Market continues to rally; Nifty tests 5K

The key benchmark indices hit a 15-1/2 month high following improved investor sentiments on higher advance tax payments by companies for the September 2009 quarter. The 50-unit Nifty tested the iconic 5,000 mark on Thursday, 17 September 2009, but retreated to close some points below that level

According to numbers reported by newspapers, advance tax payments improved by as much as six times for some firms compared with the previous quarter. The robust advance tax payouts indicate that the economic recovery is underway.

Investor sentiment was also boosted as fears of interest rate hike receded after the Reserve Bank of India governor said the central bank will not unwind its accommodative monetary policy until the economy is back on high-growth track. Rising inflationary pressures due to a surge in food prices had stoked worries that the central bank may raise rates as early as next month at a quarterly policy review.

Data released by the government on Thursday, 17 September 2009, showed the headline inflation entered the positive territory after a gap of 13 weeks. Inflation based on the wholesale price index rose 0.12% in the year through 5 September 2009 compared to previous week's annual decline of 0.12%. A surge in food price index was responsible for the rise in the headline inflation.

The cabinet on Thursday extended limits on stocks that can be held by traders of sugar, vegetable oils, lentils and rice until September 2010. The move is aimed at keeping a lid on prices of those commodities.

The BSE 30-share Sensex rose 477 points or 2.93% to 16,741.30 in the week ended Friday, 18 September 2009. The S&P CNX Nifty rose 146.5 points or 3.03% to 4,976.05 in the week.

The BSE Mid-Cap index rose 249.62 points or 4.22% to 6,171.23. The BSE Small-Cap index 272.37 points or 3.84% to 7,373.64. Both the indices outperformed the Sensex.

Trading for the week began on a subdued note. The key benchmark indices snapped preceding six days' gains on Monday, 14 September 2009, as world stocks fell on the eve of the first anniversary of the collapse of US investment back Lehman Brothers. The BSE 30-share Sensex fell 50.11 points or 0.31% to 16,214.19. The S&P CNX Nifty fell 20.95 points or 0.43% to 4808.60.

The key benchmark indices resumed their upward march on 15 September 2009, after taking a breather on Monday, 14 September 2009, on reports of higher advance tax payment by some top Indian firms. A survey showing an improvement in business confidence in India also boosted sentiments. The BSE 30-share Sensex rose 240.26 points or 1.48% to 16,454.45. The S&P CNX Nifty was up 83.90 points or 1.74% to 4892.10.

The key benchmark indices surged to their highest level in nearly 16-months on 16 September 2009, tracking firm global stocks. Metal, banking, auto and cement stocks led the rally. The BSE 30-share Sensex rose 222.59 points or 1.35% to 16,677.04. The S&P CNX Nifty rose 66.30 points or 1.36% to 4958.40.

The key benchmark indices scored small gains in choppy trade on 17 September 2009, extending recent strong gains, on firm global cues. IT and auto stocks rose even as realty stocks fell. The BSE 30-share Sensex rose 34.07 points or 0.2% to 16,711.11. The S&P CNX Nifty rose 7.15 points or 0.14% to 4965.55.

The key benchmark indices registered small gains again on Friday, 18 September 2009, as a recovery in European markets triggered an intraday rebound on the domestic bourses. The BSE 30-share Sensex rose 30.19 points or 0.18% to 16,741.30. The S&P CNX Nifty rose 10.50 points or 0.21% to 4976.05.

Index heavyweight Reliance Industries (RIL) fell 1.97% after the company sold a large number of treasury shares held by a trust for about Rs 3,188 crore. The Petroleum Trust, which owns the treasury stocks that were created seven years ago because of the merger of Reliance Petroleum with RIL, on Thursday, 17 September 2009, sold 1.5 crore equity shares of RIL through block deals on the bourses at Rs 2125 per share. The financial impact of the transaction will be reflected in the consolidated statements, RIL said.

RIL did not say for what it would use the funds for. However, reports suggested that the company may buy an unspecified petroleum asset overseas where energy assets have fallen in value since the collapse of oil price last year.

RIL has fixed 29 September 2009 as the record date for shareholders of Reliance Petroleum (RPL) to receive equity shares of RIL under a merger scheme.

Reliance Infrastructure rose 6.42% on reports the order book of the company is likely to cross $7 billion-mark over the medium term, as investment in the infrastructure sector emerges key to the sustenance of GDP growth in the country.

India's largest private sector bank by net profit ICICI Bank rose 0.92%. The bank has reportedly finalised sale of Point Of Sale (PoS) terminals to First Data Corporation for $ 80 million. Meanwhile, ICICI Bank has reportedly paid lower tax of Rs 501 crore in in the second installment against Rs 575 crore paid last year.

India's largest bank by net profit and branch network State Bank of India spurted 11.65% on optimism about Q2 September 2009 results. Chairman O.P. Bhatt, on 8 September 2009, had said the bank's earnings are likely to grow 30-35% in Q2 September 2009 over Q2 September 2008. State Bank of India has reportedly paid Rs 1838 crore in advance tax in the second installment as against Rs 1500 crore paid last year.

Axis Bank rose 1.23% on reports the private sector bank has raised $720 million through a qualified institutional placement (QIP) cum global depositary receipt (GDR). The bank has priced its QIP cum GDR issue at Rs 906.70 per share. The issue is likely to result in an equity dilution of about 10.5%.

Metal shares rose on hopes recovering industrial activity across the globe will boost demand for metals. Steel Authority of India (up 4.33%), Ispat Industries (up 5.27%), Hindalco Industries (up 10.91%), JSW Steel (up 7.81%), National Aluminium Company (up 4.93%), and Bhushan Steel (up 5.91%), rose.

World's eighth biggest steel maker by output Tata Steel climbed 10.42%. As per 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%.

Auto stocks rose on hopes of strong sales in the upcoming festive season. India's top small car maker by sales Maruti Suzuki (India) rose 11.84%. India's largest tractor maker by sales Mahindra & Mahindra rose 7.95%.

India's second largest two-wheeler maker by sales Bajaj Auto rose 14.36% 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 truck maker by sales Tata Motors jumped 8.71%. 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 in India 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.

IT stocks gained on strong US economic data. US industrial production rose 0.8% in August 2009, better than expected, and the data for the prior month was revised to a 1% gain double the 0.5% originally reported. US is the biggest market for Indian IT firms.

India's largest software services exporter by sales Tata Consultancy Services rose 4.32% on reports the company is eyeing six-seven IT outsourcing deals worth over $100 million each in Latin America. The stock also rallied on jump in advance tax in second installment.

India's third largest software services exporter by sales Wipro rose 2.85%. The company won a three-year outsourcing contract from All Nippon Airways, Japan's No.2 carrier.

India's second largest software services exporter by sales Infosys Technologies rose 4.32%. 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.

Cement stocks rose on bargain hunting after recent losses. ACC (up 9.22%), Grasim Industries (up 6.07%), and Ultratech Cement (up 6.07%), rose. Cement makers recently cut prices by Rs 3 per 50 kilogram bag in Mumbai.

The government has provided a thrust to the infrastructure sector in the Union Budget 2009-2010 which may keep cement demand strong. The government has set a target of spending $20 billion a year on road construction.