Sensex vaults 12.5% in eight trading sessions

Expectations of a second tranche of fiscal sops from the government and hopes of additional interest rate cuts by the central bank to shield the domestic economy from the global economic recession, boosted the market in what was a highly volatile trading session. The BSE 30-share Sensex advanced 142.32 points, or 1.47%, nearly 120 points down from the day's high and about 80 points off the day's low.

The market was caught between reports of a mixed bag of advance tax payment by top corporates, cutting of gains by European shares, lower US index futures and hopes of more measures by the government and central bank to revive demand in a weakening economy. Volatility in index heavyweight Reliance Industries (RIL) caused volatility in the key benchmark indices.

State Bank of India (SBI) has reportedly paid 56% higher advance tax of Rs 1,700 crore in Q3 December 2008 over Q3 December 2007. HDFC paid about 30% higher advance tax at Rs 279 crore. However, ICICI Bank paid 6% lower advance tax is at Rs 470 crore. RIL has paid almost the same advance tax as last year.

The market witnessed a bout of volatility. After an initial surge, the market pared gains before bouncing back again in morning trade. The market once again pared gains in early afternoon trade. The market lost further ground in afternoon trade. It soon came off the lower level and the recovery continued in mid-afternoon. The market once again pared gains in late trade before regaining strength later. The BSE Sensex swung 199.04 points between the day's high and low.

Factory output in India fell for the first time in more than 13 years in October 2008, the latest evidence of a rapid economic slowdown. The weak industrial output data for October 2008 has raised expectations of a suitable policy response from the government and the central bank to shield the domestic economy from the global economic recession. There is an anticipation of a second tranche of fiscal sops from the government and additional interest rate cuts by the central bank.

Shares were volatile in Europe. European shares pared gains on Monday, 15 December 2008, after three European banks announced a total of about $3.8 billion in exposure to an investment fund run by Bernard Madoff, the US investor accused of running a $50 billion "Ponzi" scheme. Stocks had recovered earlier on expectations of a further reduction in interest rate in the United States. The key benchmark indices in France, Germany and UK were up by between 0.39% to 1.29%.

Fed fund futures showed a 76% chance of a 75 basis point rate cut. The US Federal Reserve is set to announce its rate decision on Wednesday, 17 December 2008.

Trading in US index futures indicated the Dow could rise 14 points at the opening bell, extending the previous session's gains as investors awaited news on a potential bailout of the stricken auto industry and ahead of the Fed two-day policy meeting.

The White House said on Friday, 12 December 20078, the administration would consider using part of the Treasury's $700 billion bailout package for financial institutions to keep the Big 3 automakers afloat after an autos bailout bill failed in the Senate. However, US President George W. Bush said on Monday, 15 December 2008, an announcement on a auto industry rescue was not imminent.

Stocks surged in Asia on Monday, 15 December 2008, on hopes a lifeline may be given to the struggling US automakers. Key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore and Taiwan were up by between 0.52% to 5.21%.

The BSE 30-share Sensex was up 142.32 points, or 1.47%, to 9,832.39. At the day's low of 9,749.29, the Sensex gained 59.22 points in afternoon trade. The Sensex jumped 258.26 points at the day's high of 9,948.33 hit in mid-morning trade.

The S&P CNX Nifty was up 59.85 points, or 2.05%, to 2,981.20.

The BSE clocked a turnover of Rs 4,360 crore marginally lower than Rs 4,486.93 crore on Friday, 12 December 2008.

Nifty December 2008 futures were at 2989.90, at a premium of 8.70 points as compared to the spot closing of 2981.20. Turnover in NSE's futures & options (F&O) segment was Rs 37,645.87 crore, lower than Rs 41,078.17 crore on Friday, 12 December 2008.

Buying by foreign funds this month has lifted sentiments. From a recent low of 8,739.24 on 2 December 2008, the BSE Sensex has risen 1,093.15 points or 12.5% in the past eight trading sessions. Foreign funds have bought shares worth Rs 2,048.70 crore, till 11 December 2008. They are net sellers of Rs 52,688.50 crore in calendar 2008, so far.

The Sensex is down 10,454.60 points or 51.53% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 11,374.38 points or 53.63% below its all-time high of 21,206.77 struck on 10 January 2008.

The BSE Realty index (up 5.53%), the BSE Metal index (up 5.19%), the BSE Consumer Durables index (up 4.9%), the BSE PSU index (up 3.49%), the BSE Oil & Gas index (up 3.25%), the BSE Capital Goods index (up 3.18%), the BSE HealthCare index (up 2.09%), the BSE Auto index (up 1.94%), the BSE Power index (up 1.67%), the BSE Bankex (up 1.51%) outperformed the Sensex.

The BSE Teck index (up 0.5%), the BSE IT index (down 0.22%), the BSE FMCG index (up 0.74%) underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong on BSE with 1,937 shares advancing as compared with 555 that declined. 80 shares remained unchanged.

Larsen & Toubro, Grasim Industries, ONGC, rose by between 4.09% to 9.32%.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 2.44% to Rs 1,338.05 on reports the government will shortly move the Bombay High Court requesting it to vacate an interim stay order that restrained RIL from selling gas from the Krishna-Godavari (K-G) basin to companies other than Reliance Natural Resources (RNRL) and state-owned NTPC.

RIL on its part has already appealed against the order. The court's interim order in May 2007 had directed RIL not to create third party interest for the disputed volume of 40 mscmd (million standard cubic metres per day) of gas from the K-G basin.

Metal stocks rose tracking recovery in metal prices on the London Metal Exchange. Hindalco Industries, National Aluminum Company, Sterlite Industries, Steel Authority of India rose by between 2.61% to 8.81%.

India's largest steel maker by sales Tata Steel jumped 4.22% on reports of plans to merge its British unit Corus, as a cost-cutting measure which can lead to thousands of job cuts in UK.

Real estate shares surged on hopes housing demand will improve following a concessional home loan package unveiled by the state-run banks today. DLF and Indiabulls Real Estate rose by between 1.57% to 8.2%. Unitech surged 10.5% on reports it plans to finalise a buyer for its hotel property in Gurgaon in the next two weeks. It expects to earn around Rs 300 crore from the sale of the 200-room budget hotel.

PSU banks on Monday unveiled cheaper rates for home loans up to Rs 5 lakh and between Rs 5 lakh and Rs 20 lakh. Rates for home loans up to Rs 5 lakh would not be more than 8.5%. The margin requirement has been fixed at 10% for up to Rs 5 lakh loan. In addition, no processing or pre-payment fee on up to Rs 5 lakh loans would be charged.

Rates on home loans between Rs 5 lakh and Rs 20 lakh would be frozen at 9.25%. The margin requirement has been fixed at 15 %. The home loan rates under the package can fall further if rates fall more. The new home loan package is valid till 30 June 2009.

Banking shares rose on hopes further interest rate cuts by the central bank will boost lending growth. India's second largest private sector bank by net profit HDFC Bank jumped 2.72% as its American depository receipt (ADR) gained 5.89% on Friday 12 December 2008. India's largest private sector bank by net profit ICICI Bank jumped 1.7% as its ADR rose 4.91% on Friday. ICICI Bank's advance tax payment fell 6% to Rs 470 crore in Q3 December 2008 over Q3 December 2007. However, India's largest commercial bank State Bank of India (SBI), fell 0.84% despite reports SBI's advance tax payment rose 56.25% at Rs 1,700 crore in Q3 December 2008 over Q3 December 2007.

India's largest home loan lender by operating income HDFC fell 1.45% even as its advance tax payment rose 29.76% to Rs 279 crore in Q3 December 2008 over Q3 December 2007.

Indiabulls Financial Services was locked at 5% upper limit at Rs 110.90 after a block deal of 4.81 lakh shares was executed on BSE at Rs 109.80 per share.

The Reserve Bank of India (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.

PSU banks were in action after state-run banks unveiled a package for home loans at lower rates. Indian Overseas Bank, Bank of Baroda, Canara Bank, Allahabad Bank rose by between 0.86% to 3.03%.

IT stocks fell on a stronger rupee. India's largest IT exporter by sales Tata Consultancy Services fell 2.62%. India's second largest IT exporter by sales Infosys fell 0.57% to Rs 1,101.10 off day's high of Rs 1,138.15. Its ADR rose 1% on Friday. India's fourth largest IT exporter by sales Wipro fell 1.63%. While, India's third largest IT exporter by sales Satyam Computer Services rose 2.11% as ADR gained 3.6% on Friday, 12 December 2008. IT firms derive more than 50% of their revenues from the US.

The Indian rupee traded close to one-month highs in afternoon trade on Monday as gains in the stock market raised hopes of fresh capital inflows but dollar demand from oil firms capped further gains. The partially convertible rupee was at 48.00/02 per dollar, stronger than its Friday's close of 48.43/45. It rose to 47.92 in early deals, which was its strongest since 11 November 2008. A stronger rupee affects IT firms negatively as they earn most of their revenues from exports.

Auto stocks rose on hopes lower interest rates would boost demand for vehicles which is mainly driven by finance. Maruti Suzuki India, Mahindra & Mahindra, Hero Honda Motors, Tata Motors rose by between 0.49% to 3.5%.

Apollo Tyres galloped 3.97% after 18.90 lakh shares, or 0.37% of the company's equity changed hands in a block deal at Rs 19.60 on BSE.

Cement stocks rose on hopes government's efforts to give a boost to the realty sector will spur cement demand. ACC, Birla Corporation of India, Ambuja Cements, Grasim Industries rose by between 1.84% to 9.32%.

India's second largest telecom services provider by sales Reliance Communications (RCom) fell 4.09% on reports department of telecom (DoT) is set to ask the Comptroller and Auditor General of India (CAG) to appoint a special auditor to examine the books of Reliance Communications (RCOM). Allegations are that the telco in the year ended March 2008 diverted revenue earned from its mobile services to a subsidiary in an attempt to bring down the total amount it had to pay to the government as licence fee and spectrum charge.

Consumer Durables stocks rose on hopes further rate cuts would boost demand. Blue Star, Rajesh Exports, Titan Industries, Videocon Industries rose by between 3.59% to 6.44%.

Gitanjali Gems soared 7.11% after the company said its board will meet on 19 December 2008 to consider buyback of own shares.

State-run oil marketing firms were mixed amid recent reports the government is considering a proposal to deregulate the pricing of petrol and diesel. HPCL and BPCL rose by between 2.5% to 4.09%. Indian Oil Corporation fell 0.3%.

The proposed deregulation of fuel prices, will provide full freedom to oil companies to set petrol and diesel prices.

Shipping stocks rose on reports government may bail out the shipping sector from rising cost of borrowings by providing 2-3% interest subsidy. Shipping Corporation of India, Essar Shipping and GE Shipping Company rose by between 4.2% to 14.9%.

Fertliser shares rallied on recent reports of government giving bonds worth Rs 10,000 crore to 23 fertiliser companies. Nagarjuna Fertiliser & Chemicals, Chambal Fertiliser & Chemicals, RCF, and Coramandel Fertiliser rose by between 1.77% to 10.36%.

Reportedly the government on 11 December 2008 issued special bonds worth Rs 10,000 crore of coupon rate 7% to 23 fertiliser companies as compensation for subsidising prices in the current financial year.

Kirloskar Electric Company jumped 10% on BSE after a block deal of 10 lakh shares was executed on BSE at Rs 38 per share.

McNally Bharat Engineering Company jumped 13.28% on bagging an order worth Rs 86.66 crore.

Elecon Engineering Company was locked at 5% upper limit at Rs 37.15 on bagging an order worth Rs 120 crore.

Vishal Retail was locked at the upper limit of 5% at Rs 109.65 on reports the company may sell stake to raise capital for sustaining its current operations and to fund planned expansion.

Reliance Natural Resources clocked the highest volume of 3.51 crore shares on BSE. Unitech (2.29 crore shares), IFCI (2.24 crore shares), Reliance Petroleum (1,5 crore shares) and GVK Power & Infrastructure (1.46 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 505.79 crore on BSE. State Bank of India (Rs 234.15 crore), Reliance Natural Resources (Rs 206.80 crore), DLF (Rs 193 crore) and Reliance Capital (Rs 145.51 crore) were the other turnover toppers in that order.

US stocks rose on Friday, 12 December 2008, boosted by a White House statement that it would consider using some of the Treasury's $700 billion bailout package for financial institutions to keep the US "Big 3" automakers afloat. Specific bailout legislation had earlier failed to get through Congress.