Realty, auto shares cushion Sensex's fall as turnover swells

Key benchmark indices ended with modest losses after swinging wildly either ways during the course of the day. Volatility rose after the Reserve Bank of India raised inflation and GDP growth forecast while keeping key policy rates unchanged at their historical low level at a quarterly monetary policy review today, 28 July 2009. The BSE 30-share Sensex lost 43.10 points or 0.28%, off 131.52 points from the day's high but up 91.41 points from the day's low. European markets were slightly lower and most Asian stocks rose.

Poor Q1 results continued to weigh on the index heavyweight Reliance Industries for the second day in a row. Banking shares slipped. However power stocks advanced on strong response to Adani Power's initial public offer (IPO).

In stock specific activity, Tata Motors surged over 10% on better-than-expected Q1 results it announced during trading hours on Monday, 27 July 2009. Maruti Suzuki India struck a record high of Rs 1416.70. However Hindustan Unilever retraced sharply from 52-week high of Rs 306 after reporting fall in net profit in Q1 June 2009.

The Securities and Exchange Board of India (Sebi) on Monday, 27 July 2009 introduced some new norms for the comprehensive risk management system for the equity markets in the cash segment, in a move which would now reduce the margin burden on brokers. Sebi said that in case of a buy transaction in cash market, value at risk (VaR) margins, extreme loss margins and mark to market losses together will not exceed the purchase value of the transaction.

The market was volatile. After a firm start triggered by government sops to stimulate the economy announced after trading hours on Monday, 27 July 2009, the market soon slipped into the red. It cut losses after the RBI's policy announcement at about 11:15 IST. However the intraday recovery proved short lived. The market weakened again. The market bounced back one again in afternoon trade as the RBI kept policy rates at record low levels. The Sensex hit its highest level in more than a month. However, the market failed to sustain higher level and once again slipped into the red later.

The RBI has kept the key rates unchanged and increased the inflation forecast to 5% by end March 2010 from earlier 4%. The central bank raised its inflation forecast, saying an uncertain outlook for monsoon rains could "accentuate" inflation for already-high food prices. The repo rate, at which the central bank lends cash to banks, stays at 4.75%, and the reverse repo rate, at which it absorbs surplus cash from the banking system, stays at 3.25%. Both these rates are at record low level. The statutory liquidity ratio (SLR) was also kept unchanged at 24%.

The RBI also kept the cash reserve ratio (CRR), the amount of funds banks have to keep on deposit with it, unchanged at 5%. The RBI said the deposit growth is seen at 19% adding that there is scope for the banks to cut interest rates. The GDP is expected to grow at 6% in FY 2010, with an upward bias, the central bank said. At the time of the annual monetary policy announcement in April 2009, the central bank had forecast a 6% growth. So, the words 'upward bias' were the addition to that forecast.

RBI said it will maintain an accommodative monetary stance until robust signs of recovery in the economy are visible. The central bank will be ready with a roadmap to reverse the expansionary stance quickly and effectively thereafter. The Reserve Bank of India will have to reverse the expansionary measures to anchor inflation expectations and subdue inflationary pressures while preserving the growth momentum The exit strategy will be modulated in accordance with the evolving macroeconomic developments, the RBI said.

The conduct of monetary policy will continue to condition and contain perception of inflation in the range of 4% to 4.5%. This will be in line with the medium-term objective of 3% inflation consistent with India's broader integration with the global economy, the RBI said.

The central bank said it will actively manage liquidity to avoid government borrowing crowding out private credit demand. RBI also said that government will need to return to a path of fiscal consolidation

Finance Minister Pranab Mukherjee after trading hours on Monday, 28 July 2009 announced tax breaks for industrial park schemes and developers of real estate and road projects to stimulate the economy and lift growth to 8-9 percent by the end of 2010. He announced a 1% subsidy on home loans up to Rs 10 lakh, when the overall cost of the house does not exceed Rs 20 lakh.

In another measure that that could provide a boost to the realty sector the government has allowed developers of housing projects a tax holiday under section 80 IB(10) of the Income Tax Act on profits from projects approved between 1 April 2007 and 31 March 2008. The benefit is subject to a condition that the projects are completed on or before 31 March 2012.

The government has also extended tax holiday to developers of industrial parks by two years until March 2011. A tax holiday for firms engaged in food processing has also been extended. Producers of natural gas from coal-bed methane blocks would also be extended tax breaks.

Annual monsoon rains, running between June to September, are seeing a revival after a sluggish start. India's monsoon rains were 15% above normal in the week to 22 July 2009, the second consecutive week of above-average rainfall after an exceptionally dry patch at the start of the season. Total cumulative monsoon, which runs from June to September, was 19% below average, improving from a 27% deficit in the previous week, the India Meteorological Department said on Thursday, 23 July 2009.

More than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

Meanwhile, investor focus may shift from secondary market to the primary market as Adani Power's initial public offer of 30.16 crore shares in the price band Rs 90-100 opened for subscription from today, 28 July 2009. The issue received strong investors response and was subscribed 3.96 times by 16:00 IST. Adani said institutions including T. Rowe Price International Inc. demanded twice as many shares as offered in the so-called anchor investor portion of its initial sale.

The company will raise up to Rs 3,016 crore at the upper end of the price band, making it the second-biggest issue after Reliance Power.

Close on the heels of Adani Power, state-run NHPC is ready to hit the primary market in August to raise Rs 6000 crore. Besides, Oil India and Pipavav Shipyard collectively plan to raise over Rs 2000 crore. Earlier, on 17 July 2009 the government said it is considering a part sale of its shareholding in the telecom monolith Bharat Sanchar Nigam (BSNL) to the public. Currently, the government fully owns BSNL.

The Q1 June 2009 results announced so far have encouraging, with lower costs helping bottomline growth. The combined net profit of 891 companies rose 21.9% to Rs 48207 crore on 1.4% fall in sales to Rs 393192 crore in Q1 June 2009 over Q1 June 2008.

But equities may remain volatile ahead of expiry of July 2009 futures and options (F&O) contract on Thursday, 30 July 2009. As per reports, rollover of Nifty positions from July 2009 contacts to August 2009 contracts stood at 30%, as of Monday, 27 July 2009.

European markets reversed early gains and were trading marginally lower today, 28 July 2009. Key benchmark indices in UK, Germany and France were down by between 0.04% and 0.45%

Most Asian markets were in green today, 28 July 2009. Key benchmark indices in Hong Kong, Taiwan, Singapore, South Korea, China rose by between 0.13% and 1.62%. Japan's Nikkei 225 index was down marginally by 0.01%

US markets ended modestly higher on Monday, 27 July 2009 led by gains in banking shares after a bout of profit taking in early trade. The Dow Jones industrial average rose 15.27 points, or 0.17%, to 9,108.51. The S&P 500 index rose 2.92 points, or 030%, to 982.18, while the Nasdaq Composite Index rose 1.93 points, or 0.10%, to 1,967.89.

On the economic front, new home sales in June 2009 rose the most in more than eight years. Sales spiked 11% to hit a better-than-expected annualised rate of 3.84 lakh units.

Trading in US index futures showed the Dow could slide 29 points at the opening bell on Tuesday, 28 July 2009.

The BSE 30-share Sensex was down 43.10 points or 0.28% to 15,331.94. The Sensex opened 47.53 points higher at 15,422.57. The Sensex rose 88.42 points at the day's high of 15,463.46 in mid-afternoon trade, its highest level since 12 June 2009. The Sensex lost 134.51 points at the day's low of 15,240.53 in mid-morning trade.

The S&P CNX Nifty was down 8.20 points or 0.18% to 4,564.10. Nifty July 2009 futures were at 4562, at a discount of 2.10 points as compared to the spot closing. Turnover in NSE's futures & options (F&O) segment spurted to Rs 76,854.19 crore from Rs 50,488.19 crore on Monday, 27 July 2009.

The BSE clocked a turnover of Rs 7028 crore, compared to Rs 6063 crore on Monday, 27 July 2009.

The Sensex is up 5684.63 points or 58.92% in calendar year 2009 as on 28 July 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 7171.54 points or 87.88% as on 28 July 2009.

Coming back to today's trade, the market breadth, indicating the overall health of the market, was strong. On BSE, 1718 shares advanced as compared with 957 that declined. 94 shares remained unchanged.

The BSE Mid-Cap index was up 1.13% to 5,531.37 and the BSE Small-Cap index rose 1.68% to 6,245.81. Both these indices outperformed the Sensex

The BSE Realty index (up 4.64%), BSE Capital Goods index (down 0.03%), the BSE Power index (up 0.83%), the BSE TECk index (up 0.03%), the BSE Metal index (up 1.25%), BSE PSU index (up 0.52%), BSE Auto index (up 1.92%), outperformed the Sensex.

The BSE Healthcare index (down 0.60%), BSE FMCG index (up down 1.33%), BSE Consumer Durables index (down 0.82%), the BSE IT index (down 0.74%), the BSE Oil & Gas index (down 0.81%), the BSE Bankex (down 1.22%), underperformed the Sensex.

Among the 30-member Sensex pack, 20 advanced while the rest declined

Most auto stocks gained after the Reserve Bank of India (RBI) kept key policy rates unchanged at their historical low at its quarterly monetary policy review today, 28 July 2009.

India's largest truck market by sales Tata Motors galloped 10.01% to Rs 412.50 after a 3.76% jump in its ADR on Monday, 27 July 2009. It was the top gainer from the Sensex pack. The company reported 57.54% rise in net profit to Rs 513.76 crore on a 7.17% decline in total income to Rs 6723.99 crore in Q1 June 2009 over Q1 June 2008. Analysts had expected a steep fall in net profit due to lower sales volume. The result was announced at the fag end of the trading sessions today, 27 July 2009.

Tata Motors attributed the strong results to continued focus on cost efficiencies, decline in raw material prices and improvement in sales realization

India's largest tractor maker by sales Mahindra & Mahindra advanced 1.23% to Rs 826.15, rebounding from day's low of Rs 812.50. The company will unveil its Q1 June 2009 earnings on 30 July 2009.

India's top small car maker by sales Maruti Suzuki India gained 2.70% to Rs 1407 after striking a record high of Rs 1416.70 in intra-day trade today, 28 July 2009. The stock rebounded sharply from day's low of Rs 1346.60. The company had announced strong Q1 June 2009 results during market hours on 23 July 2009.

India's largest bike manufacturer by sales Hero Honda Motors lost 0.97% ahead of its Q1 June 2009 results on 29 July 2009.

Escorts surged 2.15% after net profit jumped 138.7% to Rs 22.22 crore in on 10.4% rise in net sales to Rs 582 crore in Q3 June 2009 over Q3 June 2008. The company announced the results after market hours on Monday, 27 July 2009.

India's largest power generation company by sales NTPC rose 1.12% after net profit jumped 27.1% to Rs 2193.62 crore on a 25.8% increase in sales to Rs 12002.68 crore in Q1 June 2009 over Q1 June 2008. The result was announced after market hours yesterday, 27 July 2009.

Other power generation firms gained as strong response to the Adani Power initial public offer which opened for subscription from today, 28 July 2009 lifted sentiment for the sector. Reliance Infrastructure (up 3.56%), Tata Power (up 2.45%), Reliance Power (up 0.16%), CESC (up 5.69%), advanced.

Realty stocks gained after the Reserve Bank of India (RBI) kept key policy rates unchanged at their historical low at its quarterly monetary policy review today, 28 July 2009.

DLF (up 3.49%), Unitech (up 8.75%), Housing Development & Infrastructure (up 4.50%), Parsvnath Developers (up 1.68%), and Indiabulls Real Estate (up 1.47%), advanced.

In another measure that that could provide a boost to the realty sector the government has allowed developers of housing projects a tax holiday under section 80 IB(10) of the Income Tax Act on profits from projects approved between 1 April 2007 and 31 March 2008. The benefit is subject to a condition that the projects are completed on or before 31 March 2012.

Housing finance companies rose after the government announced a 1% subsidy on home loans up to Rs 10 lakh, when the overall cost of the house does not exceed Rs 20 lakh.

HDFC (up 0.61%), LIC Housing Finance (up 3.03%), Deewan Housing Finance (up 12.28%), and GIC Housing (up 1.06%), gained

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 1.58% to Rs 1908, extending yesterday's over 3.78% fall. The fall in the stock materialised after the company posted disappointing Q1 June 2009 results after trading hours on Friday, 24 July 2009. Nevertheless, the stock recovered from day's low of Rs 1891

RIL's net profit fell 11.5% to Rs 3636 crore on a 22.9% decline in sales to Rs 32055 crore in Q1 June 2009 over Q1 June 2008. Reliance Industries (RIL) saw its net profit dip for the third straight quarter, as margins from its refining business halved and the global recession reduced fuel demand. RIL's gross refining margins (GRMs) - the difference between cost of crude oil and the price of refined petroleum products - came down 52.22% to $7.5 per barrel in Q1 June 2009 compared with $15.7 per barrel in Q1 June 2008.

Reliance Natural Resources (RNRL) chairman Anil Ambani on Tuesday accused the Petroleum Ministry of being biased in the legal dispute with brother Mukesh Ambani-led Reliance Industries (RIL) over the price of natural gas from the Krishna-Godavari basin. Addressing shareholders of the company, he also said the government would not lose a single rupee even if the gas from RIL's fields off the Andhra Pradesh coast were to be supplied to his company at the originally contracted price of $2.34 per unit.

Addressing shareholders at the RNRL's Annual General Meeting, Anil Ambani asked the Oil Ministry to cancel the Production Sharing Contract with RIL if it was really aggrieved and not challenge third party agreements. Giving details of the global gas scenario, he said the price of the industrial fuel had crashed 80% and the gas price of $4.2 per mmBtu (fixed by the Government) was "exorbitant" and against public interest.

Last month, the Bombay High Court had asked Reliance Industries to supply 28 million units of gas to Reliance Natural Resources for 17 years at $2.34 per unit, after assigning 12 million units to the state-run power utility NTPC. Reliance Industries challenged the verdict in the Supreme Court, which heard the case on 20 July 2009 and fixed 1 September 2009 as the next date of hearing. It also asked all the parties to file their replies on the government position on the matter by then.

BPCL rose 2.75% to Rs 462.80 after the company posted net profit of Rs 614.12 crore on 33.34% fall in total income to Rs 26,195.60 crore in Q1 June 2009 over Q1 June 2008. The company announced the results during trading hours today, 28 July 2009.

India's largest FMCG company by sales Hindustan Unilever slumped 6.72% to Rs 278.55, retracing sharply after striking a 52-week high of Rs 306 in intra-day trade on the BSE. The stock tanked after net profit declined 2.68% to Rs 543.19 crore on a 5.06% increase in total income to Rs 4536.17 crore in Q1 June 2009 over Q1 June 2008. The results were declared in late trade today, 28 July 2009. It was the top loser from the Sensex pack

Bank stocks were mixed after the Reserve Bank of India's (RBI) in its quarterly monetary policy review today, 28 July 2009, raised inflation forecast. India's largest private sector bank by net profit ICICI Bank was down 2.49%. The bank's net profit rose 20.63% to Rs 878.22 crore on a 9.61% decline in total income to Rs 7133.44 crore in Q1 June 2009 over Q1 June 2008. The bank reported its earnings on Saturday, 25 July 2009.

India's biggest bank in terms of branch network State Bank of India (SBI) fell 1.90%. The bank's chairman today, 28 July 2009 said that credit growth is expected to pick up in second half of the year. The state-run bank reduced interest rates on deposits by 25-50 basis points (a basis point equals one-hundredth of a percentage point) with effect from Monday, 27 July 2009.

However, India's second largest private sector bank in terms of operating income HDFC Bank rose 0.52% to Rs 1442. The stock slipped to day's low of Rs 1400 mirroring a 1.9% fall in its American depository receipt (ADR) on Monday, 27 July 2009.

Karnataka Bank fell 1.55% after the bank's gross non-performing assets rose 7.30% to Rs 447.12 crore in Q1 June 2009 over Q1 June 2008. Karnataka Bank's net profit surged 93.5% to Rs 40.06 crore on 20.1% rise in total income to Rs 609.67 crore in Q1 June 2009 over Q1 June 2008. The bank announced the results after market hours on Monday, 27 July 2009.

Kotak Mahindra Bank declined 1.63% after the bank's consolidated gross non-performing assets surged 65.83% to Rs 1084.48 crore in Q1 June 2009 over Q1 June 2008. The bank's consolidated net profit surged 71.70% to Rs 257.29 crore on 57.69% rise in total income to Rs 2,345.26 crore in Q1 June 2009 over Q1 June 2008.

Karur Vysya Bank jumped 6.19% after net profit galloped 131.02% to Rs 70.53 crore on 29.49% rise in total income to Rs 487.37 crore in Q1 June 2009 over Q1 June 2008. The bank declared its results during trading hours today, 28 July 2009.

Diversified major Grasim Industries slipped 2.18% despite 61% rise in net profit to Rs 1080 crore on 15% rise in net revenue to Rs 5123 crore in Q1 June 2009 over Q1 June 2008. The results were announced during trading hours today.

IT stocks were mixed, recovering from early lows. India's second largest IT firm by sales Infosys lost 1.50% to Rs 1995, off day's low of Rs 1968.25. India's largest IT exporter by sales TCS rose 0.06% to Rs 480.50, after slipping to day's low of Rs 472. On 17 July 2009, TCS announced Q1 results that beat market expectations. India's third largest IT exporter by sales Wipro gained 0.82% to Rs 463.50, after touching day's low of Rs 452. On 22 July 2009, Wipro announced better-than-expected Q1 results.

Telecom pivotals advanced ahead of meeting of a Group of Ministers (GoM) to decide on the base price for 3G spectrum on 31 July 2009.

India's largest cellular services provider by sales Bharti Airtel rose 0.31%. As per reports, Bharti Airtel and South Africa's MTN may extend by about four weeks their 31 July 2009 deadline for talks to agree on a merger.

Bharti and MTN have been in exclusive talks that could lead to a merger creating the world's No. 3 wireless group with more than 200 million subscribers and combined revenue of $20 billion.

India's second largest cellular services provider by sales Reliance Communications rose 2.73%.

The GoM is set up to look into matters relating to pricing of spectrum and number of operators to be allowed in each telecom circle. The finance ministry had proposed a base price of Rs 4,040 crore for 3G spectrum, whereas the Department of Telecom (DoT) suggested a price of Rs 3,540 crore. While presenting the Union Budget, the finance minister, Mr Pranab Mukherjee, said Rs 35,000 crore was expected to be raised from the auction.

Metal stocks were mixed with some stocks correcting after recent strong gains. LMEX, a gauge of six metals traded on the London Metal Exchange, advanced 1.25% on Monday, 27 July 2009.

Tata Steel (up 2.22%), Sterlite Industries India (up 0.67%), Steel Authority of India (up 1.42%), and Hindalco (up 0.43%), gained. National Aluminium Company (down 0.87%), Jindal Steel & Power (down 2.66%), Hindustan Zinc (down 0.36%), declined.

Unitech was the top traded counter on BSE with turnover of Rs 380.29 crore followed by DLF (Rs 239.78 crore), Reliance Industries (Rs 231.56 crore), Tata Steel (Rs 217.23 crore), and HDIL (Rs 199.04 crore).

Unitech was also the volume topper on BSE clocking volume of 4.06 crore shares followed by Ispat Industries (1.68 crore shares), Reliance Natural Resources (1.47 crore shares), Suzlon Energy (1.23 crore shares) and IFCI (1.09 crore shares)

Tyre shares extended gains for the second running day on fresh buying following robust earnings reported by MRF, Apollo Tyres and JK Tyres.

MRF (up 3.93%), Goodyear India (up 1.89%), Balkrishna Industries (up 3.11%), and TVS Shrichakra (up 5%), gained.

On 27 July 2009, MRF reported a 294% jump in net profit to Rs 125.70 crore on 12.4% rise in net sales to Rs 1433.55 crore in Q3 June 2009 over Q3 June 2008. JK Tyre reported a two fold spurt in net profit, while Apollo Tyres posted a 95% jump in net profit in Q1 June 2009 over Q1 June 2008.

Rashtriya Chemicals & Fertilizers surged 7.01% after net profit soared 65.5% to Rs 31.55 crore on 46% fall in net sales to Rs 843 crore in Q1 June 2009 over Q1 June 2008. The company announced the results after trading hours on Monday, 27 July 2009.

Cadila Healthcare soared 10.59% to Rs 444.40. The company, during market hours on Monday, 27 July 2009, reported a 120.3% spurt in net profit to Rs 122.56 crore on 8.4% rise in sales to Rs 465.27 crore in Q1 June 2009 over Q1 June 2008. The stock had risen 3.26% to Rs 401.85 on Monday boosted by the Q1 numbers.

Shree Renuka Sugars climbed 8.83% to Rs 167.05. The company, during market hours on 21 July 2009, reported a 165.7% surge in net profit to Rs 61.10 crore on a 17.3% increase in sales to Rs 715.50 crore in Q3 June 2009 over Q3 June 2008.

Punj Lloyd lost 2.10% despite 13.69% rise in consolidated net profit to Rs 127.16 crore on 12.07% rise in consolidated total income rose to Rs 2,979.04 crore Q1 June 2009 over Q1 June 2008. The company declared its results after market hours on Monday, 27 July 2009.