Markets ends Samvat 2065 on an upbeat note

Banking, realty stocks and index heavyweight Reliance Industries (RIL) led the rally on the bourses as strong response to the initial public offer of Indiabulls Power, sustained buying by foreign funds and higher global stocks boosted sentiment. The BSE 30-share Sensex rose 127.62 points or 0.74%, up close to 200 points from the day's low. Bulls were in complete command in the last seven months of Samvat year 2065. The new Samvat year 2066 as per the Hindu calendar begins on Saturday, 17 October 2009

India's biggest commercial bank in terms of branch network State Bank of India (SBI) jumped nearly 6%. Realty giant DLF spurted more than 6%. But, India's largest copper maker by sales Sterlite Industries fell on equity dilution worries after the company said before market hours it had raised $500 million in convertible notes. Auto and FMCG stocks also fell. Oil exploration stocks gained whereas PSU OMCs fell on rally in crude oil prices. The market breadth was positive.

The market recovered soon after an initial slide caused by mostly lower Asian stocks. The market extended gains later. The Sensex hit a fresh intraday high in early afternoon trade. The market continued to march higher in afternoon trade on gains in European stocks and higher US index futures. The market pared gains in mid-afternoon trade. The market regained strength in late trade.

A special one hour Muhurat trading session will be held tomorrow, 17 October 2009, between 18:15 to 19:15 IST to pay obeisance to Lakshmi the Hindu goddess of wealth and prosperity. Investors make token purchases on the Muhurat trading day to mark the beginning of the new Samvat year as per the Hindu calendar. The market remains closed on Monday, 19 October 2009 on account of Diwali.

Emerging-market equity fund inflows surged in the second week of October 2009 on optimism improving US earnings and China's trade figures signal increased demand for commodities, fund tracker EPFR Global said on Friday, 16 October 2009. Heavy inflows were seen in funds specialized in BRIC countries -- Brazil, Russia, India and China. Asia ex-Japan funds received $823 million in the week ended 14 October 2009.

The Securities and Exchange Board of India (Sebi) on Friday said trades in corporate bonds should be cleared and settled through the National Securities Clearing Corp (NSCCL) or the Indian Clearing Corp (ICCL), effective from 1 December 2009. Last month, the Reserve Bank of India announced draft guidelines for corporate bond repos, and sought feedback on the proposals.

Inflation based on the wholesale price index (WPI) rose 0.92% in 12 months to 3 October 2009, slightly above previous week's annual rise of 0.7%, data released by the government on Thursday showed. Within the WPI, the food articles index rose 13.34%. The government revised upwards inflation for the year through 8 August 2009 to a much smaller decline of 0.37% from an estimated fall of 1.53%.

C. Rangarajan, chairman of the prime minister's Economic Advisory Council said on Wednesday the Reserve Bank of India is likely to hold interest rates at a near decade-low in its policy review this month and the monetary stance can continue until inflationary pressures rise. Robust industrial growth could offset the impact of a 2 to 2.5% contraction in farm output due to weak monsoon, and help the economy grow between 6 and 6.5% in 2009/10, Rangarajan said.

Faster industrial output growth and rising inflationary pressures have strengthened case for an end to the RBI's accommodative monetary stance next year. Industrial output grew at its fastest pace in 22 months in August at 10.4 %.

The water level in main reservoirs rose 3 percentage points to 63% of capacity in the week to Thursday as unseasonal rain filled the tanks to levels closer to normal, government data showed. Over the last 10 years, water levels in India's 81 main reservoirs have on average been steady at 67% for three consecutive weeks at this time of the year.

Reservoirs are important for hydropower, which accounts for a quarter of India's generation capacity. They also provide water to irrigate winter crops such as wheat and rapeseed.

Stock and sector-specific activity may dominate trade in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Lower interest rates and pay hike for government employees has boosted auto sales this year after last year's slowdown in demand. Government employees have started receiving the balance 60% of their wage arrears as per the recommendations of the VIth Pay Commission.

Cement firms, too, are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.

Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower.

Banks are seen reporting a sedate growth in core lending amid sluggish credit offtake. On the flip side, PSU banks will benefit from treasury gains amid volatility in prices of government securities during the quarter.

Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.

European shares on Friday pulled back from early gains made on the back of sharp gains for oil and gas firms, after results from General Electric and Bank of America triggered more uncertainly about earnings trends. Key benchmark indices in France, Germany and UK were down by between 0.24% to 0.53%.

Asian share markets were mixed as investors awaited fresh leads from major US corporate earnings. Key benchmark indices in South Korea, Hong Kong and Singapore were down by between 0.11% to 1.12%. Key benchmark indices in Japan, and Taiwan rose by between 0.06% to 0.18%.

China's Shanghai Composite index fell 0.31% on concerns the imminent launch of the Growth Enterprise Market, a Nasdaq-style board, would divert cash from current stocks.

China's banking regulator on Friday said major Chinese banks must make sure their lending does not run out of control and that their capital adequacy ratios do not deteriorate. The instruction was relayed to the lenders by Jiang Dingzhi, a vice-chairman of the China Banking Regulatory Commission (CBRC), at a meeting on Wednesday.

His comments are the latest sign of unease among regulators about the risks that banks are taking by ramping up lending to support the government's 4 trillion yuan ($585 billion) economic pump-priming package.

China's central bank has given its first public indication that it is thinking about when to move away from the ultra-loose monetary policy it adopted a year ago to shield the economy from the global financial crisis. Zhou Xiaochuan, governor of the People's Bank of China, said the bank had suspended its normal criteria for judging the right degree of monetary restraint, but could not do so forever.

Japan's economy has been picking up but lacks the drive of domestic demand, the government said in a monthly report on Friday, giving a bleaker view than the Bank of Japan. The central bank's policy board, this week, deferred a decision on withdrawing support for corporate finance after the government pressed it to consider what the economic cost would be if it retreated from credit markets.

US index futures reversed early gains. Trading in US index futures indicated Dow could fall 26 points at the opening bell today.

General Electric, the industrial bellwether, said its third-quarter profit dropped 44% to $2.42 billion, or 23 cents a share, as revenue fell 20% to $37.8 billion.

Bank of America posted a $2.2 billon loss, or 26 cents a share which was worse than analysts had been expecting.

US markets closed with marginal gains after a topsy-turvy session on Thursday on positive economic news and better than estimated earnings from Goldman Sachs and Citigroup. The Dow gained 47.08 points, or 0.5%, to 10,062.94, its highest close since last October. The S&P 500 index added 4.54 points, or 0.4%, to 1,096.56. The Nasdaq Composite Index rose 1.06 points, or 0.1%, to 2,173.29.

US technology services giant IBM's numbers came out after market close. The company raised its full-year outlook and reported higher-than-expected quarterly profit. The Internet search leader Google Inc handily beat analysts' expectations for both profit and revenue.

In the day's economic news, weekly jobless claims dropped to their lowest level since January 2009 at 514000.

Paul Volcker, an economic adviser to President Barack Obama and a former Fed chairman on Thursday said the enormous amounts of liquidity pumped into the US financial system by the Federal Reserve is not inflationary at the moment but will become so at some point. Volcker said it is difficult, but necessary, to start draining the billions of dollars in liquidity even while unemployment rates remained high as the US battles out of recession.

Billionaire investor George Soros said on Thursday the US economy is going to be a drag on world growth. Soros said he also believes there is a something of an asset bubble in China.

Closer home, a section of the market is concerned that a glut in share sales may suck liquidity from the secondary market. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Securities & Exchange Board of India (Sebi) for raising funds through initial public offering.

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 over Rs 50,000 crore through initial public offers (IPOs), follow-up public offers, divestment of stake sale in the second half of the current financial year. Reliance Infratel also announced on 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.

Divestment of state-run firms by the government may also increase the supply of paper in the market. As per recent reports, the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.

Prime Minister Manmohan Singh on Thursday said the government is encouraging the listing of public sector enterprises on the stock markets as this will unlock the true value of companies, improve their corporate governance standards and help them raise resources for future expansion. He said the government would try to restructure and revive loss-making PSUs.

The BSE 30-share Sensex rose 127.62 points or 0.74% to 17,322.82 its highest closing since 16 May 2008. The Sensex rose 152.65 points at the day's high of 17,347.85 in afternoon trade. The barometer index fell 68.65 points at the day's low of 17,126.55 in early trade.

The S&P CNX Nifty rose 33.30 points or 0.65% to 5,148.35, its highest closing since 16 May 2008. It hit a high of 5,142.15. Nifty October 2009 futures were at 5147.10, at a premium of 4.95 points as compared to the spot closing of 5142.15. Turnover in NSE's futures & options (F&O) segment was Rs 56190.92 crore, sharply lower than Rs 71611.55 crore on Thursday, 15 October 2009.

BSE clocked a turnover of Rs 6237 crore, lower than Rs 6538.56 crore on Thursday, 15 October 2009.

The market breadth, indicating the overall health of the market was positive. On BSE, 1499 shares advanced as compared with 1262 that declined. A total of 95 shares remained unchanged.

Among the 30-member Sensex pack, 15 rose while the rest fell.

With foreign funds making heavy purchases, the Sensex is up 7,675.51 points or 79.56% in calendar year 2009 as on 16 October 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 9162.42 points or 112.27% as on 16 October 2009. FII inflow in the calendar year 2009 totaled Rs 65508.70 crore (till 15 October 2009).

Coming back to today's trade, the BSE Mid-Cap index rose 1.06% and outperformed the Sensex. The BSE Small-Cap index rose 0.48% and underperformed the Sensex.

Sectoral indices on BSE displayed mixed trend. The BSE Realty index (up 0.39%), the BSE Bankex (up 1.58%), the BSE Oil & Gas index (down 0.22%), the BSE Power index (up 0.49%), outperformed the Sensex.

The BSE Auto index (down 1.26%), the BSE Metal index (down 1.1%), the BSE FMCG index (down 0.89%), the BSE Consumer Durables index (down 0.71%), the BSE IT index (down 0.27%), the BSE Healthcare index (down 0.02%), the BSE Teck index (u 0.04%), the BSE Capital Goods index (up 0.49%), the BSE PSU index (up 0.61%), underperformed the Sensex.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) was up 2.08% to Rs 2,216.60. RIL is in advanced talks to acquire refinery and petrochemical units in the US and Europe and could finalise a deal by end-2009, Maurice Bannayan, senior vice president at Reliance Industries said on Wednesday.

Anil Dhirubali Ambani group (ADAG) Chairman Anil Ambani called on Sunday, 11 October 2009, for a renewed effort to end a bitter feud with his brother Mukesh Ambani triggered by the carve-up of up a vast family business stretching from energy to telecommunications and financial services.

Anil Ambani said in a statement he believed "all disagreements can be sorted out in a constructive, cordial and conciliatory manner", and called for "a generous heart, a willing mind and accommodating spirit to resolve issues".

Their latest dispute is over a deal for Mukesh Ambani's Reliance Industries to sell gas to Anil Ambani's Reliance Natural Resources (RNRL) at below-market rates as agreed in a 2005 family settlement to divide the business following their father's death in 2002. The dispute has landed in the Supreme Court (SC). Anil Ambani said on Sunday the contentious gas dispute is a large national issue and can only be resolved through the SC.

Reliance Industries (RIL) said it welcomes Anil Ambani's call to make a renewed effort to "resolve, reconcile and reciprocate" and said it hopes that it is a positive change in the negative, calumnious and malafide campaign launched by ADAG against RIL.

RIL, last week, announced liberal 1:1 bonus issue. Both the bonus and the dividend are applicable to shareholders of the erstwhile Reliance Petroleum, which has been merged with RIL. Meanwhile, a sharp year on year fall in refining margins will weight on Q2 September 2009 results of RIL.

Oil exploration stocks rose as crude oil rose above $78 a barrel today capping its biggest weekly gain in two months, on an unexpected decline in US gasoline stockpiles and refinery utilization. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

Cairn India rose 4.18%. UK-based oil and gas exploration major Cairn Energy Plc has mopped up $240 million by selling 2.3% in its Indian subsidiary Cairn India to Malaysia's Petronas International Corporation.

With this move, Petronas' stake in Cairn India jumps to 14.94%, within touching distance of an open offer trigger. Cairn UK now retains a 62.75% interest in Cairn India, which made a major oil discovery (Mangala) in Rajasthan in the north west of India in 2004. Cairn India, the Indian arm of the UK firm, has interests in a total of 13 acreage blocks in India and Sri Lanka.

India's second biggest state-run oil exploration firm by revenue Oil India rose 1.17%.

But, India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) fell 0.89%. ONGC has bagged over a third of the 70 blocks offered under the government's eighth New Exploration Licensing Policy (NELP 8), amid luke-warm response towards the bidding round. ONGC bid for 25 blocks and was awarded 11 offshore and two onshore concessions.

Nearly half of 70 blocks offered under NELP 8 found no bidder, with 76 bids submitted for 36 exploration blocks, D.N. Narasimha Raju, joint secretary in the oil ministry said on Monday.

PSU OMCs fell as higher crude oil prices will increase under-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. HPCL, BPCL and Indian Oil Corporation (IOC) fell by between 0.26% to 2.43%.

Bank stocks rose on better than expected result by US banks Goldman Sachs and Citigroup on Thursday. India's largest bank by net profit and branch network State Bank of India rose 5.3%. Among other PSU banks, Bank of India, Punjab National Bank, Union Bank of India, Punjab National Bank and Bank of Baroda, rose by between 1.15% to 5.95%.

India's largest private sector bank by net profit ICICI Bank rose 2.41%. Its ADR was flat on Thursday. The bank last week reduced auto loan rates by 50 basis points.

But, India's second largest private sector bank by net profit HDFC Bank fell 0.32%. The bank's net profit rose 30.2% to Rs 687.46 crore in Q2 September 2009 over Q2 September 2008. The results, which hit the market during trading hours on Wednesday, were more or less in line with market expectations.

The central bank will reportedly hike the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM) category. Banks do not have to make any mark-to-market provisions on securities held this basket if prices of securities fall. Provisions have to be made out of profit and therefore, impact a bank's bottom line. Yields on ten-year government bonds have risen sharply this year. Bond prices and bond yields are inversely related.

Indian banks can put bonds equal to 25% of the value of deposits in their HTM accounts. The market expectations is for an increase in the ceiling by up to 2 percentage points, possibly at a quarterly monetary policy review on 27 October 2009.

India's largest dedicated housing finance firm HDFC rose 1.92%. HDFC, after market hours on Monday said net profit rose 24.27% to Rs 663.94 crore in Q2 September 2009 over Q2 September 2008. The results beat market expectations.

Realty stocks rose on recent reports that 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. DLF, Indiabulls Real Estate, Omaxe, Akruti City, Unitech rose by between 0.57% to 6.3%.

India's largest copper maker by sales Sterlite Industries fell 5.44% on equity dilution worries after company said before market hours it had raised $500 million in convertible senior notes and plans to use the proceeds primarily for expansion of its copper business. The notes are convertible into American depositary shares at $23.33 per share.

But a host of other metal shares rose on strong domestic demand. Hindalco Industries, National Aluminum Company, Hindustan Zinc, Steel Authority of India, Jindal Saw rose by between 0.01% to 6.35%.

Auto stocks fell on profit taking after recent strong gains. India's largest tractor maker by sales Mahindra & Mahindra fell 2.28%. Total sales rose 10.94% to 28434 vehicles in September 2009 over September 2008. The company unveiled the sales figures during trading hours on 1 October 2009.

Bajaj Auto dropped 4.83% extending losses for second straight day on profit booking. Bajaj Auto's net profit jumped 117.85% to Rs 402.83 crore in Q2 September 2009 over Q2 September 2008. The company announced the Q2 results during trading hours on Thursday, 15 October 2009.

India's largest motor bike maker by sales Hero Honda Motors fell 0.46%. Hero Honda is seen reporting robust Q2 results on the back of higher volumes and surge in profit margins due to fall in input costs. A total of nine brokerages expect a between 59.1% to 83.1% growth in Hero Honda's net profit at between Rs 487.20 crore to Rs 560.70 crore in Q2 September 2009 over Q2 September 2008. The company unveils Q2 results on Wednesday, 21 October 2009.

India's top small car maker by sales Maruti Suzuki India fell 0.66%. The company's total sales rose 17.3% to 83,306 vehicles in September 2009 over September 2008. The figures were released during trading hours on 1 October 2009.

But, India's largest truck maker by sales Tata Motors rose 1.04%. Tata Motors is planning to ramp up production of its Nano, billed as the world's cheapest car, by a fifth this month, Rajiv Dube, head of the company's passenger car business said on Wednesday. The company said during market hours on Friday it has raised $750 million through an issue of global depositary receipts (GDRs) and convertible bonds. The company said it will use the funds to repay debt taken for acquisition of Jaguar Land Rover (JLR).

Total domestic automobile sales in the country in the first half of the financial year 2009-10 rose by 14.51% year-on-year to 57,82,920 units, according to automobile sales figures released by the Society of Indian Automobile Manufacturers (Siam). The jump in sales for the April-September period came from the double-digit growth posted by the passenger vehicle segment (comprising cars and sports utility vehicles) which grew by 13.46%, by the 15.68% spurt in two-wheeler sales and by an increase of 12.37% in sales of three-wheelers.

FMCG stocks fell on profit taking. Hindustan Unilever, ITC, Marico, Dabur India, Tata Tea and Nestle India fell by between 0.08% to 1.73%.

Ultratech Cement fell 2.37% after the company issued a cautious outlook at the time of announcing Q2 results during trading hours today. Net profit jumped 53% to Rs 251 crore in Q2 September 2009 over Q2 September 2008.

UltraTech said the performance was affected on a sequential basis due to lower demand in Southern India. The net profit dropped 39.94% to Rs 250.90 crore in Q2 September 2009 over Q1 June 2009.

The company said the cement demand may grow 9% in the year ending March 2010 on the back of government's initiative to boost rural development, infrastructure and housing. It, however, said new capacities which at various stages of implementation will result in pressure on margins.

The company said its focus on higher volume growth, captive power generation and capital productivity will help offset the impact of lower prices on margins.

Among other cement stocks, ACC, Grasim Industries and Ambuja Cements, fell by between 0.31% to 2.92%.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.19%. The company on Wednesday announced bagging orders worth Rs 966 crore.

India's largest power maker by sales Bharat Heavy Electricals rose 0.9% after the government on Thursday ruled out any immediate plan to disinvest its stake in the power equipment maker. The government owns 67% stake in Bhel.

Among other capital goods stocks, ABB, Thermax, Praj Industries rose by between 0.23% to 1.57%.

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. Gayatri Proje, Jaiprakash Associates, Nagarjuna Construction Company, Valecha Engineering rose by between 0.17% to 3.41%.

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

India's second largest mobile services provider by sales Reliance Communications (RCom) rose 2.09% after Anil Ambani chairman of RCom on Thursday alleged there was a 'vicious and malafide' campaign against his telecom company Reliance Communications by a 'known rival group' and dubbed the special audit report, which claimed that RCom was mis-stating its revenues as 'biased and prejudiced'. But the auditor, Parekh & Co defended its work and also denied a claim by Mr Ambani that it had not sought feedback from RCom.

IT stocks reversed early gains on a firm rupee against dollar. IT bellwether Infosys Technologies fell 1.16% as its ADR fell 0.9% on Thursday. Infosys raised its earnings and revenue guidance in both dollar and rupee terms for the year ending March 2010 (FY 2010) at the time of announcing Q2 September 2009 results before trading hour on Friday, 9 October 2009.

Infosys, however, said strengthening rupee is a big concern for its earnings. The rupee is hovering near its highest level in more than a year. A stronger rupee negatively impacts operating margins of IT firms as the sector earns a lion's share of revenue from exports.

India's third largest software services exporter Wipro fell 0.3%. Its ADR rose 0.11% on Thursday.

But, India's largest software services exporter TCS rose 2.84% ahead of its Q2 result today. A total of eleven brokerages expect a between 6.8% fall to a 4.9% growth in TCS' consolidated net profit as per US accounting standards at between Rs 1416.30 crore to Rs 1595.40 crore in Q2 September 2009 over Q1 June 2009. Their expectations peg a between 0.4% to 3.8% growth in revenue at between Rs 7237.70 crore to Rs 7478.40 crore in Q2 September 2009 over Q1 June 2009.

Cals Refineries clocked highest volume of 3.52 crore shares on BSE. Unitech (1.28 crore shares), Sanraa Media (.06 crore shares), Ispat Industries (0.92 crore shares) and Euro Multivision (0.81 crore shares) were other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 381.78 crore on BSE. DLF (Rs 238.01 crore), Sesa Goa (Rs 204.56 crore), Reliance Industries (Rs 184.04 crore) and ICICI Bank (Rs 142.54 crore) were other turnover toppers in that order.