Realty, infrastructure, banking shares lead 5.5% Sensex surge

Likely government measures to pump prime the economy, hopes of a further cut in interest rates, firm European stocks and rebound in US index futures boosted the domestic bourses today. The BSE 30-share Sensex jumped 482.32 points, or 5.51%, led by a surge in realty, metal, banking shares and index heavyweight Reliance Industries (RIL). The barometer index breached the psychological 9,000 mark. All the sectoral indices on BSE were in the green.

Bank shares were in demand on as falling inflation heightened expectations for an interest rate cute by the Reserve Bank of India (RBI). As per the market buzz, the Reserve Bank of India (RBI) is expected to cut repo and reverse repo rates to the extent of 200 basis points and 125 basis points respectively at the weekend, in an attempt to shield the domestic economy from the global economic slowdown. Repo rate is the rate at which RBI lends to commercial banks and reverse repo rate is the rate at which RBI accepts deposits from banks.

Inflation based on the wholesale price index rose 8.4% in the year through 22 November 2008, lower than previous week's 8.84% rise, data released by the government at about 13:15 IST showed. Inflation had surged into double digits in early June this year after an increase in state-set retail fuel prices, and peaked at 12.91% on, 2 August 2008, the highest reading since annual numbers in the current data series became available in April 1995.

Reserve Bank of India (RBI) governor D Subbarao today, 4 December 2008, said India remains vulnerable to global financial and economic developments and a period of painful adjustment was inevitable. The RBI governor said India's economic fundamentals were strong. He added that the outlook for India was mixed and there was evidence of activity slowing down.

Meanwhile, the Indian government is slated to announce a slew of measures at the weekend to pump prime the economy. The likely measures include a Rs 2000-crore export package, a further relaxation in external commercial borrowings norms and Rs 15,000-crore budgetary support for infrastructure.

A bout of volatility was witnessed earlier in the day. Likely government measures to pump prime the economy and hopes of further rate cuts by the Reserve bank of India gave a positive start to the domestic bourses. But the market soon slipped into the red due to lower US index futures, concerns about the weakening global economy and due to tension between Indian and Pakistan following last week's terror attacks in Mumbai may cap the upside. The market firmed up again in early trade. After the recovery, the market pared gains before bouncing back again. Sensex swung 518.35 points between the day's high and low.

European stocks reversed early losses to rally on Thursday, 4 December 2008, rising for the third session in a row as investors hoped deep interest rate cuts would help soothe the global economic slump. The key benchmark indices in France, Germany and UK were up by between 0.54% to 2.62%.

The Bank of England slashed interest rates by a full percentage point today to shore up Britain's crumbling economy and head off the threat of deflation. The cut took rates to 2% their lowest level since 1951. The central bank in Sweden slashed its key interest rate by a record 175 basis points to 2% on Thursday, a shock move to try and prevent the economy from sliding deeper into recession.

At its policy meeting later in the day, the European Central Bank (ECB) is expected to cut rates by at least 75 basis points.

Meanwhile, economic, corporate and industry data continues to be weak in major economies. Japan said on Thursday, 4 December 2008, it may be in a deeper recession than first thought, in the latest signal that the global economic downturn is sparing few corners of the world. Earlier, a corporate survey in Japan signaled the country's economic performance in the third quarter may have been even worse than first reported. Australia's vehicle sales slumped in November 2008.

US data on Wednesday, 3 December 2008, showed large job losses by US employers and a slumping service sector. The US economy is already in recession for a year.

Swiss Bank Credit Suisse today, 4 December 2008, reported a net loss of about 3 billion Swiss francs ($2.5 billion) in the two months to end-November 2008 and cut another 5,300 jobs.

Trading in US index futures indicated the Dow could rise 23 points at the opening bell. The US index futures bounced back from steep losses earlier in the day.

Closer home, the Indian government is reportedly considering various options including a strike on Pakistan to dismantle its terror bases in response to the recent Mumbai terror attacks. As a strike on Pakistan could lead to a full scale war between the two nuclear armed countries, India is maintaining a cautious approach and wants to gauge every possible ramification of its decision, reports suggest.

Tension between India and Pakistan have mounted after the Mumbai attacks. India has blamed Islamist militants based in Pakistan for the attacks.

The BSE 30-share Sensex was up 482.32 points, or 5.51%, to 9,229.75. At the day's high of 9,245.06 hit in late trade, the Sensex rose 497.63 points. The Sensex lost 20.72 points at the day's low of 8,726,71 hit in early trade.

The S&P CNX Nifty was up 131.55 points, or 4.95%, to 2,788.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,503 shares rose as compared with 668 that declined. 60 shares remained unchanged.

The BSE clocked a turnover of Rs 3727 crore today, higher than Rs 2,955.08 crore on Wednesday, 3 December 2008.

Nifty December 2008 futures were at 2796, at a premium of 8 points as compared to the spot closing of 2788. Turnover in NSE's futures & options (F&O) segment rose to Rs 34,123.92 crore from Rs 33,606.23 crore on Wednesday, 3 December 2008.

The barometer index BSE Sensex is down 11,057.24 points or 54.5% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,977.02 points or 56.47% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE Realty index (up 12.44% to 1,753.65), the BSE Metal index (up 7.93% to 4,803.91), the BSE Capital Goods index (up 6.91% to 6,506.98), the BSE Oil & Gas index (up 5.86% to 5,682.68), the BSE Power index (up 5.7% to 1,676.43), the BSE Bankex (up 5.64% to 4,803.37) outperformed the Sensex.

The BSE HealthCare index (up 0.92% to 2,849.12), the BSE Consumer Durables index (up 1.21% to 1,734.53), the BSE IT index (up 2.69% to 2,464.74), the BSE FMCG index (up 2.8% to 1,954.75), the BSE Auto index (up 3.22% to 2,243.11), the BSE Teck index (up 3.32% to 1,982.39) and the BSE PSU index (up 3.71% to 4,667.57), underperformed the Sensex.

As per the provisional data on BSE, foreign institutional investors (FIIs) bought shares worth Rs 307.14 crore today, 4 December 2008 and domestic funds bought shares worth Rs 79.24 crore.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) surged 8.4% to Rs 1,159.30 on recent reports it intends to restart retailing of petrol and diesel soon after margins on the two fuels turned positive.

Realty stocks rose on reports the government will next week unveil measures for the realty sector, which may include incentives for low-cost housing and lower loan rates. Indiabulls Real Estate, DLF, Unitech rose by between 11.28% to 17.17%.

Metal stocks rebounded from earlier slide on recovery in metal prices on the London Metal Exchange (LME). Tata Steel, Hindalco Industries, Sterlite Industries, Steel Authority of India, National aluminum Company rose by between 2.65% to 13.84%.

Banking stocks edged higher on rate cut hopes. India's largest private sector bank by net profit ICICI Bank rose 8.75% as American depository receipt (ADR) gained 5.64% on Wednesday, 3 December 2008. India's largest commercial bank State Bank of India (SBI) jumped 6.55%. India's second largest private sector bank by net profit HDFC Bank gained 3.52% as ADR rose 2.6% on Wednesday.

Shares of housing finance firms rose on likely sops for the realty sector, which may include incentives for low-cost housing and lower loan rates. India's top mortgage lender by market capitalisation Housing Development Finance Corporation (HDFC) rose 6.76% and India's second-biggest mortgage lender by market capitalisation LIC Housing Finance rose 10.37%.

Infrastructure Development Finance Company jumped 14.29% after a block deal of 17.01 lakh shares was executed on BSE at Rs 58.50 per share.

Indian Overseas Bank rose 3.04% after a block deal of ten lakh shares was executed on BSE at Rs 67 per share.

IT stocks shrugged off a stronger rupee after India's second largest IT exporter by sales Infosys' chief executive S. Gopalakrishnan today, 4 December 2008, said though the company has seen delays in orders there is no change in its third quarter December 2008 guidance. Infosys rose 3.12%, recovering from a 4.29% fall in the previous trading session.

India's fourth largest IT exporter by sales Wipro gained 4.71% as ADR rose 1.95%. India's third largest IT exporter by sales Satyam Computer Services rose 1.04% as ADR gained 2.43% on Wednesday, 3 December 2008. India's largest IT exporter by sales Tata Consultancy Services rose 2.82%.

The Indian rupee was stronger in afternoon trade on Thursday as hefty gains in the domestic share market raised expectations of fresh capital inflows while a drop in oil prices also eased concerns of a widening trade deficit. The partially convertible rupee was at 49.78/80 per dollar, stronger than its Wednesday's close of 49.99/50.01. On Tuesday, the rupee had hit a record low of 50.65. A stronger rupee affects IT firms negatively as they earn most of their revenues from exports.

Auto stocks rose on hopes lower interest rates will spur demand which is mainly driven by finance and on possible measures by the government to boost the commercial vehicles sector. Mahindra & Mahindra, Maruti Suzuki India and Hero Honda Motors rose by between 0.56% to 4.74%.

India's largest commercial vehicle maker by sales Tata Motors up 13.29% on reports of possible excise duty cut on commercial vehicles as a part of the government's package to boost the economy.

Capital goods stocks rose on hopes government efforts to boost economy will lift orders. Larsen & Toubro, Suzlon Energy, Bharat Heavy Electricals, Crompton Greaves and Thermax rose by between 2.87% to 10.24%.

Power stocks rose on reports the likely government measures to boost the economy may include special credit window for the power sector. Tata Power Company, Reliance Infrastructure, Reliance Power, Power Grid Corporation of India jumped by between 3.21% to 7.46%.

India's largest drug maker by sales Ranbaxy Laboratories rose 3.57% on signing a pact with a US drug firm.

Orchid Chemicals & Pharmaceuticals rose 2.51% on receiving US approval for a new drug.

Infrastructure stocks extended gains for the second day in a row on hopes a likely government package to boost the economy will give thrust to the infrastructure sector. Hindustan Construction Company, Nagarjuna Construction Company, and IVRCL Infrastructure & Projects rose by between 5.46% to 11.88%.

Marg was locked at 5% upper limit at Rs 34.45 at 12:54 IST on BSE, on bagging a contract for developing an airport at Bijapur in Karnataka.

PSU OMCs rose on fall in crude oil prices. BPCL, HPCL and Indian Oil Corporation rose by between 0.66% to 1.28%. Crude oil fell for a fifth day to the lowest in almost four years after a report showed US fuel demand extended declines because of the country's deepening economic slump. Crude oil for January 2008 delivery dropped as much as $1.49, or 3.2%, to $45.30 a barrel on the New York Mercantile Exchange. 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.

Hindustan Oil Exploration Company rose 6.12% on bagging two oil and gas blocks.

Consumer durables stocks rose on hopes further rate cuts by the Reserve Bank of India would spur demand which is mainly driven by finance. Videocon Indusries, Blue Star,Titan Industries, Lloyd Electric and Rajesh Exports rose by between 1.52% to 3.56%.

Cement stocks rose on hopes likely government measures to boost the infrastructure sector will spurt demand. ACC, Birla Corporation of India, Ultratech Cement, Ambuja Cements and Grasim Industries rose by between 1.13% to 6.6%.

Unitech clocked the highest volume of 3.19 crore shares on BSE. Suzlon Energy (2.46 crore shares), GVK Power & Infrastructure (1.82 crore shares), Housing Development & Infrastructure (1.1 crore shares) and Jaiprakash Associates (82.64 lakh shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 404.61 crore on BSE. State Bank of India (Rs 203.61 crore), Educomp Solutions (Rs 178.33 crore), Reliance Infrastructure (Rs 153.18 crore) and DLF (Rs 132.49 crore) were the other turnover toppers in that order.

Haldyn Glass Gujarat spurted 8.51% on increase in the promoters' stake in the company.

Nava Bharat Ventures jumped 20.28% on share buyback plan.

PVR galloped 4.88% on reports it plans to set up entertainment centres across the country.

Chinese stocks rose after the government on Wednesday, 3 December 2008, announced measures whereby it will use financial policy to support the economy. The Shanghai Composite was up 1.84%. But most Asian shares weakened after earlier gains. Key benchmark indices in South Korea, Hong Kong, Japan and Taiwan were down by between 0.58% to 1.58%.

China will make use of required reserves as well as interest rates and the exchange rate to ensure ample liquidity in the banking system, the government said on Wednesday. The State Council, China's cabinet, also approved measures aimed at stabilising the domestic stock market, boosting bond issuance and increasing the supply of credit.