ICICI Bank vaults in choppy market

Key benchmark indices saw divergent trend - with the BSE Sensex advancing and its peer S&P CNX Nifty ending lower. Volatility was the hallmark of the day's trading session, with traders rushing to square open positions ahead of the expiry of the near month contracts on Wednesday, 29 April 2009. Brokerage firm UBS saying slowdown in Indian economy and corporate earnings could bottom out by the second half of the year ending March 2010 (FY 2010) helped Indian bourses outperform its global peers. The market breadth indicating overall health of the market was negative.

A deadly swine flu outbreak that originated in Mexico pulled stocks down in Asian and Europe on Monday, 27 April 2009. The BSE 30-share Sensex was up 42.80 or 0.38% up close to 110 points from the day's low and off 120 points from the day's high. Realty and metal stocks were weak even as banking stocks gained.

After a weak opening caused by weakness in Asian stocks triggered by concerns over the flu outbreak, Indian stocks bounced back shortly. The market extended gains in early afternoon trade as Japanese stocks ended a choppy trading session in green. The Sensex hits its highest level in more than six months. The market gave up all the gains and fell into red in afternoon trade before recovering to move into the green. The market moved between positive and negative zone later.

The expiry of the near-month derivatives contracts has been advanced to 29 April 2009 from 30 April 2009 as the stock market remains closed on 30 April 2009 on account of voting for the parliamentary elections in Mumbai on 30 April 2009. Rollover of Nifty positions from April 2009 series to May 2009 series stood at 38% while those of stock futures were 26%, as on Friday, 24 April 2009.

Political uncertainty may lead to volatile swings on the bourses in the next few weeks with polling underway for India's 15th Lok Sabha. The month-long parliamentary elections that began on 16 April 2009 will conclude on 13 May 2009 with results due on 16 May 2009. Poll estimates point to a fractured mandate.

European stocks fell on Monday as fears of a swine flu pandemic hit airline, bank and commodity shares on worries that travel and trade would be hit. Key benchmark indices in France, Germany and UK fell by between 0.86% to 1.35%.

The Conference Board's leading economic index (LEI) for the euro area rose 0.2% in March 2009 to 92.40. Positive contributions from the interest rate spread and the business expectations (services) index more than offset a negative contribution from stock prices, it said. "Although it is too soon to conclude that the second increase in the LEI in three months offsets the recessionary signal, a broad-based perspective on business cycle indicators suggests a more moderate outlook and that a recovery may still materialize as early as the end of 2009 and before the middle of 2010," said Jean-Claude Manini, The Conference Board Senior Economist for Europe.

Asian stocks slipped on Monday as the outbreak of swine flu in North America hurt shares of airlines and transport companies. Key benchmark indices in China, Hong Kong, Taiwan, South Korea, and Singapore fell by between 1.05% and 2.99%.

But Japan's Nikkei rose 0.21% even as Japan's government said on Monday that it expects the nation's economy to contract a record 3.3% for fiscal 2009, as overseas demand continues to decline.

China and Taiwan have agreed to raise the number of direct flights between the two and to broaden financial business relations in a bid to better deal with the global economic crisis. Chen Yunlin, president of mainland China's Association for Relations Across the Taiwan Straits, and Chiang Pin-kung, chairman of Taiwan-based Straits Exchange Foundation, signed the agreements Sunday 26 April 2009 in Nanjing, according to a report by China's state-run Xinhua news agency.

Trading in US index futures showed the Dow could fall 140 points at the opening bell on Monday, 27 April 2009.

Fears that any tentative green shoots in the global economy could be trampled by the deadly outbreak of swine flu put markets on edge on Monday, after world policymakers said over the weekend that a recovery could begin later this year but plenty of downside risk remained.

Obama administration officials declared a public health emergency on Sunday, 26 April 2009, over a deadly outbreak of swine flu, following an international warning from the United Nations' health agency and moves around the world to secure vaccine supplies. The US declaration came shortly after officials confirmed that students at a New York City high school were sickened by the same strain of swine flu that has killed people in Mexico, following similar cases in Texas, California and Kansas.

Later Sunday, Mexico's Health Minister Jose Angel Cordova was quoted in reports as saying that the number of Mexican deaths from the outbreak had risen to at 103. Cordova was also quoted as saying that over 1,600 swine flu cases have been reported in the country, although about 1,000 of those have since recovered.

The World Health Organization Saturday declared the outbreak of the previously unknown virus a public health emergency of international concern. In a statement posted on its Web site, the agency advised health workers in all countries to monitor patients closely for signs of flu-like illness and severe pneumonia.

US Treasury Secretary Timothy Geithner on 24 April 2009 said the global economy looks a little better recently but that it is way too soon for any victory laps. There are signs that the pace of deterioration in economic activity and trade flows has eased, Geithner said. Without giving any specifics, Geithner said that certain spending measures have stabilized and financial conditions have shown modest improvement. He also said that the US housing markets, the epicenter of the global crisis, are beginning to stabilize.

US stocks rallied on Friday, 24 April 2009, as earnings showed companies have weathered the recession and economic data raised hopes the economic cycle may have hit a bottom. The Dow Jones Industrial Average added 119.23 points, or 1.50%, to 8,076.29, the Standard & Poor's 500 Index rose 14.31 points, or 1.68%, to 866.23 and the Nasdaq Composite index gained 42.08 points, or 2.55%, to 1,694.29.

Closer home, the Reserve Bank of India (RBI) governor D. Subbarao on Saturday, 25 April 2009, said there are signs of improvement in demand in industries including cement and steel. While the short- and medium-term outlook for the economy is mixed, Subbarao said long-term growth drivers are still intact. He expects a swift and sharp recovery once global growth rebounds, adding that it may take a couple of years for India to resume expanding at 9%. The central bank will use various policy instruments to spur the economy, he said, declining to comment on whether he will cut interest rates further.

UBS's lead economic indicator in India has climbed for three consecutive months pointing to a strong recovery in industrial activity by June 2009, it said in a note late on Friday, 24 April 2009. UBS said the key variables which have boosted its lead indicator index was the government bond yield spread, real (M1) money supply and a revival in foreign capital inflows. "Our base-case scenario is for the Indian economy and corporate earnings to bottom out by the second half of 2009/10 and for full recovery in 2010/11," it said. UBS said it is positive on the Indian stock market on a 12 month view with overweight recommendation for autos, metals, banks, real estate and conglomerates.

The Reserve Bank of India (RBI) on Tuesday, 21 April 2009 cut its key short-term rates by 25 basis points each to shore up faltering growth in the face of the global economic slowdown. The Reserve Bank also repeated a call for banks to pass on its rate cuts to customers and said deposit rates should also fall. "There is scope for the overall interest rate structure to move down within the policy rate easing already effected by the Reserve bank," it said adding its latest rate cut reinforced the case.

Reacting to the RBI rate cut, ICICI Bank, India's largest private sector bank by net profit, announced a reduction in both deposit and lending rates after trading hours on Tuesday, 21 April 2009.

The RBI cut its growth estimate for the year ended March 2009 (FY 2009) to 6.5% to 6.7%, from 7% projected earlier. It has forecast growth of around 6% for the year ending March 2010 (FY 2010). The fiscal and monetary stimulus measures initiated during 2008-09 coupled with lower commodity prices could cushion the downturn in the growth momentum during 2009-10 by stabilizing domestic economic activity to some extent, RBI said in a statement. However, any upturn in the growth momentum is unlikely in view of the projected contraction in global demand during 2009, particularly decline in trade, it added.

Strong rural demand, lagged impact of monetary and fiscal stimuli, softening of domestic input prices, investment demand from brown-field expansion projects and some restructuring initiatives are expected to have a positive impact on industrial production in the coming months, the RBI said.

While moderation in internal accruals has an adverse effect on corporate investment, decline in input prices and reduction in borrowing costs may have a favourable impact on profitability of the corporate sector going forward, the RBI said at the time of announcing the monetary policy.

The central bank said that managing large government borrowing in FY 2010 in a non-disruptive manner would be a major challenge, and said it would used a mix of monetary and debt management tools to ensure this was done smoothly. Large borrowings also militate against the low interest rate environment that the RBI is trying to maintain to spur investment demand in keeping with the stance of monetary policy, the central bank said in its policy statement.

The RBI said wholesale-priced based inflation was expected to turn negative early in the current fiscal year, but this should not be interpreted as deflation for policy purposes. It projected WPI inflation would be around 4% at the end of FY 2010.

The RBI said a planned April 2009 review of the policy on foreign banks in India would now not go ahead until there was greater clarity regarding stability, recovery of the global financial system and better global coordination on regulation and supervision.

A good news for the economy is forecast of a near normal monsoon by the India Meteorological Department (IMD) on 17 April 2009. The IMD said rainfall in the June-September 2009 monsoon season was expected to be 96% of the long-term average. The outlook is among the nation's most widely watched indicator as monsoon rains are a major influence on output of key crops, economic activity and also affects sentiment in the country's financial markets.

Foreign funds are on aggressive buying mode. Foreign institutional investors (FIIs) bought shares worth a net Rs 513.50 crore on Friday, 24 April 2009. FII inflow in April 2009 totaled Rs 5,373.90 crore (till 24 April 2009). FII outflow in calendar year 2009 totaled Rs 1,297.70 crore (till 24 April 2009).

FIIs had resorted to heavy selling of Indian stocks in the first two months of calendar 2009. Domestic institutional investors had absorbed the selling by FIIs.

The BSE 30-share Sensex rose 42.80 or 0.38% to 11,371.85. At the day's high of 11,492.10 Sensex rose 163.05 points in afternoon trade, its highest level since 14 October 2008. At the day's low of 11,176.55, the Sensex fell 152.50 points in early trade.

However the S&P CNX Nifty slipped 10.75 points or 0.31% to 3,470. Nifty April 2009 futures were at 3465, at a discount of 5 points as compared to the spot closing of 3470. Turnover in NSE's futures & options (F&O) segment surged to Rs 75,777.22 crore from Rs 68,374.47 crore on Friday, 24 April 2009.

After accounting for today's gains, the BSE Sensex is up 1,724.54 points or 17.87% in calendar 2009 from its close of 9,647.31 on 31 December 2008.

Coming back to today's trade, the BSE Mid-Cap index down 0.44%, and the BSE Small-Cap index fell 1.01%,. Both the indices underperformed the Sensex.

The BSE Bankex (up 2.41%), the BSE Capital Goods index (up 1.57%), the BSE Healthcare index (up 0.95%) outperformed the Sensex.

The BSE Consumer Durables index (down 2.77%), the BSE Realty index (down 2.42%), the BSE Power index (down 1%), the BSE PSU index (down 0.96%), the BSE Metal index (down 0.95%), the BSE TECk (down 0.72%), the BSE Auto index (down 0.71%), the BSE Oil & Gas index (down 0.54%), the BSE FMCG index (down 0.08%), the BSE IT index (down 0.03%) underperfomed the Sensex.

The market breadth, indicating the overall health of the market, turned negative from a strong breadth earlier in the day. On BSE, 1,164 stocks advanced as compared to 1,357 that declined. A total of 57 shares remained unchanged.

BSE clocked a turnover of Rs 4,846 crore lower than Rs 5,254 crore on Friday, 24 April 2009.

From the 30 share Sensex pack, 16 stocks fell while rest gained.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) was flat at Rs 1,784.85. The stock hit a high of Rs 1,804.70 and a low of Rs 1,759.95. RIL's net profit fell 9.35% to Rs 3546 crore on 23.9% fall in sales to Rs 28,362 crore in Q4 March 2009 over Q4 March 2008. The company announced the results on Thursday, 23 April 2009.

As per reports, Reliance Industries has resumed crude oil production from one well in its east coast deepwater block. Reliance had stopped crude oil production form the Krishna Godavari block, popularly known as D-6, from 22 March 2009 to add more wells to raise the crude oil output.

Oil exploration firms fell after crude oil prices dropped. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) declined 0.88% and Cairn India fell 1.87%. US crude oil futures for June 2009 delivery fell $2.16 to $49.39 a barrel on Swine-flu fears. The fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.

Auto stocks fell on profit taking after recent surge in prices. Tata Motors, Bajaj Auto, Hero Honda Motors fell by between 1.45% to 1.86%. While, Mahindra & Mahindra and Maruti Suzuki India rose by between 0.19% to 0.65%.

Banking stocks rose in choppy trade on hopes falling interest rates will boost lending growth and on rally in bond prices. India's largest private sector bank by net profit ICICI Bank rose 8.2% to Rs 467.95 after its rating was raised at Goldman, Sachs & Co. on improving core earnings. The stock was raised to "buy" from "neutral" at Goldman, which said the company's fundamentals were improving.

ICICI Bank's net profit fell 35.31% to Rs 743.76 crore on 11.42% fall in total income to Rs 9203.36 crore in Q4 March 2009 over Q4 March 2009. The bank's profit took a beating due to lower fee income, higher provisioning towards bad loans and an almost flat net interest income. As of 31 March 2009 bank's net non performing asset ratio was 1.96%.

ICICI Bank cut its lending rates by 50 basis points after the central bank cut official interest rates on Tuesday 21 April 2009. The benchmark advance rate, or the rate that it charges its top customers, now stands at 16.25% from 16.75%, effective from Wednesday, 22 April 2009.

ICICI Bank also cut rates for retail customers by 50 basis points. The rates on deposits have been cut between 25 to 50 basis points, with effect from Friday 24 April 2009.

India's second largest private sector bank by operating income HDFC Bank rose 0.5% to Rs 1,115.50. The stock hit a high of Rs 1,138 and a low of Rs 1,094. Its ADR gained 2.38% on Friday. The banks' net profit rose 33.9% to Rs 630.88 crore on 53.1% rise in operating income to Rs 5,365,52 crore in Q4 March 2009 over Q4 March 2008. The results were more or less in line with market expectations. The bank announced the results on Thursday 23 April 2009.

HDFC Bank's gross non performing assets (NPA) stood at 1.98% of advances as of 31 March 2009 compared to 1.91% as of 31 December 2008. Net NPA as of 31 March 2009 was at 0.63% of net advances.

India's largest bank in terms of assets and branch network State Bank of India (SBI) fell 1.96% to Rs 1,282.15. The stock hit a high of Rs 1,329 and a low of Rs 1,269. SBI chairman O.P. Bhatt on Tuesday 21 April 2009 said interest rate cuts by the Reserve Bank of India were a signal for commercial banks to lower their rates. He said a decision on whether SBI would lower rates would be taken after a meeting of the bank's asset-liability. SBI's 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 fell 0.05% to Rs 1,803.75.

Outsourcing focussed IT firms rose in volatile trade on a weaker rupee. India's third largest software services exporter, Wipro rose 4.12% to Rs 324.75. The stock hit a high of Rs 326.95 and a low of Rs 305. Its ADR rose 1.33% on Friday.

India's largest software services exporter by sales TCS rose 3.58% to Rs 603.45. The stock hit a high of Rs 608 and a low of Rs 550. India's second largest software services exporter Infosys Technologies was down 1.1% to Rs 1,432.60. The stock hit a high of Rs 1,450 and a low of Rs 1,417.50. Its ADR rose 0.98% on Friday.

The Indian rupee edged lower on Monday, as losses in other regional share markets raised expectations of outflows from local stocks, with the dollar's strength overseas also weighing. The partially convertible rupee was at 50.16 per dollar, weaker than its previous close of 49.81/82. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

Capital goods stocks rose after India's biggest engineering & construction firm by revenue L&T recently said it expect strong order inflow in the current year ending March 2010 (FY 2010). Larsen & Toubro, Bharat Heavy Electricals, Punj Lloyd, Crompton Greaves rose by between 1.16% to 2.77%.

Some FMCG stocks rose triggered by expectations of a surge in sales due to forecast of a good monsoon this year. ITC, Tata Tea, Marico, United Spirits, United Breweries rose by between 0.25% to 12.62%. FMCG firms derive a substantial revenue from rural markets.

India's largest drug maker by sales Ranbaxy Laboratories fell 4.61% after it reported a net loss of Rs 777.78 crore in Q1 March 2009 compared to a net profit of Rs 103.42 crore in Q1 March 2008. The company's sales fell 18.7% to Rs 802.22 crore in in Q1 March 2009 over Q1 March 2008. The stock was the biggest loser form the Sensex pack.

Realty stocks fell on profit taking after recent surge in prices Indiabulls Real Estate, Housing Development & Infrastructure, Unitech fell by between 0.03% to 11.08%.

Metal stocks fell on slide in copper prices on the London Metal Exchange. Steel Authority of India, National Aluminum Company, Hindalco Industries, Tata Steel, Hindustan Zinc fell by between 1.65% to 2.87%.

Jaiprakash Associates rose 3.58% as net profit rose 83.12% to Rs 385.32 crore on 63.13% to Rs 2,194.57 crore in Q4 March 2009 over Q4 March 2008. Jaiprakash Associates expects revenue to jump more than two-third in the year ending March 2010, driven by growth in all of its three business segments of construction, cement and real estate, its executive chairman Manoj Gaur said today at the time of announcing the results during trading hours

Cals Refineries clocked the highest volume of 4.98 crore shares on BSE. Unitech (2.19 crore shares), Reliance Natural Resources (1.63 crore shares), Jaiprakash Associates (1.55 crore shares) and Indiabulls Real Estate (1.31 crore shares) were the other turnover toppers in that order.

ICICI Bank clocked the highest turnover of Rs 366.67 crore on BSE. Reliance Industrial Infrastructure (Rs 273.58 crore), Reliance Capital (Rs 208.88 crore), Jaiprakash Associates (Rs 198.91 crore) and Reliance Industries (Rs 195.64 crore) were the other turnover toppers in that order.