Sensex jumps 7.5% in seven days as world stocks rally

The key benchmark indices gained for the straight seventh day but volatility was high. The BSE 30-share Sensex rose 141.27 points or 0.9%, off close to 35 points from the day's high and up close to 260 points from the day's low. The 50-unit S&P CNX Nifty today, 28 August 2009, hit its highest closing level in nearly 15 months. Revival of monsoon rains, higher European stocks and gains in US index futures boosted the domestic bourses. Index heavyweight Reliance Industries rose. Metal, banking and realty stocks edged higher.

The market was volatile. The market edged higher in early trade on revival of monsoon rains. The market regained strength after slipping in the red for a brief period in mid-morning trade. The market once again slipped into the red in early afternoon trade before regaining positive zone. The market weakened in afternoon trade even as European stocks edged higher in early trade. In a complete reversal of the trend, the market bounced back in mid-afternoon trade. The market pared gains after hitting fresh intraday high in late trade.

Revival of monsoon rains boosted sentiment. India's monsoon rains were 5% below average in the week to 26 August 2009, coming in close to normal for the second successive week after a prolonged dry spell, the Meteorological Department said on Thursday, 27 August 2009. Rainfall since 1 June to 26 August was 25% below normal, improving slightly from a deficit of 26% a week earlier. More than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

Water level in the main reservoirs was at 42% of the capacity as on 27 August 2009, lower than last year's 63% and below the 10-year average of 57%.

India's deficient monsoons may affect the inflation outlook more than growth prospects, the Reserve Bank said on Thursday, adding that prolonged expansionary fiscal and monetary policies threatened to push up prices and eventually crimp growth.

European shares rose on Friday after two days of losses, led higher by commodity and banking stocks. The key benchmark indices in France, Germany and UK were up by between 0.98% to 1.36%.

The UK economy contracted 0.7% the second quarter as the recession prompted companies to cut investment and inventories while consumers scaled back spending. The fall in gross domestic product was less than the 0.8% calculated last month, the Office for National Statistics said today in London.

Chinese stocks fell on concern government measures to curb lending and production in industries including steel and cement will slow economic growth. The Shanghai Composite index was down 2.91%. Hong Kong's Hang Seng was down 0.71%.

But, other Asian stocks were in green. Key benchmark indices in Taiwan Singapore and South Korea were up 0.02% to 1.78%. Japan's Nikkei rose 0.57% even as Japan's unemployment rate rose to a record 5.7% in July 2009 and deflation worsened, dealing a blow to Prime Minister Taro Aso on the eve of an election that polls indicate his ruling Liberal Democratic Party will lose.

Trading in US index futures indicated Dow could rise 34 points at the opening bell today, 28 August 2009.

US markets closed with modest gains on Thursday, 27 August 2009 helped by a late rally in bank stocks as well as higher oil prices. The Dow rose 37.11 points, or 0.4%, to close at 9,580.63. The S&P 500 index rose 2.86 points, or 0.3%, to 1,030.98, while the Nasdaq Composite Index rose 3.30 points, or 0.2%, to 2,027.73.

The US economy shrank at an annual pace of 1% between April and June 2009, unchanged from an initial estimate released last month, according to the latest data. Analysts had been expecting a downward revision, with some forecasting a contraction of 1.5%. Consumer spending contracted by at a lower-than-expected 1% in the second quarter. Consumer spending accounts for about 70% of US economic activity.

Initial jobless claims came in at 570,000, which is down 10,000 from the previous week and essentially in-line with expectations. Meanwhile, continuing claims came in at 6.13 million, below expectations and down more than 100,000 from the previous week.

The BSE 30-share Sensex rose 141.27 points or 0.9% to 15922.34, its highest closing since 3 August 2009. The Sensex rose 176.60 points at the day's high of 15957.67 in late trade. The Sensex fell 117.72 points at the day's low of 15,663.35 in afternoon trade.

The S&P CNX Nifty gained 44.15 points or 0.94% to 4,732.35 its highest closing since 2 June 2008. Nifty September 2009 futures were at 4731 at a discount of 1.35 points as compared to the spot closing of 4732.35. Turnover in NSE's futures & options (F&O) segment was Rs 60,109.07 crore, sharply lower than Rs 91,809.58 crore on Thursday, 27 August 2009.

BSE clocked a turnover of Rs 6510 crore, lower than Rs 6581.02 crore on Thursday, 27 August 2009.

The market has surged in the past seven days supported by positive global cues. The BSE Sensex has risen 1112.70 points or 7.51% in seven trading sessions to settle at 15,922.34 on Friday, 28 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 6275.03 points or 65.04% in calendar year 2009 as on 28 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7761.94 points or 95.11% as on 28 August 2009. FII inflow in calendar year 2009 totaled Rs 39,192 crore (till 27 August 2009).

Coming back to today's trade, the BSE Mid-Cap index rose 0.71% and the BSE Small-Cap index rose 0.79%. Both the indices, however, underperformed the Sensex.

The BSE Realty index (up 3.79%), the BSE Auto index (up 1.24%), the BSE Capital Goods index (up 1.15%), the BSE Bankex (up 1.12%), the BSE Oil & Gas index (up 1.09%), outperformed the Sensex.

The BSE Consumer Durables index (down 1.04%), the BSE FMCG index (down 0.42%), the BSE IT index (down 0.4%), the BSE Healthcare index (down 0.19%), the BSE Power index (up 0.54%), the BSE PSU index (up 0.55%), the BSE Teck index (up 0.65%), the BSE Metal index (up 0.74%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1528 shares advanced as compared with 1240 that declined. A total of 70 shares remained unchanged. However, the breadth weakened from a strong breadth earlier in the day.

Among the 30-member Sensex pack, 21 rose while rest fell.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 1.471% to Rs 2070.30. As per reports, a hearing on the gas dispute between RIL and Reliance Natural Resources (RNRL) will take place in the Supreme Court (SC) on 20 October 2009. Earlier, the SC had announced 1 September 2009 as the date of hearing of the case. The dispute 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.

In June, the Bombay High Court had ruled that Reliance Industries should supply gas to Reliance Natural Resources at $2.34 per million metric British thermal unit, nearly half the $4.20 price in an interim court order in January 2009.

Cairn India rose 2.83% as crude oil rose. Cairn India will start pumping crude on Saturday 29 August 2009 from its Rajasthan block.

Crude oil rose for a second day in New York and pared its weekly loss after the dollar weakened, spurring demand for commodities as a hedge against inflation. Crude oil for October delivery climbed as much as 54 cents, or 0.7%, to $73.03 a barrel on Friday, 28 August 2009, extending Thursday's rally. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms

Tata Power Company fell 1.36% even as consolidated net profit rose 160.47% to Rs 572.65 crore on 15.71% rise in total income to Rs 4781.89 crore in Q1 june 2009 over Q1 June 2008. The results were announced in late trade today.

India's largest power generation firm by sale NTPC fell 0.71%. Sidhartha Pradhan, joint secretary of the department of disinvestment, today said the government plans to file the draft prospectus for a follow-on offer by state-run utility NTPC by December 2009. The government may also file initial papers for new issues by three or four other state-run companies by December 2009, he added.

Bank stocks rose on bargain hunting. India's largest private sector bank by net profit ICICI Bank rose 1.71%. The bank has launched a special offer for new home loan borrowers effective from 20 August 2009. Under this, interest rates for home loans upto Rs 20-lakh will now be at 8.75%. For loans between Rs 20-Rs 50 lakh, the new rates will be 9.25% while those above Rs 50-lakh, the rate has been fixed at 9.75%.

India's biggest bank in terms of branch network State Bank of India (SBI) rose 1.56% after bank's Chairman O P Bhatt said interest rates will remain stable for next six months. It is difficult to say whether rates have bottomed out, he said

Among other PSU banks, Punjab National Bank, Bank of India, India Overseas Bank, Union Bank of India, rose by between 0.43% to 2.53%.

Metal stocks rose on a view that the global economy was on a recovery path. Steel Authority of India, Jindal Steel & Power, Sterlite Industries, National Aluminum Company, Hindalco Industries rose by between 0.09% to 3.07%.

India's largest steel maker by sales Tata Steel rose 0.5% on bargain hunting after Thursday's more than 5% fall triggered by hefty losses reported by the company. Tata Steel reported a net loss of Rs 2208.68 crore in Q1 June 2009 on a consolidated basis compared with a net profit of Rs 3900.90 crore in Q1 June 2008. Total income fell 46% to Rs 23496.21 crore in Q1 June 2009 over Q1 June 2008. The result was announced during market hours on Thursday, 27 August 2009.

Realty stocks rose on reports demand for residential projects in major cities is picking up on lower home loan rates, property price cuts by developers and a recovery in the job market. Omaxe, Indiabulls Real Estate, Unitech, DLF and Ackruti City rose by between 0.3% to 9.25%.

Realty market had slumped last year amid a global credit crunch and buyers fearing job losses.

Construction, capital goods and cement shares rose on government's thrust on infrastructure. 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.

Bharat Heavy Electricals, Punj Lloyd, Praj Industries, ABB, Thermax, Siemens, BEML, rose by between 0.05% to 5.48 %

India's largest engineering & construction firm by sales Larsen & Toubro rose 0.92% after the company's Chairman said the company won road projects worth Rs 1400 crore last week.

From the construction space, IVRCL Infrastructure & Projects, Nagarjuna Construction Company, Valecha Engineering rose by between 0.61% to 10%.

From the cement pack, UltraTech Cement, ACC, Birla Corporation J K Lakshmi Cement, Dalmia Cement, Mysore Cement, Andhra Cement, Madras Cement, Mangalam Cement, J K Cement rose by between 1.42% to 20%.

FMCG stocks dipped on concerns deficient monsoon rains may crimp rural sales. FMCG firms derive a substantial revenue from rural India. ITC, Marico, Nestle India, Tata Tea, United Spirits fell by between 1.13% to 2.1%.

IT stocks fell on profit taking after recent strong gains triggered by hopes of a recovery in US economy. US is the biggest market for IT firms. India's third largest software services exporter Wipro fell 0.77% even as its ADR rose 0.62% on Thursday.

India's second largest software services exporter Infosys Technologies fell 0.1% even as its American depository receipt (ADR) rose 1.38% on Thursday, 27 August 2009. A foreign brokerage has reduced its rating on the stock 'underweight' from 'equal-weight', saying the stock's valuation is 'rich'. India's largest software services exporter TCS fell 0.75%.

In one of the largest deals, the top-three Indian vendors Infosys, TCS and Wipro along with IBM Corp bagged a slice of the $1.5 billion five year information technology (IT) outsourcing contract from British Petroleum Pcl (BP), one of the world's largest integrated oil and gas companies. The companies announced the BP deal after trading hours on Wednesday.

None of the three companies announced the order size. BP has been consolidating its IT vendors for the past 12 months, with goals to simplify its processes and improve service quality.

Meanwhile, the world's biggest oil company ExxonMobil is reportedly in talks with Indian technology firms and multinational vendors to outsource IT contracts worth up to $1 billion.

Telecom stocks rose after the government on Thursday fixed Rs 3500 crore as a base price for all-India third-generation spectrum. India's largest mobile phone company by sales Bharti Airtel jumped nearly 4.39% extending Thursday's gains on reports South African mobile operator MTN wants to conclude a proposed tie-up with Bharti Airtel quickly to end any doubt about the deal. Last week, Bharti and MTN extended, for a second time, talks aimed at creating the world's third-biggest mobile company.

The two firms agreed to extend talks to 30 September 2009, after previously extending discussions by a month to 31 August, as they negotiate a $23 billion cash and share-swap deal aimed at an eventual full merger.

The government has also decided to fix Rs 1750 crore as the base price for auctioning for WiMAX spectrum for wireless broadband services. Telecom Minister A Raja said the government will get at least Rs 25000 crore ($5.1 billion) from the sale of these auctions which will be held within 90 days.

India's second largest mobile telecom player by sales Reliance Communications rose 0.76% after the company signed a deal with S Tel to share telecom infrastructure.

Auto stocks rose on slight improvement in India's annual monsoon. Auto firms derive substantial revenue from the rural sector. Maruti Suzuki, India's top car maker by sales rose 0.6%. The company expects its sales to rise more than 10% till October 2009, its chairman said on Friday, after growing sales at over 14% during four months to July 2009

India's largest bike maker by sales Hero Honda Motors rose 2.25% after the company said on Thursday it will launch 9 new models by March 2010. India's second largest bike maker by sales Bajaj Auto rose 2.17%.

India's largest truck marker by sales Tata Motors rose 0.76%. As per reports, the company's plants are running at up to 65% capacity and the firm is cautiously optimistic on sales despite the weak monsoon. The company has reportedly come to the public for the second time to raise about Rs 1,500 crore via fixed deposit schemes, offering up to 9.88% annual interest for a three-year deposit.

Shares of export oriented sectors fell on profit taking after Thursday's surge. The government extended tax sops for exports in its new foreign trade policy announced on Thursday. From the textile pack, Gokaldas Exports, and Raymond fell by between 0.22% to 2.92%.

From the leather sector, Bhartiya International, Mirza Tanneries, Liberty Shoes Crew Bos fell by between 2% to 5.8%.

Gitanjali Gems, Shrenuj & Company, Vaibhav Gems, SB&T International fell by between 2.96% to 4.74% from the gems and jewellery sector

Shares of tea makers fell on profit taking after a recent surge due to jump in tea prices caused by fall in production. Assam Tea Company, Warren Tea, McLeod Russel and Harrisons Malayalam fell by between 2.93% to 3.31%.

Unitech clocked the highest volume of 3.15 crore shares on BSE. Cals Rfineries (2.97 crore shares), IFCI (2.16 crore shares), Mahindra Satyam (1.5 crore shares) and Suzlon Energy (1.26 crore shares) were the other major volume gainers in that order.

Unitech clocked the highest turnover of Rs 312.16 crroe on BSE. Tata Steel (Rs 226.39 crore), DLF (Rs 212.13 crore), Aban Offshore (Rs 198.25 crore) and Reliance Capital (Rs 184.94 crore) were the other major turnover toppers in that order.