Nifty regains 5,000 mark

Data showing a surge in growth in the core sector boosted domestic bourses with the 50-unit S&P CNX Nifty settling above the psychological 5,000 level. The BSE 30-share Sensex rose 159.91 points or 0.96%, off close to 55 points from the day's high and up close to 50 points from the day's low. Index heavyweights Reliance Industries and ICICI Bank led the rally which was a part of a rally in most Asian stocks. IT, banking and healthcare stocks rose. But realty stocks reversed early gains. The market breadth was strong.

The market surged in early trade after opening with an upward gap on firm Asian stocks. The market moved in a narrow range in mid-morning trade. A bout of volatility was witnessed as the key benchmark indices regained strength after hitting a fresh intraday lows in early afternoon trade. Trading turned range bound later. Alterable bout of buying and selling was witnessed as volatility struck again in mid-afternoon trade.

The S&P CNX Nifty closed above the psychological 5,000 mark. Nifty had settled above the 5,000 level for the first time in 15 months on 22 September 2009. It had failed to settle above that level since then.

Shares bought in the cash segment today, 29 September 2009, cannot be sold tomorrow, 30 September 2009, as banks remain closed tomorrow on account of half-yearly closure of books. Another reason why traders may refrain from building large positions this week is because this is a truncated trading week as the market remains closed on Friday, 2 October 2009, on account of Gandhi Jayanti. The market had remained closed for a public holiday on Monday, 28 September 2009.

The index of six core industries having a combined weight of 26.7% in the index of industrial production (IIP) registered a growth of 7.1% in August 2009 compared to a growth of 2.1% in August 2008. During April-August 2009-10, six core industries registered a growth of 4.8% as against 3.3% during the corresponding period of the previous year. Coal and cement sector boosted overall growth in the six infrastructure industries in August 2009.

Pointing out signs of economic recovery, Mr V. Sridhar, Chairman, Central Board of Excise and Customs (CBEC) said on 25 September 2009, that excise duty collection were up 23% in August 2009 over July 2009.

The government will sell bonds totalling Rs 1,23,000 crore ($25.6 billion) in the second half of the current financial year as part of its borrowing schedule, Finance Secretary Ashok Chawla said on Tuesday, 29 September 2009. The amount was in line with market expectations.

A massive borrowing programme of the government this year has put pressure on government bond prices. The government had set a annual gross borrowing target of Rs 4.51 lakh crore for 2009/10 (April/March), and has already sold Rs 2.95 lakh crore of bonds until September 2009. Chawla said the gross borrowing target of Rs 1.23 lakh crore in the second half excludes the conversion of market intervention bonds.

The next trigger for the stock market is Q2 September 2009 results of India Inc next month. There is optimism about Q2 September 2009 results after advance tax collections registered a positive growth in the second quarter after witnessing a negative growth in the first quarter. Corporate advance tax and advance personal income-tax were up by 14.7% and 1.7%, respectively in the September 2009 quarter. Infosys kickstarts the reporting season on 9 October 2009.

However, a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.

As per one report, companies plan to raise at least Rs 40,000 crore through initial public offers (IPOs)/follow on public offers (FPOs) in the second half of the current financial year. Power companies such as GMR Energy, Indiabulls Power and JSW Energy and state-run Bharat Heavy Electricals and NTPC are likely to tap the primary market. Reliance Infratel also announced on Tuesday, 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.

European equities drifted lower on Tuesday after sharp gains in the previous session, with weaker commodity shares offsetting gains made by financial stocks. Key benchmark indices in France, Germany and UK were down by between 0.26% to 0.42%.

British gross domestic product shrank by 0.6% in the second quarter, revised up from an earlier estimate of a 0.7% fall, the Office for National Statistics (ONS) reported Tuesday. The change reflected an upward revision to construction output, the ONS said. Compared to the same period a year ago, GDP fell 5.5%, unchanged from the previous estimate.

Asian shares rose on Tuesday, as news of several multi-billion dollar takeover bids overseas boosted confidence in global economic recovery, while the yen dipped after Tokyo refused to rule out currency intervention. Key benchmark indices in Hong Kong, South Korea, Singapore and Taiwan rose by between 0.87% to 2.06%. But, China's Shanghai Composite fell 0.33% in volatile trade.

Trading in US futures indicated the Dow could fall 5 points at the opening bell on Tuesday, 29 September 2009. US index futures reversed initial gains.

US markets rose on Monday 28 September 2009 halting a three-day losing streak, as a spurt of corporate takeovers in the technology and healthcare sectors fueled optimism about share values. The Dow rose 124.17 or 1.3 % to 9,789.36. The Standard & Poor's 500 index rose 18.60, or 1.8 % to 1,062.98, and the Nasdaq composite index rose 39.82, or 1.9 % to 2,130.74.

On the deals front, Johnson & Johnson said it bought 18.1% of Crucell for $442.7 million. Xerox agreed to pay $6.4 billion for acquiring outsourcing and information-services company Affiliated Computer Services. And Abbott Laboratories said it will buy the pharmaceutical business of Belgium's Solvay for as much as $7 billion in a deal that would expand its presence in emerging markets.

In general, a pickup in the pace of mergers and acquisitions tends to boost the market because it sets off a guessing game among investors who begin to buy shares of companies they believe are likely acquisition targets.

Another reason why mergers and acquisitions are typically viewed as bullish is because it suggests companies are more optimistic about the business outlook.

Meanwhile, the deputy director of International Monetary Fund (IMF) Murilo Portugal on Monday said the IMF will increase its forecast for global growth next year in the next few days to account for a faster recovery in major economies. The IMF will raise its forecast for 2010 global growth to about 3% from 2.5% he said. The revised forecast could come as soon as Tuesday.

The BSE 30-share Sensex rose 159.91 points or 0.96% to 16,852.91. The Sensex rose 214.84 points at the day's high of 16,907.84 in early trade. The barometer index rose 109.80 points at the day's low of 16,802.80 in early afternoon trade.

The S&P CNX Nifty rose 47.90 points or 0.97 % to 5,006.85. Nifty October 2009 futures were at 4995.80 at a discount of 11.05 points as compared to the spot closing of 5006.85. Turnover in NSE's futures & options (F&O) segment was Rs 45,244.04 crore, sharply lower than Rs 59,792.44 crore on Friday, 25 September 2009.

BSE clocked a turnover of Rs 5006 crore, lower than Rs 5865 crore on Friday, 25 September 2009.

The market breadth, indicating the overall health of the market was strong. On BSE, 1653 shares rose as compared with 1103 that declined. A total of 89 shares remained unchanged.

Among the 30-member Sensex pack, 19 rose and rest fell.

The Sensex is up 7,205.60 points or 74.69% in calendar year 2009 as on 29 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8,692.51 points or 106.52% as on 29 September 2009. FII inflow in the calendar year 2009 totaled Rs 57,525.70 crore (till 25 September 2009).

Coming back to today's trade, the BSE Mid-Cap index rose 0.61% and the BSE Small-Cap index rose 0.93%. Both the indices underperformed the Sensex.

The BSE IT index (up 2.26%), the BSE Healthcare index (up 1.63%), the BSE Teck index (up 1.59%), the BSE Oil & Gas index (up 1.52%), the BSE Consumer Durables index (up 1.35%), outperformed the Sensex.

The BSE Realty index (down 0.65%), the BSE Auto index was unchanged, the BSE Metal index (up 0.06%), the BSE FMCG index (up 0.27%), the BSE PSU index (up 0.31%), the BSE Capital Goods index (up 0.33%), the BSE Power index (up 0.59%), the BSE Bankex (up 0.75%), underperformed the Sensex.

Index heavyweight Reliance Industries (RIL) rose 1.7% to Rs 2166. The stock came off the day's high of Rs 2177. In the face of opposition from the Power Ministry and Anil Ambani group firm Reliance Infrastructure on the marketing margins charged, Reliance Industries (RIL) has justified the levy saying it was essential to cover risks and costs incurred in marketing of gas.

Terming as illegal the market margin, Reliance Infra had refused to pay the levy prompting RIL to issue a notice for suspension of fuel supply for "default". NTPC has sought to know whether the margins levied by RIL had government's approval.

RIL had said on 24 September 2009 it has signed gas supply agreement with state-run utility NTPC to supply gas for some of its power plants for five years. Reliance will supply 0.61 million standard cubic metres a day (mscmd) to NTPC, and expects to start supplies within a week.

Meanwhile, recent report suggest the outlook for Asian oil refiners, previously hit by a sharp fall in margins, is now improving on a likely ramp-up in demand and slowing capacity expansion.

Oil exploration stocks were mixed after US crude oil futures rose more than 1% on Monday, on jitters over Iran's latest test-firing of missiles and as Wall Street rallied on stepped up mergers and acquisition activity. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms. On the New York Mercantile Exchange, November crude settled up 82 cents, or 1.24%, at $66.84 a barrel.

India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 2.49%. ONGC on 23 September 2009 said it will invest over Rs 5000 crore in the next two years in bringing new oil and gas finds into production. But Cairn India fell 0.08%.

India's second biggest oil and gas exploration firm by revenue Oil India makes its debut on the bourses on Wednesday, 30 September 2009. The company had priced its initial public offer (IPO) at Rs 1,050 per share, at the Rs 950 to Rs 1,050 price band, following a robust response from institutional investors.

PSU OMCs rose as higher crude oil prices will result in increase under-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. HPCL, Indian Oil Corporation (IOC) and BPCL fell by between 0.64% to 2.15%.

Public sector oil companies IOCL, BPCL and HPCL are reportedly expected to lose Rs 16,388 crore revenue in the first half of current financial year for keeping retail prices of auto and cooking fuels below the cost. The government recently 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.

IT stocks rose as an increase in the mergers & acquisitions in the United States suggested that companies are more optimistic about the business outlook. US is the biggest market for Indian IT firms. India's third largest software services exporter by sales Wipro rose 2.71% as its American depository receipt (ADR) rose 3.24% on Monday.

India's second largest software services exporter by sales Infosys rose 1.69% as its ADR rose 2.81% on Monday.

India's largest IT exporter by sales Tata Consultancy Services rose 3.98%. A news agency quoted chief executive S. Ramadorai as saying that the company expects a recovery in the global banking sector to boost its revenues this year. Ramadorai said the company was seeing some signs of a recovery in the demand for outsourcing, especially from the banking, financial services and insurance sectors that account for 43% of its business.

Banking stocks rose in a volatile trade after Finance secretary Ashok Chawla said today there is a need to look at consolidation of banks and that government is not discouraging Indian banks from making acquisitions abroad. Bank stocks also got support on higher advance tax payment by some top banks in the second installment this fiscal.

India's largest private sector bank by net profit ICICI Bank rose 3.12% as its ADR rose 2.95% on Monday. India's second largest private sector bank by net profit HDFC Bank rose 0.04% as its ADR rose 2.09% on Monday.

But, India's largest bank by net profit and branch network State Bank of India fell 2.26%. 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.

Realty stocks reversed early gains on reports the Reserve Bank of India (RBI) may increase the cost of funds for the commercial real estate sector by up to 200 basis points. The current move will make loans to this segment costlier by 75-200 basis points.

DLF, Indiabulls Real Estate , Unitech, Ansal Properties, Ackruti City fell by between 0.01% to 2.4%. The measure could affect the financial health of some of the largest real estate firms of the country, which were forced to sell land banks and projects to meet their cash requirements.

Realty stocks have surged over the few days back 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.

Select pharma stocks rose, extending a broad-based rally in the sector on Friday. Ranbaxy Laboratories, Lupin, Sun Pharmaceutical Industries, Cipla and Pfizer rose by between 0.15% to 6.09%.

As per the market buzz, global pharma innovators are scouting for acquiring India drug makers, as generic penetration in the developed market is expected to increase on the back of blockbuster drugs, to the tune of US $114bn, falling off the patent cliff in the next three years.

India's largest mobile telecom player by sales Bharti Airtel rose 1.09% as the South African government is expected to communicate its stance on Tuesday 29 September 2009 to South Africa's MTN and Bharti Airtel which are seeking to create the world's third largest mobile firm. The period for exclusive talks between Bharti and MTN which had been extended twice before is set to expire on 30 September 2009.

Bharti Airtel and South African MTN Group are not looking at a dual-listed structure immediately if their merger goes ahead, Finance Minister Pranab Mukherjee said in an interview with a television channel. Excerpts of Mukherjee's interview were broadcast on Monday. Finance Secretary Ashok Chawla said today there is no formal proposal before government for dual listing of Bharti and MTN.

As per media reports, South Africa's government is eager to retain MTN's national character and has approached Indian authorities to consider a dual-listed structure, which is not allowed under existing Indian laws.

India's second largest mobile services provider by sales Reliance Communications (RCOM) fell 0.6%. The company is reportedly in advanced talks with Dialnet Communications to launch mobile-based education services. If this deal is signed, RCom will earn revenue of Rs 800 crore over a five-year period.

Select cement stocks rose as a thrust on the infrastructure sector in the Union Budget 2009-2010 may keep cement demand strong. Birla Corporation, Ambuja Cements, Ultratech Cement rose by between 0.71% to 2.9%. But Grasim Industries and ACC fell by between 0.34% to 1.6%. Cement makers recently cut prices by Rs 3 per 50 kilogram bag in Mumbai.

Construction shares rose as 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. Nagarjuna Construction Company, Gammon India, Gayatri Projects, Valecha Engineering, Era Infra Engineering rose by between 1.85% to 3.93%.

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

But, Jaiprakash Associates fell 1.35%. The company on 23 September 2009 raised around Rs 1,190 crore through sale of 5 crore treasury shares by way of bulk deals on the bourses.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.11% to Rs 1647.70 after the company said during market hours today its unit got a multi million dollar contract from Germany's Infineon Technologies AG. But the stock came off the day's high of Rs 1,668.

Among other capital goods stocks, Bharat Heavy Electricals, Punj Lloyd, SKF India rose by between 1.22% to 5.18%.

Power stocks rose as the government has planned a huge expansion in power generation capacity over the next few years in a bid to reduce the power shortage in the country. Tata Power Company, Reliance Power, Torrent Power, Reliance Infrastructure, rose by between 0.41% to 1.9%.

Auto stocks were mixed. Auto stocks have rallied sharply over the fast few months on revival in demand and the rally gathered steam recently on expectations of pick up in demand in the ongoing festive season which began with Dussehra on Monday. India's largest tractor maker by sales Mahindra & Mahindra rose 0.26%. India's largest motorbike maker by sales Hero Honda Motors rose 0.15%.

But, India's largest truck maker by sales Tata Motors fell 0.35%. Tata Motors-owned Jaguar Land Rover on 24 September 2009 unveiled a new business plan for the next decade, under which it will invest substantially in a new range of eco-friendly vehicles. The plan, designed to increase global competitiveness, drive growth and sustain profitability, envisages an investment of £800 million (over Rs 6,200 crore) on environmental innovation alone, part-supported by the European Investment Bank.

The plan will also see the company shutting down of one of its plants, in a bid to cut costs and to improve its financial health.

India's top small car maker by sales Maruti Suzuki fell 0.15% on profit taking after recent strong gains.

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.

Some metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange gained 0.33% on Monday, 29 September 2009. Tata Steel, National Aluminum Company, Jindal Saw, Hindalco Industries, JSW Steel rose by between 0.16% to 1.13%.

But India's largest copper maker by sales Sterlite Industries fell 0.13%. A US bankruptcy judge on 24 September 2009 rejected attempts by India's Sterlite Industries to sweeten its offer for U.S. copper miner Asarco LLC, and recommended for the second time that rival bidder Grupo Mexico SAB de CV regain control of the company. Sterlite, however, maintained it was still in the race to acquire the copper miner.

Sterlite said on 21 September 2009 said that it would release Grupo Mexico from a potential legal liability of nearly $8 billion if the Indian miner can win control of bankrupt US copper miner Asarco LLC.

In a court document filed on Monday, Sterlite said that if a federal court approves its plan to acquire Asarco over rival bidder Grupo Mexico's offer, it would not hold Grupo Mexico liable for more than about $900 million of liability related to the 2003 transfer of a Peruvian mine. Sterlite, a unit of India-focused mining company Vedanta Resources, has been facing off with Mexican miner Grupo Mexico for acquiring control Asarco, which has been under bankruptcy protection since 2005.

Fertiliser shares rose on revival of annual monsoon since mid-August. GSFC, GNFC, Chambal Fertilisers and Chemicals, Rashtriya Chemical & Fertilisers rose by between 0.9% to 4.8%. Fertilizer sales are directly dependent on monsoon. A bountiful monsoon boosts sales whereas a drought hits sales adversely.

Revival in the monsoon in mid-August 2009 has improved prospects for an early sowing of winter crops including wheat and canola, and replenished water levels in reservoirs. Farmers use this water to grow wheat and oilseeds planted between October and December.

Some FMCG pivotals fell. FMCG firms derive substantial revenue from the rural sector. ITC, United Spirits, Marico, Tata Tea, Bestle India fell by between 0.15% to 1.01%.

Cals Refineries clocked highest volume of 2.67 crore shares on BSE. Era Infra Engineering (1.66 crore shares), Karuturi Global (1.54 crore shares), Sanraa Media (1.31 crore shares) were the other volume toppers in that order.

Era Infra Engineering clocked highest turnover of Rs 275.79 crore on BSE. Educomp Solutions (Rs 209.09 crore), Reliance Industries (Rs 154.44 crore), State Bank of India (Rs 91.70 crore) and Tata Steel (Rs 80.99 crore) were the other turnover toppers in that order.