Realty, banking stocks lead 3.6% Sensex surge

Stocks
rose on expectations the forthcoming interim budget will contain fiscal incentives to revive sagging growth after official estimates showed the economy expanded at its slowest pace in six years.

The Congress party-led coalition government will unveil a mini general budget on 16 February 2009. Because of general elections due by May this year, a full budget for the 2009/10 financial year that begins in April is expected only later.

Stocks also got a boost after the central bank suggested interest rates may drop. Central bank Governor Duvvuri Subbarao said on Sunday, 8 February 2009, there is room to adjust interest rates further to spur the economy. Interest rates were left unchanged at the Reserve Bank of India's review meet on 27 January 2009, after they were lowered to a record in early January this year to shield India from the global slump.

Inflation based on the wholesale price index (WPI) rose 4.39% in the year through 31 January 2009, much lower than previous week's annual rise of 5.07%, data released by the government on 12 February 2009, showed.

The Central Statistical Organisation (CSO) on 9 February 2009, pegged India's projected GDP growth for the year ending March 2009 at 7.1%, the slowest in six years and below the previous year's 9%. The CSO said manufacturing output growth was estimated at an annual 4.1%, half of the expansion in 2007/08 while farm output is seen at annual 2.6%, much lower than 4.9% growth in last year.

FII outflow in 2009 totaled Rs 3922.40 crore (till 12 February 2009). FIIs had pulled out a massive Rs 52,998.70 crore in calendar year 2008, as against an inflow of a huge Rs 71,486.50 crore in calendar year 2007.

The BSE 30-share Sensex rose 333.88 points or 3.59% to 9,634.74 in the week ended 13 February 2009. The S&P CNX Nifty rose 105.25 points or 3.70% at 2948.35 in the week.

The BSE Mid-Cap index rose 130.15 points or 4.51% to 3,012.95 and the BSE Small-Cap index rose 116.34 points or 3.55% to 3,395.58 in the week.

The barometer index BSE Sensex is 11572.03 points or 54.56% below its all-time high of 21,206.77 struck on 10 January 2008.

Stocks rose on 9 February 2009, on buying by foreign funds and on gains in some other emerging markets such as China and Taiwan. The BSE 30-share Sensex jumped 283.03 points, or 3.04%, to 9,583.89. The S&P CNX Nifty was up 76.80 points, or 2.7%, to 2,919.90.

Key benchmark indices extended gains on 10 February 2009 on hopes an interim budget will contain fiscal incentives to revive sagging growth. The BSE 30-share Sensex rose 63.58 points or 0.66% to 9,647.47. The S&P CNX Nifty gained up 14.60 points or 0.5% to 2934.50.

Media reports of the finance ministry is drafting a proposal to remove the securities transaction tax (STT) and news that the Centre has eased some foreign direct investment (FDI) norms triggered a solid intrday rebound on bourses on 11 February 2009. The market, however, ended in the red. The BSE 30-share Sensex fell 28.93 points or 0.3%, to 9,618.54. The S&P CNX Nifty ended down 8.8 points, or 0.3%, to 2,925.70.

Sustained selling in index pivotals kept the market depressed, with key benchmark indices trading in the negative zone throughout the day on 12 February 2009. The BSE 30-share Sensex lost 152.71 points or 1.59%, to 9,465.83. The S&P CNX Nifty shed 32.65 points or 1.12% to 2,893.05.

Expectations of further rate cuts by the central bank and hopes of stimulus package for the economy in the interim general budget on Monday, 16 February 2009, lifted the bourses on 13 February 2009.. The BSE 30-share Sensex rose 168.91 points or 1.78%, to 9,634.74. The S&P CNX Nifty shed 55.30 points or 1.91% to 2,948.35.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries rose 3.53% in the week. The company is set to begin gas sales from its fields off India's east coast this quarter.

Real estate companies rose on expectations for a government stimulus to lift sagging home demand. Unitech (up 11.56%), Housing Development & Infrastructure (up 12.2%), and DLF (up 16.25%), soared. The BSE Realty index rose 12.55% in the week.

Investors were bullish on bank stocks, betting on a rate cut next week that would boost treasury income and boost demand. ICICI Bank (up 6.7%), State Bank of India (up 6.8%), HDFC Bank (up 5.2%), and Axis Bank (up 9.1%), galloped. The BSE Bankex rose 5.48% in the week.

The RBI, on 5 February 2009, eased credit availability, extending forex swap facility for banks until the end of 2009/10 and raised interest rate ceiling on foreign currency export credit.

Auto stocks rose on hopes the government may announce some tax sops to the automobile sector in the forthcoming interim general budget. Tata Motors was unchanged at Rs 137.85, while Ashok Leyland (up 1.5%), TVS Motor Company (up 4.9%), Hero Honda Motor (up 6%), and Maruti Suzuki (up 8.7%), flared up. The BSE Auto index rose 6.72% in the week.

India's largest tractor maker Mahindra & Mahindra soared 17.1% in the week. The company said on Friday, 13 February 2009, its board had approved transfer of land systems business and naval systems business of its Mahindra Defence Systems division into separate companies.

Shares of companies associated with Indian Railways rose soared on hopes of favourable announcements in the interim rail budget on Friday, 13 February 2009. Titagarh Wagons (up 29.8%), Kalindee Rail Nirman Engineers (up 11.6%), Texmaco (up 26.8%), and Kernex Microsystems (up 36.2%), soared.

Indian Railways will invest Rs 2.3 lakh crore during the financial year to March 2010, the union railway minister Lalu Prasad Yadav said in his speech while presenting the railway budget for 2009/10 on Friday, 13 February 2009. He also added that railways will introduce new wagons of higher capacity.

Tata Steel, the world's sixth-largest steelmaker, rose 4.30%. The company reportedly expects February sales from Indian operations to rise by 10%-15% over January 2009 on continuing demand from the construction sector.