Sensex vaults 470 points in Asian recovery

The market made a strong comeback today. The Sensex had surged over 500 points at of time in late trading, to breach the psychologically important 13,000 level. Strong Asian markets triggered a rebound on the domestic bourses, which had seen a huge value erosion over the past few days. Short-covering in derivatives aided the surge.

Blue-chips rose almost across-the-board, and a host of small-cap and mid-cap shares too were in demand. Cement, banking shares, power equipment makers, construction, telecom shares and pharma pivotals led the charge.

The 30-share BSE Sensex vaulted 469.60 points (3.7%), to 13,049.35. It was the biggest single-day point rise in the Sensex recorded since mid-June 2006. On 15 June 2006, the Sensex had spurted 615.62 points to 9,545.06 from a closing of 8,929.44 on 14 June 2006. Once again, the trigger came from the overseas market. It was a rebound in global markets, which had lifted the Sensex on 15 June 2006.

The S&P CNX Nifty jumped 134.80 points (3.7%), to settle at 3,761.65. The Nifty March 2007 futures were at 3,768.80, compared to the spot Nifty closing of 3,761.65

On Thursday (8 March 2007), Asian markets extended their recovery from a recent steep fall triggered by steepling losses in Chinese stocks and jitters about health of the US economy. Key benchmark indices in the region were up 1 - 2%. Domestic bourses had recovered on Tuesday (6 March 2007) when Asian markets first recovered from the steep fall. However, they had declined on Wednesday (7 March 2007) in volatile trade.

Indian stocks had tumbled in the last few days due to a sell-off in global markets, with the Union Budget 2007-08 of 28 February 2007 only compouding their woes. The fall was accentuated as margin calls were triggered. The Sensex had tumbled 541 points on Budget day itself. The market had recovered the next day (on 1 March 2007) on the back of a rally in IT shares under a reckoning that their earnings will be impacted only to a small extent following an increase in tax in the Budget. The Sensex had surged 221 points, to 13,159.55 on 1 March 2007. However, a sell-off had gripped the bourses again, which saw the Sensex hurtle down to 12,415.04 on 5 March 2007.

While there was no cut in the 10% corporate surcharge as expected, the dividend distribution tax was raised to 15% from 12.5%. The Budget also raised direct/indirect taxes for cement, construction and IT sectors.

In today’s trade, the BSE Small-Cap Index gained 157.50 points (2.5%), to 6,245.81. The BSE Mid-Cap Index gained 132.38 points (2.5%), to 5,246.79.

All sectoral indices on BSE had gained. The biggest gainer in percentage terms was the BSE Metal Index. It jumped 356.52 points (4.58%), to 8,132.68. The BSE Capital Goods Index gained 376.84 points (4.51%), to 8,730.82. BSE’s banking sector Bankex rose 275.69 points (4.45%), to 6,466.36.

The BSE clocked a turnover of Rs 3599 crore, lower than Wednesday’s Rs 4328 crore. Turnover on NSE’s futures & options segment declined to Rs 32218.18 crore from Wednesday’s Rs 36254.09 crore.

FMCG giant Hindustan Lever jumped nearly 10% to Rs 184.50, after influential brokerage CLSA in a report released today put 'buy' on the stock with a 12-month price target of Rs 240, citing attractive valuation after the steep correction in the counter of late. From a recent peak of Rs 224.10 on 22 January 2007, the HLL stock had tumbled 25% to Rs 167.80 by 7 March 2007.

Battered cement shares looked up. Gujarat Ambuja Cements rose 8% to Rs 112.65 and Grasim rose 6.9% to Rs 2250. Cement scrips had declined on Wednesday, with the government hinting at a ban on cement exports.

ACC was up 2.7% to Rs 836. The Sekhsaria group-Holcim combine has raised its stake in ACC by over 2% in the last fortnight through the secondary market.

Pharma pivotals were in demand. Dr Reddy’s Lab surged 6.4% to Rs 674.95, while Ranbaxy gained 6.9% to Rs 331. Ranbaxy’s subsidiary, Terapia, in Romania, has reported 50% growth in sales for 2006.

Bank shares edged up on bargain-buying after a recent steep fall. HDFC Bank rose 7.7% to Rs 987, ICICI Bank gained 4.5% to Rs 864 and State Bank of India gained 3.6% to Rs 1000.

Wipro gained 4% to Rs 581, on reports it was close to buying a US-based aerospace services firm for about $90 million.

Telecom shares rose for the second day in a row, ahead of the listing of Idea Cellular. Reliance Communications surged 5.8% to Rs 434.90, and Bharti Airtel gained 5.8% to Rs 764.70.

Idea Cellular debuts on the bourses on Friday (9 March 2007). Idea Cellular had priced its IPO at the upper end of Rs 65 - Rs 75 price band following a strong response to the issue. The company has a large equity base of Rs 2592.86 crore. The post- issue, FII-holding in Idea Cellular is 11.65%, while promoters hold 57%. At the IPO rate of Rs 75 per share, the issue was priced 48 times its annualised April-December 2006 (nine-month) EPS of Rs 1.55.

Reliance Industries (RIL) advanced 3.6% to Rs 1336.85 and IPCL jumped nearly 12% to Rs 259.20. RIL on Wednesday (7 March 2007) said that its board will meet on 10 March 2007, to consider a proposal for merging subsidiary, IPCL, with the company. The annoucement happened after trading hours on Wednesday.

Steel shares bounced back on renewed buying due to firm global steel prices. Sail jumped 15% to Rs 107, and JSW Steel rose 8% to Rs 447.70. Steel firms had raised prices on 1 March 2007, but had partially rolled them back to cooperate with the government on inflation.

Tata Steel gained nearly 4% to Rs 428.90, off the session’s low of Rs 399. Shareholders of the Corus Group have agreed to Tata Steel’s $12 billion takeover of the European steelmaker. Investors representing 97% of the shares backed the purchase, Corus said on Wednesday.

Battered power equipment makers surged. Bhel gained 7% to Rs 2165, Crompton Greaves rose 6.5% to Rs 188, ABB rose 5.6% to Rs 3434, Voltamp Transformers gained 5.6% to Rs 563, Thermax rose 5.3% to Rs 366.75, Areva T&D rose 5% to Rs 1064, Alstom Projects gained 4.7% to Rs 421 and Siemens gained 4.4% to Rs 1037.

Construction shares spurted. Jaiprakash Associates jumped 12.7% to Rs 575, Hindustan Construction gained 9.7% to Rs 104.45, Gammon India gained 8.7% to Rs 287, Nagarjuna Construction gained 7.7% to Rs 155.90, Gayatri Projects rose 6.6% to Rs 238, Punj Lloyd gained 5.8% to Rs 777 and L&T rose 5% to Rs 1527. Removal of a tax holiday benefit under Section 80 IA in the Union Budget 2007-08 had spooked construction stocks.

Era Constructions rose 5% to Rs 316.95, after the Reserve Bank of India said foreign funds will be allowed to purchase equity shares and convertible debentures of the company up to 40% of the paid-up capital of the company, through the primary and secondary markets in India.

Some real estate developers, which had been battered over the past few days, edged up. Akruti Nirman vaulted 12.7% to Rs 420, Sobha Developers gained 8.7% to Rs 689, Parsvanath Developers rose 7% to Rs 244, and Mahindra Gesco Developers advanced 5% to Rs 541.

Chemicals maker SRF rose 1.7% to Rs 119, after the firm's board approved setting up an equal joint venture in China to make anhydrous hydrogen fluoride. The project will cost an estimated $9 million.

Power cable maker Diamond Cables rose 5% to Rs 141. The company said Thursday its board would meet on 20 March 2007, to consider the acquisition of power transformer making companies.

Software firm ICSA India gained almost 4% to Rs 980. The company said on Thursday it planned to raise up to $24 million through various means including overseas and domestic equity or debt issuances. The company's board had also decided to allot 0.35 million fully convertible warrants to Goldman Sachs International, each warrant being convertible into an equity share within 18 months. This will constitute 5.3% of ICSA's outstanding equity.

HFCL Infotel surged 4.8% to Rs 21.80. The stock came sharply off day’s low of Rs 19.80. The market regulator on Wednesday put on hold the offer for sale document filed by the telecom services company.

Indus Fila settled at Rs 135 NSE. The stock debuted at Rs 158.90, a discount over the IPO price of Rs 170. A strong 1.1 crore shares changed hands in the counter on NSE.

FIIs were net buyers to the tune of Rs 84 crore on Wednesday (7 March), the day when the Sensex lost 117 points in volatile trade. Foreign funds had sold nearly $600 million worth of Indian stocks in the five trading sessions ending Tuesday (6 March 2007).