Oil stocks buck weak market

The key benchmark indices edged lower on profit taking ahead of the weekend after Thursday (13 August 2009)'s sharp rally. The BSE 30-share Sensex shed 106.86 points or 0.69% off close to 120 points from the day's high and up close to 45 points from the day's low. Oil & gas stocks bucked the weak trend. IT, banking, auto, realty and FMCG stocks fell. The market breadth, indicating the overall health of the market, was positive.

Intraday volatility was high. The key benchmark indices slipped in early trade on profit taking after Thursday's (13 August 2009)'s sharp gains. Weak Chinese stocks and poor monsoon triggered profit taking. The market extended losses in morning trade before recovering from lower level. The recovery gathered steam later as the Sensex moved into the green from red in early afternoon trade.

The market once again slipped into the red in early afternoon trade and extended losses for the day. The Sensex once again moved into the green as European stocks rose. However, it soon slipped into the red once again. The market extended losses in late trade.

The Sensex had jumped 498.33 points or 3.32% at 15,518.49 on Thursday boosted by government's proposal to reform direct taxes and on improved economic data in key European economies.

India's economic growth is expected to be between 6% to 6.5 % in the 2009/10 fiscal year, Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan today said.

A rapid expansion in the government's borrowing impedes the Reserve Bank of India's (RBI) monetary policy transmission, its Governor Duvvuri Subbarao said on Friday. He was speaking at a Reserve Bank event in Hyderabad. The agriculture situation in India is disturbing but it is too early to take action on inflation, the RBI governor said. There was no policy decision yet on increasing the size of government borrowing, he said.

Investors are worried about poor rains. Monsoon was 56% below normal in week to 12 August 2009 and was 72% below normal in the soyabean growing central region in past one week, India Meteorological Department (IMD) said on Thursday. Monsoon rains were 29% below normal during the period from 1 June 2009 to 12 August 2009. India relies on rain for 60% of its irrigation and on agriculture for 17% of its economy. The weather office chief Ajit Tyagi on Thursday told a television channel that the situation was grim and low rainfall would hurt winter-sown crops as well.

Prime Minister Manmohan Singh on Thursday constituted a Group of Ministers (GoM) which will suggest measures to control the damage caused by the failure of summer crop. The GoM, headed by finance minister Pranab Mukherjee, has agriculture minister Sharad Pawar, railway minister Mamata Banerjee, petroleum minister Murli Deora and power minister Sushil Kumar Shinde as its members.

Meanwhile, India on Thursday signed a landmark free trade agreement (FTA) with 10-member regional grouping The Association of Southeast Asian Nations (Asean) that will eliminate tariffs on around 4,000 products such as consumer electronics, pharmaceuticals, machinery, metals and readymade garments. The pact is a strategic victory for India, which has been trying to intensify its relationship with the region as a counterweight to the regional blocs in North America and Europe. Formal negotiations on liberalising services and investment, however, are yet to begin and the challenge before India is to expedite the process, reports suggest.

European shares rose on Friday amid growing confidence of a global economic rebound, and helped by overnight gains in the United States. The key benchmark indices in France, Germany and UK were up by between 0.42% to 0.54%.

But, Chinese stocks fell extending a recent steep correction triggered by concerns this year's rally has overvalued the prospects for earnings growth. The Shanghai Composite index was down 2.98%.

Most other Asian markets were in green as higher metal prices and anticipation of more takeovers fueled speculation a five-month rally will continue. The key benchmark indices in Hong Kong, Singapore, Japan, South Korea, Taiwan rose by between 0.15% to 1.71%.

Trading in US index futures indicated Dow could fall 8 points at the opening bell today, 14 August 2009.

US markets pulled off modest gains in a late rally on Thursday, 13 August 2009 as investors cheered an encouraging business-inventories report, the latest sign that the recession may be winding down. The Dow Jones industrial average gained 36.58 points, or 0.4%, to 9,398.19. The S&P 500 index added 6.92 points, or 0.7%, to 1,012.73, while the Nasdaq Composite Index rose 10.63 points, or 0.5%, to 2,009.35.

But weekly jobless claims rose unexpectedly by 4,000 to 558000 while continuing claims made a surprise drop to 6.2 million. Data on US retail sales, too, was weak. After increasing by an upwardly revised 0.8% in June 2000 and 0.5% in May 2009, sales at US retailers declined 0.1% in July 2009.

The BSE 30-share Sensex shed 106.86 points or 0.69% at 15,411.63. The Sensex rose 16.98 points at the day's high of 15,535.47 in early trade. At the day's low of 15,367.61, the Sensex fell 150.87 points in afternoon trade.

The S&P CNX Nifty was down 24.95 points or 0.54% to 4,580.05. Nifty August 2009 futures were at 4561, at a discount of 19.05 points as compared to the spot closing of 4580.05. Turnover in NSE's futures & options (F&O) segment was Rs 63,891.72 crore, lower than Rs 65,552.20 crore on Thursday, 13 August 2009.

BSE clocked a turnover of Rs 5623 crore, lower than Rs 6105.39 crore on Thursday, 13 August 2009.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1412 shares advanced as compared with 1243 that declined. 70 shares remained unchanged. Breadth weakened compared to strong breadth earlier in the day.

From the 30 share Sensex pack, 25 stocks fell and rest rose.

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex is up 5764.32 points or 59.75% in calendar year 2009 as on 14 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7,251.23 points or 88.85% as on 14 August 2009. FII inflow in calendar year 2009 totaled Rs 35,634.60 crore (till 12 August 2009).

Coming back to today's trade, the BSE Mid-Cap index was down 0.09%. The BSE Small-Cap index was up 0.4%. Both the indices outperformed the Sensex.

The BSE Oil & Gas index (up 1.73%), the BSE Consumer Durables index (up 1.2%), the BSE PSU index (up 0.45%), the BSE Metal index (down 0.46%), the BSE Capital Goods index (down 0.57%), the BSE Power index (down 0.68%), outperformed the Sensex.

The BSE Realty index (down 1.69%), the BSE FMCG index (down 1.26%), the BSE IT index (down 1.16%), the BSE Teck index (down 1.05%), the BSE Auto index (down 1.04%), the BSE Healthcare index (down 0.89%), the BSE Bankex (down 0.82%), underperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 0.54% to Rs 2034.30. The stock hit the high of Rs 2063.80 and a low of Rs 2007.05. Prime Minister Manmohan Singh has reportedly constituted a panel of four senior cabinet ministers that will continuously review the government's position in the Supreme Court case over allocation of gas from the Krishna-Godavari basin to ensure that their ministries don't speak in divergent voices on the vexed issue.

The dispute between Reliance Industries and Reliance Natural Resources (RNRL) which is centred around the price and supply of gas from KG basin operating by RIL to RNRL for the power plants of Anil Dhirubhai Ambani group.

Oil exploration stocks rose as crude oil rose for a second day after the German and French economies unexpectedly grew and the US Federal Reserve on Wednesday said the recession is easing, sparking hopes for a rebound in fuel demand. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

India's largest state-run oil exploration firm by sales ONGC rose 4.79%. Crude oil for September delivery rose 36 cents, or 0.5%, to settle at $70.52 a barrel on the New York Mercantile Exchange on Thursday.

Cairn India rose 3.27%. As per reports, the company is likely to start crude production from its Rajasthan oil fields later this month. The company has already reached pricing agreements for the crude with principal buyers, Indian Oil Corporation and Mangalore Refinery and Petrochemicals.

Shares of three public sector oil marketing companies rose on expectations that a hike in retail fuel prices in early July 2009 may boost Q2 September 2009 results. BPCL, HPCL and Indian Oil Corporation (IOC) rose by between 2.04% to 3.6%. On 1 July 2009, the government had hiked petrol price by Rs 4 per litre and diesel by Rs 2 per litre.

The three public sector oil marketing firms reported strong Q1 June 2009 results as they incurred negligible underrecoveries on domestic sale of fuel at controlled prices. The strong performance was despite lack of any oil bonds from the government.

Indraprastha Gas jumped 12.49% on reports it has signed a gas sale and purchase agreement (GSPA) with RIL and its partner NIKO (NECO) for procurement of 0.308 million square cubic meters a day (mscmd) from D6 block of Krishna-Godavari basin.

Some FMCG stocks fell on concerns over scanty rains. FMCG firms derive substantial revenue from rural markets. United Spirits, ITC, Hindustan Unilever fell by between 1.45% to 2.6%.

IT stocks fell on weak US retail sales and increase in weekly jobless claims. IT companies derive a lion's share of revenues from exports to the US. India's second largest IT exporter by sales Infosys fell 1.23%. Its American depository receipt (ADR) fell 0.37% on Thursday. India's third largest IT exporter by sales Wipro fell 1.04% even as its ADR rose 0.9% on Thursday India's largest IT exporter by sales TCS fell 1.21%.

Realty shares fell on profit taking. Phoenix Mills, Ackruti City, Omaxe, Indiabulls Real Estate, Ansal Properties, DLF fell by between 1.25% to 3.88%. Realty shares had risen sharply in the past few weeks on hopes the government's thrust on housing sector in the Union Budget 2009-2010 may help extend recovery in housing demand witnessed in the past few months.

Unitech fell 1.85% after jumping 7.07% on Thursday when index compiler MSCI added the stock in the MSCI Emerging Markets Index.

Auto stocks fell on concerns arising from scanty rains. Auto firms derive substantial revenue from rural India. Maruti Suzuki India, Hero Honda Motors, Mahindra & Mahindra, fell by between 0.78% to 1.99%.

India's largest commercial vehicle maker by sales Tata Motors fell 1.38%. Tata Motors reportedly plans to spend around Rs 8,000 crore over the next three to four years on capital expenditure and product development, taking advantage of easing credit conditions and reviving sales to breathe life into an ageing product portfolio.

Construction, capital goods and cement shares fell on profit taking after recent gains. Higher government spending on infrastructure sector in 2009-2010 to provide a stimulus to the economy, may result in increase order flow for construction and capital goods firms and may help boost cement demand. Among construction shares, IVRCL Infrastructure & Projects, Hindustan Construction Company, Nagarjuna Construction Company, fell by between 1.27% to 3.52%.

Bidding is expected to start soon on 139 road projects covering 14,395 kilometres at a cost of about US$ 21 billion.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 0.64% on profit taking after recent gains triggered after a joint venture of the company bagged a Rs 4000-crore equipment order. The announcement was made on Wednesday.

Other capital goods stocks, Bharat Heavy Electricals, Thermax, Punj Lloyd, ABB, Crompton Greaves, fell by between 0.09% to 1.35%.

From the cement pack, UltraTech Cement, Grasim Industries, ACC, Ambuja Cements, fell by between 0.96% to 2.94%.

India's largest mobile services provider by sales Bharti Airtel fell 1.17% on profit taking after a three-day rally. The Securities Appellate Tribunal (SAT) on Tuesday adjourned till 28 August 2009 the hearing on an appeal seeking greater clarity on a Securities & Exchange Board of India (Sebi) order, which exempts South Africa's MTN from making an open offer to shareholders of Bharti, if a merger deal between two telecom companies materialises.

On seeking guidelines on the proposed merger with MTN, Sebi in an order dated 22 June 2009 had said that telecom giant MTN need not make an open offer to Bharti shareholders in India as its stake in the domestic mobile company would be through the Global Depository Receipts (GDRs). The appeal was filed by a shareholder Deepak Mehra, who holds around 200 shares, arguing that MTN has to make an open offer to Bharti shareholders.

India's second largest mobile services provider by sales Reliance Communications fell 2.34%. The company on Wednesday said it has tied-up with US-based Kodiak Networks for a nationwide roll-out of mobile conferencing service

Bank stocks fell on profit taking. India's largest private sector bank by net profit ICICI Bank fell 1.69% even as its ADR rose 4.14% on Thursday.

India's biggest commercial bank in terms of branch network State Bank of India (SBI) fell 0.1%. Among other PSU banks, Bank of Baroda, Punjab National Bank, Bank of India, Union Bank of India fell by between 0.94% to 1.99%.

But, India's second largest private sector bank by net profit HDFC Bank rose 0.13% as its ADR rose 2.01% on Thursday.

India's largest dedicated home loan lender HDFC fell 2.19% after firm reduced home loan rates by 50 basis points to 9% in the Rs 30 lakh to Rs 50 lakh segment for new loans.

Some power stocks rose as the NHPC IPO received robust investor response. The IPO which ended on Wednesday, 12 August 2009, was subscribed 23.74 times. Reliance Infrastructure, Reliance Power, PowerGrid Corporation of India, GVK Infrastructure & Company, CESC and Torrent Power rose by between 0.11% to 1.97%.

But, India's biggest power producer by revenue NTPC lost 2.41% on reports that India's top two law officers have advised NTPC to move Supreme Court to secure gas at a contracted price from RIL, a position in variance with Oil Ministry's plea on the Ambani borthers' gas dispute. NTPC is fighting to get gas at $2.34 a unit from RIL, which has challenged it on the grounds that government's stand on price would frustrate the deal.

Metal shares fell even after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 3.6% on Thursday, 13 August 2009. Steel Authority of India, Hindalco Industries, Tata Steel, Hindustan Zinc fell by between 0.16% to 1.5%.

India's second largest aluminum producer by sales National Aluminium Company fell 0.86% even after the company recently raised aluminium prices for the second time this month following a rise in international prices of the metal.

But, India's largest copper maker by sales Sterlite Industries rose 0.34% on reports government plans to offer to sell its 49% stake in Bharat Aluminium Co (Balco) to non-ferrous metals maker Sterlite Industries , for about Rs 2000 crore. Sterlite already owns 51% stake in Balco.

Airline stocks extended Thursday's rally. Aviation minister Praful Patel said on Thursday government will form a group of ministers (GoM) to look into airline industry's woes. Kingfisher Airlines, Jet Airways and SpiceJet rose by between 3.19% to 9.69%.

He further said the GoM will look into the ATF price issue. He said the industry is likely to grow 8.5% per year till 2015.

IFCI clocked highest volume of 2.26 crore shares on BSE. Cals Refineries (1.46 crore shares), Ispat Industries (1.36 crore shares), Firstsource Solutions (1.28 crore shares) and NOCIL (1.08 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 244.46 crore on BSE. Tata Steel (Rs 170.83 crore), DLF (Rs 150.15 crore), Educomp Solutions (Rs 141.62 crore) and Reliance Capital (Rs 132.56 crore) were the other turnover toppers in that order.