Highest closing for Sensex in nearly 6 months

Key benchmark indices extended recent strong gains with the barometer index BSE Sensex registering its highest closing in nearly six months. Realty, capital goods, FMCG and IT stocks, led the rally. Index heavyweight Reliance Industries (RIL) extended recent gains. Banking stocks cut intraday losses. The BSE 30-share Sensex rose 207.47 points or 1.97% up close to 570 points from the day's low.

Data showing resumption of buying by foreign funds boosted the market sentiment. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has jumped 2,581.94 points or 31.63%.

The market staged a strong rebound after an initial steep slide caused by weak global markets and data showing fall in exports for the sixth month in a row in March 2009. Weak global markets triggered profit taking after a steep rally on the domestic bourses in the past few days.

Indian stocks have risen sharply in the past few days as a part of a solid rally in global stocks triggered by hopes the worst of the global economic recession may be over.

As per the provisional data released by the commerce department on Tuesday, 7 April 2009, India's exports declined for a sixth month in a row in March 2009. Quick estimates made by the commerce department reveal that exports fell by 18% in March 2009 to $12 billion. With demand in key markets including the US, the European Union and Japan slowing down, exports in most countries have been hit.

The Q4 March 2009 results of India Inc would start trickling in soon and investors will closely watch the future outlook provided by the management. IT bellwether Infosys Technologies kickstarts the earnings reporting season on 15 April 2009.

One domestic brokerage expects core earnings of 30-Sensex firms to decline 12% in Q4 March 2009 over Q4 March 2008. The decline in earnings may be more widespread than in the previous quarter. The decline in earnings was led primarily by commodities in Q3 December 2008. The above mentioned brokerage expect earnings to decline in real estate, automobiles, banking, financial services & insurance (BFSI), media, and construction, in addition to commodities (metals & mining, cement), sectors. FMCG and capital goods are expected to report only a marginal earnings growth. Oil marketing companies are, however, expected to post strong earnings growth.

The suspension of AS-11 till 2011 will result in significant increase in profits in Q4 March 2009, as companies may write back marked-to-market losses on foreign currency liabilities booked in the past three quarters.

The above-mentioned brokerage expects Sensex earnings to decline 5% in the year ending March 2010 (FY 2010). Capital goods, FMCG, oil & gas, and BFSI are expected to register earnings growth in FY 2010, whereas metals, cement and real estate are expected to see sharp earnings decline, it says in a recent report. Slowing economic growth, weak demand, and lower realisations will keep earnings growth and profitability of Indian corporates under pressure in the near term. With sales declining, operating leverage will result in margin contraction. However, this will be partially compensated by lower input costs.

Consensus earnings expectations have been consistently revised downwards. There could be further earnings downgrades if the macroeconomic situation does not improve materially.

European stocks witnessed intraday recovery after a sharp slide in opening trade. In London, the FTSE 100 index was now down 0.68%. It had fallen 1.3% in early trade. In France, the CAC-40 index was now down 0.34%. It had fallen 1.8% in early trade. In Germany, the DAX index was now down 0.04%. It had fallen 1.9% in early trade.

European shares edged lower today as the first-quarter earnings season got off to a poor start following a larger-than-expected loss from aluminum giant Alcoa.

Asian stocks fell for a second day in a row on Wednesday, 8 April 2009, led by mining and finance companies, as losses at Alcoa Inc. and Daiwa Securities Group Inc. renewed concern the global recession is hurting corporate earnings. Key benchmark indices in China, Singapore, Taiwan, Indonesia, South Korea fell by between 1.02% to 3.76%.

Alcoa, the largest US aluminum producer, posted a second-straight quarterly loss as the global recession reduced demand for the metal used in automobiles and appliances.

Japan's Nikkei 225 Stock Average dropped 2.69% as a government report showed the country's exports sank 50.4% in February 2009 from a year earlier. Daiwa Securities, Japan's second-biggest brokerage, said it will report an annual loss as it books a 17.4 billion yen ($173 million) decline in the value of securities holdings.

Hong Kong's leading share index which had ended the morning session sharply lower on Wednesday pulled down by losses from market heavyweight HSBC Holdings, cut losses later. The Hang Seng was now down 3.04%.

Trading in US index futures showed the Dow could fall 42 points at the opening bell on Wednesday, 8 April 2009. The Dow futures were choppy.

US stocks slumped on Tuesday, 7 April 2009, as investors George Soros and Marc Faber predicted that the recent rebound in equities will falter.

The International Monetary Fund will probably increase its estimate of credit losses on US assets to about $2.8 trillion from $2.2 trillion in its Global Financial Stability report due on 20 April 2009, the Financial Times said, citing people familiar with the matter.

The US Treasury has decided to extend bailout funds to several struggling life insurance companies, according to a report in The Wall Street Journal. The extension of the Troubled Asset Relief Program is expected to be announced in the next several days, the newspaper reported. Keeping life insurers on solid footing is seen as crucial to maintaining confidence, the report said.

Meanwhile, investors moved more cash out of safe-haven money market funds and moved it into higher-risk investments in the week ended 1 April 2009, data from Boston-based fund tracker EPFR Global showed on 3 April 2009. During the week ended 1 April 2009, long-only dedicated emerging market equity funds witnessed net inflows of $1.2 billion, according to the US-based EPFR Global, which provides fund flows and asset allocation data to financial institutions.

The broader category of Global Emerging Market (GEM) equity funds had net inflows of $867.5 million. However, India had net outflows of $4.1 million in the week ended 1 April 2009. It seems that emerging markets have once again become attractive investment destinations, promising better growth prospects, says EPFR Global managing director Brad Durham.

In the latest period, investors pulled $9.68 billion out of money market funds while developed equity markets such as the United States and Japan had outflows of $1.095 billion and $487.1 million, respectively.

Foreign funds have resumed buying of Indian stocks. The foreign funds bought shares worth Rs 172.30 crore on Monday, 6 April 2009. Foreign funds bought shares worth Rs 931.10 crore in two trading sessions between 1 April 2009 and 2 April 2009. The inflow followed heavy sales in the preceding three trading sessions. Foreign funds dumped stocks worth a net Rs 1266.70 crore in three trading sessions from 27 March 2009 to 31 March 2009. Before the selling, foreign institutional investors had mopped up stocks worth Rs 3635 crore in a short span from 17 March 2009 to 26 March 2009.

However, a recent sharp volatility in the rupee may dissuade fresh buying by foreign funds. The rupee has bounced back after hit a record low beyond 52 per dollar early last month.

The Indian rupee dropped on Wednesday after a three-day rise as weakness in regional stocks raised concerns of outflows from domestic shares. The partially convertible rupee was at 50.19 today weaker compared to a closing of 50.04/05 per dollar, on Monday 6 April 2009. India's bond and currency markets were closed on Tuesday 7 April 2009 for a local holiday.

Domestic institutional investors have been absorbing heavy selling by foreign funds witnessed in first two months of calendar year 2009.

Indian manufacturing activity contracted for a fifth straight month in March 2009 as demand remained depressed by the global economic downturn, although there were some signs of improvement, a survey showed on 1 April 2009. The new orders index rose to 49.5 in March 2009 from 45.9 in February 2009.

Prime Minister Manmohan Singh on 24 March 2009 said India's economy will revive in a big way in six to seven months as stimulus packages start to take effect. On the same day, Planning Commission Deputy Chairman Montek Singh Ahluwalia scaled down the GDP (gross domestic product) growth projection for the current fiscal to 6.5% from the 7.1% increase estimated by the government earlier during the year, owing to the ongoing global crisis.

Meanwhile, there are signs that the credit flow to businesses is improving. 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. Earlier, an extreme risk aversion by banks had chocked credit flow to the industry - the lifeline of business.

Indian corporate bonds sales posted their best quarter on record as government-backed infrastructure and finance companies raised funds to bolster their capital. Indian companies raised Rs 37800 crore from bonds in Q1 March 2009, 44% more than in the same period a year earlier. State-owned lender India Infrastructure Finance Co. raised Rs 7370 crore in the biggest bond sale of the quarter, followed by a Rs 3950-crore issue by the National Bank for Agriculture & Rural Development, known as Nabard.

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.

Raising funds may become difficult for small and medium enterprises (SMEs) with new lending regulations for banks, popularly known as Basel II norms coming into force from 1 April 2009. All business units, irrespective of their size, will need to take ratings for their enterprises to secure working capital, loans, and other funds from banks.

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.

India's fiscal deficit for the April-February 2009 period was Rs 3,07,000 crore ($61 billion), or 94.1% of an upwardly revised budget target, a government statement said on Tuesday, 31 March 2009. In February 2009, the government revised upwards its fiscal deficit estimate for the year ending 31 March 2009 to Rs 3, 27, 000 crore, equivalent to 6% of gross domestic product from 2.5% estimated earlier. The deficit has widened after the government announced extra spending of close to Rs 1,50,000 to cover a farm debt scheme, subsidies and steps to stimulate a slowing economy.

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. More so at a time when early estimates point a fractured mandate. A group of smaller political parties, including the communists, have formally launched a Third Front in a bid to provide an alternative to the two main parties viz. the Congress and the BJP.

The BSE 30-share Sensex rose 207.47 points or 1.97% to 10,742.34 its highest closing since 15 October 2008. At the day's high of 10,778.11, the Sensex rose 243.24 points in late trade. At the day's low of 10,171.91, the Sensex fell 362.96 points in early trade.

The S&P CNX Nifty gained 86.35 points or 2.65% to 3,342.95 its highest closing since 14 October 2008.

The BSE clocked a turnover of Rs 5,423 crore, higher than Rs 4,690.15 crore on Monday, 6 April 2009.

Nifty April 2009 futures were at 3,354.50, at a premium of 11.55 points as compared to the spot closing of 3342.95. Turnover in NSE's futures & options (F&O) segment surged to Rs 63,465.15 crore from Rs 48,445.32 crore on Monday, 6 April 2009.

The BSE Mid-Cap index rose 3.11% and the BSE Small-Cap index rose 4.47%. Both the indices outperformed the Sensex.

The BSE Realty index (up 4.74%), the BSE Consumer Durables index (up 4.62%), the BSE FMCG index (up 4.47%), the BSE PSU index (up 3.54%), the BSE Oil & Gas index (up 3.24%), the BSE Healthcare index (up 3.04%), the BSE Capital Goods index (up 3.02%), the BSE Power index (up 2.81%) outperformed the Sensex.

The BSE Bankex (down 0.22%), the BSE Auto index (up 1.31%), the BSE TECk index (up 1.41%), the BSE Metal index (up 1.65%), the BSE IT index (up 1.78%) underperfomed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 2,031 stocks advanced as compared to 492 that declined. A total of 58 shares remained unchanged. The breadth was weak earlier in the day.

From the 30 share Sensex pack 22 stocks gained while rest fell.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 3.1% to Rs 1,724.05. The stock came off the day's low of Rs 1,605.10. The company started pumping gas from the Krishna Godavari (KG) recently which is estimated to add close to $2 billion to the company's profit at peak production levels.

PSU OMCs rose on fall in crude oil prices. BPCL, HPCL and Indian Oil Corporation rose by between 1.15% to 3.78%. Lower oil prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price. Oil fell by over a dollar toward $48 a barrel on Wednesday, adding to Tuesday's 3.7% on higher-than-expected rise in US crude inventories.

Auto shares rose on a revival of demand for vehicles on lower interest rates and fall in fuel prices. Auto sales are largely driven by finance. India's largest car maker by sales Maruti Suzuki India rose 2.15% to Rs 816.50. It came off the day's low of Rs 775. Its total vehicle sales rose 21.9% to 85,669 units in March 2009 over March 2008.

India's largest motorbike maker by sales Hero Honda Motors rose 1.68% to Rs 1,077.70. It came off the day's low of Rs 1,040.05. Sales rose 10.2% to 3.53 lakh unit in March 2009 over March 2008.

India's largest commercial vehicle maker by sales Tata Motors rose 6.29% to Rs 222.30. It came off the day's low of Rs 197.50. Its domestic sales however fell 13% to 52,686 units in March 2009 over March 2008. Nevertheless, the domestic sales rose 24% in March 2009 over February 2009.

But, India's largest tractor maker by sales Mahindra & Mahindra fell 3.54%. Total sales rose 6% to 26,209 in March 2009 over March 2008.

Some healthcare stocks rose triggered by expectations of better Q4 March 2009 results following reports of higher advance tax payment by these firms. Lupin, Pfizer, Cipla, Ranbaxy Laboratories, Biocon, Sun Pharmaceutical Industries, Piramal Healthcare rose by between 0.61% to 10.42%.

Aurobindo Pharma rose 3.61% on receiving approval from Swissmedic, Government of Switzerland, for launch of a new drug in Switzerland.

Rate sensitive real estate shares surged on hopes lower rates will spur housing demand. DLF, Unitech, Indiabulls Real Estate, Housing Development & Infrastructure rose by between 1.15% to 12.12%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Some of the FMCG stocks rose triggered by expectations of better Q4 March 2009 results following reports of higher advance tax payment by these firms. Britannia Industries, United Spirits, Tata Tea, Marico, ITC, REI Agro rose by between 0.21% to 13.26%. India's largest FMCG major Hindustan Unilever rose 6.06% after the stock fell over 5% in last five sessions.

Outsourcing focussed IT firms reversed early losses on a weaker rupee. India's third largest software services exporter, Wipro rose 4.69% to Rs 282.10. The stock came off the day's low of Rs 258. Its ADR fell 3.72% on Tuesday. Recently its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC).

India's largest software services exporter by sales TCS rose 4.35% to Rs 604.80, off the day's low of Rs 550. The company has reportedly bagged a $80 million outsourcing contract from UK's Child Maintenance and Enforcement Commission, the first in a series of $2-3 billion worth of contracts to be awarded by the UK's state-owned departments. The company's advance tax payment fell 54.3% to Rs 53 crore in Q4 March 2009 over Q4 March 2008.

India's fifth largest IT firm by sales HCL Technologies rose 10.75% on recent reports the firm has bagged a five-year IT services contract worth close to $170 million or Rs 848 crore from US-based Microsoft Corporation.

India's second largest software services exporter Infosys Technologies rose 0.52% to Rs 1,421.80, off the day's low of Rs 1,368.10. Its ADR fell 0.42% on Tuesday.

Recent reports said Infosys 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.

A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

Banking stocks cut intraday losses on hopes lower interest rates may boost lending growth. India's largest private sector bank by net profit ICICI Bank rose 0.51% to Rs 376.55. The stock came off the day's low of Rs 341.20. Its American depository receipts (ADR) fell 2.15% on Tuesday, 7 April 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 second largest private sector bank by operating income HDFC Bank slipped 1.61% to Rs 1,045.85. The stock came off the day's low of Rs 992.50. Its ADR fell 3.48% 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 fell 0.45% to Rs 1,123.90. Nevertheless, the stock came off the day's low of Rs 1,071. Its advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

India's biggest dedicated housing finance firm by operating income HDFC rose 0.58% to Rs 1,709.10. The stock came off the day's low of Rs 1,600. It announced a 50 basis points reduction in its retail prime lending rate (RPLR) to 14% effective 25 March 2009.

Indian largest engineering and construction firm by sales Larsen & Toubro rose 4.71%. It had recently won two orders worth a total of Rs 1,344 crore ($265 million) from refiner Mangalore Refinery and Petrochemicals. It had also bagged two orders aggregating Rs 1,143 crore ($227 million) from Tata Steel.

Other capital goods stocks, BEML, Praj Industries, Thermax, ABB, Punj Lloyd, rose by between 1.46% to 7.3%.

India's largest steel maker by sales Tata Steel rose 2.82% as its total sales rose 45% to 6.96 lakh tones in March 2009 over March 2008.

Other metal stocks, Steel Authority of India, National Aluminum Company and Hindalco Industries rose by between 2.93% to 8.85%

India's largest power generation firm by sales NTPC rose 6.7% after it reported a 5.6 % rise in provisional net profit to Rs 7827 crore in the year ended March 2009 over the year ended March 2008.

Airline stocks rose on fall in crude oil prices. SpiceJet, Kingfisher Airlines and Jet Airways, rose by between 7.74% to 20%. Jet fuel constitute more than 50% of the operating cost for the airliners. The prices of jet fuel are linked to crude oil.

Reliance Natural Resources clocked the highest volume of 2.57 crore shares on BSE. Unitech (2.36 crore shares), United Breweries Holdings (2.12 crore shares), Cals Refineries (1.98 crore shares) and Ispat Industries (1.66 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 346.19 crore on BSE. United Breweries Holdings (Rs 228.95 crore), Reliance Capital (Rs 202.35 crore), Essar Oil (Rs 190.67 crore), Essar Oil (Rs 190.87 crore) and Reliance Infrastructure (Rs 189.34 croree) were the other turnover toppers in that order.