IT, metal stocks lead 3% Sensex surge

Bulls were back as key benchmark indices reversed last three days losses on firm global markets. IT, metal, realty, banking and auto stocks jumped. Index heavyweight Reliance Industries rose ahead of the announcement of Q4 March 2009 results after trading hours. The BSE 30-share Sensex jumped 317.45 points or 2.93%. The barometer index today breached the psychological 11,000 mark.

The Sensex had breached 11,000 level in mid-April 2009 after a solid rally that began in early March 2009. Profit taking had pulled it below that level later.

Inflation based on the wholesale price index (WPI) rose 0.26% in the year through 11 April 2009, higher than previous week's 0.18% rise, data released by the government today, 23 April 2009, showed.

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 is 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.

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.

The stock market was volatile today, 23 April 2009. After opening on a positive note, the market soon slipped into the red as political uncertainty weighed on the market with polling for India's 15th Lok Sabha underway. The second phase of the five-phased polling began today, 23 April 2009. 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.

The market bounced back in morning trade on after Credit Suisse Group's Q1 results beat market expectations. Credit Suisse Group Thursday said it swung to a far better-than-expected first-quarter net profit, climbing back from several quarterly losses in 2008 when it was mired in write-downs and unfavorable trading results. The result resoundingly beat analyst expectations.

In its outlook, Credit Suisse said it is optimistic about its prospects, and will continue to act prudently as it cautioned that financial turmoil may not be entirely over.

After a sharp surge in early afternoon trade, the market cut gains later as European markets dropped. The market soon cut losses as US index futures rose. Market spurted in mid-afternoon trade and extended gains in late trade as European markets moved into the green from red.

European stocks reversed early losses as a rise in crude and metal prices supported commodity shares. Improved economic data in the euro-zone aided the recovery. Key benchmark indices in France and Germany were up by between 0.58% to 0.83%. Germany's DAX was down 0.03%. Though in the red, DAX cut early losses. It had lost 1% in early trade.

The 16-nation euro-zone's manufacturing and services sectors continued to contract in April 2009, but the decline continued to slow, according to monthly surveys of purchasing managers released Thursday. The preliminary Markit euro-zone PMI rose to 40.5 from a reading of 38.3 in March 2009, a six-month high. Economists had forecast a rise to 39. The April 2009 services PMI rose to 43.1 from 40.9 in March 2009, exceeding forecasts for a reading of 41.2.

April 2009 manufacturing PMI rose to 43.1 from 33.9 in March 2009, while expectations were for a reading of 41.2. A figure of less than 50 means a majority of purchasing managers saw a drop in activity, while a reading of more than 50 signals expansion.

ABB today reported 35% drop in first-quarter net profit to $652 million and flagged more cost cuts as infrastructure and power markets remained challenging, especially in Asia and the US.

Tech shares led Asian markets higher today, 23 April 2009 helped by gains in their US counterparts yesterday, 22 April 2009. Key benchmark indices in China, Singapore, South Korea Hong Kong and Japan were up by between 0.11% to 2.26%. Taiwan's Taiwan Weighted fell 0.18%.

South Korean automaker Hyundai Motor Co. on Thursday reported a 43% decline in first-quarter profits in the wake of the impact on sales from the global economic downturn, according to reports. Net income dropped to 225 billion won ($166.5 million) -- slightly ahead of expectations -- from 392.7 billion won in the year-earlier period.

Apple Inc. on Wednesday reported 15% growth in net income. Its gross margin of 36.4% was its highest such number in nearly two years. Meanwhile, shares of EBay Inc. gained 4.2% in after-hours trading in the US as its first quarter results - while weak - were better than expected, and it put its second-quarter view in line with expectations.

Trading in US index futures indicated the Dow could rise 67 points at the opening bell today, 23 April 2009.

US markets ended lower on Wednesday, 22 April 2009 on sell-off in financials after US banks said credit markets haven't recovered yet. The Dow slipped 82.99 points, or 1%, to 7,886.57. The S&P 500 index fell 6.53 points, or 0.8%, to 843.55. But the Nasdaq composite index rose 2.27 points, or 0.1%, to 1,646.12.

The International Monetary Fund said in a forecast released yesterday, 22 April 2009, that the world economy will shrink 1.3% this year, compared with its January 2009 projection of 0.5% growth. The lender predicted expansion of 1.9% next year instead of its earlier 3% estimate.

Separately, US Treasury Secretary Timothy Geithner on Wednesday said the United States carries much of the blame for the economic crisis, but the world must work together to ease the strains. In Britain, Finance Minister Alistair Darling on Wednesday said the British economy was in its worst shape since World War Two and he predicted the economy will shrink 3.5% this year before recovering weakly in 2010.

China's Deputy Central Bank Governor Yi Gang said on Wednesday, the world's third-largest economy was on track to grow close to Beijing's 8% target this year after hitting a low point in the last three months of 2008. Looking into the future, the second quarter and the remainder of this year will continue this recovery trend, Yi told a meeting in Beijing.

Closer home, foreign funds have resumed buying. Foreign institutional investors (FIIs) bought shares worth a net Rs 1.70 crore on Wednesday, 22 April 2009, as against an outflow of Rs 62.70 crore on Tuesday, 21 April 2009. FII inflow in April 2009 totaled Rs 4548.70 crore (till 22 April 2009). FII outflow in calendar year 2009 totaled Rs 2,122.90 crore (till 22 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 317.45 points or 2.93% to 11,134.99. At the day's high of 11,203.28 Sensex rose 385.74 points in late trade. At the day's low of 10,758.97, the Sensex fell 58.57 points in mid-morning trade.

The S&P CNX Nifty was up 93.40 points or 2.8% to 3,423.70.

BSE clocked a turnover of Rs 4,720 crore, lower than Rs 5,023.93 crore on Wednesday, 22 April 2009.

Nifty April 2009 futures were at 3433.80, at a premium of 10.10 points as compared to the spot closing of 3423.70. Turnover in NSE's futures & options (F&O) segment was Rs 68331.06 crore, lower than Rs 70,645.94 crore on Wednesday, 22 April 2009.

The BSE Sensex is up 1,487.68 points or 15.42% 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 rose 1.48%. The BSE Small-Cap index rose 0.94%. However, both these indices underperformed the Sensex.

The BSE IT index (up 5.22%), the BSE Metal index (up 5.2%), the BSE Realty index (up 4.21%), the BSE Auto index (up 3.92%), the BSE Bankex (up 3.16%), the BSE TECk (up 3.12%), outperformed the Sensex.

The BSE Consumer Durables index (down 0.06%), the BSE FMCG index (up 0.09%), the BSE Healthcare index (up 0.83%), the BSE PSU index (up 2.09%), the BSE Oil & Gas index (up 2.25%), the BSE Power index (up 2.26%), the BSE Capital Goods index (up 2.83%) underperfomed the Sensex.

The market breadth, indicating the overall health of the market, was strong. The breadth did a total U turn. In early trade, the breadth was weak. On BSE, 1,426 stocks advanced as compared to 1,097 that declined. A total of 59 shares remained unchanged. From the 30 share Sensex pack 27 stocks gained while rest fell.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 2.7% to Rs 1,762.35. After trading hours RIL said net profit fell 9.35% to Rs 3546 crore on 21.87% fall in total income to Rs 29,355 crore in Q4 March 2009 over Q4 March 2008. RIL's gross refining margin fell to $9.9 per barrel in Q4 March 2009, from $15.5 in Q4 March 2008.

Reliance Petroleum (RPL) rose 2.62% after the company reported a net profit of Rs 84 crore on net sales of Rs 3678 crore in Q4 March 2009. It was the maiden operational performance of RPL after its refinery started commercial operations on 15 March 2009.

Rate sensitive real estate shares reversed early losses on hopes lower rates will spur housing demand. DLF, Indiabulls Real Estate and Housing Development & Infrastructure rose by between 4.84% to 11.71%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Metal stocks rose as metal prices advanced on the London Metal Exchange on improved economic data in the euro-zone. Tata Steel, Hindalco Industries, National Aluminum Company, Hindustan Zinc, Steel Authority of India rose by between 0.54% to 8.98%.

India's largest copper maker by sales Sterlite Industries rose 6.02% after a US court on Wednesday allowed Sterlite to buy bankrupt Asarco LLC for $1.1 billion in cash and a $600 million note. The proposed Sterlite purchase is fair and reasonable and provides a benefit to the debtors, their estates and to all creditors, the court said in its verdict.

Maharashtra Seamless rose 5.39% after net profit surged 29.55% to Rs 252.93 crore in the year ended March 2009 over the year ended March 2008.

Rate sensitive 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 5.64% after it raised more than Rs 2,000 crore ($397 million) from the public through term deposits. Tata Motors cut the rates on the deposit plan to 10 percent for three years from 11% earlier.

Other auto stocks Maruti Suzuki India, Hero Honda Motors and Mahindra & Mahindra, rose by between 3.72% to 6.02%.

Banking stocks gained on hopes lower interest rates will boost lending growth. India's largest bank in terms of assets and branch network State Bank of India (SBI) rose 2.69%. 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 largest private sector bank by net profit ICICI Bank rose 5.85%. 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, the bank said. Its American depository receipts (ADR) fell 3.37% on Wednesday.

India's second largest private sector bank by operating income HDFC Bank rose 0.3% ahead of Q4 results. After trading hours, HDFC Bank said net profit rose 33.91% to Rs 630.88 crore on 53.05% rose in total income to Rs 5365.52 crore in Q4 March 2009 over Q4 March 2008.

India's biggest dedicated housing finance firm by operating income HDFC rose 1.35%.

IT stocks rose on a surge in American depository receipts on Wednesday, 22 April 2009. India's third largest software services exporter, Wipro rose 11.11% extending gains for the second straight day. Its ADR rose 4.4% overnight. Wipro reported 14.8% rise in Q4 consolidated net profit at Rs 1010 crore on 13.5% rise in total income to Rs 6,583.20 crore in Q4 March 2009 over Q4 March 2008. The company announced the results on Wednesday.

Wipro has forecast between $1.009 billion and $1.025 billion in revenue from information technology services in the quarter ending 30 June 2009, lower than the $1.058 billion posted in the three months ended 31 March 2009.

Wipro Chairman Azim Premji said the company did a major re-organization of its software business at the beginning of the last financial year and hopes to emerge stronger than before. Chief Financial Officer Suresh Senapaty said operating margins for the software business expanded to 21.8% during the quarter from 21% in year-earlier period, in spite of lower business volumes.

India's second largest software services exporter Infosys Technologies rose 5.11%. Its ADR rose 2.5% overnight. India's fifth largest IT exporter by sales HCL Technologies rose 2.44%. India's largest software services exporter by sales TCS rose 4.6%.

The Indian rupee strengthened after weak start. The partially convertible rupee was at 49.93 per dollar, strong compared to its previous close of 50.33/34. A stronger rupee affects operating profit of IT firms negatively as they earn most of their revenues from exports.

Healthcare stocks rose triggered by expectations of better Q4 March 2009 results following reports of higher advance tax payment by these firms. Ranbaxy Laboratories, Pfizer, Dr Reddy's Laboratories, Biocon, Lupin rose by between 0.71% to 2.58%.

Some FMCG stocks rose triggered by expectations of a surge in sales due to forecast of a good monsoon this year. ITC, Tata Tea, Nestle India, Britannia Industries Nestle India and Dabur India rose by between 0.04% to 1.69%. FMCG firms derive a substantial revenue from rural markets.

Reliance Infrastructure jumped 6.67% to Rs 712.95 on 14.85% rise in consolidated net profit to Rs 1353.23 crore in the year ended March 2009 over the year ended March 2008.

Unitech clocked the highest volume of 3.58 crore shares on BSE. Cals Refineries (3.05 crore shares), Housing Development & Infrastructure (1.55 crore shares), Suzlon Energy (.54 crore shares) and Reliance Natural Resources (1.51 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 234.72 crore on BSE. Reliance Capital (Rs 219.76 crore), Housing Development & Infrastructure (Rs 212.23 crore), Reliance Infrastructure (Rs 196.81 crore) and Tata Steel (Rs 179.54 crore) were the other turnover toppers in that order.