Sensex breaches the psychological 10,000 mark

The stock markets displayed a distinctly strong trend during the week under review as the benchmarks jumped over 10%, on a host of positive global factors. A steep fall in the India's inflation also raised expectations of a further easing of the monetary policy by the Reserve Bank of India.

India's wholesale price index (WPI) rose 0.27% in the 12 months to 14 March 2009, below the previous week's annual rise of 0.44%, government data showed on 26 March 2009. The sharp fall in inflation has provided room for the RBI to cut interest rates further to support faltering economic growth.

The 30-share BSE Sensex jumped 1,081.81 points or 12.06% to 10,048.49, in the week ended Friday, 27 March 2009. The broader 50-issue Nifty jumped 301.6 points, or 10.74%, to end the week at 3108.65.

The BSE Mid-Cap index gained 173.10 points or 6.27% to 2,934.16 and the BSE Small-Cap index advanced 123.73 points or 3.97% to 3,238.11 in the week.

The BSE Sensex jumped 1888.09 points or 23.13% in twelve trading sessions to 10,048.49 on 27 March 2009 from a three-year closing low of 8,160.40 on 9 March 2009. The Sensex is up 4.15% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is up 5.05% in calendar 2009 from its close of 2,959.15 on 31 December 2008.

Foreign institutional investors (FIIs), who were continuously selling for last several months, picked up shares worth approximately Rs 2300 crore in seven sessions between 18 and 25 March 2009. However, they still remain net sellers in this month and year as their outflow totaled Rs 51.70 crore in March 2009 and Rs 6733.50 crore in calendar year 2009 (till 25 March 2009).

Trading for the week began on an upbeat note. Banking stocks surged on Monday, 23 March 2009, tracking global rally in financial stocks as key benchmark indices made hefty gains on latest effort by the US to revive the economy and stabilize its financial system. The BSE 30-share Sensex jumped 457.34 points, or 5.1%, to 9,424.02, its highest closing since 13 February 2009 and its biggest one-day rise in percentage terms since early December 2008. The S&P CNX Nifty gained 133.85 points or 4.73% at 2939.90.

Key benchmarks ended flat on Tuesday, 24 March 2009, as the market reversed most of its earlier strong intraday gains after European stocks gave up early gains. Political uncertainty ahead of parliamentary elections also prompted traders to lock in gains after the previous day's steep rise. The BSE 30-share Sensex was up 47.02 points or 0.5%, to 9,471.04, its highest close since 13 February 2009. But S&P CNX Nifty was down 1.20 points or 0.04% to 2,938.70.

The market surged on Wednesday, 25 March 2009, as buying by foreign funds and higher US index futures bolstered sentiment. Expectations of a further cut in policy rates by the Reserve Bank of India (RBI) also aided the surge in what a highly volatile trading session. The BSE 30-share Sensex rose 196.85 points, or 2.08%, to 9,667.90, its highest closing since 6 January 2009. The S&P CNX Nifty jumped 45.65 points or 1.55% to 2,984.35.

Fall in headline inflation to a record low and short covering in the derivatives segment ahead of the expiry of the near-month March 2009 contracts lifted the barometer index BSE Sensex above the psychological 10,000 mark on Thursday 27 March 2009. The BSE 30-share Sensex advanced 335.20 points, or 3.47%, to 10,003.10. The S&P CNX Nifty was up 97.90 points or 3.28% to 3,082.25.

Benchmarks gave up some of the last-hour gains but ended the volatile session higher on 27 March 2009, while broader markets outperformed them. The BSE Sensex rose 45.39 points or 0.45% at 10,048.49. The 50-unit Nifty rose 26.40 points or 0.86% to 3108.65.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) jumped 15.65% ahead of production of gas from KG basin, off the east coast. The company is reportedly expected to start natural gas production from its Krishna Godavari (KG) basin field in early April 2009. RIL's advance tax payment fell 16.47% to Rs 370 crore in Q4 March 2009 over Q4 March 2008.

State-run gas distributor GAIL India spurted 9.13% on reports the company plans to invest Rs 1,000 crore in setting up 2,000 compressed natural gas dispensing stations on major national highways in the next three years.

Private sector oil explorer Cairn India rose 9.91% on reports the firm is likely to pump out crude oil from its Barmer field in Rajasthan in a month.

India's largest commercial vehicle maker by sales Tata Motors rose 17.34%. The world's cheapest car Tata Nano was unveiled in Mumbai by Tata Group Chairman Ratan Tata on 23 March 2009. The Tata Nano was launched in three models - Base, CX and LX. The booking for Tata Nano will be held between 9 April 2009 and 25 April 2009. The first set of Tata Nano will be delivered in the first week of July 2009. Within 60 days of the closure of bookings, Tata Motors will process and announce the allotment of 1,00,000 cars in the first phase of deliveries, through a computerised random selection procedure.

India's largest car maker by sales Maruti Suzuki India 7.67%. As per reports, firm is working towards launching new cars and improvising the existing ones to counter attack Tata Motors' Nano. In a tussle to capture the Indian passenger car market, Maruti is likely to launch Maruti Splash or Ritz in the second week of May 2009. Ritz will mount a 1.2 litre (KB series) petrol or 1.3-litre diesel engine and will be priced at around Rs 4-5.5 lakh.

Outsourcing focussed IT stocks rose on hopes of a revival in the US economy, the biggest market for IT firms. India's largest software services exporter by sales TCS rose 12.83%. The company's advance tax payment fell 54.3% to Rs 53 crore in Q4 March 2009 over Q4 March 2008.

India's third largest software services exporter Wipro rose 9.35%. Recently its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC).

India's second largest software services exporter Infosys Technologies rose 3.81%. Recent reports said it may win a large IT project from the government, which will run on a transaction-based pricing model, similar to the passport processing contract its larger rival Tata Consultancy Services (TCS) won last year. The contract is among the many large IT contracts that are up for bidding from government departments or public sector undertakings, reports suggest.

Rate sensitive real estate shares surged on hopes lower interest rates will spur housing demand. DLF (up 6.72%), Indiabulls Real Estate (up 2.96%), Housing Development & Infrastructure (up 17.96%), rose. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Delhi-based realtor Unitech rose 33.21%. Foreign fund house Morgan Stanley Mauritius purchased 96 lakh shares of realty firm Unitech at Rs 30.67 each through an open market transaction on 25 March 2009.

Metal shares rose on hopes a recovery in the global economy will boost demand for metals. Steel Authority of India (up 16.02%), Sterlite Industries (up 18.47%), Tata Steel (up 26.92%) and Hindalco Industries (up 15.65%) rose.

Banking stocks gained in volatile trade on hopes lower interest rates may boost lending growth. India's largest bank in terms of assets and branch network State Bank of India rose 18.02%. 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 19.29%. ICICI Bank's advance tax payment remained unchanged at Rs 250 crore in Q4 March 2009 when compared to Q4 March 2008.

India's second largest private sector bank by operating income HDFC Bank rose 18.97%. Its advance tax payment rose 10% to Rs 275 crore in Q4 March 2009 over Q4 March 2008.

India's biggest dedicated housing finance firm by operating income HDFC rose 12.72% after it announced a 50 basis points reduction in its retail prime lending rate (RPLR) to 14% effective 25 March 2009.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 16.22%. As per recent reports L&T and Grasim Industries are on the verge of settling their 7-year old legal dispute over Grasim`s 0.62% stake in L&T and the latter`s 11.49% stake in Ultratech, the Birla group cement firm. Grasim Industries and Ultratech Cement are Aditya Birla group companies. Diversified Grasim Industries rose 9.74% in the month.

India's infrastructure sector output grew 2.2% in February 2009 over February 2008, above an upwardly revised 1.5% in January 2009, government data showed on Friday, 27 March 2009. Output rose an annual 7% percent in February 2008, and in the 2007/08 fiscal year it rose 5.6%. The infrastructure sector accounts for 26.7% of India's industrial output.

Bank lending has improved in the fortnight following conducive environment created by policy makers. During the fortnight ended 13 March 2009, loans sanctioned by scheduled commercial banks (SCBs), including regional rural banks, went up by Rs 22,423 crore. This was the third fortnight in a row when credit flow went up.

The Indian government and central bank will continue to take measures to revive growth, Economic Affairs Secretary Ashok Chawla said on Friday, 27 March 2009. The government expects growth in the Indian economy to slow to 7.1% in 2008/09.

The Reserve Bank of India (RBI) has slashed interest rates since mid-October 2008, and the government has cut duties and taxes and introduced stimulus packages to shore up activity.

RBI Governor Duvvuri Subbarao said on Wednesday, 25 March 2009, that further fiscal stimulus would carry a cost.

India's economy would be significantly worse in 2009 than in the previous year, a top policy advisor said on Friday, 27 March 2009, and the woes would not end in the fiscal year ending March 2010. Planning Commission Deputy Chairman Montek Singh Ahluwalia said the latest assessment, on calendar year basis, suggests that 2009 is clearly going to be significantly worse than 2008.