Sensex up 5.42% in two trading sessions on hopes for more measures in interim budget

Bulls were in command on expectations the forthcoming interim budget will contain fiscal incentives to revive sagging growth after official estimates showed the economy expanding at its slowest pace in six years. Buying by foreign funds and gains in some other emerging markets such as China and Taiwan, reflecting a gradual return of investor risk appetite also helped gains on the domestic bourses. News during trading hours of the global rating agency Fitch keeping India's rating unchanged also bolstered stocks at a time when there have been fears of a rating downgrade of India due to surging fiscal deficit.

The BSE 30-share Sensex jumped 283.03 points, or 3.04%. The barometer index moved past the 9,500 mark. The Sensex had last hit 9,500 in intraday trade on 9 January 2009. The last time it had settled above that mark was on 7 January 2009. Buying was witnessed in metal, banking, capital goods and IT stocks. Index heavyweight Reliance Industries (RIL) spurted.

The market had opened firm tracking firm Asia but it had pared gains later as key Asian stocks reversed gains on growing worries about a US rescue bank plan after its announcement was postponed. After a bout of profit taking, the market surged later after Fitch affirmed India's ratings.

The Congress party-led coalition government will unveil an interim railway budget on Friday, 13 February 2009 followed by a mini general budget on 16 February 2009, ahead of national elections due by May 2009. A full budget for 2009-2010 will come only after a new government takes over. Foreign Minister Pranab Mukherjee, who is also responsible for finance and will present the mini budget, said on Friday, the government would take measures to boost growth, especially in sectors where jobs are at stake.

The government has so far announced two stimulus packages including tax cuts and the capital injections for banks. However, there is uncertainty on the earnings outlook for Indian companies for the year ending March 2010 amid the global financial sector crisis, recession in global economies and slowdown in the Indian economy.

The Central Statistical Organisation (CSO) today, 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 1 4.9% growth in last year.

Stocks in some emerging markets rose today after data from EPFR Global showed long-only dedicated emerging market equity funds had net inflows of $432.97 million in the week ended 4 February 2009, breaking a two-week losing streak.

Closer home foreign funds bought shares worth a net Rs 60.30 crore on Friday, 6 February 2009, data released by the stock market regulator Securities & Exchange Board of India after trading hours showed. Foreign funds had bought stocks worth a net Rs 51.20 crore on Thursday, 5 February 2009. There has been substantial selling by foreign funds from the beginning of the calendar year 2009, with net outflow totaling Rs 4,336.40 crore, till 6 February 2009.

Fitch Ratings affirmed India's ratings on Monday but kept its negative outlook on the local currency rating, saying public finances will deteriorate due to a weakening economy and government stimulus measures. Fitch also affirmed India's foreign currency issuer default ratings at BBB-minus, or the lowest investment-grade level, with a stable outlook.

European markets which opened after the Indian market, dropped as investors awaited the approval of Washington's massive stimulus plan and bank rescue package. The key benchmark indices in France and Germany fell by between 0.13% to 0.17%. But UK's FTSE 100 rose 1.17%.

Japan's Nikkei 225 Average lost 1.33% reversing earlier gains after the postponement of a US bank rescue plan offset optimism spurred by a massive US stimulus package to bolster the economy. Key benchmark indices in Singapore and South Korea were down by between 0.63% to 1.33%. Stocks moved between green and red in Hong Kong. Key benchmark indices in Hong Kong, China and Taiwan were up by between 0.52% to 1.99%.

Hopes of a recovery in Chinese economy had supported Asian stocks in the last few days. Data during trading hours in Asia on 4 February 2009, showed China's official purchasing managers' index rose, even though it remained below a reading of 50 that divides expansion from contraction. The index rose to 45.3 for January 2009, up from 41.2 in December 2008 and a record low of 38.8 plumbed in November 2008. China unveiled an eye-popping $585 billion spending plan in November 2008, and central bank governor Zhou Xiaochuan said that the pump-priming had a positive impact.

Wall Street rallied broadly on Friday after figures showing US job losses in January 2009 were the worst in 34 years, sparking hopes that Congress will act quickly to pass a stimulus package to help the economy. But the US administration pushed back the announcement of a keenly awaited bank rescue plan until Tuesday, 10 February 2009 from Monday as it pressed lawmakers to settle their differences over the huge stimulus plan.

Squabbling over the US rescue plan is set to continue on Monday, when the Democratic-led Senate votes to end debate on an $827 billion rescue package so it can be passed on Tuesday. US President Barack Omaba has demanded that the bill be on his desk for signing into law by next Monday.

US Treasury Secretary Timothy Geithner will outline the Obama administration's financial stability plan in speech on Tuesday, the Treasury Department said. The keenly awaited bank rescue plan and economic stimulus package are key parts of Obama's strategy for tackling the country's deepest financial crisis since the Great Depression.

The BSE 30-share Sensex jumped 283.03 points, or 3.04%, to 9,583.89. The Sensex rose 300.70 points at the day's high of 9,601.56 in late trade. The Sensex rose 28.37 points at the day's low of 9,329.23 in early trade.

The S&P CNX Nifty was up 76.80 points, or 2.7%, to 2,919.90.

The BSE clocked a turnover of Rs 2,824 crore, higher than Rs 2,742.59 crore on Friday, 6 February 2009.

Nifty February 2009 futures were at 2905, at a discount of 14.90 points as compared to the spot closing of 2919.90. Turnover in NSE's futures & options (F&O) segment increased to Rs 36,041.93 crore from Rs 30,053.25 crore on Friday, 6 February 2009.

The market breadth, indicating the overall health of the market, was strong on BSE with 1,578 shares advancing as compared with 935 that declined. A total of 61 shares remained unchanged.

The BSE Metal index (up 4.41%), the BSE Consumer Durables index (up 3.69%), the BSE Capital Goods index (up 3.59%), The BSE Oil & Gas index (up 3.37%), the BSE Bankex (up 3.19%), outperformed the Sensex.

The BSE FMCG index (up 0.57%), the BSE Auto index (up 1.57%), the BSE IT index (up 1.62%), the BSE Healthcare index (up 1.67%), the BSE Realty index (up 1.67%), the BSE Teck index (up 2.06%), the BSE PSU index (up 2.77%), the BSE Power index (up 2.85%), underperformed the Sensex.

The barometer index BSE Sensex has risen 493.01 points or 5.42% in last two trading sessions. The Sensex is down 63.42 points or 0.65% so far in 2009 from its close of 9647.31 on 31 December 2008. The barometer index had lost 10,639.68 points or 52.44% in the calendar year 2008

Among the 30-share Sensex pack, 29 rose while the rest fell. Jaiprakash Associates, ONGC, Reliance Infrastructure, Tata Power Company rose by between 3.43% to 8.48%.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 3.39% to Rs 1,389.05 on reports the petroleum ministry is seeking re-introduction of the seven-year income-tax holiday for natural gas producers in an attempt to make the next round of Nelp (New Exploration and Licensing Policy) bidding attractive. The finance ministry had withdrawn the tax holiday last year.

Meanwhile, RIL will soon initiate discussions with buyers for its Krishna Godavari Basin field (D6 block) gas, reports suggest. Subsequent to the interim order of the Mumbai High Court that allowed RIL to sell gas at $4.20/million British thermal units, the company plans to start signing term sheets with the customers in the next few weeks. RIL is looking at starting trial gas production by the end of this month.

Metal stocks rose as copper surged more than 8% on the London Metal Exchange on Friday 6 January 2009 on hopes for an economic recovery in China. Steel Authority of India, Hindustan Zinc, Sterlite Industries National Aluminum Company and Hindalco Industries rose by between 2.2% to 6.21%. China is the world's largest consumer of industrial metals.

India's largest steel maker by sales Tata Steel rose 7.2% as domestic sales rose 26% to 5,11,000 tonnes in January 2009 over January 2008, boosted by hot metal and crude steel.

Bank stocks rose on buzz that the interim budget will provide Rs 2,000 crore for bank recapitalization and also on firm bond prices. India's largest bank in terms of assets and branch network State Bank of India rose 2.61%. 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 2.29% as its American depository receipt (ADR) rose 5.2% on Friday, 6 February 2009. India's largest private sector bank by net profit ICICI Bank jumped 5.17% as its ADR gained 8.07% on Friday.

India's largest dedicated housing finance company by total income HDFC rose 5.55%.

Indian bond prices held near one week high on Monday, 9 February 2009, as the lower official GDP growth projection for 2008-09 reinforced expectations the Reserve Bank of India (RBI) would cut rates. Higher bond price could boost treasury income for banks.

IT pivotals spurted on hopes for US stimulus measures to take shape sooner rather than later. TCS, India's largest software services exporter by sales rose 2.66%. India's third largest software services exporter, Wipro rose 1% as its ADR gained 6.9% on Friday. India's second largest software services exporter Infosys Technologies rose 1.76% as its ADR rose 8.17% on Friday. But, India's fifth largest IT exporter by sales HCL Technologies fell 4.33%.

Satyam Computer Services fell 2.74% on reports insurance major Assurant and the world's largest credit card network Visa Inc had ended contracts with the firm. Satyam has been battling for its survival after founder and former chairman Ramalinga Raju disclosed last month that profits had been overstated for years.

IT firms derive a lion's share of revenue from export to the US. IT stocks rose despite a firm rupee. The Indian rupee rose to three week high as stocks surged and prompted some banks to sell their dollar holdings, while a marginally weaker dollar overseas also helped. The partially convertible rupee closed at 48.57/58 per dollar, 0.2% stronger than its previous close of 48.67/68. It touched 48.56 during the session, the rupee's strongest since 19 January 2009. A stronger rupee affects operating margin of IT firms negatively.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. DLF, Indiabulls Real Estate and Unitech rose by between 1.23% to 3.19%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Some healthcare stocks rose on defensive buying. Biocon, Ranbaxy Laboratories, Sun Pharmaceutical Industries, Cipla, Dr. Reddy's Laboratories, Cadila HealthCare rose by between 0.21% to 4.2%.

India's largest electric equipment maker by sales Bharat Heavy Electricals rose 2% after it won four contracts worth Rs 7,000 crore ($1.4 billion) to supply and set up electrical equipment for thermal power projects. Other capital goods stocks Larsen & Toubro, Praj Industries, ABB, Crompton Greaves rose by between 1.68% to 5.59%.

BEML galloped 7.82% on bagging an order worth to Rs 1672.50 crore for supply of metro rail coaches.

Some of the FMCG stocks rose on defensive buying. ITC, Marico, Nestle India, United Spirits rose by between 0.22% to 13.92%.

India's largest cement maker by sales ACC rose 0.33% on reports cement makers across the country are expected to hike prices by Rs 5 per 50 kg bag in a couple of weeks. The price rise will help cement makers improve margins.

Cals Refineries clocked the highest volume of 2.53 crore shares on BSE. Wire & Wireless (1.44 crore shares), GVK Power & Infrastructure (1.27 crore shares), Satyam Computer Services (1.08 crore shares) and Unitech (87.25 lakh shares) were the other volume toppers in that order.

United Spirits clocked the highest turnover of Rs 235.18 crore on BSE. Reliance Industries (Rs 233.78 crore), Educomp Solutions (Rs 135.95 crore), Reliance Infrastructure (Rs 120.68 crore) and Reliance Capital (Rs 88.74 crore) were the other turnover toppers in that order.