RIL drops as Sensex ends five-day winning streak

Key benchmark indices saw divergent trend for the second running day, as the Sensex ended with marginal loss while the S&P CNX Nifty settled slightly higher. Volatility was high. The BSE Sensex fell marginally by 4.01 points, or 0.03%, up 134 points from the day's low and off 174.98 points from the day's high.

After striking multi-month high in opening trade mirroring upbeat global markets, the market faltered in early afternoon trade on profit booking and lower European markets. However, the market rebounded from day's low as pivotals staged a comeback in late trade.

The Sensex alternatively moved above and below the psychological 15,000 mark, the level it reached for the first time in nearly 9 months.

Weak European stocks and lower index futures triggered profit taking after a solid surge in share prices over the past 3 months. Sustained buying by foreign funds and hopes for economic reforms from the new government triggered a strong rally on the domestic bourses in past 3 months. The Sensex gained 5223.59 points or 54.14% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 6710.50 points or 82.23%

Foreign funds' inflow totaled Rs 20,606.80 crore in May 2009 and inflow in calendar year 2009 totaled Rs 21,937.30 crore (till 1 June 2009).

There are reasons to believe that the recent strong rally may continue. For one, equity analysts are raising earnings forecasts of India Inc on hopes that the new government will focus on infrastructure sector and push economic reforms to boost growth.

The market may see a pre-budget rally over the next one month on hopes of accelerated economic reforms and pro-reforms announcements. The UPA government's comfortable victory, without the support of the Left parties, has raised expectations that the government may revive disinvestment programme. The Congress party had in its manifesto released before polls promised to go ahead with disinvestment while retaining a majority holding in the state-run companies. Disinvestment programme was earlier put on backburner due to stiff opposition from the Left front.

Investors expect financial sector reforms such as increase in the cap on foreign direct investment in insurance sector to 49%, from 26% at present. Finance Minister Pranab Mukherjee on 26 May 2009 said that a sustained stimulus to economic growth is possible by next round of reforms. He said reviving growth momentum is a top priority for the government adding that fiscal prudence will also be kept in mind.

Mukherjee said the government will stick to fiscal deficit target of 5.5% of GDP in the current financial year that ends on March 2010 (FY 2010). He said the government is committed to fiscal consolidation in 2-3 years. The minister said he would be able to announce the full-budget for FY 2010 by the first week of July 2009 and try to get it approved by 31 July 2009. He said the common man will be the focus of the government policy.

Congress candidate Meira Kumar was elected Speaker of the 15th Lok Sabha unanimously on Wednesday, 3 June 2009. Kumar is the first woman to be elected as the Speaker of the Lok Sabha. The first session of the 15th Lok Sabha on Monday, 1 June 2009. The session will last till 9 June 2009. In all, the Parliament session will have seven sittings. Investors will keenly watch President's address to the Lok Sabha on 4 June 2009, which will unveil the new agenda of the government.

Recent data has reinforced expectations that the economy is recovering. India's infrastructure sector output grew 4.3% in April from a year earlier, government data showed on Tuesday. Output had risen 2.3% in the same month last year, and climbed 2.7% in the fiscal year ended March 2009 compared with 5.9% growth in 2007/08. The infrastructure sector accounts for 26.7% of India's industrial output.

Data during trading hours on Monday 1 June 2009 showed that the Market Purchasing Managers' Index (PMI) based on a survey of 500 companies, rose to 55.7 in May 2009 from April's 53.3, well above the threshold of 50 that separates expansion from contraction.

The manufacturing index was boosted mainly by the new orders index, which rose to 59.1 in May 2009 from 54.9 in April 2009. Manufacturing makes up about 15% of India's gross domestic product. Although domestic demand improved, the pricing power of manufacturers was hurt by intense competition, while higher commodity prices also pushed up input prices, Market economist Gemma Wallace said

But a glut in share shares will soak liquidity from the secondary market and may cap upside on the bourses in the medium term. Indian companies or their founders have collected $3 billion over the past three weeks, either by transferring existing stock or selling new shares, and more local companies plan to raise at least four times that number, Credit Suisse Group AG said in a note to clients on 25 May 2009. According to Goldman Sachs Group, Indian companies may raise $4 billion to $6 billion from initial public offerings in the 12 months ending 31 March 2009 and another $5 billion to $7 billion through share placements over the next two to three months.

Commodity-sector stocks led losses in European stocks on Wednesday. Key benchmark indices in UK, Germany and France were down by between 0.62% and 1.90%

The Markit euro-zone composite purchasing managers index for the 16-nation euro zone released Wednesday rose to 44.0 in May, hitting an eight-month high.

Britain's services sector expanded for the first time in 13 months in May, according to the CIPS/Markit purchasing managers index released Wednesday. The index rose to 51.7 from a reading of 48.7 in April. A reading of more than 50 indicates a majority of managers saw an expansion in activity, while a reading below 50 signals contraction.

Most Asian markets rose led by gains in electronics makers and technology companies, as a US report showed home resales increased at the fastest pace in seven years. Key benchmark indices in Japan, China, Hang Seng, Singapore, and South Korea were up by between 0.14% and 1.99%. However Taiwan's Taiwan Weighted index fell 0.80%.

Trading in US index futures showed the Dow could fall 44 points at the opening bell on Wednesday, 3 June 2009. Earlier in the day, the Dow futures were in green

US markets ended higher on Tuesday, 2 June 2009 as encouraging housing sales data lifted hopes for an economic rebound. The Dow Jones Industrial Average gained 19.43 points, or 0.22%, to 8,740.63. The Standard & Poor's 500 Index rose 1.87 points, or 0.20%, to 944.74 and the Nasdaq Composite index added 8.12 points, or 0.44%, to close at 1,836.80.

The BSE 30-share Sensex fell 4.01 points, or 0.03%, to 14,870.90. The Sensex opened 27.71 points higher at 14,906.62. The Sensex gained 170.97 points at the day's high of 15,045.88 in mid-morning trade, its highest level since 8 September 2008. At the day's low of 14,734.90, the Sensex lost 140.01 points in afternoon trade.

However, the S&P CNX Nifty rose 5.45 points, or 0.12%, to 4,530.70, its highest closing since 12 August 2008. The Nifty struck an intra-day high of 4574.90

Nifty June 2009 futures were at 4540.20, at a premium of 9.50 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment increased to Rs 65,165.46 crore from Rs 63,624.63 crore on Tuesday, 2 June 2009.

The BSE Sensex today, 3 June 2009 ended its five day winning streak. It had gained 1285.68 points or 9.46% in five trading days to 14,874.91 on 2 June 2009 from 13589.23 on 26 May 2009.

Nevertheless, the market breadth, indicating the overall health of the market, was strong. On BSE, 2011 shares rose as compared with 808 that declined. A total of 51 shares remained unchanged.

The BSE Mid-Cap index was up 1.50% to 5,325.54 and the BSE Small-Cap index advanced 2.11% to 6,384.92. Both these indices outperformed the Sensex

BSE clocked a turnover of Rs 9415 crore as compared with Rs 7231 crore by 14:25 IST

Sectoral indices on BSE displayed mixed trend. The BSE Consumer Durables index (up 4.04%), the BSE Auto index (up 0.58%), BSE FMCG index (up 4.19%), the BSE Power index (up 0.94%), the BSE Metal index (up 1.79%), the BSE Capital Goods index (up 0.98%), the BSE Healthcare index (up 2.28%), the BSE Realty index (up 0.79%), the BSE TECk index (up 0.36%), outperformed the Sensex

The BSE IT index (down 1%), the BSE PSU index (down 0.47%), the BSE Oil & Gas index (down 0.97%), the BSE Bankex (down 1.29%) underperfomed the Sensex

Among the 30-member Sensex pack, 17 advanced while the rest declined.

Metal shares advanced on strong domestic demand. India's top private sector aluminium maker by sales Hindalco Industries jumped 5.92% to Rs 93 and was the top gainer from the Sensex pack.

The world's sixth largest steel maker by sales Tata Steel advanced 2.10% to Rs 484, extending a recent surge. Last week, Tata Steel's unit, Tata Steel UK, won approval from banks to ease conditions on a 3.7 billion pounds loans it took to buy Anglo-Dutch Corus. The announcement was made on Saturday, 30 May 2009.

Sterlite Industries (up 0.66%), Maharashtra Seamless (up 7.49%), JSW Steel (up 2.76%), Nalco (up 2.51%) and Jindal Steel & Power (up 2.55%), edged higher.

Cement shares rose on higher dispatches. India's top dam builder by sales Jaiprakash Associates advanced 4.12% to Rs 225 after its cement dispatches rose 25.7% to 8.07 lakh tonnes in May 2009 over May 2008.

India's largest cement manufacturer by sales ACC gained 4.31% to Rs 818.30 after cement production rose 1.11% to 1.81 million tonnes and cement dispatches rose 1.11% to 1.82 million tonnes in May 2009 over May 2008. The figures were announced after market hours on Tuesday, 2 June 2009.

North India's largest cement firm by sales Ambuja Cements rose 4.24% after its shipments rose 8.3% to 1.64 million tonnes in May 2009 over May 2008. The figures were announced after market hours on Monday, 1 June 2009.

Grasim Industries rose 4.10% while UltraTech Cement slipped 2.58% despite the Aditya Birla Group's shipments rose 19.5% to 3.18 million tonnes in May 2009 over May 2008. Production rose 20% to 3.24 million tonnes in the same period. The group's cement business includes flagship Grasim Industries and unit UltraTech Cement, with combined production capacity of 42 million tonnes a year.

India's top truck marker by sales Tata Motors jumped 2.61% to Rs 358.25 after global credit rating agency Moody's on Tuesday, 2 June 2009 revised upwards outlook for its low investment grade rating on from negative to stable after the company successfully refinanced a bridge loan for Jaguar and Land Rover acquisition. Despite the sharp rise, the stock is off day's high of Rs 378.70

Tata Motors had refinanced the bridge loan through issuing Rs 4,200 crore secured non-convertible rupee debentures and others prepayment through fixed deposits scheme and rollover of some balance.

However, India's top tractor maker by sales Mahindra & Mahindra (M&M) lost 3.36% to Rs 701 on profit booking after surging 49.18% in one month to 2 June 2009. It was the top loser from the Sensex pack. Nevertheless, the stock came off day's low of Rs 685

India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) rose 0.13% to Rs 2120 on reports it has successfully commissioned two grid-interactive solar power plants of 100 KWp each in Lakshadweep as part of India`s largest solar power-based island electrification project in India.

However India's largest engineering & construction firm by sales Larsen & Toubro slipped 0.24% to Rs 1408 on profit booking after advancing 60.46% in one month to 2 June 2009.

India's largest pharma company by market capitalisation Sun Pharmaceuticals rose 2.55% to Rs 1261 on recent reports the company will spend Rs 332 crore in research & development (R&D) of low-cost versions of original drugs to be sold in the domestic and global markets. The Mumbai-based drug maker had last year spent Rs 290 crore on R&D activities.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) slipped 1.97% to Rs 2234.20. The stock moved in a range of Rs 2228.20 and Rs 2300 during the day. Analysts expect strong growth in RIL's bottom line in coming quarters from sale of gas which it started pumping last month from its deep-sea field off the east coast.

Meanwhile, the Directorate General of Hydrocarbons has reportedly contested the authenticity of claims of gas reserves at Krishna Godavari basin blocks D-3 and D-9 by Hardy Oil & Gas Plc. UK-based Hardy Oil, late last month, said RIL may have an estimated 20 trillion cubic feet of natural gas reserves in two areas off the east coast, more than double the quantity of its biggest field. The D-3 and D-9 fields may hold as much as 9.5 trillion cubic feet and 10.8 trillion cubic feet of gas, respectively, it had said. Hardy Oil & Gas Plc has 10% stake each in the two blocks where RIL is the operator with 90% interest.

Essar Oil jumped 8.35% to Rs 181.10 on reports company has decided to raise around $500 million by way of qualified institutional placement route as part of a $2 billion fund-raising programme

India's largest bank by net profit and branch network State Bank of India (SBI) shed 2.36% to Rs 1864.50, off sharply from day's high of Rs 1935. The bank reportedly plans to raise Rs 28000 crore by selling bonds to boost capital and fund growth. The bank aims to maintain its capital adequacy ratio of 13% in the year to 31 March 2010 (FY 2010). The bank may grow its loans and deposits by 25% each in FY 2010, reports suggest

India's largest private sector bank by net profit ICICI Bank lost 1.97% to Rs 718 on profit taking after surging 53.31% in one month to 2 June 2009.

Shares from FMCG sector advanced on fresh buying on reports key product segments such as soaps, detergents, toothpastes, biscuits, snack foods and soft drinks saw volume growth of more than 20% in April-May 2009 due to stable prices and promotional activities

Tata Tea (up 9.36%), ITC (up 5.86%), Hindustan Unilever (up 2.14%),United Spirits (up 4.51%), Dabur India (up 2.84%), and Colgate Palmolive (up 2.72%), gained.

Realty stocks gained on expectations that stability at the Centre will attract more money from foreign investors into the sector which in turn will boost growth. Unitech (up 3.10%), Shobha Developers (up 9.99%), Parsvnath Developers (up 0.35%), Mahindra Lifespace (up 4.96%), Indiabulls Real Estate (up 0.19%), advanced. Housing Development & Infrastructure ended unchanged at 305.60

However India's largest listed real estate developer by sales DLF slipped 0.62% to Rs 402.25 on profit booking after surging 75.29% in one month to 2 June 2009. The Board of Approvals on Special Economic Zones has reportedly agreed to denotify four zones of the DLF.

In the last six weeks, three realty firms Unitech, DLF and Indiabulls Real Estate, have together raised Rs 8000 crore through qualified institutional placements (QIPs).

India's second largest listed cellular services provider by sales Reliance Communications (RCom) spurted 4.16% to Rs 332.65 on the company's plans to raise funds through the qualified institutional placement route. The announcement was made after market hours on Friday, 30 May 2009.

RCom will seek shareholders' approval to garner funds from qualified institutional investors, either through a share sale or an issue of a variety of instruments including fully convertible, partly convertible or non-convertible debentures with warrants or any other security. Although the company did not say how much it planned to raise reports suggested it may be around $500 million and will be used to strengthen financial position for a planned participation in the upcoming auction for nationwide 3G and Wi-Max spectrum allocation by the Indian government.

However India's largest cellular services provider by sales Bharti Airtel fell 0.26% to Rs 798 on concerns of earnings dilution after the company on 25 May 2009 said it is in talks to buy 49% of Johannesburg-based MTN, the first step in a potential $23 billion merger. The deal may also see MTN, Africa's largest mobile-phone company, buy 36% of Bharti Airtel.

Suzlon Energy was the top traded counter on BSE with turnover of Rs 392.45 crore followed by Unitech (Rs 291.35 crore), Essar Oil (273.62 crore), Tata Steel (Rs 273.62 crore) and Reliance Communications (Rs 238.86 crore).

Satyam Computer led the volume chart on BSE with volume of 4.78 crore shares followed by Cals Refineries (4.21 crore shares), Ispat Industries (3.87 crore shares), Alok Industries (3.55 crore shares) and Suzlon Energy (3.27 crore shares).

Shipping stocks gained after the Baltic Dry Index jumped to an eight-month high, propelled by increased Chinese imports of iron ore. Great Eastern Shipping Company (up 8.05%), Shipping Corporation of India (up 3.96%), Mercator Lines (up 5.71%), and Varun Shipping (up 2.14%), advanced.

Satyam Computer Services jumped 8.67% after the Securities & Exchange Board of India cleared Tech Mahindra's open offer for the company. Tech Mahindra galloped 18.18%.

Nucleus Software Exports jumped 14.48% to Rs 107.50 after the company won a contract for its software product FinnOne from United Finance Company, Oman. The company made this announcement during trading hours today, 3 June 2009.

Marg hit 5% upper circuit at Rs 125.80 after company signed a memorandum of understanding with BSNL to provide telecommunications facilities in the company's upcoming mega infrastructure project Marg Swarnabhoomi.

Motilal Oswal Financial Services rose 6.08% to Rs 181.50 after a block deal of 3.92 lakh shares was executed on BSE at Rs 172.45 per share. The block deal constituted 0.28% of the firm's equity.

Flawless Diamond India rose 2.36% to Rs 36.85 after the company bagged two overseas orders aggregating Rs 33.60 crore. The company announced the new order win during trading hours today, 3 June 2009.