RIL leads rally

Media reports that the forthcoming interim budget may offer tax sops and sector-specific stimulus package boosted the domestic bourses today, 6 February 2009. Buying was witnessed in metal, banking and IT stocks. Index heavyweight Reliance Industries (RIL) soared. The BSE Sensex provisionally jumped 221.60 points, or 2.44%

The market pared gains for a brief period in mid-afternoon trade as European market which opened after Indian market came off higher level due to caution ahead of the release of what is likely to be a dismal US non-farm payroll data for January 2009. The market bounced back again in late trade. Earlier in the day, the market had pared gains in afternoon trade after a rally in mid-morning trade triggered by firm Asian stocks. A worse-than-expected deterioration in the job market may dampen sentiment. The battered US stocks have found support in the past few days on some positive data, the latest being a solid January sales report from retailer Wal-Mart. The US economy is in recession for more than a year.

Closer home, the government is examining all options including tax cuts aimed at giving a boost to the slowing economy and relief to the industry to prevent job cuts, reports suggest. Given the severity of the current global financial and economic crisis, the government may announce some measures to boost the economy even as the established political practice is not to announce tax changes in interim budget so as to avoid burdening the new government. The Indian industry has sought tax benefits like cut in the corporate tax rate from 30% to 20%, sops for the housing sector and relief from payment of fringe benefit tax for exporters.

The government has already announced two fiscal stimulus packages to boost demand. The government will present an interim budget on 16 February 2009 before the parliament elections which are due by mid-May 2009.

European shares were higher on Friday, tracking overnight gains in the US market that rose on optimism that a Government rescue plan would go ahead and bank lending would increase. The key benchmark indices in France, Germany and UK were up by between 0.08% to 0.33%.

Asia stocks rose for a fourth day on Friday, 6 February 2009, with investors awaiting a vote on a massive US stimulus package. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore, Taiwan and China were up by between 0.63% to 3.97%. The US Senate is debating a $920 billion plan but it could shrink before being passed.

US stocks rallied on Thursday, 5 February 2009, on investor hopes that the government's plan to shore up the financial system will include a change in accounting rules that would stem bank write-downs and spur lending. The Obama administration is due to announce its bank rescue plan next week.

A solid January sales report from Wal-Mart, coupled with better-than-expected reports from a few other retailers added to the positive tone. The Dow Jones industrial average rose 106.41 points, or 1.34%, to 8,063.07. The Standard & Poor's 500 Index gained 13.62 points, or 1.64%, to 845.85. The Nasdaq Composite Index climbed 31.19 points, or 2.06%, to 1,546.24.

US President Barack Obama on Wednesday, 4 February 2009, urged action on a $900 billion stimulus bill before Congress to stave off "catastrophe". The US Senate is due to resume debate on the stimulus plan on Friday. Majority Leader Harry Reid said he was cautiously optimistic of it passing.

As per the provisional figures, the BSE 30-share Sensex was up 221.60 points, or 2.44%, to 9,312.48. The Sensex rose 230.50 points at the day's high of 9,321.38 in mid-afternoon trade. The Sensex rose 67.71 points at the day's low of 9,158.59 in early trade.

The S&P CNX Nifty was up 66.70 points, or 2.4%, to 2,846.75 as per the provisional figures.

The BSE clocked turnover of Rs 2,732 crore higher than Rs 2,589.37 crore on Thursday, 5 February 2009.

The market breadth, indicating the overall health of the market, was strong on BSE with 1,460 shares advancing as compared with 1,038 that declined. A total of 63 shares remained unchanged.

Among the 30-share Sensex pack, 28 rose while the rest fell. Mahindra & Mahindra, Ranbaxy Laboratories, Grasim Industries, Reliance Infrastructure rose by between 3.7% to 8.97%.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 4.84% to Rs 1,349. The stock has been boosted by a recent Bombay High Court's interim order lifting the stay on sale of gas from its KG basin till the final order.

Other oil & gas stocks, Cairn India, GAIL (India), Reliance Petroleum and ONGC rose by between 0.89% to 2.86%.

Metal stocks gained as improved manufacturing data in China on Wednesday 4 February 2009 suggested its downturn may be bottoming out. Tata Steel, Steel Authority of India, Sterlite Industries and Hindalco Industries rose by between 0.61% to 7.36%. China is the world's largest consumer of industrial metals.

Bank stocks rose after the Reserve Bank of India (RBI) on Thursday, 5 February 2009, unveiled steps to ease credit situation. India's largest bank in terms of assets and branch network State Bank of India rose 2.02%. State Bank of India will lower its home loan rates to 8% for new customers over the coming year, the second time it has reduced mortgage rates in as many months as the economy slows. The new rate will be offered between 2 February and 30 April 2009. SBI had previously charged 9.75% on a floating basis for home loans, and 11.25-12.25% on a fixed basis.

India's second largest private sector bank by net profit HDFC Bank rose 1.34% as its American depository receipt (ADR) rose 2.79% on Thursday, 5 February 2009.

India's largest private sector bank by net profit ICICI Bank gained 3.75% as its ADR gained 0.99% overnight.

PSU banks, Punjab National Bank, Union Bank of India, Bank of Baroda, Bank of India rose by between 0.38% to 1.93%.

India's largest dedicated housing finance company by total income HDFC rode 1.97%.

The RBI on Thursday extended forex swap facility for banks until the end of 2009-10 and raised interest rate ceiling on foreign currency export credit. Another trigger for the rally in banking stocks was on buzz that the interim budget will provide Rs 2,000 crore for bank recapitalization and also on hopes the Reserve Bank of India may cut rates after the interim budget.

IT pivotals gained on hopes for US stimulus measures to take shape sooner rather than later. India's third largest software services exporter, Wipro rose 1.93%. India's second largest software services exporter Infosys Technologies rose 2.16% even as its ADR fell 1.03% overnight. India's fifth largest IT exporter by sales HCL Technologies rose 3.37%. TCS, India's largest software services exporter by sales rose 4.04%.

Satyam Computer Services rose 2.49% after the new board of fraud-scarred Satyam Computer Services on Thursday, 5 February 2009, appointed A S Murty as chief executive officer (CEO), and said it had bank approval for funding of Rs 600 to meet capital requirements. Murty, a Satyam executive for 15 years, will be the chief executive with immediate effect, the company said in a statement.

IT firms derive a lion's share of revenue from export to the US. IT stocks rose despite a firm rupee. The Indian rupee edged higher early on Friday, supported by the dollar's weakness against some Asian currencies and hopes for a firm opening in stocks. The partially convertible rupee was at 48.69 per dollar, stronger than Thursday's close of 48.77/78. A stronger rupee affects operating margin of IT firms negatively.

India's largest realty player by market capitalization DLF fell 0.86% on recent report it has cut property prices by 20% to beat slowdown in demand for new homes.

Sunteck Realty soared 9.24% on reports domestic real estate fund Kotak Realty picked up 10% stake in the company through conversion of warrants.

Sundaram Brake Linings rose nearly 5% to Rs 111.30 after the company said its board approved raising upto Rs 15 crore by way of issuing equity shares on rights basis.