Sensex scales 7-month high

The key benchmark indices surged after Congress party's Kamal Nath said in an interview to a news agency on Thursday, 14 May 2009, the alliance led by the Congress party is confident of retaining power at the Centre. Banking, IT, capital goods stocks and index heavyweight Reliance Industries (RIL), surged. The BSE 30-share Sensex jumped 300.51 points or 2.53%.

Firm global markets and data showing fall in consumer price index in March 2009, aided the rally. The Sensex attained its highest closing in more than seven months. The market today snapped last two days' losses, with the barometer index BSE Sensex regaining the psychological 12,000 level.

But volatility was high. After a surge in morning trade, the market pared gains. It firmed up again later in early afternoon trade. It pared gains in afternoon trade. The market surged in mid-afternoon trade with the Sensex hitting fresh intraday high. The market pared gains later before recovering from lower level.

India's consumer price index rose 8.03% in March 2009 from a year earlier, lower than February 2009's annual rise of 9.63%, government data showed today. The consumer price index, which is published monthly, for industrial workers, remained steady at 148. The wholesale price index is more closely watched in India because it covers a higher number of products and is released weekly. Government data showed on Thursday 14 May 2009 the wholesale price index rose 0.48 % in the 12 months to 2 May 2009, below the previous week's annual rise of 0.7%.

The stock market shrugged off a reduction in India's weight in the Morgan Stanley Capital International (MSCI) index. Morgan Stanley has announced changes to the MSCI India Index under its May 2009 Semi Annual Index Review (SAIR). Based on these changes, India's country weight in the MSCI EM (emerging markets) Index will come down marginally from 6.47% to 6.36%. The change is effective from 29 May 2009

European shares turned negative in mid-session on Friday, having risen as much as 1% earlier. That was after the Indian markets had closed. Key benchmark indices in France and UK were down by between 0.42% to 0.68%.

Germany's DAX fell 0.69% in a choppy trade after a dismal economic data. Slumping exports pushed German gross domestic product (GDP) down 3.8% in the first quarter of 2009, a far steeper drop than economists had forecast and the economy's worst performance since reunification in 1990.

Asian stocks climbed today after Sony Corp. forecast a smaller loss than analysts expected and bank borrowing costs plunged. Key benchmark indices in China, Hong Kong, Singapore, South Korea, Taiwan, Japan rose by between 0.2% to 1.96%.

China's electricity production fell 3.9% in early May 2009 from a year earlier, the China Securities Journal reported today, citing unidentified sources at China State Grip Corp

Hong Kong's economy shrank by the most since at least 1990 as exports tumbled and unemployment climbed, prompting the government to forecast a full-year contraction of as much as 6.5%. Gross domestic product shrank a seasonally adjusted 4.3% in the first quarter of 2009 from the previous three months, the government said today at a press briefing, after dropping a revised 1.9% in the fourth quarter.

Trading in US index futures indicated the Dow could fall 30 points at the opening bell on Friday, 15 May 2009.

US markets snapped a two-day losing streak on Thursday 14 May 2009 as banks rebounded and tech stocks gained. However, a pair of economic reports that missed expectations curbed gains. Initial jobless claims rose by 32,000 last week to 6.37 lakh, well above the 6.10 lakh expectation. Continuing jobless claims rose to a new record at 6.56 million. The Dow gained 46.43 points, or 0.6%, to 8,331.32. The S&P 500 index rose 9.15 points, or 1%, to 893.07, and the Nasdaq added 25.02 points, or 1.5%, to 1,689.21.

Volatility on the bourses may remain high in the near futures ahead of the formation of the next government at the Centre. The counting of votes will take place on Saturday, 16 May 2009. A party/alliance needs 272 seats in the 543-member parliament to claim power at the Centre.

Indian stocks had declined for the second straight day on Thursday, 14 May 2009 after the exit polls indicated a fractured mandate in the just concluded parliamentary election. The Sensex lost 285.12 points or 2.4% to 11,872.91 on 14 May 2009 from 12,158.03 on 12 May 2009.

The exit polls commissioned by various news channels to get a sense of the shape of the next government at the centre predicted a badly fractured mandate, with the Congress-led UPA shown holding a slight edge over the BJP-led NDA. Neither the UPA nor NDA were shown anywhere close to the halfway mark, making it clear that they'll have to do business with parties bracketed with the Third Front and the Fourth Front.

Six television networks forecast UPA - the ruling alliance led by Congress may emerge just ahead of its chief rival headed by the Bharatiya Janata Party. CNN-IBN predicted Congress and its allies will get as many as 205 seats compared with a maximum 185 for the opposing coalition. Star News-Nielsen and News X gave the Congress-led bloc 199 seats to 191 for the BJP grouping.

Consumption and investment decisions will be significantly impacted by any signs that the new government is unstable.

Even before the election results are out, the two main political parties the Congress and the BJP have started wooing regional parties in their bid to stake claim to form the next government at the Centre. In anticipation of getting the first invite from President Pratibha Patil after the poll results are out on Saturday, 16 May 2009, the Congress party has moved in swiftly to mop up support and has invited Samajwadi Party (SP) to join a government led by it.

Spurred by its estimate that SP's numbers won't be very different from BSP's and plagued by a nagging suspicion that Mayawati may not be averse to going over to BJP led National Democratic Alliance (NDA), Congress conveyed its invitation to SP through senior leader Pranab Mukherjee when he met SP general secretary Amar Singh late on Wednesday, 13 May 2009, reports suggest.

Reports also suggest that SP may demand some key portfolio as a part of the proposed power-sharing arrangement.

As part of the gameplan to stake claim to form the government, Sonia Gandhi has also reached out to Lalu Prasad Yadav, Ramvilas Paswan and Sharad Pawar in the last 24 hours, reports suggest. The party is also confident of roping in PMK, which while being part of the AIADMK-led combine, has promised to switch over to Congress at the right time, reports suggest

Meanwhile, LJP party chief Ram Vilas Paswan today told a news agency that the party will not support BJP at any cost to form a government and that he will make all efforts to ensure that a secular government is formed. Paswan said that not only LJP, but even SP and RJD would jointly chalk out plans on forming a secular government.

Paswan said if the UPA does not get majority, LJP, SP and RJD who have formed the Fourth Front, would jointly take a decision on the methodology of forming a secular government.

BJP on Thursday, 14 May 2009, claimed that it would be the biggest party with 160-plus seats and said NDA would emerge as the most credible pre-poll alliance. Reports suggest that BJP is likely to see support from the regional parties in the south viz. J Jayalalithaa's AIADMK and N Chandrababu Naidu's TDP, as the first option to take numbers to the majority mark. Gujarat Chief Minister Narendra Modi is BJP's assigned negotiator with Jayalalithaa, reports suggest.

TDP's Naidu has stressed that he will not go with BJP though there has been contact between him and emissaries from the saffron camp, reports suggest.

BJP spokesperson Ravi Shankar Prasad claimed that if secularism was the glue for parties to consolidate against BJP, anti-Congressism of some parties would push them towards the NDA camp. Prasad said internal surveys showed the BJP winning 166 seats and NDA emerging victorious in 218 constituencies. Prasad said the survey conducted by BJP showed Congress gaining only in Kerala, Punjab and Rajasthan and faring badly in Tamil Nadu and Andhra Pradesh. BJP is expected to gain in Madhya Pradesh, Chhattisgarh, Gujarat, Orissa and Karnataka, he said, adding that the party was looking forward to some very dramatic results in its favour in Uttar Pradesh.

Meanwhile, it what could be a blow for the BJP-led National Democratic Alliance (NDA), Bihar chief minister and Janata Dal (United) leader Nitish Kumar today, 15 May 2009, made it clear that special status for Bihar is a deciding factor on who to support for the next government in the Centre. At a book release function this morning in Patna, the JD(U) leader said Manmohan Singh had refused to give Bihar special status. He said he was keeping his options open and his eye on the Prime Minister's post.

Samajwadi Party (SP) general secretary Amar Singh today said SP would not align with the BJP as long as the Ram temple remained BJP's core issue.

Away from politics and back to economics, rating agency Fitch on Thursday, 14 May 2009, said the government needs to cut fiscal deficit to avoid having its credit rating lowered. While current economic conditions are prompting many governments to undertake counter-cyclical stimulus measures, the recent deterioration in India's fiscal position accentuates underlying structural weaknesses in public finances that, if unaddressed, could undermine sovereign creditworthiness, Fitch said in a statement during trading hours on Thursday. Fitch, currently has a BBB- rating on India, its lowest investment grade rating.

Indian market has risen sharply in the past two months on 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 jumped 4,013.02 points or 49.17% to 12,173.42 on 15 May 2009. The BSE Sensex has risen 2,526.11 points or 26.18% in calendar year 2009.

Foreign funds have turned sellers after recent aggressive buying of Indian stocks. Foreign institutional investors (FIIs) sold shares worth a net Rs 345.70 crore on 14 May 2009. FII inflow in May 2009 totaled Rs 9270.40 crore (till 14 May 2009) while their inflow in calendar year 2009 totaled Rs 9627 crore.

The BSE 30-share Sensex jumped 300.51 points or 2.53% to 12,173.42, its highest closing since 3 October 2008. The Sensex rose 346.63 points at the day's high of 12,219.54 in mid-afternoon trade. At the day's low of 11,948.70, the Sensex rose 75.79 points in early trade.

BSE clocked a turnover of Rs 5,091 crore, higher than Rs 4,564.43 crore on Thursday 14 May 2009.

The S&P CNX Nifty was up 81 points or 2.25% to 3,674.45. Nifty May 2009 futures were at 3684.95, at a premium of 13.3 points over the spot closing of 3671.65. Turnover in NSE's futures & options (F&O) segment rose to Rs 52853 crore from Rs 50988.41 crore on Thursday, 14 May 2009.

The BSE Mid-Cap index rose 1.33% and the BSE Small-Cap index rose 0.84%. However, both these indices underperformed the Sensex.

The BSE Bankex (up 3.86%), the BSE Capital Goods index (up 3.57%), the BSE Consumer Durables index (up 3.18%), the BSE TECk index (up 3.05%), outperformed the Sensex.

The BSE FMCG index (down 0.24%), the BSE PSU index (up 0.13%), the BSE Auto index (up 1.11%), the BSE Oil & Gas index (up 1.21%), the BSE Healthcare index (up 1.49%), the BSE Metal index (up 1.76%), the BSE Power index (up 1.88%), the BSE Realty index (up 2.14%), the BSE IT index (up 2.47%), underperfomed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,480 shares rose as compared with 1,085 that fell. A total of 56 shares remained unchanged.

From the 30 share Sensex pack, 25 stocks rose while rest fell.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 2.08% to Rs 1,948.25. Analysts expect strong growth in bottom line in coming quarters from sale of gas which it started pumping last month from its deep-sea field off the east coast.

Late last week, Ratnagiri Gas & Power, which supplies electricity to the western Indian state of Maharashtra, agreed to buy natural gas from an offshore field operated by Reliance Industries.

India's largest oil exploration firm by revenue ONGC fell 2.27% on reports the company's net profit may fall in 2008-09 as the government is planning to ask the company to pay more compensation to PSU OMCs.

PSU OMCs fell as crude prices rose. HPCL and Indian Oil Corporation, fell by between 1.44% to 1.46%. BPCL rose 1.46%. Crude oil for June delivery traded at $58.74 a barrel, up 12 cents, on the New York Mercantile Exchange. Oil reached $60.08 on 12 May 2009, the highest intraday price since 11 November 2008.

Some healthcare stocks rose as most of the healthcare firms reported better than expected Q4 March 2009 result. Piramal HealthCare, Lupin, Glenmark Pharmaceuticlas, Biocon, Sun Pharmaceuticals Industries, Cipla rose by between 0.33% to 4.3%.

India's largest drugmaker by sales Ranbaxy Laboratories rose 8.59% on reports that the company sees an upside in the strengthening of the rupee, and even hopes to trim its losses during the second quarter with the appreciation in the rupee. Rupee is currently hovering at around 50 a dollar. The stock was the major gainer form the Sensex pack.

Banking stocks rose on hopes falling interest rates will boost lending growth. Bank interest rates are falling in India after the central bank began slashing interest rates last October to lift a slowing economy.

India's largest private sector bank by net profit ICICI Bank rose 7.03% as its ADR rose 6.19% on Thursday.

India's second largest private sector bank by operating income HDFC Bank was up 1.71% as its ADR rose 3.95% overnight.

India's biggest bank in terms of branch network State Bank of India was up 3.5%. State Bank of India has cut interest rates on deposits by up to 50 basis points effective Monday, 18 May 2009.

Other PSU banks, Bank of India, Indian Overseas Bank, Bank of Baroda, Bank of Baroda rose by between 1.32% to 4.72%.

India's biggest dedicated housing finance firm by operating income HDFC rose 3.75% on reports it is likely to cut deposit rates and follow it with a cut in lending rates

Capital goods stocks rose after India's biggest engineering & construction firm by revenue Larsen & Toubro (L&T), last month, said it expects a strong order flow in the year ending March 2010 (FY 2010). L&T rose 4.32%. Thermax, Punj Lloyd, Praj Industries, Siemens, BEML rose by between 1.23% to 7.1%. L&T on 16 April 2009 said the company expects its order inflow to grow by 25-35% in FY 2010.

India's largest electric equipment maker by sales Bharat Heavy Electricals rose 2.67% on reports the company has bagged an order worth Rs 1,475 crore for a 600 megawatt thermal power plant in Chattisgarh.

Outsourcing focussed IT stocks rose on talks the worst may be over for the US economy and the US banking system. US is the biggest market for Indian IT firms. India's second largest software services exporter by sales Infosys rose 1.8% after its American depository receipt (ADR) rose 3.69% on Thursday 14 May 2009.

India's largest software services exporter by sales TCS rose 4.16%. TCS said on Wednesday 13 May 2009 it has been selected for a five-year IT services contract for auto maker Volkswagen group's operations in the United Kingdom.

India's third largest software services exporter by sales Wipro rose 3.68% after its ADR rose 2.77% on Thursday.

Meanwhile, analysts feel that US government's plan to scrap tax incentives that encourages American firms to ship jobs overseas is unlikely to dent business for Indian outsourcers. On 4 May 2009, US president Barack Obama announced plans to reduce tax breaks for US-based multinationals shipping jobs to places like India. Instead, the tax incentives would now go to those creating jobs inside the US, in places like the Buffalo city, New York.

Currently, US businesses that invest overseas can take an immediate tax deduction for expenses supporting their overseas investments. They can also defer the payment of US taxes on the profits they make from such investments. But, now the Obama Administration wants to ensure that companies do not receive deductions for expenses supporting their offshore investments until they pay tax on their offshore profits. This is intended to dis-incentivise US companies from retaining profits abroad.

Infosys said the proposal, if implemented, was unlikely to reverse the outsourcing of a gamut of services by US firms to Indian companies. "The current proposal, as we understand, is to close corporate tax loopholes on US multinational corporations and crack down on their overseas tax havens," the company said in a statement. "We do not believe that it has anything to do with IT outsourcing done by US corporations." Infosys said.

Metal stocks gained on a solid surge in copper price this year. Tata Steel, Steel Authority of India, Sterlite Industries, Hindustan Zinc, National Aluminum Company, rose by between 0.9% to 6.14%.

Copper for delivery in three months on the London Metal Exchange has jumped 45% this year.

Telecom stocks rose on strong growth in new subscribers addition in April 2009. Idea Cellular, Bharti Airtel and Reliance Communications, rose by between 3.36% to 7.62%.

FMCG stocks rose triggered by expectations of a surge in sales due to forecast of a good monsoon this year. Britannia Industries, Marico, United Spirits and Tata Tea rose by between 0.96% to 2.32%. FMCG firms derive a substantial revenue from rural markets.

Auto stocks gained on improved sales in April 2009. Tata Motors Hero Honda Motors and Mahindra & Mahindra, rose by between 0.91% to 1.9%.

India's largest car maker by sales Maruti Suzuki India rose 1.63%. The company today launched its premium compact car Ritz.

Realty stocks rose on recent reports banks have stepped up lending to real estate firms. According to Reserve Bank of India (RBI) data, loans to the real estate sector grew 61% with Rs 90,765 crore outstanding during the year upto 27 February 2009 over the same period previous year. DLF, Unitech, Akruti City, Anant Raj Industries, Omaxe rose by between 1.04% to 3.59%.

Sugar stocks rose as sugar prices are set to remain firm due to an estimated drop in the country's output. Balrampur Chini, Shree Renuka Sugars, Bajaj Hindustan, Ghampur Sugar rose by between 0.14% to 5%.

Shipping shares rose after the Baltic dry index, a measure of shipping costs for commodities, jumped 4.28% to 2,432 yesterday, 14 May 2009, its highest level in calendar year 2009. Essar Shipping, Mercator Lines, SEAMEC, Shreyas Shipping, ABG Shipyard, Shipping Corporation of India rose by between 0.05% to 5.73%.

Baltic Dry Freight Index (BDI), which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser across the world, hit a new 2009 high driven by continued demand for goods by China.

Cals Refineries clocked the highest volume of 3.67 crore shares on BSE. Cairn India (1.95 crore shares), Unitech (1.71 crore shares), Suzlon Energy (1.14 crore shares) and Reliance Natural Resources (80.85 lakh shares) were the other volume toppers in that order.

Aban Offshore clocked the highest turnover of Rs 430.04 crore on BSE. Cairn India (Rs 382.70 crore), ICICI Bank (Rs 214.69 crore), DLF (Rs 185.20 crore) and Reliance Industries (Rs 173.89 crore) were the other turnover toppers in that order.