Short covering, strong global cues trigger an over 250-point Sensex rally

Buying frenzy in late trade coupled with short covering of open positions ahead of January 2009 derivative contracts expiry tomorrow, 29 January 2009 triggered a solid rally in key benchmark indices, for the second straight day. Strong global cues also cheered the sentiment. Index heavyweights Reliance Industries, ONGC and ICICI Bank were in forefront of the rally. The BSE 30-share Sensex jumped 253.39 points, or 2.81%.

As per reports, Lok Sabha elections will be held between 8 April and 15 May 2009, the Election Commissioner S Y Quraishi informed today, 28 January 2009. General election in India is the largest electoral exercise in the world involving 671 million voters.

The market had opened on a firm note, extending yesterday's surge, on positive global cues and short covering ahead of futures & options (F&O) contracts expiry tomorrow, 29 January 2009. The market however retraced from the day's high in midmorning trade. Volatility rose as market oscillated in a narrow band in first half of the day. However strong buying demand in index pivotals propelled bourses to day's high in late trade.

Volatility was high ahead of the outcome of the two-day Federal Reserve meeting, which concludes today. The US central bank has already cut interest rates to nearly zero and is searching for other tools to pull the world's largest economy out of a deepening year long recession.

Expiry of futures & options contracts for January 2009 series on Thursday, 29 January 2009, also triggered volatility. As per reports, rollover of Nifty positions from January 2009 series to February 2009 series was 47% while marketwide rollover of positions stood at 44%, as on Tuesday, 27 January 2009.

Strong global cues lifted sentiment today. Trading in US index futures showing the Dow could rally 144 points at the opening bell. European shares gained in early trade on Wednesday led by banks and energy stocks. The key benchmark indices in France, Germany and UK were up by between 1.76% to 2.68%.

Asian stocks advanced today, 28 January 2009 helped by gains on Wall Street, but Japan lagged as exporters such as Honda Motor Co lost ground on news that US consumer confidence has slumped to record lows. The key benchmark indices in Japan, South Korea and Singapore rose by between 0.56% to 5.91%.

Hong Kong, China and Taiwan`s stocks are not trading today. The markets will remain closed from Monday to Wednesday for the Lunar New Year holidays and will reopen on Thursday, 29 January 2009.

The BSE 30-share Sensex was up 253.39 points, or 2.81%, to 9,257.47. The Sensex rose 266.67 points at the day's high of 9,270.75 in late trade. The Sensex rose 49.72 points at the day's low of 9,053.80 in mid-morning trade.

From the recent low of 8,674.35 on 23 January 2009 the Sensex rose 583.12 points or 6.72%.

The S&P CNX Nifty rose 78.15 points, or 2.82%, to 2,849.50.

BSE clocked a turnover of Rs 3,593 crore today higher compared to a turnover of Rs 3,083.50 crore on Tuesday, 27 January 2009.

Nifty January 2009 futures were at 2846.50, at a discount of 3 points as compared to the spot closing of 2849.50. Turnover in NSE's futures & options (F&O) segment was Rs 40,894.23 crore lower than Rs 42,867.49 crore on Tuesday, 27 January 2009. The near month January 2009 derivatives contract will expire tomorrow, 29 January 2009.

The BSE Sensex has lost 389.84 points or 4.04% so far in 2009 from its close of 9,647.31 on 31 December 2008. The barometer index had lost 10,639.68 points or 52.44% in the calendar year 2008.

Sectoral indices on BSE displayed mixed trend. the BSE Realty index (up 6.32%), the BSE Metal index (up 4.44%), the BSE Bankex (up 3.79%), the BSE Oil & Gas index (up 3.76%), the BSE PSU index (up 3.12%), the BSE Capital Goods index (up 3.04%) outperformed the Sensex.

The BSE HealthCare index (up 0.09%), the BSE Auto index (up 1.21%), the BSE Power index (up 1.48%), the BSE Teck index (up 1.8%), the BSE FMCG index (up 2.36%), the BSE IT index (up 4.05%), the BSE Consumer Durables index (up 2.74%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive on BSE with 1,412 shares advancing as compared with 1,048 that declined. 64 shares remained unchanged. The breadth was positive in early trade.

Among the 30-share Sensex pack, 27 advanced while the rest slipped.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) gained 3.76% to Rs 1,273.15.

Meanwhile, oil rebounded above $42 a barrel today, 28 January 2009 from a 9% fall a day ago, as worries over demand due to the faltering global economy eased. U.S. crude rose 67 cents a barrel to $42.25.

India's largest oil exploration firm by revenue Oil and Natural Gas Corporation rose 3.42% ahead of its Q3 December 2008 result today.

FMCG stocks rose on defensive buying. United Spirtis, Hindustan Unilever, ITC, rose by between 2.33% to 15.17%.

Shares from Auto pack, too, rose on hopes lower interest rates and fall in fuel prices would spur demand for vehicles which is mainly driven by finance. Hero Honda Motors and M& M rose by between 1.63% to 4.28%.

India's largest car maker by sales Maruti Suzuki India fell 3.15% after it raised prices by Rs 5000-10000 across models.

India's largest commercial vehicle maker by sales Tata Motors rose 4.6% after the British government guaranteed up to 2.3 billion pounds of loans to help the ailing auto firms in the UK, which includes Jaguar Land Rover.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. Indiabulls Real Estate, DLF, Unitech, Omaxe rose by between 1.86% to 13.21%.

Metal stocks spurted. World's sixth largest steel maker by sales Tata Steel rose 2.64%.The company during market hours today announced 56.36% fall I net profit to Rs 466.24 crore on 4.18% fall in total income to Rs 4,810.63 crore in Q3 December 2008 over Q3 December 2007.

Hindalco Industries, Steel Authority of India, Jindal Steel, Bhushan Steel rose by between 0.68% to 9.69%.

Banking stocks rose after the Reserve Bank of India kept its key rates unchanged in its credit policy on Tuesday, 27 January 2009. India's second largest private sector bank by net profit HDFC Bank gained 2.63% as its American depository receipt (ADR) rose 1.48% on Tuesday, 27 January 2009.

India's largest bank in terms of assets and branch network State Bank of India rose 2.01% after its net profit rose 37.03% to Rs 2478.42 crore on 38.3% rise in total operating income to Rs 21,255.90 crore in Q3 December 2008 over Q3 December 2007. The bank announced the result on 24 January 2008.

India's largest private sector bank by net profit ICICI Bank rose 7.08% as its ADR rose 3.62% overnight. Net profit of ICICI Bank rose 3.41% to Rs 1272.15 crore on 0.1% rise in total operating income to Rs 10,350.62 crore in Q3 December 2008 over Q3 December 2007. The unexpected rise in net profit was because earnings from fees and bond trading offset slowing credit growth and rise in bad loans. The bank announced the result on Saturday, 24 January 2008.

India's largest dedicated housing finance company by total income HDFC rose 4.02%.

IT firms rose on firm ADRs overnight. India's third largest software services exporter, Wipro rose 3.63% as its American depository receipt (ADR) rose 3.26% on Tuesday, 27 January 2009. The company forecasted a 7% fall in revenue for Q4 March 2009 on global economic downturn and pricing pressure from western clients, at the time of declaring results before market hours on 21 January 2009.

India's second largest software services exporter Infosys Technologies gained 2.67% as its ADR rose 1.54% overnight. While, India's fifth largest IT exporter by sales HCL Technologies rose 1.2% after its net profit rose 56.82% to Rs 398.01 crore on 10.97% rise in sales to Rs 1,304.85 crore in Q2 December 2008 over Q1 September 2008.

TCS, India's largest software services exporter by sales rose 1.38%. Satyam Computer Services rose 16.01% on reports the firm appointed Boston Consulting Group as Management Advisors and that the firm will take measures to invite open bids.

Satyam Computer Services clocked the highest volume of 8.19 crore shares on BSE. Unitech (2.54 crore shares), Suzlon Energy (1.16 crore shares), HDIL (92.49 lakh shares) and Reliance Natural Resources (81 lakh shares) were the other volume toppers in that order.

Satyam Computer Services clocked the highest turnover of Rs 434.85 crore on BSE. United Spirits (Rs 284.46 crore), Reliance Industries (Rs 187.52 crore), State Bank of India (Rs 146.91 crore) and ICICI Bank (Rs 137.65 crore) were the other turnover toppers in that order.

Hanung Toys & Textiles soared 19.34%, extending gains for the second session in a row after the government banned import of cheap toys from China.

Jagran Prakashan fell 1.9% after its net profit declined 40% in Q3 December 2008 over Q3 December 2007.

United Phosphorous rose 3.5% after its consolidated net profit rose 33% in Q3 December 2008 over Q3 December 2007.

Foreign institutional investors (FIIs) are in selling mode after an inflow of Rs 1319.10 crore in December 2008. Their outflow in January 2009 totaled Rs 4,294.30 crore (till 23 January 2009).

The Fed in its two-day meet concluding today, 28 January 2009, could unveil fresh steps to ease the global credit crunch when it concludes a two-day policy meeting later in the day, and traders will be scouring its statement for any clues on whether it will buy US government bonds, which could help check longer term borrowing rates.

On Tuesday, 27 January 2009, the Fed took a step toward easing mortgage foreclosures threatening millions of Americans, announcing that it would write down troubled mortgages to keep people in their homes.