Realty, metal, oil & gas stocks lead 5.3% Sensex surge

Frenzied buying in index pivotals on speculation US lawmakers will approve a $15 billion bailout of American auto companies, boosted the domestic bourses today, 10 December 2008. The BSE 30-share Sensex surged 492.28 points or 5.37% All the BSE sectoral indices logged gains.

Buying by foreign institutional investors (FIIs) led today's rally. As per the provisional data released by the stock exchanges after trading hours, FIIs bought shares worth a net Rs 950.65 crore today, 10 December 2008. Domestic funds sold shares worth a net Rs 59.01 crore.

The market witnessed a bout of volatility. After a firm opening triggered by the news that a tentative deal was reached on a plan to rescue the battered US auto industry, the Sensex pared gains in mid-morning trade on slide in India's biggest state-run bank in terms of assets, State Bank of India, and auto shares. The market surged in early afternoon trade as Asian shares extended gains.

After a surge of close to 400 points or 4.36%, in afternoon trade, the market came off the higher level on a likely subdued start of European markets. The market spurted later.

Asian stocks surged on hopes governments worldwide will bail out ailing industries and increase spending as they fight back against a deepening economic crisis. China's Shanghai Composite index rose 2.03%, reversing early losses. Key benchmark indices in Hong Kong, Japan, Singapore, South Korea and Taiwan were up by between 3.62% and 5.59%, extending earlier gains. Earlier in the day, the key indices in these five Asian countries were up by 0.95% and 3.41%.

Governments worldwide are looking to spend their way out of sharply slowing economic growth via various stimulus measures, while expectations are rising they will also step in to help sectors and companies in trouble. As per reports, the White House and congressional Democrats late on Tuesday, 9 December 2008, reached an agreement in principle on a $15 billion proposal for bailing out US automakers.

Trading in US index futures indicated the Dow could rise 110 points at the opening bell.

But European markets were subdued. Key benchmark indices in UK and France declined 0.24% and 0.10% respectively. However, Germany's DAX index rose 0.10% on a better-than-anticipated report on investor confidence in Germany, the largest eurozone economy.

The BSE 30-share Sensex surged 492.28 points or 5.37% to 9,654.90. At the day's high of 9,678.70, the Sensex gained 516.08 points in late trade. The Sensex rose 117.54 points at the day's low of 9,280.16 in early trade.

The S&P CNX Nifty advanced 144.25 points or 5.18% to 2928.25. Nifty December 2008 futures were at 2934.95, a premium of 6.70 points as compared to the spot closing.

The barometer index BSE Sensex is down 10632.09 points or 52.40% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11551.87 points or 54.47% below its all-time high of 21,206.77 struck on 10 January 2008.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1539 shares advanced as compared with 888 that declined. 113 shares remained unchanged. The BSE Mid-Cap index (up 2.19% to 2,948.24) and the BSE Small-Cap index (up 1.56% to 3,395.45), though up, underperformed the Sensex.

The total turnover on the BSE amounted to Rs 4169 crore as compared with Rs 3,243.32 crore on Monday, 8 December 2008. Turnover in NSE's futures & options (F&O) segment surged to Rs 43,597.57 crore from Rs 39,051.16 crore on Monday, 8 December 2008.

All the sectoral indices rose. The BSE Realty index (up 12.56% to 2,005.09), the BSE Metal index (up 8.38% to 5,181.92), and BSE Oil & Gas index (up 6.97% to 5,906.46), outperformed the Sensex.

The BSE Consumer Durables index (up 2.01% to 1,739.10), the BSE Teck index (up 4.31% to 2,053.28), the BSE IT index (up 2.89% to 2,454.98), the BSE Auto index (up 4.16% to 2,375.42), the BSE HealthCare index (up 1.04% to 2,850.81), the BSE Capital Goods index (up 4.51% to 6,824.14), the BSE Power index (up 4.02% to 1,762.53), the BSE FMCG index (up 0.79% to 1,950.49), the Bankex (up 3.58% to 4,959.29) and the BSE PSU index (up 2.42% to 4,748.00), underperformed the Sensex.

Jaiprakash Associates (up 9.40% to Rs 75.10), HDFC (up 8.85% to Rs 1645), and Hindustan Unilever (up 1.20% to Rs 244.70), edged higher from the Sensex pack.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) jumped 9.29% to Rs 1224 on high volumes of 33.16 lakh shares on hopes stimulus packages around the world would revive demand for its petroleum and petrochemical products. RIL's refining margins comfortably beat most of its global peers, and is seen as well placed to tap any revival in demand.

India's largest oil exploration firm by market capitalisation Oil & Natural Gas Corporation (ONGC) climbed 1.60% to Rs 670 after the government reportedly permitted its overseas arm ONGC Videsh (OVL) to make a formal offer for acquiring 100% equity in UK-listed Imperial Energy for 1.4 billion pounds despite sharp slide in crude oil prices.

Ranbaxy Laboratories was the lone loser from the 30-member Sensex pack. India's top pharma company by sales lost 1.01% to Rs 210.90 after brokerage Reliance Money maintained its sell rating on the stock with a target price of Rs 177 in its report dated 10 December 2008 stating that foreign exchange fluctuation could continue to dent the company's performance through hedging as well as translation losses.

Wockhardt rose 4.40% to Rs 100.80 on reports it is in talks with private equity funds to divest a 15% stake at a huge premium over the ruling market price.

Real estate shares extended Monday's (8 December 2008) gains after the Reserve Bank of India (RBI) on Saturday, 6 December 2008, announced several measures, including a refinance facility for the National Housing Bank and priority sector status for housing loans up to Rs 20 lakh, in a bid to revive housing demand.

India's top real estate developer by market capitalisation DLF galloped 21.85% to Rs 269.10 on huge volumes of 1.14 crore shares and was the top gainer from the Sensex pack. The stock had surged 8.71% on Monday, 8 December 2008.

Unitech (up 6.39% to Rs 34.70), Sobha Developers (up 2.98% to Rs 97), and Housing Development Infrastructure (up 10.63% to Rs 98.85), rose.

Cement shares surged on hopes price cut will boost demand. Grasim (up 14.35% to Rs 1105), ACC (up 10.75% to Rs 480), Ambuja Cements (up 11.21% to Rs 64.50), and Shree Cement (up 8.33% to Rs 390.25) advanced.

Major cement manufacturers, including ACC, Ambuja Cements and Shree Cement announced price cuts by up to Rs 7 per 50 kilogram bag in response to the government's move on Sunday, 7 December 2008, to reduce excise duty by 4% across the board, as a part of a fiscal stimulus package for the economy. The cement companies have, however, not passed on the entire benefit of excise duty cut due to hike in railway freight by about 8%.

Capital goods heavyweights rose on hopes the government's thrust on the infrastructure sector, will boost orders. India's largest power equipment maker by sales Bharat Heavy Electricals gained 3.68% to Rs 1412. India's largest engineering & construction company by sales Larsen & Toubro rose 5.38% to Rs 780

Elecon Engineering Company rose 4.31% to Rs 32.70 after Prayas Engineering, a promoter, has acquired 44,500 shares or 0.05% of the equity capital of the company through open market, Elecon Engineering Company said in a filing to the BSE. The company made this announcement before trading hours today, 10 December 2008.

The government hopes to precipitate infrastructure projects worth Rs 100,000 crore through faster clearances of public-private partnership projects, and ensure their easier financing by way of a tax break on fund raising by the India Infrastructure Finance Company, a specialist lender to the infrastructure sector.

IT pivotals rose reports of government-led support in Asia for sectors such as technology. India's second largest IT exporter by sales Infosys rose 1.20% to Rs 1171.10. India's third largest IT exporter by sales Satyam Computer Services climbed up 5.34% to Rs 235.60. India's fourth largest IT exporter by sales Wipro jumped 10.45% to Rs 263.20. India's largest IT exporter by sales Tata Consultancy Services gained 2.88% to Rs 537.45.

In Taiwan, struggling memory chip maker ProMOS has reportedly asked for government assistance.

IT stocks shrugged off a firmer rupee. A stronger rupee affects operating margins of IT firms negatively as they earn most of their revenues from exports. The rupee was trading firm at 48.98/49 per dollar, higher than its previous close of 49.58/59 as gains in Asian share markets eased concerns about an outflow of foreign funds from the market.

Metal stocks advanced, boosted by a surge in metal prices on the London Metal Exchange. Sterlite Industries (up 9.38% to Rs 273.50), Hindalco Industries (up 6.02% to Rs 53.75), Tata Steel (up 13.27% to Rs 222), Nalco (up 6.26% to Rs 195.10), Steel Authority of India (up 16.21% to Rs 79.95), soared.

Telecom shares were in demand on reports the finance ministry has reportedly allowed state-owned India Infrastructure Finance Company to lend money to telecom firms to bid for licences for the third generation (3G) spectrum auction early next year. Reliance Communications (up 11.52% to Rs 230.90), Bharti Airtel (up 4.95% to Rs 735.50), and Idea Cellular (up 3.83% to Rs 52.80), advanced.

Banks shares vaulted on hopes lower interest rates will spur lending growth. ICICI Bank (up 8.42% to Rs 400.95), HDFC Bank (up 2.99% to Rs 924.85), rose.

India's top state-run bank by total assets State Bank of India rose 1.86% to Rs 1190 after swing wildly in a range of Rs 1197.60 - Rs 1150.05 in the day.

LKP Finance was locked at 5% upper limit at Rs 55.05 after its board of directors scheduled a meet on 15 December 2008 to consider buy back of shares. The company announced the board meet during trading hours today, 10 December 2008.

The RBI, on 6 December 2008, announced a 100-basis point cut in the repo rate and the reverse repo rate each. 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. The RBI also announced steps to improve liquidity and shore up economic activity.

Auto shares reversed early losses on hopes the recent price cuts will revive demand. India's top truck maker by sales Tata Motors gained 10.53% to Rs 168, recovering from an early low of Rs 146.30 caused by a brokerage downgrade. Reliance Money put a sell rating on stock with a target of Rs 120 in its latest research report dated 8 December 2008 citing weak demand and fall in overall sales volume

India's top tractor maker by sales Mahindra & Mahindra (M&M) galloped 16.82% to Rs 290, off day's low of Rs 242.50.

India's top small car maker by sales Maruti Suzuki India gained 4.72% to Rs 522.90 after sliding to a low of Rs 485.65. The company cut prices of all 11 car models following an across-the-board 4% reduction in excise duty announced by the government on Sunday, 7 December 2008.

Most auto firms have cut prices after the government on Sunday cut excise duties in a bid to pump-prime the economy.

Power generation stocks gained as the government has decided to eliminate the import duty on naphtha used for power generation. Tata Power Company (up 6.20% to Rs 729.80), Reliance Infrastructure (up 9.24% to Rs 605) and NTPC (up 1.29% to Rs 168.55), rose.

Naphtha is used as a fuel in power sector generation. The elimination of import duty will bring down the price of naphtha which would in turn reduce the cost of power generated from naphtha. This will help the power producers to bring down the tariff of power that they sell to transmission companies. Currently, naphtha attracts a customs duty of 5%.

State-run oil marketing companies (OMCs), though up, underperformed the Sensex, as crude oil bounced back. HPCL (up 1.63% to Rs 227.10), BPCL (up 3.33% to Rs 337), and IOC (up 1.30% to Rs 386.40), rose.

State-run oil firms suffer revenue losses on domestic sale of petrol, diesel, LPG and kerosene at a controlled price. US crude for January 2009 delivery was up $1.21 at $43.28 a barrel today, 10 December 2008 on bargain hunting.

Shipping stocks advanced tracking the Baltic Dry Index, which rose for second day rebounding from a 22-year low. GE Shipping (up 13.77% to Rs 166.05), Mercator Lines (up 19.91% to Rs 27.70), and Shipping Corporation of India (up 5.88% to Rs 72), surged. The Baltic Dy Index represents daily average of prices to shipping raw materials.

Among the side counters, Andhra Cements (up 20% to Rs 18.72), Kisan Mouldings (up 20% to Rs 16.50), Modern Dairies (up 20% to Rs 14.31), Aurobindo Dairies (up 19.91% to Rs 140.60), and Gwalior Chemicals (up 19.90% to Rs 46.40), surged.

Redington (down 14.78% to Rs 102.05), CCAP (down 13.21% to Rs 12.35), Softpro Systems (down 11.65% to Rs 91), Kirloskar Electronics (down 10.68% to Rs 62.75), and Enkei Castalloys (down 10.58% to Rs 18.60), bucked the trend

Reliance Industries topped the turnover chart on BSE with a turnover of Rs 395 crore followed by DLF (Rs 282.40 crore), SBI (Rs 182 crore), Tata Steel (Rs 159 crore) and ICICI Bank (Rs 158.40 crore).

Unitech led the volume chart on BSE clocking volumes of 3.21 crore shares followed by Suzlon (2.05 crore shares), Housing Development Infrastructure (1.47 crore shares), GVK Power Infrastructure (1.47 crore shares) and DLF (1.14 crore shares).

Meanwhile, the global economic slowdown has impacted the Indian manufacturing sector, which has cut output in the last few months and this trend is expected to continue in coming months, according to a survey by industry body Federation of Indian Chambers of Commerce and Industry (Ficci). The survey found that the manufacturing slowdown is likely to continue till March 2009, which might result in job losses.