Market moves higher on rebound in Chinese equities

The BSE Sensex, which had moved between positive and negative territory earlier during the day, firmed up in the second half of the trading session. It settled with modest gains, as buying emerged for index pivotals from afternoon trade. Volatility was the hallmark of today’s trade, with Sensex swinging sharply.

A strong recovery in markets across the globe, led by rebound in China, aided recovery in domestic markets. Buying was seen in IT, banking stocks and in select pivotals. FMCG stocks declined.

Sensex gained 39.24 points or 0.27% at 14,535.01. It had opened slightly higher at 14,514.20, but immediately declined to a low of 14,432.67 as selling emerged. It surged to strike an intra-day high of 14,571.31, in mid-afternoon trade.

The S&P CNX Nifty rose 17.60 points or 0.41% at 4,284.65

However, there are concerns that investors may pull out funds from the secondary market to invest in IPOs which are scheduled to hit the market later this month. Reality major DLF is mopping up between Rs 8750 crore and Rs 9625 crore at the proposed price band of Rs 500 - Rs 550 per share. DLF IPO opens for subscription on 11 June 2007 and ends on 14 June 2007. ICICI Bank had, on 15 May 2007, filed a draft prospectus with Sebi to seek approval for raising Rs 17500 crore through an equity issue in the domestic and overseas market.

The total turnover on BSE amounted to Rs 3776 crore while the NSE's futures & options (F&O) segment clocked a turnover of Rs 31210.07 crore.

The market breadth, which indicates the overall health of the market, was positive with 1,318 shares advancing on BSE as compared to 1,270 that declined. 90 remained unchanged. The market breadth had turned negative in mid-morning trade compared to positive breadth in early trade.

The BSE Mid-Cap index was up 0.44% at 6261.02, while the BSE Small-Cap index rose 0.27% to 7,486.67

Among the Sensex pack, 18 pivotals advanced, while the rest declined.

State Bank of India (SBI) gained 2.93% to Rs 1447.90 on 6.56 lakh shares. It also surged to an all time high of Rs 1448, in intra-day trade. The government appears set to promulgate an ordinance to close the largest ever acquisition involving the transfer of Reserve Bank of India's 59.7% stake in State Bank of India to the Centre in a deal worth nearly Rs 40,000 crore.

As per reports, the finance ministry will seek the Cabinet's approval over the next couple of weeks to ensure that the Centre hands over the cheque to RBI on 29 June 2007, a day before RBI closes its annual books of accounts.

Other shares from the banking and financial sector also advanced on renewed buying after last week's inflation data eased market concerns of a further tightening in monetary policy. UTI Bank (up 0.57% to Rs 579.50), Vijaya Bank (up 4.24% to Rs 50.54), Federal Bank (up 3.77% to Rs 286.50), Canara Bank (up 2.78% to Rs 257), Kotak Mahindra Bank (up 6.08% to Rs 610), HDFC (up 0.71% to Rs 1890), and ICICI Bank (up 0.27% to Rs 936), edged higher.

Led by SBI, BSE's banking sector index Bankex rose 1.06% at 7,823.97, and was the top gainer among sectoral indices on BSE.

IT pivotals extended early gains on fresh buying after the rupee backed away from last week's nine-year high as traders bought dollars on concerns the Reserve Bank of India (RBI) may intervene aggressively to check the Indian currency's rise.

The BSE IT index rose 31.58 points or 0.79% to 4,884.93. TCS (up 0.10% to Rs 1210), Infosys Technologies (up 1.33% to Rs 1942) and Wipro (up 0.27% to Rs 535.40) advanced. I-Flex Solutions jumped 10.5% to Rs 2431 on market talk that majority owner Oracle Corp. may make an open offer to increase its stake in the Indian banking software maker.

IT stock have not performed in the market's recent surge due to the stronger rupee. A rise in the rupee directly impacts revenue and profit of IT firms, which derive a lion’s share of revenue from exports to the US. The rupee has gained about 9% this calendar year.

Reliance Energy (REL) advanced 1.64% to Rs 550.10 on 1.45 lakh shares, while Bajaj Auto rose 1.57% to Rs 2253.90 on 56,138 shares.

Index heavyweight Reliance Industries (RIL) was up 0.25% to Rs 1744.10 on 6.13 lakh shares. It recovered from low of Rs 1724.

Cigarette major ITC was the top loser among Sensex constituents, down 1.81% to Rs 161.80, on 9.40 lakh shares. The stock has been declining since the past few trading sessions. Hindustan Lever (down 0.8% to Rs 194.90), Tata Tea (down 2.3% to Rs 893), and Bata (down 1.54% to Rs 182.50), were the other losers from FMCG pack. The BSE FMCG Index lost 1.3% at 1,869.87, and was the top loser among sectoral indices on BSE.

L&T (down 1.32% to Rs 1943.90), Gujarat Ambuja Cements (down 1.71% to Rs 111.95) and Cipla (down 0.94% to Rs 215.45) slipped on profit booking.

Nitin Fire Protection Industries settled at Rs 484.10 on BSE, a premium of 155% over the IPO price of Rs 190. It debuted at Rs 332.50, (also its low), and surged to a high of Rs 502.70. On BSE, 1.29 crore shares were traded on the counter on BSE.

Nitin Fire Protection Industries provides fire protection, and safety and security by offering end-to-end turnkey solutions. This business is carried through two wholly owned subsidiaries and one partnership concern. Its IPO ended was subscribed 48.04 times. The issue received total subscription for 16.28 crore shares compared to the issue size of 33.90 lakh shares.

After staying range-bound to slightly weak in the earlier part of the day, sugar stocks surged on momentum buying. Shree Renuka Sugars (up 2.74% to Rs 645.15), Bajaj Hindusthan (up 1.10% to Rs 167.50), Dhampur Sugar (up 1.71% to Rs 68.45) and Mawana Sugar (up 1.09% to Rs 41.65), edged higher.

On Monday, 4 June 2007, Uttar Pradesh-based sugar companies' shares had slumped after the newly elected government in the region withdrew an incentive scheme for sugar mills. Bajaj Hindusthan said on Monday, 4 June 2007, the cancellation of the Uttar Pradesh sugar policy 2004 would have a significant adverse impact on its financials. It said it could not yet quantify the impact, adding it had not heard from the government on the issue.

Amtek Auto rose 0.51% to Rs 415.60 after announcing the acquisition of assets of UK-based J.L. French (Witham). J L French's (Witham) (JLF), is a manufacturer of HPDC aluminium for automotive application. JLF's business has been developed to offer die-casting solutions including product design, simulation, testing, rapid prototyping, high pressure die-casting, precision machining and assembly. This is predominantly aimed at the European automotive industry. The company supplies its products to Land Rover, Jaguar, Trellborg, Ford and PSA (Peugeot). JLF's current sales revenues are pegged at about $ 60 million with 60% capacity utilisation.

Samtel Color jumped 5% to Rs 18 after 25.4 lakh shares, or 5.4% shareholding, changed hands through block deals at Rs 16.50 per share on BSE. The Samtel Color stock was also boosted by stock exchanges' decision to transfer the scrip back to normal rolling settlement from trade to trade segment.

Construction firm Sadbhav Engineering vaulted 7.20% to Rs 570 on bagging Rs 90.5-crore contracts.

Ispat Industries rose 2.61% to Rs 15.70 on entering into a revised MoU with Chhattisgarh for setting up a 1,200-MW coal-based power project. The proposed power project entails an investment of approximately Rs 5,300 crore.

Shares of refining companies slipped for the second straight day, after they slashed jet fuel (aviation turbine fuel — ATF) prices by 1.9%, the first reduction since February 2007.

Hindustan Petroleum Corporation (HPCL) (down 2.96% to Rs 277.25), and Bharat Petroleum Corporation (BPCL) (down 1.65% to Rs 349) declined.

Other refinery stocks like Bongaigaon Refinery and Petrochemicals (down 0.80% to Rs 49.55) and Chennai Petroleum (down 0.83% to Rs 245.25), also declined.

Oil firms had raised jet fuel prices for three consecutive months since February 2007. Public sector companies—Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL) —-revise ATF prices on the first of every month in line with movement in international prices.

Sterlite Industries rose 1.45% to Rs 554 after it filed with US regulators to raise up to $2.1 billion in an initial public offering of 125 million American depositary shares. Each (American depository share) ADS will represent the right to receive one equity share.

Shipping firm Mercator Lines jumped 3.80% to Rs 47.80 after receiving a Rs 200-crore contract from Indian Oil Corporation. The contract is for transporting around 12 million tonnes of crude oil over a period of 15 months to Indian Oil Corporation (IOC) commences from July 2007.

AvayaGlobal Connect vaulted 9.05% to Rs 383.30 after parent Avaya Inc. agreed to be acquired by a private equity firms TPG Capital and Silver Lake for $8.2 billion. Silver Lake LP and TPG's TPG Capital LLC, on Monday 4 June 2007, agreed to purchase telecommunications-equipment company Avaya Inc. for about $8.2 billion, marking the second big buyout in the telecom industry in two weeks. Avaya Inc. holds 59.13% stake in Avaya GlobalConnect.

Power transmission equipment maker KEC International added 1.58% to Rs 523 after it won Rs 380-crore worth of orders in Kazakhstan. The order is to construct a 475-kilometer transmission line of 500 kilovolts (Kv) in the Ekibastuz-Agadyr section of the North-South Electricity Transit in Kazakhstan. The project will be executed over a period of 27 months. KEC has a strong order book of over Rs 3000 crore.

GMR Infrastructure rose 2.53% to Rs 500.45 on signing a MoU with the Chhattisgarh government for a 1,000-MW coal-based thermal power plant.

GMR Infrastructure announced during the market hours today, 5 June 2007, that GMR Energy, the holding company for the GMR Group's energy business and a subsidiary of the company, has signed a memorandum of understanding (MoU) with the government of Chhattisgarh for implementation, operation and maintenance of a 1,000-mega watt (MW) coal-based, thermal power plant in Chhattisgarh.

China’s Shanghai Composite index recovered on rumours that Chinese authorities would make a policy statement to restore investor confidence, after a 7% slide in the index earlier in the day. The index rose 96.70 points, or 2.63%, to 3,767.10. Chinese markets have tumbled ever since the government, late last month, tripled a share-trading tax to cool its red-hot market. However, the Chinese market fall has failed to trigger a broad rout in global equity markets, which some had feared.

Boosted by strong recovery by Shanghai Composite, other Asian and European markets also gained. Hong Kong's Hang Seng index was up 112.56 points, or 0.54%, to 20,842.15.

Japan's Nikkei 225 Stock Average ended above the 18,000 level for the first time in about three months on Tuesday, 5 June 2007, tracking the steady increases in the US market and investors' confidence in Japanese companies. The Nikkei index rose 80. 39 points or 0.45%, to close at 18,053. 81.

Wall Street recovered from a mostly down session yesterday, 4 June 2007, eking out a gain as investors brushed off another slide in Chinese stocks. The Dow Jones Industrial Average (DJIA) rose 8.21 points, or 0.06%, to 13,676.32. Broader stock indicators were also narrowly higher. The S&P 500 index was up 2.84 points, or 0.18%, to 1,539.18, and the Nasdaq Composite index moved up 4.37 points, or 0.17%, to 2,618.29.

Oil prices eased on Tuesday, 5 June 2007, as the Middle East cyclone fears waned. But concerns over gasoline supply in the United States kept crude above the $70 mark. London Brent crude shed a cent to $70.39 a barrel, after climbing $1.33 on Monday, 4 June 2007, on concerns the storm could disrupt shipping and output in the Middle East. US light crude fell 18 cents to $66.03 a barrel.