Post Session Commentary - Jan 5 2009

The Indian market continued its last week''s rally and surged more than 2% today following deep rate cuts by the central bank and measures by the government to boost growth. RBI cut the cash reserve ratio by 50 basis points to and both the Repo and Reverse Repo rates by 100 basis points respectively. The announcement of the second fiscal stimulus package by the government to revitalize the economy amounting to Rs 20,000 crore also contributed to the positive sentiments. In addition to this, Firm global markets also added gains on the domestic bourses.

The domestic market opened sharply higher on the back of the RBI’s move to cut rates and the government’s second stimulus package. These steps led positive sentiments as inventers believe that it may help to ease the overseas borrowings, which will bring the liquidity into the system. Further, stocks continued to trade in positive territory with a bout of volatility. During the last trading hours, market extended its gains to climb sharply as buying momentum lifted up. BSE Sensex breached the psychological 10,000 mark and ended above 10,200 level along with NSE Nifty above 3,100 level. From the sectoral front, Investors on-loaded positions across the sectors and Metal and Oil & Gas stocks outperformed the benchmark indices as ended with gains of more than 5%. Apart from that, most of the buying was observed in Bank, Capital Goods, IT, PSU and Power stocks. Midcap and Smallcap stocks also joined the rally. However, Reality, and FMCG stocks remained out of favor as witnessed most of the selling from these baskets.

Among the Sensex pack 23 stocks ended in green territory and 7 in red. The market breadth was positive as 1680 stocks closed in green while 859 stocks closed in red and 74 stocks remained unchanged in BSE.

The BSE Sensex closed higher by 317.38 points at 10,275.60 and NSE Nifty ended up by 74.70 points at 3,121.45. The BSE Mid Caps and Small Caps ended with gains of 60.46 points and 46.92 points at 3,451.64 and 3,917.37 respectively. The BSE Sensex touched intraday high of 10,306.17 and intraday low of 10,069.11.

Gainers from the BSE Sensex pack are Sterlite In (9.82%), Tata Power (7.76%), JP Associates (7.49%), Tata Steel (6.73%), ONGC Ltd (6.43%), Reliance (6.38%), ICICI Bank (6.04%), Reliance Infra (5.55%), HDFC (5.40%), RCom (5.35%) and Hindalco (4.11%).

Losers from the BSE Sensex pack are Satyam Computer (6.00%), Bharti Airtel (2.76%), DLF Ltd (1.60%), NTPC Ltd (1.60%), HUL (1.58%), ITC (1.46%) and Ranbaxy Lab (0.18%).

The Reserve Bank of India slashed its key rates after the market hours on Friday. The Central bank cut the Repo rate by 100 basis points to 4% along with reverse Repo rate by 100 basis points to 5.5% and Cash Reserve Ration (CRR) by 50 basis points to 5%. The cut in CRR will infuse Rs 20,000 crore in the system.

The government has drawn Rs 20,000 crore recapitalization plan for the next two years in order to ensure that the banking system will not suffer from capital adequacy constraints. The package also provides for liberalization of norms for External Commercial Borrowing and raising FII investment limit in rupee-denominated instruments from the current $6 bn to $15 bn. In a view to revive the economy, the package will facilitate the funding of pending highways and port projects of about Rs 25,000 crore. However, the India Infrastructure Finance Company Limited (IIFCL) is being enabled to access additional Rs 30,000 crore by tax-free bonds in order to finance additional projects worth Rs 75,000 crore over the next 18 months.

The BSE Metal index advanced by (5.54%) or 307.84 points to close at 5,869.08 as Sterlite In (9.82%), Hindustan Zinc (8.24%), Jindal Saw (7.15%), Steel Authority (6.97%), Tata Steel (6.73%) and Jindal Steel (5.50%) ended in green.

The BSE Oil & Gas index gained (5.10%) or 318.23 points to close at 6,559.66 as ONGC Ltd (6.43%), Reliance (6.38%), Cairn Ind (5.78%), Aban Offshore (3.92%), Gail India (3.03%) and Reliance Pet (2.38%) ended in positive territory.

The BSE Bank index ended higher by (3.53%) or 200.56 points at 5,874.87. Gainers are Indus Ind Bank (9.80%), Yes Bank (8.29%), Canara Bank (6.86%), ICICI Bank (6.04%) and Oriental Bank (5.02%).

The BSE Capital Goods index ended up by (2.83%) or 206.42 points at 7,493.25. Major gainers are Kalpat Power T (13.76%), Lakshmi MA W (9.47%), BEML Ltd (7.25%), Thermax Ltd (7.21%), Havell’s India (5.56%) and Usha Martin (5.30%).

The BSE FMCG index ended down by (0.53%) or 10.58 points at 1,996.03. Major losers are Marico Ltd (2.33%), HUL (1.58%), Tata Tea Ltd (0.89%), Godraj Cons (0.74%) and Colgate Palm (0.43%).

The BSE Reality index ended lower by (0.33%) or 8.23 points at 2,464.28. Main losers are Penland Ltd (3.44%), Mahindra Life (1.83%), DLF Ltd (1.60%), Omaxe Ltd (1.19%), Parsvnath (0.47%) and Sobha Dev (0.39%).