Sensex adds 162 points

The Sensex's recovery from Monday’s steep fall on the back of RBI's liquidity tightening measure lasted for the second successive day, thanks to the revival across global markets. Domestic bourses have been closely tracking the trend in the global markets, lately.

The 30-share BSE Sensex jumped 162.19 points (1.28%), to settle at 12,786.77. The S&P CNX Nifty gained 42.60 points (1.15%), to end at 3,733.25. The Sensex shot up 170 points on Tuesday (3 April), after having tumbled 617 points on Monday (2 April) due to the RBI’s surprise hike in a short-term interest rate.

The market-breadth was strong. Against 1,548 scrips rising on BSE, 946 had declined. Also, 91 stocks were unchanged. Gainers outpaced losers by a ratio of 1.63:1.

The BSE clocked a turnover of Rs 3218 crore, compared to Tuesday’s Rs 2886 crore.

As per provisional data, FIIs were net sellers to the tune of Rs 45 crore today.

Asian stocks extended their rally on Wednesday, with Australia, Singapore and South Korea hitting record highs, inspired by a reassuring US housing data and falling oil prices.

US stocks closed sharply higher on Tuesday, as a drop in oil prices soothed worries about inflation and news of an unexpected rise in home sales raised hopes that the housing market was stabilising. The rally took the Dow and S&P 500 to their highest levels since 27 February 2007. The Dow Jones Industrial Average gained 128 points (1.03%), to 12,510.30. The tech-laden Nasdaq Composite Index had advanced 28.07 points (1.16%), to 2450.33.

Oil prices extended a near 2% sell-off in New York overnight, as dealers waited for US data, which is expected to show a mild drop in fuel inventories. US light crude for May delivery fell 18 cents to $64.46 a barrel, following a $1.30 slide on Tuesday after Britain and Iran said they were willing to use diplomacy to end a standoff.

Index heavyweight Reliance Industries (RIL) gained 1.6% to Rs 1364, on reports that it was planning to set up two gas-based projects.

PSU power equipment major Bhel surged 4% to Rs 2349, extending gains from Tuesday's reported 42% growth in provisional net profit for the year ended 31 March 2007.

Housing finance major, HDFC, gained 5% to Rs 1495. The scrip had declined 6.3% in the past two days, after raising the lending rate by 75 basis points to counter the hike in a short-term rate by the Reserve Bank of India (RBI).

Banking scrips advanced ahead of the weekly inflation data, which is due to be released on Thursday. ICICI Bank gained 1.6% to Rs 817.50 and State Bank of India rose 0.5% to Rs 931.80. India's wholesale price inflation rate is expected at 6.29% for the 12 months to 24 March 2007, falling from an annual rise of 6.46% a week earlier. The data will be released on Thursday (5 April), instead of on Friday. Stock exchanges will remain closed for a public holiday on Friday.

Pharma stocks were in demand. Dr Reddy’s Lab gained nearly 4% to Rs 747, drawing inspiration from the rally in its ADR on Tuesday. Cipla gained 2.4% to Rs 229.50.

IT bellwether Infosys gained 1.4% to Rs 1993. The stock had eased in morning trade from the early gains, as the rupee today hit its highest level in nearly eight months. Infosys’ FY 2008, which it will unveil along with Q4 March 2007 results, on 13 April 2007, is the next major trigger for the market. In a recent pre-guidance report on Infosys, Merrill Lynch placed a short-term 'sell' on the Sensex heavyweight, expecting a conservative guidance from the company due to an uncertain US economic outlook, the appreciation of the rupee versus the dollar and other client-specific issues. Merill Lynch expects Infosys to give an EPS growth guidance in the early 20s.

HCL Tech rose 3% to Rs 287, after the company said its board will meet on 16 April 2007, to take on record Q3 March 2007 results. The board will also consider the payment of a third interim dividend for FY 2007 (year ending 30 June 2007).

Cement shares remained subdued. Grasim lost 2.4% to Rs 2053 and Gujarat Ambuja Cements shed 0.2% to Rs 105.15. ACC was up 1.8% at Rs 718. The government's decision on Tuesday to do away with countervailing duty (CVD) of 16%, and an additional customs duty of 4% on portland cement with immediate effect, worsened sentiment about cement companies, which were already reeling under government pressure for curbing prices. However, the actual import of cement is unlikely to take place in a big way due to high transportation costs, and poor infrastructure at the ports to handle bulk cement.

Ashok Leyland dropped 1.6% to Rs 35.50, after its vehicle sales in March 2007, fell 1.6% to 8444 units from 8577 units a year earlier. Domestic sales dropped 1.9% to 7,936 units from 8,087 in the same period a year ago. Exports rose to 508 units from 490 a year earlier.

UTI Bank dropped nearly 2% to Rs 456.20, after Chairman & Managing Director (CMD), P J Nayak, offered to quit at the end of his current term, on 31 July 2007. UTI Bank said that the Reserve Bank of India (RBI) had declined an approval to UTI Bank’s earlier proposal to appoint Nayak as CMD for two years, commencing 1 August 2007. RBI has proposed that the office of chairman and managing director should be bifurcated into two in accordance with the recommendations of the Dr Ganguly Group Report on Corporate Governance and to comply with international best practices. The board of UTI Bank will meet on 17 April 2007, in this regard.

Metal shares advanced, after metal futures rose on the London Metal Exchange on Tuesday. Sterlite Industries jumped nearly 7% to Rs 466.95, Hindustan Zinc jumped 8% to Rs 619 and Hindalco gained 0.4% to Rs 129.65. Copper futures rose 3.8%, and Zinc futures jumped 3.6%.

ABB gained nearly 2% to Rs 3510, after the company said its board will meet on 26 April 2007, to take on record un-audited financial results for Q1 March 2007.

Public sector steel giant, Steel Authority of India (Sail), gained 0.45% to Rs 111.65, after the board of directors gave their in-principle approval for a Rs 11260 crore expansion plan. The investment will nearly double capacity at the firm's Bhilai steel plant to 7 million tonnes a year. The state-run steel maker, which plans to raise its total output from 14 million tonnes to 23 million by 2010, said it produced 12.6 million tonnes of saleable steel during FY-2007.

Some offshore oil services firms were in demand. Aban Offshore gained nearly 4% to Rs 2132.05, South East Asia Marine Engineering & Construction jumped 5% to Rs 185.20, and Dolphin Offshore advanced 4% to Rs 187.

Multiplex operator, Cinemax India, rose 1.5% to Rs 122.85, after ICICI Prudential Life Insurance Company said on Tuesday it had mopped up 1.94 lakh shares of Cinemax India through the open market on 28 March 2007, taking its cumulative holding to 14.31 lakh shares (5.11%).

Mahindra & Mahindra dropped 2.64% to Rs 708.50, a day after Mahindra Renault, a joint venture between Mahindra & Mahindra (M&M) and Renault, on Tuesday launched the Logan budget-priced car range in India. The Logan will roll out from M&M’s plant at Nashik, which has been upgraded with an installed capacity of 50,000 units annually.

Eicher Motors dropped 2.5% to Rs 228.05. The company has posted 20% growth in vehicle sales in March 2007, at 3,730 units. Domestic sales grew 18% to 3,283 units and exports rose 37% to 447 units.

IFCI rose 1.1% to Rs 31.75, even after RBI said on Tuesday no further purchases of shares in IFCI by foreign funds will be allowed without their prior permission. The foreign fund holding in IFCI has reached the 22% limit, RBI informed.

JSW Steel lost 1.8% to Rs 470.10. The company today said it had posted a growth of 20% in crude steel production for Q4 March 2007. The company said it had recorded higher production in all product segments, except galvanised products.