Sensex up more than 10% in six trading sessions

It was a day of immense volatility with alternate bouts of buying and selling. The barometer index BSE Sensex ended slightly higher after recovering sharply in mid-afternoon trade. Expectations of a further cut in policy rates by the Reserve Bank of India and firm European markets triggered a late recovery. Volatility in index heavyweight Reliance Industries (RIL) caused volatility in key benchmark indices today. Banking stocks, too, were choppy. IT and realty stocks rose.

Shares of some textile, gems and jewellery and leather exporters rose after Trade Secretary Gopal Pillai said exports of textiles, leather and gems and jewellery, which contribute heavily in India's total export basket, were showing signs of a pick up.

The BSE 30-share Sensex rose 25.07 points, or 0.28%, off close to 100 points from the day's low but down close to 85 points from the day's high. The Sensex flirted with the 9,000 level throughout the day.

The market surged at the onset of the trading session on mostly higher Asian stocks, increase in risk appetite globally, hopes of a recovery of the global economy, a strong rebound in rupee against the dollar and on buying by foreign funds. The barometer index BSE Sensex moved past the psychological 9,000 level. However, the market soon came off the day's high on lingering concerns about the slowing Indian economy and on lower US index futures. It slipped into the red later as some Asian stocks slipped into the red.

The Sensex moved into the green from red after the inflation data hit the market in early afternoon trade. It later recovered again after slumping to the day's low in afternoon trade. However, the recovery proved short-lived and the market weakened later. The Sensex fell below the psychological 9,000 level. It cut losses trade to trade in green for a brief period. It fell once again to hit day's low before recovering in mid-afternoon trade regaining 9,000 level. The market pared gains in late trade with the Sensex once again falling below the 9,000 mark

Inflation based on the wholesale price index (WPI) rose 0.44% in the year through 7 March 2009, a record low for the current series data released by the government today showed. The rate of growth in inflation was much lower than previous week's annual rise of 2.43%.

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.

However, the central bank would be in dilemma over further rate cuts as other gauges of inflation that it 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.

Nonetheless, a rally in rupee against the dollar has helped reduce concerns about the increase in costs of imports for Indian firms arising from a recent steep slide. However, volatility of the currency remains a cause for concern. Early this month, the rupee had tumbled to a record low below 52 a dollar.

The Indian rupee strengthened past 51 per dollar for the first time in three weeks on Thursday, boosted by firmer Asian stock markets and a weakening dollar. The partially convertible unit was at 50.32, sharply higher than Wednesday's close of 51.29/30.

The increase in global risk appetite in the past few days is a good news for Indian Inc which is facing liquidity crunch as Indian banks have become risk averse on fears of rising defaults in a slowing economy and due to the global financial sector crisis. Fund crunch for the corporate sector has, in turn, accelerated slowdown in the economy.

Earlier the global financial crisis ends and sooner the risk appetite of global investors and global companies improves, better it will be for India Inc. An increase in risk appetite of global investors/global companies will help Indian firms raise overseas funds required for business expansion. The global financial crisis has chocked the overseas funding route for Indian firms.

Lack of funding has hit a slew of long-gestation infrastructure projects in India. World Bank Chief Economist & Senior Vice-President, Dr Justin Yifu Lin, on 13 March 2009, said if India can improve its infrastructure such as electricity, power, transportation and port facilities, it will be well on its path to achieve a 9-10% growth.

Risk appetite rose globally following the latest aggressive move by the US Federal Reserve. The Fed on Wednesday said it would buy $300 billion in longer-dated Treasurys over the next six months, along with another $850 billion in mortgage-related debt, in a bid to improve credit markets and pull the US economy out of its hole.

The Fed kept the benchmark interest rates unchanged at between zero and 0.25%.

European shares rose on Thursday, tracking gains on Wall Street after the Federal Reserve said it would buy long-term Treasury bonds for the first time in four decades to try and revive the economy. Key benchmark indices in France, Germany and UK were up between 1.75% to 2.3%.

Asian markets were mixed in contrast to a firm start on lower US index futures. Key benchmark indices in Japan, Taiwan and South Korea were down by between 0.23% to 0.7%. Key benchmark indices in Singapore, Hong Kong and China were up by between 0.1% to 1.89%.

Meanwhile, Oracle Corp jumped 7.4% in after-hours trade in the US after the company said it would pay its first-ever dividend. Its fiscal third-quarter net income eased 0.8%. Yet, trading in US index futures indicating that the Dow could slide 36 points at the opening bell on Thursday, 19 March 2009.

Closer home, concerns about the slowing Indian economy remain. Indian commercial banks have become more averse to extending loans, further throttling the economic growth.

On the flip side, foreign institutional investors (FIIs) are now in buying mode which follows easing of FII selling vigour in the past few days. FIIs bought shares worth a net Rs 353.70 crore on Wednesday, 18 March 2008. FIIs can also take solace in the recent strong rebound in the rupee. A recent sharp slide in the rupee to a record low had resulted in a depreciation in the value of their equity portfolio to the extent of the fall in rupee.

Domestic institutional investors (DIIs) bought shares worth a net Rs 526.34 crore on Wednesday as per the provisional data. DIIs have been absorbing heavy selling by foreign funds in calendar year 2009.

However, 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.

The BSE 30-share Sensex was up 25.07 points, or 0.28%, to 9,001.75, its highest closing since 19 February 2009. At the day's high of 9,086.77, the Sensex gained 110.09 points in early trade. At the day's low of 8,900.39, the Sensex fell 76.29 points in mid-afternoon trade.

The S&P CNX Nifty was up 12.45 points or 0.45% to 2,807.15.

From the recent low of 8,160.40 on 9 March 2009, the Sensex has risen 841.35 points or 10.31% in six trading sessions. Yet, the Sensex is down 645.56 points or 6.69% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 152 points or 5.13% in calendar 2009 from its close of 2,959.15 on 31 December 2008.

The BSE clocked a turnover of Rs 3,967 crore, lower than Rs 4,148.70 crore on Wednesday, 18 March 2009.

Nifty March 2009 futures were at 2801.55, at a discount of 5.60 points as compared to the spot closing of 2807.15. Turnover in NSE's futures & options (F&O) segment was Rs 48,752.20 crore, sharply lower than Rs 54,871.64 crore on Wednesday, 18 March 2009.

The BSE Mid-Cap index was up 0.52% and BSE Small-Cap index rose 1.08%. Both the indices outperformed the Sensex.

The BSE Realty index (up 2.48%), the BSE IT index (up 1.58%), the BSE TECk index (up 0.83%), the BSE Oil & Gas index (up 0.74%), the BSE Bankex (up 0.61%), the BSE Metal index (up 0.59%) outperformed the Sensex.

The BSE Capital Goods index (down 2.62%), the BSE Auto index (down 0.71%), the BSE FMCG index (down 0.28%), the BSE Consumer Durables index (down 0.19%), the BSE Power index (down 0.08%), the BSE Healthcare index (up 0.03%), the BSE PSU index (up 0.12%) underperfomed the Sensex.

The market breadth indicating the overall health of the market was positive on BSE with 1,335 shares advancing as compared with 1,128 that declined. A total of 62 shares remained unchanged. The market breadth had turned even in afternoon trade from a strong breadth earlier in the day.

From the 30 share Sensex pack, 19 stocks rose while rest fell.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) was volatile, moving between positive and negative zone. It provisionally rose 1% to Rs 1,344.65. The company is likely to start production of gas from KG basin, off the east coast, this month. RIL's advance tax payment fell 16.47% to Rs 370 crore in Q4 March 2009 over Q4 March 2008.

India's largest oil exploration firm by revenue ONGC rose 0.97% as crude oil prices rose more than 2% in Asian electronic trading on Thursday, 19 March 2009. Rise in crude oil prices would result in higher realizations from crude sales for the oil exploration firms.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. DLF, Indiabulls Real Estate and Unitech rose by between 1.11% to 3.81%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Arihant Foundations & Housing rose 4.47% after one of the promoter group companies hiked stake in the firm.

Rate sensitive banking shares rose in choppy trade on hopes a further fall in interest rates may boost lending growth. The stocks were volatile. India's largest private sector bank by net profit ICICI Bank rose 0.87% to Rs 338.10, off the day's low of Rs 327.60. Its American depository receipts (ADR) jumped 6.19% on Wednesday, 18 March 2009. ICICI Bank's advance tax payment remained unchanged at Rs 250 crore in Q4 March 2009 when compared to Q4 March 2008.

India's largest bank in terms of assets and branch network State Bank of India rose 0.75% to Rs 968.20, off the day's low of Rs 936.40. Its advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

India's second largest private sector bank by operating income HDFC Bank fell 1.48% to Rs 830.20, off the day's low of Rs 819.40. Its ADR rose 4.77% on Wednesday. Its advance tax payment rose 10% to Rs 275 crore in Q4 March 2009 over Q4 March 2008.

Bond prices surged in early trade today ahead of the central bank's purchase of Rs 10000-crore of existing debt from investors in an effort to cap yields. The yield on the 6.05 bond maturing in February 2019 dropped 14 basis points to 6.3% as of 9:13 IST in Mumbai. Bond yields and bond prices are inversely related.

Outsourcing focussed IT firms gained on hopes of revival in the US economy, the biggest market for IT firms. A surprise move by the Federal Reserve to buy government bonds revived hopes the battered US economy could soon begin its recovery.

India's largest software services exporter by sales TCS rose 1.62% to Rs 514.80 off the day's high of Rs 517.95. 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 2% extending recent gains on securing a contract worth $350 million on Monday, 16 March 2009.

India's third largest software services exporter, Wipro rose 0.89% as its ADR rose 5.05% on Wednesday. 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 1.44% as its ADR gained 3.31% on Wednesday. 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.

MindTree surged 32.58% on reports the company will restructure its business into five independent business units.

However, a stronger rupee may cap upside in IT stocks in the near future. The Indian rupee strengthened past 51 per dollar for the first time in three weeks on Thursday, boosted by firmer Asian stock markets and a weakening dollar. A stronger rupee affects operating margins of IT firms negatively as they earn most of their revenues from exports.

Metal stocks gained on jump in metal prices on London Metal Exchange. Steel Authority of India, Hindustan Zinc, Sterlite Industries and Hindalco Industries rose by between 0.01% to 2.91%. But Tata Steel and National Aluminum Company fell by between 1.76% to 2.32%.

Rate sensitive auto shares fell on worries a sluggish consumer spending may dent demand for cars, motorcycles and scooters. Profit taking was another reason for slide in auto stocks after recent strong gains. Mahindra & Mahindra and Hero Honda Motors fell by between 0.65% to 1.89%. But India's largest car maker by sales Maruti Suzuki India rose 1.7%.

India's largest commercial vehicle maker by sales Tata Motors fell 2.75% after a recent strong rally in the stock 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 fell on profit taking after recent gains triggered by expectations of better Q4 March 2008 results following reports of higher advance tax payment by these firms. Nestle India, Dabur India, Britannia Industries, Marico and United Spirits fell by between 0.2% to 3.98%. India's largest FMCG firm by sales Hindustan Unilever fell 1.03% extending recent fall even as the company's advance tax payment rose 30% to Rs 130 crore in Q4 March 2009 over Q4 March 2008.

Some healthcare stocks fell after recent gains triggered by expectations of better Q4 March 2008 results on reports of higher advance tax payment by these firms. Cipla, Wochardt, Biocon, Glenmark Pharmaceuticals, Lupin fell by between 0.03% to 3.61%.

Areva T & D India gained 0.76% on bagging an order worth 33 million euros.

Cals Refineries clocked the highest volume of 2.01 crore on BSE. Suzlon Energy (96.87 lakh shares), Unitech (84.65 lakh shares), Firstsource Solutions (81.46 lakh shares) and NIIT (72.01 lakh shares) were the other volume toppers in that order.

Akruti City clocked the highest turnover of Rs 994.03 crore on BSE. Reliance Industries (Rs 192.40 crore), ICICI Bank (Rs 169.95 crore), Educomp Solutions (Rs 144.15 crore) and HDFC (Rs 113.1 crore) were the other turnover toppers in that order.