Sensex notches gains for 8th session in a row

Relentless buying helped the market maintain its upward march for the eighth straight session. The Sensex spurted 317.51 points or 2.90% to end at its highest level in more than six months. Barring the BSE IT index, all the other 11 sectoral indices on BSE ended higher. Software shares lagged behind after sector bellwether Infosys issued a weak guidance for the year ending March 2010 (FY 2010).

The market had tumbled in opening trade on weak cues from global markets and dismal guidance by IT bellwether Infosys Technologies. Expectations of a further easing of the monetary policy by the Reserve Bank of India (RBI) triggered a rebound later. Inflation based on the wholesale price index (WPI) rose 0.26% in the year through 28 March 2009, lower than previous week's 0.31% rise, data released by the government on 9 April 2009, showed. It was the lowest growth in WPI inflation in at least two decades.

Forecast of a good monsoon this year also supported rally on the domestic bourses. The International Research Institute (IRI) for Climate and Society at Columbia University has forecast normal-to-slightly-above-normal monsoon for India between June and September this year. Monsoon is key as sixty per cent of India's population lives in rural regions.

The market sentiment was firm due to buying by foreign funds after heavy outflows in the first two months of calendar 2009. Foreign institutional investors (FIIs) bought shares worth a net Rs 641.90 crore on Monday, 13 April 2009, much higher than Rs 90.60 crore on 9 April 2009. FII inflow in April 2009 totaled Rs 2,320 crore (till 13 April 2009). FII outflow in calendar year 2009 totaled Rs 4,351.70 crore.

The BSE 30-share Sensex rose 317.51 points or 2.90% to 11,284.73, its highest closing since 14 October 2008. At the day's high of 11,337.75, the Sensex rose 370.53 points in late trade. At the day's low of 10,719.18, the Sensex fell 248.04 points in early trade.

The S&P CNX Nifty rose 101.55 points or 3% at 3484.15, its highest closing since 14 October 2008. Nifty April 2009 futures were at 3496.20, a premium of 12.05 points compared to the spot closing. Turnover in NSE's futures & options (F&O) segment was Rs 72224.45 crore sharply higher than Rs 51688.1 crore on Monday, 13 April 2009.

The BSE Mid-Cap index rose 3.95% and the BSE Small-Cap index rose 5.32%. Both the indices outperformed the Sensex.

The market breadth was strong. On BSE, 2173 shares rose as compared to 463 that declined. A total of 67 shares were unchanged. The Sensex clocked a turnover of Rs 7678 crore, much higher than Rs 5,420.30 on 13 April 2009.

European shares declined after struggling Swiss bank UBS said it expects to post a loss of nearly 2 billion Swiss francs ($1.8 billion) for the first three months of 2009. Key indices in France and Germany were down 0.23% to 0.42%. UK's FTSE index, which swayed between gains and losses, was now up 0.05% after the hard-hit British housing market showed further signs of stabilization in March 2009

Swiss bank UBS said Wednesday that despite some positive signs at the start of the quarter, there was a further outflow of client money, with a net outflow of 23 billion francs from its wealth management and Swiss bank unit.

Trading in US index futures showed the Dow could rise 33 points at the opening bell on Wednesday. Earlier in the day, US index futures were in the red.

Chinese shares ended positive on reports the government is considering additional stimulus measures to boost consumption and bolster growth. The Shanghai Composite index rose 0.35%. In other Asian markets, Jakarta Composite index in Indonesia was up 1.49%, Singapore's Straits Times rose 0.47% and Hong Kong's Hang Seng rose 0.57%

Key benchmark indices in Japan, South Korea, and Taiwan were down by 0.30% to 1.13%.

US retail sales in March 2009 ended two months of increases and sparked selling across the board on Wall Street on Tuesday, 14 April 2009, with the stocks of retailers, big manufacturers and energy companies among the casualties.

Goldman Sachs shares slid 11.6% to $115.11, a day after the company said it would raise $5 billion by issuing common stock and posted a stronger-than-expected quarterly profit. Equity offerings are traditionally a drag due to their dilutive effect. Further, there were concerns about the quality of Goldman's earnings.

After the market closed Intel said its first-quarter net income dropped 55% on lower sales and margins; while the world's largest computer-chip maker said there were some signs of a bottoming, its fairly hazy second quarter guidance unnerved markets. Its shares fell 5.1% after-hours trading.

In a major speech, US President Barack Obama on Tuesday said there were signs of recovery, but by no means are we out of the woods just yet.

India's second largest software exporter by sales Infosys Technologies fell 2.70% to 1370.80 after its consolidated net profit as per Indian GAAP declined 1.7% to Rs 1613 crore in Q4 March 2009 over Q3 December 2008. Sales declined 2.6% to Rs 5635 crore in Q4 March 2009 over Q3 December 2008. The stock came off early lows of Rs 1300.05.

Infosys forecast a 3.1% to 6.7% decline in revenue to between $4.35 billion and $4.52 billion as per US GAAP for the year ending March 2010 (FY 2010). The company forecast a 9.5% to 13.6% decline in consolidated earnings per American Depositary Share in the range of $ 1.91 and $ 2.00 for FY 2010. The pricing for the quarter ended March 2009 declined by 3%, S.D.Shibulal, chief operating officer, Infosys said in a statement.

India's largest software outsourcer by sales TCS fell 2.39% and financial software servicer provider Financial Technologies fell 0.35%. India's third largest software outsourcer by sales Wipro ended unchanged at Rs 269.

Software developer CMC surged 51.22% at Rs 571.75 on reporting 42.42% rise in net profit to Rs 33.27 crore in Q4 March 2009 over Q3 December 2008. Net sales rose 17.49% to Rs 210.58 crore in Q4 March 2009 over Q3 December 2008. At the time of announcing Q4 results, the company declared dividend at the rate of Rs 15 per share (150%).

Tech Mahindra, who the bid to acquire fraud-hit Satyam Computer Services, rose 2.55%. The company reportedly plans to raise Rs 600 crore through bonds. Tech Mahindra will have to shell out Rs 2,900 crore for acquiring a 51% in Satyam. Satyam Computer, which is now owned by Tech Mahindra, fell 2.56%

India's largest engineering and construction company by revenue Larsen & Toubro (L&T) spurted 6.65%. The company recently announced that it bagged orders worth Rs 605-crore from the water and steel sectors in the January-March 2009 quarter. The stock has a sixth highest weightage of 5.53% on the Sensex.

L&T has lost the bid for buying a major stake in fraud-hit Satyam Computer. L&T's chief financial officer, however, said in a television interview on Monday that L&T will continue holding its stake in Satyam Computer. L&T had acquired 4% in Satyam at Rs 174 per share before Satyam's founder B Ramalinga Raju admitted on 7 January 2009 of a Rs 7,000-crore accounting fraud at the IT firm. L&T later had to hike its stake in Satyam to 12% as the initial cost of investment in Satyam was at risk after the Satyam stock tumbled hit by Raju's confession of the fraud on 7 January 2009.

India's largest power equipment maker by sales Bharat Heavy Electricals spurted 9.48% on expectations that lower steel prices will boost margins in the current year. Steel is a key raw material for power equipment.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries rose 3.18%. The scrip has the highest weightage of 17.73% on the Sensex. The company recently started pumping gas from the Krishna Godavari (KG) which is estimated to add close to $2 billion to the company's profit at peak production levels.

Bank stocks rose after government bond yields fell. India's second largest private sector bank by market capitlaisation ICICI Bank, which has fourth highest weightage of 5.89% on the Sensex, rose 6.77%. It recovered from the day's low of Rs 401.10 hit in early trade. ICICI Bank's advance tax payment remained unchanged at Rs 250 crore in Q4 March 2009 over Q4 March 2008.

Axis Bank (up 9.09%), Union Bank of India (up 2.47%), State Bank of India (up 6.38%), Kotak Mahindra Bank (up 6.43%), Punjab National Bank (up 5.21%), Karnataka Bank (up 1.87%), Yes Bank (up 7.78%), and Indian Overseas Bank (up 8.84%), soared.

Bond yields edged lower on Wednesday, 15 April 2009, supported by good liquidity conditions in the banking system, but upcoming bond auction kept gains in check. At 12:00 IST, the 10-year benchmark bond yield was at 6.66%, below Monday's close of 6.75%. The bond market was shut on Tuesday, 14 April 2009, on account of national holiday.

It may be recalled that many banks had reported robust Q3 December 2008 results on the back of treasury gains as bond prices soared. Bond yields and bond prices are inversely related.

Auto stocks extended recent gains on revival in demand on the back of lower interest rates. India's largest truck maker by sales Tata Motors topped the Sensex gainer, rising 11.50%. The company said after market hours on Monday, 13 April 2009, that it repurchased and extinguished its US and Japan listed foreign currency convertible bonds (FCCBs). The buyback of FCCBs will help reduce liabilities

Tata company repurchased 170 Zero Coupon Convertible Alternative Reference Securities (due 2012), of the face Value US $ 1,00,000 each aggregating $ 17,000,000 at the average price of 50.375%. Subsequent to this repurchase, the outstanding bonds would reduce from $490 million to $473 million.

The company also repurchased 30 Zero Coupon Convertible Notes (due 2011), of the face value of Japanese yen (JPY) 10,000,000 each aggregating JPY 300,000,000 at an average price of 54.27%. Subsequent to this repurchase, the outstanding Bonds would reduce from JPY 11760 million to JPY 11460 million.

Maruti Suzuki jumped 2.96% to Rs 847.70. The stock hit a high of Rs 853, its 52-week high. The company on Tuesday, 14 April 2009, unveiled its second K-series gasoline engine to be used in its upcoming passenger car Ritz.

Ashok Leyland (up 7.28%), Mahindra & Mahindra (up 5.39%), Escorts (up 4.83%), Bajaj Auto (up 3.50%), and Hero Honda (up 1.27%), rose.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. Penland (up 10.33%), Orbit Corporation (up 8.46%), Mahindra Lifespace Developers (up 6.45%), HDIL (up 5.96%), Sobha Developers (up 6.15%), Indiabulls Real Estate (up 5.59%), and Omaxe (up 5.21%), rose. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

India's largest realtor by market capitalisation DLF soared 10%. DLF and its unlisted promoter group company DLF Assets (DAL) are together reported to have raised around Rs 1100 crore as debt from HDFC Bank through lease rental discounting (LRD) of their properties. The fresh round of debt raising will reportedly ease cash flow at DLF. LRD allows a property owner to raise funds against the expected rentals from the property in future. Privately held DAL has raised around Rs 800 crore, while DLF raised the rest.

Delhi-based realty firm Unitech rose 14.81%. According to recent reports, the company plans to raise as much as Rs 1,250 crore through private placement of shares to qualified institutions to repay part of its debt of over Rs 8,000 crore.

Telecom shares spurted on good monthly subscriber addition figures. India's largest listed telecom operator by market share Bharti Airtel rose 3.30%. Bharti added 28 lakh GSM users in March 2009 as against 27.3 lakh users in February 2009. Bharti Airtel continues to be the top GSM operator, with a market share of 32.57%. The stock has 5.61% weightage on the Sensex.

India's third largest listed cellular operator by sales Idea Celular rose 3.27%. The firm added added 15 lakh new customers, boosting its subscriber base to 4.30 crore. With this, Idea's market share is 14.92%.

India's second largest listed telecom operator by sales Reliance Comunication rose 4.95%. The company said on Wednesday, 15 April 2009, it will launch a tender offer to buyback FCCBs at a discount, subject to central bank approval. The company said in a statement $950 million of FCCB bonds were outstanding from $1 billion issue set to mature in 2012. It said it had already repurchased $40 million of the bonds.

The world's sixth largest steel producer Tata Steel extended recent gains, rising 3.69%. The company is reportedly in discussion with Tata Motors to supply flat steel products for the world's cheapest car, Nano.

India's largest copper maker by sales Sterlite Industries fell 0.75% after global mining giant Grupo Mexico outbid Vedanta Resources for acquiring bankrupt copper mining firm Asarco.

Tata Group firm Tata Communicatons rose 2.24% to Rs 582.85. It hit an intraday high of Rs 594.90, which is also its 52-week high.

Drug maker Pfizer jumped 2.12%. It hit an intraday high of Rs 712, which is also its 52-week high. US drug maker Pfizer Inc offered on Sunday, 12 April 2009, to pay about $136 million to boost its stake in its Indian arm Pfizer to 75%. Pfizer -- which announced plans to buy rival Wyeth for $68 billion earlier this year -- said it will launch a tender offer to buy a 33.77% stake in the Indian business at a price of Rs 675 per share. Pfizer already owns 41.23% of the Indian company. It expects the offer, which is subject to regulatory approvals, to open in June 2009.

Offshore service provider Garware Offshore Services was locked at an upper limit of 20% at Rs 92.40 on BSE, after the company said it has secured three-year contract from ONGC for its newly built platform supply vessel M V Makalu.

Signs of an improvement in the Indian economy and easing of the credit crisis triggered a solid rally on the Indian bourses in the past few days. The rally was also a part of a sharp surge in global equities triggered by hopes the worst of the global economic recession may be over. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex jumped 3124.33 points or 36.92% to 11,284.73 on 15 April 2009, its highest closing since 14 October 2008.

There are signs that the credit crisis is easing. 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 the quarter ended March 2009, 44% more than in the same period a year earlier. State-owned lender India Infrastructure Finance Company 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. The credit offtake from the banking sector is also improving.

The Q4 March 2009 results will dictate the near-term trend on the bourses and investors will closely watch the future outlook provided by the company managements.