Global markets continued to wield a strong influence on the domestic bourses. Asian markets were boosted today by prospects of rate cuts in the United States, Asia's top export market, taking the Indian bourses higher. Short-covering in derivatives also aided the rally.
The US Federal Reserve policy-setting meeting on Wednesday dropped an explicit reference to the possibility of taking rates higher in its statement, sparking talk abut the next move of a cut. The Fed left interest rates unchanged at 5.25%. US interest-rate futures indicated a 48% chance of a rate-cut by end - June 2007, compared with 24% before the Fed's announcement.
Rate hikes in the United States tend to drain cash from emerging markets, but rate cuts tend to swell flows of dollars to developing economies such as India. As per provisional figures, FIIs were net buyers of Indian stocks to the tune of a massive Rs 712.70 crore today.
The 30-share BSE Sensex jumped 362.15 points (2.8%), to settle at 13,308.03, its highest closing since 27 February 2007, the highest closing in more than three weeks. It was the Sensex’s biggest daily gain since 8 March 2007, when the benchmark index had vaulted 469.60 points (3.7%), to 13,049.35, tracking a rally across Asian markets.
The S&P CNX Nifty today surged 111.35 points (2.9%), to 3,875.90. It also hit a high of 3,881. The Nifty March 2007 futures were at 3,880.10 compared to the spot Nifty closing of 3,875.90. The Nifty April 2007 futures were at 3,878.
Key benchmark indices in Asia were up between 0.39 - 2% on Thursday. The Dow Jones industrial average shot up 159.42 points, or 1.30%, to 12,447.52 on Wednesday. The Standard & Poor's 500 Index jumped 24.1 points, or 1.71%, to 1,435.04. The Nasdaq Composite Index surged 47.71 points, or 1.98%, to 2,455.92.
Indian bourses are set to record its first weekly gain after five consecutive weekly losses till the week ended 16 March 2007. The next major trigger for the domestic bourses is Q4 March 2007 earnings, reports of which by corporates will start next month. Analysts expect Q4 results to be strong. Market men will closely watch what company managements have to say about the outlook for FY 2008.
The key economic data eyed tomorrow is the weekly inflation data. Market expectations peg India’s wholesale price inflation rate at 6.51% for the 12 months to 10 March 2007, up from an annual rise of 6.46% a week earlier. The data will be released around noon on Friday (23 March 2007). The annual rate hit 6.73% on 3 February 2007, its highest in more than two years, but has moderated after the central bank tightened policy and the government cut duties on a range of items to rein in prices.
A number of sectoral indices on BSE clocked strong gains today. The biggest gainer was the BSE’s banking sector index, the Bankex. It vaulted 282.02 points (4.3%), to 6,827.35. The BSE Capital Goods Index spurted 324.88 points (3.76%), to 8,973.06, on the back of strong gains in Bhel. The BSE Auto Index rose 151.92 points (3.1%), to 5,045.93. The BSE Oil & Gas Index surged 167.12 points (2.66%), to 6,444.48, on the back of gains in Reliance Industries and ONGC.
The market-breadth on BSE was strong. Against 1,658 shares rising, 933 declined while 84 did not change. Gainers had outpaced losers by a ratio of 1.77:1. Although the breadth was strong throughout, it had weakened during the course of trading on BSE. Breadth was much stronger in mid-morning trade. At about 11:30 IST, the advance-decline ratio was 2.73:1.
Both Small-Cap and Mid-Cap indices underperformed the market. The BSE Small-Cap Index rose 87.92 points (1.38%), to 6,457.56, lagging the Sensex’s nearly 3% surge. The BSE Mid-Cap Index gained 54.11 points (1%), to 5,395.24.
Total turnover in the cash segment on BSE improved from Wednesday’s Rs 2730 crore to Rs 3555 crore today. The turnover on NSE’s futures & options segment rose to Rs 39943 crore from Wednesday’s Rs 32808 crore.
Bank shares extended Wednesday’s gains. HDFC Bank gained 5.8% to Rs 1022 and ICICI Bank rose 3% to Rs 987. On Wednesday, ICICI Bank's ADR gained 4.3% to $40.31, and HDFC Bank's ADR rose 3.2% to $69.89.
Buying also happened in PSU banks. State Bank of India rose 4% to Rs 1024, Bank of India gained 11% to Rs 174, Canara Bank surged 7.5% to Rs 207 and Punjab National Bank added 7%, to Rs 485. Banks had surged on Wednesday as well on value-buying, as well as due to short-covering in the derivatives.
IT pivotals rose shrugging of a rupee’s recent surge against the US dollar. Wipro gained 2.8% to Rs 598, Satyam Computer advanced nearly 3% to Rs 464.90, TCS added 3% to Rs 1307 and Infosys rose 1.1% to Rs 2117.
Oil exploration major ONGC surged nearly 5% to Rs 853. As many as 4.6 lakh shares changed hands in the counter on BSE. US crude oil held firm near $60 a barrel after a big drop in US gasoline supplies raised worries of a crunch leading into the US summer driving season.
Auto shares were in driver’s seat. Car major Maruti Udyog (MUL) gained 4.8% to Rs 830.50, Hero Honda advanced 4.9% to Rs 683, Tata Motors gained 3% to Rs 801, and Bajaj Auto rose 3% to Rs 2576. Mahindra & Mahindra (M&M) rose 3.4% to Rs 781, after the company on Wednesday set a liberal interim dividend of Rs 7.50 per share for FY 2007.
Bhel (up 6% to Rs 2231) was the top-gainer among the Sensex's constituents. The company is set to unveil its tentative FY 2007 (year ending 31 March 2007) results on 3 April 2007.
Engineering & construction major L&T surged 5% to Rs 1579. The company is sitting on a strong order-book.
Reliance Industries (RIL) gained nearly 3% to Rs 1378. Reliance Industries said on Thursday that Rohm and Haas Co, US, and itself were exploring joint construction of an acrylic-monomer plant in India. The proposed plant in Jamnagar will be able to produce 2 lakh tonnes of acrylic acid and its esters annually, RIL said in the statement. Products from the new firm will be used to make paints, packaging adhesives, detergents, textile and construction materials, RIL added
But caution prevailed in cement shares. Grasim lost 1.2% to Rs 2080 and ACC shed 0.07% to Rs 752. Cement makers have reportedly turned down a request by the government to cut prices. A meeting was held today between the finance minister and cement makers, as the government wants cement makers to moderate prices in its efforts to combat inflation.
Punj Lloyd gained 1.5% to Rs 826.95, after the company said on Thursday it had won a Rs 242-crore order from state-run explorer Oil and Natural Gas Corporation (ONGC) to build offshore pipelines.
Pfizer India ended almost unchanged at Rs 725. Pfizer India during market hours today reported a 14% rise in net profit for three months ended 28 February 2007 to Rs 28.27 crore (Rs 24.77 crore). Net sales for the same period rose 5.6% to Rs 166.97 crore from Rs 158.06 crore in the corresponding year ago period.
Telecom behemoth VSNL gained 10% to Rs 422.90, boosted by a newspaper report that the government may ask the company to sell its surplus land bank of 773 acres.
Kotak Mahindra Bank gained nearly 2% to Rs 438.25, after the private lender signed a deal with International Finance Corp (IFC) to raise up to $45 million in Tier II subordinated bonds, with a maturity of more than 15 years.
India Gelatines & Chemicals rose 2.5% to Rs 22, after the company said its board will meet on 28 March 2007, to consider selling 11% stake for Rs 2.25 crore to Japan's Nippi Inc.
Material handling equipment maker Elecon Engineering rose 1.1% to Rs 387.25, on securing three orders worth Rs 39.65 crore.
Healthcare services firm Kovai Medical Center & Hospital gained 3% to Rs 47.95, after it signed an initial deal to acquire south India-based Idhayam Hospitals Erode for Rs 9.25 crore, including the latter's debt.
There has been a lack of direction with respect to FII inflows over the past few days, which have seen FII inflow and outflow on almost every alternate day.
Rollover has already started to April 2007 contracts from March 2007 contracts in the derivative segment. With the market scheduled to remain closed next Tuesday (27 March) for a public holiday, only four trading sessions are left before the expiry of the March 2007 contracts.