Nifty settles above 5,000 for the first time in 16 months

The key benchmark indices extended gains for the fifth straight day on expectations of good Q2 September 2009 results. The BSE 30-share Sensex rose 145.13 points or 0.87%. The Sensex and S&P CNX Nifty today, 22 September 2009, attained their highest closing level in 16 months. Firm European markets and surge in US index futures supported the domestic bourses. FMCG, IT and auto stocks gained.

Nifty settled above the psychological 5,000 mark for the first time in 16 months. Nifty had hit 5,000 level in intraday trade on 17 September 2009 but it had failed to settle above that level that day.

The market sentiment was boosted after a news agency quoted an unnamed finance ministry official as saying that corporate advance tax is expected to rise 14.7% to Rs 44010 crore in the September 2009 quarter. Higher advance tax payment indicates good Q2 September 2009 results from India Inc. next month. The report also said the official as saying that he sees better growth in advance tax collection in the December 2009 quarter.

Earlier, market expectations of strong Q2 results were tempered after a news agency quoted an unnamed government official as saying on 17 September 2009 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.

The market sentiment also got a boost today from reports that the stock market regulator is planning to simplify norms on foreign portfolio investments which could boost inflows from foreign institutional investors. Comments by the finance minister that the stimulus package will continue, also underpinned sentiment.

The market surged to the day's high in morning trade. It pared gains later. The market was firm but range bound in early afternoon trade. The market extended gains in afternoon trade on higher European markets. It continued uptrend in mid-afternoon trade. Weakness in Reliance Industries pulled the market off the higher level later.

Volatility may be the order of the day in the near term as traders rollover derivatives contracts from September 2009 series to October 2009 series ahead of the expiry of September 2009 contracts on Thursday, 24 September 2009. Rollover in Nifty futures was low at just about 20% at the end of Friday's (18 September 2009)'s trading. Rollover in Mini Nifty futures, too, was low at about 26%. The market was closed on Monday, 21 September 2009, for a public holiday. The next major trigger for the market is Q2 September 2009 results next month.

As per reports, the stock market regulator Securities & Exchange Board of India (Sebi) is planning to simplify and further relax norms on governing foreign portfolio investment in the country. The proposed move could give individual foreign investors direct access to the Indian stock markets.

At present, a foreign individual seeking to invest in Indian stocks has to be registered as a sub-account of an already registered foreign institutional investors (FII), which in turn has to apply to Sebi on the behalf of the sub-account holder. Besides, the validity of the sub-account registration is co-terminus with the registration of the FII through which he has accessed the Indian market. This is onerous and often expensive. The market regulator intends to remove such hurdles and make it simpler, and also to bring foreign investors on a par with domestic ones, reports suggest.

Finance Minister Pranab Mukherjee said on Saturday, 19 September 2009, that the Centre will not roll back the stimulus package given to the industry in wake of the global economic meltdown till signs of clear recovery are visible across recession-hit US and Europe. The Finance Minister also said the nation's equities index is moving steadily and authorities will avoid disturbing the pattern.

Meanwhile, Sebi chairman C B Bhave announced after market hours today that the takeover laws would apply to all future issues of American Depositary Receipts (ADR) or Global Depositary Receipts (GDR) with voting rights, but would not be retrospective. The market regulator has also allowed the concept of anchor investors in Indian Depository Receipts (IDRs). It has also decided that at least 30% of issue size of the IDRs will be reserved for allocation to retail individual investors.

European equities resumed their upward march on Tuesday after two sessions of losses but investors remained cautious ahead of a two-day Federal Reserve meeting. The key benchmark indices in France, Germany and UK were up by between 0.86% to 1.29%.

Select Asian stocks rose today for the first time in three days after Citigroup Inc. raised Samsung Electronics Co.'s price estimate and Morgan Stanley lifted its rating on companies that make automobile batteries. The key benchmark indices in South Korea, Singapore, Taiwan and Hong Kong were up by between 1.06% to 1.38%. But, key benchmark indices in China and Taiwan were down by between 0.45% to 2.34%. Japanese stock markets have been shut since Monday, 21 September 2009, for national holiday. Trading will begin on Thursday, 24 September 2009.

The Asian Development Bank (ADB) on Tuesday raised its estimate of 2009 average growth in developing Asian economies to 3.9% from its March forecast of 3.4%, saying that Asia had proved to be more resilient than expected to the global financial crisis. ADB raised its forecast for India's economic growth this year by 1 percentage point to 6%.

Trading in US index futures indicated Dow could rise 64 points at the opening bell today, 22 September 2009.

US stocks ended mostly lower on Monday, 21 September 2009, on speculation a six-month rally has outpaced prospects for profit growth, even as an index of US leading economic indicators rose for the fifth straight month. The Dow Jones Industrial Average was down 41.34 points, or 0.4%, to 9,778.86. The S&P 500 index fell 3.64 points, or 0.3%, to 1,064.66. But the Nasdaq Composite index rose 5.18 points, or 0.2%, to 2,138.04.

At a policy meeting of the Federal Open Market Committee on 22 and 23 September 2009, the Fed policy makers will assess the early signs of improvement now taking shape across the economy. The Fed is expected to hold rates steady but markets will be interested to know when its ultra-loose policy will start to be tightened.

Meanwhile, the world economy is likely to be the focus of a two-day G20 financial summit in Pittsburgh on 24-25 September 2009. The G20 leaders will discuss overhauling global financial regulation and fixing long-term imbalances in the world economy. The G20 leaders are also considering ways to rein in bank bonuses that many say contributed to the global financial crisis by encouraging excessive risk-taking. Bank bonuses are part of the G20 agenda to consider ways to reshape global financial rules after the 2008-2009 crisis.

The G20 finance ministers and central bankers said on 5 September 2009 that they would not remove economic stimulus until the global recovery was well entrenched. Low interest rates across the world have been one key element in the recovery of risk appetite triggering a solid rebound in global stocks from March 2009 lows.

Closer home, 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. Total rainfall since 1 June 2009, the start of the season, was 21% below average because of exceptionally dry spells earlier in the season. More than two-thirds of the people live in villages and 60% of the farm land depends on the annual rains.

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 BSE 30-share Sensex rose 145.13 points or 0.87% to 16,886.43, its highest closing since 22 May 2008. The Sensex rose 202.19 points at the day's high of 16,943.49 in late trade. The barometer index rose 22.48 points at the day's low of 16,763.78 in early trade.

The S&P CNX Nifty rose 44.15 points or 0.89% to 5020.20, its highest closing since 22 May 2008. It hit a high of 5,036.30. 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 5437 crore, lower than Rs 6309.48 crore on Monday, 21 September 2009.

The market breadth, indicating the overall health of the market was strong. On BSE, 1599 shares rose as compared with 1176 that declined. A total of 80 shares remained unchanged.

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

The Sensex has jumped 672.24 points or 4.14% in five trading sessions from a recent low of 16,214.19 on 14 September 2009. The barometer index has jumped 1,488.10 points or 9.66% from a low of 15,398.33 on 3 September 2009. The Sensex is up 7,239.12 points or 75.03% in calendar year 2009 as on 22 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8,726.03 points or 106.93% as on 22 September 2009. FII inflow in the calendar year 2009 totaled Rs 47,685.20 crore (till 17 September 2009).

Coming back to today's trade, the BSE Mid-Cap index rose 0.74% to 6216.99. It underperformed the Sensex. The BSE Small-Cap index rose 1.05% to 7,451.02 and outperformed the Sensex.

From a recent low of 5,758.03 on 2 September 2009, the BSE Mid-Cap index has risen 458.96 points or 7.97%. The BSE Small-Cap index has jumped 582 points or 8.47% from a recent low of 6,869.02 on 2 September 2009.

The BSE IT index (up 1.91%), the BSE FMCG index (up 1.63%), the BSE Realty index (up 1.02%), the BSE Auto index (up 0.99%), the BSE Bankex (up 0.97%), the BSE Healthcare index (up 0.95%), the BSE Capital Goods index (up 0.88%) outperformed the Sensex.

The BSE Oil & Gas index (down 0.03%), the BSE Metal index (up 0.1%), the BSE Consumer Durables index (up 0.54%), the BSE PSU index (up 0.61%), the BSE Power index (up 0.66%), the BSE Teck index (up 0.73%), underperformed the Sensex.

India's largest dedicated housing finance firm by revenue HDFC jumped 5.3% on expectations of good Q2 September results. HDFC has reportedly paid advance tax of Rs 320 crore in the second installment of 15 September 2009 compared to Rs 290 crore in the same period a year ago.

Index heavyweight Reliance Industries (RIL) fell 0.11% to Rs 2096.35. The stock hit a high of Rs 2139.80 and a low of Rs 2088.20. As per report company is looking at acquiring the assets either partly or fully of the bankrupt Dutch petrochemicals company LyondellBasell.

The stock was under pressure late last week following a large treasury share sale by the company in the secondary market. Petroleum Trust on Thursday 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.

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 fell as US crude oil futures fell below the $70 a barrel level on Monday as the dollar strengthened, global equities slipped and demand worries persisted despite signs of economic recovery. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) fell 0.47%. As per recent reports, ONGC's Russian unit has substantially cut oil production due to increase in cost. Cairn India fell 0.49%. Fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms.

PSU OMCs rose as crude dropped after a recent rally. BPCL and HPCL rose by between 2.69% to 2.74%. Indian Oil Corporation (IOC) rose 0.58%. The company's board approved a liberal 1:1 bonus issue on 14 September 2009. Lower oil prices will reduce underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

The government last week 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.

India's largest thermal power generator by sales NTPC rose 0.82% as company will reportedly sign an agreement to buy natural gas from Reliance Industries in two days to increase fuel supplies to plants other than those facing lawsuits.

Among other power stocks, Reliance Power, CESC, Torrent Power, Power Grid Corporation of India, Reliance Infrastructure rose by between 0.19% to 2.56%.

Auto stocks rose on hopes of strong sales in the upcoming festive season. India's top small car maker by sales Maruti Suzuki rose 1.12%. But India's largest tractor maker by sales Mahindra & Mahindra rose 0.37%.

Among two wheeler makers, India's largest motor bike maker by sales Hero Honda Motors rose 0.86%. Bajaj Auto rose 2.25%, 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.

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.

Commercial vehicle makers rose on reports they plan to raise prices in the range of 1-3% on pick up demand. India's largest truck maker by sales Tata Motors rose 2.6%. 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.

India's second largest truck maker by sales Ashok Leyland rose 2.47%.

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.

FMCG pivotals rose on revival of monsoon rains since mid-August 2009. FMCG firms derive substantial revenue from the rural sector. Dabur India, Nestle India, United Spirits, ITC, Hindustan Unilever, rose by between 0.2% to 2.59%

IT stocks gained on strong US economic data. US is the biggest market for Indian IT firms. India's largest IT exporter by sales Tata Consultancy Services rose 2.92%. The company's unit last week secured overseas contracts worth around $25 million from different players for implementing its financial software products in the Asia-Pacific and the US.

TCS also rallied on jump in advance tax in second installment. As per preliminary data, TCS has reportedly paid Rs 220 crore in advance tax in the second installment of 15 September 2009 as against Rs 81 crore in the same period last year.

India's second largest software services exporter by sales Infosys rose 1.77%. Its ADR rose 0.6% on Monday 21 September 2009. 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 1.28% even as its ADR fell 0.24% on Monday. The company recently won a three-year outsourcing contract from All Nippon Airways, Japan's No.2 carrier.

India's largest telecom player by sales Bharti Airtel fell 3.28%. Bharti Airtel is reportedly making a slew of last-minute concessions to sew up a deal with MTN. Bharti is offering to retain the top management of MTN for at least three years, giving the option of an all-cash offer to minority holders of MTN, and more shares in itself for the same money, which would push up the cost of acquisition for Bharti.

Meanwhile, Sebi chief Bhave said today that Sebi has not received an application for dual listing, seen as a key issue holding up a finalisation of tie-up talks between Bharti Airtel and South Africa's MTN. 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 largest copper maker by sales Sterlite Industries fell 0.25% after company said on Monday 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.

But most other metal shares rose on strong domestic demand. Tata Steel, Steel Authority of India, National Aluminum Company, rose by between 0.54% to 1.44%.

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 Indiabulls Real Estate and Unitech rose by between 0.31% to 2.76%.

Cement stocks rose as a thrust on the infrastructure sector in the Union Budget 2009-2010 may keep cement demand strong. ACC, Grasim Industries, Ultratech Cement rose by between 0.01% to 0.78%. Cement makers recently cut prices by Rs 3 per 50 kilogram bag in Mumbai.

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. Era Infra Engineering, Valecha Engineering, Gammon India, IVRCL Infrastructure & Projects rose by between 1.03% to 12.7%.

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

Banking stocks rose 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 rose 1.5% even as its ADR fell 0.75% on Monday.

India's largest private sector bank by net profit ICICI Bank rose 0.96% even as its ADR fell 0.99% on Monday. The bank has reportedly finalised sale of Point Of Sale (PoS) terminals to First Data Corporation for $ 80 million.

India's largest bank by net profit and branch network State Bank of India rose 1.41% to Rs 2172.75 on optimism about Q2 September 2009 results. The stock hit a 52 week high of Rs 2195. 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.

India's largest engineering & construction firm by sales Larsen & Toubro rose 0.97% on higher advance tax payment.

Among capital goods stocks, Praj Industries, Crompton Greaves, Punj Lloyd, SKF India, BEML, Thermax, ABB, rose by between 0.31% to 1.43%.

India's largest power equipment maker by sales Bharat Heavy Electricals rose 0.31%. 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).

Sugar stocks fell after Union Cabinet late last week extended limits on stocks that can be held by traders of sugar until September 2010. The move is aimed at keeping a lid on prices of commodity. Shree Renuka Sugars, Dhampur Sugars, Bajaj Hindustan and Balrampur Chini fell by between 0.91% to 2.36%.

Jindal Cotex settled at Rs 87.25 on BSE, a premium of 16.33% on its offer price of Rs 75.

Cals Refineries clocked highest volume of 11.54 crore shares on BSE. Jindal Cotex (2.43 crore shares), Sanraa Media (1.56 crore shares), Karuturi Global (1.4 crore shares) and K S Oils (1.32 crore shares) were the other volume toppers in that order.

Jindal Cotex clocked highest turnover of Rs 212.19 crore on BSE. Reliance Industries (161.95 crore), Tata Steel (Rs 1.3 crore shares), Suzlon Energy (Rs 1.15 crore shares) and Reliance Natural Resources (Rs 108.45 crore) were the other turnover toppers in that order.