Sensex up nearly 10% in three trading sessions

Firm global markets helped the domestic bourses log on gains for the straight third day. Index heavyweight Reliance Industries (RIL), realty, FMCG, metal, banking and auto stocks led the rally. The BSE 30-share Sensex jumped 186.93 points, or 2.13%.

But the market was volatile. Signs of a recovery in the domestic economy, buying by foreign funds and higher Asian stocks
lifted the domestic bourses at the onset of the trading session. But the market soon came off the day's high as investors resorted to profit taking after last week's solid gains. The Sensex had jumped 5.17% in the week ended 13 March 2009, boosted by a strong global rally in world markets.

After hitting the day's low in mid-morning trade, the Sensex soon recovered in choppy trade. The market extended gains later as European markets, which opened after Indian market, surged.

The corporate advance tax payment for the fourth installment of 14 March 2009 is a mixed bag. As per reports RIL paid lower tax for the fourth installment. State Bank of India, Tata Steel and Bank of India have paid higher advance tax whereas Indian Oil Corporation has made a sharply lower advance tax payment. Tata Motors made no advance tax payment in Q4 March 2009 while Tata Consultancy Services paid lower advance tax.

Advance tax payment gives indication on the outlook on earnings. Thus if a company pays higher advance tax, it could indicate a good financial performance for the quarter and vice versa.

Companies have to pay 25% of their annual tax bill in the March installment. Despite the economic slowdown, the Income Tax department expects advance tax collections to be marginally better than the collections in the third quarter. Corporate India had paid Rs 45400 crore as the third tranche of advance tax by 15 December 2008, much lower than the Rs 54,900 crore companies shelled out in the third tranche a year before.

After heavy outflow over the past few days, there has been reduction in selling vigor of foreign funds. They, in fact, were net buyers on Friday, 13 March 2009. Foreign institutional investors (FIIs) purchased shares worth a net Rs 191.40 crore on Friday, 13 March 2009.

FII outflow in March 2009 totaled Rs 2084.80 crore (till 13 March 2009). FII outflow in calendar year 2009 totaled Rs 9025.80 crore (till 13 March 2009).

Meanwhile, there are signs that the stimulus packages announced by the government since December 2008 and an aggressive rate cuts announced by the central bank since October 2008 have started having some positive impact - lower interest rate have helped automobile sales rebound in the past few months. Interest rates have dropped drastically over the past few months.

A pick up in the production of consumer goods and capital goods point to a rise in investment and consumption demand. Government data released during trading hours on Thursday, 12 March 2009, showed consumer durables output rose 2.5% in January 2009, moving into positive territory after three months of decline on the back of high growth in automobile sales. The capital goods sector saw strong growth, with output rising 15.4%, led by an impressive expansion in production of machinery and equipment. The pick up in production in these two segments also indicates that there is an improvement in the credit availability to the industry.

Further, a large government spending plan may help pump-prime the economy. The economy will also get another stimulus in the form of a huge spending by the political parties for the forthcoming Lok Sabha elections. As per reports, around Rs 6,000 crore would be pumped into the system as political parties and candidates splurge on their campaign and the Election Commission pays a huge bill for conducting the election. And the main beneficiary would be the services sector that often spurs growth.

Another plus point is that prospects look bright for the Rabi harvest in contrast to the previous kharif harvest which saw coarse grains recording lower output. Agriculture remains the mainstay of the economy and if rabi output increases as has been projected, rural demand may rise in the coming months, though perhaps not as much as had been hoped.

A good news for corporate India is the extension of the deadline for buyback of foreign currency convertible bonds (FCCBs) by the Reserve Bank of India (RBI) by nine months to 31 December 2009. The central bank made the announcement after trading hours on Friday, 13 March 2009. In December 2008, the RBI had liberalised the procedure for buyback of FCCBs by Indian companies, both under the automatic and approval routes.

Under the automatic route, some of the conditions for buyback of FCCBs were: value of the FCCB should be at a minimum discount of 15% on the book value; the funds used for the buyback should be out of existing foreign currency funds held either in India (including funds held in EEFC account) or abroad and/or out of fresh ECB raised in conformity with the current ECB norms.

Buyback FCCBs will help companies reduce liabilities. It will also ease concerns about the impact of foreign exchange fluctuations in the profit & loss account, to the extent of the reduction of the FCCBs. The recent steep slide in the rupee will increase in the cost of servicing overseas debt to the extent of the rupee's slide unless the company (which has overseas borrowings) has adopted an effective hedging strategy.

The sharp slide in rupee will also raise import costs for a number of Indian firms unless the companies adopts an effective hedging strategy. For those importers which also export, the negative impact will be lower. However, at a time when exports are slumping the cushion for such firms will be limited.

On the flip side, the rupee's fall will boost the topline of IT firms in terms of the domestic currency as IT companies derive a lion's shares of revenue from exports. Further, some exporters may also benefit as the weak rupee makes their products cheaper for the importer. As per reports, some of the top global retailers have placed orders worth Rs 700 crore for Indian textiles in the current calendar year so far.

European shares rose for a fifth straight session on Monday, led higher by financial stocks, as investor sentiment improved following further assurances over the health of the US banking sector. The key benchmark indices in France, Germany and UK were up by between 2.06% to 2.38%.

Asian stocks struck a one-month high on Monday as reassurances over the health of the US banking industry sparked a broad recovery in investor appetite for risk. Key benchmark indices in China, Hong Kong, Singapore, Taiwan and Japan rose by between 0.56% to 3.6%. South Korea's Seoul Composite fell 0.05%.

Executives from Citigroup, Bank of America and JPMorgan Chase said last week their banks had been profitable for the first two months of the year.

Trading in US index futures indicated the Dow could rise 79 points at the opening bell on Monday, 16 March 2009. US Stocks stayed positive for the fourth straight day on Friday, 13 March 2009, with the Dow gaining 54-points. Nasdaq and S&P 500 each rose about 5 points.

The global financial crisis has prompted governments from the US to China and Japan to widen measures to stimulate growth. Federal Reserve Chairman Ben S. Bernanke on Sunday, 15 March 2009, said the risk of depression has been averted.

Group of 20 finance ministers meeting at the weekend pledged to combat the global recession and restore the financial system to health. The key priority now is to restore lending, a G- 20 statement on 14 March 2009 said.

The Bank of Japan is considering buying subordinated debt from banks, the Nikkei reported today. The purchases may help the banks offset losses caused by write-downs on shareholdings and bolster their capital, the report said.

The BSE 30-share Sensex was up 186.93 points, or 2.13%, to 8,943.54, its highest closing since 26 February 2009. At the day's high of 8,955.73, the Sensex gained 199.12 points in late trade. At the day's low of 8,697.46 Sensex was down 59.15 points in mid-morning trade.

The S&P CNX Nifty was up 58 points, or 2.13%, to 2,777.25.

The BSE clocked a turnover of Rs 3,490 crore, higher than Rs 3,230.11 crore on Friday, 13 March 2009.

Nifty March 2009 futures were at 2777.40, near the spot price of 2777.25. Turnover in NSE's futures & options (F&O) segment increased to Rs 48,027.96 crore from Rs 47,689.67 crore on Friday, 13 March 2009.

The BSE Sensex has risen 783.14 points or 9.59% in the past three trading sessions from a 3-year closing low of 8,160.40 on 9 March 2009. Yet, the Sensex is down 703.77 points or 7.29% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 181.90 points or 6.14% in calendar 2009 from its close of 2,959.15 on 31 December 2008.

The market breadth, indicating the overall health of the market, was strong on BSE with 1622 shares advancing as compared with 879 that declined. A total of 62 shares remained unchanged.

The BSE Mid-Cap index (up 2.28%) and BSE Small-Cap index (up 2.2%), both outperformed the Sensex.

All sectoral indices on BSE logged gains. The BSE Realty index (up 5.35%), the BSE Oil & Gas index (up 3.44%), the BSE Bankex (up 2.86%), the BSE PSU index (up 2.84%), the BSE FMCG index (up 2.73%), the BSE Consumer Durables index (up 2.72%), the BSE Metal index (up 2.37%), the BSE Capital Goods index (up 2.26%) outperformed the Sensex.

The BSE IT index (up 0.4%), the BSE Healthcare index (up 0.81%), the BSE TECk index (up 1.73%), the BSE Power index (up 1.78%), the BSE Auto index (up 1.82%) underperfomed the Sensex

From the 30 share Sensex pack, 25 stocks gained while rest fell.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 3.45% to Rs 1,326.60. Reports suggest that the company might propose to sell or lease out its 1,432 petrol pumps to Indian Oil Corporation (IOC), even as it will start reopening its outlets, shut a year ago today, 16 March 2009. Meanwhile, as per reports, RIL's advance tax payment fell 16.47% to Rs 370 crore in Q4 March 2009 over Q4 March 2008.

PSU OMCs rose on slide in crude oil prices. BPCL, HPCL and Indian Oil Corporation rose by between 2.96% to 8.3%. Lower oil prices will reduce under-recoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Oil prices fell to near US$44 a barrel in Asia on Monday after Organisation of Petrleum Exporting Countries (OPEC) decided not to cut production levels at its meeting over the weekend in Vienna.

FMCG stocks rose on defensive buying. Marico, Nestle India, Hindustan Unilever, ITC, United Spirits rose by between 1.15% to 6.2%.

India's largest electric equipment maker by sales Bharat Heavy Electricals rose 2.16% on reports it is in talks with a consortium of French nuclear technology provider Areva and Pune-based Bharat Forge for its proposed foray in nuclear forgings business.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. DLF, Indiabulls Real Estate, Akruti City and Housing Development & Infrastructure rose by between 2.43% to 19.5%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

India's largest copper maker by sales Hindalco Industries rose 0.35% as it is seen benefiting the most from imposition of import duty by the government on Friday, 13 March 2009. In its bid to safeguard interests of the domestic producers, the government has imposed import duty on aluminium products imported from China. Aluminium foils will attract a safeguard duty of 22% while aluminium sheets will attract a duty of 35% with both applicable for 200 days. Safeguard duties are typically imposed over shorter time periods to protect the domestic industry from cheap imports.

Lately, the Indian markets had been flooded with cheap import of aluminium products from China thereby threatening the domestic producers who are already under pressure due to the demand slowdown and sharp fall in aluminum prices.

India's largest steel maker by sales Tata Steel rose 1.29% as its advance tax payment rose 92.41% to Rs 406 crore in Q4 March 2009 over Q4 March 2008. Other metal stocks, National Aluminum Company, Sterlite Industries and Hindustan Zinc rose by between 0.51% to 4.29%.

India's second largest steel maker by sales Steel Authority of India rose 2.2% on reports the company's sales may improve in the current quarter.

Auto shares rose on hopes lower interest rates and fall in fuel prices would spur demand for vehicles which is mainly driven by finance. India's largest commercial vehicle maker by sales Tata Motors rose 2.97%. The company did not pay any advance tax in Q4 March 2009 compared to Rs 75 crore in Q4 March 2008. India's largest motorbike maker by sales Hero Honda Motors rose 0.33%. But India's largest car maker by sales Maruti Suzuki India fell 1.9%.

India's largest tractor maker by sales Mahindra & Mahindra spurted 10.79% on reports the firm has slashed its planned capital spending by Rs 500 crore as it is renegotiating contracts with vendors.

Banking shares gained on rally in bond yields and on hopes lower interest rates may boost lending growth. India's largest private sector bank by net profit ICICI Bank rose 4,52%. Its American depository receipts (ADR) was up 0.34% on Friday, 13 March 2009.

India's second largest private sector bank by operating income HDFC Bank rose 1.2% as its ADR rose 3.66% on Friday.

India's largest bank in terms of assets and branch network State Bank of India rose 3.65% after its advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

Bank of India rose nearly 3% on reports it had paid advance tax of Rs 590 crore in Q4 March 2009, sharply higher than Rs 191 crore in Q4 March 2008.

Bond yields tumbled after the central bank announced a larger-than-expected buyback auctions after rejecting all bids at Friday's debt sale. The 8.24% bond maturing in 2018 was at 6.37%, compared with its previous close of 6.80%. The central bank said on Friday it would buy back Rs 20000-crore government bonds via auctions this week.

Lower bond yields or higher bond prices (the two are inversely related) will result in appreciation in the value of the bond portfolio of banks.

Outsourcing focussed IT firms gained on a recent sharp slide in a rupee. Meanwhile 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.

India's largest software services exporter by sales TCS rose 2.62% even as the company's advance tax payment fell 54.3% to Rs 53 crore in Q4 March 2009 over Q4 March 2008. The company said its promoter Tata Sons has pledged more than 12.06 crore shares or 12.33% of the equity capital of the firm.

TCS had Thursday, 12 March 2009, said 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 fifth largest IT major by sales HCL Technologies rose 5.62% on securing a contract worth $350 million.

India's third largest software services exporter, Wipro rose 1.65%. Recently its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC). Its ADR jumped 2.8% on Friday.

But, India's second largest software services exporter Infosys Technologies fell 0.62%.

The Indian rupee was volatile. The partially convertible rupee was at 51.32 per dollar, off a high of 51.33, its strongest since 27 February 2009 and above its previous close of 51.48/50. The rupee had 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.

India's largest telecom services provider by sales Bharti Airtel rose 2.37% on reports the company will restructure its businesses into nine verticals under different chief executives, as it looks to expand into areas beyond its mainstay, voice telephony. It has already identified some of these verticals such as mobile commerce, entertainment, media, internet, enterprise services and small & medium businesses. The company will also announce a new reporting structure that will give these new business divisions flexibility and independence to innovate, develop and implement new technologies to address changing demands of customers, reports added.

India's second largest telecom services provider by sales Reliance Communication surged 6.74%. Reports suggest US-based American Tower Corporation is set to acquire Xcel Telecom, a telecom tower infrastructure firm founded by former BPL Mobile chief. Last month, there were rumours that ATC may buy a 20% stake in Reliance Communication's (RCom) tower unit 'Reliance Infratel'.

Aviation stocks rose after domestic air travel shown some revival signs after several months of double digit falls. Kingfisher Airlines, Jet Airways and SpiceJet rose by between 3.15% to 17.16%. Domestic passenger traffic rose to 33.36 lakh in February 2009 compared to 33.26 lakh passengers flown in January 2009. However, passenger traffic saw an 8% fall in February 2009 over February 2008.

Ingersoll-Rand India was locked 20% upper limit at Rs 245.70 after the company said its board will meet on 24 March 2009 to consider buyback of equity shares.

EID Parry rose 18.37% after the company declared an interim dividend of 500%

Reliance Natural Resources clocked the highest volume of 2.09 crore shares on BSE. Unitech (1.38 crore shares), Pennar Industries (1.32 crore shares), Satyam Computer Services (1.2 crore shares) and Suzlon Energy (97.53 lakh shares) were the other volume toppers in that order.

Akruti City clocked the highest turnover of Rs 297.78 crore on BSE. Reliance Industries (Rs 233.09 crore), ICICI Bank (Rs 189 crore), Reliance Infrastructure (Rs 186.56 crore) and Educomp Solutions (Rs 175.65 crore) were the other turnover toppers in that order.