Market rebounds in global recovery

The market rebounded today, 20 August 2007, after posting three straight sessions of losses, as global markets reversed their falling trend. However the turnover was low today. Short covering also propelled the domestic market. However, volatility was witnessed since mid-afternoon trade.

The strong opening of the Asian markets, which had begun trading earlier, exerted a strong influencing the Indian market. All the European markets, which opened later, were trading higher today, 20 August 2007.

The strong show by the global markets today followed the Federal Reserve' 50 basis-point cut in discount rate at which it lends to banks, on Friday 17 August 2007.

The BSE 30-share Sensex jumped 286.03 points or 2.02% at 14,427.55. It had opened with a huge upward gap of 370.76 points to 15,512.28 and advanced further to hit a high of 15,680.09 as buying continued. The benchmark index touched a low of 14,406.91 at the fag end of the trading session on profit booking at higher level.

The S&P CNX Nifty advanced 101 points or 2.46% at 4209.05. The Nifty August 2007 futures settled at 4205, a discount of 4.05 points as compared to spot closing

In the calendar year 2007, the BSE Sensex is up 641 points or 4.64% from its close of 13,786.91 on 29 December 2006

The turnover on BSE amounted to Rs 3,819 crore as against Rs 5,320 crore on Friday, 17 August 2007. The NSE F&O turnover was Rs 40,075.04 crore as compared to Rs 64879.41 crore on Friday, 17 August 2007.

The market breadth, in sync with overall buoyant market, was strong as small-cap and mid-cap stocks resumed their rally: 1,901 shares advanced as compared to 828 that declined, while 51 remained unchanged.

The BSE Mid-Cap Index rose 1.3% to 6,342.78 while the BSE Small-Cap Index gained 1.8% at 7,832.36. Both were underperformers when compared to the Sensex.

All the sectoral indices on BSE posted gains, except the BSE IT index which declined 0.92% to 4,459.07.

The BSE Metal index (up 3.95% to 10,199), BSE Oil & Gas index (up 2.61% to 7,620.91), BSE PSU index (up 2.61% to 6,713.14), BSE Realty index (up 2.19% to 7,173.66), and BSE Capital Goods index (up 2.50% to 12,330.37) outperformed the Sensex.

The BSE Consumer Durables (up 0.90% to 4,035.14), BSE FMCG Index (up 1.80% to 1,844.22), BSE Auto index (up 0.84% to 4,599.04), BSE Healthcare index (up 1.47% to 3,538.59), and the BSE TECk index (up 0.70% to 3,480.90) underperformed the Sensex.

The fertiliser sector was the star of the day as shares surged on reports that the government, for the first time, had issued fertiliser bonds worth Rs 7,500 crore to part-finance the additional subsidy burden on fertiliser companies arising from rising price of imported feedstock and fertilisers. As per reports, these bonds will be freely tradable in the market. The move came as the recoveries made by the government were not enough to pay for the additional subsidy.

Rashtriya Chemicals & Fertilisers (RCF), (up 19.04% to Rs 53.15), National Fertilizers (up up 13.39% to Rs 36), Coromandel Fertilisers (up 10.12% to Rs 93), Nagarjuna Fertilisers (up 16% to Rs 37.70), Gujarat Narmada Valley Fertilisers Company (GNFC) (up 13.23% to Rs 135.20) and Fertilisers & Chemicals Travancore (up 12.53% to Rs 26.05), all surged.

Chambal Fertilisers & Chemicals (CFCL) surged 19.92% to Rs 44.85. On Friday, 17 August 2007, CFCL said its Singapore-based subsidiary Chambal Biotech sold its entire holding in Australia's Technico to Russell Credit, Kolkata. Post- transaction, Technico has ceased to be a subsidiary of the company.

Among the 30-member Sensex pack, 25 advanced while the rest slipped.

IT stocks were laggards on concerns that the sector, which gets more than half of its revenue from United States, may face tougher market conditions if the US credit woes squeeze IT spending. Rupee was hovering at 41.06 against the US dollar, stronger than Friday (17 August 2007)’ close of 41.33/34.

India’s fourth largest software services exporter Satyam Computers lost 1.84% to Rs 432.10 on 9.32 lakh shares. It was the top loser from Sensex pack.

Wipro (down 0.68% to Rs 472.25) and Infosys (down 1.35% to Rs 1830) also declined. India’s largest IT services provider Tata Consultancy Services (TCS) slipped 0.10% to Rs 1055 on reports that it is close to securing an approximately Rs 6000 crore outsourcing contract with the UK-based Prudential Insurance. Prudential Insurance is one of the leading life and pensions provider in the UK and services over seven million customers. The stock came off day's high of Rs 1097.85

Just a couple of days ago, WNS Global Services, the country’s second largest BPO firm, announced that it has been hit by the turmoil in the US sub-prime lending market. Most US financial companies use Indian software firms for outsourcing technology services. There is a fear that if the credit problem worsens, then there might be a cutback in IT spending by them.

HDFC Bank, the counrty’s second largest private sector bank by net profit, jumped 5.68% to Rs 1130 on 58,368 shares. It was the top gainer from the Sensex pack.

India's largest private sector bank by net profit ICICI Bank surged 4.99% to Rs 867.20 on 7.61 lakh shares. The Foreign Investment Promotion Board (FIPB), on 18 August 2007, reportedly approved ICICI Bank's proposal to sell up to 24% stake in its newly-formed wholly-owned subsidiary ICICI Financial Services, the proposed holding company for its insurance and asset management ventures, to foreign investors. ICICI Bank’s ADR soared 12.80% or $4.89 to $42.92, on Friday 17 August 2007.

Other banking stocks Kotak Mahindra Bank (up 7.75% to Rs 684), Bank of India (up 2.35% to Rs 235), Axis Bank (up 4.74% to Rs 601.90), Andhra Bank (up 1.68% to Rs 78.75) and Vijaya Bank (up 1% to Rs 50.80) also posted gains

Telecom pivotals advanced on fresh buying. India's second largest cellular services provider Reliance Communications rose 2.97% to Rs 508 on reports that the company is in talks with Malaysia's Maxis Communications to buy a controlling stake in its Indian unit Aircel Cellular. Maxis is Malaysia's largest mobile operator. Aircel is valued at about $7 billion. Maxis holds 74% in Aircel while the owners of south India-based Apollo Hospitals Enterprises control the rest. Reliance Communications added 14.6 lakh mobile customers during the month of July taking its total subscriber base to about 3.7 crore. It added 14.5 lakh users in June 2007.

Bharti Airtel, the country’s largest cellular service provider in terms of sales surged 4.41% to Rs 829.50. As per reports, it has entered into an agreemnet with Selecto Systems for providing telecom network infrastructure and services for its IT SEZ-Haryana Technology Park (HTP).

India’s second largest bike maker Bajaj Auto rose 0.84% to Rs 2270 after its equity shareholders and unsecured creditors approved the scheme of arrangement between itself, Bajaj Holdings & Investment, and Bajaj Finserv in a meeting on 18 August 2007.

Maruti Udyog rose marginally by 0.02% to Rs 780.20, coming off the session’s high of Rs 812.75. Maruti Udyog has raised discounts on many of its car models amid slowdown in demand caused by higher interest rates.

India’s largest private sector entity by market cap and oil refiner Reliance Industries was up 1.95% to Rs 1786.90 on 6.69 lakh shares. As per reports, the D6 block in the Krishna-Godavari basin, jointly owned by Reliance Industries and Niko Resources, is likely to see investment of Rs 10,500 crore more in the current financial year. The entire D6 block is estimated to see total investment of $5.2 billion (Rs 21,359 crore).

ONGC (up 4.20% to Rs 815.50), Ranbaxy Laboratories (up 3.49% to Rs 364.90) and Bhel (up 3.47% to Rs 1613) were the other gainers from the Sensex pack.

Metal scrips rose tracking recovery in global industrial metals prices. Tata Steel, the country’s largest private sector steel maker rose 4.73% to Rs 570. India’s largest aluminium maker Hindalco gained 0.86% to Rs 141.20 and Sterlite Industries jumped 9.33% to Rs 564.90. India’s top zinc maker Hindustan Zinc moved up 1.6% to Rs 681 even as it cut zinc prices by 1.9% to Rs 1.51 lakh per tonne with effect from Saturday, 18 August 2007.

Among the side counters, Pioneer Embroideries (up 20% to Rs 139.65), Deltron cables (up 20% to Rs 97.20), Akar Tools (up 19.97% to Rs 43.55), Maharashtra Scooters (up 18.69% to Rs 282.90), and Siel (up 19.92% to Rs 28.60) advanced. Rasi Electrodes (down 9.98% to Rs 47.35), Milkfood (down 5.52% to Rs 303), Ankit Metal (down 9.38% to Rs 48.30), Khoday India (down 5% to Rs 376.40), and Camlin (down 6.35% to Rs 160) declined.

Aban Offshore jumped 7.10% to Rs 2761 on reports of Great Offshore was close to buying Norwegian firm, Petrojack SA. Reportedly Great Offshore is close to buying Norwegian firm, Petrojack SA for about $500 million. Aban holds 18.04 % in Petrojack.

Ajanta Pharma slipped 0.56% to Rs 97, after hitting a high of Rs 106.45. It would transfer the technology of its anti-scar product to Taiwan-based Orient Europharma. Under the agreement, Ajanta Pharma will transfer the technology of its anti-scar product, ‘Vaniza’ to Orient Europharma for Taiwan, Macau, Hong Kong, Singapore and Malaysian markets and Orient will manufacture the product at its plant in Taiwan. Ajanta did not disclose the value of the deal.

Pantaloon Retail India gained 2.30% to Rs 488 after its board of directors scheduled an extraordinary general meeting on 18 September 2007 for giving approval to initial public offering (IPO) of Future Capital Holdings.

Hanung Toys & Textiles soared 5.20% to Rs 141.65 after it secured a Rs 600-crore order from Sweden's IKEA for exporting soft toys and kids furnishings. The company expects the business with IKEA to reach a level of €15 million in the first year, €23 million in the second year, € 30 million in the third year and €40 million in the fourth year from now.

Real-estate firm Sobha Developers rose 1.03% to Rs 786.90 after the company said it plans to set up an integrated township project in Kerala involving an investment of Rs 5000 crore.

Punjab National Bank gained 1.87% to Rs 492.25 on media reports it may bid for acquiring 26% strategic stake in IFCI. IFCI was up 3.22% to Rs 64.20 .

JSW Steel rose 1.63% to Rs 577 after its board decided to meet on 21 August 2007 to consider buying a plate mill, double joining & coating, and pipe mill facility in the United States. The company made this announcement before the market hours today, 20 August 2007.

Patni Computer Systems surged 7.30% to Rs 390.50 on reports that two US private equity funds - Texas Pacific Group and Apax Partners - are set to buy the stake of two Patni brothers Ashok and Gajendra.

Hindustan Copper (HCL) gained 2.68% to Rs 157.20. It surged 21.46% in the past week from Rs 126.05 on 10 August 2007 to Rs 153.10 on 17 August 2007 on reports it plans to enter gold mining in India and is scouting copper mines abroad.

The benchmark BSE Sensex posted the fourth straight weekly loss, losing 726.73 points to 14,141.52 in the week ended Friday, 17 August 2007. The S&P CNX Nifty was down 225.30 points to 4,108.05 in the week. A whole host of factors from unwinding of yen carry trade positions, redemption pressure faced by hedge funds, heavy selling by foreign institutional investors (FIIs) and sub-prime concerns haunted local bourses throughout the week.

All the Asian markets settled higher today, 20 August 2007, including Japan's Nikkei (up 3% at 15,732.48), Hong Kong's Hang Seng (up 5.93% at 21,595.63), Taiwan's Taiwan Weighted (up 5.26% at 8,515.60), Shanghai Composite (up 5.33% to 4,904.56), Singapore's Straits Times (up 6.12% at 3,322.38) and South Korea's Seoul Composite (up 5.69% at 1,731.27).

US stocks rallied on 17 August 2007 after posting losses for six consecutive previous trading sessions as the Federal Reserve cut its key discount rate by 0.5% to 5.75 %. The Dow Jones Industrial Average surged 233.30 points, or 1.82 %, to 13,079.08. The Standard & Poor's 500 index rose 34.67 points, or 2.46 %, to 1,445.94, and the Nasdaq Composite index was up 53.96 points, or 2.20 %, to 2,505.03.

Meanwhile, in a bid to end the stand off with the Left on the nuclear issue, the Congress-led United Progressive Alliance government on Sunday, 19 August 2007, announced the setting up of an expert committee to look into the concerns raised by the Left on the Hyde Act passed by the US Congress. The debate on the nuclear issue in parliament will take place on 27 August and 29 August 2007.

Left parties warned the government on Saturday, 18 August 2007, of serious consequences if it pursues with a nuclear deal with the United States. The four communist parties have 60 members of parliament (MPs) in the 545-member lower house of parliament. Prime Minister Manmohan Singh's government could fall or be reduced to a minority if the left withdraws support.

India is committed to developing its nuclear energy capability and other sources of power as its oil bill will impose an "unbearable burden" as growth continues, the prime minister said on Monday, 20 August 2007.

Crude oil fell in New York on signs Hurricane Dean's more southerly track may mean it will miss the largest oil production regions of the Gulf of Mexico. Crude oil for September delivery dropped as much as 94 cents, or 1.3%, to $71.04 a barrel on the New York Mercantile Exchange