Sensex retraces after hitting 14-month high above 16,000

Key benchmark indices edged lower, reversing gains in the preceding three trading sessions, as lower European stocks and US index futures triggered profit taking after a recent solid rally. The BSE 30-share Sensex lost 93.25 points or 0.59%, off 171.48 points from the day's high and up 131.85 points from the day's low. Realty, power and IT stocks underwent correction even as auto stocks extended recent gains on robust July 2009 sales.

As per the provisional data released by the stock exchanges, foreign funds today, 4 August 2009, bought stocks worth a net Rs 219.10 crore and domestic funds mopped equities worth Rs 253.29 crore.

Among stock specific activity, Tata Power lost over 4% on profit booking, while ONGC dropped around 4% on fall in crude oil. Tata Motors rose over 2% on healthy July 2009 monthly sales. Hindalco gained over 3% on rise in global metal prices.

Stocks were volatile. The market edged higher in early trade on overnight rally in US stocks. The barometer index BSE hit the psychological 16,000 mark for the first time in more than 14 months at the onset of the trading session. But the market lost ground later.

The market cut losses in early afternoon trade as index heavyweight Reliance Industries (RIL) and State Bank of India (SBI) rose. The Sensex moved into the positive zone before slipping into the negative zone shortly. The market weakened in mid-afternoon trade. The Sensex cut losses in choppy late trade.

Strong Q1 results from India Inc have triggered a solid recent rally on the bourses in the past few days. The Q1 June 2009 results of India Inc were encouraging, with lower costs helping bottomline growth. The combined net profit of 2870 companies rose 17.20% to Rs 73664 crore on 5% fall in sales to Rs 719293 crore in Q1 June 2009 over Q1 June 2008.

Foreign institutional investors (FIIs) bought shares worth Rs 475.90 crore on Monday, 3 August 2009. FII inflow in calendar year 2009 totaled Rs 36,645.70 crore (till 3 August 2009).

World equity funds garnered $9.5 billion in the week ending 29 July 2009, according to data with global fund tracker EPFR Global. The inflow is the highest since June 2008. Emerging markets continued to be the darling of investors, with dedicated BRIC (Brazil, Russia, India and China) equity funds seeing net inflows for a 19th straight week. India equity funds took in a year-to-date high of $211 million in the most recent week, while China and Greater China stock funds saw $711 million in fresh money.

Meanwhile, the Indian government on Monday, 3 August 2009 introduced the Companies Bill, 2009, in the Lok Sabha. When enacted, this will bring about significant changes in the way business is done in India, make it easier to start and close businesses, and protect shareholders. While the Bill was introduced in the Lok Sabha in October 2008, it could not be taken any further. The country went to the polls in May 2009 and the Bill lapsed.

There are sings 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.

But data released by the government on Monday, 3 August 2009 showed that exports fell 27.7% in June 2009 to $12.8 billion, its ninth straight monthly fall. Imports dropped 29.3% to $18.98 billion in June 2009. Exports were down 31.3% at $35.4 billion between April and June this year from the same period in the previous year.

A weak monsoon also 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.

A Finance Ministry report on Tuesday, 4 August 2009, said the government will take steps to moderate inflation and prune unproductive spending. The government will focus on fiscal consolidation to sustain growth, the report said.

The government on Monday, 3 August 2009 said raising foreign direct investment (FDI) cap in the insurance sector to 49% will not result in automatic change of management in a company. The government is proposing to raise the FDI cap in private sector insurance companies from 26% to 49% and a bill to give effect to the proposal is pending in the Rajya Sabha.

Minister of State for Commerce and Industry Jyotiraditya Scindia said in a written reply in the Lok Sabha that there is no proposal to extend the limit of FDI in banking and media. At present, FDI up to 26% in media sector and 74% in banking is allowed.

European equities inched lower on Tuesday after hitting a nine-month high in the previous session, with investors pausing for breath after an impressive rally in the past few days. Key benchmark indices in UK, Germany and France were down by between 0.74% and 0.94%.

Profit taking capped gains in Asian stocks after recent strong gains. Key benchmark indices in South Korea, China and Japan were up by between 0.09% and 0.26%. However key indices in Hong Kong, Singapore and Taiwan were down 0.05% and 1.43% respectively.

Trading in US index futures showed the Dow could fall 53 points at the opening bell on Tuesday, 4 August 2009.

US stocks advanced on Monday, 3 August 2009, to their highest closes since November 2008 following encouraging economic reports from the US and abroad. The Dow Jones Industrial average gained 114.95 points, or 1.25%, to 9,286.56.The S&P 500 index rose 15.15 points, or 1.53%, to 1,002.63. The Nasdaq Composite index increased 30.11 points, or 1.52%, to 2,008.61.

The Institute for Supply Management (ISM) manufacturing index made its seventh straight increase by coming in at 48.9 for July 2009 as compared with 44.8 in June 2009. The reading was better than economist expectation of 46.5. Construction spending data for June 2009 made a surprise 0.3% increase. It was expected to fall 0.5%.

The BSE 30-share Sensex was down 93.25 points or 0.59% to 15,830.98. The Sensex opened 38.42 points higher at 15,962.65. The Sensex rose 78.23 points at the day's high of 16,002.46 in early trade, its highest level since 2 June 2008. The Sensex lost 225.10 points at the day's low of 15,699.13 in mid-afternoon trade

The S&P CNX Nifty was down 30.90 points or 0.66% to 4,680.50. The Nifty struck high of 4731.45, its highest since 4 June 2008 in opening trade. Nifty August 2009 futures were at 4676, at a discount of 4.50 points as compared to the spot closing.

The BSE Sensex had gained 750.77 points in three trading days to 15924.23 on 3 August 2009 from 15173.46 on 29 July 2009. The barometer index BSE Sensex is up 6183.67 points or 64.09% in calendar year 2009 as on 4 August 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 7670.58 points or 93.99% as on 4 August 2009.

Coming back to today's trade, the BSE clocked a turnover of Rs 6590 crore, higher than Rs 5624 crore on Monday, 3 August 2009. Turnover in NSE's futures & options (F&O) surged to Rs 60,859.86 crore from Rs 50,805.16 crore on Monday, 3 August 2009.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1501 shares advanced as compared with 1246 that declined. 75 shares remained unchanged. The breadth turned negative in mid-afternoon trade in contrast to strong breadth in early trade.

The BSE Mid-Cap index was down 0.24% to 5,688.73 and the BSE Small-Cap index was up 0.32% to 6,333.95. Both the indices outperformed Sensex.

The BSE Auto index (up 0.51%), the BSE Metal index (down 0.32%), the BSE Oil & Gas index (up 0.24%), BSE Consumer Durables index (up 1.41%), the BSE FMCG index (up 0.36%), the BSE PSU index (down 0.50%), the BSE Capital Goods index (down 0.28%), outperformed the Sensex.

The BSE Power index (down 1.28%), BSE Realty index (down 1.20%), the BSE IT index (down 1.10%), the BSE Teck index (down 1.41%), the BSE Bankex (down 0.71%), the BSE Healthcare index (down 1.35%), underperformed the Sensex.

Among the 30-member Sensex pack, 19 declined while the rest rose

India's second largest private sector power generation firm by sales Tata Power lost 4.80% to Rs 1293 and was the top loser from the Sensex pack. Profit taking after recent gains triggered by strong response for Adani Power initial public offer, weighed on the counter. The IPO of Adani Power was subscribed over 21 times on 31 July 2009.

Other power stocks Reliance Infrastructure (down 3.34%), NTPC (down 0.55%), Reliance Power (down 1.97%) also declined on profit booking.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 1% to Rs 2035.10 after oil and petroleum minister Murli Deora said that gas to be produced from RIL's KG-D6 fields has to be utilized in accordance with the gas utilization policy approved by the government.

Meanwhile, 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.

The Supreme Court on 20 July 2009, asked the energy giant and former group firm Reliance Natural Resources (RNRL) why a gas pact between the two should not be cancelled. The court has scheduled next hearing on the dispute over the gas supply to Reliance Natural Resources (RNRL) on 1 September 2009.

Oil exploration stocks slipped on fall in crude oil prices. India's largest oil exploration firm by sales ONGC lost 2.98%. India's second largest oil exploration firm by sales Cairn India slipped 2.17%. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms. Crude oil fell 1.5% to $70.52 a barrel on the New York Mercantile Exchange, after Monday's over 3% rally.

State run oil marketing companies (OMC) spurted on fall in crude oil prices. HPCL (up 3.19%), BPCL (up 4.56%), and Indian Oil Corporation (up 1.28%), gained. The slide in crude oil prices after a recent steep surge will reduce underrecoveries of the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

PSU OMC's had increased jet fuel prices marginally by 1.6% due to rising international oil prices from 1 August 2009. The increase follows a sharp 5.7% cut in jet fuel prices two weeks ago.

Castrol India flared up 6.44%. The company's net profit rose 55.1% to Rs 128.40 crore on a 2.6% rise in sales to Rs 637.50 crore in Q2 June 2009 over Q2 June 2008. The results were announced on 27 July 2009.

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 (down 0.79%), Indiabulls Real Estate (down 2.37%), HDIL (down 2.34%), DLF (down 1.86%), and Omaxe (down 2.38%), slipped

IT stocks extended early fall as the rupee hovered near two-month high against the dollar. India's second largest IT exporter by sales Infosys fell 1.34% even as its American depository receipt (ADR) rose 3.14% on Tuesday, 3 August 2009. India's third largest IT exporter by sales Wipro fell 1.74% even as its ADR rose 4.13% on Tuesday, 3 August 2009. However India's largest IT exporter by sales TCS rose 0.23% to Rs 532 on reports the company is a frontrunner for a Rs 2,500-crore outsourcing contract from the Indian Railways. The stock recovered from day's low of Rs 521.10

The rupee gained further towards near two-month peaks on Tuesday, 3 August 2009 on expectations for inflows into the domestic market. The partially convertible rupee was at 47.60 per dollar, off an early high of 47.43, its strongest since 12 June 2009 and slightly firm above its Monday's close of 47.635/645. A firm rupee affects operating profit margins of IT firms negatively as they earn most of their revenues from exports.

MphasiS slipped 2.83% to Rs 499 after striking record high of Rs 601.05 on profit booking after it advanced 22% in the preceding five trading sessions.

Rolta India rose 3.53% after net profit surged 41.6% to Rs 372.32 crore in the year ended June 2009 over the year ended June 2008. The company declared the results during trading hours on Monday, 3 August 2009, when the stock had declined 1.31%

India's largest cellular services provider by sales Bharti Airtel lost 2.64% on concerns it will have to sweeten its offer for a deal with South Africa's MTN. The company has extended a deadline for merger talks with South Africa's MTN Group until 31 August 2009. The structure and terms of the potential transaction may be adjusted to reflect further discussions between the parties, Bharti said in a statement during trading hours on Monday.

Metal stocks advanced after LMEX, a gauge of six metals traded on the London Metal Exchange, jumped 4.92% on Monday, 3 August 2009.

India's largest aluminum maker by sales Hindalco Industries surged 3.51% to Rs 112. The company reported lesser-than-expected 31% fall in net profit to Rs 480.56 crore in Q1 June 2009 over Q1 June 2008. The result hit the market during trading hours on Friday, 31 July 2009

However India's largest copper market by sales Sterlite Industries rose 0.55% after its American depository receipt (ADR) jumped 8.23% on Monday, 3 August 2009.

National Aluminium Company (up 1.77%), Jindal Saw (up 2.40%), Jindal Stainless (up 1.30%), and Maharashtra Seamless (up 3.26%) gained

However, steel stocks retreated from day's high after some steel markets announced price cuts on some products. India's largest private sector steel marker by sales Tata Steel fell 1.99% to Rs 474, off day's high of Rs 492.10.

India's largest state-run steel producer by sales Steel Authority of India lost 2.59% to Rs 175, off day's high of Rs 181.50 after the company announced a cut in prices for a second month. Prices of long products were lowered by as much as Rs 1,500 a tonne. However prices of flat products, used in automobiles, were raised by as much as Rs 900 a tonne.

India's largest private sector steel marker by sales JSW Steel declined 2.19% to Rs 728.90, off day's high of Rs 762.15. The company lowered prices of long products, but raised flat steel prices. Prices for long products, which are mainly used in construction, stand lowered by 3-4% for August whereas prices for flat steel, that go in the making of automobiles and white goods, are up by 2-3% from the previous month.

India's largest FMCG company by sales Hindustan Unilever gained 3.41% on reports the company plans to concentrate on the Rs 35,000-crore branded processed food segment. While announcing the company's results, Harish Manwani, chairman, HUL, said that foods division will become a larger part of the overall portfolio in the future.

Godrej Consumer Products surged 2.68% on reports the company is actively scouting for acquisitions in China, Latin America and the Middle East.

Auto stocks gained on reporting healthy monthly sales figures for July 2009. India's largest truck market by sales Tata Motors gained 2.26% to Rs 441 after total vehicle sales rose 18% to 48,054 units in July 2009 over July 2008. However, the stock came off day's high of Rs 468.20 after global ratings major Standard & Poor's 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+'.

Mahindra & Mahindra (up 1.34%), Bajaj Auto (up 1.19%), and Maruti Suzuki India (up 1.05%), edged higher.

Auto ancillary and tyre stocks gained for the second day in a row on recovery in auto sales in India and abroad. Motherson Sumi Systems (up 7.16%), Lumax Industries (up 4.12%), Amtek India (up 2.72%), Gabriel (up 3.45%), advanced. Higher auto sales will boost demand for auto parts.

Apollo Tyres (up 5.31%), Falcon Tyres (up 5%), Ceat (up 4.99%), JK Industries (up 3.78%), Goodyear India (up 5.46%), MRF (up 1.07%) were the gainers among tyre stocks

Bank stocks rebounded from the day's low. India's biggest bank in terms of branch network State Bank of India (SBI) rose 0.19% to Rs 1850, off day's low of Rs 1837.10. The state-run bank reduced interest rates on deposits by 25-50 basis points (a basis point equals one-hundredth of a percentage point) with effect from 27 July 2009, which will help reduce cost of funds.

India's largest private sector bank by net profit ICICI Bank fell 1.05% to Rs 765.25, off the day's low of Rs 754.10. India's second largest private sector bank by net profit HDFC Bank was down 1.85% to Rs 1466, off day's low of Rs 1452.

Insurance and healthcare firm Max India advanced 6.17%. The government proposes to raise the limit on foreign direct investment (FDI) in the insurance sector from 26% to 49%

Cement stocks were mixed despite healthy July 2009 monthly sales by cement makers. India's largest cement manufacturer by sales ACC rose 1.46% after its cement sales rose 4.09% to 1.78 million tonnes in July 2009 over July 2008.

Aditya Birla Group cement firms were mixed despite 10% rise in the group's cement shipments to 2.7 million tonnes in July 2009 over July 2008. Grasim slipped 0.71% while UltraTech Cement rose 0.30%.

North India's largest cement producer by sales Ambuja Cements rose 0.74% after dispatches rose 4.50% to 14.38-lakh tonnes in July 2009 as compared to 13.76-lakh tonnes in July 2008

India Cements gained 7.25% after shipments rose 19% to 10.2 lakh tonnes in July 2009 over July 2008

Dalmia Cement jumped 1.39% after cement sales rose 14.80% to 3.8 lakh tonne in July 2009 July 2008.

Reliance Capital was the top traded counter on BSE with turnover of Rs 219.57 crore followed by Mahindra Satyam (Rs 196.17 crore), Reliance Industries (Rs 191.34 crore), ICICI Bank (Rs 178.98 crore), and Tata Motors (Rs 176.11 crore).

Cals Refineries was the volume topper on BSE with volume of 3.24 crore shares on BSE followed by Mahindra Satyam (1.84 crore shares), Ispat Industries (1.83 crore shares), Suzlon Energy (1.59 crore shares), and Unitech (1.56 crore shares).

IRB Infrastructure Developers rose 3.57% after winning a contract to construct a greenfield airport in Sindhudurg district in Maharashtra. The announcement was made at the onset of trading session today, 4 August 2009.