Sensex, Nifty scale highest level in nearly 16 months; Nifty hits 5,000

The key benchmark indices scored small gains in choppy trade, extending recent strong gains, as global stocks rose. The BSE 30-share Sensex rose 34.07 points or 0.2%, off close to 110 points from the day's high and up about 75 points from the day's low. Index heavyweight Reliance Industries (RIL) slumped as the firm sold a part of its own shares held in a trust to raise funds.

The 50-unit S&P CNX Nifty hit the psychological 5,000 mark first time since 23 May 2008 in mid-morning trade but fell below that level later. The Sensex and Nifty achieved their highest closing levels in nearly 16 months today, 17 September 2009.

IT and auto stocks rose. But, realty stocks fell. Oil exploration stocks rose whereas PSU OMCs fell as crude oil prices advanced. The market breadth turned negative in contrast to a strong breadth earlier in the day.

Intraday volatility was high. After an initial surge triggered by higher Asian stocks, the Sensex erased almost the entire gains shortly. The market strengthened again to hit a fresh intraday high in mid-morning trade. A sell-off in RIL pulled the Sensex into the red for a short while in early afternoon trade. The market regained positive zone later. The market alternately moved between positive and negative terrain in afternoon trade. It firmed up in mid-afternoon trade. The market slipped into the red once again in choppy late trade.

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 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, it 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.

Data released by the government today 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.

Meanwhile, market expectations of strong Q2 results were tempered after a news agency quoted an unnamed government official as saying 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 fully subscribed within an hour of opening of the issue on Wednesday, 16 September 2009. The IPO was subscribed 3.37 times at 16:00 IST on second day of the issue on Thursday. The company has allotted 1.52 crore shares to anchor investors at the top-end of the Rs 55-Rs 60 price band.

World stocks have risen sharply from a trough in early March 2009 on hopes the global economic is recovering from a slump in late calendar 2008 caused by global financial crisis.

European shares rose on Thursday, extending the previous session's sharp gains, as renewed hopes of a global economic recovery buoyed demand for riskier assets like equities. Key benchmark indices in France, Germany and UK were up by between 0.47% to 0.71%.

Asian stocks hit their highest level in 13 months on Thursday after US economic data raised hopes that the global economic recovery is strengthening. Key benchmark indices in China, Hong Kong, Singapore and Taiwan were up by between 0.5% to 2.02%.

Japan's Nikkei rose 1.68% after Bank of Japan (BoJ) held a key policy rate steady at 0.1% as expected. The BoJ also slightly upgraded its economic view for the first time since July 2009.

Trading in US index futures indicated Dow could gain 18 points at the opening bell today, 17 September 2009.

US markets rallied on Wednesday, 16 September 2009, with the benchmark indices up more than a percent, after industrial production rose for the second straight month and weakness in the dollar boosted commodity and industrial stocks. The Dow gained 108.30 points, or 1.1%, to 9,791.71. The S&P 500 index added 16.13 points, or 1.5%, to 1,068.76, while the Nasdaq Composite Index rose 30.51 points, or 1.5%, to 2,133.15. The S&P 500 is up about 60% from 9 March 2009 low.

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.

The BSE 30-share Sensex rose 34.07 points or 0.2% to 16,711.11 its highest closing since 22 May 2008. The Sensex rose 142.98 points the day's high of 16,820.02 in mid-morning trade. The barometer index fell 40.49 points at the day's low of 16,636.55 in afternoon trade.

The S&P CNX Nifty rose 7.15 points or 0.14% to 4965.55 its highest closing since 22 May 2008. Nifty September 2009 futures were at 4961.50 at a discount of 4.05 points as compared to the spot closing of 4965.55. Turnover in NSE's futures & options (F&O) segment surged to Rs 83,762.65 crore from Rs 70,086.74 crore on Wednesday, 16 September 2009. It hit a high of 5003.05 in mid-morning trade, its highest since 23 May 2008.

BSE clocked a turnover of Rs 9380 crore, sharply higher than Rs 6645.31 crore on Wednesday,16 September 2009.

The market breadth, indicating the overall health of the market, turned negative in contrast to a strong breadth in early trade. On BSE, 1,215 shares rose as compared with 1574 that declined. A total of 92 shares remained unchanged.

Among the 30-member Sensex pack, 22 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 7063.80 points or 73.22% in calendar year 2009 as on 17 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8,550.71 points or 104.78% as on 17 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 0.27% and outperformed Sensex. The BSE Small-Cap index rose 0.13% and underperformed Sensex.

The BSE Teck index (up 1.92%), the BSE IT index (up 1.91%), the BSE Auto index (up 1.46%), the BSE Bankex (up 0.78%), the BSE Consumer Durables index (up 0.66%), the BSE Capital Goods index (up 0.55%), outperformed the Sensex.

The BSE Oil & Gas index (down 2.86%), the BSE Realty index (down 0.91%), the BSE PSU index (down 0.35%), the BSE Metal index (down 0.27%), the BSE Power index (down 0.22%), the BSE FMCG index (down 0.22%), the BSE Healthcare index (down 0.14%), underperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) fell 4.45% to Rs 2086.35 after the firm said during market hours today that Petroleum Trust sold 1.5 crore equity shares of RIL through block deals on the boruses today, 17 September 2009.

Reliance Industrial Investments and Holdings a wholly owned subsidiary of RIL, is the sole beneficiary of the Trust. The trust will realize close to Rs 3,188 crore, at an average price of about 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 rose after crude oil futures prices settled at their highest level this month on Wednesday after US crude oil inventories dropped more than expected last week. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 0.99%. As per recent reports, ONGC's Russian unit has substantially cut oil production due to increase in cost. Cairn India was flat at Rs 267.75.

Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms. Light, sweet crude oil for October delivery on the New York Mercantile Exchange rose $1.58 a barrel, or 2.2%, at $72.51 a barrel, the highest level since 28 August 2009.

PSU OMCs fell as the rally in crude oil prices will result in increase in under-recoveries on domestic sale of petrol, diesel, LPG and kerosene at a controlled price. BPCL and HPCL fell by between 4.98 % to 4.99%.

Indian Oil Corporation (IOC) fell 2.61%. 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.

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 1.87% 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 2.02% as its ADR rose 1.58% on Wednesday. The company recently 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 rose 1.87% as its ADR rose 2.99% on Wednesday. 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.

Auto stocks rose on hopes of strong sales in the upcoming festive season. India's top small car maker by sales Maruti Suzuki rose 3.08%.

Bajaj Auto rose 2.13% 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.

India's largest tractor maker by sales Mahindra & Mahindra rose 1.25% on jump in advance payment in the second installment.

India's largest truck maker by sales Tata Motors was flat at Rs 608.15 despite a surge in advance tax payment in the second installment.. 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.

Realty stocks fell on profit taking after a recent surge. Indiabulls Real Estate, Ackruti City, Omaxe and Unitech fell by between 1.1% to 3.04%.

As per 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.

Higher advance tax payment by banks in the second quarter aided rally in bank stocks for the second day in a row. India's largest bank by net profit and branch network State Bank of India rose 0.82%. The bank expects to maintain 40% growth in its business in the United Kingdom, Chairman O.P. Bhatt said today. Bhatt said the bank was looking at smaller acquisitions in the UK, and it planned to make London the core of its operations in Europe.

India's second largest private sector bank by net profit HDFC Bank rose 1.44% as its ADR rose 2.74% on Wednesday. India's largest private sector bank by net profit ICICI Bank rose 0.58% as its ADR rose 3.63% on Wednesday. The bank's managing director Chanda Kochhar said on 8 September 2009 credit growth in India is likely to pick up in the second half of this year.

Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange rose 3.69% on Wednesday 16 September 2009. India's largest copper maker by sales Sterlite Industries rose 0.12%. The company on Friday 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.

Among other metal stocks, National Aluminum Company, Hindustan Zinc, Hindalco Industries rose by between 0.05% to 3.62%.

But, India's largest steel maker by sales Tata Steel fell 1.97% on profit taking after Wednesday's 8.21% gains. 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 drugmaker by sales Ranbaxy Laboratories fell 1.17% even after the company entered into a strategic in-licensing agreement with Medy-Tox Inc of South Korea, for selling a cosmetic product in India

Some FMCG pivotals rose on revival in India's annual monsoon in the past few weeks. FMCG firms derive substantial revenue from the rural sector. Marico, Dabur India, REI Agro, United Spirits and Hindustan Unilever rose by between 0.41% to 1.26%.

Finance Minister Pranab Mukherjee said on Monday, 14 September 2009, said late monsoon rains have eased drought conditions in India.

Cement stocks rose on bargain hunting after recent losses triggered by reports cement makers have cut prices by Rs 3 per 50 kilogram bag in Mumbai. ACC, Grasim Industries, Ultratech Cement rose by between 0.25% to 3.65%.

Telecom stocks rose. India's largest telecom player by sales Bharti Airtel rose 3.13%. On Tuesday 15 September 2009, South Africa's communications regulator had said it might not grant approval for the proposed alliance between Bharti and MTN this year. 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 telecom player by sales Reliance Communications rose 0.99% on 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.

India's largest engineering & construction firm by sales Larsen & Toubro rose 0.89% on higher advance tax payment.

Among other capital goods stocks, BEML, Crompton Greaves, Siemens, Thermax, ABB, rose by between 0.08% to 3.55%.

But, India's largest electric equipment maker by sales Bharat Heavy Electricals fell 0.11%. 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).

Aviation stocks rose on hopes a recent cut in fares would boost air traffic. Jet Airways, Kingfisher Airlines and SpiceJet rose by between 7.18% to 18.05%.

As per reports, almost all airlines have dropped ticket prices by 20-50% following Jet Airways' 50% fare cut. Jet Airways had on 14 September 2009 announced the discount on all routes for five days to make up for Rs 200 crore in losses it incurred during the pilots' strike which ran for five days last week

Sugar stocks fell after the cabinet imposed restrictions on stocks to check price rise. Bajaj Hindustan, Dhampur Sugars and Shree Renuka Sugars fell by between 1.02% to 2.44%.

King Fisher Airlines clocked highest volume of 2.37 crore shares on BSE. Cals Refineries (2.24 crore shares), SpiceJet (2.18 crore shares), NHPC (1.6 crore shares) and Reliance Industries (1.29 crore shares) were the other volume toppers in that order.

Reliance Industries clocked highest turnover of Rs 270.16 crore on BSE. Tata Steel (Rs 188.24 crore), Jaiprakash Associates (Rs 171.77 crore), Aban Offshore (Rs 163.78 crore) and Unitech (Rs 139.75 crore) were the other turnover toppers in that order.