RIL firms up in choppy market

Key benchmark indices settled with small gains in what was a highly choppy trading session. After striking day's high in mid-afternoon trade, the key benchmark indices retreated sharply in late trade to sink into negative zone only to end with marginal gains. The BSE 30-share Sensex rose 21.10 points or 0.14% to 14,785.74, off 169.81 points from the day's, high but up 100.29 points from the day's low.

IT pivotals weighed dropped on fears a US economic recovery may take longer time than expected. Realty shares advanced as concerns of tight liquidity eased further. Index heavyweight Reliance Industries (RIL) rose.

The market was volatile. The market moved between positive and negative zone in early trade. It weakened in morning trade on lower US index futures. The market cut losses later as investors took fresh positions on hopes of a reform-oriented budget. The Sensex surged in early afternoon trade. The market pared gains after hitting fresh intraday high in afternoon trade.

The market firmed up again in mid-afternoon trade on firm European stocks. A sell-off pushed the Sensex into the red in late trade. The market regained positive zone at the fag end of the trading session

A fresh build of positions had triggered a near 3% rally in Sensex on Friday, 26 June 2009, following a reduction in lot sizes of derivative contracts on the National Stock Exchange. Lower lot size has made the contracts affordable to small traders and retail investors.

The National Stock Exchange (NSE) has reduced the lot size of a number of derivatives contracts as a part of a periodic review to meet a previously set value of the contract at Rs 2 lakh. Thus, the lot size of Maruti Suzuki has been reduced to 200 from 800 and that of Steel Authority of India (Sail) has been cut to 1350 from 5400. The lot size of Axis Bank has been halved to 450 from 900 and for Reliance Industries to 150 from 300. State Bank of India's lot size, too, has been halved to 132 from 264.

Finance Minister Pranab Mukherjee would present the budget on 6 July 2009. The Railway Budget will be presented on 3 July 2009 and the Economic Survey would be presented on 2 July 2009.

The corporate sector is expecting a removal of the fringe benefit tax (FBT) in the budget. Under the current dispensation, an employer has to pay FBT at 30% on the fringe benefit, the taxable value of which is determined in accordance with a formula. FBT is a tax levied on perquisites-or fringe benefits -provided by an employer to his employees.

Meanwhile, domestic brokerages and fund houses want the government to remove securities transaction tax (STT) on trading in securities in the Budget. The Securities & Exchange Board of India (Sebi) members have already forwarded the demand of premier stock exchanges, BSE and NSE, to Finance Minister Pranab Mukherjee for scrapping STT in the Budget.

STT, which was introduced in the Union Budget 2004-05 by the then Finance Minister P Chidambaram, taxes every purchase and sale of securities entered into in a recognised stock exchange in India in securities like shares, debentures, bonds, and units of mutual funds. Equity investors pay an STT of 0.125% for every transaction in cash for the delivery of shares.

Many equity analysts have been raising earnings forecasts of India Inc on hopes that the new government will provide thrust on the infrastructure sector and push economic reforms to boost growth. Citigroup expects the economy to grow by 6.8% in the year ending March 2010 (FY 2010) and 7.8% in the year ending March 2011 (FY 2011).

A comfortable victory last month for the Congress-led United Progressive Alliance (UPA) government in elections for the 15th Lok Sabha has raised hopes for economic reforms. Reforms virtually came to a halt in the past five years of the Congress-led alliance government at the centre, when the Communists provided support to the government from outside for a large part of the five-year term. Left parties are opposed to economic reforms.

Investor expectations from the new government are high. Investors expect financial sector reforms such as increase in the cap on foreign direct investment in insurance sector to 49%, from 26% at present.

Meanwhile, before the budget, investors will be keenly watching the outcome of the Employees' Provident Fund Organisation (EPFO's) apex advisory body meet on 4 July 2009. The Central Board of Trustees (CBT) will take a view on the Finance Ministry's proposal to invest 15% of its corpus in equity. The EPFO has a corpus of about Rs 1,82,000 crore and the permission to invest 15% funds in equity could have positive implications for the capital market. A proposal to park funds in the stock market was earlier rejected by the EPFO's Finance and Investment Committee (FIC) at its meeting on 26 March 2009.

European markets were trading firm today, 29 June 2009 on buying in pharma shares. Key benchmark indices in UK, Germany and France were up by between 0.11% and 0.76%.

Most Asian markets were trading lower today, 29 June 2009 despite encouraging economic reports from Japan. Key benchmark indices in South Korea, Singapore, Taiwan, Japan, Hong Kong were down by between 0.03% and 1.12%. But China's Shanghai Composite rose 1.61%

Trading in the US index futures indicated the Dow could rise 30 points at the opening bell today, 29 June 2009. Earlier in the day, the US index futures were in the red.

US markets ended mixed on Friday, 26 June 2009 with the Nasdaq Composite index rising on strong demand for Palm's Inc's Pre smartphone, while the Dow took a hit on account of falling oil prices. Strength in some financial stocks helped cushion the S&P 500's decline.

The Dow Jones industrial average dropped 34.01 points, or 0.40%, to 8,438.39. The Standard & Poor's 500 Index fell 1.36 points, or 0.15%, to 918.90. But the Nasdaq Composite Index gained 8.68 points, or 0.47%, to 1,838.22.

The BSE 30-share Sensex rose 21.10 points or 0.14% to 14,785.74. The Sensex opened 51.26 points higher at 14,815.90. At the day's high of 14,955.55, the Sensex rose 190.91 points in mid-afternoon trade. The Sensex lost 79.19 points at the day's high low of 14,685.45 in morning trade

The S&P CNX Nifty was up 15.45 points or 0.35% to 4390.95. Nifty July 2009 futures were at 4389, at a discount of 1.95 points as compared to the spot closing of 4390.95. Turnover in NSE's futures & options (F&O) segment was Rs 47,588.96 crore, lower than Rs 48,071.62 crore on Friday, 26 June 2009.

The barometer index BSE Sensex is up 5,138.43 points or 53.26% in calendar year 2009 as on 29 June 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 6,625.34 points or 81.18% as on 29 June 2009

Coming back to today's trade, the BSE clocked a turnover of Rs 5969 crore, higher than Rs 5,541.06 crore on Friday, 26 June 2009.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1684 shares advanced as compared with 987 that declined. 65 shares remained unchanged.

The BSE Mid-Cap index rose 1.14% to 5,230.09 and the BSE Small-Cap index advanced 1.50% to 5,887.86. But both these indices outperformed the Sensex

Sectoral indices on BSE displayed mixed trend. The BSE Capital Goods index (up 0.87%), BSE Bankex (up 1.24%), and the BSE Realty index (up 2.94%), the BSE Consumer Durables index (up 4.24%), BSE Power index (up 1.10%), the BSE Oil & Gas index (up 2.40%), the BSE PSU index (up 1.73%), the BSE Metal index (up 2.59%), outperformed the Sensex

The BSE IT index (down 2.07%), the BSE TECk index (down 1.26%), the BSE Healthcare index (down 0.33%), the BSE Auto index (down 0.42%), the BSE FMCG index (down 0.37%), underperformed the Sensex.

Among the 30-member Sensex pack, 16 gained while the rest slipped

Metal shares rose on strong domestic demand. India's largest zinc and copper maker by sales Sterlite Industries galloped 8.49% to Rs 664 after its American depository receipt (ADR) jumped 5.48% on Friday, 26 June 2009. It was the top gainer from the Sensex pack.

Tata Steel (up 2.38%), JSW Steel (up 1.43%), Hindalco Industries (up 1.44%), Hindustan Zinc (up 1.43%), and Nalco (up 2.90%), edged higher

Rate sensitive realty stocks rose after successful fund raising by Unitech through a second round of qualified institutional placement. Unitech, India's second largest real estate company by sales, gained 3.52% to Rs 85.25. As per reports, Unitech has raised $575 million through qualified institutional placement (QIP) with overseas private equity funds at Rs 81 per share.

India's largest real estate developer by sales DLF jumped 3.69% to Rs 337.55.

Among other realty firms, Parsvnath Developers (up 4.95%), Sobha Developers (up 4.99%), Omaxe (up 3.37%), Akruti City (up 2.10%), HDIL (up 4.54%), edged higher.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) advanced 2.62% to Rs 2081.90 on recent reports the company is evaluating options for future course of action after the Bombay high court on 15 June 2009 asked RIL to supply gas to Anil Ambani Group firm Reliance Natural Resources (RNRL) at prices lower than the government-approved. The stock slipped from day's high of Rs 2011.90

The Bombay High Court has directed RIL and Reliance Natural Resources (RNRL) to sign gas supply deal. The court has asked RIL to supply 28 million metric standard cubic meters per day (mmscmd) of gas for 17 years at $2.34 per million metric British thermal unit (mmbtu) to RNRL. This is much lower than the price fixed by the government for gas sale from the RIL block in the KG basin at $4.2 million per metric British thermal unit. According to analysts the lower gas sale price will result in lower-than-expected earnings from gas sales for RIL.

Some PSU stocks were in demand. India's largest oil exploration firm by net profit ONGC jumped 2.70% on reports it would get the coveted 'Mahanavaratna' status conferring greater operational autonomy.

Shares of other companies likely to get 'Mahanavaratna' status such as Indian Oil Corporation (up 1.13%) and Steel Authority of India (up 3.73%), also logged gains.

A total of 5 companies including 2 unlisted firms - BSNL and Coal India may get Mahanavaratna status. According to the criteria set by Department of Public Enterprises (DPE), only five pubic sector enterprises (PSUs) could meet the qualifying norm in turnover, profitability and networth. As per reports Mahanavaratna status would be given to PSUs who had clocked Rs 30,000 crore or more turnover in the past three years and earned more than Rs 5,000 crore profit after tax in three consecutive years.

Also, the Mahanavaratna-eligible PSU should have an average networth of Rs 15,000 crore and global presence, according to the cabinet note circulated by DPE.

BEML jumped 17.80% after net profit surged 45.2% to Rs 172.02 crore 20.4% rise in net sales rose 20.4% to Rs 1,262.51 crore in Q4 March 2009 over Q4 March 2008. The company announced the results after market hours on Friday, 26 June 2009.

India's largest commercial vehicle maker by sales Tata Motors tumbled 7.80% to Rs 313.75 and was the top loser from the Sensex pack. The company reported a net loss of Rs 2505.25 crore in the year ended March 2009 as compared with net profit of Rs 2167.70 crore in the year ended March 2008. Net sales jumped 98.73% to Rs 70370.40 crore in the year ended March 2009 over the year ended March 2008.

However the figures are not comparable as the year-ago numbers did not include that of Jaguar and Land Rover, as well as some other assets the company bought and sold during the year. The results were announced after market hours today, 26 June 2009.

Meanwhile, Tata Motors, on 28 June 2009, launched in India its marquee car brands Jaguar and Land Rover. The company had completed the acquisition of the two British marquee car brands last year for $2.3 billion from Ford Motor Company.

India's top tractor maker by sales Mahindra & Mahindra (M&M) rose 1.08% after its unit Mahindra Holidays & Resorts India reportedly priced shares in its initial public offer (IPO) at Rs 300 each. The Mahindra Holidays IPO was subscribed nearly 10 times. The issue closed on Friday, 26 June 2009

India's largest bike maker by sales Hero Honda Motors slipped 2.19% while India's largest pharma company by sales Ranbaxy Laboratories gained 1.21%. The former has replaced the latter in the BSE 30-share Sensex from today

India's top pharma firm by market capitalisation Sun Pharma lost 3.36% extending Friday's over 10% after reports the US drug regulator has seized generic drugs made by Caraco Pharmaceutical Laboratories, a US subsidiary of Sun Pharma after the agency found manufacturing defects at company plants, including oversized tablets. Sun Pharma holds 70.21% stake in Caraco Pharmaceutical Laboratories.

Infrastructure stocks rose on hopes the government may announce higher spending for the infrastructure projects in the Union Budget 2009-10. Bharat Heavy Electricals (up 1.84%), GVK power Infrastructure (up 3.23%), Punj Lloyd (up 2.29%), Nagarjuna Construction Company (up 3.78%), GMR Infrastructure (up 13.13%), gained.

India's largest engineering and construction company by sales Larsen & Toubro was unchanged at Rs 1610.80 despite winning six orders aggregating to Rs 1230 crore for electrical projects in the domestic market. The company made this announcement before market hours today, 29 June 2009.

In a move to push financially unviable highway projects worth approximately Rs 22,000 crore, the National Highways Authority of India (NHAI) has proposed a more lucrative hybrid model which will combine both toll as well as annuity payment under build operate transfer (BOT) scheme.

According to the proposed model, a concessionaire will get the viability gap funding (VGF), meaning the gap between the cost of the project and the expected return, up to a maximum of 40% of the project cost from NHAI. However, in case the developer needs more than 40% VGF, it has to make its own investment.

Suzlon Energy slumped 5.35% after reporting net loss of Rs 183.36 crore in Q4 March 2009 as compared with net profit of Rs 482.55 crore in Q4 March 2008. Net sales declined 25.8% to Rs 2037.07 crore in Q4 March 2009 over Q4 March 2008. The results were announced after market hours on Friday, 29 June 2009.

Cement shares slipped on reports prices are likely to soften by Rs 3-5 per 50 kilogram bag next month due to the twin effect of excess supply and lower demand. ACC (down 0.51%), Grasim (down 2.65%), Ambuja Cement (down 0.76%), UltraTech Cement (down 2.16%), slipped.

Post this price cut, retail cement prices will come down to Rs 255 in Mumbai, Gujarat, South India and to around Rs 245 in the northern and eastern markets. Grasim, ACC and Ambuja Cement are expected to announce price cut on 1 July 2009, reports added.

India Cements lost 4.81% after consolidated net profit declined 34% to Rs 423.25 crore on 14.8% rise in net sales to Rs 3,496.26 crore in the year ended March 2009 over the year ended March 2008. The company announced results on Saturday, 27 June 2009.

Outsourcing focussed IT stocks slipped on worries the US economic recovery may take longer time that expected. US is the biggest market for Indian IT firms. India's second largest software firm by sales Infosys Technologies slipped 2.01% despite a 2.67% rise in its ADR on Friday, 26 June 2009.

India's largest software services exporter by sales TCS declined 2.99%. India's third largest software services exporter by sales Wipro dropped 1.76% even as its ADR rose 3.75% on Friday, 26 June 2009

Bank stocks rose on hopes banks may get tax relief on interest earned on infrastructure lending in the Union Budget 2009-2010. But front line bank shares came off the day's highs. India's biggest bank in terms of branch network State Bank of India (SBI) rose 0.92%. The stock came off the day's f Rs 1777.60.

India's second largest private sector bank by net profit HDFC Bank gained 0.37% to Rs 1502.25 after hitting a day's high of Rs 1535. India's largest private sector bank by net profit ICICI Bank slipped 1.77% to Rs 741, off the day's high of Rs 772.70.

Among notable gainers were Union Bank of India (up 6.15%), Kotak Mahindra Bank (up 2.63%), Axis Bank (up 5.20%), Canara Bank (up 2.22%), and Punjab National Bank (up 3.31%).

A tax relief on infrastructure lending will enable banks to lend more to the sector. This relief was withdrawn by the government in 2007. Bankers have also sought rebate for long-term deposits, which are necessary for infrastructure funding.

Indiabulls Financial Services was locked at 5% upper limit after 20 lakh shares changed hands in two block deals on BSE and NSE combined.

India's top cellular services provider by sales Bharti Airtel slipped 0.44%. As per reports, JP Morgan, BNP Paribas, HSBC and Barclays are in talks with Bharti Airtel to fund part of the $4 billion needed by Bharti Airtel to complete its $23-billion merger with MTN, Africa's largest mobile phone operator. The merger deal will see both Bharti and MTN offering equity stakes and cash to each other. Bharti will have to make a net cash payment of around $4 billion to complete the deal, which will see it acquiring a 49% stake in MTN, which, in turn, will get a 36% economic interest in the Indian firm. Both companies are in exclusive talks till 31 July 2009.

India's second largest listed telecom services provider by sales Reliance Communications shed 1.86% on reports the company is in advanced talks with private equity firms Carlyle Group and Providence Equity to divest raise capital of its subsidiary BIG TV.

Tulip Telecom spurted 7.27% after net profit jumped 60% to Rs 105.73 crore on a 24% increase in total income to Rs 519.52 crore in Q4 March 2009 over Q4 March 2008. The results were announced before market hours today, 29 June 2009.

Sugar shares gained after sugar prices moved up by Rs 50 a quintal to Rs 2,400 today, 29 June 2009 in the wholesale foodgrains market. Bajaj Hindusthan (up 11.33%), Triveni Engineering (up 1.63%), Ugar Sugar (up 1.96%), Sakthi Sugar (up 5%), Shree Renuka Sugar (up 4.03%), and Balrampur Chini Mills (up 3.71%), rose.

Shares of firms which rely on orders from Indian railways rose on expectation of some positive announcement in the forthcoming Railway Budget on 3 July 2009. Kernex Microsystems (up 5%), Hind Rectifiers (up 4.76%), Texmaco (up 5%), Titagarh Wagons (up 4.76%), Kalindee Rail Nirman Engineers (up 4.47%), Stone India (up 4.91%), spurted.

Rishabhdev Technocable settled on BSE at Rs 27.20 on BSE on its day of debut. The stock listed on Rs 42, a 27.27% premium compared with issue price of Rs 33 per share.

GMR Infrastructure was the top traded counter on BSE with turnover of Rs 244.84 crore followed by Suzlon Energy (Rs 228.90 crore), HDIL (Rs 216.75 crore), Reliance Industries (Rs 197.37 crore) and Reliance Capital (Rs 181.35 crore).

Rishabhdev Technocable led the volumes chart on BSE with volume of 2.53 crore shares followed by Suzlon Energy (1.95 crore shares), IFCI (1.90 crore shares), Unitech (1.75 crore shares) and GMR Infrastructure (1.60 crore shares)

Jain Irrigation Systems rose 1.55% after the company bagged fresh orders aggregating Rs 158 crore. The company announced the new order win before trading hours today, 29 June 2009.

Adani Enterprises was locked at 5% upper limit after a block deal of two lakh shares was executed on NSE at Rs 829.40 per share. The block deal constituted 0.08% of the company's equity.

VST Tiller Tractors rose 1.86% after the company's board recommended a 1:2 bonus issue.