Realty, metal shares lead 1.2% Sensex surge

Key benchmark indices came sharply off the day's high in late trade as IT and banking stocks pared gains amid caution ahead of the outcome of the two-day meeting of the US Federal Reserve. Index heavyweights Reliance Industries (RIL) and Larsen & Toubro came off the day's high even as realty stocks held firm. The barometer index BSE Sensex fell below the psychological 9,000 level. Fall in shares in London after weak economic data also triggered profit taking after a sharp surge in prices in the past few days.

The BSE 30-share Sensex was up 112.86 points, or 1.27% off close to 140 points from the day's high. The steep slide in the second half of the trade came after the market surged to its hit highest level in more than a month in afternoon trade.

The market extended gains during the course of the trading session after a firm opening triggered by data showing substantial buying by foreign funds on Tuesday and on overnight rally in US stocks. Share prices, however, witnessed intermittant decline as investors cashed on gains after a recent solid rally. The market came sharply off the higher level after 14:00 IST. Just before the sharp slide, the Sensex was hovering comfortably above the psychological 9,000 level.

Expectations of further cut in policy rates by the Reserve Bank of India remain with sharply falling headline inflation.

Trading in US index futures indicated the Dow could fall 36 points at the opening bell on Wednesday, 18 March 2009. The Federal Reserve will conclude its two-day meeting Wednesday amid signs the economy is still continuing to contract sharply. Over the past year, the Fed has slashed rates to zero and thrown $1 trillion at selected credit markets to try to break the economy's vicious downward cycle.

Foreign institutional investors (FIIs) bought shares worth a net Rs 415.12 crore on Tuesday, as per the provisional data released by the stock exchanges. The substantial buying follows easing of FII selling vigour in the past few days.

But the upside on the domestic bourses will be capped in the next two months due to political uncertainty ahead of parliamentary election to be held between mid-April 2009 to mid-May 2009.

Meanwhile, FIIs have responded enthusiastically to the government's decision to increase the cumulative investment limit in corporate debt from $ 6 billion to $ 15 billion. In an open bidding held at the National Stock Exchange (NSE) recently, a total of 24 bidders were allocated investments of Rs 29350 crore, the highest ever investment allocation by FIIs in India. In comparison, the net investment of FIIs in 2008 was only Rs 12069 crore. Since January 2009, FII's net investment in debt instrument has fallen by Rs 634 crore.

As per the Securities and Exchange Board of India (Sebi) data, $8 billion (Rs 41,000 crore) was available for allocation to FIIs and their sub-accounts in an open bidding platform.

Attractive interest rates have lured foreign funds to Indian debt market. For instance, corporate debt returns in the US are 1-1.5%, whereas in India, the rates are as high as 8-9%. Bonds floated by state-run firms fetch yields in the range of 9.30%, which are about 300 basis points higher than 10-year G-Sec yields. As per reports, FIIs are likely to invest in attractive PSU bonds floated by quasi-government entities like Power Finance Corporation and Rural Electrification Corporation.

Meanwhile, foreign direct investment (FDI) in India in January 2009 was up 55% at $2.73 billion from $1.76 billion for the same month in the preceding year. Up to September this fiscal year, the monthly inflows were in excess of $2 billion. However, the following three months witnessed a sharp dip in the overseas investment, due to the backdrop of the global financial crisis. The January figures bring a renewed hope that India is back on the radar of global investors.

A sharp fall in inflation in the past few months has provided room for the Reserve Bank of India (RBI) to cut policy rates. Japanese financial services firm Nomura expects a 100 basis points reduction in key short-term interest rates by RBI in April-June 2009 quarter.

While gains in the wholesale-price index (WPI) have slowed, other gauges of inflation that the central bank takes into account when deciding policy are at a decade high. The inflation rate as measured by consumer price index for industrial workers, which seeks to represent the impact of retail prices on the country's workforce, had risen to 10.45% in January 2009, compared to 9.7% in the previous month.

Similarly, consumer price index for urban non-manual employees suggests that the annual rate of inflation in 59 Indian cities had been 9.8% in December 2008, the latest month for which data is available.

London's FTSE 100 stock index turned lower as the latest data showed the tally of unemployed British workers rose to 2.03 million in the November-to-January period for an unemployment rate of 6.5% when measured by International Labor Organization standards. The FTSE was down 0.01% at 3,856.74. The number of unemployed rose by 1,65,000 from the previous three months and the unemployment rate jumped from 6%. The number of people claiming jobless benefits in February 2009 rose by a record 138,400 from January to 1.39 million. Economists had expected a rise in claimants of 87,500.

Key benchmark indices in France and Germany and UK pared gains and were up by between 0.38% to 0.68%.

Asian shares rose on Wednesday, 18 March 2009, following an upbeat session in the US overnight. Key benchmark indices in Hong Kong, China, Singapore, Japan, South Korea and Taiwan were up by between 0.12% to 1.86%.

At a policy meeting, the Bank of Japan today kept interest rates unchanged at 0.1% but said it would broaden its purchases of government bond to bolster liquidity and ensure market stability. The Bank of Japan also forecast that the economy would remain under stress in the new fiscal year and said that substantial liquidity is required to ensure stability in financial markets.

The Bank of Japan had announced late Tuesday that it would provide up to one trillion yen ($10.2 billion) in subordinated loans to financial institutions in an effort to bolster banks' capital ratios and ease strains in Japan's financial system.

US stocks surged on Tuesday, 17 March 2009, helped by news February 2009 housing starts increased 22.2% to a seasonally adjusted 5,83,000 annual rate compared to the prior month, after plunging 14.5% in January 2009. The Dow Jones Industrial Average rose 2.5%, its fifth gain in six sessions and its highest close since 19 February 2009.

The BSE 30-share Sensex was up 112.86 points, or 1.27%, to 8,976.68, its highest closing since 19 February 2009. At the day's high of 9,120.46, the Sensex gained 256.64 points in afternoon trade, its highest level since 17 February 2009. At the day's low of 8.951.32, the Sensex rose 87.50 points in late trade.

The S&P CNX Nifty was up 37.25 points or 1.35% to 2,792.90.

The Sensex is down 670.63 points or 6.95% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 166.25 points or 5.61% in calendar 2009 from its close of 2,959.15 on 31 December 2008.

The BSE clocked a turnover of Rs 4.134 crore, higher than Rs 3,974.95 crore on Tuesday, 17 March 2009.

Nifty March 2009 futures were at 2786.75, at a discount of 7.95 points as compared to the spot closing of 2794.70. Turnover in NSE's futures & options (F&O) segment increased to Rs 54,871.64 crore from Rs 53,883.76 crore on Tuesday, 17 March 2009.

The BSE Mid-Cap index was up 2.36% and BSE Small-Cap index rose 1.8%. Both the indices outperformed the Sensex.

The BSE Realty index (up 7.65%), the BSE Metal index (up 3.47%), the BSE Capital Goods index (up 3.18%), the BSE Bankex (up 2.63%), the BSE Consumer Durables index (up 1.73%), the BSE Oil & Gas index (up 1.64%), the BSE Power index (up 1.44%) outperformed the Sensex.

The BSE FMCG index (down 1.14%), the BSE TECk index (up 0.75%), the BSE PSU index (up 0.81%), the BSE Healthcare index (up 0.82%), the BSE IT index (up 1.09%), the BSE Auto index (up 1.25%) underperfomed the Sensex.

The market breadth, indicating the overall health of the market, was strong on BSE with 1,570 shares advancing as compared with 949 that declined. A total of 60 shares remained unchanged.

From the 30 share Sensex pack, 23 stocks rose while rest fell.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 2.38% to Rs 1,333.60 ahead of production of gas from KG basin, off the east coast, this month. But the stock came off the day's high of Rs 1,359.90. RIL's advance tax payment fell 16.47% to Rs 370 crore in Q4 March 2009 over Q4 March 2008.

Banking stocks pared gains on fears of rising defaults in a weakening economy. India's second largest private sector bank by operating income HDFC Bank rose 2.09% to Rs 842. 65, off the day's high of Rs 859.79 . Its ADR rose 2.1% on Tuesday. Its advance tax payment rose 10% to Rs 275 crore in Q4 March 2009 over Q4 March 2008.

India's largest bank in terms of assets and branch network State Bank of India gained 1.2% to Rs 960.95, off the day's high of Rs 975. Its advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

India's largest private sector bank by net profit ICICI Bank rose 3.41% to Rs 335.20. Its American depository receipts (ADR) jumped 3.56% on Tuesday, 17 March 2009. ICICI Bank is reportedly considering spinning off its automated teller machines and point of sale terminals, which accept credit and debit card payments, and has sought bids from banking technology firms and private equity players. ICICI Bank's advance tax payment remained unchanged at Rs 250 crore in Q4 March 2009 when compared to Q4 March 2008.

Outsourcing focussed IT firms came off the day's high on fears a weak global economy would cut the amount firms spent on technology. India's largest software services exporter by sales TCS rose 1.85% to Rs 506.60 off the day's high of Rs 513.90. The company's advance tax payment fell 54.3% to Rs 53 crore in Q4 March 2009 over Q4 March 2008. The company during trading hours on Monday 16 March 2009 said its promoter Tata Sons has pledged more than 12.06 crore shares or 12.33% of the equity capital of the firm.

India's fifth largest IT major by sales HCL Technologies rose 1.29% to Rs 102.45 on securing a contract worth $350 million on Monday, 16 March 2009.

India's third largest software services exporter, Wipro rose 1.47% to Rs 230.65, off the day's high of Rs 237.85. Recently its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC). Its ADR rose 0.63% on Tuesday.

India's second largest software services exporter Infosys Technologies rose 0.94% to Rs 1,277.45, off the day's high of Rs 1,301.70. Its ADR rose 1.08% on Tuesday. Infosys chief and co-founder Mr S Gopalakrishnan said on Sunday, 15 March 2009, the Indian IT industry would tide over the current downturn and might surpass the US in terms of having the largest number of IT professionals in the world in the next three years.

The Indian rupee climbed on Wednesday, propelled by a rise in domestic stocks and the dollar's weakness against the euro. The partially convertible rupee was at 51.30 per dollar, above its previous close of 51.470/485. The rupee has declined sharply in the past few days. It hit a record low beyond 52 a dollar recently. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. DLF, Unitech and Indiabulls Real Estate rose by between 2.7% to 7.76%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 3.4% to Rs 638 as the company's advance tax payment rose 61.76% to Rs 275 crore in Q4 March 2009 over Q4 March 2008. But the stock came off the day's high of Rs 645.50. Bharat Heavy Electricals, Thermax, Praj Industries, ABB, rose by between 0.67% to 5.56%.

Auto shares 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 Maruti Suzuki India rose by between 1.17% to 2.38%. But India's largest tractor maker by sales Mahindra & Mahindra fell 4.09%.

India's largest commercial vehicle maker by sales Tata Motors rose 2.56% ahead of the launch of its Rs 1-lakh car Nano on 23 March 2009. Tata Motors paid no advance tax in Q4 March 2009 compared to Rs 75 crore in March 2008.

Some FMCG stocks rose on expectations of better Q4 March 2008 results following reports of higher advance tax payment by these firms. Ruchi Soya, Dabur India, Britannia Industries, ITC and United Spirits rose by between 0.75% to 4.5%. But India's largest FMCG firm by sales Hindustan Unilever fell 0.45% even as the company's advance tax payment rose 30% to Rs 130 crore in Q4 March 2009 over Q4 March 2008. India's largest cigarette maker by sales ITC fell 2.11%.

Some healthcare stocks, too, rose on expectations of better Q4 March 2008 results on reports of higher advance tax payment by these firms. Dr Reddy's Laboratories, Sun Pharmaceuticals Industries, Ranbaxy Laboratories, Biocon, Glenmark Pharmaceuticals, Lupin, Matrix Laboratories, rose by between 0.4% to 5.9%.

Metal stocks rose on rally in metal prices on London Metal Exchange. Tata Steel, Steel Authority of India, Hindustan Zinc, Sterlite Industries National Aluminum Company and Hindalco Industries rose by between 1.04% to 5.68%.

India's largest iron ore exporter Sesa Goa rose 1.99% on reports India's iron ore exports jumped 21.53% to 13.9 million tonnes in January 2009 against 11.5 million tonnes in January 2008 led by rising demand from China.

Shanghai copper crept up on Wednesday, after earlier touching a four-month high, buoyed by strong spot prices. The most-active Shanghai June copper contract rose 0.4% to 30,570 yuan ($4,472) a tonne by the midday break, after hitting a peak of 30,880 yuan, the best level since 11 November 2008. Three-month London Metal Exchange copper rose $10 to $3,810 a tonne, having struck a more than four-month high of $3,862 the previous day.

LME copper prices have rallied 25% this year having plummeted 60% from record highs last July, while Shanghai copper has rallied 28% since the end of December 2008. Copper prices have been supported in recent weeks by the purchase of 3,00,000 tonnes of metal by China's State Reserves Bureau (SRB) to boost the country's strategic stockpiles.

Vijaya Bank clocked the highest volume of 2.68 crore shares on BSE. Cals Refineries (2.01crore shares), Suzlon Energy (1.57 crore shares), Satyam Computer Services (1.39 crore shares) and Reliance Natural Resources (1 crore shares) were the other volume toppers in that order.

Akruti City clocked the highest turnover of Rs 786.55 crore on BSE. Reliance Industries (Rs 217.06 crore), ICICI Bank (Rs 146.17 crore), Educomp Solutions (Rs 143.71 crore) and Everonn Systems (Rs 135.97 crore) were the other turnover toppers in that order.