Market extends gains for the third day; turnover swells

Key benchmark indices extended gains for the third straight session led by rally in index heavyweights Reliance Industries (RIL) and State Bank of India (SBI). Volatility was as the market pared gains after hitting its highest level in more than 15 months in intraday trade. The BSE 30-share Sensex rose 107.35 points or 0.67%, off 108.49 points from the day's high and up 93.11 points from the day's low. Positive global cues supported domestic bourses.

The market breadth, indicating overall health of the market, turned negative in mid-afternoon trade in contrast to strong breadth earlier in the day. Turnover on BSE vaulted to Rs 7,000 crore. Metal shares rose on firm global commodity prices with Hindalco Industries surging over 6%. Index heavyweight Reliance Industries surged over 3.5%. Banking heavyweight State Bank of India jumped over 4%. Auto and FMCG stocks slipped on profit booking

Intraday volatility was witnessed right from the onset of the trading session. The market came off the higher level in early trade after an initial surge. The market surged in early afternoon trade as index heavyweight Reliance Industries (RIL) rose. The market extended gains in afternoon trade as European markets opened firm and Asian equities extended early gains. The market retreated from a 15-month high on profit booking in mid-afternoon trade.

Minister of State for Finance Namo Narain Meena today said the government is committed to clear the Insurance Amendment Bill that seeks to bring in more foreign investments in the sector. Currently, foreign direct investment (FDI) in insurance is capped at 26% and the bill seeks to raise the FDI ceiling to 49%. Ever since the Congress-led United Progressive Alliance (UPA) government returned to power for a second term in May 2009 with a decisive mandate, investors have been betting that the government will pursue economic reforms to boost growth.

The Finance Ministry on Monday, 7 September 2009, asked all government ministries and departments to cut expenses on domestic and foreign travel, publications, advertising and purchase of vehicles. The plan will see a 10% reduction in government's non-plan expenditure, pegged at Rs 6.9 lakh crore for the year to March 2010. The cut in expenditure is aimed at reducing the strain on government finances.

Finance Minister, Pranab Mukherjee on Monday, 7 September 2009 said that a slowdown is likely in growth rate in the second and third quarters of the current fiscal due to less agricultural growth. Mukherjee said that he is, however, not revising the target of 6% plus growth rate for the fiscal as the economy will expand at a higher pace in the fourth quarter.

Mukherjee on Tuesday said the government is constantly reviewing the economic situation to decide until when the stimulus measures need to be continued and it is not desirable to plan the exit strategy now

The Reserve Bank of India (RBI) Governor D Subbarao on Monday, 7 September 2009, said inflation in India is becoming a concern sooner than anticipated and the current monetary stance must be unwound. In an interview to a news agency, Subbarao said there is a need to balance growth and price stability. Chanda Kochhar, managing director India's No. 2 lender ICCI Bank said on Tuesday that lending and borrowing rates in India have bottomed out and rates will harden from here on.

Analysts are concerned that a sharp surge in food prices in the past few days due to scanty rains may stoke inflationary pressures in the economy. Interest rates could rise on higher inflation which in turn may impact a nascent economic recovery and corporate profits.

On the flip side, a survey to gauge business confidence sentiment, carried out by Federation of Indian Chambers of Commerce and Industry (Ficci), for the month of September 2009, has suggested that the confidence level of India Inc is on the rise thanks to government's fiscal stimulus measures. Eighty per cent of the companies believe that the Indian economy is on the road to recovery and expect improvement in corporate performance in the months to come.

Although, the future outlook for the Indian industry as a whole is fairly positive, 86% of the companies expressed concern over delayed monsoons. The respondents feel this can have an adverse impact on demand for industrial goods in the coming months.

Incidentally, there has been a revival in monsoon rains in the past few days. After playing truant for most of the season, the monsoon has picked up pace in the past few days thereby reducing the deficiency in cumulative rainfall in this season. The cumulative rainfall was 23% below normal in the week ended 2 September 2009, an improvement from 25% in the week ended 26 August 2009 and 29% in the week ended 12 August 2009, the India Meteorological Department said on 4 September 2009.

However, a cause of concern is that reservoir levels in key reservoirs are at two-thirds of the 10-year average, and 60% of last year's levels. Because of the deficient rainfall between June and September, good water storage level in these key reservoirs, which makes up one-third of the country's total water storage, are crucial to a good winter crop. Two-third of India's population lives in villages and 60% of the farm land depends on the annual rains.

Meanwhile, the Oil India IPO which opened for bidding on 7 September 2009, was subscribed 1.41 times by 16:00 IST today, data on the National Stock Exchange showed. The IPO opened for bidding on Monday, 7 September 2009 and will close on 10 September 2009. OIL, which produces 3.5 million tonnes of oil annually, will be listed on the bourses on 29 September 2009. The government has fixed Rs 950-1,050 per share price band for the initial public offering of Oil India (OIL), the second state-run firm to hit the market this year after NHPC, and will raise up to Rs 2,777 crore.

The response to Oil India IPO is being closely watched after a tepid secondary market debut of power sector firms NHPC and Adani Power, recently.

The National Stock Exchange on Monday, 7 September 2009, said the transaction charges would be lower by about 10% in cash and derivatives segments from 1 October 2009. For the first time, the exchange is proposing to levy 'system abuse charge' in the Futures & Options category from 1 October 2009. The move is to serve as a deterrent for trading members from punching large non-serious trade orders which clog the system and delays order placement and execution for other trading members.

European markets edged higher today, 8 September 2009 led by mining shares after gold prices rose above the $1,000 per ounce level. Key benchmark indices in UK, Germany and France were up by between 0.40% and 0.51%.

Asian markets were trading higher today, 8 September 2009 led by technology and commodity companies, as computer memory prices and metal prices rose. Key benchmark indices in South Korea, Singapore, Japan, China, Hong Kong, and Taiwan rose by between 0.64% and 2.14%.

Trading in US index futures showed the Dow could rise 92 points at the opening bell on Tuesday, 8 September 2009. US markets were closed on Monday, 7 September 2009 on account of the Labor Day holiday.

The Group of 20 finance ministers and central bankers said over the weekend they would not remove economic stimulus until the global recovery was well entrenched.

The BSE 30-share Sensex rose 107.35 points or 0.67% to 16,123.67, its highest closing since 30 May 2008. The Sensex opened 14.24 points higher at 16,030.56, also its day's low. The barometer index gained 215.84 points at the day's high of 16,232.16 in mid-afternoon trade.

The S&P CNX Nifty rose 22.35 points or 0.47% to 4805.25, its highest closing since 30 May 2008. Nifty September 2009 futures were at 4802, at a discount of 3.25 points as compared to the spot closing.

The BSE Sensex has jumped 725.34 points or 4.71% in three trading days to 16,123.67 on 8 September 2009 from a recent low of 15,398.33 on 3 September 2009 as revival of monsoon rains, strong response to the initial public offer of Oil India, a survey showing an improvement in business confidence of India Inc and firm global stocks boosted sentiments.

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 6476.36 points or 67.13% in calendar year 2009 as on 8 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7963.27 points or 97.58% as on 8 September 2009. FII inflow in calendar year 2009 totaled Rs 40,373.80 crore (till 7 September 2009).

Coming back to today's trade, the BSE clocked a turnover of Rs 7162 crore, higher than Rs 6100 crore on Monday, 7 September 2009. Turnover in NSE's futures & options (F&O) segment surged to Rs 67,576.95 crore from Rs 57,490.85 crore on Monday, 7 September 2009.

The market breadth, indicating the overall health of the market, turned negative after a strong start. On BSE, 1468 shares declined as compared with 1372 that rose. A total of 77 shares remained unchanged.

The BSE Mid-Cap index fell 0.42% to 5,942.77 and the BSE Small-Cap index declined 0.15% to 7,178.95. Both these indices underperformed the Sensex

The BSE Metal index (up 2.51%), the BSE Oil & Gas index (up 2.01%), outperformed the Sensex.

The BSE Teck index (down 0.57%), the BSE Bankex (up 0.46%), BSE Consumer Durables index (up 0.34%), BSE Realty index (down 0.93%), the BSE PSU index (down 0.03%), the BSE Auto index (down 0.97%), the BSE Capital Goods index (up 0.64%), the BSE FMCG index (down 1.15%), the BSE Power index (down 0.20%), BSE IT index (down 0.72%), the BSE Healthcare index (down 0.52%), underperformed the Sensex.

There were as many losers as gainers in the 30-member Sensex pack

Metal stocks gained after LMEX, a gauge of six metals traded on the London Metal Exchange rose 0.68% on Monday, 7 September 2009. Back home, the world's largest steel marker ArcelorMittal's deal to become a co-promoter of India's Uttam Galva Steel also boosted sentiment. Uttam Galva Steels was locked at upper limit of 5% of Rs 131.30 on BSE, a lifetime high for the counter

India's largest private sector aluminium marker by sales Hindalco Industries surged 6.19% to Rs 115 and was the top gainer from the Sensex pack. The counter clocked volume of 66.32 lakh shares

India's largest private sector steel marker by sales Tata Steel gained 3.03%. The company on Monday, 7 September 2009 said steel sales at its Indian operations rose 25% to 492,000 tonnes in August 2009 over August 2008. Saleable steel production rose 14% to 526,000 tonnes while sales of long products jumped 81%.

Domestic operations contribute about 25% of the group's total annual global capacity, including Europe's second-largest steelmaker Corus.

JSW Steel gained 1.34%. The company reported 53% rise in crude steel production to 5.21 lakh tonne units in August 2009 over August 2008. The company made this announcement during trading hours on 4 September 2009.

Steel Authority of India rose 0.63%. The company reported a 20% rise in domestic sales to 1.1 million tonnes in August 2009 over August 2008, on the back of a 30% jump in sale of special steels. The company made this announcement during trading hours on 4 September 2009.

Other steel firms gained on momentum buying on hopes of further consolidation in the sector through merger & acquisition activity after a deal between Uttam Galva Steel and ArcelorMittal, the world's largest steel.

Bhushan Steel (up 0.93%), Mukand (up 12.03%), National Steel & Agro Industries (up 3.95%), Mahindra Ungine Steel Company (up 6.19%), Shah Alloys (up 5.98%), surged.

Sterlite Industries (up 4.03%), Sesa Goa (up 1.83%), and Hindustan Zinc (up 0.73%), were the other gainers from the metal pack.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) advanced 3.67% to Rs 2074 on 14.05 lakh shares. India's largest thermal power producer by sales NTPC on Saturday, 5 September 2009 moved the Supreme Court seeking quashing of the Bombay high court order giving permission to the Mukesh Ambani's RIL to amend its plea in its on-going dispute with the country's largest utility on the supply of gas from the Krishna-Godavari basin.

RIL had arrived at an agreement with the NTPC to supply 12 million standard cubic metres per day (mmscmd) gas at $2.34 per million British thermal unit (mmBtu) pusuant to the global competitive bidding.

However, the RIL sought to wrigle out and avoid the Gas Sale & Purchase Agreement (GSPA) on one pretext or the other, compelling NTPC to move Bombay high court for enforcement of its agreement with the contractor RIL.

Another dispute between the Mukesh Ambani promoted RIL and Anil Ambani promoted Reliance Natural Resources (RNRL) is now in the Supreme Court. The dispute between RIL and RNRL is centered around the price and supply of gas from Krishna Godawari (KG) basin operating by RIL to RNRL for the power plants of Anil Dhirubhai Ambani group. Meanwhile the NTPC-RIL case also deals with price and supply of gas to NTPC's power plants from RIL.

India's largest thermal power producer by sales NTPC fell 0.70% while RNRL fell 1.48%.

India's largest oil exploration firm by sales Oil and Natural Gas Corporation (ONGC) fell 0.16%. As per reports ONGC's overseas investment arm ONGC Videsh is pumping $209 million into Russian fields of Imperial Energy for ramping up production.

PSU OMCs declined after crude oil prices advanced on Monday, 7 September 2009. BPCL (down 1.20%), HPCL (down 1.03%), and Indian Oil Corporation (down 3.14%) fell.

Higher crude oil prices will increase under-recoveries of state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

Oil prices climbed on Monday, 7 September 2009 helped by rising equity markets and a weaker US dollar. Light sweet crude for October delivery rose 76 cents to settle at $68.78 a barrel on the New York Mercantile Exchange.

Tata Consultancy Services, India's largest software services exporter by sales, advanced 0.25%. 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.

Shares of two IT majors - Infosys and Wipro fell on reports the West Bengal government has decided to scrap the Rajarhat IT township project. India's second largest software services exporter by sales Infosys fell 0.85% and India's third largest software services exporter by sales Wipro slipped 0.23%.

The decision implies that Wipro and Infosys will not get land demanded by them to set up an IT hub. The projects had become controversial in recent weeks following allegations that land sharks had been involved in acquisition of plots there.

Tech Mahindra rose 1.36% after the company bagged a Rs 2,000-crore deal for end-to-end outsourcing of IT applications and infrastructure from Etisalat DB Telecom, a joint venture between the UAE-based Etisalat and the Dynamix Balwas group. The JV, earlier known as Swan Telecom, is rolling out cellular services across 15 circles in India.

India's largest mobile services provider by sales Bharti Airtel rose 0.95% to Rs 425.60 after a block deal of 30 lakh shares was executed on the counter on NSE at Rs 425 per share. The block deal constituted 0.08% of the company's equity.

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 mobile services provider by sales Reliance Communications slipped 2.25% after a company spokesperson clarified to the media that the firm is not in talks to buy a stake in Kuwaiti telecom firm Zain or its African assets. The stock has been on a roll recently, advancing 19.61% in five trading days to 7 September 2009, on reports its telecom tower unit may revive a plan to raise funds through an initial public offer.

India's largest engineering & construction company by sales Larsen & Toubro (L&T) rose 1.24%. As per reports L&T's financial services unit - L&T Finance is in the race to acquire DBS Cholamandalam asset management company (AMC). Shares of Cholamandalam DBS were frozen in the 10% upper circuit filter.

Infrastructure stocks rose as higher government spending on infrastructure sector in 2009-2010 to provide a stimulus to the economy may boost orders.

India's largest dam builder by sales Jaiprakash Associates rose 1.41%. The stock had jumped over 6% on Monday, 7 September 2009 after the National Stock Exchange (NSE)'s index maintenance committee at a periodic review during the weekend decided to include the stock in the S&P CNX Nifty index effective from 20 October 2009. Jaiprakash Associates will replace National Aluminium Company in the index

India's largest power equipment maker by sales Bharat Heavy Electricals rose 0.29%. The company may name an overseas partner by October for a venture to build atomic plants in the country.

Gateway Distriparks spurted 4.45% on reports the firm is close to signing a deal with an international private equity firm to raise around Rs 300 crore, by selling a stake of up to 25% in its unit Gateway Rail Freight.

India's largest private sector bank by net profit ICICI Bank fell 0.23% to Rs 787, off day's high of Rs 806. The bank's managing director Kochhar said credit growth in in India is likely to pick up in the second half of this year.

India's largest bank by net profit and branch network State Bank of India spurted 4.19% after Chairman O.P. Bhatt said the bank's earnings are likely to grow 30-35% in the current quarter. SBI's retail loan growth is likely to be twice of what it was in the year-ago quarter, he said.

SBI has reduced rates on its flagship deposit scheme, the 1000-day deposit, by 25 basis points to 7% with effect from 8 September 2009. Now deposit of more than two years but less than three years will be clubbed together with an interest rate of 7%. Earlier deposits for tenures of two years but less than 1,000 days had an interest rate of 7% while the 1000-day deposit had an interest rate of 7.25%.

India's second largest private sector bank by net profit HDFC Bank was down 1.12%.

Wall Street Finance spurted 5.07% after industrialist B K Modi on Monday, 7 September 2009, acquired 51% stake in the company at Rs 55 each. Anil Dhirubhai Ambani Group's (ADAG) Reliance Money had exited Wall Street Finance by selling its entire 36.8% holding last week.

FMCG pivotals dipped as investors shifted their exposure from the so-called defensive sector. India's largest FMCG company by sales Hindustan Unilever lost 2.55% India's largest cigarette company by sales ITC shed 1.17%

Marico (down 1.33%), Dabur India (down 3.40%), Britannia Industries (down 0.35%), Bata India (down 1.76%), United Spirits (down 2.43%), Tata Tea (down 1.47%) edged lower

Nirma galloped 3.79% to Rs 182, after a block deal of 10 lakh shares was executed on the counter on BSE at Rs 204.95 per share. The block deal constituted 0.63% of the company's equity.

Auto stocks took a breather after Monday's surge triggered by that the forthcoming festive season will boost auto sales. India's largest truck marker by sales Tata Motors lost 1.36%. The stock had surged 11.32% on Monday.

India's top small car maker by sales Maruti Suzuki fell 2.26%. India's largest tractor maker by sales Mahindra & Mahindra slipped 2.43%

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 today, 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.

Realty stocks declined on profit booking after recent triggered by gains reports prices of residential units in key regions like New Delhi-NCR (National Capital Region) and Mumbai have moved up 10-15% on gradual return of residential property buyers. DLF (down 0.25%), Phoenix Mills (down 2.09%), Unitech (down 1.69%), Omaxe (down 1.32%), Indiabulls Real Estate (down 1.41%), and HDIL (down 1.70%), gained.

The 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.

Reliance Industries was the top traded counter on BSE with turnover of Rs 289.28 crore followed by Unitech (Rs 213.51 crore), Tata Steel (Rs 203.47 crore), DLF (Rs 191.63 crore), and Suzlon Energy (Rs 158.22 crore).

NHPC clocked the highest volume of 2.21 crore shares on BSE. Ispat Industries (2.15 crore shares), Unitech (1.87 crore shares), Suzlon Energy (1.53 crore shares) and IFCI (1.28 crore shares), were the other volume toppers in that order.

Among the small and mid-cap stocks Remi Metals (up 20%), Savera Hotel (up 20%), Spice Communications (up 19.95%), Goa Carbon (up 17.17%), and ABG Shipyard (up 16.59%), surged.

Amtek Auto (down 9.79%), MM Forgings (down 8.22%), Garware Polyester (down 7.81%), and Honda Siel Power Products (down 7.45%), declined

Jet Airways (India) rose 3.55% to Rs 264.30. The stock staged a comeback after tumbling to the day's low of Rs 221.80 after the airline said its pilots resorted to a simulated strike, hurting operations. The announcement was made during trading hours today, 8 September 2009

Gujarat NRE Coke jumped 3.63% after the company said its board will meet on 19 September 2009 to consider a bonus issue of 'B' class shares. The company made the announcement after market hours on Monday, 7 September 2009.

Jaybharat Textiles & Real Estate soared 10% after the company fixed 17 September 2009 as the record date for a 1:2 bonus issue. The company announced the record date during trading hours today, 8 September 2009.

Suven Life Sciences was locked at 5% upper limit after the company received the first milestone payment from Eli Lilly and Company, US, with their drug discovery collaboration achieving a positive outcome. The company made this announcement during trading hours on Monday, 7 September 2009, when the stock surged 4.87%.