Sensex gains 2.25% on rate cut hopes

Sell-off in Bharti Airtel capped sharp gains in the key benchmark indices triggered by rally in battered index pivotals Reliance Industries and ICICI Bank. The BSE 30-share Sensex jumped 183.35 points, or 2.25%, off 95.51 points from the day's high but up 68.97 points from the day's low. Expectations of further cut in policy rates by the central bank helped the market shrugged off weak data on industrial output. Easing inflation raised hopes for further monetary-policy easing.

Despite the gains, the market breadth was negative on BSE. The breadth turned negative from a strong breadth in early trade.

As per the provisional data released by the stock exchanges, foreign institutional investors (FIIs) today, 12 March 2009, sold shares worth a net Rs 186.86 crore whereas domestic institutional investors (DIIs) bought shares worth a net Rs 227.10 crore.

In the last few months, DIIs have absorbed heavy sales by FIIs who are facing redemption pressures in their home countries amid the global financial sector crisis.

Indian equities opened firm today, playing a catch-up with global markets after a two-day break on 10 and 11 March 2009 on account of local holidays. The market surged in early afternoon trade after the latest data showed a sharp fall in inflation which will provide room for the central bank to reduce policy rates further. However, the market soon cut gains as the data showed industrial production declined for the second month in a row in January 2009.

The market firmed up again in afternoon trade with the Sensex surging to the day's high. It firmed up further before profit taking pulled it off the day's high. The market weakened further in late trade as index heavyweight Bharti Airtel slumped.

Industrial production declined for the third time in fours months in January 2009. The index of industrial production (IIP) declined 0.5% in January 2009 against a upwardly revised 0.6% decline in December 2008, government data released during trading hours today showed. Industrial production had risen 6.18% in January 2008.

Manufacturing and mining contracted at 0.8% and 0.4% respectively while capital goods, consumer durables and consumer goods expanded at 15.4%, 2.5% and 1.1% respectively.

Inflation based on the wholesale price index (WPI) rose 2.43% in the year through 28 February 2009, much lower than previous week's 3.03% rise, data released by the government today, 12 March 2009, showed. It was the smallest annual rise in inflation since 8 June 2002 when inflation was at 2.18%. Its lowest ever was 1.13% on 2 February 2002. However, the inflation for the year through 3 January 2009 was revised upwards to 5.33% from 5.24%.

The Reserve Bank of India (RBI) on 4 March 2009 cut the repo rate and reverse repo rate by 50 basis points each, with immediate effect. At that time, RBI said it will continue to maintain ample liquidity in the system.

According to a domestic brokerage, the latest RBI rate cut will set the ball rolling for lower interest rates in the economy and increase credit flow to individuals and the corporate sector. The latest rate cut brings the reverse repo to 3.5%, identical to the rate at which banks mobilize savings deposits. The lower repo rate in turn could dissuade banks from parking surplus funds with the RBI and increase lending, it notes in a report. Banks have been parking large sums of money with RBI through the repo window.

According to Aditya Puri, Managing Director, HDFC Bank, Indian banks are flush with funds and interest rates have dropped drastically over the past few months. According to him, the regulators should allow Indian banks to raise long term funds without cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements for such funding. This in turn will enable banks to provide long-term lending to corporates and long-gestation infrastructure projects.

European shares lost ground on Thursday, with oil producers and mineral extractors among the weakest performers and banks also coming under a bit of selling pressure. Key benchmark indices in UK, Germany and France were down by between 1.55% and 2.49%.

Asian markets, rebounded from early lows and were trading mixed now. Key benchmark indices in Singapore and Taiwan were down 0.80% and 0.11%. South Korea's Seoul Composite index rose 0.08%. Hong Kong's Hang Seng gained 0.59%, reversing early losses.

Japan's Nikkei 225 index slumped 2.41% after a revised data showed that the Japanese economy contracted at a 12.1% annual rate in the fourth quarter

China's Shanghai Composite index fell 0.24% after industrial-production growth slowed in the first two months of the year as exports slid at a record pace. Output rose 3.8% in January and February 2009 from a year earlier, slowing from a 5.7% increase in December 2008, the statistics bureau said today, 12 March 2009.

Trading in US index futures indicated the Dow could fall 52 points at the opening bell on Thursday, 12 March 2009.

US markets ended slightly higher on Wednesday, 11 March 2009 amid hope for additional government financial support for the tumbling economy. The Dow Jones industrial average rose 3.91 points, or 0.06%, to 6,930.40. The Standard & Poor`s 500 index climbed 1.76 points, or 0.24%, to 721.36, while the Nasdaq Composite index increased 13.36 points, or 0.98%, to 1,371.64.

Earlier, US markets had surged on Tuesday, 10 March 2009 after Treasury Secretary Timothy Geithner said the government will use capital injections to spur lenders to sell distressed securities. Meanwhile, US Congress also gave its final approval to $410 billion stimulus package.

JP Morgan CEO Jamie Dimon said on Wednesday, 11 March 2009, that the bank was profitable in January and February 2009 bolstering speculation that the worst of the banking crisis may be over. On Tuesday, 10 March 2009 Citigroup CEO Vikram Pandit wrote in an internal memorandum that the firm was profitable in the first 2 months of 2009 and is confident about its capital strength.

The BSE 30-share Sensex jumped 183.35 points, or 2.25%, to 8,343.75. Sensex opened 114.38 points higher at 8,274.78, also its day's low. At the day's high of 8,439.26, the Sensex gained 278.86 points in mid-afternoon trade.

The S&P CNX Nifty advanced 44.30 points, or 1.72%, to 2,617.45. Nifty March 2009 futures were at 2597.70, a discount of 19.75 points over spot closing. Turnover in NSE's Futures & options segment rose to Rs 49526.24 crore from Rs 37897.25 crore on Monday, 9 March 2009.

The market breadth, indicating the overall health of the market, turned negative during the course of the day. On BSE, 1274 shares declined as compared with 1151 that advanced. A total of 96 shares remained unchanged. The breadth was strong in early trade.

BSE clocked a turnover of Rs 2721 crore, higher than Rs 2,201.43 crore on Monday, 9 March 2009.

The barometer index BSE Sensex had settled at its lowest level in more than three years on Monday, 9 March 2009. The Sensex is down 1303.56 points or 13.51% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 341.70 points or 11.54% in calendar 2009 from its close of 2,959.15 on 31 December 2008.

Coming back to today's trade, the BSE Mid-Cap index (up 0.43%) and BSE Small-Cap index (up 0.37%), both underperformed the Sensex.

The BSE Oil & Gas index (up 3.21%), the BSE IT index (up 2.38%), the BSE Metal index (up 2.87%), the BSE Bankex (up 3.33%), the BSE Auto index (up 3.70%), the BSE FMCG index (up 2.26%), outperformed the Sensex.

The BSE Capital Goods index (up 2%), the BSE Consumer Durables index (down 1.30%), the BSE Power index (up 0.54%), the BSE PSU index (up 1.06%), the BSE Healthcare index (up 1.23%), the BSE TECk index (down 0.09%), the BSE Realty index (up 0.44%), underperfomed the Sensex

Among the 30-member Sensex pack, 24 logged gains while only 6 of them slipped. Tata Power (down 3.10%), NTPC (down 2.75%), Ranbaxy (down 1.04%) edged lower from the Sensex pack.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) shot up 3.90% to Rs 1198.90 on bargain hunting after a recent steep slide. The stock moved in a band of Rs 1170 and Rs 1212.75. Earlier, the stock lost 16.93% to Rs 1153.85 in one month to 9 March 2009.

India's largest state-run oil exploration firm by sales ONGC gained 2.10% and India's largest private sector oil exploration firm by sales Cairn India rose 0.65% after crude oil prices rose nearly 2% on the Asian electronic trading on Thursday, 12 March 2009. Rise in crude oil prices would result in higher realizations from crude sales for the oil exploration firm.

Shares of state-run oil marketing firm slipped on concerns about the weak rupee. HPCL (down 1.47%), BPCL (down 0.42%) and Indian Oil Corporation (IOC) (down 0.85%) fell. The recent sharp slide in the rupee against the dollar will raise cost of crude imports of oil refiners unless they undertake effective hedging strategies. Oil firms rely substantially on import of crude oil.

Oil marketing firms suffer under-recovery on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

US light, sweet crude for April 2009 delivery rose 76 cents or 1.80% to $43.09 a barrel in Asian electronic trading on Thursday, 12 March 2009 after a 10% fall in the past two sessions.

Rate sensitive banking shares vaulted on hopes lower interest rates may boost lending growth and on rally in American depository receipt (ADRs) on Tuesday, 10 March 2009.

India's largest private sector bank by net profit ICICI Bank jumped 8.71% to Rs 285.85 on 78.83 lakh shares after its ADR surged 16.27% on on Tuesday, 10 March 2009. It was the top gainer from the Sensex pack.

India's largest bank in terms of assets and branch network State Bank of India gained 1.13% to Rs 906.90. Though the stock rebounded from the day's low of Rs 898, it is off from the day's peak of Rs 935.

Axis Bank (up 9.28%), Karnataka Bank (up 4.47%), Andhra Bank (up 3.95%), Bank of India (up 4.78%), and Punjab National Bank (up 4.72%), logged gains.

However India's second largest private sector bank by operating income HDFC Bank fell 0.73% to Rs 793. The rose as much as 3.51% at the day's high of Rs 826.90 mirroring a 10.97% rally in its ADR on Tuesday, 10 March 2009.

Auto shares gained after the Society of Indian Automobile Manufacturers (SIAM) data released on Monday, 9 March 2009 showed 10.61% rise in auto sales to 10.4 lakh units in February 2009 over February 2008.

Mahindra & Mahindra (up 4.06%), and Maruti Suzuki India (up 6.04%), surged.

India's largest truck maker by sales Tata Motors galloped 6.62% to Rs 142.75 after the British government announced a 27 million pounds (Rs 192 crore) grant to Jaguar Land Rover to help it build a new, greener vehicle. Its ADR surged 12.15% on Tuesday, 10 March 2009.

Ashok Leyland rose 3.12% to Rs 16.55 on reports the company has increased the number of working days at its manufacturing units due to recovery in demand.

However realty stocks fell on recent reports falling interest rates have failed to revive housing demand. DLF (down 1.44%), Ansal Infrastructure (down 0.45%), Sobha Developers (down 0.90%), and Omaxe (down 0.50%) fell. Most of the realty deals including sale of commercial property and housing sales are driven by finance.

India's largest pharma company by market capitalisation Sun Pharmaceuticals spurted 4.33% to Rs 1021. After market hours on Friday, 6 March 2009, Sun Pharma said it extended its tender offer to Taro Pharmaceuticals till 20 March 2009. The extension was to comply with an order issued by the Supreme Court of Israel prohibiting the closing of the offer until the court decides on the appeal made by Taro's non-promoter directors against the offer.

India's top copper maker by sales Sterlite Industries India vaulted 7.18% to Rs 262 after foreign brokerage Credit Suisse retained its 'outperform' rating on stock with a target price of Rs 500. On 7 March 2009, the company announced that it will pay $1.7 billion in cash and notes to buy bankrupt US copper miner Asarco LLC, lower than the $2.6 billion it offered last year.

India's largest private sector steel maker by sales Tata Steel rose 1.31% to Rs 154.30. On 10 March 2009, the company announced that the production cut at its UK-subsidiary Corus continues to be about 40%.

Other metal shares also gained. Hindalco Industries (up 3.17%), Sesa Goa (up 4.85%), JSW Steel (up 1.32%), and Sail (up 3.20%), edged higher.

Outsourcing focussed IT firms gained as higher ADRs and a weak rupee. India's largest software services exporter by sales TCS rose 1.88% after it signed a multi-year IT solutions contract with German semiconductor maker Infineon Technologies AG, one of the leading semiconductor manufacturers. The financial details were not disclosed.

India's third largest software services exporter, Wipro rose 1.58% after its ADR jumped 11.15% on Tuesday, 10 March 2009. India's second largest software services exporter Infosys Technologies advanced 2.45% after a 7.41% surge in its ADR on Tuesday, 10 March 2009.

However India's fifth largest IT major by sales HCL Technologies fell 1.48%.

Tech Mahindra fell 1.54% to Rs 259. Reportedly the company is in discussions to acquire Bangalore-based niche telecom solutions player Sloka Telecom. The 5- year-old tech start-up Sloka Telecom has put a price tag of Rs 30-35 crore but there is no agreement on a final transaction.

The Indian rupee weakened against the US dollar today, 12 March 2009 on expectations of capital outflow from the stock exchanges. The partially convertible rupee was at 51.93 per dollar, weaker than its previous close of 51.85/51.87. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

India's largest FMCG major by sales Hindustan Unilever (HUL) jumped 3.83% to Rs 224.80 on bargain hunting after a recent steep slide. The stock had slumped 11.48% in the previous four trading sessions to Rs 216.50 on 9 March 2009 from Rs 241.50 on 3 March 2009 triggered by foreign brokerage JPMorgan Chase & Company cutting its rating on the stock to 'underweight' from 'neutral', citing weakening growth and increasing competition.

ITC (up 0.82%), Nestle India (up 2.74%), Bata India (up 2.82%), and Britannia Industries (up 0.49%), gained.

Capital goods shares gained on steady progress to the landmark India-US civil nuclear deal. Gammon India (up 3.29%), Areva T&D (up 1.31%), Siemens (up 2.31%), and Punj Lloyd (up 1.52%), gained.

India's largest engineering and construction by sales Larsen & Toubro (L&T) advanced 2.40% to Rs 575.30 on reports Oman has shortlisted six firms including Larsen & Toubro, to build a $1.4 billion airport terminal. The lowest bidder is a consortium of the local NRI-owned Galfar Engineering & Contracting Company and L&T, the Middle East Economic Digest (MEED) reported last week.

Meanwhile, L&T has registered interest to participate in the bidding process for Satyam Computer Services, its spokesman said today. L&T is the single largest shareholder in Satyam with a 12% stake.

Satyam Computer Services slipped 3.79%. Suitors for fraud-hit Satyam have to give notice by today, 12 March 2009, that they are interested in bidding for the Indian outsourcing firm amid lingering uncertainty over the true state of its finances.

India's largest power equipment maker by sales Bharat Heavy Electricals rose 3.96% to Rs 1352 on bagging an order worth Rs 81 crore from Powegen Infrastructure for supplying generator transformers for the 1980-megawatt (MW) Tirora thermal power project of Adani Power Maharashtra (APML) at Tirora in Gondia district of Maharashtra. The company unveiled the new order win on Monday, 9 March 2009.

India's Foreign Secretary Shivshankar Menon, who discussed the nuclear deal with both Secretary of State Hillary Clinton and his counterpart Under Secretary for Political Affairs William Burns, said the deal is on track with both sides determined to go forward with an initiative. Noting that deal had already been signed in 2008, Menon said now its a question of operationalisation and bringing it down to the commercial level. For that India had already signed an additional protocol with the International Atomic Energy Agency (IAEA).

Telecom pivotals saw divergent trend after the Telecoms Regulatory Authority of India (Trai) on Monday, 9 March 2009, said it will cut the termination charge telecom firms pay each other for domestic calls while increasing the rate for incoming international calls.

Shares of India's largest cellular services provider by sales Bharti Airtel, having weightage of 6.12% in the BSE 30-share Sensex, fell on concerns that large operators like the company and unlisted Vodafone will likely get hurt from the cut in domestic termination charges as they are the net collectors of termination fees while the other operators are net payers. The stock was down 7.20% to Rs 545.45 and was the top loser from the Sensex pack.

Another reason why Bharti Airtel slumped was news of its chief executive, Manoj Kohli, offloading his holding in the telecom firm through open-market transactions. Kohli, who owned 1,23,000 shares, sold 53,000 shares on 6 March and 70,000 shares on 9 March 2009.

After trading hours, Kohli clarified that he sold the shares for personal reasons and that he continues to be the chief executive officer and joint managing director of the company. He further said he still held 1,80,000 options in the company.

India's second largest cellular services provider by sales Reliance Communications advanced 3.89% to Rs 137.40 on bargain hunting after a recent sharp fall. The stock lost 20.52% to Rs 132.25 in a month to on 9 March 2009.

Reliance Industries topped the turnover chart on BSE with a turnover of Rs 223.53 crore followed by ICICI Bank (Rs 222.16 crore), Satyam Computer Services (Rs 184.30 crore), Bharti Airtel (Rs 137.20 crore) and Reliance Capital (Rs 123.11 crore).

Satyam Computer Services led the volume chart on BSE clocking volume of 3.76 crore shares followed by IDFC (1.61 crore), Rolta India (98.88 lakh), ICICI Bank (79.05 lakh) and Cals Refineries (75.23 lakh).

Aurobindo Pharma gained 0.28% to Rs 158.65 on BSE, on receiving US nod for a generic drug. The company made this announcement during trading hours today, 12 March 2009.

Fulford (India) soared 14.71% to Rs 333 on speculation of a possible open offer from Merck & Co Inc.

The National Stock Exchange had earlier said that trading would continue in the normal course from 5 March 2009 to 19 March 2009 despite Sun Outage between 11:45 IST to 12:25 IST. The exchange has advised members to use alternative mode of connectivity instead of VSAT during the above mentioned period for continuing trading without any disruptions on account of Sun outage.

Earlier on 25 February 2009, the Indian Space Research Organization (ISRO) had informed the NSE that there would be Sun Outage from 5 March 2009 to 19 March 2009 between 11:45 IST to 12:25 IST due to which trading members may face connectivity problems at different times on different dates based on geographical location during this period.