Sensex snaps four-day losing streak led by auto shares

Strong global cues with positive European markets and Asian markets extending gains in late trade triggered a solid rally on the local bourses, helping them break their four-day declining trend. Key benchmark indices rallied in late trade on buying demand for auto, metal and capital goods after starting the day on a soft note. The BSE 30-share Sensex gained 290.79 points or 1.89%, up 330.18 points from the day's low and off 51.71 points from the day's high.

The market breadth was strong on BSE with small and mid-cap shares also participating in the rally. All the sectoral indices on BSE edged higher. BSE cash market turnover swelled to Rs 5,695 crore as compared with Rs 5,132.57 crore on Thursday, 3 September 2009. Volatility was high throughout the day ahead of the crucial US jobs data that will be released evening today, 4 September 2009.

In what could boost the sentiment, the Employees' Provident Fund Organisation (EPFO) is looking for options to park 3-5% of its corpus of Rs 2.57 lakh crore of retirement fund in stock markets to earn better returns.

Direct tax collections by the government grew to Rs 87,888 crore for the first five months of the current fiscal, a 4.12% growth which is attributed to tax refunds paid during the period. The direct tax mop-up in August 2009 was Rs 13,898 crore against Rs 12,761 crore in the year-ago period.

Today's gains were also boosted by a research report from a foreign brokerage house which indicated that the benchmark indices BSE Sensex could hit the 50,000 mark in nine years on more growth in fiscal year 2011. The pace for the gain will depend on economic growth, interest rates, inflation and the success of the nation's infrastructure and fiscal consolidation efforts, the research report said. European shares gained today, 4 September 2009, ending a four-day falling trend, on buying in bank shares. Key benchmark indices in UK, Germany and France were up by between 0.53% and 0.85%.

Most Asian markets were trading higher today, 4 September 2009 ahead of the unemployment data in the US. Key benchmark indices in Hong Kong, Singapore, China, and Taiwan rose between 0.58% and 2.82%. Indices in South Korea and Japan were down 0.29% and 0.27% respectively.

US markets snapped their four-day losing streak on Thursday, 3 September 2009 as investors focused on stronger-than-expected sales by key retailers in August 2009, offsetting weak labor-market data. Financials rebounded after taking a beating on Wednesday. The Dow gained 63.94 points, or 0.69%, to 9,344.61. The S&P 500 index added 8.49 points, or 0.9%, to 1,003.24, while the Nasdaq Composite Index rose 16.13 points, or 0.8%, to 1,983.20.

In economic news, the ISM reported its service-sector index rose to 48.4 in August 2009 from 46.4 in July 2009, slightly above expectations. Initial jobless claims fell 4,000 last week, roughly in-line with estimates. Continuing claims however, jumped to 6.23 million from 6.14 million.

The US non-farm payrolls report for August 2009 will be released by the Labor Department today, 4 September 2009 (after Indian market hours). Economists forecast 225,000 jobs were lost in August 2009, compared with a loss of 247,000 jobs in July 2009. However the unemployment rate is expected to rise to 9.5%, compared with a 9.4% rate in July.

Trading in US index futures showed the Dow could rise 32 points at the opening bell on Friday, 4 September 2009. The Dow futures were in red earlier.

Back home, analysts are concerned that a sharp surge in food prices 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.

Poor rains will impact agricultural sector. However, its impact on the economy may not be much due to falling share of agriculture. The monsoon witnessed a revival in the second half of August 2009 but the cumulative rains were still a quarter below average till last week. Drought or drought-like conditions have been declared in 278 districts or 44% of the nation's total, as rainfall has been 25% below average so far in the four- month monsoon season that started on 1 June 2009, the farm ministry said on 27 August 2009.

Farm secretary T. Nanda Kumar on Wednesday 2 September 2009 said improved monsoon rains in recent days will boost crop prospects for rice and sugar cane. He said other crops would also gain.

A slowdown in the manufacturing sector and falling exports remains a cause for concern. A latest survey showed India's manufacturing activity expanded at its slowest pace in five months in August 2009. The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, fell to a five-month low of 53.2 in August 2009 from a revised reading of 55.4 in July 2009. The new orders index fell to 56.2 in August 2009, also its lowest in four months, from 60 in July 2009.

The PMI has been above 50, which separates expansion from contraction, for five months. Before that, it shrank for the five months through March 2009, hitting a trough of 44.4 in December 2008.

India's gross domestic production (GDP) grew 6.1% in Q1 June 2009 compared with the year-earlier, figures released by the Central Statistical Organisation announced on Monday, 31 August 2009, showed. The segment grouping financing, insurance, real estate and business services led growth in GDP, gaining 8.1% on year. The category including trade, hotels, transport and communication was also up 8.1%.

The GDP growth was lower than 7.8% achieved in Q1 June 2008 but it accelerated from the 5.8% expansion in Q4 March 2009.

The BSE 30-share Sensex advanced 290.79 points or 1.89% to 15,689.12. The Sensex opened 27.53 points higher at 15,425.86. The barometer index gained 342.50 points at the day's high of 15,740.83 in mid-afternoon trade. The Sensex fell 39.39 points at the day's low of 15,358.94 in early afternoon trade.

The S&P CNX Nifty gained 86.85 points or 1.89% to 4,680.40. Nifty September 2009 futures were at 4692.50 at a premium of 12.10 points as compared to the spot closing.

Key benchmark indices had declined for the fourth straight trading session on Thursday, 3 September 2009 underperforming firm global stocks on worries a surge in food prices may stoke inflationary pressures in the economy. The BSE Sensex has lost 524.01 points or 3.29% in the last four days to 3 September 2009 after gaining for seven straight days

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 6041.81 points or 62.62% in calendar year 2009 as on 4 September 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7528.72 points or 92.25% as on 4 September 2009. FII inflow in calendar year 2009 totaled Rs 39368.40 crore (till 3 September 2009)

The BSE clocked a turnover of Rs 5695 crore as compared with Rs 5,132.57 crore on Thursday, 3 September 2009. Turnover in NSE's futures & options (F&O) segment surged to Rs 70,260.73 crore from Rs 62,922.53 crore on Thursday, 3 September 2009.

The market breadth, indicating the overall health of the market, was strong. It was positive in afternoon trade after turning negative in early afternoon session. Breadth was strong in opening session of trade. On BSE, 1573 shares rose as compared with 1180 that slipped. A total of 100 shares remained unchanged.

The BSE Metal index (up 2.76%), the BSE Realty index (up 2.09%), the BSE PSU index (up 1.04%), the BSE Capital Goods index (up 2.29%), the BSE Auto index (up 2.88%), the BSE Oil & Gas index (up 2.16%), outperformed the Sensex.

The BSE FMCG index (up 1.71%), the BSE Power index (up 1.23%), BSE IT index (up 0.48%), the BSE Teck index (up 0.42%), the BSE Bankex (up 1.25%), BSE Consumer Durables index (up 0.27%), the BSE Healthcare index (up 0.80%), underperformed the Sensex.

The BSE Mid-Cap index rose 1.08% to 5,833.22 and the BSE Small-Cap index gained 1.07% to 6,991.51. Both these indices underperformed the Sensex

Among the 30-member Sensex pack, 27 advanced while only 3 of them declined. HDFC (up 3.22%), ITC (up 2.73%), and Grasim (up 2.70%), edged higher from the Sensex pack

Auto stocks extended early gains on fresh buying after a recent consolidation. Besides the revival of India's monsoon after an initial lull also supported gains. Auto companies derive a third of their sales from rural market.

Indian largest tractor maker by sales Mahindra & Mahindra jumped 5.63% to Rs 859.20 on reports the company will foray in United States market in the first quarter of 2010 with two new variants of SUV Scorpio besides two vehicles in the Indian market over the next six months. It was the top gainer from the Sensex pack.

Maruti Suzuki, India's top car maker by sales, gained 1.91%. The company's total vehicle sales rose 41.6% to 84,808 units in August 2009 over August 2008. The company announced August sales figures during market hours on Tuesday.

India's largest motorbike maker by sales Hero Honda Motors rose 4.20%. The company's sales rose 36% in August 2009 over August 2008. India's second largest motorbike maker by sales Bajaj Auto rose 1.49%. India's third largest motorbike maker by sales TVS Motor Company gained 2.07%.

However India's largest truck marker by sales Tata Motors lost 0.69% to Rs 503.30 on profit booking after advancing 22.93% in the month to 2 September 2009. The stock fluctuated in a wide range of Rs 430 and Rs 516.30 today. The stock has even struck a 52-week high of Rs 530.50 on 3 September 2009. It was the top loser from the Sensex pack

Gains in auto stocks spilled over auto ancillary and tyre stocks are their fortunes are closely linked to performance of auto industry.

Among the auto ancillary stocks - Amtek Auto (up 12.67%), Lumax Industries (up 5.50%), Munjal Auto (up 6.07%), Subros (up 4.34%), and Steel Strips Wheels (up 14.42%), surged.

MRF (up 5.97%), JK Industries (up 5%), Goodyear (up 3.09%), Apollo Tyres (up 0.47%), and TVS Srichakra (up 0.69%), rose from the tyre pack

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) advanced 2.37% to Rs 1977.90. The government on Tuesday amended the special leave petition filed in the Supreme Court stating that the country's largest utility NTPC and Anil Ambani's Reliance Natural Resources (RNRL) were not on the same footing with regard to the supply of gas from the Krishna-Godavari basin by Reliance Industries (RIL). The price of gas to be paid by NTPC, the government said in its application, will be considered in-dependently of the RIL-RNRL case.

The biggest change in the government's stand on Tuesday is its categorical assertion that the government-set price of $4.20 per MMBTU was not applicable to a disputed contract between NTPC and RIL.

The Bombay High Court had asked RIL to supply 28 million standard cubic meters (mmscmd) of gas to RNRL at $2.34 per mmbtu. RIL has appealed this decision in the apex court. Subsequently, the ministry of oil and natural gas had also moved the apex court by filing an independent SLP. It was only an intervenor before the high court in the case.

India's largest thermal power producer by sales NTPC rose 0.22% while RNRL rose 0.82%.

India's largest oil exploration firm ONGC surged 2.85%, ahead of the opening of the public issue of the India's second largest oil exploration firm Oil India on 7 September 2009. The issue in the price band of Rs 950- 1050 will remain open till 11 September 2009.

Metal stocks edged higher as LMEX, a gauge of six metals traded on the London Metal Exchange rose 1.58% on Thursday, 3 September 2009.

India's largest non-ferrous metals producer by sales Sterlite Industries gained 3.94% mirroring a 1.1% rise in Shanghai copper futures today, 4 September 2009.

India's largest private sector steel marker by sales Tata Steel gained 2.33%. The company had on 3 September 2009 hiked prices of some of their products by up to Rs 1,500 a tonne on improvement in demand.

JSW Steel gained 3.25% after 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 today, 4 September 2009.

Steel Authority of India rose 2.75% after 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 sales of special steels.

Uttam Galva Steels was locked at 10% upper limit after a block deal of 13.57 lakh shares was executed on BSE at Rs 113.70 per share. The block constituted 1.13% of the company's equity.

Hindalco (up 2.58%), Sesa Goa (up 1.40%), National Aluminum Company (up 0.79%), Hindustan Zinc (up 6.25%), gained.

India's second largest listed cellular service provider by sales Reliance Communication rose 0.45%, on follow-up buying. The stock has been on a roll recently, gaining 12% in three trading days to 3 September 2009, on reports its telecom tower unit may revive a plan to raise funds through an initial public offer.

India's largest mobile services provider by sales Bharti Airtel rose 0.16% to Rs 406, recovering from day's low of Rs 399.60. 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 largest bank by net profit and branch network State Bank of India (SBI) was up 0.79%. The bank on Thursday slashed rates for farmers looking for minor irrigation and crop loans. As part of its special drought-relief schemes, the bank has taken this step to support farmers who have been hit by the weak monsoon this year. The bank reduced interest rates to 8% in the first year and 9% in the second and the third year for loans up to Rs 25 lakh, sanctioned till the end of March 2010.

India's largest private sector bank by net profit ICICI Bank rose 1.09% mirroring a 1.15% rise in its ADR on 3 September 2009.

India's largest engineering & construction company by sales Larsen & Toubro shot up 3.69%. Reports on 1 September 2009 showed Maharashtra State Power Generation Co (Mahagenco) has identified Larsen & Toubro-led consortium as the lowest bidder for a boiler-turbine-generator (BTG) package at its Koradi project.

India's largest power equipment maker by sales Bhel rose 0.84% on reports the company is expecting to tie up orders worth about $2.5 billion in the next 4-6 weeks as private firms step up investment in the power sector

Software stocks were mixed ahead of the crucial US jobs data. US is the key market for Indian software firms.

India`s second largest software services exporter by sales Infosys was up 0.44% tracking a 2.10% rise in its ADR on 3 September 2009. India`s third largest software services exporter by sales Wipro fell 0.06% despite a 0.78% rise in its ADR on 3 September 2009.

India`s largest software services exporter by sales, Tata Consultancy Services declined 0.27%. The company will reportedly hire 25,000 people globally this year of which 90% will be in India. The figure is 10,000 short of the number of people TCS hired last year.

Realty stocks rose on reports of rising property prices in regions like New Delhi-NCR (National Capital Region) and Mumbai have by 10-15% on gradual return of residential property buyers.

DLF (up 0.29%), Unitech (up 3.63%), HDIL (up 1.55%), Indiabulls Real Estate (up 4.38%), edged higher.

Bharti Airtel was the top traded counter on the BSE with turnover of Rs 266.96 crore followed by IFCI (Rs 218.65 crore), DLF (Rs 213.60 crore), Reliance Industries (Rs 199.01 crore) and Unitech (Rs 197.89 crore).

IFCI clocked the highest volume of 3.84 crore shares on BSE. NHPC (3.75 crore shares), Unitech (1.89 crore shares), Suzlon Energy (1.56 crore shares) and Ispat Industries (1.11 crore shares) were the other volume toppers in that order.

Among the side counters Take Solutions (up 15.23%), LKP Merchant Finance (up 19.98%), Shivam Auto (up 19.95%), R Systems International (up 14.53%), and Astra Microwave (up 20%), surged.

Andhra Sugar (down 9.03%), Archies (down 8.19%), and Lincoln Pharma (down 9.22%), slipped.

Ramco Industries jumped 5% after the company set record date for stock split and bonus issue. The company made this announcement after market hours on Thursday, 3 September 2009.

FDC rose 2.99% after the company said its board will meet on 9 September 2009 to consider buy back of shares. The company announced the board meet during trading hours today, 4 September 2009.

Radico Khaitan soared 8.89% after Nomura Funds Ireland Public bought 15 lakh shares, or 1.46% stake in the company at Rs 104 each on the NSE on Thursday, 3 September 2009.

Golden Tobacco was locked at upper limit of 5%, extending previous session's gain on reports the company may co-develop a property in the Mumbai suburbs with Godrej Properties.

CESC gained 4.37% after a block deal of 4 lakh shares was executed on BSE at Rs 370 per share. The block deal constituted 0.32% of the company's equity.

UTV Software Communications rose 0.49% after the company's board approved raising up to Rs 100 crore by issuing non-convertible bonds to Life Insurance Corporation of India. The company made the announcement before market hours today, 4 September 2009.