Sentiments remain edgy despite market recovery

The stock market today managed to extend yesterday’s gains as improved April 2008 industrial production data, firm European markets and higher US futures markets triggered rebound on domestic bourses after an earlier steep intra-day fall. Consumer durables stocks rose.

US futures markets were in green indicating positive start of US markets later in the day. Dow Jones Industrial Average futures were up 46 points and Nasdaq 100 futures were up 7.50 points.

The 30-share BSE Sensex gained 64.88 points or 0.43% at 15,250.20. Sensex gained 85.53 points at day's high of 15,270.85 hit in late trade. The market had slumped earlier in the day hit by Reserve Bank of India (RBI)'s announcement of a repo rate rise, the first hike in repo rate since March 2007, after trading hours on Wednesday, 11 June 2008. Weak Asian markets further marred the sentiment. At the day’s low of 14,748.07, Sensex lost 437.32 points in early trade.

The broader based S&P CNX Nifty rose 15.75 points or 0.35% at 4,539.35.

Nifty June 2008 futures were at 4500.55, at a discount of 38.80 points as compared to spot closing of 4539.35.

The BSE clocked a turnover of Rs 6209 crore today as compared to a turnover of Rs 5,317.70 crore on 11 June 2008. NSE futures & options (F&O) segment turnover was Rs 52,333.46 crore, which was higher than Rs 45,775.86 crore on Wednesday, 11 June 2008.

Industrial production rose 7% in April 2008 from a year earlier, rebounding strongly from the previous month's provisional 3% rise, data released by the government today, 12 June 2008, afternoon showed. Manufacturing production rose 7.5% in April 2008 from a year earlier, compared with a provisional 2.9% growth in March 2008.

The Reserve Bank of India (RBI) on Wednesday, 11 June 2008, raised short-term lending rate viz. the repo rate, by 25 basis points to 8% to contain inflation expectations. Banks are likely to raise interest following a strong signal from RBI that banks' cost of funds is headed north. Higher interest rates will raise borrowing costs and hit bottom line of corporates.

The market breadth turned positive compared to weak breadth earlier in the day. 1,481 shares advanced as compared to 1,109 that declined on BSE. 84 remained unchanged. Among the 30 stocks from Sensex pack, 18 were trading in green.

The Indian stock market which had hit its lowest level in 2008 on Tuesday 10 June 2008, had recovered on Wednesday, 11 June 2008 with Sensex rising 296.07 points or 1.99% at 15,185.32 as investors resorted to bargain buying after recent steep fall in share prices, taking cue from firm Asian markets.

Back to today's trade, the BSE Mid-Cap index rose 0.53% to 6,223.50 and BSE Small-Cap index climbed 0.78% to 7,525.90. Both these indices outperformed Sensex.

BSE Consumer Durables index (up 1.73% to 3,913.40), BSE Oil & Gas index (up 1.45% to 9,974.94), BSE Capital Goods (up 0.74% at 11,989.71), BSE Metal index (up 0.7% to 15,508.64), outperformed Sensex.

BSE TecK index (up 0.42% to 3,387.15), The BSE Realty index (up 0.3% at 5,820.90), BSE PSU index (up 0.28% to 6,521.69), BSE Bankex (up 0.28% at 7,037.89), BSE Power index (up 0.13% to 2,656.46), BSE FMCG index (up 0.01% to 2,268.86), The BSE Auto (down 0.09% at 4,148.55), BSE HealthCare index (down 0.14% at 4,441.15), BSE IT index (down 0.27% to 4,345.82), underperformed Sensex.

India’s largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 0.96% to Rs 2,281.75. The stock recovered from intraday low of Rs 2185. RIL Chairman Mukesh Ambani today said the company's annual general meeting that RIL will pursue greenfield investment in polyester.

Consumer durables stocks rose in late trade. Rajesh Exports (up 13.12% to Rs 79.30), Videocon Industries (up 2.66% to Rs 302.60), Titan Industries (up 0.81% to Rs 1,075) edged higher.

Power stocks edged higher. Reliance Power (up 2.06% to Rs 186.15), Reliance Infrastructure (up 2.4% to Rs 1,046.50), Tata Power Company (up 1.05% to Rs 1,316.50), Power Grid Corporation of India (up 1% to Rs 86.15) edged higher.

Interest rate sensitive auto stocks were mixed. Mahindra & Mahindra (up 0.24% to Rs 575.40), Tata Motors (up 0.35% to Rs 507.35), Maruti Suzuki India (up 0.37% to Rs 736.35) edged higher. India’s largest motorbike maker by sales Hero Honda Motor declined 0.29% to Rs 806.70.

Realty stocks were mixed. DLF (down 2.64% to Rs 497.70), Housing Development and Infrastructure (down 1.48% to Rs 568.30) edged lower. However Indiabulls Real Estate (up 3.69 % to Rs 394.95) and Unitch (up 2.6% to Rs 189.15) edged higher.

Banking stocks recovered after initial sharp fall caused by RBI's repo rate hike. India’s largest private sector bank by market capitalisation ICICI Bank rose 0.09% to Rs 742.30. The stock recovered from session's low of Rs 702.15. State Bank of India, India's biggest commercial bank, rose 2.31% to Rs 1,339.70. The stock came off session's low of Rs 1252.30.

Banks are set to raise interest rates following the repo rate hike by RBI. State Bank of India chairman O.P. Bhatt said on Thursday, the bank will review its interest rates on Friday, 13 June 2008.

India’s largest dedicated housing finance firm by operating income HDFC declined 0.69% to Rs 2,171.95. The stock recovered from session's low of Rs 2,001. HDFC chairman Deepak Parekh today said HDFC will take a decision on raising interest rates on home loans by end of this month. He said there was upward pressure on interest rates.

Tata Steel (up 2.35% to Rs 856.85), Wipro (up 2.11% to Rs 483.10), Jaiprakash Associates (up 1.67% to Rs 186.20), Bharti Airtel (up 1.61% to Rs 819.90), Grasim Industries (up 0.83% to Rs 2,210.35) edged higher from the Sensex pack.

Ranbaxy Laboratories (down 3.08% to Rs 543.50), Ambuja Cements (down 2.61% to Rs 85.90) Infosys (down 0.89% to Rs 1,877.55), Cipla (down 0.57% to Rs 217) edged lower from Sensex pack.

IFCI clocked the highest volume of 3.15 crore shares on BSE. Reliance Petroleum (2.12 crore shares), Reliance Natural Resources (1.84 crore shares), Spice Communications (1.31 crore shares) and Suzlon Energy (1.15 crore shares) were other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 417.14 crore on BSE. Reliance Petroleum (Rs 372.83 crore), Suzlon Energy (Rs 292.39 crore) and DLF (Rs 218.02 crore) were other turnover toppers in that order.

European markets were in green. Key benchmark indices in France, Germany and UK were up by between 0.5% to 0.8 %.

US stocks sank on Wednesday, 11 June 2008, with all the three indices viz. the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite index - losing around 2%, after oil prices shot back near their record high, stoking fears about inflation and its toll on consumers. More signs of trouble in the financial sector further soured the mood on Wall Street. The Financial Times said on Wednesday that Lehman Brothers may look to raise more capital, hammering shares of the investment bank.

Asian stocks fell on Thursday, 12 June 2008, hit by the steep oil price rise. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were down by between 1.44% to 3.39%.

Oil futures jumped almost $7 to an intraday high above $138 a barrel on Wednesday, and settled at $136.38 a barrel on that day.

A surge in global commodity prices led by crude oil spooked stocks across the globe in the past few days. In India, foreign funds have pressed heavy sales. FIIs sold shares worth a net Rs 5170 crore in the first few days of this month, till 10 June 2008. They had dumped stocks worth a net Rs 5011.50 crore in May 2008. Their outflow in calendar 2008 reached Rs 20539.40 crore, till 10 June 2008. There has been heavy buying by domestic funds led by insurance firms in the past few days, but that has failed to stop the slide on the bourses.

A near term trigger for the market will be corporate advance tax payments for the first installment which falls due on 15 June 2008. The income tax law requires a company to 15% the estimated tax liability for the year as advance tax in the first installment. The advance tax payment by the corporate sector will give a cue on Q1 June 2008 results.