Rally continues unabated

The market recouped most of the last week's losses to close above the psychological levels of 17000 for the barometer index the BSE Sensex and 5000 for the 50-unit S&P CNX Nifty. News of a probable patch-up between the two Ambani brothers and a surprisingly strong industrial production numbers worked as a sentiment boosters.

Strong global markets also lifted sentiments. The US Dow Jones index crossed the vital 10,000 mark, more than a year after getting clobbered by a sudden implosion of the financial system.

The BSE 30-share Sensex rose 680.16 points or 4.09% to settle at 17,322.82 in the week ended Friday, 16 October 2009. The S&P CNX Nifty rose 196.95 points or 3.98% to 5,142.15 in the week

The BSE Mid-Cap index jumped 307.11 points or 4.87% to 6,608.49 and the BSE Small-Cap index rose 295.21 points or 4% to 7,667.

Foreign institutional investors (FIIs) inflow in October 2009 totaled Rs 4409.40 crore (till 14 October 2009). Foreign funds had bought equities worth Rs 17,328 crore in September 2009. FII inflow in the calendar year 2009 totaled Rs 64,546.60 crore (till 14 October 2009).

Industrial production (IIP) rose a robust 10.4% in August 2009. It is the fastest pace of growth in 22 months. Manufacturing output rose 10.2%. The government revised upwards industrial production growth for July 2009 to 7.2% from an earlier estimated 6.8%.

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.

The key benchmark indices surged on Monday, 12 October 2009, led by index heavyweight Reliance Industries (RIL) on optimism for a patch-up between warring Ambani brothers and on better-than-expected industrial output data for August 2009. Firm European markets and higher US index futures aided rally. The BSE 30-share Sensex rose 384.01 points or 2.31% to 17,026.67. The S&P CNX Nifty rose 109.05 points or 2.21% to 5,054.25.

The stock market was closed on Tuesday, 13 October 2009, on account of assembly election in Maharashtra.

The key benchmark indices surged for the second day in a row on Wednesday, 14 October 2009, as a rally in global stocks, strong response to the initial public offer of Indiabulls Power, stronger-than expected Q2 results from housing finance major HDFC and healthy Q2 outcome from HDFC Bank, boosted market sentiment. The BSE 30-share Sensex rose 204.40 points or 1.2% to 17,231.11. The S&P CNX Nifty rose 63.95 points or 1.27% to 5,118.20.

Stock-specific buying continued even as the key benchmark indices edged lower in what was a choppy trading session on Thursday, 15 October 2009. The BSE 30-share Sensex fell 35.91 points or 0.21% to 17,195.20. The S&P CNX Nifty fell 9.35 points or 0.18% to 5,108.85.

Banking, realty stocks and index heavyweight Reliance Industries (RIL) led the rally on the bourses on Friday, 16 October 2009, 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% to 17,322.82. The S&P CNX Nifty rose 33.30 points or 0.65% to 5,142.15.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) jumped 5.55% in the week. 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 RIL said on Wednesday, 14 October 2009.

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.

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 weigh on Q2 September 2009 results of RIL.

Oil exploration stocks rose as crude oil rose above $78 a barrel on Friday, 16 October 2009, 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 11.63%. 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 was almost unchanged. The company was listed on the bourses on 30 September 2009.

India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 1.80%. 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 (down 7.52%), BPCL (down 6.53%) and Indian Oil Corporation (IOC) (down 4.10%), declined.

Bank stocks rose on recent reports the central bank will hike the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM) category. India's largest bank by net profit and branch network State Bank of India rose 18.78%. Bank of India (up 16.02%), Punjab National Bank (up 5.43%), Union Bank of India (up 13.69%), Punjab National Bank (up 5.43%) and Bank of Baroda (up 9.68%), surged.

India's largest private sector bank by net profit ICICI Bank rose 6.34%. The bank last week reduced auto loan rates by 50 basis points.

India's second largest private sector bank by net profit HDFC Bank rose 2.73%. 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, 14 October 2009, were more or less in line with market expectations.

Banks do not have to make any mark-to-market provisions on securities held in the HTM category 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 Housing Development Finance Corporation (HDFC) rose 4.87%. 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.

Indiabulls Financial Services rose 3.03%. The company is reported to have received the Reserve Bank of India's special approval to hold up to 74% in its proposed life insurance joint venture France's Societe Generale.

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 (up 10.73%), Omaxe (up 2.04%), Ackruti City (up 4.66%), Unitech (up 6.34%), advanced.

India's largest copper maker by sales Sterlite Industries rose 3.55%. The company has 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.

India's largest tractor maker by sales Mahindra & Mahindra rose 5.62%. 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.

India's top small car maker by sales Maruti Suzuki India rose 2.74%. 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.

India's largest truck maker by sales Tata Motors rose 5.51%. 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 9 October 2009 it had 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).

But, Bajaj Auto dropped 6.98% on profit booking after a recent strong surge. 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.

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.

Ultratech Cement fell 4.84%. The company issued a cautious outlook at the time of announcing Q2 results during trading hours on Friday, 16 October 2009. 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.