Market snaps 4-day losing streak as RIL soars

Key benchmark indices snapped four-day declining trend on frenzied buying in index heavyweight Reliance Industries (RIL) and IT pivotals. Strong buying momentum was seen in stocks of Anil Dhirubhai Ambani Group (ADAG) and Mukesh Ambani group in late trade on speculation the two warring Ambani brothers will reach out-of-court settlement over supply of gas from Reliance Industries (RIL)'s KG basin. However, a television channel reported after trading hours that RIL has denied rumours of out-of-court settlement.

The BSE 30-share Sensex surged 299.13 points or 3.30% at 9370.49. The market remained in green throughout the trading session. However, the turnover was low.

Volatility was high. The market extended gains in morning trade after opening with an upward gap on the back of gains in Asian stocks and on strong Q3 December 2008 results announced by IT bellwether Infosys Technologies before trading hours on Tuesday, 13 January 2009. It later cut gains. The market surged again to gain as much as 3.49% in mid-morning trade. The market pared gains after the steep surge.

The market firmed up again in afternoon trade. But it came sharply off the higher level in mid-afternoon trade on subdued European markets. Rally in RIL and ADAG stocks took the market sharply higher in late trade.

Infosys Technologies, India's second largest software services exporter jumped 6.49% to Rs 1310, extending yesterday's 5.90% surge. Infosys' American depository receipt advanced 5.87% on Tuesday, 13 January 2009.

European shares slipped today, 14 January 2009 as banks and mining stocks dragged the index lower, overshadowing gains in the energy sector. Key benchmark indices in UK, France and Germany were down by 0.70% to 0.99%. HSBC dragged the banking sector lower after Morgan Stanley said Europe's biggest bank may have to raise as much as $30 billion in capital and halve its dividend as earnings were likely to deteriorate more than expected.

Most Asian markets advanced today, 14 January 2009, as technology companies gained on assumption consolidation will strengthen profits and as a jump back in oil boosted energy producers. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea were up by between 0.16% and 3.52%. However Taiwan's Taiwan Weighted index fell 0.24%

US markets ended mixed on Tuesday, 13 January 2009, as investors continued to show concerns over the slowing economy, ahead of the corporate earnings season. The Dow Jones industrial average slipped 25.41 points, or 0.30%, to 8,448.56. However the S&P 500 index rose 1.53 points, or 0.18%, to 871.79 and the Nasdaq composite index gained 7.67 points, or 0.50%, to 1,546.46. On the economic front, US trade deficit shrank nearly 29% in November 2008, the biggest contraction in 12 years.

The BSE 30-share Sensex surged 299.13 points or 3.30% at 9370.49. The Sensex opened 151.80 points higher at 9,223.16. The Sensex jumped 341.61 points at day's high of 9,412.97 in late trade. At the day's low of 9,202.57, the Sensex rose 131.21 points in mid-afternoon trade.

The S&P CNX Nifty gained 90.35 points or 3.29% at 2835.30. Nifty January 2009 futures were at 2812, at a discount of 23.30 points as compared to the spot closing of 2835.30.

As per the provisional data released by the stock exchanges after trading hours, foreign funds today, 14 January 2009, bought shares worth a net Rs 91.44 crore and domestic funds bought stocks worth a net Rs 10.98 crore.

The BSE Sensex had lost 1264.57 points or 12.24% in the four trading sessions from 10,335.93 on 6 January 2009 to 9,071.36 on 13 January 2009, hit by accounting scandal at IT major Satyam Computer and on weak global markets. Before the sharp slide, the Sensex had risen 1,007.01 points or 10.79% to 10,335.93 on 6 January 2009 from a recent low of 9,328.92 on 26 December 2008.

The market breadth, indicating the overall health of the market, was strong on BSE with 1402 shares advancing as compared with 992 that declined. 104 shares remained unchanged.

The BSE Mid-Cap index slipped 1.43% at 3,006.41 and the BSE Small-Cap index fell 1.51% at 3,442.35. Both these indices underperformed the Sensex.

But the rally was accompanied by low volumes. The total turnover on BSE amounted to Rs 2,811 crore compared to Rs 3,476.99 crore on Tuesday, 13 January 2009. Turnover in NSE's futures & options (F&O) segment also slipped to Rs 36,766.76 crore from Rs 38,378.33 crore on Tuesday, 13 January 2009.

All BSE sectoral indices logged gains. The BSE Metal index (up 4.18%), the BSE Oil & Gas index (up 5.85%), the BSE Teck index (up 4.57%), BSE IT index (up 5.02%), BSE Realty index (up 4.38%), outperformed the Sensex.

The BSE HealthCare index (up 1.99%), the BSE PSU index (up 1.73%), the BSE Power index (up 2.97%), the BSE Bankex (up 1.74%), BSE Capital Goods index (up 1.78%), BSE Consumer Durables index (up 1.80%), the BSE FMCG index (up 0.54%), the BSE Auto index (up 2.24%), underperformed the Sensex.

Among the 30-member Sensex pack, 25 gained while the rest slipped.

Jaiprakash Associates (up 5.97%), Mahindra & Mahindra (up 4.41%), and Tata Steel (up 5.74%), edged higher from the Sensex pack.

Grasim (down 3.21%), Hindustan Unilever (down 0.37%) and Maruti Suzuki India (down 0.64%), edged lower from the Sensex pack.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) galloped 11.35% to Rs 1203.55 on 24.94 lakh shares. As per reports RIL would re-enter the retail fuel business when government deregulates fuel prices and allows the market-determined prices to prevail, boosted on the counter. RIL had had to close down its 1,433 retail outlets in May 2008 as it was unable to compete with the state-run oil marketing firms that were given subsidies by the government to sell the fuels. The company had captured a market share of 14.3% in diesel and 7.3% in gasoline before it closed down its operations.

As per reports, the government will soon allow state-run oil firms to set prices on retail sales of petrol and diesel. Currently, government announces prices changes on petrol and diesel.

Meanwhile, the memorandum of understanding (MoU) on settlement of dispute between the two Ambani brothers Anil and Mukesh was opened in court for the first time ever today, 14 January 2009, according to media reports. The document was submitted by the ADAG group. RIL maintains that it is not party to it and not bound by it. The MoU was signed by the two Ambani brothers and their mother Kokilaben prior to the split of the Reliance group into two.

Harish Salve, RIL counsel, has asked for the document to be kept in a sealed cover, and that it should not be allowed to be published verbatim by making it available to a third party. He claims it may lead to shareholders claiming that the deal was against the shareholders interest.

The Bombay High Court's interim order in May 2007 had directed RIL not to create third party interest for the disputed volume of 40 million standard cubic metres per day (mscmd) of gas from the K-G basin.

RIL and Anil Dhirubhai Ambani group firm Reliance Natural Resources (RNRL) had agreed on a price of $2.34 per million British thermal units (mBtu) in July 2006, but RIL wanted to charge more after gas prices rose and costs climbed. The government in September 2007 set the price of gas from the K-G field for potential buyers at $4.2 per million mBtu. The price was linked to crude oil equal to or more than $60 a barrel.

Other Mukesh Ambani group stocks, Reliance Petroleum (up 6.69%) and Reliance Industrial Infrastructure (up 4.96%), also surged.

Stocks of ADAG group soared. India's largest cellular services provider by sales Reliance Communcations spurted 14.23% to Rs 191.90 after declining 32.49% in one week to 13 January 2009. It was the top gainer from the Sensex pack.

Other ADAG stocks Reliance Infrastructure (up 12.99%), Reliance Natural Resources (up 14.95%), Reliance Capital (up 7.55%), jumped.

India's largest cellular services provider by sales Bharti Airtel gained 2.62% to Rs 623, after falling 7.57% in one week to 13 January 2009.

India's largest state run oil exploration firm by market capitalisation Oil & Natural Gas Corporation (ONGC) gained 2.16% to Rs 643.90 and India's largest private sector oil exploration firm by market capitalisation Cairn India rose 0.93% to Rs 153.65 on rise in crude oil.

However state run oil marketing firms HPCL (down 1.03%), BPCL (down 0.52%), and IOC (down 1.11%) slipped on recent reports the government will on Thursday, 15 January 2009, reduce petrol, diesel and LPG (cooking gas) prices by Rs 5 a litre, Rs 3 a litre and Rs 25 a cylinder, respectively.

Petronet LNG jumped 9.29% to Rs 37.65 after the world's largest liquefied natural gas exporter Qatar said it will sell additional LNG cargoes to the company

Most Auto shares rose on hopes lower interest rates and fuel prices would spur demand for vehicles which is mainly driven by finance. Tata Motors (up 0.97% to Rs 156.75), Mahindra & Mahindra (up 4.41% to Rs 317), and Hero Honda (up 3.74% to Rs 829.90) rose. However India's top small car maker by sales Maruti Suzuki India slipped 0.65% to Rs 584.50 on profit booking after striking day's high of Rs 607.

US light crude for February 2009 delivery rose $1.21 to $38.99 a barrel today, 14 January 2009 as organisation of petroleum exporting countries (Opec) kept up its talk of production cuts and a cold snap in the United States boosted heating oil demand. The prices have fallen from a record high of $147 a barrel struck in July 2008.

Strong Infosys results helped IT stocks shrug off a firm rupee. India's largest software services exporter by sales TCS advanced 2.33% to Rs 535 on reports it has got a significant portion of World Bank contracts that were previously serviced by Satyam Computer Services. The stock retraced from day's high of Rs 556.90. TCS unveils its Q3 December 2008 results on 15 January 2009.

India's third largest software services exporter in terms of sales, Wipro rose 0.83% to Rs 243.10, off day's high of Rs 253.40. Wipro's American depository receipt jumped 6.67% on Tuesday, 13 January 2009. Wipro unveils its Q3 December 2008 earnings on 21 January 2009.

But Satyam Computer Services fell 4.65% to Rs 29.80, off day's high of Rs 34 on reports the government is finding it difficult to move ahead with Satyam's rescue plan. The government has ascertained that Satyam immediately requires Rs 1,000 crore to pay rents in the US and salaries. However, the government is unlikely to provide any funds because of a report from the Registrar of Companies that the documents accessed from the company are a pack of lies. Satyam's American depository receipt slumped 9.59% on Tuesday, 13 January 2009.

Meanwhile, special economic zones (SEZs) set up by IT majors like Infosys, Wipro and TCS under the parent companies will soon be able to enjoy 100% tax exemption on profits on par with SEZs set up as separate entities as the government has reportedly decided to amend the income tax law relating to tax exemption for units operating out of special economic zones.

Rupee was higher at 48.80/82 per dollar, from its previous close of 49.11/12, on expectations of capital inflows into local shares. A firm rupee negatively impacts operating margins of IT firms as the sector derives a lion's share from exports.

India's largest power generation company in terms of sales NTPC rose 3.45% to Rs 174.55. The company's board of directors at its meet held on 13 January 2009 approved investment of Rs 6,037 crore in super thermal power projects in Madhya Pradesh, Uttar Pradesh and Chattisgarh.

India's largest real estate firm by market capitalisation DLF advanced 3.24% to Rs 211.75 on bargain hunting after sliding 26.70% in one week to 13 January 2009.

India's largest private sector bank by net profit ICICI Bank rose 3.70% to Rs 442 after its ADR gained 1.90% on Tuesday, 13 January 2009.

India's biggest bank in terms of total assets and branch network, State Bank of India rose 1.94% to Rs 1200. The bank has entered into an agreement with the state government of Gujarat to create a Rs 5,000 crore fund for investing in infrastructure projects.

India's second largest private sector bank by net profit, HDFC Bank eased from day's high of Rs 1023.80 and settled 1.61% lower at Rs 973 after the gross net performing assets (NPA) rose 120.47% to Rs 1911.41 crore as at 31 December 2008 from Rs 866.97 crore as on 31 December 2007. The ratio of gross NPA to gross advances rose to 1.9% to 1.2% and the ratio of net NPA to net advances rose to 0.6% from 0.4% as on 31 December 2007, the private sector bank said at the time of announcing Q3 results during trading hours today, 14 January 2009. The bank said the ratio of net NPA to net advances remained unchanged compared to that on 30 September 2008 (at 0.6%).

The bank posted 44.77% rise in net profit to Rs 621.74 crore on 58.78% rise in total income to Rs 5,407.89 crore in Q3 December 2008 over Q3 December 2007.

India's largest pharma company by market capitalisation Sun Pharma lost 0.83% to Rs 1125.35 on profit booking after a 8.96% rise in a week to 13 January 2009.

The stock entered the BSE Sensex from the beginning of this week replacing Satyam Computer. The stock exchanges removed Satyam from the key indices after Satyam's founder and former chairman B Ramalinga Raju on Wednesday, 7 January 2009, admitted of a nearly Rs 7000-crore financial fraud.

Metal shares surged on firm commodity prices on the London Metal Exchange (LME). Tata Steel (up 5.74% to Rs 214.50), Hindalco Indusitries (up 4.84% to Rs 50.95), and Sterlite Industries (up 4.28% to Rs 274), jumped.

Airline stocks Jet Airways (up 8.53%), Kingfisher Airlines (up 5.82%), and SpiceJet (up 6.46%), rose on reports the government may allow foreign airlines to pick up a minority stake in domestic airlines.

At present, foreign airlines are debarred from holding a direct or indirect stake in domestic carriers. The ability for foreign airlines to invest may provide a much-needed lifeline for an airline industry that desperately needs cash reports added. The Indian airline industry is estimated to lose close to Rs 10,000 crore in the year ended 31 March 2009.

Reliance Industries was the turnover topper on the BSE with turnover of Rs 286.35 crore followed by Rolta (Rs 132.57 crore), Reliance Capital (Rs 132.20 crore), Reliance Communications (Rs 125.30 crore) and Infosys (Rs 107.25 crore).

Satyam Computer Services led the volume chart on BSE clocking volume of 2.67 crore shares followed by Reliance Natural Resources (2 crore shares), Rolta (1.53 crore shares), Unitech (1.36 crore shares) and Suzlon Energy (86.50 lakh shares).

Sugar shares surged after Indian sugar futures edged up today, 14 January 2009, on the commodities markets on speculation of a sharp fall in the output in the current sugar season. Shree Rennuka Sugars (up 3.28%), Bajaj Hindusthan (up 8.38%), and Balrampur Chini Mills (up 8.36%), gained.

Siemens India rose 6.58% to Rs 225 after the board approved transfer of its stake in its software unit, Siemens Information Systems, to a unit of its parent Siemens AG.

Mundra Port & Special Economic Zone surged 9.26% to Rs 386.90 on signing a pact with the state government of Gujarat, involving a total investment of Rs 15000 crore, for expansion and development of new facilities in the state. The company made this announcement after trading hours on Tuesday, 13 January 2009.