Sensex, Nifty scale multi-month highs

Key benchmark indices extended gains for the fourth straight session to settle at multi-month highs in anticipation of a strong push for economic reforms by the newly-elected United Progressive Alliance (UPA) government. But the market was volatile. The BSE 30-share Sensex jumped 215.38 points, or 1.47%, off 66.18 points from the day's high and up 182.62 points from the day's low.

Strong global markets, sustained buying by foreign funds and signs of improving global and domestic economy propelled the market further. Also boosting the sentiment, the National Stock Exchange (NSE) after trading hours on Friday, 29 May 2009, announced a reduction in 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. For most of the stocks, the changes will be applicable from July 2009 derivative contracts. The reduction in lot size may result in increased participation from retail investors.

Thus, the lot size of Maruti Suzuki has been slashed to 200 from 800 and that of Steel Authority of India (Sail) has been reduced to 1350 from 5400. The lot size of Axis Bank has been halved to 450 from 900 and for Reliance Industries also the lot size has been halved to 150 from 300. State Bank of India's lot size too has been halved to 132 from 264.

Foreign funds are aggressively buying Indian stocks. Foreign funds net bought shares worth Rs 21307.80 in May 2009 in 2009.

The market was volatile. After an early surge triggered by firm global markets, Indian stocks pared gains on profit taking. The market recovered from lower level later. Volatility was high in early afternoon trade. Stocks surged in afternoon trade on firm European markets which opened after Indian market. Volatility heightened in the last one hour of trade.

There are signs of recovery in the Indian economy. Manufacturing activity in India expanded for a second straight month in May 2009 to its highest in eight months, a survey showed, reflecting a revival in domestic demand but export orders remained weak. 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.

On the back of higher government spending, India's economy expanded 5.8% in the fourth quarter ended March 2009 compared with a year earlier. That matched a revised gain of the previous quarter, government data announced on Friday, 29 May 2009 showed. Economists were expecting a 5% increase. The GDP grew 6.7% in the year ended March 2009, slowing from 9% in the previous year.

Meanwhile, India's consumer price index rose 8.70% in April 2009 from a year earlier, higher than March's 2009 annual rise of 8.03%, as prices of edible items rose, government data showed on Friday, 29 May 2009. The consumer price index for industrial workers increased by 2 points to 150.

The sentiment on the stock markets remains upbeat following upgrade in earnings of India Inc as thumping victory of the Congress-led United Progressive Alliance (UPA) in the 15th Lok Sabha elections means political stability for the next five years.

Market may see a pre-budget rally 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.

Meanwhile, Civil Aviation Minister Praful Patel said today, 1 June 2009 the government will consider bringing out an initial public offer for flag carrier Air India and list it on the bourses. However, he did not give any time frame

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.

The first session of 15th Lok Sabha began today, 1 June 2009 with the first two days of Parliament kept for newly elected members to take oath followed by election of the Speaker on 3 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 would chart out the road map of the second term of the Manmohan Singh Government.

Firm overseas markets supported the domestic bourses today. European markets surged on stronger commodity prices and growing signs of a global economic recovery. Key benchmark indices in UK, Germany and France were up by between 1.75% and 3.24%

Asian markets extended early gains boosted by encouraging manufacturing data from China. Key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea, and Taiwan were up by between 0.92% and 3.95%

Japan's Nikkei stock average rose 1.63%, after touching a nearly eight-month high, buoyed by shippers, smelters and trading houses.

China's official purchasing managers' index, a key economic indicator, slipped slightly in May 2009, but stayed above the 50 reading indicating manufacturing activity continued to expand for the third consecutive month. The Purchasing Managers Index slipped to 53.1 in May 2009 from 53.5 in April 2009 but held over the expansionary 50 mark, the China Federation of Logistics & Purchasing said.

US Treasury Secretary Timothy Geithner today, 1 June 2009 said that the global recession seemed to be losing force but that it will be critical for the United States and China to institute major economic reforms to put the world on a more sustained footing. Geithner said that a successful transition to a more balanced and stable global economy will require substantial changes to economic policy and financial regulation around the world and especially in the world's largest and third largest economies.

Trading in US index futures showed the Dow could rise 124 points at opening bell on Monday, 1 June 2009. General Motors Corporation and the US government have reportedly finalized plans for the battered company to reorganize, setting the stage for America's largest-ever industrial bankruptcy filing before markets open today, 1 June 2009. Government support for GM is expected to total up to $60 billion. Nearly half of that money has already been extended this year in emergency aid.

Meanwhile, another US automaker Chrysler LLC is nearing the end of a court-supervised restructuring in New York to cut debt and non-performing assets, as well as consummate an alliance with Italy's Fiat SpA.

US markets surged on Friday, 1 June 2009 on encouraging consumer confidence data and a better-than-expected GDP data for the first quarter. The Dow Jones industrial average rose 96.53, or 1.15%, to 8,500.33. The Standard & Poor's 500 index soared 12.31, or 1.36%, to 919.14, and the Nasdaq Composite index was up 22.54, or 1.29%, to 1,774.33.

US GDP decreased at an annual rate of 5.7% in the first quarter of 2009, according to preliminary estimates from the Bureau of Economic Analysis. Although a significant contraction, the fall was smaller than the 6.3% drop in the fourth quarter of last year, and also beat advance estimates which had suggested a decline of 6.1%.

The BSE 30-share Sensex gained 215.38 points, or 1.47%, to 14,840.63, its highest closing since 9 September 2008. The Sensex opened 165.64 points higher at 14,790.89. The Sensex rose 281.56 points at the day's high of 14,906.81 in early trade. At the day's low of 14,658.01, the Sensex 32.76 rose points in morning trade.

The Sensex is up 5193.32 points or 53.83% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 6,680.23 points or 81.86%.

The S&P CNX Nifty advanced 80.95 points, or 1.82%, to 4,529.90, its highest closing since 12 August 2008. Nifty June 2009 futures were at 4535, at a premium of 5.10 points as compared to the spot closing.

BSE clocked a turnover of Rs 8141 crore, lower than Rs 8444.33 crore on Friday, 29 May 2009. Turnover in NSE's futures & options (F&O) segment was Rs 58,484.39 crore, lower than Rs 63,060.58 crore on Friday, 29 May 2009.

The market breadth, indicating the overall health of the market, was strong. On BSE, 2282 shares rose as compared with 557 that declined. A total of 42 shares remained unchanged.

The BSE Mid-Cap index was up 2.92% to 5,204.21 and the BSE Small-Cap index was up 3.51% to 6,196.78. Both these indices outperformed the Sensex

Most sectoral indices on BSE logged gains. The BSE Realty index (up 5.65%), the BSE Consumer Durables index (up 2.68%), the BSE Auto index (up 1.94%), the BSE PSU index (up 1.55%), the BSE Metal index (up 5.32%), the BSE FMCG index (up 2.76%), the BSE Power index (up 2.63%), the BSE IT index (up 3.95%), the BSE TECk index (up 2.27%), outperformed the Sensex.

The BSE Oil & Gas index (up 0.79%), the BSE Capital Goods index (up 0.70%), the BSE Healthcare index (down 0.03%), the BSE Bankex (down 0.85%) and underperfomed the Sensex.

Among the 30-member Sensex pack, 23 gained while the rest slipped. HDFC shot up 5.68%, ITC gained 5.17%, and Tata Power advanced 2.38%

Metal shares advanced on strong domestic demand and firm prices on the London Metal Exchange (LME). JSW Steel (up 2.41%), Steel Authority of India (up 2.11%), Hindalco (up 3.60%), Nalco (up 1.62%), Sesa Goa (up 2.23%), and Hindustan Zinc (up 4.55%), edged higher.

LMEX, a gauge of six metals traded on the LME, rose 2.5% to 2,260.50 on Friday, 29 May 2009

India's largest copper maker by sales Sterlite Industries surged 6.95% to Rs 666 and was the top gainer from the Sensex pack

The world's sixth largest steel maker by sales Tata Steel jumped 6.85% to Rs 434.15 after its 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.

India's second largest listed cellular services provider by sales Reliance Communications (RCom) surged 4.68% to Rs 320.10 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 2.03% to Rs 803, on fears that the merger deal with MTN would lead to dilution in earnings per share. Nevertheless, the stock came off sharply from day's high of Rs 921.

On 25 May 2009, Bharti Airtel 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

IT shares advanced mirroring gains in American depository receipts (ADR) on Friday, 29 May 2009. India's second largest software services exporter by sales Infosys rose 4.56% after ADR jumped 3.54% rise on Friday, 29 May 2009

India's third largest software services exporter by sales Wipro advanced 4.15% after ADR rose 2.16% on Friday, 29 May 2009. India's largest software services exporter by sales TCS gained 0.61%.

Cement were in action ahead of release of their monthly sales figures for May 2009. ACC (up 6.32%), Ambuja Cements (up 7.10%), Grasim (up 2.33%), UltraTech Cement (up 3.26%), and India Cement (up 2.89%), rose

India's top small car maker by sales Maruti Suzuki gained 1.61% to Rs 1038 after total sales rose 15.7% to 79,872 units in May 2009 over May 2008. The company announced the monthly sales data during trading hours today, 1 June 2009.

Hero Honda Motors rose 2.02% after vehicle sales rose 22.5% to 3.82 lakh units in May 2009 over May 2008. The company announced the monthly sales figure before market hours today, 1 June 2009.

TVS Motor Company surged 3.13% on reporting 5.15% growth in total two-wheeler sales to 1,18,574 units in May 2009 over May 2008. TVS Motor Company's domestic motorcycle sales clocked a 3% growth in May 2009 over May 2008. However, the total motorcycle sales slipped 2.23% to 53,495 units in May 2009 over May 2008. Scooters sales declined 1.94% to 22,486 units in May 2009 over May 2008. The company made this announcement during trading hours today, 1 June 2009.

Tata Motors (up 0.39%), Mahindra & Mahindra (up 5.36%), and Ashok Leyland (up 4.78%), were the other gainers from the auto pack.

India's largest power generation firm by sales NTPC surged 6.13% to Rs 228.65 on reports the company will sign an agreement with Coal India next month for setting up a 4,000-mwgawatt pithead power plant at Brahmani block near Rajmahal in Jharkhand, entailing an investment of over Rs 23,000 crore. Brahmani block had a reserve of 1.1 billion tonne of coal.

India's largest power equipment maker by sales Bharat Heavy Electricals lost 2.39% to Rs 2122.95 after gaining 31.67% in one month to 29 May 2009. It was the top loser from the Sensex pack.

India's largest engineering and construction firm by sales Larsen & Toubro was unchanged at Rs 1405.60 after advancing 59.81% in one month to 29 May 2009

Voltas jumped 21.77% after net profit rose 13.4% to Rs 62.86 crore in Q4 March 2009 over Q4 March 2008. Voltas' net sales surged 51.6% to Rs 1,276.54 crore in Q4 March 2009 over Q4 March 2008. The company announced the results after market hours on Friday, 29 May 2009.

Infrastructure shares gained on hopes the Congress-led UPA government may boost spending on infrastructure sector. Gammon India (up 1.79%), Reliance Infrastructure (up 1.73%), GVK Power & Infrastructure (up 0.99%), GMR Infrastructure (up 6.37%), and IVRCL Infrastructures & Projects (up 1.17%), surged

India largest dam builder by sales Jaiprakash Associates spurted 6.27% to Rs 220.50 on high volume of 78.68 lakh shares ahead of the record date of 12 June 2009 for the proposed merger of four group companies with itself. The company on 15 May 2009 got approval from the Allahabad High Court for merger of Japyee Cement (JCL), Gujarat Anjan Cement (GACL), Jaypee Hotels (JHL) and Jaiprakash Enterprises (JEL) with itself.

JMC Projects India was locked at 5% upper limit at Rs 146.40 after net profit jumped 70.32% to Rs 16.30 crore in Q4 March 2009 over Q4 March 2008. The company's net profit rose 19.82% to Rs 36.76 crore on 44.19% surge in net sales to Rs 1,319.29 crore in the year ended March 2009 over the year ended March 2008.

Realty stocks rose on expectations that stability at the Centre will attract more money from foreign investors into the sector which in turn will boost growth. DLF (up 2.50%), Housing Development & Infrastructure (up 8.79%), Indiabulls Real Estate (up 0.37%), and Unitech (up 15.86%), gained.

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).

Hotel shares gained on speculation the government will push for lower lending rates and tax breaks for all industries that are labor-intensive which includes hotels. Indian Hotels Company (up 16.60%), EIH (up 14.10%), Taj GVK Hotels (up 19.96%), Asian Hotel (up 13.67%), and Hotel Leelaventures (up 21.80%), surged.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) was almost unchanged at Rs 2276.05. The stock moved in a band of Rs 2257 and Rs 2311.45 in choppy trade

India's largest private sector bank by net profit ICICI Bank and a heavyweight in the 30-share BSE Sensex was down 1.98% to Rs 726 on profit booking after surging 55.04% in one month to 29 May 2009. Nevertheless, the stock recovered from day's low of Rs 710.05

India's largest bank by net profit and branch network State Bank of India (SBI) gained 1.12% to Rs 1890. As per reports the bank hopes to earn more profit than the landmark figure of Rs 10,000 crore in the current fiscal

Shares of public sector firms gained on speculation the UPA government may revive disinvestment programme. Shipping Corporation of India (up 8.35%), HMT (up 2.37%), Hindustan Copper (up 4.98%), NMDC (up 2.05%), MMTC (up 2.31%), Central Bank of India (up 1.52%), rose

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 the back burner due to stiff opposition from the Left front which provided support to the previous government for most part of the five-year term.

India's largest pharma firm by market capitalisation Sun Pharmaceuticals rose 0.85% to Rs 1220 after net profit rose 71.3% to Rs 424.69 crore on 49.8% rise in net sales to Rs 1169.27 crore in Q4 March 2009 over Q4 March 2008. The results were announced on Saturday, 30 May 2009.

Glenmark Pharmaceuticals rose 0.33% after Glenmark Generics Inc. USA, a subsidiary of Glenmark Pharmaceuticals got final approval from US Food and Drug Administration (US FDA) for Hydralazine Hydrochloride tablets in multiple strengths. The drug is used for treating hypertension. The company made this announcement during trading hours today, 1 June 2009.

Opto Circuits India surged 6.94% after an overseas unit of the company received approval from the US drug regulator for Sequel, a next generation pulse oximeters module. The company made this announcement during trading hours today, 1 June 2009.

Page Industries rose 3.47% after ICICI Prudential Discovery Fund acquired 80,000 shares, or 0.71% equity of the company at Rs 450 each on Friday, 29 May 2009.

Unitech topped the turnover chart on BSE with turnover of Rs 376.72 crore followed by Suzlon Energy (Rs 358.45), Reliance Capital (Rs 260.18 crore), HDIL (Rs 241.98 crore) and Reliance Natural Resources (Rs 216.64 crore).

Unitech also led the volume chart on BSE with trades of 4.26 crore shares was followed by Suzlon Energy (3.28 crore shares), Satyam Computer Services (3.18 crore shares), Reliance Natural Resources (2.52 core shares) and Cals Refineries (2.51 crore shares).

Gokul Refoils and Solvent rose 9.01% after the company's board approved a 5-for-1 stock split. The company made this announcement before trading hours today, 1 June 2009.