Market gains on the fourth straight day; Sensex, Nifty at 16-month high

The key benchmark indices posted small gains in choppy trade as a recovery in European stocks triggered intraday rebound on the domestic bourses. The market extended gains for the fourth day in a row. The BSE 30-share Sensex rose 30.19 points or 0.18%, up close to 135 points from the day's low and off close to 25 points from the day's high. The BSE Sensex and S&P CNX Nifty achieved their highest closing level in nearly 16 months.

Cement and auto stocks rose even as banking stocks fell. The market breadth was marginally positive after moving between negative and zone during the day.

As per provisional data, foreign funds today, 18 September 2009, bought equities worth a net Rs 1,486.08 crore. Taking an opposite stance, domestic funds offloaded stocks worth a net Rs 505.38 crore

The Sensex has jumped 527.11 points or 3.25% in four days to 16,741.30 on Friday, 18 September 2009, from its close of 16,214.19 on Monday, 14 September 2009.

The market was volatile today. After an initial slide caused by weak Asian stocks, the market soon cut losses. The market moved in a narrow range in mid-morning trade. The market weakened again in early afternoon trade. The market cut losses after hitting fresh intraday low in afternoon trade. The intraday recovery gathered steam later. The market pared gains after hitting a fresh intraday high in lat trade.

The next major trigger for the market is Q2 September 2009 results next month. The market remains closed on Monday, 21 September 2009, for a public holiday.

After a strong revival since 15 August 2009, rains weakened again last week. The South West monsoon rains were 41% below average in the week to 16 September 2009, the government-run India Meteorological Department (IMD) said on Thursday. Total rainfall since 1 June 2009, the start of the season, was 21% below average because of exceptionally dry spells earlier in the season, IMD said. More than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

On the flip side, fears of hike interest rates have receded after recent comments by the Reserve Bank of India governor that 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.

RBI deputy governor Shyamala Gopinath on Thursday said it was too soon for the central bank to unwind its accommodative monetary policy even though the economy has shown signs of resilience. Inflation based on wholesale prices could hit 6% by March 2010, RBI deputy governor K.C. Chakrabarty said on Friday.

Data released by the government on Thursday 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.

Meanwhile, market expectations of strong Q2 results were tempered after a news agency quoted an unnamed government official as saying on Thursday that the government expects only a marginal improvement in corporate advance tax in second quarter. Media reports had on Wednesday, 16 September 2009, indicated a surge in advance payment by top Indian firms that raised expectations of strong Q2 September 2009 results.

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 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.

Meanwhile, the initial public offer (IPO) of the private sector ship builder, Pipavav Shipyard, was subscribed 8.21 times at 17:00 IST on last day of issue today, 18 September 2009. The company has already allotted 1.52 crore shares to anchor investors at the top-end of the Rs 55-Rs 60 price band.

European equities edged higher, reversing early losses. Key benchmark indices in France, UK and Germany were up by between 0.05% to 0.12%.

But most Asian stocks fell as Japanese consumer financing company Aiful Corp. sought to reschedule its debt payments and as metal prices declined. Aiful Corp. said it will try to reschedule debt payments after the financial crisis hurt its ability to raise money. Key benchmark indices in Hong Kong, Japan and Singapore fell by between 0.67% to 0.92%. But key benchmark indices in South Korea and Taiwan rose by between 0.25% to 0.66%.

China's Shanghai Composite ended 3.19% lower, led by steel counters as a slew of upcoming new share issues sparked profit-taking. The steel sector was hit hard by reports the United States might impose extra heavy duty on Chinese-made steel tubes, sparking fresh worries over a possible escalation of the Sino-US trade dispute.

China will stick to its pro-growth economic policies in the coming period of time as the economic recovery is not yet stable, the ruling Communist Party said on Friday, 18 September 2009

US index futures reversed initial losses. Trading in US index futures indicated Dow could rise 8 points at the opening bell today, 18 September 2009.

US markets snapped their winning streak on Thursday, 17 September 2009 after making fresh highs this week. The markets got a boost from an encouraging Philadelphia Fed report earlier in the day but then gave up gains to end in the red. The Dow Jones Industrial Average was down 7.79 points, or 0.1%, to 9,783.92. The S&P 500 index fell 3.27 points, or 0.3%, to 1,065.49, and the Nasdaq Composite Index lost 6.40 points, or 0.3%, to 2,126.75.

In economic news, the Philadelphia Fed said its manufacturing gauge rose to 14.1 in September 2009 from 4.2 in August 2009. This is its first back-to-back monthly gain since October and November of last year.

Initial jobless claims unexpectedly fell last week, dropping by 5,000 coming in at 5,45,000. Continuing claims climbed to 6.23 million from 6.10 million. Another report showed housing starts and permits rose in August 2009 to their highest level since November 2008.

The BSE 30-share Sensex rose 30.19 points or 0.18% to 16,741.30, its highest closing since 22 May 2008. The Sensex rose 53.92 points at the day's high of 16,765.03 in late trade. The barometer index fell 101.06 points at the day's low of 16,610.05 in afternoon trade.

The S&P CNX Nifty was up 10.40 points or 0.21% to 4975.95, its highest closing since 22 May 2008. Nifty September 2009 futures were at 4982, at a premium of 5.95 points as compared to the spot closing of 4976.05. Turnover in NSE's futures & options (F&O) segment was Rs 69,288.12 crore, sharply lower than Rs 83,762.65 crore on Thursday, 17 September 2009.

BSE clocked a turnover of Rs 6272 crore, lower than Rs 9401.72 crore on Thursday 17 September 2009. Turnover had surged on Thursday due to large block deals on Reliance Industries (RIL)

The market breadth, indicating the overall health of the market, was positive after moving between negative and positive zone in intraday trade. On BSE, 1437 shares rose as compared with 1336 that declined. A total of 79 shares remained unchanged.

Among the 30-member Sensex pack, 18 rose and rest declined.

Indian 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. There is a huge amount of liquidity in the global financial system which is a the result of the global policy response to the crisis following the collapse of Lehman Brothers a year ago. Central banks across the world have slashed policy rates in the past one year to revive economic growth.

The Sensex is up 7093.99 points or 73.53% in calendar year 2009 as on 18 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8,580.90 points or 105.15% as on 18 September 2009. FII inflow in the calendar year 2009 totaled Rs 45,022.70 crore (till 16 September 2009).

Coming back to today's trade, the BSE Mid-Cap index rose 0.45% and the BSE Small-Cap index rose 0.77%. Both the indices outperformed Sensex.

The BSE Auto index (up 2.1%), the BSE Realty index (up 1.29%), the BSE Healthcare index (up 0.89%), the BSE Power index (up 0.77%), the BSE Oil & Gas index (up 0.47%), the BSE Teck index (up 0.4%), the BSE Capital Goods index (up 0.32%), outperformed the Sensex.

The BSE Metal index rose 0.18% and matched the Sensex's performance. The BSE Bankex (down 1.17%), the BSE PSU index (down 0.16%), the BSE FMCG index (down 0.03%), the BSE Consumer Durables index (down 0.01%), the BSE IT index (up 0.17%), underperformed the Sensex.

Auto stocks rose on hopes of strong sales in the upcoming festive season. India's top small car maker by sales Maruti Suzuki rose 5.23%. India's largest tractor maker by sales Mahindra & Mahindra rose 1.75%.

Bajaj Auto rose 3.14%, extending recent strong gains, 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.

But, India's largest truck maker by sales Tata Motors fell 1.19%. 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.

Index heavyweight Reliance Industries (RIL) rose 0.59% to Rs 2098.70 rose recovering after 4.45% slide on Thursday when a large treasury share sale by the company in the secondary market weighed on the counter. But the stock was off the day's high of Rs 2113. Petroleum Trust on Thursday sold 1.5 crore equity shares of RIL through block deals on the boruses at Rs 2125 per share. The financial impact of the transaction will be reflected in the consolidated statements, RIL said. The stock hit a high of Rs 2113 and a low of Rs 2069.70.

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.

Oil exploration stocks were mixed after recent rally in crude oil prices. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 0.1%. As per recent reports, ONGC's Russian unit has substantially cut oil production due to increase in cost. Cairn India fell 1.34%. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

US crude futures ended slightly lower on Thursday, as demand worries amid high inventories offset positive economic data. On the New York Mercantile Exchange, October 2009 crude settled down 4 cents, or 0.06%, at $72.47 a barrel.

PSU OMCs rose as crude dropped after a recent rally. BPCL and HPCL rose by between 0.46% to 3.11%. Indian Oil Corporation (IOC) rose 0.64%. 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.

Banking stocks were mixed after higher advance tax payment by some top banks in the second installment this fiscal. India's second largest private sector bank by net profit HDFC Bank fell 1.3% as its ADR fell 0.51% on Thursday.

India's largest private sector bank by net profit ICICI Bank fell 3.35% as its ADR fell 2.99% on Thursday. The bank has reportedly finalised sale of Point Of Sale (PoS) terminals to First Data Corporation for $ 80 million.

But, India's largest bank by net profit and branch network State Bank of India rose 1.69% on optimism about Q2 September 2009 results. 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. The stock was volatile.

Axis Bank rose 0.28% in volatile trade 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%.

Telecom stocks were mixed. India's largest telecom player by sales Bharti Airtel rose 2.18%. The company on Friday said it would charge 50 paisa per minute for local and national calls on its network, heating up competition in a market that already has some of the world's cheapest tariffs.

Meanwhile, South African President Jacob Zuma on Thursday said a proposed merger deal between Bharti and South African telecom giant MTN was held up by legal problems in India. South Africa's communications regulator earlier had said it might not grant approval for the proposed alliance between Bharti and MTN this year.

Bharti and 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 fell 1.49%. As per recent 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.

Realty stocks rose on reports 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. Omaxe, DLF, Ackruti City and Unitech rose by between 0.54% to 4%.

India's largest engineering & construction firm by sales Larsen & Toubro rose 0.47% on higher advance tax payment.

Reliance Infrastructure rose 4.47% 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.

Among capital goods stocks, Punj Lloyd, SKF India, Thermax, ABB, rose by between 0.37% to 5.56%.

India's largest power equipment maker by sales Bharat Heavy Electricals was flat at Rs 227505. 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).

Cement stocks rose on bargain hunting after recent losses. ACC, Grasim Industries, Ultratech Cement rose by between 0.5% to 3.27%. 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.

Select construction shares rose on government's thrust on infrastructure. Higher government spending on infrastructure sector in the Union Budget 2009-2010 to provide a stimulus to the economy, may result in increase order flow for construction. Hindustan Construction Company, Nagarjuna Construction Company and Jaiprakash Associates, Gayatri Projects rose by between 1.06% to 13.20%.

The government has set a target of spending $20 billion a year on road construction.

Some FMCG pivotals fell on worries over scanty rains this year. FMCG firms derive substantial revenue from the rural sector. Marico, Nestle India, ITC, Britannia Industries fell by between 0.3% to 1.67%.

IT stocks gained on strong US economic data. US is the biggest market for Indian IT firms. India's largest software services exporter by sales Tata Consultancy Services rose 0.67% on recent 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 second largest software services exporter by sales Infosys rose 0.12% as its ADR rose 1.26% on Thursday. 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.

India's third largest software services exporter by sales Wipro rose 0.37% as its ADR rose 1.91% on Thursday. The company recently won a three-year outsourcing contract from All Nippon Airways, Japan's No.2 carrier.

Metal stocks fell as industrial metals fell on Friday on the global commodities marekts, weighed down by the dollar's rebound, weaker global equities and persistent worries over increasing stockpiles and thin demand. Hindustan Zinc, JSW Steel, Steel Authority of India fell by between 0.55% to 1.09%.

India's largest steel maker by sales Tata Steel fell 0.59%. 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%.

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.

India's largest copper maker by sales Sterlite Industries fell 1.29% on profit taking after recent gains. The company on 11 September 2009 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.

Dr Reddy's Laboratories jumped 3.63% to Rs 865.45 on reports UK-based GlaxoSmithKline Plc is in talks to buy a 5% stake in the Hyderabad-based drug maker. It hit an alltime high of Rs 900.

Cals Refineries clocked highest volume of 3.56 crore shares on BSE. Ispat Industries (1.92 crore shares), Reliance Natural Resources (1.36 crore shares), K S Oils (1.25 crore shares), Maars Software International (1.13 crore shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 183.15 crore on BSE. Jaiprakash Associates (Rs 165.79 crore), Reliance Industries (Rs 160.79 crore), Reliance Capital (Rs 152.67 crore) and Tata Steel (Rs 150.33 crore) were the other turnover toppers in that order.