Bulls emerge victorious after five days of defeat

Equities staged a solid rebound after touching fresh calendar 2008 lows in early trade. The initial jolt was caused by the Reserve Bank of India's move late evening yesterday, 24 June 2008, to hike the key lending rate in an aggressive attempt to combat over 11% inflation. However, short covering ahead of the expiry of June 2008 derivatives contracts tomorrow, 26 June 2008, provided a foundation for the recovery. Positive European and Asian markets also helped the battered Indian bourses recover

Heavyweights Reliance Industries and Bharti Airtel, helped the market snapped its five-day declining trend. The market breadth turned positive later in the day in contrast to a weak breadth earlier in the day.

RBI raised its key lending rate viz. the repo rate by 50 basis points to 8.5% with immediate effect, its highest since March 2002 and the second hike this month. It also increased the cash reserve ratio, the ratio of deposits banks must keep with it, to 8.75% from 8.25% in two 25-basis-point stages on 5 July 2008 and 19 July 2008.

The 30-share BSE Sensex gained 113.49 points or 0.80% at 14,220.07. At the day’s high of 14,248.65 hit in late trade, the Sensex gained 142.07 points. Sensex opened 333.27 points lower at 13,776.21 and slipped further to touch a low of 13,736.01 in early trade. At the day’s low, the Sensex lost 370.57 points.

The broader based S&P CNX Nifty surged 61.55 points or 1.47% at 4,252.65. Nifty June 2008 futures were at 4256.80, a premium of 4.15 points as compared to spot closing.

As per provisional data, foreign funds today sold shares worth a net Rs 363.71 crore. Domestic funds bought shares worth a net Rs 529.87 crore.

Volatility is likely to remain high tomorrow as derivatives contracts for June 2008 series expire. As per reports, the marketwide rollover of positions from June 2008 series to July 2008 series stood at 43.10% while that of Nifty was 44.70%, as on Tuesday, 24 June 2008.

Bears have been calling the shots on the bourses for a while now. The Sensex shed 1590.32 points or 10.13% in five trading sessions to 14,106.58 on Tuesday, 24 June 2008 from a recent high of 15,696.90 on 17 June 2008.

The BSE Sensex is down 6,066.92 points or 29.90% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2008. It is 6,986.70 points or 32.94% away from its all-time high of 21,206.77 struck on 10 January 2008.

Sectoral indices on BSE displayed mixed trend. The BSE Metal index (up 2.96% to 13,765.14), BSE Power (up 1.93% to 2,444.42), BSE Realty index (up 2.15% at 5,207.85), BSE TecK index (up 1.17% to 3,198.64), BSE Consumer Durables index (up 1.71% to 3,782.86), BSE Capital Goods index (up 1.53% at 10,802.18), outperformed the Sensex.

The BSE FMCG index (down 0.76% to 2,130.35), BSE Auto (up 0.47% at 3,860.88), BSE Oil & Gas index (up 2.90% to 9,411.56), BSE IT index (down 1.12% to 4,094.95), BSE Bankex (down 0.37% at 6,475.81), BSE PSU index (up 0.25% to 6,055.11), and BSE Health Care index (up 0.59% at 4,189.98), underperformed the Sensex.

The market breadth was positive. On BSE, 1379 shares advanced as compared to 1260 that declined. 68 remained unchanged.

The BSE Mid-Cap index was up 0.59% to 5,747.60 and the BSE Small-Cap index was up 0.74% to 7,058.02. Both these indices underperformed the Sensex

The total turnover on BSE amounted to Rs 5240 crore as compared to Rs 5,413.87 crore yesterday, 24 June 2008. Turnover in NSE’s futures & options segment amounted to Rs 81001.29 crore as compared to Rs 70250.13 crore yesterday, 24 June 2008.

Among the 30-member Sensex pack, 17 gained while the rest slipped.

Reliance Communications (RCom), the country’s second largest telecom services provider in terms of market capitalisation galloped 6.85% to Rs 507.40 on 31.95 lakh shares. It was the top gainer from Sensex pack. As per reports, RCom’s proposed merger deal with South Africa based global operator, MTN is expected to close by first week of July 2008

Shares from metal sector surged. Hindalco Industries (up 2.18% to Rs 147.90), Tata Steel (up 4.18% to Rs 741), JSW Steel (up 4.23% to Rs 1002), Sesa Goa (up 2.12% to Rs 3370), and Steel Authority of India (up 2.91% to Rs 150.45), were the other gainers from metal sector.

Bharat Heavy Electricals (Bhel), the country’s largest state-run engineering company in terms of order book, surged 3.88% to Rs 1445. As per recent reports, Bhel has paid 42.8% higher advance tax at Rs 300 crore in the first installment of this financial year over the corresponding period in the previous year.

However Larsen & Toubro, the country’s largest private sector engineering company in terms of order book slipped 0.16% to Rs 2307, after touching a low of Rs 2235.25. The stock is currently trading 1:1 cum bonus.

India’s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) advanced 4.05% to Rs 2149.95 on 13.16 lakh shares. RIL has reportedly signed a cooperation agreement with UAE-based Crescent Petroleum to jointly undertake projects of mutual interest in the region's energy sector.

Bharti Airtel (up 4.58% to Rs 785) and Reliance Infrastructure (up 3.55% to Rs 943.30), ), edged higher from Sensex pack.

India’s leading pharma company in terms of sales Ranbaxy Laboratories jumped 4.12% to Rs 546.95 after receiving tentative approval from US Food and Drug Administration for manufacturing and marketing valganciclovir hydrochloride tablets in 450 miligram strength.

India’s largest state-run oil exploration company Oil & Natural Gas Corporation (ONGC) rose 1.73% to Rs 870.10. The company posted 6.77% rise in net profit to Rs 16701.65 crore on 6.54% increase in net sales to Rs 64859.18 crore in the year ended March 2008 over the year ended March 2007. The company announced the results during trading hours today, 25 June 2007.

Real estate stocks rebounded from early lows. DLF (up 2.35% to Rs 450.20), Unitech (up 7% to Rs 182.60), Purvankara Projects (up 6.83% to Rs 183), Mahindra Lifespace Developers (up 2.45% to Rs 498), and Anant Raj Industries (up 0.81% to Rs 137), gained.

Auto stocks staged a sharp recovery from early lows. India’s top small car maker Maruti Suzuki India advanced 3.15% to Rs 700, off day’s low of Rs 640. However, Tata Motors (down 1.41% to Rs 475), and Mahindra & Mahindra (down 0.08% to Rs 537) declined.

Banking and financial shares though in the red pared losses. ICICI Bank (down 1.16% to Rs 697, off day’s low of Rs 675.10), State Bank of India (down 0.49% to Rs 1206, off day’s low of Rs 1155), and Kotak Mahindra Bank (down 2.55% to Rs 525, off day’s low of Rs 512.50), recovered from lower level

India’s largest dedicated housing finance company, Housing Development Finance Corporation slumped 4.47% to Rs 2165 on concerns higher interest rates will slow down demand for housing loans. A total of 1.83 lakh shares were traded on the counter. It was the top loser from the Sensex pack.

Software pivotals were subdued after Indian rupee firmed against the dollar. Satyam Computer Services (down 1.12% to Rs 449), Wipro (down 2.59% to Rs 458), and Infosys (down 2.15% to Rs 1754.50), declined. However India’s largest software services exporter TCS vaulted 4.72% to Rs 883.80.

The partially convertible Indian rupee was trading at 42.78/79 per dollar in afternoon trade, stronger than Tuesday's close of 42.9625/9700. A firm rupee impacts margins of IT firms negatively as they derive majority of their revenue from exports to the US.

ITC (down 2.65% to Rs 186), Cipla (down 2.75% to Rs 207.15), and Grasim (down 2% to Rs 2046), edged lower from the Sensex pack.

Sugar stocks gained on momentum buying. Shree Renuka Sugars (up 8.55% to Rs 112.30), Bajaj Hindustan (up 1.87% to Rs 183.50), Balrampur Chini Mills (up 2.89% to Rs 85.40), Uttam Sugar Mills (up 4.94% to Rs 61.60), and Sakthi Sugar (up 4.54% to Rs 67.90), surged.

Spice Communication was the top traded counter on BSE with total turnover of Rs 339.39 crore followed by Reliance Capital (Rs 321.40 crore), Reliance Industries (Rs 276.49 crore), Reliance Petroleum (Rs 196.23 crore), and ONGC (Rs 156.66 crore), in that order.

Spice Communication led the volume chart clocking volumes of around 4.88 crore shares followed by Reliance Natural Resources (1.39 crore shares), Reliance Petroleum (Rs 1.17 crore shares), Ispat Industries (1.08 crore shares) and IFCI (1.04 crore shares), in that order.

Spice Communication surged 32.93% to Rs 72.25 on huge volumes of 4.87 crore shares after Idea Cellular said it will buy 40.8% stake in the company at Rs 77.30 a share. Meanwhile, shares of Idea Cellular were up 2.37% at Rs 101.50.

Idea Cellular said it would merge Spice with itself through a share swap whereby Spice shareholders would get 49 Idea shares for every 100 Spice shares held. Idea also said that it would make an open offer for additional 20% stake to Spice Communicaton shareholders at Rs 77.30 a share.

Among the side counters, GHCL (up 10% to Rs 65.50), Rayban Sun Optics (up 16.89% to Rs 91), Sasken Communications (up 13.26% to Rs 152), and Bajaj Auto Finance (up 12.76% to Rs 167), surged.

Amara Raja Batteries rose 3.47% to Rs 159.50 after posting 71.94% growth in net profit to Rs 26.18 crore on 61.59% increase in total income to Rs 318.10 crore in Q4 March 2008 over Q4 March 2007. The company announced the results before trading hours today, 25 June 2007.

Hind Rectifiers rose 4.80% to Rs 155 after it announced issue of bonus shares in the ratio of one equity share for each equity share held.

Patel Engineering rose 1.37% to Rs 366.50 on reporting 58.4% rise in net profit to Rs 53.78 crore on 26.7% increase in net sales to Rs 501.98 crore in Q4 March 2008 over Q4 March 2007. The company announced the results after trading hours yesterday, 25 June 2007.

Nagarjuna Construction Company declined 1.11% to Rs 151 even as the company said it has bagged three new orders aggregating to Rs 333 crore from three different clients. The company made this announcement during trading hours today, 25 June 2007.

GMR Infrastructure gained 2.96% to Rs 99 after the company said it has bought 50% stake in Netherlands-based power generation company InterGen N.V. for $1.1 billion. The company made this announcement before trading hours today, 25 June 2007.

Jet Airways India jumped 5.36% to Rs 549 despite reporting a net loss of Rs 221.18 crore in Q4 March 2008 as compared to net profit of Rs 88.01 crore in Q4 March 2007. Jet Airways India’s net sales rose 39.5% to Rs 2759.90 crore in Q4 March 2008 over Q4 March 2007. The company announced the results after trading hours yesterday, 24 June 2007.

In a crucial event on the political front, an UPA-Left committee on the Indo-US nuclear deal will meet later today, 25 June 2008, to discuss the deal. However, it is difficult to say whether there will be a concrete outcome or not. The Left parties have already made it clear that they withdraw their support to the government if it moves ahead with the nuclear deal. This could further worsen the already weak stock market sentiment.

Crude oil prices rose 26 cents to settle at $137.00 a barrel yesterday, 24 June 2008, on the New York Mercantile Exchange

European markets, which opened after Indian market, were trading higher in early trade. Key benchmark indices in United Kingdom, France and Germany were up by between 0.44% and 1.09%.

Asian markets, which opened before Indian market were trading mixed today, 25 June 2008. China's Shanghai Composite (up 3.65% at 2,905.54), South Korea's Seoul Composite (up 0.41% at 1,717.91), Taiwan Weighted (up 1.51% at 7,855.06), Hang Seng (up 0.64% to 22,598.79), Singapore's Straits Times (up 0.37% at 2,973.30) advanced. However, Japan's Nikkei slipped 0.14% at 13,829.92

US markets ended lower yesterday, 24 June 2008 on concerns about the economy, after a report showed consumer confidence hit a 16-year low. The Dow Jones industrial average lost 34.93 points, or 0.29%, to 11,807.43. The Standard & Poor's 500 index fell 3.71 points, or 0.28%, to 1,314.29, and the Nasdaq composite index declined 17.46 points, or 0.73%, to 2,368.28.