Small-cap, mid-cap stocks hog limelight

Buying in metal, banking and auto shares today, 13 April 2009, led rally on the domestic bourses which have witnessed a solid surge in the past one month. The barometer index BSE Sensex breached the psychological 11,000 mark in late trade. It, however, failed to end above 11000 mark as IT pivotals slipped. The Sensex rose 163.36 points or 1.51%. It was the Sensex's highest closing in almost six months.

Mid-and small-cap stocks were the flavor of the day. However, blue chips pared intraday gains after trade secretary G K Pillai said India's exports are expected to have fallen about 31% in March 2009 from a year earlier with the global slump hurting overseas sales of Indian firms. Pillai said provisional figures show exports just under $12 billion in March 2009. India's imports may have fallen 37% in March 2009, he added.

Traders refrained from building large positions ahead of a holiday. The stock market remains closed tomorrow, 14 April 2009, on account of Dr. Ambedkar Jayanti.

The trading session was marked with intense volatility. After a strong opening triggered by a rally in global equities, the market slipped into the red. It soon recovered as the sentiment remained firm on resumption of buying by foreign funds in the past few days. The market pared gains in afternoon trade after trade secretary Pillai's comments on dismal exports last month.

The market came off the lower level and surged again in the mid-afternoon trade. After hitting 11,000 market, the Sensex once again pared gains in late trade.

The BSE 30-share Sensex rose 163.36 points or 1.51% to 10,967.22, its highest closing since 14 October 2008. At the day's high of 11,069.54, the Sensex rose 265.68 points in the mid-afternoon trade. At the day's low of 10,800.84, the Sensex fell 3.02 points in early trade.

The S&P CNX Nifty rose 40.55 points or 1.21% at 3382.60, its highest closing since 14 October 2008. Nifty April 2009 futures were at 3378.90, at a discount of 3.7 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment was Rs 51688.1 crore lower than Rs 62970.1 crore on Wednesday, 9 April 2009.

The BSE Mid-Cap index was up 3.17% and the BSE Small-Cap index was up 3.92%. Both the indices outperformed the Sensex.

The market breadth was strong. On BSE, 2064 shares rose as compared to 514 that declined. A total of 64 shares were unchanged.

The BSE reported a turnover of Rs 5398 crore, lower than Rs 5932.83 on Thursday, 9 April 2009.

Signs of an improvement in the Indian economy and easing of the credit crisis triggered a solid rally on the domestic 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 has risen 2806.82 points or 34.39%.

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.

Asian markets surged today, 13 April 2009 after Japanese prime minister Taro Aso more than doubled stimulus spending and Chinese lending rose by a record. Key benchmark indices in China, Singapore, South Korea and Taiwan were up by between 0.17% and 2.95%. Indonesia's Jakarta Composite Index surged 4.61% after elections boosted the position of the country's president. However, the Nikkei 225 average was down 0.44%.

On 10 April 2009, Japan's Aso unveiled a record 15.4 billion yen ($153 billion) stimulus plan, his third since taking office and bringing total spending to 25 trillion yen. The proposal includes a 1.6 trillion yen investment in low-carbon technology, 1.9 trillion yen on employment measures and 370 billion yen for subsidies of new car purchases.

China's banks, which are mostly state-owned, have already met the bulk of the government's target of at least 5 trillion yuan of new loans this year. The People's Bank of China said the government's stimulus package is showing initial results and it will continue to ensure sufficient liquidity after new loans surged sixfold to a record in March 2009.

Several Asia-Pacific markets including Hong Kong, Thailand, New Zealand and Australia were are shut today, 13 April 2009 for Easter Monday. European markets were also closed for Easter Monday

Trading in US index futures showed the Dow could fell 33 points at the opening bell on Monday, 13 April 2009

US markets jumped on Thursday, 9 April 2009 after Wells Fargo said it expects to report a record quarterly profit, fueling a month-long rally prompted by hopes that deterioration in the financial sector was abating. The Dow Jones Industrial Average rose 246.27 points, or 3.14%, to 8,083.38, the Standard & Poor's 500 Index gained 31.40 points, or 3.81%, to 856.56 and the Nasdaq Composite Index climbed 61.88 points, or 3.89%, to 1,652.54.

US President Barack Obama said on 10 April 2009, the US economy is starting to see progress toward recovery. He cited a 20% increase in government-backed loans to small business in the past month as one sign the economy is on the rebound.

Closer home, the market sentiment was firm due to resumption of buying by foreign funds in the past few days. Foreign institution investors (FIIs) bought shares worth a net Rs 90.60 crore on Thursday, 9 April 2009. FII inflow totaled Rs 1678.10 crore in the first few days this month.

Emerging-market equity funds carried into April 2009 their first-quarter momentum, taking in $2.2 billion in inflows on the week to 8 April 2009, fund tracker EPFR Global said on 10 April 2009. It was the fifth consecutive week of positive net inflows for emerging-market equity funds, EPFR said. "You have to think that all this liquidity being pumped in by central banks around the world is finally removing some of the shackles," EPFR Global's managing director Brad Durham said in a press release.

Emerging-market equity funds' $2.2 billion weekly inflow, or 0.9% of their total assets, brought year-to-date inflows to emerging-market stock funds to $5.4 billion, EPFR Global said.

Asia ex-Japan Equity Funds enjoyed another solid week, with an inflow of $794 million in the week ended 8 April 2009. It was the best week of inflows for Emerging Asia since April 2008. More than half of the $794 million of weekly inflows were received by China equity funds.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 2.09%. The stock has a highest weightage of 17.63% 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.

Telecom software outsourcer Tech Mahindra soared 12.31% after the company won the bid for acquiring scam-hit IT firm Satyam Computer Services. As per reports Tech Mahindra bid for Satyam at Rs 58 per share, while Larsen & Toubro, the other player in the fray, bid at Rs 49.50 per share. Tech Mahindra would pay Rs 1,757 crore for a 31% stake in Satyam.

India's largest engineering firm by revenue Larsen & Toubro (L&T), which has a sixth highest weightage of 5.53% on the Sensex, fell 0.59% after its its chief financial officer said in a television interview 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.

Satyam Computer Services rose 3.61%. Three months ago, Satyam's founder and chairman shocked investors by saying profits had been overstated for years, and put in doubt the survival of the company once ranked as India's fourth-largest software services exporter.

India's second largest software outsourcer by sales Infosys Technologies, which has a second highest weightage of 8.98% on the Sensex, fell 1.22% on market talks that the IT bellwether may give a cautious outlook for the year ending March 2010 (FY 2010).

Infosys will unveil its FY 2010 guidance at the time of unveiling Q4 March 2009 results on Wednesday, 15 April 2009. According to analysts, pricing pressure remains a major headwind for the IT sector as the global economy slows down.

Other software outsourcers also fell as the rupee firmed up against the dollar. Wipro lost down 1.90% and TCS fell 1.91%. The rupee firmed up against the dollar. The rupee was trading at 49.85 against the dollar, lower than Thursday's close of 50/50.02. A firm rupee affects operating profit of IT firms negatively as they earn most of their revenues from exports.

But geospatial engineering design maker Rolta India surged 43.20% after a domestic brokerage firm issued a report stating that Rolta is likely to benefit from relaxation of AS-11 norms. The brokerage expected Rolta to grow in top line and bottom line by around 40% this fiscal, given the relaxation in implementation of AS-11. Rolta can opt not to provide for mark-to-market (MTM) losses during the current fiscal, which will positively impact its bottom line. Resultantly, it might write back Rs 84 crore MTM provided during H1FY09, the report said.

Shares of FMCG companies fell as recovering equity market forced investors to dump these so called defensive plays. India's largest cigarette maker by sales ITC, which has a third highest weightage of 6.29% on the Sensex, fell 0.24%.

India's largest FMCG company by sales Hindustan Unilever fell 1.33%.

Shares from fast moving consumer goods (FMCG) sector are perceived as defensive and safe haven for investment in turbulent times. The sector is considered so due to the strong characteristics of the FMCG business that relies on domestic consumption.

FMCG sector, however, tends to underperform when the secondary markets rally. Investors typically offload these defensive shares when markets recover to look for bargain in other high growth sectors.

Metal shares rose on firm metal prices on the London Metal Exchange. Hindustan Zinc (up 1.39%), Steel Authority of India (up 2.66%), Jindal Steel & Power (up 3.84%), Sesa Goa (up 3.07%), and Welspun Gujarat Stahl Rohren (up 7.41%), soared.

World's sixth largest steel maker Tata Steel surged 8.31% on reports the company relied heavily on government-funded projects and the Railways in the face of a demand downturn to boost steel sales in Q4 March 2009. This indicates the company may declare good results Q4 March 2009 results.

India's biggest aluminum producer by sales Hindalco Industries rose 1.19% even as the rating on the stock was reduced to underperform' from 'neutral' by Credit Suisse Group, citing the weak outlook for the industry.

Shares of copper makers surged after India's copper futures hit a new high today, 13 April 2009. India's largest private sector copper maker by sales Sterlite Industries jumped 7.39%.

India's third-largest producer of copper by sales Hindustan Copper extended gains for the seventh day rising 9.36% on the BSE. Prices of copper in the spot market rose 7.71% to Rs 222.65 a kilogram in this fortnight to 9 April 2009 on the Multi Commodity Exchange. The red metal is up 57.68% in 2009 from Rs 141.20 on 31 December 2008. Besides this, another reason for the surge in the stock price could be the low public float in the company. The total promoter holding in the company is 99.59%, while the total public float is merely 0.27% as on 31 December 2008.

Steel ropes maker Usha Martin surged 7.01%, extending gains for the sixth session on reports the European Union has scrapped a 23.8% tariff on steel ropes.

Bank stocks rose on expectations of a further easing of the monetary policy by the Reserve Bank of India with headline inflation at near zero. India's second largest private sector lender by market capitalisation ICICI Bank rose 4.49%. India's largest private sector bank by market capitalisation HDFC Bank rose 4.84%. India's largest public sector bank by assets State Bank of India rose 6.80%.

Kotak Mahindra Bank (up 7.93%), Karnataka Bank (up 8.08%), Oriental Bank of Commerce (up 6.09%), Allahabad Bank (up 7.30%), Indian Overseas Bank (up 12.97%), and Yes Bank (up 9.55%), were the other bank shares that soared.

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 Thursday, 9 April 2009, showed. It was the lowest growth in WPI inflation in at least two decades.

Auto shares rose on revival of demand in the past few months. India's largest truck maker by sales Tata Motors rose 12.01% after its American depository receipt soared 15.06% to $7.64 on Thursday, 9 April 2009. Meanwhile, Tata Motors received a strong response for booking world's cheapest car 'Nano'.

State Bank of India alone is reported to have witnessed around 1.5 lakh bookings for Nano from its various branches on day one. Booking from Nano commenced on 9 April 2009. Tata reportedly expects to receive over six lakh applications during the booking period that ends on 25 April 2009.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) jumped 3.39%. Escorts (up 2.76%), TVS Motor Company (up 4.98%), Ashok Leyland (up 4.93%), and Maruti Suzuki (up 1.98%), rose.

Total passenger car sales in the domestic market increased marginally in March 2009 to 1,29,358 from 1,28,098 units in March 2008, according to the figures released by the Society of Indian Automobile Manufacturers (SIAM) on 8 April 2009.

Shares of five sugar firms extended gains for the third day after a downward revision in the output estimate. Shree Renuka Sugars (up 2.10%), Triveni Engineering & Industries (up 7.36%), DCM Shriram Industries (up 2.90%), Balrampur Chini Mills (up 9.37%), and Simbhaoli Sugar Mills (up 5%), rose in anticipations of high sugar prices.

Sugar production is estimated about 45% lower at 14.2 million tonnes during the current season ending September 2009 compared with last year's 26.4 million tonnes. This would be the lowest production since 2004-05, when 12.7 million tonnes were produced. The fall is because lower cane availability has forced mills to end crushing earlier than expected.

Recovery of sugar from the cane has also been affected this year due to adverse weather conditions in the growing areas. Another key reason for the likely fall in output is that more sugar cane in India is being used to make jaggery that sells for almost double the price of white sugar. Farmers in Maharashtra, India's biggest sugar cane growing region, get 13% higher prices from jaggery makers compared with sugar mills.

LED display maker MIC Electronics hit upper circuit limit of 9.87%. On 6 April 2009, its chief said in a television interview that the company expects to do sales of Rs 450 crore in 2010 and profit is expected to be around Rs 100 crore.

India's largest listed retailer by sales Pantaloon Retail India jumped 8.04% ahead of its board meeting later today to decide on restructuring the company and changing its name. The board will decide on preferential issue of shares to the promoters and investors.

Drug maker Strides Arcolab rose 6.96% ahead of a board meet to consider various options of reorganizing the business of the company and its subsidiary companies.

India's biggest maker of wind-turbine generators by sales Suzlon Energy soared 11.66% after Tulsi Tanti, chairman of India's biggest maker of wind-turbine generators by sales, said the firm may return to profit in the quarter ended March 2009 after new orders boosted sales. Suzlon signed more than 300 megawatts of orders in the three months ended March 2009 from companies in Australia and China. The turbines will be supplied in the current quarter.