Sensex up 21.4% in four days

A surprise rate cut by the central bank over the weekend, the stock market regulator’s decision to increase tenure for lending and borrowing of stocks, and firm Asian stocks, boosted the domestic bourses. The BSE Sensex rose 549.62 points or 5.62% led by gains in capital goods, banking, auto and realty stocks. The market also got support from the Prime Minister assurance to business leaders that government will take measures to protect growth.

Lower rates boosts stocks as they help lift corporate bottomline by way of lower borrowing costs. The Reserve Bank of India (RBI) on Saturday, 1 November 2008, unexpectedly cut its main short-term lending rate viz. the repo rate for the second time in as many weeks to ease a growing cash squeeze, spur faltering economic growth and fend off damage from the global financial crisis.

The Securities & Exchange Board of India (Sebi)'s decision to extend the tenure for lending and borrowing of stocks is aimed making the domestic stock lending and borrowing (SLB) mechanism more robust and increase liquidity in the secondary markets. Short selling refers to selling of shares one does not own and a SLB mechanism facilitates this activity.

Prime Minister Manmohan Singh told top business leaders on Monday, 3 November 2008, that the government will take all the necessary monetary and fiscal policy measures to protect growth. The Prime Minister also said the government was working closely with other countries to ensure coordinated policy action for the containment of the global financial crisis.

European shares rose on Monday, 3 November 2008, to track gains on the Wall Street and in Asia, as investors hoped recent worldwide steps to stem the financial crisis and likely rate cuts in Europe this week would calm market nerves. The key benchmark indices in France, UK and Germany were up by between 0.38% to 0.81%.

Asian stocks edged up for a fifth straight day on Monday on hopes policy efforts so far to dampen the impact of the financial crisis would ultimately take hold, though data still painted an ugly picture of the global economy. Key benchmark indices in Hong Kong, Taiwan, Singapore and South Korea rose by between 1.44% to 3.93%. China’s Shanghai composite fell 0.52%.

The BSE 30-share Sensex jumped 549.62 points or 5.62% to 10,337.68. The market rose amid intermittent bouts of profit taking after a recent steep surge. The Sensex jumped 585.11 points at the day's high of 10,373.17 in late trade. The Sensex rose 324.60 points at day’s low of 10,112.66 in mid-afternoon trade.

The S&P CNX Nifty was up 158.25 points or 5.48% to 3,043.85.

BSE clocked a turnover of Rs 3,668 crore today as compared to a turnover of Rs 3,717.17 crore on Friday,31 October 2008.

Nifty November 2008 futures were at 3047.65, at a premium of 3.80 points as compared to spot closing of 3043.85. NSE's futures & options (F&O) segment turnover was Rs 34,113.94 crore, which was lower than Rs 36,959.23 crore on Friday, 31 October 2008.

The market has staged a solid rebound after a recent steep fall. From a low of 8,509.56 on 27 October 2008, the BSE Sensex has risen 1,828.12 points or 21.48% in four trading sessions. There has been a massive erosion in investors' wealth this year. The barometer index BSE Sensex is down 10.017.99 points or 49.38% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 10,869.09 points or 51.25% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE Mid-Cap index was up 4.86% at 3,355.44 and the BSE Small-Cap index was up 4.3% at 3,927.10. Both the indices underperformed the Sensex.

The BSE Realty index (up 8.29% to 2,142.28), the BSE Capital Goods index (up 8.19% to 7,592.22), the BSE Bankex (up 7.51% to 5,387.39), the BSE Power index (up 6.48% to 1,685.99), the BSE PSU index (up 6.14% to 4,845.25), the BSE Oil & Gas index (up 5.67% to 6,547.12) outperformed the Sensex.

The BSE IT index (up 0.43% to 2,874.36), the BSE Consumer Durables index (up 1.52% to 2,104.51), the BSE Auto index (up 2.24% to 2,745.82), the BSE Teck index (up 2.66% to 2,218.95), the BSE HealthCare index (up 2.86% to 2,858.04), the BSE FMCG index (up 4% to 1,871.90), and the BSE Metal index (up 4.75% to 5,622.37), underperformed the Sensex.

The market breadth was strong. On BSE, 1,970 shares advanced as compared to 633 that declined. 49 shares remained unchanged.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) jumped 4.84% to Rs 1,437.05 on 20.77 lakh shares, on reports its retail arm Reliance Retail and UK-based supply-chain firm Wincanton have called off their proposed joint venture (JV). Wincanton withdrew from the JV after it thought RIL was unlikely to meet its initial growth projections and generate expected volumes, a media report quoted sources as saying. The stock was highly volatile hitting a high of Rs 1448.80 and a low of Rs 1397.10 in the day.

Ranbaxy Laboratories (up 12.33% to Rs 190.35) and Jaiprakash Associates (up 13.36% to Rs 81.45) were the major gainers from the Sensex pack.

Reliance Infrastructure galloped 17.35% on reports the promoter may raise stake beyond 50% to ward off a hostile takeover bid and was the biggest gainer from the Sensex pack.

India’s second largest telecom services provider by sales Reliance Communications rose 5.41% to Rs 232.65. In a volatile trade, the stock after hitting a high of Rs 237.70 in early trade, hit a low of Rs 221.50 in mid-morning trade, only to bounce back again in late trade.

Capital goods stocks jumped. Larsen & Toubro and Suzlon Energy rose by between 3.37% to 10.78%. India’s largest electric equipment maker by sales Bharat Heavy Electricals (BHEL) jumped 4.65% to Rs 1341.15 on reports of seeking an expression of interest for turbines and generators of 700 megawatt and above for nuclear power plants. The stock after a firm start slumped to a low of Rs 1278.60 in mid-afternoon trade but surged in late trade to hit a high of Rs 1,378.

Banking stocks were boosted by the Reserve Bank of India’s latest initiative to prop up liquidity in the financial system, with hopes lower rates will boost lending. India’s largest private sector bank by net profit ICICI Bank jumped 7.91% as American depository receipt (ADR) spurted 7.18% on Friday, 31 October 2008 in US. The bank's ICICI Bank's chief executive K.V. Kamath today the bank will review interest rates in the next few days.

India’s largest commercial bank State Bank of India rose 11.81%. India’s second largest private sector bank by net profit HDFC Bank gained 4.61%, as ADR jumped 1.41% on Friday.

India’s largest home loan lender by operating income HDFC rose 7.2%.

Many PSU banks rose. Punjab National Bank, Bank of India, Bank of Baroda, Union Bank of India, Federal Bank, IDBI Bank, Canara Bank, Indian Overseas Bank, Allahabad Bank, IndusInd Bank rose by between 1/36% to 8.87%.

Besides a cut in the repo rate, the central bank took other liquidity boosting measures on Saturday, including a cut banks' cash reserve ratio (CRR) by 100 basis points to 5.5%. The RBI also cut banks' statutory liquidity ratio (SLR) by 100 bps to 24% of their deposits with effect from 8 November 2008.

The CRR is the percentage of deposits which the banks must keep with the central bank. The CRR cut is expected to release Rs 40000 crore into the system. The SLR is the ratio of government bonds and other approved securities that banks have to hold as a percentage of their total deposits.

The central bank today said it would conduct a special 14-day money market operation for mutual funds and non-banking finance companies (NBFC) on Monday, 3 November 2008, for a cumulative amount of Rs 60000 crore ($12.2 billion) to help meet their liquidity needs.

Auto stocks jumped on hopes lower interest rates may spur sales which are largely driven through finance. India’s largest commercial vehicle maker by sales Tata Motors rose 11.12% even sales fell 20% in October 2008 over October 2007, the largest drop in at least four years, as tighter lending and a slowing economy damped demand for commercial vehicles.

India's largest car maker by sales Maruti Suzuki India rose 6.62% even as total sales fell 6.21% at 64,490 units in October 2008 over October 2007. India’s largest tractor maker by sales Mahindra & Mahindra rose 3.14%.

India’s largest motorbike maker by sales Hero Honda Motors fell 3.06% on fall of more than 3% in sales at 3,52,449 units in October 2008 over October 2007.

Bajaj Auto slumped 8.56% after October 2008 motorcycle volumes fell 34% at 1.63 lakh units against 2.48 lakh units in the same month last year.

IT stocks were mixed amid weak ADRs and a stronger rupee. India's third largest IT exporter by sales Satyam Computer Services fell 1.54% to Rs 300.10, off the day’s high of Rs 319, as ADR fell 2.24%. The company won a SAP implementation contract in Kuwait from First Holding, a leading business group that handles multiple businesses in Kuwait.

India's fourth largest IT exporter by sales Wipro rose 1.51% even as ADR declined 5.26%. India's second largest IT exporter by sales Infosys slipped 0.23% to Rs 1378.10 off day’s high of Rs 1,457, even as ADR gained 0.03%.

India's largest IT exporter by sales Tata Consultancy Services rose 2.09% to Rs 548.70 , on reports of entering genetic diagnostics and medicine after clinching some pharma deals in the last two years.

A stronger rupee affects IT firms negatively as they earn most of their revenues in dollar terms. The rupee rose in opening deals after the rate cut by the central bank and took liquidity boosting measures over the weekend. The partially convertible rupee was at 49 per dollar, compared to Friday's close of 49.44/46.

Rate sensitive realty stocks rose on hopes lower interest rates would spur demand for residential poperties. Indiabulls Real Estate, DLF and Unitech rose by between 1.98% to 14.89%.

Housing Development & Infrastructure fell 4.06% even as net profit rose 15.8% to Rs 265.68 crore in Q2 September 2008 over Q2 September 2007.

Nagarjuna Construction Company rose 4.69% on bagging two orders aggregating to Rs 527 crore from two different clients.

IVRCL Infrastructure & projects moved up 22.85% extending gains for the second day in a row, boosted by strong quarterly performance.

Steel stocks spurted after government, on Friday, 31 October 2008, withdrew export duty on items such as pig iron, iron and steel ingots, bars and rods on Friday, 31 October 2008.. Tata Steel, Steel Authority of India, Jindal Steel, JSW Steel, Welspun Gujarat Stahl Rohren rose by between 1.71% to 7.21%.

As per latest reports, India's leading steel producers have slashed prices of their products by up to Rs 6,000 a tonne to ward off the threat of cheaper imports from countries like China and Ukraine amid a dip in demand. State-run Steel Authority of India, along with private producers Essar Steel and JSW Steel, announced lowering of prices while the biggest private sector producer Tata Steel is still weighing its options.

Iron ore miner Sesa Goa jumped 3.61% after government rejig the tax structure to improve the export competitiveness of the mining industry. The 15% ad valorem export duty on iron ore fines has been replaced with a specific duty of Rs 200 a tonne. However, the export duty on iron ore lumps has been kept unchanged at 15%.

Gujarat NRE Coke spurted 10%, as net profit surged 718.73% to Rs 102.75 crore in Q2 September 2008 over Q2 September 2007.

PSU OMCs rose as crude oil prices fell. BPCL, HPCL and Indian Oil Corporation rose by between 3.8% to 7.73%. Lower oil prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Crude oil fell as reduced imports by Asian refiners reinforced concerns that a demand slowdown is spreading to emerging markets. Crude oil for December 2008 delivery dropped as much as $1.27 or 1.9 %, to $66.54 a barrel in electronic trading on the New York Mercantile Exchange today.

Jindal Drilling & Industries galloped 9.49% on BSE, on bagging a large order for rig deployment.

Airline stocks spurted after the government scrapped the basic customs duty of 5% on jet fuel and after oil firms slashed jet fuel prices. SpiceJet, Kingfisher Airlines and Jet Airways jumped by between 4.81% to 22.57%.

The sale price of aviation turbine fuel (ATF) has been reduced by 15-17% across the four metros. This will help bring down costs of domestic airlines. In the near term, it will reduce their losses. In the medium term it may lead to fare reductions. This is primarily because fuel constitutes 45-50% of the operating cost of most domestic airlines.

Reliance Natural Resources clocked the highest volume of 2.13 crore shares on BSE. Suzlon Energy (1.54 crore shares), Cals Refineries (99.9 lakh shares), GVK Power & Infrastrucutre (90.16 lakh shares) and Unitech (88.04 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 295.41 crore on BSE. HDFC (Rs 178.20 crore), ICICI Bank (Rs 148.26 crore), Reliance Capital (Rs 140.81 crore) and State Bank of India (Rs 133.65 crore) were the other turnover toppers in that order.

Advanta India was locked at upper limit of 20% to Rs 535.65 on BSE, extending gains for the second successive session on strong Q3 September 2008 numbers.

Ipca Laboratories rose 2.05% as the company mulls share buyback.

Essar Shipping Ports & Logistics was locked at 5% upper limit at Rs 35.15 at 10:33 IST on BSE, as net profit surged 275.10% to Rs 60.77 crore in Q2 September 2008 over Q2 September 2007.

ABG Shipyard galloped 9.02% after the company bagged its first rig order.