Sensex regains 15,000, Nifty above 4,500 as pivotals rally

Key benchmark indices extended gains for the second day in a row as European markets and US index futures rose. The BSE 30-share Sensex jumped 228.51 points or 1.52%, recovering a massive 405.75 points from the day's low. Stocks rallied in second half of the day's trading session after a subdued start. Revival of monsoon rains and gains in Chinese stocks underpinned sentiment. The barometer index regained the psychological 15,000 mark, having fallen below that level earlier in the day. The S&P CNX Nifty moved above the 4,500 mark in late trade.

As per provisional figures, foreign funds today, 21 August 2009, bought shares worth a net Rs 532.80 crore and domestic funds bought shares worth Rs 95.72 crore.

All the sectoral indices on BSE logged smart gains. Auto stocks were at the forefront of the rally, extending gains for the second day in a row on hopes of a recovery in sector. Among stock-specific activity, index heavyweights Reliance Industries gained over 1.5%, and ICICI Bank jumped over 3.5%. Larsen & Toubro was almost unchanged, recovering from an initial slide. Hero Honda Motors advanced over 4%. HDFC Bank lost over 1%

Intraday volatility was high. The market slipped in early trade on weak Asian stocks. A sustained recovery from lower level was witnessed later. The market moved between the positive and negative zone in mid-morning trade. The market surged in afternoon trade as the intraday recovery gathered strength with European stocks nudging higher in early trade. The market came off the higher level later before bouncing back again. After a bout of volatility, the market jumped to a fresh intraday high in late trade

Finance Minister Pranab Mukherjee today, 21 August 2009, said the government will take all the required steps to control drought. Addressing a gathering of state agriculture ministers, Mukherjee said the monsoon situation in the country is difficult and that 246 districts were drought hit. He added late rains could help winter crop and said the government will import grains if needed. He said that the government has good buffer stock of grains. However, water shortage will impact hydropower generation

Poor rains this year have raised worries about growth in India's domestic-demand driven economy. Annual monsoon rains, running between June to September, are the main source of irrigation for farms and are crucial for Asia's third-largest economy as more than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

Prime Minister Manmohan Singh recently said that India is equipped to handle a widespread drought as there is room for several fiscal steps to cushion the impact of a dry spell.

The rainfall deficit in the country narrowed to 26% during the period from 1 June 2009 to 19 August 2009 from 29% during the period from 1 June 2009 to 12 August 2009. Rains were 2% below normal in the week ended 19 August 2009, the Meteorological Department said on Thursday, 20 August 2009

European markets nudged higher as the latest data raised hopes the economy in the region is recovering. Key benchmark indices in UK, Germany and France were up by between 0.88% and 1.23%

The Markit/CDAF French flash manufacturing purchasing managers index rose to 50.2 in August 2009 from 48.1 in July 2009, a 15-month high and above the 50 no-change threshold. In Germany, the manufacturing activity fell at its slowest pace in 12 months in August 2009.

Chinese markets rose in volatile trade after Industrial & Commercial Bank of China posted higher-than- estimated second-quarter profit. The Shanghai Composite index was up 1.69%. South Korea's Seoul Composite rose 0.29%.

But most other Asian stocks fell on concerns China might tighten bank lending. Key benchmark indices in Japan, Taiwan, Honk Kong, and Singapore were down by between 0.50% and 1.40%.

There have been talks in recent months that a large amount of bank lending in China has found its way into the stock market.

US markets extended their winning streak for a third straight day on Thursday, 20 August 2009 helped by some upbeat news from the manufacturing sector that helped offset a disappointing job report. The Dow Jones industrials gained 70.89 points, or 0.76%, to 9,350.05. The S&P 500 index added 10.91 points, or 1.09%, to 1,007.37. The Nasdaq Composite Index gained 19.98 points, or 1.01%, to 1,989.22.

In economic data, the Philadelphia Federal Reserve branch said its gauge of manufacturing activity in the region rose to 4.2 in August 2009 from minus 7.5 in July 2009.

Leading indicators rose 0.6% in July 2009, inline with expectations, according to a report from the Conference Board. But jobs data disappointed. Initial jobless claims for the week ending 15 August 2009 to 576,000 from a revised 561,000 the week before, the Labor Department said on Thursday, 20 August in Washington. The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 4.7% in the week ended 8 August 2009.

US index futures which were down sharply earlier in the day, recovered. Trading in US index futures showed the Dow could rise 42 points at the opening bell on Friday, 21 August 2009.

Meanwhile in what could boost market sentiment, investor optimism about the global economy has soared to its highest level in nearly six years, with portfolio managers putting their cash back into equity markets, a global fund manager survey for August 2009 by a foreign brokerage house showed.

A net 75% of survey respondents believe the world economy will strengthen in the coming 12 months, the highest reading since November 2003 and up from 63% in July 2009. Confidence about corporate health is at its highest since January 2004. A net 70% of the panel respondents expect global corporate profits to rise in the coming year, up from 51% last month.

Closer home, Finance Minister Mukherjee has reportedly put his seal of approval on a plan that will make it compulsory for at least a quarter of the shares in all listed companies to be owned by the public, including investment and financial institutions. Companies will be required to increase the public float by 5% annually until atleast 25% of the shareholding is in the hands of the public

The new rules will affect public sector companies like Steel Authority of India (government stake of 85.82%), Minerals and Metals Trading Corp (99.33%) National Mineral Development Corp (98.38%) and State Bank of Mysore (92.33%). Private companies in which the founders own over three-fourths of shares include Puravankara Projects (89.50%), Ackruti City (89.96%), Wipro (79.22%), Jet Airways (80%), Nirma (77.17%) and Novartis (76.42%) among others.

Meanwhile, the Securities and Exchange Board of India (Sebi) on Thursday, 20 August 2009 streamlines rights issue norms. The market regulator has restricted companies from using funds raised in rights issues until the share allotment was finalized. Until now, companies were able to use the funds once the stock exchange was convinced that 90% of the issue had been taken up.

Investors will also be allowed to use the banking channel to apply for shares in rights issues so that they don't have to wait for refund.

The BSE 30-share Sensex was up 228.51 points or 1.52% to 15,240.83. The Sensex opened 60.83 points lower at 14951.49. The barometer index slipped 177.24 points at the day's low of 14,835.08 in early trade. The Sensex rose 262.85 points at the day's high of 15,275.17 in late trade.

The S&P CNX Nifty was up 75.35 points or 1.69% to 4,528.80. Nifty August 2009 futures were at 4532, at a premium of 3.20 points as compared to the spot closing.

The Sensex had risen 202.68 points or 1.37% to 15,012.32 on Thursday, 20 August 2009, led by a near 5% rally in China's Shanghai Composite index.

Equities have risen sharply this year on the back of heavy buying by foreign funds. The Sensex is up 5593.92 points or 57.98% in calendar year 2009 as on 21 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7080.43 points or 86.76% as on 21 August 2009. FII inflow in calendar year 2009 totaled Rs 35761.00 crore (till 19 August 2009).

Coming back to today's trade, the BSE clocked a turnover of Rs 4887 crore, slightly higher than Rs 4,863.43 crore on Thursday, 20 August 2009. Turnover in NSE's futures & options (F&O) segment climbed to Rs 80,422.25 crore from Rs 61,882.96 crore on Thursday, 20 August 2009.

The market breadth, indicating the overall health of the market, was strong compared to negative breadth earlier in the day. On BSE, 1748 shares advanced as compared with 972 that declined. A total of 87 shares remained unchanged.

The BSE Mid-Cap index was up 1.50% to 5,559.32, underperforming the Sensex. The BSE Small-Cap index rose 1.61% to 6,462.98, outperforming the Sensex.

The BSE Bankex (up 1.76%), the BSE IT index (up 1.85%), the BSE Auto index (up 2.27%), the BSE FMCG index (up 1.58%), the BSE Oil & Gas index (up 1.60%), the BSE Teck index (up 1.96%), the BSE Realty index (up 3.48%), outperformed the Sensex.

The BSE Power index (up 1.41%), BSE Metal index (up 1.08%), BSE Consumer Durables index (up 0.42%), the BSE Healthcare index (up 0.43%), the BSE Capital Goods index (up 1.10%), the BSE PSU index (up 0.83%), underperformed the Sensex.

HDFC Bank was the lone loser in the 30-member Sensex pack. India's second largest private sector bank by net profit lost 1.19% to Rs 1463 on profit booking.

India's biggest bank in terms of branch network State Bank of India (SBI) rose 1.05%, extending Thursdays' near 4% rally. O P Bhatt, Managing Director of State Bank of India said on Wednesday 19 August 2009, the bank hopes to maintain 40% growth in net profit in the year ending March 2010. He also ruled out rights issue by the bank in the near future.

Bhatt added that he does not see any possibility of interest rates going up till October or November. In fact, interest rates may decline by 25-50 basis points between now and the busy Diwali season, Bhatt added.

India's largest private sector bank by net profit ICICI Bank jumped 3.69% to Rs 746 after a 1.85% rise in its American depository receipt (ADR) on Thursday, 20 August 2009. The stock came off day's low of Rs 706.90. The bank has repaid $300 million of notes that matured on 18 August 2009, it said after market hours on Thursday, 20 August 2009.

India's largest mortgage lender by total income HDFC reversed early fall and settled 1.15% higher at Rs 2424. The stock came off the day's low of Rs 2358. After trading hours on Thursday, 20 August 2009, the company announced the pricing and terms of a simultaneous issue of equity warrants and non-convertible debentures to qualified institutional buyers.

HDFC said each warrant is priced at Rs 275, with a right exercisable by the warrant holder to exchange each warrant with one equity share of face value of Rs 10 each, any time before the expiry of a period of 3 years from the date of its allotment, at a warrant exercise price of Rs 3,000 per equity share. The issue price of Rs 275 per warrant is neither adjustable with the warrant exercise price nor refundable by the company.

Auto stocks extended gains for the second day after a survey on hiring trends in India by found that recruitment in auto and ancillary units were up 11% in July 2009, compared with June 2009, raising optimism that the sector is once again poised for a high growth after the global economic slowdown had hit the sector hard last year

India's largest bike marker by sales Hero Honda Motors advanced 4.24% to Rs 1472.05. The stock extended Thursday's 4.01% rally. It was the top gainer from the Sensex pack

India's second largest bike marker by sales Bajaj Auto gained 1.12%. India's largest car market by sales Maruti Suzuki India rose 1.43%, extending Thursday's 5.27% rally. India's largest tractor marker by sales Mahindra & Mahindra advanced 3.51%. India's largest truck marker by sales Tata Motors rose 0.43%.

Auto ancillary stocks also joined the rally as their fortunes are closely linked to the auto sector. Lumax Automotive (up 4.96%), Bharat Seats (up 5.90%), Fairfield Atlas (up 4.92%), Bharat Forge (up 1.73%), and Motherson Sumi Systems (up 10.22%), rose.

Expansion plans, movement into new segments including the small car, lower interest rates, and stimulus packages are fueling the recruitment drive in the auto sector, the survey showed.

India's largest cellular services provider by sales Bharat Airtel advanced 2.36% after a newspaper report quoted Chairman Sunil Mittal as saying that the company is not looking to sweeten its deal to buy a stake in South Africa's MTN.

Bharti Airtel and South Africa's MTN Group have extended until 30 September 2009 their exclusive talks aimed at merging their operations to create the world's third-largest mobile operator, Bharti said during trading hours on Thursday, 20 August 2009.

The two companies - Bharti and MTN said in separate but similar statements on Thursday that discussions continued to progress satisfactorily, though no decision had yet been taken to acquire any shares or implement the potential transaction.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) was up 1.58% to Rs 1928, recovering from the day's low of Rs 1865. The government will speak in one voice on the Krishna-Godavari gas row, Law Minister M Veerappa Moily said on Thursday, 20 August 2009 after the ministerial panel set up to coordinate the government's position on the issue met for the second consecutive day late Thursday night. A statement in this regard is expected to be issued today, 21 August 2009.

Prime Minister Manmohan Singh had formed the panel to coordinate the government's legal stand over two overlapping disputes - supply of gas by Mukesh Ambani-headed Reliance Industries (RIL) to Anil Ambani's Reliance Natural Resources (RNRL), being heard in the Supreme Court, and between Reliance Industries and state-run power utility NTPC, which is being adjudicated in the Bombay High Court.

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.

Other parties involved in the gas tussle gained. NTPC was up 0.32% while RNRL gained 1.96%

Realty shares rose on recent reports prominent realty firms Lodha Group 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). Omaxe (up 3.04%), Parsvnath Developers (up 2.21%), Sobha Developers (up 5.37%), HDIL (up 3.55%), and Unitech (up 1.66%), advanced.

India's largest realty firm by market capitalisation DLF gained 2.26% on reports the company had bagged a 350-acre plot for Rs 1,750 crore in Haryana, New Delhi, for developing a recreation and leisure project, making it one of the costliest land deals in recent times.

Indiabulls Real Estate surged 9.02% on reports the company has won the auction to redevelop the Mumbai Mantralaya building. In this regard, the company has clarified that it is awaiting a confirmation letter for the contract from the Public Works Department, government of Maharashtra.

Infrastructure related stocks rose as higher government spending on infrastructure sector in 2009-2010 to a provide a stimulus to the economy may result in increase order flow for these firms and may help boost cement demand. IVRCL Infrastructure & Projects (up 4.90%), Punj Lloyd (up 3.53%), ABB (up 1.93%), Siemens (up 3.10%), Reliance Infrastructure (up 1.25%), GMR Infrastructure (up 2.38%), and GVK Power & Infrastructure (up 3.84%), advanced.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 0.17% to Rs 1484.75, staging a recovery from day's low of Rs 1451. Global rating agency Moody's cut its rating outlook on the company to negative from stable on Thursday, 20 August 2009. The announcement was made during trading hours on Thursday when the stock ended little changed. Moody's said outlook change on Larsen & Toubro (L&T)'s BAA2 rating reflects increase in consolidated debt.

India's largest power equipment market by sales Bharat Heavy Electricals gained 1.99% after it bagged an order worth Rs 2630 crore

EMCO rose 9.38% after company's chairman Rajesh Jain said that the company may use funds from its recent sale of unit Emco Energy for future growth.

McNally Bharat Engineering Company rose 9.97% after the company said its overseas unit will acquire KHD Humboldt Wedag's coal and minerals businesses. The company made this announcement during trading hours today, 21 August 2009.

IT stocks rose on improved manufacturing data in the US, the biggest market for Indian IT firms. India's second largest IT firm by sales Infosys advanced 1.67% to Rs 2026.15, reversing early fall. The stock recovered from day's low of Rs 1972. The stock had gained 2% on Thursday on reports the company has bid for at least 10 large government projects as part of a drive to lower its dependence on the US market.

India's third largest IT exporter by sales Wipro rose 1.43% and India's largest IT exporter by sales TCS gained 1.76%.

HCL Technologies climbed 10.09% in a pre-result rally. The company will declare its Q4 and year ended June 2009 results on 25 August 2009.

India's largest copper producer Sterlite Industries rose 1.10%. The company has increased its cash offer for acquiring bankrupt US copper miner Asarco and has offered $2.2 billion to Asarco matching its bid with rival Grupo Mexico. The company made this announcement before market hours on Thursday, 20 August 2009. This is for the second time in less than 10 days that Sterlite has increased the cash component for the bankrupt US miner. The stock rose 1.48% on Thursday, 20 August 2009

Other metal stocks were trading higher after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 0.17% on Thursday, 20 August 2009.

Steel Authority of India (up 0.49%), Maharashtra Seamless (up 1.24%), Jindal Stainless (up 3.48%), Hindustan Zinc (up 1.88%), Hindalco Industries (up 0.68%), Tata Steel (up 0.43%), rose.

India's largest pharma company by market capitalisation Sun Pharmaceuticals rose 0.15% to Rs 1190, recovering from day's low of Rs 1150. The stock had gained 1.52% on Thursday, 20 August 2009 on reports of a faourable court ruling. As a result, the company will now be able to launch a low cost version of the drug of a block buster drug in the US by November 2010.

Unichem Laboratories jumped 6.52%, extending gains for the second consecutive day, after the company's overseas unit got approval from US drug regulator for a generic drug.

FMCG stocks rose on revival in monsoon rainfall. FMCG firms derive a substantial revenue from rural India. ITC (up 1.69%), Hindustan Unilever (up 1.34%), Dabur India (up 0.62%), Colgate Palmolive India (up 1.50%), Nestle India (up 1.49%), Marico (up 0.23%), rose.

Adani Power was the top traded counter on BSE with turnover of Rs 198.49 crore followed by Reliance Industries (Rs 147.09 crore), ICICI Bank (Rs 139.98 crore), Indiabulls Real Estate (Rs 126.55 crore) and Aban Offshore (Rs 118.53 crore).

Cals Refineries clocked the highest volume of 1.98 crore shares on BSE. Adani Power (1.94 crore shares), IFCI (1.02 lakh shares), Unitech (93.30 lakh shares), and Ispat Industries (68.45 lakh shares) were the other volume toppers in that order.

Tea shares gained on momentum buying. Jayshree Tea (up 20%), Harrisons Malayalam (up 19.96%), Warren Tea (up 14.31%), McLeod Russel (up 13.77%), Goodricke (up 18.69%), and Tata Tea (up 6.49%), gained.

The fall in domestic tea production due to lower than normal rainfall, coupled with sustained rise in domestic consumption, has facilitated firming up of tea auction prices. The global scenario, too, is favourable with regards to prices with fall in production in other tea producing countries such as Kenya and Sri Lanka.

Greenply Industries rose 3.65% after the company said that a meeting of a committee on rights issue will be held on 25 August 2009 to consider the terms of proposed rights issue. The company made the announcement after trading hours on Thursday, 20 August 2009.