RIL, IT stocks lead rally

A recovery in European stocks helped Indian equities score gains in what was a choppy trading session. Sustained buying by foreign funds and an expected economic recovery in India underpinned sentiment. Oil & gas and IT stocks rose even as auto and realty stocks fell. The market breadth was positive. The BSE 30-share Sensex rose 72.85 points or 0.46%, up close to 210 points from the day's low and off close to 70 points from the day's high.

The market was volatile. The key benchmark indices surged in early trade recovering from the previous day's 0.6% slide. However, lower Asian stocks pulled the market into the red later. Volatility was high in early afternoon trade. The market moved into the green from red in mid-afternoon trade as index heavyweight Reliance Industries (RIL) rose.

Foreign institutional investors (FIIs) bought shares worth a net Rs 207.80 crore on Tuesday, 4 August 2009. FII inflow in calendar year 2009 totaled Rs 36,841.10 crore (till 4 August 2009).

Heavy purchases by foreign funds triggered a solid rally on the bourses this year. The Sensex was up 6256.52 points or 64.85% in calendar year 2009 as on 5 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex was up 7743.43 points or 94.89% as on 5 August 2009.

There are signs that the Indian economy is recovering from a slowdown last year. Growth in India's manufacturing activity held steady in July 2009 amid robust local demand and a slight rebound in exports. However, intense competition curbed companies' pricing power even as raw material costs jumped, a survey released during trading hours on Monday, 3 August 2009, showed. The Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, was at 55.30 in July 2009, little changed from 55.34 in June 2009. It has been above the threshold of 50 -- which separates expansion from contraction -- for four straight months. The new orders index rose to 59.75, its highest in nine months, from 58.56 in June 2009.

A weak monsoon remains a cause of concern though. India's monsoon rains were 18% below normal in the week to 29 July 2009, having been above normal in the preceding two weeks. Total rainfall since the beginning of June was 19% below average, the India Meteorological Department said on 30 July 2009. On the flip side, water levels in India's 81 main reservoirs rose to 35% of capacity in the week to 30 July 2009, up from 23% a week earlier and 31% a year ago, government data showed. More than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

Finance Minister Pranab Mukherjee said on Tuesday, 4 August 2009, the government will continue reforms to get back to a higher growth trajectory of at least 9% at the earliest and encourage state-run firms to sell stakes through public offerings. He said the government is determined to get back to fiscal consolidation at the earliest. The government has said it aims to cut the fiscal deficit to 5.5% of GDP by the end of 2010/11, and further to 4% in 2011/12 from an expected 6.8% in 2009/10.

Meanwhile, the Reserve Bank of India Governor Duvvuri Subbarao said on Tuesday India will not slow down on financial reforms, but would recalibrate the roadmap for reforms given the backdrop of the global crisis.

European shares inched higher in volatile trade on Wednesday, with banks boosted by results from Societe Generale. Key benchmark indices in Germany, France and UK were up by between 0.36% to 0.78%.

Asian stocks fell in volatile trade as investors awaited fresh clues on whether recent upwards momentum can be sustained. Key benchmark indices in Hong Kong, South Korea, Singapore, Taiwan China and Japan were down by between 0.44% to 1.58%.

Trading in US index futures indicated that the Dow could open flat on Wednesday, 5 August 2009.

US markets scored modest gains on Tuesday, 4 August 2009. The S&P 500 held above the 1,000 mark, a level it achieved on Monday for the first time since November, 2008. The Dow Jones Industrial Average rose 33.63 points, or 0.36%, to close at 9,320.19. The S&P 500 Index added 3.02 points, or 0.30%, to 1,005.65. The Nasdaq Composite Index was up 2.70 points, or 0.13%, to end at 2,011.31.

In economic news, pending-home sales jumped 3.6% in June 2009, well above expectations of a 0.6% increase. It was the fifth straight monthly gain and the longest such streak in six years.

June personal income fell more-than-expected at 1.3%. It was the biggest drop in four-and-a-half years. But consumer spending rose 0.4% in June 2009, slightly more than expected, and helped by spending on non-durable goods.

Closer home, the Q1 June 2009 results of India Inc were encouraging, with lower costs helping bottomline growth. The combined net profit of 2969 companies rose 17% to Rs 73667 crore on 5% fall in sales to Rs 721530 crore in Q1 June 2009 over Q1 June 2008.

The BSE 30-share Sensex was up 72.85 points or 0.46% to 15,903.83. The Sensex rose 142.12 points at the day's high of 15,973.10 in early trade. The Sensex fell 135.87 points at the day's low of 15,695.11 in early afternoon trade.

The S&P CNX Nifty was up 13.65 points or 0.29% to 4,694.15. Nifty August 2009 futures were at 4696, at a premium of 1.85 points as compared to the spot closing of 4694.15. Turnover in NSE's futures & options (F&O) climbed to Rs 63729.03 crore from Rs 60859.86 crore on Tuesday, 4 August 2009.

The BSE clocked a turnover of Rs 5,957 crore, lower than Rs 6,614.07 crore on Tuesday, 4 August 2009.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,607 shares advanced as compared with 1,059 that declined. A total of 93 shares remained unchanged. The breadth had turned negative for a brief period in mid-morning trade from strong breadth in early trade.

Among the 30-member Sensex pack, 17 fell while the rest gained.

The BSE Mid-Cap index was up 0.12%. It underperformed the Sensex. The BSE Small-Cap index was up 1%, outperforming the Sensex.

The BSE Consumer Durables index (up 2.11%), the BSE Oil & Gas index (up 1.95%), the BSE IT index (down 1.94%), the BSE Teck index (down 1.19%), the BSE PSU index (up 1.11%), the BSE Healthcare index (up 0.92%), outperformed the Sensex.

The BSE Realty index (down 1.92%), the BSE Auto index (down 1.11%), the BSE FMCG index (down 0.96%), the BSE Capital Goods index (down 0.51%), the BSE Bankex (down 0.08%), the BSE Power index (down 0.08%), the BSE Metal index (up 0.14%), underperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 1.67% to Rs 2,075.25 after the upstream regulator said on Tuesday, 4 August 2009, the company can raise gas supply to its peak rate faster than planned. Reliance had said its deep-sea fields off the east coast would reach an 80 million cubic metres a day (mmscmd) peak by December 2009, but V K Sibal, director general of hydrocarbons, said this was possible by October 2009.

As per separate reports, RIL will pick up a 67% stake in Krishna Godavari Gas Network (KGGNL), a joint venture promoted by the Andhra Pradesh (AP) government, for undertaking city gas distribution in the state.

The Supreme Court on 30 July 2009 said, it will give a date on 1 September 2009 to expedite the decision pertaining to the Krishna-Godavari basin gas dispute between Mukesh Ambani's Reliance Industries (RIL) and Anil's Ambani's Reliance Natural Resources (RNRL). RNRL counsels Mukul Rohatgi and Mahesh Agrawal sought an early decision in the case.

Oil exploration stocks rose after crude oil climbed towards $72 on Wednesday after data showed a surprise drawdown in crude oil inventories in the United States. India's largest state-run oil exploration firm by sales ONGC rose 4.5%. India's second largest oil exploration firm by sales Cairn India rose 0.27%. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms. US light, sweet crude rose 41 cents to $71.83 a barrel on the New York Mercantile Exchange.

State run oil marketing companies (OMC) rose shrugging off a rise in crude oil prices. HPCL and BPCL rose by between 1.48% to 2.35%. Indian Oil Corporation fell 0.3%. Rise in crude oil prices will result in increase in underrecoveries of the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Rate sensitive realty shares declined on profit booking after recent strong gains triggered by of the government's thrust on housing sector in the Union Budget 2009-2010. Unitech, Indiabulls Real Estate, Phoenix Mills, Anant Raj Industries, Ackruti City, DLF fell by between 0.18% to 3.77%.

Auto stocks fell on profit taking after recent surge triggered by healthy monthly sales figures for July 2009 and good Q1 June 2009 results. Mahindra & Mahindra, Bajaj Auto, Hero Honda Motors, and Maruti Suzuki India fell by between 0.67% to 3.1%.

But, India's largest truck market by sales Tata Motors rose 1.46%. Global ratings major Standard & Poor's during trading hours on Tuesday, 4 August 2009, downgraded long term corporate credit rating of the auto major to 'B' from 'B+'. The outlook is negative. At the same time, Standard & Poor's lowered the issue rating on the company's senior unsecured notes to 'B' from 'B+'.

IT stocks rose as a better-than-expected data on US home sales reinforced expectations that the economy is recovering. US is the biggest market for Indian IT firms. India's second largest IT exporter by sales Infosys rose 2.49% after company's chief executive said company is looking at acquisitions of companies with $450-$500 million revenue. He further said company is pursuing outsourcing deals worth $1 billion and that 2-15 deals are in pipeline.

India's third largest IT exporter by sales Wipro rose 3.25% after it entered a five-year contract with US apparel retailer Charming Shoppes Inc. to provide information technology services. But, India's largest IT exporter by sales TCS fell 0.13%.

FMCG stocks fell on concerns over progress of India's annual monsoon. FMCG firms derive substantial revenue from rural sector. Hindustan Unilever, Tata Tea, ITC, United Spirtis, Marico fell by between 0.04% to 2.05%.

Some cement stocks rose on healthy July 2009 monthly sales by cement makers. Grasim Industries rose 1.56% and but UltraTech Cement fell 0.67%. The Aditya Birla Group cement firm posted 10% rise in the group's cement shipments to 2.7 million tonnes in July 2009 over July 2008. Grasim Industries and UltraTech Cement are part of the Aditya Birla Group.

North India's largest cement producer by sales Ambuja Cements rose 1.32% as cement sispatches rose 4.50% to 14.38-lakh tonnes in July 2009 over July 2008

India's largest cement manufacturer by sales ACC rose 2.74% after its cement sales rose 4.09% to 1.78 million tonnes in July 2009 over July 2008.

Construction shares fell on profit booking after recent strong gains triggered by of the government's thrust on the infrastructure sector in the Union Budget 2009-2010. Nagarjuna Construction Company, Era Infra Engineering, Hindustan Construction Company, Valecha Engineering fell by between 0.34% to 2.84%.

Power stocks fell on profit taking after recent gains triggered by strong response to Adani Power's initial public offer. The IPO of Adani Power was subscribed over 21 times on 31 July 2009. NTPC, CESC, Torrent Power, Power Grid Corporation of India, Torrent Power fell by between 0.25% to 0.91%.

Reliance Infrastructure rose 1.98% after company said on Tuesday, 4 August 2009, its consortium with Reliance Communications and Canada's SNC-Lavalin won a Rs 11000 crore Mumbai rail project. The 32-kilometre Metro-II line from Charkop, a western suburb of Mumbai, to Mankhurd in the east will have 27 stations and is expected to be operational by 2015, the company said.

India's largest engineering and construction firm by sales Larsen & Toubro fell 0.31% on reports the company has sought permission from market regulators to sell its stake in outsourcer Mahindra Satyam. At the current Satyam share price, the holding is worth nearly Rs 900 crore ($190 million).

Other capital goods stocks, Crompton Greaves, Bharat Heavy Electricals, ABB, BEML, Praj Industries, Punj Lloyd, fell by between 0.05% to 1.6%.

Bank stocks fell on profit taking after strong gains in the past few months. India's biggest bank in terms of branch network State Bank of India (SBI) fell 0.64%

India's second largest private sector bank by net profit HDFC Bank fell 1.54% as its ADR fell 0.42% on Tuesday. But, India's largest private sector bank by net profit ICICI Bank rose 1.28% even as ADR fell 0.81% overnight in US.

Steel stocks fell even as the country's top steel makers increased prices of flat steel products sold in the spot market by up to 3% from 1 August 2009 due to higher input costs and rising metal prices globally. India's largest private sector steel marker by sales Tata Steel fell 0.41%.

India's largest state-run steel producer by sales Steel Authority of India fell 0.63%.

India's largest private sector steel marker by sales JSW Steel fell 2.13%.

Steel Authority of India (Sail), Tata Steel, JSW Steel and Essar steel have already effected the price hike, others are likely to follow suit soon. Flat steel is mainly used by automobile and consumer durable sectors. At the same time, players such as Sail and JSW have slashed prices of long steel products, used mainly in the construction sector, by around Rs 1,500 per tonne, or 5%, as its demand has dropped with the onset of monsoon.

Sugar stocks rose on firm global sugar prices. Bajaj Hindustan, Shree Renuka Sugars, Balrampur Chini and Dhampur Sugars rose by between 0.37% to 5%.

Cals Refineries clocked highest volume of 3.12 crore shares on BSE. Mahindra Satyam (2.96 crore shares), Ispat Industries (2.85 crore shares), Firstsource Solutions (2.29 crore shares) and Unitech (1.53 crore shares) were the other volume toppers in that order.

Mahindra Satyam clocked highest turnover of Rs 335.14 crore on BSE. Reliance Industries (Rs 219.01 crore), Aban Offshore (Rs 195.93 crore), Reliance Capital (Rs 158.02 crore) and Unitech (Rs 143.15 crore) were the other turnover toppers in that order.