Capital goods stocks, RIL lead 113 points Sensex surge

The market posted decent gains in the week passed by with Sensex gaining 464 points ahead of the earnings season. Rally in index heavyweight Reliance Industries led rally on the bourses today. Improved Index of Industrial Production (IIP) data aided the surge. Firm Asian and European markets also boosted the sentiment. However, Infosys slipped ahead its Q4 March 2008 results due on 15 April 2008.

Power and capital goods stocks rose. IT stocks were mixed. Banking stocks rose. Bharat Heavy Electricals and Larsen & Toubro were major gainers from Sensex pack. Ambuja Cements and Infosys were major losers from Sensex pack. The market breadth was strong.

Asian stocks rose today, 11 April 2008, after Banc of America Securities upgraded the US semiconductor sector and Wal-Mart Stores Inc, the world's largest retailer, raised its profit forecast. Key benchmark indices in Hong Kong, Japan, China, South Korea, Singapore, and Taiwan were up by between 0.61% to 2.92%. European markets which opened after Indian markets were firm. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 rose in between 0.69% to 1.15%.

India's industrial output (IIP) rose 8.6% in February 2008 from a year earlier, rising from the previous month's upwardly revised 5.8% growth, data showed today.

The wholesale price index rose 7.41% in 12 months to 29 March 2008, accelerating from the previous week's annual rise of 7%, government data showed today, 11 April 2008. The data was announced at about 10:45 IST. The rate is the highest reading since 13 November 2004 when it was 7.68%. The annual inflation rate was 5.94% during the corresponding week of the previous year.

The 30-share BSE Sensex rose 112.54 points or 0.72% at 15,807.64. The Sensex gained 262.14 points at day’s high of 15,957.24, hit in early afternoon trade. At the day’s low of 15673.67 Sensex lost 21.43 points in mid-morning trade.

The S&P CNX Nifty was up 44.80 points or 0.95% at 4777.80. Nifty April 2008 futures were at 4773, at a discount of 4.80 points as compared to spot closing of 4777.80.

The BSE clocked a turnover of Rs 5556 crore today, 11 April 2008 as compared to turnover of Rs 5,519.49 crore on 10 April 2008. The NSE's futures & options (F&O) segment turnover was Rs 41,003.92 crore, which was higher than Rs 33,689.60 crore on Thursday, 10 April 2008.

The market breadth was strong: on BSE, 1637 stocks gained, 1050 stocks declined and 62 stocks were unchanged.

The BSE Mid-Cap index was up 0.68% at 6,23.22 and the BSE Small-Cap index was up 0.63% at 8,081.43.

As per the provisional figures on NSE, the foreign institutional investors (FII) sold shares worth Rs 173 crore today 11 April 2008 and domestic funds bought shares worth Rs 326.04 crore.

BSE Capital Goods index (up 2.86% to 13,267.51), BSE Oil & Gas index (up 2.82% to 11,028.75), BSE Power index (up 2.08% to 3,164.39), BSE PSU index (up 1.61% to 7,444.41), BSE Metal index (up 0.8% to 13,966.38), outperformed Sensex.

BSE Consumer Durables index (up 0.61% to 4,003.21), BSE Auto index (up 0.54% to 4,427.06), BSE HealthCare index (down 0.08% to 3,919.27), BSE Realty index (down 0.29% to 7,195.57), BSE IT index (down 0.47% to 3,659.38), BSE Bankex (down 0.64% to 7,900.97), and BSE FMCG index (down 1.29% to 2,319.36) underperformed Sensex.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries rose 3.34% at Rs 2,550.05. Reportedly, Reliance is in talks with several oil majors to sell up to 10% in its deep-water D6 block off India's east coast.

IT stocks were mixed on the penultimate trading session ahead of Infosys’ annual guidance on Tuesday 15 April 2008. Infosys, India’s second largest IT exporter by sales, declined 2.13% to Rs 1,422.45. Tata Consultancy Services (up 0.82% to Rs 908.15) and Satyam Computer Services (up 2.3% to Rs 433.20) rose.

Banking stocks were mixed after higher inflation data. India’s largest private sector bank by operating income ICICI Bank declined 1.56% to Rs 788.45. It came off from its high of Rs 822. However, State Bank of India (up 0.36% to Rs 1,667.90) and HDFC Bank (up 0.17% to Rs 1,327.80) edged higher.

Capital goods stocks rose. Larsen & Toubro (up 3.57% to Rs 2,774), Bharat Heavy Electricals (up 3.67% to Rs 1,830) and Suzlon Energy (up 0.22% to Rs 290.35) edged higher.

Power stocks rose. Tata Power Company (up 3.95% to Rs 1,247.05) and Reliance Power (up 0.82% to Rs 361.35), NTPC (up 0.27% to Rs 186.50) edged higher. India's second largest power utility by revenue Reliance Energy rose 2.22% to Rs 1,281.15 after the company said on 10 April 2008 it has spent about a third of the Rs 800 crore ($200 million) allocated for buying back shares from the stock market.

Oil & Gas stocks rose. Cairn India (up 4.38% to Rs 252.75), Gail India (up 4.24% to Rs 445), Reliance Petroleum (up 3.68% to Rs 181.95) edged higher.

Hindalco Industries (up 1.67% to Rs 176.35), Reliance Communications (up 1.83% to Rs 493.25), Bharti Airtel (up 0.69% to Rs 804.20), Mahindra & Mahindra (up 1.31% to Rs 620.25) , Tata Steel (up 0.92% to Rs 692.20) edged higher from the Sensex pack.

Ranbaxy Laboratories (down 1.58% to Rs 443.55), Grasim Industries (down 0.78% to Rs 2,550), Hindustan Unilever (down 2.02% to Rs 235.15) , ITC (down 1.83% to Rs 204.15) and Ambuja Cements (down 3.61% to Rs 117.60), ACC (down 0.05% to Rs 813.20) edged lower from Sensex pack.

Reliance Petroleum clocked the highest volume of 1.8 crore shares on BSE. Vijaya Bank (1.37 crore shares), Sita Shree Food Products (1.24 crore shares), Orchid Chemicals & Pharmaceuticals (1.16 crore shares) and Reliance Natural Resources (1.04 crore shares) were other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 361.20 crore on BSE. Reliance Petroleum (Rs 326.49 crore), Orchid Chemicals & Pharmaceuticals (Rs 280.26 crore), Reliance Capital (Rs 262.45 crore) and Larsen & Toubro (Rs 154.40 crore) were other turnover toppers in that order.

The near term trigger for the market is Q4 March 2008 results of India Inc. Analysts will be closely watching what the company managements have to say about the outlook for the year ending March 2009 (FY 2009). Analysts will also scrutinize disclosures that companies may make regarding foreign exchange derivatives products that they have bought on the advice of their bankers. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt. As per estimates by a domestic brokerage, the mark-to-market losses of corporate India under forex derivatives could be around $4 billion.

What added to the gloom regarding corporate earnings was lower-than-expected provisional results announced by Bharat Heavy Electrical (Bhel), India’s biggest power equipment firm by revenue, recently. Slower than expected execution rate and project specific delays could be the reasons for the lower-than-expected growth in the top line of Bhel.

Recent government action to rein in inflation has also added to uncertainty about outlook on corporate profits. The government has scrapped import duty on crude edible oil and banned the export of rice and pulses. It also surged steelmakers to cut prices of the alloy.

Prospects of further outflow by foreign funds to offset losses incurred by them in the US sub-prime mortgage market continue to weight on the market sentiment. In the calendar year so far, FIIs sold shares worth a net Rs 11455.60 crore (till 9 April 2008), to offset their huge losses in the US sub-prime mortgage market.

As far as domestic liquidity is concerned, inflows to equity mutual funds and unit linked insurance plans (with high weightage for equity) have slowed after the sharp setback on the bourses in the past two months. As per provisional data, domestic funds bought shares worth a net Rs 594.48 crore on Thursday, 10 April 2008.

US stocks rose on Thursday, 10 April 2008, after a brokerage upgrade of chip makers lifted technology stocks and on optimism that poor March sales may have been the low point for retailers this year. Dow Jones Industrial Average gained 54.72 points or 0.44% at 12,581.98. The tech-laden Nasdaq Composite index rose 29.58 points or 2,351.70.

Sensex dropped 95.41 points or 0.60% at 15,695.10 on Thursday, 10 April 2008, in choppy trade