RIL leads 4% Sensex surge

Strong buying across-the-board lifted the market higher last week after a recent steep correction. The sentiment was helped by the government's push towards disinvestment, along with its plan to exit fiscal stimulus in a phased manner.

The BSE 30-share Sensex rose 690.55 points or 4.27% to 16,848.83 in the week ended 13 November 2009. The S&P CNX Nifty rose 202.8 points or 4.22% to 4998.95.

The BSE Mid-Cap index underperformed the Sensex, rising 2.63% to 6,418.65. The BSE Small-cap index also underperformed the Sensex, gaining 3.33% to 7,409.70.

The key benchmark indices spurted on Monday, 9 November 2009, as the US dollar fell sharply against major rivals after finance ministers and central bankers from the Group of 20 leading economic powers pledged to keep massive stimulus measures in place until the global recovery strengthens. The BSE 30-share Sensex rose 340.44 points or 2.11% to 16498.72. The S&P CNX Nifty jumped 102.25 points or 2.13% to 4898.40.

The key benchmark indices snapped previous four sessions' gains on Tuesday, 10 November 2009, closing with small losses due to profit taking. The BSE 30-share Sensex fell 58.16 points or 0.35% to 16440.56. The S&P CNX Nifty fell 16.70 points or 0.34% to 4881.70.

The key benchmark indices soared on Wednesday, 11 November 2009, tracking firm global stocks after China reported continued strength in industrial production growth, keeping alive hopes of a recovery in the global economy. The BSE 30-share Sensex rose 409.04 points or 2.49% to 16,849.60. The S&P CNX Nifty rose 122.25 points or 2.5% to 5,003.95.

Interest rate sensitive banking, auto and realty stocks led the slide on Thursday, 12 November 2009, as mostly lower Asian stocks triggered profit taking on the domestic bourses after a sharp rally in the past few days. Stocks fell despite strong industrial production data. The BSE 30-share Sensex fell 153.57 points or 0.91% to 16,696.03. The S&P CNX Nifty fell 51.30 points or 1.03% to 4952.65.

India's industrial output rose 9.1% in September 2009 over September 2008, data released by the government on Thursday showed. The government revised upwards the industrial production growth for August 2009 to 11% from 10.4%. Consumer durable goods output surged by an annual 22.2%, manufacturing production rose 9.3%, mining output was up 8.6% and power generation rose 7.9% in September 2009 over September 2008.

Equities ended a volatile session in the positive terrain on Friday, 13 November 2009. The BSE 30-share Sensex rose 152.80 points or 0.92% to 16,848.83. The S&P CNX Nifty rose 46.30 points or 0.93% to 4998.95.

Shares of public sector units were the flavour of last trading week after Prime Minister Manmohan Singh on 5 November 2009, approved divestment in public sector companies to raise funds for social welfare.

NMDC (up 28.80%), Hindustan Copper (up 14%), Rural Electrification Corporation (up 9.84%), Rashtriya Chemicals and Fertilisers (up 3.60%), Engineers India (up 13.09%), and Neyveli Lignite Corporation (up 13.40%), soared.

However, MMTC (down 0.33%), Dredging Corporation Of India (down 3.43%), and NHPC (down 1.23%), declined.

Mr Singh's government believes that divestment is not selling family jewels, but it is essential to save the nation's finances. The government is staring at a fiscal deficit of 6.8% this year, a 16-year high. If the estimated sale happens, Mr Singh would break the divestment record set by the Atal Behari Vajpayee government, which raised $6 billion between 1999 and 2004.

Use of disinvestment proceeds would free up government resources to that extent or bring down its fiscal deficit in line with targets set in the road map. The government targets fiscal deficit at 5.5% in 2010-11 and 4% in 2011-12.

India's largest private sector company by market capitalisation Reliance Industries (RIL) rose 8.17% in the week. Mukesh Ambani's RIL and Anil Ambani led Reliance Natural Resources (RNRL) are slugging it out in the Supreme Court over the supply of gas from RIL's D6 block in the Krishna-Godavari (KG) basin. While RNRL has sought the apex court's intervention in a special leave petition for immediate supply of 28 mscmd of gas from KG D6 at $2.34 per mmBtu for a period of 17 years, RIL has opposed this saying the price is 44% lower than that mandated by the government. RIL says it cannot supply gas at a price not approved by the government and to a user not listed in its gas utilization policy.

RIL, on 10 November 2009, said reports of a meeting between the billionaire Ambani brothers to settle a gas-pricing dispute were baseless. RIL said in a statement the matter would be decided by the Supreme Court, which is currently hearing the case.

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.

India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 2.10% on television reports the oil ministry has proposed a sharp hike in administered gas prices.

Meanwhile, the government has allowed ONGC Videsh - the overseas arm of state-run Oil and Natural Gas Corporation (ONGC) to invest an additional Rs 322 crore in an oilfield in Brazil. The approval of the Cabinet Committee on Economic Affairs (CCEA) will raise the total investment in the project to Rs 1,762 crore.

India's largest thermal power producer by sales NTPC rose 2.16%. A 5% stake sale in state-run power producer could fetch the government Rs 8100 crore ($1.7 billion), Sunil Mitra, a senior finance ministry official, said on Friday. Last week, the government mandated more sales of shares by state firms and changed the rules on how it can use the proceeds, as it seeks to boost revenues and rein in a widening budget deficit

Last month, the cabinet approved share sales for NTPC, Satluj Jal Vidyut Nigam and Rural Electrification Corp. The stake sales will be completed by March next year, Mitra said. Rural Electrification Corporation soared 9.84%.

Rate sensitive realty shares fell after the Reserve Bank of India (RBI), last month, raised the provisioning requirements for loans to commercial real estate from 0.4% to 1% in its monetary policy review meet on 27 October 2009. Unitech (down 3.78%), Indiabulls Real Estate (down 5.75%), DLF (down 3.06%), fell.

The latest RBI move will result in increase in borrowing costs for realty firms which depend heavily on borrowing. In view of large increase in credit to the commercial real estate sector over the last one year and the extent of restructured advances in this sector, it would be prudent to build cushion against likely non-performing assets (NPAs), the central bank said in its quarterly policy review.

Banking shares rose on hopes of likely reforms in the financial sector. India's largest private sector bank by net profit ICICI Bank rose 7.15%. 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.

India's second largest private sector bank by net profit HDFC Bank rose 5.06%.

India's largest bank by net profit State Bank of India (SBI) rose 4.26%. State Bank of India said on 9 November 2009, that 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.

Prime Minister Manmohan Singh said on Sunday, 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.

Rate sensitive auto stocks rose as low interest rates and attractive benefits offered by companies pushed up sales in October 2009.

India's largest small car marker by sales Maruti Suzuki India rose 0.44%. The company's total sales grew 32.4% to 85415 units in October 2009, compared with 64490 units posted in the same month a year ago.

India's largest truck marker by sales Tata Motors rose 8.77%. The company's total sales grew 18% to 20,011 units last month against 17,014 units in the same period last year.

India's second largest motorcycle marker by sales Bajaj Auto rose 0.62%. Carlos Ghosn, chief executive of French car maker Renault and Japan's Nissan Motor Co, said on Tuesday an agreement had been signed with Bajaj Auto for a low-cost car which would come to India in 2012.

India's largest bike marker by sales Hero Honda Motors rose 3.22%. The company reported a marginal increase in October sales at 354,156 units as against 352,449 units in the same month last year

India's largest tractor maker by sales Mahindra & Mahindra rose 6.03%. The company's overall sales climbed 32% in October this year to 18,410 units against 13,935 units in the same month last year. Mahindra and Mahindra (M&M) reportedly plans to launch a motorcycle next year. The company is also looking at acquisitions in the electronic scooter space. The auto major had entered the two-wheeler market market by acquiring the assets of Pune-based scooter manufacturer Kinetic Motor in 2008.

Car sales in India rose an annual 34% to 132,615 units in October 2009, boosted by festival demand and easier availability of loans, an industry body said on Wednesday 11 November 2009. Sales of trucks and buses, a gauge of economic activity, rose 52% to 42,562 units in October 2009, the data showed.

Technology stocks rose as investor bought shares, following a recent correction, and on hopes that the environment for spending on information technology was improving. Last week, the software services trade body, National Association of Software and Services Companies, said it expects the industry to regain double-digit revenue growth from April 2010.

India's second largest software company by sales Infosys Technologies rose 6.36%. Infosys BPO, the business processing outsourcing subsidiary of Infosys Technologies, on Thursday 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 third largest software company by sales Wipro rose 5.63%. 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.

India's largest software company by sales Tata Consultancy Services (TCS) rose 7.98%. The company recently secured a 150 million pounds software implementation contract for 15 years from Cardiff city council, UK.

Metal stocks rose on strong demand. Hindalco Industries (up 4.02%), Sterlite Industries (up 4.13%), National Aluminium Company (Nalco) (up 3.24%). Nalco recently hiked the prices of aluminium products by Rs 1000 a tonne reflecting the recent uptrend in prices on the London Metal Exchange.

Tata Steel, the world's eighth largest steelmaker by output, rose 4.31%. The company said on Thursday 12 November 2009 it approved a new convertible bonds offer in exchange for an existing $875 million securities to reduce costs and ease repayment obligations. The company said on Friday 6 November 2009 steel sales at its Indian operations rose 38% to 462,000 tonnes in October 2009 over October 2008.

Demand for steel remains strong from auto, rural construction and infrastructure sectors. Also demand for construction grade steel has improved post monsoon season, and has resulted into higher sales.