Market surges in late trade as bank stocks rally

The market surged in late trade ending with decent gains shrugging off subdued to weak trend in Asian and European markets. It had edged lower at the onset of the trading session tracking subdued-to-weak trend in Asian markets before bouncing back shortly. Banking stocks surged in late trade. Power stocks rose. Realty and IT stocks declined. Capital goods stocks rose on reports Finance Minister P Chidambaram met representatives from auto and capital goods industries to discuss industrial slowdown after recent weak Index of Industrial Production (IIP) numbers.

HDFC Bank and HDFC were major gainers from Sensex pack. The market breadth was strong. Buying was witnessed in select mid-cap and small-cap stocks.

Asian and European stocks edged lower after Washington Mutual Inc, the largest US savings and loan firm, said on Tuesday, 8 April 2008, it expected a large quarterly loss and minutes from the Federal Reserve's latest meeting showed some of the central bankers saw the possibility of a prolonged and severe US economic downturn.

The 30-share BSE Sensex provisionally ended up 234.32 points or 1.5% at 15,821.94. At the day’s high of 15,829.59, Sensex gained 241.97 points in late trade. At the day’s low of 15,464.72, Sensex lost 122.9 points in early trade.

The BSE clocked a turnover of Rs 5,294 crore today 9 April 2008 compared to a turnover of Rs 5,145.99 on 8 April 2008.

The broader based S&P CNX Nifty was up 44.55 points or 0.19% at 4,754.20 as per provisional figures.

The market breadth was strong: on BSE 1819 shares advanced as compared to 811 that declined. 58 shares remained unchanged.

The BSE Mid-Cap index up 1.39% to Rs 6,471.88 and BSE Small-Cap index up 1.68% to 7,945.36.

Banking stocks surged in late trade. ICICI Bank (up 3.44% to Rs 841.20) and HDFC Bank (up 6.65% to Rs 1,391) edged higher. India's largest commercial bank State Bank of India rose 1.33% to Rs 1,697. It has reportedly shortlisted three potential partners, including Insurance Australia Group, for a general insurance venture. The other two shortlisted partners are a German firm and a US-based firm, the reports suggested.

Capital goods stocks rose. Larsen & Toubro (up 2.55% to Rs 2,647), Bharat Heavy Electricals (up 4.1% to Rs 1,783) and Suzlon Energy (up 4.25% to Rs 302.05) edged higher. As per reports, the finance ministry is looking at various measures to provide a boost to the capital goods sector, which witnessed a sharp slowdown in growth earlier this year. Finance Minister P Chidambaram today held a meeting with chief executives of several leading public sector and private companies in the sector including the likes of NPTC, Bhel, BEML and L&T among others. In January this year, the Index of Industrial Production (IIP) numbers showed a significant slowdown in the capital goods sector, with growth in the sector falling sharply from over 16% in December 2007, to just 2.1% in January 2008.

Power stocks rose. Reliance Power (up 3.1% to Rs 362.25), Reliance Energy (up 2.3% to Rs 1,176.90), NTPC (up 0.62% to Rs 187.70), Tata Power Company (up 4.84% to Rs 1,188.80) edged higher. The Finance Ministry has cleared a restructured Rs 50,000-crore accelerated power development and reforms programme (APDRP), which would soon be sent to the cabinet for approval.

IT majors declined. Tata Consultancy Services (down 0.98% to Rs 876.65), Wipro (down 0.56% to Rs 411.70) and Satyam Computer Services (down 0.37% to Rs 427.50) edged lower. However, India’s second largest IT exporter by sales Infosys rose 1.27% to Rs 1,479.90.

Realty stocks declined. Indiabulls Real Estate (down 3.33% to Rs 479.80), Housing Development Infrastructure (down 2.02% to Rs 639.50), Unitech (down 2.23% to Rs 263.35) and DLF (down 0.91% to Rs 610) edged lower.

India's biggest FMCG firm by sales Hindustan Unilever (HUL) declined 1.39% to Rs 244.45. It has reportedly cut prices of three of its soap brands—Lux, Hamam and Rexona. The price reduction by HUL is being termed as a post-budget measure to please consumers, the reports added.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries rose 1.55% to Rs 2,418.05.

Jaiprakash Associates (down 1.44% to Rs 218.35), ITC (down 1.2% to Rs 205.80), Ranbaxy Laboratories (down 1.78% to Rs 462.35), Reliance Communications (down 1.71% to Rs 492), Satyam Computer Services (down 1.67% to Rs 421.90), Maruti Suzuki India (down 1.65% to Rs 731.90), Bharti Airtel ( down 1.44% to Rs 816.65) edged lower from the Sensex pack.

HDFC (up 4.83% to Rs 2,421), Tata Steel (up 3.44% to Rs 678.90), Ambuja Cements (up 1.82% to Rs 120.20), Hindalco Industries (up 1.38% to Rs 172.65) and Cipla (up 2.42% to Rs 217.60) edged higher from Sensex pack.

The next major 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.

Good results are expected from the telecom sector on the back of strong growth in new subscribers additions. Infrastructure and engineering firms, too, are seen reporting decent numbers in Q4 March 2008 on the back of healthy order book positions. The performance of auto firms is likely to be sluggish due to muted volume growth and rise in input costs.

A depreciation of the rupee against the dollar is likely to drive good results from the IT sector on a sequential basis in Q4 March 2008 over Q3 December 2007, though the focus here is on guidance for the year ending March 2009 from IT bellwether Infosys Technologies. Infosys guidance will give investors a sense of the effect of the weakening US economy on technology spending by companies there. Infosys unveils Q4 results on Tuesday, 15 April 2008.

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 11808.70 crore (till 4 April 2008), to offset their huge losses in the US sub-prime mortgage market. As per provisional data, FIIs bought shares worth a net Rs 7.27 crore on Tuesday, 8 April 2008.

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 447.79 crore on Tuesday, 8 April 2008.

European markets were subdued. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 were down between 0.31% to 0.78%. In Asia, key benchmark indices in Hong Kong, China, Japan, and Singapore were down by between 0.06% to 5.5%.

US stocks fell on Tuesday, after Washington Mutual Inc said it expects a large quarterly loss, raising concerns about results from the rest of the financial sector, while minutes from the Federal Reserve's latest meeting stoked fears of a recession. The Dow Jones industrial average lost 35.99 points, or 0.29%, finishing at 12,576.44. The Standard & Poor's 500 Index lost 7 points, or 0.51%, ending the day at 1,365.54. The Nasdaq Composite Index lost 16.07 points, or 0.68%, at 2,348.76