agreement to build Tata pick-up trucks under the Fiat brand at the Italian carmaker's plant in Cordoba, Argentina, with annual production projected at 20,000 trucks next year. The news triggered a 2.1% rise in the ADR on Wednesday, to $19.87.

IT shares edged higher tracking overnight gains in their ADRs. Infosys rose 4% to Rs 2382 after its ADR surged 3% on Wednesday to $59.20. Satyam Computer rose nearly 5% to Rs 486.50; its ADR rose nearly 4% to $23.48 on Wednesday. Wipro gained 5% to Rs 683. Its ADR rose 1.2% to $17.92 on Wednesday.

L&T surged nearly 5% to Rs 1693.90, on bargain-hunting after a sharp correction of late. The company has a robust order-book position.

A strong response to an IPO of the sixth largest cellular service provider, Idea Cellular, boosted telecom shares. Reliance Communications gained 3% to Rs 466. Bharti Airtel gained 3.6% to Rs 789, despite cutting roaming charges. The Idea IPO was subscribed nearly 27 times by 15:00 IST today. The IPO will close today.

Index heavyweight Reliance Industries (RIL) rose 2.3% to Rs 1410, extending a recent upmove. The upstream regulator said last Thursday that crude production from RIL’s deepwater gas block, off the country's east coast, was commercially viable.

Ranbaxy plunged 5% to Rs 392.25, following reports that criminal investigators for the US Food & Drug Administration yesterday locked the headquarters of Ranbaxy USA.

Bank shares shrugged off a rise in inflation. ICICI Bank gained nearly 4% to Rs 951. The private sector bank's ADR rose 3.2% on Wednesday to $43.61. HDFC Bank gained 3% to Rs 1048. HDFC Bank's ADR gained 0.8% to $71.83 on Wednesday.

The wholesale price index rose 6.73% in the 12 months to 3 February, higher than the previous week's annual increase of 6.58% due to an increase in food and manufactured product prices, data showed on Thursday. The annual inflation rate was 3.98% during the corresponding week of the previous year.

Indiabulls Financial Services jumped nearly 8% to Rs 420.95, after the company said on Thursday its board had approved a one-for-one share entitlement ratio for the demerger of its securities and advisory business to Indiabulls Securities. The ratio for the merger of Indiabulls Credit Services with Indiabulls Financial was also set at three shares of Indiabulls Financial of Rs 2 each for every 10 shares of Rs 10 each held in Indiabulls Credit, the company said.

South East Asia Marine Engineering & Construction rose 10% to Rs 224.85, extending Wednesday’s rally sparked by robust Q4 December 2006 results announced after trading hours on Tuesday.

Theatre chain operator Cinemax India jumped 20% to Rs 182.80. Volumes in the stock were a huge 64.3 lakh shares on BSE. The stock debuted at Rs 175 on BSE on Wednesday, compared to the IPO price of Rs 155. It had settled at Rs 152.35, on its first day, a discount over the IPO price.

Nicholas Piramal India gained nearly 4% to Rs 251.50. The company said on Thursday it planned to invest about $50 million in new drug development and manufacturing facilities in India and the UK during 2007 - 2009.

ITI surged rose 11% to Rs 50.60 following reports that Alcatel-Lucent on Thursday had won a multi-million euro contract from the state-run telecom equipment maker for supply and installation of 2 million GSM lines.

Jain Irrigation Systems gained 0.7% to Rs 431, after the company said on Thursday it had bought US-based designer and maker of drip-irrigation systems, Aquarius Brands, for $21.5 million in an all-cash deal.

Avaya Global Connect gained 4% to Rs 270. The company said on Thursday a growth fund of Reliance mutual fund bought a further 3.51% stake in the company, taking the fund's total holding to 6.13%.

Hexaware Technologies gained nearly 3% to Rs 174. The company today reported 36% growth in its consolidated net profit in the December 2006 quarter to Rs 33.75 crore. Gross revenue during the quarter surged to Rs 240.21 crore from Rs 174 crore in the year ago quarter.

Redington (India) settled at Rs 163.25. The stock debuted at Rs 140 compared to the IPO price of Rs 113.

House of Pearl Fashions settled at Rs 469.40. The stock debuted at Rs 500 versus the IPO price of Rs 550.

Asian markets were firm on Thursday. Key benchmark indices in Hong Kong, Japan, Singapore and South Korea were up between 0.5 - 2.2%.

US stocks and bonds surged on Wednesday, with the Dow climbing to an intraday record, after Federal Reserve Chairman Ben Bernanke said the economy was growing and inflation pressures were starting to ease.

The Dow Jones industrial average rose 87.01 points, or 0.69%, to end at 12,741.86. The Standard & Poor's 500 Index gained 11.04 points, or 0.76%, to finish at 1,455.30. The Nasdaq Composite Index advanced 28.50 points, or 1.16%, to close at 2,488.38, off the session's high at 2,494.51.

Nymex crude was up slightly by 14 cents, at $58.14.