Banking, auto stocks lead 3.5% Sensex surge

The key benchmark indices staged a stellar performance today buoyed by Finance Secretary Ashok Chawla's comments that the Finance Ministry will introduce bills in parliament to reform the financial industry. The BSE 30-share Sensex rose 494.67 points or 3.47%. Auto, IT, and banking stocks led the rally. Firm global markets and revival of monsoon rains also underpinned sentiment. Chawla's comments that the government's record market borrowing programme would not pressure bond yields and interest rates further bolstered bulls.

India's largest IT firm by sales TCS rose ahead of Q1 June 2009 result. The market breadth, indicating the overall health of the market, was strong. All the sectoral indices on BSE rose

India's monsoon has revived this month after a dismal start last month. Rainfall in the week to 10 July was 6% more than the long-term average. For the 1 June-15 July period it was 27% below normal, improving from a deficit of 36% up to 8 July.

The weather office has also forecast widespread rainfall in the next five days in most regions of India where more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains. The weak start to the vital June-September monsoon rains had stoked fears of crop failure, encouraging the government to ban wheat exports and prepare contingency plans. While the monsoon rains have picked up, progress has been uneven, causing floods in some areas and drought in some districts which are not major crop producers.

However, a cause for concern is that water levels in India's 81 main reservoirs more than halved from a year earlier in the week to 16 July 2009 after the lowest June monsoon rains in more than 80 years, government data showed. Shrinking water level in reservoirs has already hit hydropower supply and will limit the water available to irrigate winter-sown rapeseed and wheat crops which will be harvested next year.

The Finance Secretary today said the government will introduce seven bills in parliament, including proposals for pension and banking reforms and efforts to raise the foreign investment limit in insurance companies. Chawla said on Friday the government's record market borrowing of Rs 4, 51,000 crore in 2009/10 would not pressure bond yields and interest rates. Chawla also said that he sees economic growth of around 7% for 2009/10 and expects inflation to be between 2-3% by end March 2010.

Reserve Bank of India deputy governor K.C. Chakrabarty said on Friday the stance on interest rates should be stable and benign. He further said credit in system is improving and trend is likely to continue.

The Indian government ramped up its borrowing plan by nearly a quarter for the fiscal first half to September 2009 to bridge its growing budget deficit. After a meeting with finance ministry officials, Reserve Bank of India (RBI) Deputy Governor Shyamala Gopinath said on Thursday, 16 July 2009 the government would borrow an additional Rs 1,10,000 crore ($22.6 billion) from next week up to 30 September 2009.

The new figure means the government would have completed about 66% of its full-year record borrowing target of a record Rs 4,51,000 crore in the first half. In its first budget last week after being re-elected with a stronger mandate, the Congress-party led government boosted spending on rural and infrastructure programmes, and projected the fiscal deficit to widen to 6.8% of gross domestic product, its highest in 16 years.

Meanwhile, the government is considering to divest stake in four PSUs -- National Minerals Development Corporation (NMDC), Kudremukh Iron Ore Company (KIOCL), Manganese Ore (India) (MOIL) and Rashtriya Ispat Nigam (RINL) -- administered by the steel ministry, as part of a broader plan to mobilise resources to meet their funding needs.

The stock market has entered a crucial period of earnings. L&T yesterday reported results which were more or less in line with market expectations. Early this week, HDFC Bank, India's second biggest private sector bank, reported good Q1 results. India's largest IT firm by sales TCS will announce Q1 June 2009 result today.

European shares rose for the fifth straight day on Friday led by banks and commodity stocks ahead of earnings from Citibank, Bank of America and General Electric. Key benchmark indices in France, Germany and UK were up by between 0.49% to 0.79%.

Asian stocks rose today as key US earnings reports beat expectations, fueling hopes that the global recession is receding. Key benchmark indices in Singapore, Hong Kong, Japan, South Korea, China, Singapore and Taiwan rose by between 0.19% to 2.42%.

But trading in the US index futures indicated the Dow could slide 8 points at the opening bell on Friday, 17 July 2009.

US stocks rallied for a fourth day in a row on Thursday, 16 July 2009 on optimism about the earnings season. Comments by well-known economist Nouriel Roubini that US economy was no longer in a free fall, also aided the rally. The Dow added 95.61 points, or 1.1%, to 8,711.82. The S&P 500 index rose 8.06 points, or 0.9%, to 940.74. The Nasdaq rose 22.13 points, or 1.2%, to 1,885.03.

In economic news, the initial jobless claims came in at 5,22,000 the lowest since January 2009. On the earnings front, Google Inc's quarterly profit beat Wall Street expectations, but the weak economy and slump in advertising spending took a toll on revenue growth and the price of its search ads. JPMorgan's robust results added to growing optimism about the quarterly earnings season.

The BSE 30-share Sensex rose 494.67 points or 3.47% at 14,744.92. At the day's high of 14,800.70, the Sensex rose 550.45 points in late trade. At the day's low of 14,325.58, the Sensex rose 75.33 points in early trade.

The S&P CNX Nifty was up 143.55 points or 3.39% to 4,374.95. Nifty July 2009 futures were at 4398, at a substantial premium of 23.05 points as compared to the spot closing of 4374.95. Turnover in NSE's futures & options (F&O) segment surged to Rs 74,254.90 crore from Rs 68,847.29 crore on Thursday, 16 July 2009.

BSE clocked a turnover of Rs 6623 crore, higher than Rs 6573.37 crore on Thursday, 16 July 2009.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,824 shares rose as compared with 828 that fell. A total of 82 shares remained unchanged.

From the 30 shares Sensex pack, 27 rose and rest fell.

The Sensex is up 5,097.61 points or 52.83% in calendar year 2009, as on 17 July 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 6,584.52 points or 80.68% as on 16 July 2009.

Coming back to today's trade, the BSE Mid-Cap index was up 2.54% and the BSE Small-Cap index was up 2.61 %. Both the indices, however, underperformed the Sensex.

The BSE Auto index (up 5.16%), the BSE Bankex (up 4.76%), the BSE IT index (up 4.11%), the BSE TECk index (up 4.09%), outperformed the Sensex.

The BSE Oil & Gas index (up 0.48%), the BSE Healthcare index (up 0.96%), the BSE Consumer Durables index (up 1.34%), the BSE Capital Goods index (up 2.72%), the BSE Power index (up 2.82%), the BSE Metal index (up 3.01%), the BSE FMCG index (up 3.02%), the BSE PSU index (up 3.31%), the BSE Realty index (up 3.55%), underperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) was flat at Rs 1,919.10. The stock came off the day's high of Rs 1,964. RIL today said it has no unfettered rights to Krishna Godavari Gas. The company today told the Supreme Court it is bound by government policies on the pricing and sale of gas produced at the KG-D6 field, Reliance Industries said in the Supreme Court (SC) today, 17 July 2009. The company made its stand clear following a petition filed by Reliance Natural Resources (RNRL) seeking enforcement of a lower court order on supplying gas for less than the price set by the government.

The SC is scheduled to hear the dispute on 20 July 2009 in what could be the final stage of a wrangle sparked by the breakup of the Ambani family empire in 2005. The Bombay High Court ruled that RIL must honor a 2005 agreement to sell gas from the Bay of Bengal field to estranged brother Anil's company.

The accord required Reliance Industries to sell 28 million cubic meters of gas a day at $2.34 per million British thermal units for 17 years to Reliance Natural, a price that is 44% lower than fixed by the government.

Shares of oil exploration firms rose even as crude oil fell in New York, reversing two days of gains, as the US dollar rose against the euro, limiting the appeal of commodities as an investment. India's largest state-run oil exploration firm by revenue ONGC rose 1.79%. Cairn India rose 1.86%. Crude oil for August delivery fell as much as 51 cents, or 0.81% to $61.52 a barrel on the New York Mercantile Exchange.

India's largest copper maker by sales Sterlite Industries fell 0.42%, extending Thursday's 6.12% slide, on equity dilution concerns after the company said it has raised $1.5 billion from an issue of American Depositary Receipts in which parent Vedanta has subscribed $500 million.

IT stocks rose on hopes of a revival in US economy. US is the largest market for IT firms. India's third largest IT exporter by sales Wipro rose 3.11% as its American depository receipt (ADR) rose 3.77% on Thursday.

India's largest IT firm by sales Infosys rose 4.01% after the company raised the lower end of its annual forecast in dollar terms at the time of announcing Q1 June 2009 results late last week. Its ADR rose 0.78% overnight. India's largest IT exporter by sales TCS rose 3.13% ahead of its Q1 June 2009 result today.

Two-wheeler makers rose for the second straight day boosted by good Q1 June 2009 results from Bajaj Auto during market hours on Thursday, 16 July 2009. Bajaj Auto gained 0.59% after surging 5.12% yesterday. Bajaj Auto's net profit jumped 67.60% to Rs 293.49 crore in Q1 June 2009 over Q1 June 2008.

Hero Honda Motors and TVS Motor Company rose by between 0.4% to 6.49%.

India's largest commercial vehicle maker by sales Tata Motor rose 6.68% on recent reports the company will deliver the first batch of Nano, the world's cheapest car, in the last week of July 2009.

India's largest small car maker by sales Maruti Suzuki India rose 3.58% and India's largest tractor maker by sales Mahindra & Mahindra rose 8.07%.

Bank stocks rose after the Finance Minster said early this week that the government is committed to financial sector reforms. The minister's articulation of commitment to financial sector reforms suggests that greater foreign direct investment in insurance and pension reforms, issue that had been put in cold storage because of Left opposition during the UPA's last term, would now be expedited.

India's largest private sector bank by net profit ICICI Bank rose 6.82% even after its American depository receipt (ADR) fell 1.51% on Thursday, 16 July 2009.

India's biggest bank in terms of branch network State Bank of India (SBI) rose 4.19% after Chairman O P Bhatt said early this week that the bank's net interest margin may be over 2.5% in the year ending March 2010.

Axis Bank rose 6.6% extending recent gains after net profit rose 70.24% to Rs 562.04 crore on 33.64% rise in total income to Rs 3864.13 crore in Q1 June 2009 over Q1 June 2008. The bank announced the result during market hours on Monday 13 July 2009.

India's second largest private sector bank bank in terms of operating income HDFC Bank rose 3.64%. HDFC Bank's net profit rose 30.52% to Rs 606.11 crore on 21.86% rise in total income to Rs 5136.75 crore in Q1 June 2009 over Q1 June 2008. Other income jumped 75.9% to Rs 1043.70 crore in Q1 June 2009 over Q1 June 2008, due to spurt in fees and commissions. The bank announced the result on Tuesday, 14 July 2009.

Some FMCG stocks rose following revival in India's annual monsoon. FMCG firms derive substantial revenue from the rural sector. Britannia Industries, ITC, Hindustan Unilever, and United Spirits rose by between 0.15% to 5.99%.

Some drug makers rose after the Finance Minister Pranab Mukherjee reduced customs duty on life saving drugs in the Budget. Ranbaxy Laboratories, Sun Pharmaceutical Industries, Cipla, Lupin, rose by between 1.08% to 2.31%.

Finance minister on 6 July 2009, reduced basic customs duty on influenza vaccine and nine other specified life-saving drugs used for treating breast cancer, hepatitis-B, rheumatic arthritis, etc. The government has also reduced basic customs duty for two bulk drugs used in manufacturing these medicines from 10% to 5%. Bulk drugs are processed raw materials used in manufacturing the final doses of medicines.

Power stocks rose on bargain hunting after a recent fall triggered by disappointment from the Budget. There was lack of any major sops in the Budget for the power sector. Reliance Power, Reliance Infrastructure, Power Grid Corporation of India, Tata Power Company rose by between 0.77% to 8.44%.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 3.03% recovering from Thursday's fall of 3.65% after the company stood by its stated outlook of 25% growth in order inflows for the current year even as the first quarter ended with a negative note. At the time of announcing Q1 June 2009 results, L&T had during trading hours on Thursday said its order inflow was down 22 % in Q1 June 2009 over Q1 June 2008. The company's order backlog at the end of the June quarter was Rs 71, 650 crore ($14.7 billion).

Other capital goods stocks, Praj Industries, BEML, ABB, Siemens, rose by between 1.29% to 7.11%.

Some cement stocks rose after a thrust on infrastructure development in the Union Budget 2009-2010. Birla Corporation of India, Grasim Industries, ACC, Ultratech Cements, rose by between 0.41% to 3.62%.

Construction stocks, too, were in demand. Era Infra Engineering, Hindustan Construction Company, IVRCL Infrstructure &Projects and Nagarjuna Construction Company rose by between 1.69% to 5.69%.

Finance Minister Pranab Mukherjee on 6 July 2009, provided a thrust on various infrastructure projects in the Budget which may result in increase in orders for construction firms and help boost cement demand. The government announced more spending for urban, water and road projects. The allocation to National Highway development program allocation was increased 23% to Rs 15948 crore.

Realty stocks rose on the government strong thrust to the housing sector in the Union Budget 2009-2010. Unitech, Housing Development & Infrastructure, Indiabulls Real Estate, DLF, Omaxe, Ackruti City rose by between 1.67% to 5.02%.

Fertiliser shares rose on of the annual monsoon rains. Rashtriya Chemicals and Fertilizers, Nagarjuna Fertilizers & Chemicals, Zuari Industries, Chambal Fertilizers & Chemicals, National fertilizers, Gujarat State Fertilizers Company, Deepak Fertilisers and Petrochemicals Corporation, Tata Chemicals rose by between 0.76% to 3.67%. The fortunes of the fertiliser sector are linked to monsoon.

Shares of tyre companies rose after JK Tyre & Industries posted a robust Q1 numbers. CEAT, MRF, Apollo Tyres and Goodyear India rose by between 0.84% to 7.14%.

JK Tyre & Industries surged 10.84% after net profit jumped 101.3% to Rs 40.75 crore on 5.7% rise in net sales to Rs 897.67 crore in Q1 June 2009 over Q1 June 2008. The company announced its results after market hours on Thursday, 16 July 2009.

Shipping stocks rose as the Baltic Dry Index, a measure of shipping costs for commodities, surged 5.3% in London on Thursday, for a three- day advance of 18%. Essar Shipping, GE Shipping Company and Mercator Lines rose by between 1.01% to 3.21%.

Mahindra Satyam clocked the highest volume of 3.76 crore shares on BSE. Reliance Natural Resources (1.72 crore shares), Cals Refineries (1.61 crore shares),Ispat Industries (1.61 crore shares) and Suzlon Energy (1.38 crore shares) were the other volume toppers in that order.

Mahindra Satyam clocked the highest turnover of Rs 335.61 crore on BSE. Reliance Industries (Rs 243.55 crore), Reliance Capital (Rs 201.17 crore), Mahindra Holiday & Resorts (Rs 194.34 crore) and ICICI Bank (Rs 192.90 crore) were the other turnover toppers in that order.