Market recovers after a weak start; RIL declines

The key benchmark indices recovered and were trading flat after a negative start. The gains in some Asian stocks helped recovery. The BSE 30-share Sensex was flat at 17051.90 up close to 60 points from the day's low. The Sensex regained 17000 mark after falling that level in early trade. Banking stocks fell but IT stocks rose. Oil exploration stocks rose but PSU OMCs fell on gains in crude oil prices. Index heavyweight Reliance Industries fell despite setting record date for the bonus issue. Another index heavyweight Larsen & Toubro also fell.

Federal Reserve Chairman Ben Bernanke surprised investors on Monday 16 November 2009 when he said the central bank was attentive to implications of changes in the value of the dollar, although he reiterated that interest rates would remain exceptionally low for an extended period.

Closer home, inflation based on the wholesale price index accelerated in October 2009 from a month earlier on costlier minerals and fuels. On Saturday 14 November 2009, the government switched to using monthly inflation data for all commodities with 1993/94 as the base year, from the earlier practice of announcing weekly price movement. The wholesale price index was up 1.34% in October 2009 from a year earlier, compared with 0.5% rise in September 2009 and 11.06% jump a year ago. Food prices, however, declined by 1% from the previous month's level, while minerals and industrial fuels were each costlier by 3%.

Industrial output grew 9.1% in September 2009 from a year earlier, helped by stimulus and festival demand, and adding to the debate on the timing of exit policy. However, Finance minister Pranab Mukherjee said on Monday stimulus packages to perk up the economy during the slowdown are unlikely to be withdrawn in the current financial year and the exit when it happens will be a gradual one.

Economists and analysts surveyed by the Reserve Bank of India (RBI) revised downwards India's gross domestic product projection to 6% for 2009/10 from 6.5% in the previous round of survey, the RBI released the results of the ninth round of survey on Monday 16 November 2009.

The RBI in its mid-term monetary policy review last month kept its GDP projection for the current fiscal unchanged at 6% but had increased inflation target to 6.5% by end-March 2010 from 5%. The government is scheduled to announce the July-September GDP growth number on 30 November 2009.

Asian stocks were trading mixed on Wednesday as the generally bearish dollar kept riskier assets in demand. The key benchmark indices in China, South Korea and Taiwan rose by between 0.265% to 0.72%. The key benchmark indices in Hong Kong, Japan and Singapore fell by between 0.49% to 0.88%.

Trading in US index futures indicated Dow could fall 12 points at the opening bell on Wednesday, 18 November 2009.

US stocks rose to fresh 13-month highs on Tuesday as upbeat broker views on improving prospects for two Dow components offset disappointing holiday spending outlooks from Target and Home Depot. The Dow Jones industrial average was up 30.46 points, or 0.29%, to end at 10,437.42. The Standard & Poor's 500 Index gained 1.02 points, or 0.09% to finish at 1,110.32. The Nasdaq Composite Index rose 5.93 points, or 0.27% to close at 2,203.78.

In economic data from the US, producer prices rose 0.3% in October, with the core rate dropping 0.6%. And industrial production climbed 0.1% in October 2009. This was less than the 0.4% gain expected.

At 10:20 IST, the BSE 30-share Sensex was flat at 17051.90. At the day's high of 17,055.99, the Sensex rose 5.30 points in early trade. The Sensex fell 59.85 points at the day's low of 16990.80 in early trade.

The S&P CNX Nifty was flat at 5062.95.

The market breadth, indicating the overall health of the market was strong. On BSE, 703 shares advanced as compared with 439 that declined. A total of 40 shares remained unchanged.

From the 30 share Sensex pack, 22 fell and rest rose.

The BSE Mid-Cap index rose 0.4% and the BSE Small-cap index rose 0.46%.

Energy major Reliance Industries (RIL) fell 0.68%. The company plans an aggressive exploration campaign, investments in petrochemicals and overseas acquisitions as India's top company by market capitalisation prepares itself for the next phase of growth. The company will work towards attaining global scale for its conventional energy platform petrochemicals, refining and oil and gas exploration and invest in its new businesses such as retailing and alternative energy, chairman Mukesh Ambani said at the company's annual meeting of shareholders on Tuesday. RIL has set 27 November 2009 as the record date for a liberal 1:1 bonus share issue.

The government on Monday 16 November 2009 announced additional allocation of 51.6 million metric standard cubic metres per day (mmscmd) of natural gas from RIL's Krishna Godavari D6 field. Nearly 70% of this has been to the power sector. The move, finalised at the meeting of the ministry of petroleum and natural gas on 27 October 2009, takes the total allocation to 91.6 mmscmd from the current 40 mmscmd.

RIL on Tuesday 10 November 2009 announced its first oil discovery in its exploration block in the Cambay Basin off Gujarat. Reliance holds 100% participating interest in the block. This block was awarded to Reliance under the fifth round of the New Exploration Licensing Policy.

Oil exploration stocks rose as crude oil gained for a third day on Wednesday after an industry report showed U.S. stockpiles declined after a hurricane in the Gulf of Mexico. Oil rose as much as 0.9 % to $79.85 a barrel on Asian electronic trading. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

Cairn India rose 0.41%. The company on 5 November 2009 signed a pact with Reliance Industries for supply of crude oil.

India's second biggest state-run oil exploration firm by revenue Oil India rose 0.25%. But, India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) fell 0.35%. Steel magnate Lakshmi Mittal has reportedly pulled out of a project to develop an oil block in Kazakhstan with Indian joint venture partner Oil and Natural Gas Corp. ONGC Mittal Energy was to have acquired a 25 % stake in Satpaev block from state-owned KazMunaiGaz and invested a total of $400 million in the project.

The petroleum ministry has reportedly proposed a 33% hike in the price of natural gas produced by ONGC and Oil India and gradually increase it to $4.20 per mmBtu set for gas from Reliance Industries' KG-D6 fields.

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 and BPCL fell by between 0.14% to 0.22%. But Indian Oil Corporation (IOC) rose 0.5%.

Banking shares fell on profit taking. India's largest bank by net profit State Bank of India (SBI) fell 0.95%. State Bank of India said on 9 November 2009 said it had entered into an agreement with T. Rowe Price to sell a 6.5% holding each in UTI Asset Management Company and UTI Trustee Company. State Bank currently holds 25% in each of the companies and after the sale its holding would be reduced to 18.5%, it said in a statement.

SBI announced after market hours on Friday 6 November 2009 it has revised downwards interest rates on deposits by 25-50 basis points for a few maturities effective from 9 November 2009. The bank's consolidated net profit rose 28.29% to Rs 3,133.16 crore on 22% rise in consolidated income to Rs 33,101.65 crore in Q2 September 2009 over Q2 September 2008. The results were announced on 31 October 2009.

India's largest private sector bank by net profit ICICI Bank fell 0.73% as its ADR fell 0.23% on Tuesday. The bank's net profit rose 2.6% to Rs 1040.13 crore on a 12.7% decline in total income to Rs 8480.73 crore in Q2 September 2009 over Q2 September 2008. The result was announced during trading hours on 30 October 2009.

But, India's second largest private sector bank by net profit HDFC Bank rose 0.15% even as its ADR ended flat on Tuesday.

India's largest dedicated home loan lender Housing Development Finance Corporation (HDFC) fell 0.93%. The lender announced after market hours on Friday 13 November 2009 it has agreed to acquire approximately 41% in the fully diluted equity share capital of Credila Financial Services from DSP Merrill Lynch Capital.

Prime Minister Manmohan Singh said on 8 November 2009, financial reforms, such as building up a domestic bond market and expanding foreign investment in sectors like insurance, would be pushed forward.

As per reports, the government plans to introduce two key bills in parliament by December 2009. It plans to introduce bills proposing the raising of foreign stake limits in insurers to 49% from the present 26% and opening up the pension sector to private and foreign firms.

Meanwhile, the Reserve Bank of India Deputy Governor Usha Thorat said on Monday 16 November 2009 the central bank will soon issue guidelines on provisioning for bad loans by banks

India's largest engineering and construction firm by sales Larsen & Toubro fell 0.92%. The company after market hours on Tuesday said Gilbarco Inc. has bought its petroleum dispensing pump business.

Meanwhile, the company made a profit of Rs 86.14 crore by paring a third of its stake in software firm Mahindra Satyam last week. Larsen and Toubro (L&T) on Friday, 13 November 2009 sold 2.72 crore shares in Mahindra Satyam in two bulk deals at an average price of Rs 113.65 on BSE in opening trade.

IT stocks rose on gains in American depository receipts overnight in US. India's second largest software company by sales Infosys rose 1.22% as its ADR rose 1.27% on Tuesday. Infosys BPO, the business processing outsourcing subsidiary of Infosys Technologies, last week, announced the signing of a definitive agreement to acquire all of the outstanding interests of McCamish Systems LLC, a premier business process solutions provider, based in Atlanta, Georgia in the United States.

The acquisition is expected to be completed later this year subject to the satisfaction of certain closing conditions. The upfront consideration for the deal is $38 million with up to an additional $20 million payable to the sellers if McCamish Systems achieves certain financial targets in the future. The announcement was made before market hours on Thursday 12 November 2009.

India's largest software company by sales Tata Consultancy Services (TCS) rose 1.09%. The company recently secured a 150 million pounds software implementation contract for 15 years from Cardiff city council, UK.

India's third largest software company by sales Wipro rose 1.31% as its ADR rose 0.99% on Tuesday. Wipro, sees robust deal pipeline on the back of improving IT demand worldwide, Suresh Vaswani, joint chief executive said on Tuesday 10 November 2009. The company said on 5 November 2009 it had agreed to buy some personal care businesses of Yardley for about $45.5 million, adding to its consumer goods business. Wipro said it had signed an agreement with UK-based Lornamead group, which owns the Yardley brand, for the businesses in Asia, the Middle East, Australasia and some African markets.

Mahindra Satyam fell 1.76% on Tuesday rejected claims worth Rs 1,230 crore made by 37 companies linked to the company's former promoter B Ramalinga Raju in a filing to the stock exchange terming them legally untenable. Satyam received letters from these 37 companies reclaiming the money a day after Raju confessed to the Rs 7,000-crore fraud.

Valecha Engineering gained 1.43% after the company bagged two new road projects aggregating Rs 110 crore at Himachal Pradesh.