Tata Steel spurts as Sensex extends gains for the fifth day in a row

Key benchmark indices saw divergent trend with the BSE Sensex logging small gains and Nifty ending slightly lower in what was a highly choppy trading day. The BSE Sensex extended gains for the fifth straight day as stocks staged a comeback in late trade after an early slump caused by profit booking, weak European markets and on Asian markets turning negative after early gains. Index heavyweights Reliance Industries and ICICI Bank played a lead role in the recovery in the key benchmark indices from lower level. Turnover on BSE's cash segment surged to Rs 9,438 crore as compared with Rs 8,177.61 crore on Monday, 1 June 2009.

The BSE 30-share Sensex rose 34.28 points, or 0.23%, recovering 266.68 points from the day's low but off 119.31 points from the day's high.

Volatility was high. Profit taking pulled the market off the higher level after an initial surge that took the barometer index BSE Sensex within striking distance of the psychological 15,000 level. The market slipped into the red in early trade. The market cut losses after the latest data showed India's infrastructure sector output grew 4.3% in April 2009 from a year earlier. Weak European markets pulled the Sensex to intraday low in early afternoon trade. The market cut losses later. The BSE Sensex moved into green from red in choppy late trade.

The Sensex is up 5227.60 points or 54.18% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 6714.51 points or 82.28%.

But a glut in share shares will soak liquidity from the secondary market and 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.

Nevertheless, there are reasons to believe that the recent strong rally may continue in the near term. 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.

The newly elected UPA government convened the first session of the 15th Lok Sabha on Monday, 1 June 2009. The session will last till 9 June 2009. As regards the business of the first Lok Sabha session, the first two days are reserved for oath of affirmation to the newly elected members. On 3 June 2009, election for the Lok Sabha Speaker would be held, followed by the President's address to both the houses of parliament on 4 June - the date of commencement of Rajya Sabha session. 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. On Monday, 1 June 2009, Civil Aviation Minister Praful Patel said 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

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

The latest data showed cement sales surged in May 2009 even as auto sales data depicted a mixed picture. Aditya Birla Group's cement shipments 19.5% to 3.18 million tonnes in May 2009 over May 2008. The shipments of the country's third-largest cement maker Ambuja Cements surged 8.3% while Shree Cement witnessed a 32.1% growth during the month.

Car market leader Maruti Suzuki India sold a total of 79,872 vehicles in May 2009, up 15.6% year-on-year (yoy). This includes 9,087 units for export, up 87.1%. M&M recorded an almost flat growth in the total volume for the month of May 2009 at 30,366 units (30,123). Its auto Segment reported an 18.3% yoy decline to 16,866 whereas the tractor segment reported a 42.6% yoy jump in volume (including sales figures of Punjab Tractors).

Tata Motors' domestic sales for the month of May 2009 were 38,392 units, an 11% decline yoy. However, they were 6% higher compared to the 36,257 units sold in the previous month (April 2009). The company's sales of commercial vehicles in the domestic market, in May 2009, were 23,004 units, a 3% decline yoy.

In the two-wheelers segment, Hero Honda clocked a robust 22.5% yoy growth in May 2009 to 382,678 units (312,317). TVS Motors recorded a 5.2% yoy growth in May 2009 to 118,574 (112,770). Its export volumes declined 20.9% yoy during the month to 11,135, while domestic volumes grew by 7% yoy.

Two-wheeler maker Bajaj Auto on Tuesday reported an 8.13% fall in motorcycle sales in May 2009 at 1,65,049 units as against 1,79,649 units in the same month last year. Total two-wheeler sales during the month stood at 1,65,697, an 8.42% decrease over the same month last year.

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.

Foreign funds are aggressively buying Indian stocks. Their inflow in 2009 totaled Rs 21,937.30 crore (till 1 June 2009).

European markets were trading lower today, 2 June 2009 as investors resorted to profit taking following a recent sharp surge. Key benchmark indices in UK, France and Germany were down by between 0.02% and 0.51%.

Stocks in Hong Kong, Taiwan, South Korea and Singapore were down by between 0.07% and 2.65% on profit taking after recent strong gains. Yet, select Asian markets were trading higher as US manufacturing data reinforced hopes that demand will stabilise, while automakers such as Toyota Motor Co and Honda Motor Co climbed after General Motor's bankruptcy filing removed some uncertainty from the market. Key benchmark indices in China and Japan rose 0.11% and 0.27% respectively

Trading in US index futures showed the Dow could rise 17 points at the opening bell on Tuesday, 2 June 2009.

US markets rallied on Monday, 1 June 2009 despite General Motors filing for bankruptcy, as strong manufacturing and construction reports raised hopes of a global economic recovery. The Dow Jones Industrial Average jumped 221.11 points, or 2.6%, to 8,721.44. The Standard & Poor's 500 Index gained 23.73 points, or 2.58%, to 942.87 and the Nasdaq Composite index rose 54.35 points, or 3.06%, to 1,828.68.

The Institute for Supply Management (ISM) manufacturing index rose to 42.8 in May 2009 from 40.1 in March 2009. Construction spending also jumped 0.8% in April 2009, doubling the 0.4% increase seen in March 2009.

GM filed for bankruptcy on Monday, 1 June 2009 after years of taking heavy losses, becoming the largest-ever US manufacturer to seek court protection. The US government will extend $50 billion of loan to the automaker and will convert it into a 60% stake in the reorganized company, according to a filing in US Bankruptcy Court in New York.

The BSE 30-share Sensex rose 34.28 points, or 0.23%, to 14,874.91, its highest closing since 9 September 2008. The Sensex opened 101.58 points higher at 14,942.21. The Sensex rose 153.59 points at the day's high of 14,994.22 in early trade. At the day's low of 14,608.23, the Sensex lost 232.40 points in afternoon trade.

The BSE Sensex has gained 1285.68 points or 9.46% in five trading days from 13589.23 on 26 May 2009 to 14,874.91.

The S&P CNX Nifty was down 4.65 points, or 0.10%, to 4525.25. The Nifty struck an intra-day high of 4586.40, its highest level since 12 August 2008. Nifty June 2009 futures were at 4524.30, at a discount of 0.95 points as compared to the spot closing.

Turnover in NSE's futures & options (F&O) segment surged to Rs 63,624.63 crore from Rs 58,484.39 crore on Monday, 1 June 2009.

The market breadth, indicating the overall health of the market, was positive. The breadth gyrated between positive and negative zone during the day. On BSE, 1699 shares advanced as compared with 1128 that declined. A total of 52 shares remained unchanged.

The BSE Mid-Cap index was up 0.82% to 5,246.68 and the BSE Small-Cap index was up 0.91% to 6,252.98. Both these indices outperformed the Sensex

BSE clocked a turnover of Rs 9438 crore as compared with Rs 7040 crore by 14:25 IST. The turnover was boosted by 3 massive bulk deals of 1 crore shares each in Essar Oil counter in opening trade. Essar Oil was the top traded counter on BSE with turnover of Rs 987.15 crore.

Other turnover toppers were Unitech (Rs 300.21 crore), DLF (Rs 289.14 crore), Tata Steel (Rs 271.04 crore) and HDIL (Rs 221.92 crore).

Sectoral indices on BSE displayed mixed trend. The BSE Consumer Durables index (up 2.63%), the BSE Auto index (up 1.37%), the BSE Metal index (up 2.48%), the BSE Capital Goods index (up 0.31%), outperformed the Sensex.

The BSE FMCG index (up 0.15%), the BSE Power index (down 1.65%), the BSE IT index (up 0.17%), the BSE TECk index (down 0.08%), the BSE PSU index (down 1.14%), BSE Realty index (down 2%), the BSE Oil & Gas index (down 0.26%), the BSE Healthcare index (up 0.16%), the BSE Bankex (down 0.31%) and underperfomed the Sensex.

Among the 30-member Sensex pack, 16 slipped while the rest gained. HDFC (up 4.76%), Grasim (up 1.14%), Infosys (up 0.57%), and Larsen & Toubro (up 1.15%), edged higher from the Sensex pack. However ACC (down 5.65%), Jaiprakash Associates (down 1.48%), and Tata Power (down 3.12%), edged lower from the Sensex pack.

Metal shares advanced on strong domestic demand and firm prices on the London Metal Exchange (LME). The world's sixth largest steel maker by sales Tata Steel jumped 10.71% to Rs 484.85, extending yesterday's 7.79% surge 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. It was the top gainer from the Sensex pack.

India's largest copper market by sales Sterlite Industries gained 3.57% to Rs 688.50 after its American depository receipt surged 6.99% on Monday, 1 June 2009.

Ispat Industries (up 10.71%), Steel Authority of India (up 3.62%), and Hindustan Zinc (up 6.66%), edged higher.

LMEX, a gauge of six metals traded on the LME, rose 4.18% to 2,355.20 on Monday, 1 June 2009

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) slipped 0.29% to Rs 2274.30, rebounding from day's low of Rs 2205. Earlier the stock came off day's high of Rs 2309. 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.

Cairn India rose 1.99% after Goldman Sachs raised its 12-month target price to Rs 290 from Rs 240 earlier, saying the company was set to produce oil from its Rajasthan fields within the next few weeks.

HPCL lost 3.23% to Rs 349 despite reporting 32.74% rise in net profit to Rs 510.40 crore in Q4 March 2009 over Q4 March 2008. The results were announced during market hours today, 2 June 2009.

India's largest private sector bank by net profit ICICI Bank and a heavyweight in the 30-share BSE Sensex gained 2.05% to Rs 738, after sliding to a day's low of Rs 704. The bank's ADR rose 3.02% on Monday, 1 June 2009

India's largest bank by net profit and branch network State Bank of India (SBI), too, recovered sharply from an intra-day low of Rs 704 to settle 2.05% higher at Rs 738. The country's largest lender, State Bank of India (SBI), today said it has increased its stake to 55% in joint venture Nepal SBI from 50% earlier.

India's top tractor maker by sales Mahindra & Mahindra (M&M) advanced 2.02% to Rs 724.80 on surge in tractor sales in May 2009. The sales figures were announced after market hours on Monday, 1 June 2009.

India's top truck maker by sales Tata Motors rose 4.88% to Rs 354.45 after the company's American depository receipt (ADR) jumped 4.75% on Monday, 1 June 2009.

Bajaj Auto advanced 1.73% to Rs 1074 after total vehicle sales surged 9.59% to 1.85 lakh units in May 2009 over April 2009. The company's motorcycle sales rose 10% to 1.65 lakh units in May 2009 over April 2009. The sales figures were announced during market hours today, 2 June 2009.

India's top pharma company by sales Ranbaxy Laboratories fell 4.59% to Rs 262. The stock slipped on profit booking after it jumped 65.47% in one month to 1 June 2009.

However, India's largest pharma company by market capitalisation Sun Pharmaceuticals rose 0.53% to Rs 1225 on 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 second largest private sector power generation firm by sales Reliance Infrastructure plunged 4.22% to Rs 1246. The stock slipped on profit booking after advancing 87.12% in one month to 1 June 2009.

India's second largest listed cellular services provider by sales Reliance Communications (RCom) slipped 0.67% to Rs 318.60 on profit booking. The stock had risen 4.89% on Monday, 1 June 2009 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.

Realty stocks cooled off on profit booking after a recent solid 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.

DLF (down 2.82%), Housing Development & Infrastructure (down 0.85%), Indiabulls Real Estate (down 5.96%), and Unitech (down 0.54%), edged lower. DLF slipped on profit booking after surging 79.67% in one month to 1 June 2009.

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).

North India's largest cement firm by sales Ambuja Cements rose 1.89% 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 1.14% while UltraTech Cement slipped 1.90% 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.

Shree Cement rose 1.91% to Rs 1060 after cement shipments surged 32.19% to Rs 7.35 lakh tonne in May 2009 over May 2008. The company made this announcement after market hours on Monday, 1 June 2009.

Essar Oil, too, led volume chart with over 57 million shares traded on the BSE today. It was followed by Ispat Industries (46.97 million), Unitech (32.58 million), IFCI (32.42 million) and Reliance Natural Resources (18.77 million).

Rashtriya Chemicals and Fertilizers (up 9.98%), Nagarjuna Fertilizers & Chemicals (up 4.96%), Deepak Fertilisers and Petrochemicals Corporation (up 1.49%), Tata Chemicals (up 3.12%), and Chambal Fertilisers & Chemicals (up 1.76%), rose on governments plan to maximise domestic production of fertilisers through modernisation and restructure of existing fertilisers production units.

Some mid and small-cap software shares gained on buying momentum. Aztecsoft (up 4.94%), Core Projects (up 5.60%), Firstsource Solutions (up 6.90%), KPIT Cummins (up 9.09%), 3i Infotech (up 8.57%), Patni Computer (up 5.14%), Polaris (up 3.56%), and Tech Mahindra (up 6.85%), surged

Sanghvi Movers jumped 8.65% to Rs 169.50 after a block deal of nine lakh shares was executed on BSE at Rs 162.10 a piece. The block deal constituted 2.08% of the company's equity.

Pantaloon Retail (India) rose 0.29% on reports France's Carrefour will buy stake in Future Fashion Merchandise, a company formed after a restructuring of Pantaloon earlier this year.

KGN Industries was locked at 5% upper limit after the company said its board will meet on 6 June 2009 to consider a 10-for-1 stock split. The company announced the board meet during trading hours today, 2 June 2009.

Among other side counters, Mindtree (up 18.78%), Bartronics (up 19.96%), Hawkins Cookware (up 20%), Ankur Drugs (up 19.98%), and Sasken Communications (up 15.46%), surged.

However, Metrochem Industries (down 11.01%), Sundaram Finance (down 8.42%), and HT Media (down 7.35%), slipped.