Sensex extents gains for the 14th week in a row

The appetite of cash-flush foreign institutional investors (FIIs) for Indian shares showed no sign of waning as the market ended higher for the 14th week in a row. The modest rise in the BSE Sensex was after a solid rally in 13 preceding weeks.

Encouraging speech by the prime minister acted as a sentiment booster. Prime Minister Manmohan Singh said the economy had the potential to achieve a 9% growth rate amid the global recession. President Pratibha Patil had last week said the government would ease foreign investment rules, sell holdings in state companies and pump money into lenders to stoke growth.

FII inflow in June 2009 totaled Rs 5,595.40 crore, while the inflows in the calendar year 2009 totaled Rs 26,914.80 crore (till 11 June 2009).

Economic indicators confirmed a recovery. The industrial production for April 2009 bounced back into the positive zone after declining three times in four months. The index of industrial production (IIP) rose 1.4% in April from a revised 0.75% decline in March 2009.

Inflation based on the wholesale price index (WPI) rose 0.13% in the year through 30 May 2009, government data on Thursday showed. The annual inflation rate was 9.32% during the corresponding week of the previous year. Inflation for the week ended 4 April 2009, was revised to 0.83% as against the provisional figure of 0.18%.

The BSE 30-share Sensex rose 134.39 points, or 0.89%, to 15,237.94 in the week ended 12 June 2009. But the S&P CNX Nifty declined 3.5 points or 0.07% to 4583.40 in the week.

Second-rung stocks gave up recent gains with their barometer indices underperforming the main stock indices. The BSE Mid-cap index fell 174.75 points or 3.23% to 5,235.03 and the BSE Small-cap index lost 443.99 points or 6.87% to 6,014.66.

Trading for the week began on a weak note, with key benchmark indices plunging from multi-month highs on Monday, 8 June 2009, as lower European markets and US index futures triggered profit taking after a recent solid surge. That day, the BSE 30-share Sensex lost 437.63 points, or 2.9%, to 14,665.92. The S&P CNX Nifty ended down 157 points, or 3.42%, to 4,429.90.

Investors, however, saw the sharp plunge on Monday, as a buying opportunity. The market bounced back with vengeance on Tuesday, 9 June 2009, erasing all the losses incurred in the previous session. Prime minister's comment fortified investor sentiment that day, as he said Indian economy can achieve 8% to 9% growth with a high savings rate. The BSE 30-share Sensex jumped 461.08 points, or 3.14%, to 15,127, its highest closing since 12 August 2008. The S&P CNX Nifty rose 121.05 points, or 2.73%, to 4,550.95.

Firm global markets and higher US index futures helped Indian stocks register strong gains for the second straight day on Wednesday, 10 June 2009. Comments by Petroleum Secretary R.S. Pandey that the government is committed to reforms in fuel pricing also boosted the sentiment. The BSE 30-share Sensex rose 339.81 points, or 2.25%, to 15,466.81 its highest closing since 11 August 2008. The S&P CNX Nifty rose 104.95 points, or 2.31%, to 4,655.90 its highest closing since 5 June 2008.

On Thursday, 11 June 2009, the key benchmark indices snapped gains made in the preceding two sessions. Profit booking pulled the Sensex down by 55.34 points, or 0.36%, to 15,411.47. The S&P CNX Nifty ended down 17.55 points or 0.38% to 4,637.70.

The key benchmark indices extended losses for the second straight day on Friday, 12 June 2009, as investors took profits ahead of the weekend on a more than 90% rally since early March 2009. Stocks from interest rate sensitive sectors viz. auto and realty fell as an improved industrial production data raised fears that the rate cutting cycle may come to an end sooner than later. The BSE 30-share Sensex fell 173.53 points, or 1.13%, to 15,237.94. The S&P CNX Nifty ended down 54.30 points or 1.17% to 4583.40.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 6.55% in the week on market talks the government may extend a seven-year tax holiday given to crude oil explorers to producers of natural gas in the Union Budget 2009-2010.

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.

The Bombay High Court is likely to deliver the final judgement on the legal tussle over the supply of gas from Reliance Industries (RIL) to Reliance Natural Resources (RNRL) shortly. The basic argument in the RIL-RNRL case pertains to the pricing and quantum of gas RIL has to supply s from its Krishna Godavari basin to RNRL for RNRL's upcoming 7400 megawatt (MW) power project at Dadri in Uttar Pradesh.

Realty stocks fell on profit taking after a recent sharp surge triggered by expectations that stability at the Centre will attract more money from foreign investors into the sector which in turn will boost growth. Unitech (down 11.86%), Omaxe (down 11.12%), DLF (down 9.69%), and Akruti City (down 2.75%), fell.

Unitech and Indiabulls Real Estate, have already raised funds through qualified institutional placements (QIPs). A number of other realty funds have decided to raised funds by way of QIPs. The promoters of DLF last month sold a 10% stake in the secondary equity markets.

Engineering-to-construction major Larsen & Toubro (L&T) rose 4.16% after it sold its entire 11.49% stake in UltraTech Cement on Thursday, 11 June 2009.

Among other capital goods stocks, ABB (up 7.57%), Thermax (up 8.11%), rose.

India's largest electric equipment maker by sales Bharat Heavy Electricals fell 3.13% even after it got orders worth Rs 4,015 crore from Hindalco Industries.

Some auto stocks fell on profit taking after recent surge triggered by improved sales in the month of May 2009. India's largest truck maker by sales Tata Motors (down 8.33%), and India's second largest two-wheeler maker by sales Bajaj Auto (down 10.89%), declined.

Software outsourcers moved higher on talks worst may be over for the US economy and the US banking system. Tata Consultancy Services (up 5.95%), Wipro (up 4.37%), and HCL Technologies (up 11.64%), soared.

India's second largest software exporter Infosys Technologies rose 2.21% after it won a new information technology-outsourcing contract from Telstra Corp, Australia's top phone company.

Beleaguered software company Satyam Computer Services galloped 20.89% after posting unaudited consolidated net profit of Rs 160 crore in Q3 December 2008. It reported a standalone net profit of Rs 181 crore on revenue of Rs 2,294 crore in Q3 December 2008.

Satyam said it had total bank balances of Rs 373 crore as at 31 March 2009. The employee count stood at 41,622, the statement to the stock exchanges said.

Shares of Satyam's new owner, Tech Mahindra jumped 13.53% in the week. Tech Mahindra won an auction in April this year for a controlling stake in Satyam. Tech Mahindra launched an open offer to buy up to 20% in Satyam from its shareholders on Friday, 12 June 2009. If the open offer is fully accepted, it would take Tech Mahindra's holding in Satyam to 51%.