Post Session Commentary - Aug 13 2009

Markets extended its initial upsurge to close near days’ high on significant buying over the ground led by firm global cues. Market rallied sharply following firm European markets along with positive US index futures and higher Asian stocks. Further, strong industrial production (IIP) also boosted investor’s sentiments, which expanded 7.8% in June 2009, at the fastest pace in 16 months. The draft direct tax code, which proposes to reduce tax rates on individual and corporate and scrapping of the Securities Transaction Tax (STT) also contributed to the upward movement across the board. Meanwhile, inflation fell to the lowest in three decades to (-) 1.74% for the week ended 1st August 2009. The BSE Sensex ended above 15,500 level and NSE Nifty closed above 4,600 mark

Market opened significantly up backed by favorable cues from the US markets after Fed reassured of improved outlook for the economy. The US stocks markets closed higher on Wednesday, on improved outlook from the Fed and a cheering housing report. The Federal Reserve kept its benchmark short-term interest rates steady near zero and said it would likely stay there for an extended period. The existing home sales increased 3.8%. Further, the Indian benchmark indices continued to extend gains on positive sentiments led by direct tax code unveiled by the government after the market hours yesterday. Strong global cues also added to the northward journey. During final trading hours, market gained further grounds and concluded its upward journey with strong gains. From the sectoral front, all indices ended in green. Besides, Realty, Metal, Bank, Auto, Capital Goods, FMCG, PSU and Power witnessed most of the buying from these baskets. The BSE Midcap and Smallcap indices also followed same trend.

Among the Sensex pack all 30 stocks ended in green territory. The market breadth indicating the overall health of the market remained extremely positive as 2215 stocks closed in green while 514 stocks closed in red and 62 stocks remained unchanged in BSE.

The BSE Sensex closed higher by 498.33 points or (3.32%) at 15,518.49 and NSE Nifty ended up by 147.50 points or (3.31%) at 4,605. BSE Mid Caps and Small Caps closed with gains of 194.36 and 252.12 points at 5,608.89 and 6,387.05 respectively. The BSE Sensex touched intraday high of 15,545.13 and intraday low of 15,207.96.

Gainers from the BSE Sensex pack are DLF Ltd (7.21%), ICICI Bank (6.53%), Maruti Suzuki (6.41%), Tata Steel (6.04%), Tata Motors (5.86%), Sterlite Industries (5.81%), SBI (5.68%), L&T Ltd (5.20%), ITC Ltd (5.15%), Hindalco (4.93%), Herohonda Motors (4.78%), JP Associates (4.72%), Reliance Infra (3.51%), HDFC (3.21%), Rcom (3.18%) and ONGC Ltd (2.99%).

Inflation fell to (-) 1.74% for the week ended August 1, which is the lowest in three decades, even as prices of essential food items like pulses, cereals fruit and vegetables continued to rise. The wholesale price index during the corresponding week a year ago was as high as 12.91% while in the previous week, it was (-) 1.58%. The food prices continued on a higher path with barley, jowar and gram gaining 2% each and condiments & spices, arhar and fruits & vegetables costlier by 1%. However, the prices of tea fell by 9% in the concerned week.

In order to reduce the tax burden and streamline the over four-decade-old income tax, the government proposed radical tax reforms through a draft code. As per the proposal, the tax rates on individuals are set to decline to 10% for incomes up to Rs 10 lakh while 20% for up to Rs 25 lakh and 30% for above that. Moreover, the incentives on savings are also set to rise to Rs 3 lakh, even as securities transaction tax (STT) is scrapped, capital gains tax unified to one in the long and short term and wealth tax slashed to 0.25% from one per cent with an increase in limit to Rs 50 crore.

On the global markets front the Asian markets that opened before the Indian market, ended up. Shanghai Composite, Hang Seng, Nikkei 225 and Singapore''s Straits Times Index ended higher by 27.84, 426.06, 82.19 and 42.87 points at 3,140.56, 20,861.30, 10,517.19 and 2,614.18 respectively. However, Seoul Composite dropped slightly by 0.71 points at 1,564.64.

European markets, which opened after the Indian market, are trading in green. In Frankfurt the DAX index is trading higher by 79.89 points at 5,428.98 and in London FTSE 100 is trading up by 53.19 points at 4,769.95.

The BSE Realty index outperformed the benchmark indices as gained (6.86%) or 258.67 points at 4,031.26. Gainers are Parsvnath (9.96%), Housing Dev (9.05%), Ansal Infra (9.02%), Penland Ltd (8.53%) and Omaxe Ltd (8.40%).

The BSE Metal index advanced by (5.57%) or 674.63 points at 12,779.72. Scrips that gained are Jindal Saw (9.62%), Ispat Industries (7.73%), JSW Steel (7.69%), Gujarat NRE C (6.71%) and Sesa Goa Ltd (6.19%).

The BSE Auto index closed higher by (4.41%) or 237.90 points at 5,627.82. Gainers are Maruti Suzuki (6.41%), Tata Motors (5.86%), Ashok Leyland (5.57%), Cummins Indi (5.10%) and Herohonda Motors (4.78%).

The BSE Bank index gained (4.34%) or 347.13 points at 8,354.08. Main gainers are Yes Bank (6.92%), ICICI Bank (6.53%), SBI (5.68%), Kotak Bank (5.64%) and IDBI Bank (5.46%).

The BSE Capital Goods index ended up by (4.20%) or 500.28 points at 12,417.75. Gainers are Usha Martin (13.25%), Kalpat Power T (8.22%), L&T Ltd (5.20%), SKF India (4.96%) and Suzlon Energy (4.87%).

The BSE FMCG index increased by (3.94%) or 97.98 points at 2,585.28. As Ruchi Soya (9.79%), United Spr (5.23%), ITC Ltd (5.15%), Godrej Cons (4.64%) and Colgate Palm (3.78%) ended in green.

L&T Ltd surged 5.20%. The company has signed a Rs 4,000-crore agreement to supply power equipment to Jaypee Group-promoted Jaiprakaskh Power Venture (JPVL). Under the agreement, L&T will supply boiler and steam turbine generator to a thermal power project in Nigrie, Madhya Pradesh.

Orchid Chemicals advanced by 3.90%. The company has received the final approval from the US Food and Drug Administration (US FDA) for its drug Sumatriptan Succinate tablets, 25. mg, 5.0 mg and 100 mg.

Adlabs films ended up by 4.17%. The Board of Adlabs Films Limited {Adlabs) approved raising an amount upto Rs. 600 crore (US $ 124 million) by way of rights offer of equity shares to the Company’s shareholders, subject to necessary sanctions and applicable provisions of law.

National Aluminium Company Ltd spurted 3.89% after the company raised aluminium prices for the second time this month following a rise in international prices of the metal.

Mastek Ltd gained 1.97% after the company launched a platform for life insurance carriers for India and Asia Pacific markets.

Dr. Reddy''s Lab went up by 0.89%. The company has launched Strea Professional, the company''s first product in the non-invasive aesthetics segment in India.