IT shares help Sensex hold 9,000 level

Key benchmark indices ended slightly higher in what was a lackluster trading session, in sync with range-bound activity in global markets. Volumes were low. The BSE 30-share Sensex rose 27.45 points, or 0.30%, up 64.83 points from the day's low, but off 68.64 points from the day's high. The BSE Sensex settled above the psychologically important 9,000 mark after alternatively moving above and below that level in intraday trade.

Rate cut hopes and higher US index futures support the domestic bourses. Trading in US index futures should the Dow could rise 73 points at the opening bell on Thursday, 19 February 2009

Inflation rose at the lowest level in 13-months at 3.92% in the year through 7 February 2009, much lower than previous week's annual rise of 4.39%, data released by the government today, 19 February 2009, showed.

Falling inflation has provided room for the Reserve Bank of India (RBI) to cut interest rates further to shield the domestic economy from the global financial sector crisis and recession in key global economies. Just yesterday, 18 February 2009, the Reserve Bank of India Governor D Subbarao said that there is room to cut interest rates further. The statement comes at a time when the market is expecting further action from the central bank.

Market men see a bigger role for RBI to shield the domestic economy from the global financial sector crisis and recession in key global economies in the coming months as election code will be in force by the end of the month which means that there cannon be any policy action from the government.

Meanwhile, Commerce minister Kamal Nath is likely to announce an export booster package later this month which would address some of the crucial concerns of the exporters. The sops under consideration include simplification of rules for service tax refund, extension of time given to exporters to meet export obligation and an increase in rates of input duty reimbursement schemes like drawback and DEPB for some sectors.

European markets rose with food producers adding most points to the index after Nestle posted 2008 results and beat sales forecasts. Key benchmark indices in UK, Germany and France were up by between 0.03% and 0.38%.

Asian shares were mixed today, 19 February 2009. Key benchmark indices in China, Japan, China and Taiwan were up by between 0.06% and 0.78%. However indices in South Korea and Singapore fell 0.55% and 1.31% respectively.

The Bank of Japan said it will buy 1 trillion yen ($10.7 billion) in corporate bonds from financial institutions and extend lending programs to prevent a shortage of credit from deepening the recession. Governor Masaaki Shirakawa and his colleagues said the bank will buy bonds rated A or higher from 4 March to 30 September 2009. The board kept the overnight lending rate at unchanged at 0.1% in a unanimous vote.

US markets ended mixed on Wednesday, 18 February 2009 as gloomy outlook from Fed and dismal housing data overshadowed government's Housing Relief Plan. The Dow Jones industrial average was up 3.03 points, or 0.04%, to 7,555.63 while the Standard & Poor's 500 Index was down 0.75 points, or 0.10%, to 788.42. The Nasdaq Composite Index slipped 2.69 points, or 0.18%, to 1,467.97.

The US Federal Reserve cut its outlook for the performance of the battered US economy on Wednesday, 18 February 2009 saying it now expects a contraction of between 0.5 and 1.3% this year. Back in mid-November 2008, the Fed projected that 2009 could see anything from a contraction of 0.2% up to expansion of 1.1%. The US central bank also offered a bleaker picture for the employment situation. It said the jobless rate in the US is now expected to reach between 8.5 and 8.8% this year. That is up from the previous forecast of between 7.1 and 7.6%. The US unemployment rate currently sits at 7.6%

Housing starts slumped by a worse than expected 16.8% in January 2009 to 4,66,000 units, the lowest since the Commerce Department started keeping records in 1959. Meanwhile, the number of permits issued for new buildings also fell to an all-time low, down 4.8% to 521,000 units.

President Barack Obama unveiled a $75-billion mortgage relief plan on Tuesday, which would provide incentives to mortgage lenders to help borrowers reduce their payments. In a bid to help restore confidence, the US Treasury Department will also double the size of current financial support to Fannie Mae and Freddie Mac.

The BSE 30-share Sensex rose 27.45 points, or 0.30%, to 9,042.63. The Sensex opened 19.72 points higher at 9,034.90. At the day's high of 9,111.27, the Sensex gained 96.09 points in early trade. At the day's low of 8,977.80, the Sensex lost 37.38 points in afternoon trade.

The S&P CNX Nifty rose 13.20 points or 0.48% to 2789.35. Nifty February 2009 futures were at 2785.90, at a discount of 3.45 points as compared to the spot closing.

The barometer index BSE Sensex is down 604.68 points or 6.26% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The Sensex currently trades at a PE multiple of 10.4 based on projected earnings per share (EPS) of about Rs 867 for the 30-Sensex firms in the year ending March 2010.

The market breadth, indicating the overall health of the market, was negative, on BSE with 1290 shares declining as compared with 1091 that advanced. A total of 104 shares remained unchanged. The breadth was strong earlier in the day.

BSE clocked a turnover of Rs 2422 crore, much lower than Rs 2,883.85 crore yesterday, 18 February 2009. Turnover in NSE's futures & options (F&O) segment dropped to Rs 30,637.67 crore from Rs 41,094.83 crore on Wednesday, 18 February 2009.

The BSE Power index (up 0.34%), the BSE Auto index (up 0.96%), the BSE PSU index (up 0.31%), BSE IT index (up 2.45%), BSE Consumer Durables index (up 1.12%), outperfomed the Sensex.

The BSE Bankex (down 0.56%), BSE Healthcare index (down 0.01%), BSE Metal index (down 0.36%), BSE Oil & Gas index (down 0.09%), BSE Realty index (down 0.36%), the BSE Capital Goods index (down 0.93%), and the FMCG index (down 0.19%), underperformed the Sensex.

Among the 30-member Sensex pack, 18 gained while the rest slipped. Grasim (up 2.52%), Reliance Infrastructure (up 2.10%), and HDFC (up 1.96%), edged higher from the Sensex pack.

ACC (down 2.29%), Hindustan Unilever (down 1.20%), and Jaiprakash Associates (down 0.29%), edged lower from the Sensex pack.

IT stocks gained on a sharp fall in rupee this week. India's third largest software services exporter, Wipro jumped 5.24% to Rs 220 despite a 1.11% fall in ADR on Wednesday, 18 February 2009. It was the top gainer from the Sensex pack.

India's second largest software services exporter Infosys Technologies rose 2.40% as its ADR gained 0.24% on Wednesday, 18 February 2009. India's largest software services exporter by sales TCS rose 1.57% and India's fifth largest IT exporter by sales HCL Technologies rose 0.32%.

However Satyam Computer Services slumped 5.25% to Rs 46 on reports the restatement of accounts of the software developer may take more than six months as it includes auditing accounts of the past three-to-four years and involves complicated transactions.

The partially convertible rupee was at 49.66 per dollar, stronger than Wednesday's close of 49.92/93. Today's recovery in rupee followed a sharp fall in the past two days that had pulled it to a two-month low. A weaker rupee boosts operating margins of IT firms which earn a lion's share of revenue from exports.

India's largest private sector power generation firm by sales Reliance Infrastructure rose 2.10% to Rs 511.75. The finance ministry has told Parliament that companies Reliance Infrastructure and Reliance Petroleum were being investigated for alleged violation of norms governing insider trading and overseas borrowings, respectively. Reliance Petroleum fell 1.54% to Rs 79.90

Auto shares rose on hopes lower interest rates will boost sales which are largely driven by finance. Mahindra & Mahindra (up 1.92%), Maruti Suzuki India (up 2.27%), and Tata Motors (up 0.60%), edged higher from the auto pack.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 0.13% to Rs 1293.10. The stock moved in a band of Rs 1281.90-Rs 1309.90 in the day. Reports on Wednesday, 18 February 2009 RIL may restart crude oil production from its predominantly gas-rich KG-D6 fields next month aided early gains which fizzled out later on profit booking. The field in KG-D6 had commenced crude oil production in September 2008 and had produced over 790,000 barrels up to 9 December 2008, when output ceased due to equipment failure.

Banking shares turned mixed after a firm start despite latest data showing fall in inflation which raised hopes of an interest rate cut. India's second largest private sector bank by net profit HDFC Bank was up 0.96% to Rs 885 even as its ADR slipped 2.72% on Wednesday, 18 February 2009. The stock eased from day's high of Rs 892.70.

However India's largest private sector bank by net profit ICICI Bank fell 2.21% to Rs 361.20 on a 2.52% slide in its ADR on Wednesday, 18 February 2009. The stock had hit a day's high of Rs 378.75 in early trade. India's largest bank in terms of assets and branch network State Bank of India lost 1.27% to Rs 1057.15, after striking high of Rs 1093.45 in intra-day trade.

Metal stocks declined on worries a weakening domestic and global economy will hit demand for metals. Sail (down 0.90%), Sesa Goa (down 1.34%), Nalco (down 1.34%), and Jindal Steel & Power (down 0.29%), declined. However India's largest private sector steel maker by sales Tata Steel rose 0.88% to Rs 172.55

India's largest private sector aluminium maker by sales Hindalco Industries fell 2.89% to Rs 40.35. The company reportedly plans to raise Rs 25000 crore pledging assets and future earnings of its units.

However India's largest copper maker by sales Sterlite Industries India rose 1.02% to Rs 257 after copper edged higher in the commodities market today, 19 February 2009.

JSW Steel gained 0.41% to Rs 209.50 after the company said it commissioned the country's largest blast furnace at Vijayanagar in Karnataka. The company made this announcement after trading hours on Wednesday, 18 February 2009.

Realty shares declined as margins of realty firms are under pressure due to falling property prices. India's largest realty developer by market capitalisation DLF fell 1.89% to Rs 155.70, off day's high of Rs 162.95. Foreign brokerage Goldman Sachs in its latest research report lowered DLF's 12-month target price to Rs 124 post weak Q3 December 2008 results.

Unitech (down 1.37%), Omaxe (down 1.81%), HDIL (down 0.19%), and parsvnath Developers (down 0.80%), fell.

Capital goods pivotals fell on worries a slowing economy will crimp orders. India's largest power equipment maker by sales Bhel fell 1.23% to Rs 1378.35. India's largest engineering and construction Larsen & Toubro shed 2.16% to Rs 639.95.

But Suzlon Energy spurted 3.12% to Rs 42.95 after its German unit REpower Systems AG bagged an order worth nearly 2 billion euro from RWE Innogy GmbH for supplying 250 offshore wind turbines.

Gayatri Projects jumped 10% to Rs 74.30 after a consortium of the company bagged two orders aggregating Rs 2131.62 crore. The company made announcement of the order win during trading hours today, 19 February 2009.

Educomp Solutions was the top traded counter on BSE turnover of Rs 235.30 crore followed by Reliance Industries (Rs 148.85 crore), Reliance Infrastructure (Rs 139.60 crore), United Spirits (Rs 124.60 crore) and ICICI Bank (Rs 120 crore).

Wire & Wireless India was the volume topper on BSE clocking volume of 2.20 crore shares followed by Cals Refineries (99.26 lakh), Spice Communications (86.10 lakh), Suzlon Energy (80.90 lakh) and Satyam Computer Services (79.32 lakh).

TRF surged 2.16% to Rs 236.05 on bagging an order worth Rs 99.75 crore. The company announced the new order win before trading hours today, 19 February 2009.

Tulip Telecom surged 2.34% to Rs 328.40 after the company said it has repurchased foreign currency convertible bonds aggregating $30.50 million. The company made this announcement during trading hours today, 19 February 2009.

Foreign funds continue to dump Indian stocks. As per the provisional data released by the stock exchanges after trading hours, foreign funds today, 19 February 2009, sold shares worth a net Rs 363.48 crore. Domestic funds bought shares worth a net Rs 108.44 crore.