Firm global stocks propel Sensex to highest level in nearly 16 months

The key benchmark indices surged to their highest level in nearly 16-months tracking firm global stocks. The market gained for the second straight day after taking a breather on Monday, 14 September 2009, following gains in the preceding six trading sessions. The BSE 30-share Sensex rose 222.59 points or 1.35%. The sentiment was upbeat as preliminary data showing a strong growth in advance tax payment by India Inc raised expectations of decent-to-strong Q2 September 2009 results. Comments by the Reserve Bank of India governor that the central bank won't hike interest rates until economic recovery is firmly on track, also supported stocks.

Metal, banking, auto and cement stocks led the rally. Index heavyweight Reliance Industries (RIL) moved between positive and negative zone. The market breadth was strong.

As per provisional data, foreign funds today, 16 September 2009, lapped up stocks worth a net Rs 1,105.64 crore. Domestic funds bought equities worth a net Rs 143.45 crore.

After an initial surge triggered by higher Asian stocks, the market soon pared gains. The market firmed up again in mid-morning trade. A range bound movement was witnessed later. The market surged in mid-afternoon trade as US index futures rose. The Sensex hit a fresh intraday high in late trade.

Higher advance tax payment by some of the top firms in the second installment of 15 September 2009 means their profits may rise in Q2 September 2009 over Q2 September 2008. As per reports, State Bank of India, India's biggest commercial bank by branch network, has paid Rs 1838 crore in advance tax in the second installment as against Rs 1500 crore paid in last year. HDFC Bank paid Rs 425 crore advance tax against Rs 315 crore last year. But, ICICI Bank paid lower tax of Rs 501 crore against Rs 575 crore last year.

Larsen & Toubro paid Rs 210 crore as against Rs 150 crore last year. Reliance Industries paid Rs 1157 crore in advance tax against Rs 683 crore paid in last year. But, Tata Steel paid a sharply lower advance tax of Rs 400 crore Rs 1000 crore paid in last year.

Software major TCS has reportedly paid Rs 220 crore as against Rs 81 crore. Tractor major Mahindra & Mahindra paid Rs 112 crore as against Rs 17.5- crore. Tata Motors paid advance tax of Rs 130 crore in the second installment, much higher than Rs 60 crore last year. Tata Power Company paid Rs 75 crore as against Rs 14 crore in last year.

The Reserve Bank of India (RBI) governor D Subbarao after trading hours on Tuesday said the central bank will not unwind its accommodative monetary policy until the economy is back on high-growth track. His comments belied some expectations that the RBI may begin to increase interest rates from as early as next month to contain rising inflationary pressures.

Meanwhile, the initial public offer (IPO) of the private sector ship builder, Pipavav Shipyard, was fully subscribed within an hour of opening of the issue today, 16 September 2009. At 16:00 IST today IPO was subscribed 1.94 times. The company also said it has allotted 1.52 crore shares to anchor investors at the top-end of the Rs 55-Rs 60 price band.

European shares rose on Wednesday, boosted by banks and commodities, with comments by US Federal Reserve chief Ben Bernanke that the recession was probably over, helping lift sentiment. Key benchmark indices in France, Germany and UK were up by between 0.9% to 1.41%.

Billionaire investor Warren Buffett told a conference in Carlsbad, California on Tuesday that the economy is responding to government stimulus measures.

World stocks have risen sharply from a trough in early March 2009 on hopes the global economic is recovering from a slump in late calendar 2008 caused by global financial crisis.

Asian shares hit their highest levels for 2009 on Wednesday after upbeat US economic data gave riskier assets, leveraged to global growth, a boost. The key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.52% to 2.57%.

But, China's Shanghai Composite index fell 1.12%. A row over Washington's decision to impose added duties on Chinese-made tyres showed no signs of abating, and Beijing said the US move has send a wrong message to the rest of the world.

Trading in US index futures indicated Dow could rise 40 points at the opening bell today, 16 September 2009.

US stocks closed at 2009 highs on Tuesday after stronger-than-expected manufacturing and retail sales data boosted commodity prices and shares of materials companies. The Dow Jones Industrial Average rose 54.72 points, or 0.57 % at 9,681.52. The Standard & Poor's 500 Index gained 3.30 points, or 0.31% to 1,052.64. The Nasdaq Composite Index rose 10.22 points, or 0.49 % to 2,102.00.

US government reported that retail sales jumped 2.7% in August 2009, more than the 2% expected and at the fastest pace in three-and-half years. In other economic news, the August producer price index rose 1.7%, higher than economists' expectations while core prices saw a 0.2% increase.

The BSE 30-share Sensex rose 222.59 points or 1.35% to 16,677.04, its highest closing since 22 May 2008. The Sensex rose 246.11 points the day's high of 16,700.56 in late trade. The barometer index rose 44.14 points at the day's low of 16,498.59 in early trade.

The S&P CNX Nifty rose 66.30 points or 1.36% to 4958.40 its highest closing since 22 May 2008. Nifty September 2009 futures were at 4968, at a premium of 9.60 points as compared to the spot closing of 4958.40. Turnover in NSE's futures & options (F&O) segment rose to Rs 70,086.74 crore from Rs 68,394.42 crore on Tuesday, 15 September 2009.

BSE clocked a turnover of Rs 6612 crore, higher than Rs 5494.39 crore on Tuesday, 15 September 2009.

Stocks have risen sharply this year on increased global risk appetite triggered by hopes of a recovery in the global economy after a setback from a financial sector crisis. The Sensex is up 7029.73 points or 72.86% in calendar year 2009 as on 16 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8516.64 points or 104.36% as on 16 September 2009. FII inflow in the calendar year 2009 totaled Rs 43,848.80 crore (till 15 September 2009).

Coming back to today's trade, the BSE Mid-Cap index rose 1.45% and outperformed Sensex. The BSE Small-Cap index rose 1.1% and underperformed Sensex.

All the sectoral indices on BSE were in green. the BSE Metal index (up 4.2%), the BSE Auto index (up 2.23%), the BSE Consumer Durables index (up 2.17%), the BSE Bankex (up 1.99%), the BSE Realty index (up 1.8%), the BSE IT index (up 1.45%), outperformed the Sensex.

The BSE Oil & Gas index (up 0.08%), the BSE FMCG index (up 0.23%), the BSE Capital Goods index (up 0.61%), the BSE Healthcare index (up 0.69%), the BSE PSU index (up 0.79%), the BSE Power index (up 1.03%), the BSE Teck index (up 1.34%), underperformed the Sensex.

The market breadth indicating the overall health of the market, was strong. On BSE, 1,566 shares rose as compared with 1,246 that declined. A total of 64 shares remained unchanged.

Among the 30-member Sensex pack, 24 rose and rest declined.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 0.15% to Rs 2183.50 on a jump in advance tax payment in the second installment. The stock hit a high of Rs 2210 and a low of Rs 2163.35. Reliance Industries on Tuesday said that it has fixed 29 September 2009 as the record date for shareholders of Reliance Petroleum (RPL) to receive equity shares of Reliance Industries under a merger scheme.

RIL executive director P.M.S. Prasad on Monday said the company's new 5,80,000 barrel-per-day (bpd) refinery in Gujarat is operating at close to full capacity.

RNRL last week told the Supreme Court that the government has no role to play either in the utilisation or the fixation of gas price as per its contract with Mukesh-led RIL. The two sides - RIL and RNRL had approached Supreme Court challenging a decision by the Bombay High Court on 15 June 2009, which said RIL should provide 28 million cubic metres of gas per day to RNRL at $ 2.34 per mmBtu and both the parties should sign a necessary agreement for the same within a month.

RIL, however, is pleading that it was only a contractor for the gas from the Krishna-Godavari basin's D6 block and did not have the power to fix the price, while the government has also moved a special leave petition in the case asserting its right on pricing and distribution of natural gas. The apex court has decided to commence hearing on this matter on 20 October 2009.

Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange rose 1.2% on Tuesday, 15 September 2009. India's largest copper maker by sales Sterlite Industries rose 3.71%. The company on Friday said it had raised its open offer price for bankrupt US copper miner Asarco by a fifth to $2.565 billion. Sterlite, a unit of India-focused mining company Vedanta Resources, has been facing off with Mexican miner Grupo Mexico for the assets of Asarco, which has been under bankruptcy protection since 2005.

Among other metal stocks, Hindalco Industries, National Aluminum Company, JSW Steel, Steel Authority of India, rose by between 2.01% to 6.98%.

India's largest steel maker by sales Tata Steel rose 8.21% to Rs 531.63 on reports its European unit, Corus will soon restart its plant in South Wales on the back of rise in demand. The unit was shut in December 2008 as part of its plan to reduce production by 30%. From a recent low of Rs 417.45 on 1 September 2009, the has risen 28% in a short while.

Domestic steel makers raised prices of flat steel products such as plates and sheets, mainly used in manufacturing automobiles, refrigerators and washing machines, by about 3-5% from 1 September 2009, in line with international prices.

Tata's steel sales from Indian operations rose 25% to 4,92,000 tonnes in August 2009 over August 2008. The local operations contribute about a quarter of the group's total annual global capacity of 30 million tonnes, which includes Corus, Europe's second-largest steelmaker.

Auto stocks rose on hopes of strong sales in the upcoming festive season. India's top small car maker by sales Maruti Suzuki rose 1.09%.

India's largest bike maker by sales Hero Honda Motors rose 3.65%. Bajaj Auto rose 1.19% extending Tuesday's 7.87% rise on reports it has paid advance tax of Rs 170 crore in the second installment this year, much higher than Rs 50 crore in the corresponding period last year.

India's largest tractor maker by sales Mahindra & Mahindra rose 1.96% on jump in advance payment in the second installment.

India's largest truck maker by sales Tata Motors rose 6.22% on surge in advance tax payment in the second installment. Tata Motors is reportedly planning to sell about 10-15 % in subsidiary Tata Motors Finance to raise funds to reduce debt.

The company has a huge debt largely related to the purchase of Ford Motor's marquee brands Jaguar Land Rover last year, for which it took a loan of $3.2 billion and other debt to keep the loss-making unit running.

As per reports, the government will release pay arrears to government employees under the second and final installment ahead of big festivals in October 2009. The payout would boost demand for cars and motorcycles.

Car sales rose 26% to 120,669 units in August 2009 over August 2008 boosted by new launches and availability of cheaper loans, data released by the industry body Society of Indian Automobile Manufacturers on 8 September 2009, showed. Sales of trucks and buses rose 18.5% to 40,624 units and motorcycle sales rose 26% to 611,173 units.

Higher advance tax payment by banks in the second quarter aided rally in bank stocks. India's largest bank by net profit and branch network State Bank of India rose 4% extending Tuesday's gain. Chairman O.P. Bhatt on 8 September 2009 said the bank's earnings are likely to grow 30-35% in Q2 September 2009 over Q2 September 2008. SBI's retail loan growth is likely to be twice of what it was in the year-ago quarter, he said.

Among other PSU banks, Union Bank of India, Punjab National Bank, Bank of Baroda, rose by between 0.55% to 3.33%.

India's second largest private sector bank by net profit HDFC Bank rose 0.1% as its ADR rose 1.56% on Tuesday. India's largest private sector bank by net profit ICICI Bank rose 3% as its ADR rose 2.3% on Tuesday. The bank's managing director Chanda Kochhar said on 8 September 2009 credit growth in India is likely to pick up in the second half of this year.

Cement stocks rose on bargain hunting after recent losses triggered by reports cement makers have cut prices by Rs 3 per 50 kilogram bag in Mumbai. ACC, Grasim Industries, Ultratech Cement, Ambuja Cements rose by between 1.11% to 3.58%.

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

DLF, Indiabulls Real Estate and Unitech rose by between 0.9% to 2.07%.

Telecom stocks rose. India's largest telecom player by sales Bharti Airtel rose 0.95%. On Tuesday, South Africa's communications regulator had said it might not grant approval for the proposed alliance between Bharti and MTN this year. Bharti and South African telecom operator MTN have been in negotiations since 25 May 2009 on a $23 billion cash and share-swap deal aimed at an eventual full merger. The deadline for the talks has been extended twice, most recently the deadline was put back another month to 30 September 2009.

India's second largest telecom player by sales Reliance Communications rose 2.51% on reports the company has initiated talks with its overseas lenders to revise the terms of the $1 billion unsecured external commercial borrowings, or ECBs, which the company raised in 2007.

The government plans to hold a much-awaited auction on 7 December 2009 to sell airwave spectrum bands to the country's mobile operators for use in third-generation wireless services, the Department of Telecommunications said on Monday.

The auction for 3G spectrum will allow operators a chance to offer mobile-phone access to high-speed Internet, video downloads and other 3G services in the world's second-largest wireless market by subscribers. The move is also expected to earn the government billions of dollars in revenue in a year when it is expected to borrow a record amount to bridge its fiscal deficit.

The government said it will issue a notice inviting applications from interested bidders on 26 October 2009, with the final date for receiving the applications set for 13 November 2009.

India's largest engineering & construction firm by sales Larsen & Toubro was flat at Rs 1629.95, underperforming the market, despite higher advance tax payment.

Among other capital goods stocks, BEML, Praj Industries, Siemens, Thermax, ABB rose by between 1.88% to 5.07%.

India's largest electric equipment maker by sales Bharat Heavy Electricals rose 0.45%. As per recent reports the company has won an order worth Rs 1300 crore for an upcoming Vallur Thermal Power project at Ennore in Tamil Nadu. The power project is being set up by a joint venture between NTPC and the Tamil Nadu Electricity Board (TNEB).

IT stocks fell as the rupee rose to its highest in more than a month against the dollar on Wednesday. Rupee surged as gains in domestic shares boosted capital inflow hopes while the dollar's weakness against major currencies also underpinned sentiment. A firm rupee negatively impacts the operating margins of IT firms as the sector derives a lion's shares of revenue from exports.

India's largest software services exporter by sales Tata Consultancy Services fell 0.11% despite a jump in advance tax in second installment. TCS's Chief Executive S. Ramadorai on 7 September 2009 said TCS is seeing stability on the ground and the company's demand pipeline is good.

India's third largest software services exporter by sales Wipro fell 0.73%. The company won a three-year outsourcing contract from All Nippon Airways, Japan's No.2 carrier. Its ADR rose 0.3% on Tuesday.

But, India's second largest software services exporter by sales Infosys rose 2.1% as its ADR rose 1.49% on Tuesday. Infosys still finds the business situation quite challenging and decision making by clients continues to be slow, Chief Operating officer S.D. Shibulal said on Tuesday. He also said last month' s outsourcing contract from oil and gas major British Petroleum Plc was worth $116 million over five years.

Some FMCG pivotals rose on revival in India's annual monsoon in the past few weeks. FMCG firms derive substantial revenue from the rural sector. Marico, Dabur India, ITC rose by between 0.85% to 2.9%.

Finance Minister Pranab Mukherjee said on Monday, 14 September 2009, said late monsoon rains have eased drought conditions in India. The South West monsoon delivered the season's heaviest rain in the week to 9 September 2009, boosting reservoirs and prospects of winter crops. But the monsoon is still a fifth below normal this year.

PSU OMCs fell after crude oil prices surged more than 3% on the New York Mercantile Exchange, on Tuesday, 15 September 2009. State-run oil marketing firms suffer revenue loss on domestic sale of petrol, diesel, LPG and kerosene at a controlled price. BPCL and HPCL fell by between 1.06% to 1.09%.

But Indian Oil Corporation (IOC) rose 0.73%. The company's board approved a liberal 1:1 bonus issue on Monday, 14 September 2009.

The government on Tuesday issued bonds worth over Rs 10,306 crore to three oil marketing PSUs to compensate them for the losses incurred on account of selling petroleum products below market price. While bonds worth Rs 6,207.06 were issued to IOC, Rs 2,033.99 crore worth bonds were given to HPCL and Rs 2,065.28 crore worth of bonds were given to BPCL.

Hotel stocks rose after the Union tourism ministry permitted hospitality firms to raise external commercial borrowings up to $100 million during the current financial year. EIH, Indian Hotels, Hotel Leela Ventures rose by between 9.57% to 10.28%.

Meanwhile, the Reserve Bank of India has removed hotels from the 'commercial real estate' classification. This two-pronged push will make larger credit available to the capital-intensive and credit starved hospitality industry at lower rates of interest, thus bringing down the high cost of the hotel projects.

Sugar stocks rose on bargain hunting after recent losses. Bajaj Hindustan, Shree Renuka Sugars and Balrampur Chini rose by between 2.59% to 5.3%.

Indian spot sugar prices fell for the eighth straight day on Tuesday, on restrictions imposed by the government on millers and consumers in an attempt to soften prices

NHPC clocked a highest turnover of 4.2 crore shares on BSE. Cals Refineries (3.7 crore shares), Ispat Industries (2.03 crore shares), SpiceJet (1.98 crore shares) and IFCI (1.64 crore shares) were the other volume toppers in that order.

Tata Steel clocked the highest turnover of Rs 324.83 crore on BSE. NHPC (Rs 152.02 crore), Tata Motors (Rs 150.11 crore), Aban Offshore (Rs 149.67 crore) and Orchid Chemicals (Rs 147.38 crore) were the other turnover toppers in that order.