Market extends gains for the fifth day on strong US economic data

Key benchmark indices extended gains for the fifth day in a row after the Finance Minister said economic reforms would boost growth. The BSE 30-share Sensex gained 81.38 points or 0.52%, off 61.64 points from the day's high and up 73.91 points from the day's low. Global cues were mixed.

As per provisional data, foreign funds today, 26 August 2009, bought equities worth a net Rs 378.54 crore. Domestic funds mopped up stocks worth a net Rs 128.65 crore

Shares from the IT pack led the rally on the bourses today, 27 August 2009. Realty, metal and power stocks also attracted buying demand. However, banking shares pared early gains on selling pressure. FMCG and select auto shares dipped on profit booking.

The market was volatile. After an early surge triggered by strong US economic data, the market came off the higher level. It regained strength later. The market erased almost its entire intraday gains in early afternoon trade after the latest data showed a slowdown in infrastructure sector growth. The market surged later as European stocks recovered from an initial slide. The market retraced from the day's high on profit booking after a recent strong rally. The market moved in a range in late trade.

Volatility may remain high in the near term as traders roll over positions in the derivatives segment from August 2009 series to September 2009 series, ahead of the expiry the August 2009 contracts on Thursday, 27 August 2009. Rollover was a little over 54% in Nifty futures at the end of Tuesday's (25 August 2009) trading. The rollover in Mini Nifty futures was about 44%.

India's infrastructure output rose 1.8% in July 2009, much lower than a revised 6.8% growth in June 2009, government data released a little while ago showed. Infrastructure output had risen 5.1% in the same month last year. The infrastructure sector accounts for 26.7% of industrial output.

Finance Minister Mukherjee on Tuesday said reforms would continue in right earnest to get the economy back to 9% growth. At an event on Tuesday, 25 August 2009 on 'Mission 2010: The Reform Road Map', the finance minister said that the green shoots were visible in industry with basic goods, intermediates and consumer durables doing better in the first quarter.

Mr Mukherjee made it clear that public spending won't push interest rates higher. Nor would the government's huge debt appetite leave private industry high and dry.

Both Mukherjee and C Rangarajan, chief of the Prime Minister's Economic Advisory Council, pegged the GDP growth for this fiscal at 6-6.5% after factoring in the drought damage. Mr Rangarajan, a former Reserve Bank of India governor, said growth should pick up speed to hit 7-8% next fiscal. To accelerate to 9%, though, it was vital to boost domestic consumption, he added.

Planning Commission Deputy Chairperson Montek Singh Ahluwalia said on Monday, 24 August 2009 that India's fiscal deficit this year will not exceed 6.8% despite rising concerns that high government spending. In the budgetary estimates for 2009-10, the fiscal deficit was projected at 6.8%. The first full meeting of the Planning Commission will be held on 1 September 2009 and the main topic of discussion will be the state the economy.

European markets declined in volatile trade, led lower by commodity stocks. Key benchmark indices in UK, Germany and France were down by between 0.16% and 0.32%.

Profit taking weighed on European stocks despite a strong economic data in Germany. The Ifo Institute's index of German business confidence rose to 90.5 in August 2009, up from 87.3 in July 2009 and surpassing expectations for a rise to 88.8, news reports said. The Ifo current conditions index rose to 86.1 in August from a reading of 84.3 the previous month. The expectations gauge jumped to 95.0 from 90.4 in July

Most Asian markets gains were trading higher today, 26 August 2009, helped by solid US data on Tuesday and a stronger Wall Street. Key benchmark indices in China, South Korea, Japan, Singapore were up by between 0.37% and 1.78%. However, Taiwan's Taiwan Weighted slipped 1.32%

Japan's Nikkei 225 index rose 1.36% supported by news that the country's merchandise trade surplus in July 2009 widened, from the year ago period, for the second straight month.

Hong Kong's Hang Seng index came off day's high and closed 0.10% higher.

On Wall Street, stocks finished modestly higher on Tuesday, 25 August 2009 as better-than-expected economic reports on housing prices and consumer confidence and news of Ben Bernanke's reappointment as the Fed Chief for a second term generated some upbeat sentiment.

The three major indices closed at 2009 highs, although they were off the intraday highs reached after the stronger-than-expected economic data. The Dow Jones Industrial Average advanced 30.01 points, or 0.32%, to 9,539.29. The Standard & Poor's 500 Index gained 2.43 points, or 0.24%, to 1,028.00. The Nasdaq Composite Index rose 6.25 points, or 0.31%, to 2,024.23.

The Consumer Confidence Index for August 2009 jumped to 54.1, rising for the first time in three months. This marked an improvement from an upwardly revised 47.4 in July 2009. Meanwhile, the S&P/Case-Shiller home-price index declined 15.4% in June 2009 from a year earlier, less than estimated by economists.

Trading in US index futures showed the Dow could fall 10 points at the opening bell on Wednesday, 26 August 2009. The Dow futures reversed initial losses

Closer home, the Central Board of Direct Taxes (CBDT) has advised its field formations to scrutinise all cases in which companies have amortised foreign exchange losses under the one-time discretion allowed by the government through an amendment to Accounting Standard 11 (AS-11).

The temporary relief on AS-11 was permitted on 31 March 2009 against the background of the sharp depreciation of the rupee against the dollar, euro, pound and Swiss franc in 2008. As a result of this, several companies with significant foreign currency loans had to suffer mark-to-market losses.

Under AS-11, gains or losses from foreign exchange fluctuations have to be recognised in the profit and loss account. The amendment to AS-11 provided an option to capitalise or amortise exchange differences on long-term foreign currency positions (typically overseas borrowings) with retrospective effect from December 2006. This was done by adding or deducting such losses from the cost of fixed assets if, and only if, the money was borrowed for acquiring an asset. This treatment enabled companies to make adjustments directly on the balance-sheet by bypassing provisioning in the profit and loss account.

The BSE 30-share Sensex was up 81.38 points or 0.52% to 15,769.85. The Sensex opened 74.62 points higher at 15763.09. The barometer index gained 143.02 points at the day's high of 15,831.49 in mid-afternoon trade. The Sensex rose 7.47 points at the day's low of 15,695.94 in early afternoon trade.

The S&P CNX Nifty rose 21.50 points or 0.46% to 4,680.85. Nifty August 2009 futures were at 4683.70 at a premium of 2.85 points as compared to the spot closing.

The market has surged in the past five days supported by positive global cues. The BSE Sensex has risen 960.21 points or 6.48% in the past five trading days to 15,769.85 on Wednesday, 26 August 2009 from 14,809.64 on 19 August 2009.

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex is up 6122.54 points or 63.46% in calendar year 2009 as on 26 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7609.45 points or 93.24% as on 26 August 2009. FII inflow in calendar year 2009 totaled Rs 36854.50 crore (till 24 August 2009).

Coming back to today's trade, the BSE clocked a turnover of Rs 6865 crore, higher than Rs 6430 crore on Tuesday, 25 August 2009. Turnover in NSE's futures & options (F&O) segment was Rs 78,077.71 crore, sharply lower than Rs 88,341.26 crore on Tuesday, 25 August 2009.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1938 shares advanced as compared with 884 that declined. A total of 70 shares remained unchanged.

The BSE Mid-Cap index was up 1.10% to 5,800.55 and the BSE Small-Cap index rose 1.97% to 6,878.35. Both these indices outperformed the Sensex.

Sectoral indices on BSE displayed mixed trend. The BSE IT index (up 3.35%), the BSE Realty index (up 1.23%), the BSE Oil & Gas index (up 0.61%), the BSE Teck index (up 2.50%), the BSE Power index (up 0.63%), the BSE Healthcare index (up 0.80%), outperformed the Sensex.

The BSE Metal index (up 0.40%), the BSE Consumer Durables index (down 0.45%), the BSE Capital Goods index (up 0.36%), the BSE Auto index (up 0.06%), the BSE FMCG index (down 1.01%), the BSE Bankex (down 0.16%), the BSE PSU index (up 0.33%), underperformed the Sensex.

Among the 30-member Sensex pack, 18 advanced while the rest slipped.

IT stocks dominated Sensex gainers on strong US economic data. US is the biggest market for Indian IT firms. India's second largest software services exporter Infosys Technologies jumped 4.10% to Rs 2182 after a 1.70% rise in its American depository receipt (ADR) on Tuesday, 25 August 2009. It was the top gainer from the Sensex pack.

After market hours today, 26 August 2009, Infosys announced that it has bagged a five-year outsourcing deal from oil and gas firm BP. Financial details were available not disclosed.

India's third largest software services exporter Wipro gained 2.13%, extending Tuesday's 3.7% advance. After trading hours Wipro said it has entered into a five-year agreement with BP to provide IT applications development and maintenance services for its fuels and corporate businesses globally. No financial details were available.

India's largest software services exporter TCS jumped 3.69%. As per reports, leading IT companies including Tata Consultancy Services (TCS), Infosys, Wipro and IBM are bidding for various outsourcing contracts to help the Department of Posts (DoP) to automate and integrate its business processes with a standard software solution. The DoP will be spending up to $1 billion over the next five years and will announce the selected tech vendors from the list by the end of this month

Kale Consultants rose 1.45% after the company secured a contract from International Air Transport Association for providing industry wide interline settlement solution. The company announced the new order win during trading hours today, 26 August 2009.

Educomp Solutions jumped 2.98% after the company's board approved a 5-for 1 stock split. The company made this announcement during trading hours today, 26 August 2009.

Tech Mahindra rose 2.91% on reports the company has won a 10-year outsourcing contract worth about $500 million from Swan Telecom.

Select mid-cap software stocks faltered after Tuesday's rally. Mastek (down 2.33%), MphasiS (down 3.81%), Polaris Software (down 1.19%), and CMC (down 1.51%), and Megasoft (down 0.46%) slipped.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 0.70% to Rs 2038 in volatile trade. The stock moved in a band of Rs 2013.10 and Rs 2045 in the day. A panel of ministers has reportedly decided to protecting NTPC's interests with regard to a gas dispute. As per reports, the government has decided to spell out its position in the two disputes involving the Krishna-Godavar Basin D6 block gas supplies - NTPC-Reliance Industries (RIL) and RIL-Reliance Natural Resources Ltd (RNRL).

On Friday, 21 August 2009 the government had clarified that it was not correct that it would earn Rs 500 crore from the KG basin gas, as claimed by Anil Ambani in the media. It said it would get Rs 84,000 crore.

The dispute between Reliance Industries and Reliance Natural Resources (RNRL) is centered around the price and supply of gas from KG basin operating by RIL to RNRL for the power plants of Anil Dhirubhai Ambani group. NTPC-RIL case also deals with price and supply of gas to NTPC's power plants from RIL. NTPC was down 0.50% while RNRL surged 9.94%

India's largest oil exploration firm by market capitalisation ONGC lost 0.97% after crude oil prices slipped sharply from 10-month high on Tuesday, 25 August 2009.

Aban Offshore galloped 28.46% to Rs 1555 on high volume of 38.59 lakh shares after the company said it expects revenue of $695 million from two contracts it signed for deploying four rigs. The company announced the new order win after market hours on Tuesday, 25 August 2009.

Shares of state run oil marketing firms came off day's high after oil secretary R.S. Pandey said the government is not considering raising retail fuel prices despite an uptrend in global crude oil prices. HPCL declined 0.22% to Rs 347.70, off day's high of Rs 357.30. BPCL slipped 0.66% to Rs 500.50 after striking day's high of Rs 509.90. Indian Oil Corporation also eased from day's high of Rs 583 to settled 0.42% higher at Rs 574.80.

Rising global crude oil prices will result in increase in under recoveries of PSU OMCs on domestic sale of petrol, diesel, kerosene and LPG at controlled prices.

Crude oil prices fell on Tuesday, 25 August 2009 as traders took profits after a recent rally despite strong US economic data on home prices and consumer confidence. Light sweet crude for October delivery dropped to $72.05, losing $2.32 or over 3% on the session.

FMCG stocks dipped on concerns deficient monsoon rains may crimp rural sales. FMCG firms derive a substantial revenue from rural India.

India's largest FMCG company by sales Hindustan Unilever lost 2.27% to Rs 262.80 and was the top loser from the Sensex pack. India's largest cigarette maker by sales ITC fell 0.96%

Auto stocks were mixed. India's largest truck marker by sales Tata Motors was up 1.58% to Rs 498, after striking a 52-week high of Rs 505 in intra-day trade today, 26 August 2009. At its annual general meeting in Mumbai on Tuesday, 25 August 2009, Ratan Tata, Chairman of Tata Motors, said that Tata Motors and Jaguar Land Rover will come through this tough period as leaner and more cost-efficient companies.

However India's top car maker by sales Maruti Suzuki India lost 0.66% on profit booking after four straight days of rise. India's largest bike maker by sales Hero Honda Motors fell 1.66%. India's second largest bike maker by sales Bajaj Auto rose 0.79%.

Motherson Sumi Systems soared 11.36% after its unit won orders worth 500 million euros, or Rs 3490 crore from major European carmakers including Volkswagen. The announcement was made during trading hours today, 26 August 2009.

Bank stocks pared early gains on profit taking. India's second largest private sector bank by net profit HDFC Bank shed .58% to Rs 1463.05 despite a 0.61% rise in its ADR on Tuesday, 25 August 2009.

India's largest private sector bank by net profit ICICI Bank was up 0.28% to Rs 761.50. The stock came off the day's high of Rs 768.

India's biggest bank in terms of branch network State Bank of India (SBI) rose 0.14% to Rs 1749.80, off day's high of Rs 1770.25.

India's largest private sector copper maker by sales Sterlite Industries India surged 3.61% on a solid surge in copper prices on the London Metal Exchange in the past few days.

Gujarat NRE Coke rose 7.20%. Some reports today, 26 August 2009, suggested that Gujarat NRE Coke, which has made a takeover bid to acquire Australia's Rey Resources, will not hike its offer if share prices continue to rally.

Rey shares have jumped over 250% since the takeover offer first came in June from Gujarat NRE Minerals, the Australian unit of Gujarat NRE Coke. Rey Resources owns coal, oil and gas tenements in west Australia. The offer is valid up to 4 September 2009.

India's largest cellular services provider by sales Bharti Airtel was up down 0.55%. Chairman Sunil Mittal on Monday, 24 August 2009 met the Finance Minister Pranab Mukherjee and Minister of Corporate Affairs Salman Khursheed to discus a proposed deal with South African firm MTN. Bharti and MTN last week extended their merger talks for the second time till 30 September 2009.

Bharti and MTN are in exclusive talks since May for a $23-billion complex cash and share swap deal. As per the proposal, Bharti would acquire 49% in MTN and in turn MTN and its shareholders would buy about 36% economic interest in the Indian firm.

India's second largest cellular services provider by sales Reliance Communications rose 1.87%. The company has reportedly raised Rs 1225 crore ($252 million) selling one-month bills on Tuesday, 25 August 2009.

Power stocks rose on fresh buying. Among a slew of IPOs lined from the sector include that of Indiabulls Power, JSW Energy, Jindal Power, Sterlite Energy, and GMR Energy.

India's largest private sector power generation company by net profit Reliance Infrastructure rose 0.34%. India's second largest private sector power generation company by net profit Tata Power gained 1.82%.

Adani Power (up 2.49%), JP Hydropower (up 1.21%), Torrent Power (up 0.09%), moved higher

Infrastructure stocks came off day's high after latest data showed a slowdown in growth in infrastructure output. India's largest engineering & construction company by sales Larsen & Toubro was almost unchanged at Rs 1573, off day's high of Rs 1586. The company has won four orders for electrical projects totaling Rs 1044 crore from Qatar, United Arab Emirates and Oman to build electrical sub-stations. The announcement was made during trading hours on 24 August 2009.

India's largest power equipment marker by sales Bharat Heavy Electricals slipped 0.28% to Rs 2296 after striking day's high of Rs 2325.

ABB (down 0.20%), Lanco Infratech (down 1.91%), and Gammon Infrastructure (down 0.44%) declined.

Gayatri Projects was locked at upper limit of 5% after it raised Rs 18.50 crore through a preferential allotment of shares to Reliance Mutual Fund. The announcement was made during trading hours today, 26 August 2009.

Realty shares gained on fresh buying after taking a breather on Tuesday, 25 August 2009 on profit booking. Omaxe (up 0.45%), Parsvnath Developers (up 2.59%), DLF (up 1.12%), Sobha Developers (up 1.04%), Unitech (up 0.88%), gained.

Ansal Properties & Infrastructure jumped 14.11% after the company said its board will meet on 28 August 2009 to consider fund raising. The announcement was made after market hours yesterday, 25 August 2009.

Phoenix Mills galloped 10.74% after a block deal of four lakh shares was executed on NSE at Rs 157.40 per share. The block deal constituted 0.28% of the company's equity.

Prominent realty firms Lodha Group, Godrej Properties and Oberoi Construction have filed a draft red herring prospectus (DRHP) with the Securities & Exchange Board of India (Sebi) for raising funds through an initial public offer (IPO).

Aban Offshore topped the turnover chart on BSE with a turnover of Rs 570.29 crore followed by Reliance Natural Resources (Rs 255.15 crore), Mahindra Satyam (Rs 177.61 crore), Educomp Solutions (Rs 132.79 crore), Reliance Industries (Rs 132.56 crore).

Cals Refineries clocked the highest volume of 6.39 crore shares on BSE. Reliance Natural Resources (2.94 crore shares), Mahindra Satyam (1.61 crore shares), FirstSource Solutions (1.237 crore shares) and Suzlon Energy (1.234 crore shares), were the other volume toppers in that order.

Shares of export oriented sectors gained ahead of the Foreign Trade Policy on Thursday, 27 August 2009. Among the textile pack - Gokaldas Exports (up 4.96%), Arvind Mills (up 10.50%), Alok Industries (up 7.88%), Raymond (up 5%), gained.

From leather sector - Bhartiya International (up 19.91%), Mirza Tanneries (up 1.65%), Liberty Shoes (up 3.46%), Crew Bos (up 4.97%), advanced

Gitanjali Gems (up 0.66%), Shrenuj & Company (up 1.34%), Vaibhav Gems (up 4.91%), SB&T International (up 9.93%), and Asian Star (up 2.85%), were the gainers from the gems and jewellery sector.

Exporters are expecting the forthcoming Foreign Trade Policy to provide the much-needed impetus for growth revival in the face of waning overseas demand. They are hoping that the policy will act on certain long pending demands such as streamlining the taxation structures and creating market development assistance funds to fuel growth.

Among the small and mid-cap shares - Pitti Laminations (up 20%), Jetking Infotrain (up 19.98%), IFGL Refractories (up 19.96%), Asian Tea (up 19.90%), Granules India (up 19.97%), Aries Agro (up 19.96%), Murudeshwar Ceramics (up 20%), Allied Digital (up 19.99%), and Jindal Photo (up 7.01%), surged.

Singer India (down 6.05%), Valiant Communications (down 7.80%), and HTMT Global (down 7.20%), declined.

Kavveri Telecom Products rose 4.96% after a wholly owned subsidiary of the company signed a pact with one of the major cellular operators. The company made this announcement before trading hours today, 26 August 2009.

Hanung Toys & Textiles rose 4.96% after the company's board approved raising up to US$50 million by issuing securities. No other details were disclosed by the company. The announcement was made after trading hours yesterday, 25 August 2009.

Great Eastern Shipping Company rose 7.01%. Rating agency Brickwork Ratings today, 26 August 2009, assigned BWR AAA+ (Pronounced BWR Triple A Plus) rating for the Great Eastern Shipping Company's proposed unsecured non convertible debenture (NCD) issue of Rs 250 crore of ten year terms.