Sensex jumps nearly 5% in three days

The key benchmark indices extended for the third day in a row as the US dollar fell against a basket of major currencies. But intraday volatility was high. The BSE 30-share Sensex rose 94.36 points or 0.59%, off close to 120 points from the day's high and up close to 85 points from the day's low. Metal, banking and realty stocks edged higher. But FMCG and auto stocks fell. Index heavyweight Reliance Industries nudged higher in volatile trade. The market breadth was strong.

Intraday volatility was quite high. The market surged in early trade on firm Asian markets and overnight surge in US stocks triggered by positive economic data in the US. The market remained range bound in mid-morning trade. It pared gains in early afternoon trade. The market soon came off the lower level. Volatility ruled the roost as the Sensex tumbled to a fresh intraday low in afternoon trade. The market regained strength in mid-afternoon trade.

The dollar index, a gauge of the US unit's performance versus six majors, was down 0.2%. With short-term interest rates very low, global traders have turned to borrowing funds cheaply in the US and then reinvesting the proceeds in equities and commodities, looking to lock in higher returns and benefiting from further erosion in the dollar. These so called US dollar carry trades have kept putting pressure on the dollar as investors short the currency to invest elsewhere.

The US Federal Reserve on Wednesday, 4 November 2009, promised again to keep interest rates exceptionally low for an extended period because it expects only a weak recovery. There has been a solid surge in inflows in emerging markets equity funds this year.

Closer home, the Indian government on Thursday mandated more sales of shares by state-run 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.

The government said all profitable, listed state-run firms must have at least 10% of their shares in public hands, and unlisted firms that had a positive net worth, no accumulated losses and a net profit over the past three years should list.

The government said the funds from the listings would be spent on social schemes for three years. Currently, proceeds are put in a National Investment Fund and only its dividends are used for funding social security schemes. The government also said it was debating the need for changes in tax laws including on saving schemes, capital gains for non-residents and tax pacts with other nations, as part of reforms to boost revenues. The government has said it will maintain fiscal stimulus until the recovery is secure.

On Thursday, data showed food inflation remained firm at 13.39% for the 12 months to 24 October 2009. The government said it will release monthly wholesale price index (WPI) for October 2009 on 12 November 2009 and there will be no more weekly headline inflation data.

Chief statistician Pronab Sen said the government aims to start quarterly employment data on trial basis in one year. He said government's move to report wholesale price index (WPI) inflation data on a monthly instead of a weekly basis will remove a source of market volatility.

The Group of 20 finance ministers and central bankers start a meeting in Scotland on Friday seeking to firm up a plan to rebalance the world economy. Ahead of the meeting, British finance minister Alistair Darling said in an interview to a news agency that the G20 policymakers are agreed that it is too early to pull the plug on economic life-support packages as the global recovery is still fragile.

The top central banks have shown little inclination yet to choke off the extraordinary support given to economies shaken by global financial crisis but some have offered the first signs of changing tack. The Federal Reserve, European Central Bank (ECB) and Bank of England all left interest rates at record lows this week and the British central bank opted to pump yet more money into its economy.

ECB President Jean-Claude Trichet said on Thursday he expected the euro zone economy to recover at a gradual pace in 2010, after the central bank left rates at 1%, and signalled some of the bank's liquidity measures could soon be halted. The Bank of England (BoE) decided to pump another 25 billion pounds ($41 billion) into its economy on Thursday, taking its quantitative easing (QE) to 200 billion pounds in total, but slowed the pace of the programme. The BoE also left interest rates at a record low of 0.5% and said the prospect was for "a slow recovery in the level of economic activity".

Meanwhile, ministers and officials from the 21 Asia-Pacific countries are holding a meeting next week in Singapore to discuss ways to improve the ease of doing business in the region, remove trade barriers and explore new growth frameworks.

Most European shares rose on Friday ahead of a key US employment report, with banks and miners gaining. The key benchmark indices in Germany and UK were up by between 0.04% to 0.22%. But, France's CAC 40 fell 0.03%.

Asian stocks rose on Friday after Australia's central bank more than tripled its economic-growth forecast and reports showed US unemployment claims and worker productivity beat estimates. The key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.28% to 1.63%.

China's Ministry of Commerce on Friday said it would protect its industry's interests and accused Washington of double-standards in denouncing new US anti-dumping duties imposed shortly before a visit by President Barack Obama. It also called for Washington's swift recognition of China as a market economy.

The United States on Thursday slapped preliminary anti-dumping duties ranging up to 99% on $2.63 billion in Chinese-made pipes used in the oil and gas industry, in the biggest US trade action against China. That comes on top of counter-vailing duties on the same product, announced in September 2009. The preliminary Commerce Department decision came a week before US President Barack Obama heads to Asia on a trip that includes stops in Shanghai and Beijing.

In retaliation against the US move, China's Ministry of Commerce today, 6 November 2009, launched an anti-dumping investigation into US sport-utility vehicles (SUVs) with engines of 2 liters and above. Beijing initiated the investigation after Chinese auto makers petitioned for the action, alleging unfair trade practices, the report said. The investigation will include sedans and SUVs.

Meanwhile, Japanese Prime Minister Yukio Hatoyama said on Friday he could not be optimistic about Japan's economic outlook. There is a chance the economy may worsen further, Hatoyama told an upper house budget committee meeting.

Japan's deputy prime minister Naoto Kan said on Friday the government will likely keep the budget for next fiscal year stimulative for Japan's economy. He said there is strong risk of Japan's economy experiencing a double-dip recession. His comments were in stark contrast to comments by Bank of Japan (BoJ) Deputy Governor Hirohide Yamaguchi that the chances of the economy experiencing a double dip are small. Yamaguchi said the economy continues to recover modestly.

US index futures reversed early losses. Trading in US index futures indicated Dow could gain 16 points at the opening bell on Friday, 6 November 2009.

US stocks rose sharply on Thursday, with the S&P 500 up four straight days and the Dow closing above 10,000, after a rise in business productivity and a drop in jobless claims boosted confidence in the economy, while strong results from Cisco bolstered tech stocks. The Dow Jones industrial average was up 203.82 points, or 2.08 % to end at 10,005.96. The Standard & Poor's 500 Index was up 20.13 points, or 1.92 %, at 1,066.63. The Nasdaq Composite Index was up 49.80 points, or 2.42 % at 2,105.32.

The US non-farm payrolls report due later today, 6 November 2009, may show 175,000 jobs cut in October 2009. While that would be an improvement on the 263,000 jobs lost in September 2009, the unemployment rate is tipped to rise from 9.8% to 9.9%, menacingly close to the psychologically key 10% level.

Closer home, the supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.

The BSE 30-share Sensex rose 94.36 points or 0.59% to 16158.28. The Sensex rose 219.96 points at the day's high of 16283.86 in mid-morning trade. The Sensex rose 11.29 points at the day's low of 16075.19 in afternoon trade.

The S&P CNX Nifty rose 30.60 points or 0.64% to 4796.15. Nifty November 2009 futures were at 4797, near spot closing of 4,796.15. Turnover in NSE's futures & options (F&O) segment was Rs 77,394.87 crore, sharply lower than Rs 96,498.50 crore on Thursday, 5 November 2009.

BSE clocked a turnover of Rs 5997 crore, higher than Rs 5972.13 crore on Thursday, 5 November 2009.

The market breadth, indicating the overall health of the market was strong. On BSE, 1934 shares advanced as compared with 782 that declined. A total of 62 shares remained unchanged.

From the 30 share Sensex pack, 19 stocks rose and rest fell.

From a low of 15,404.94 on 3 November 2009, the Sensex has gained 753.34 points or 4.89% in the last three trading sessions to current 16158.28. The Sensex is up 6510.97 points or 67.49% in calendar year 2009, as on 6 November 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 7997.88 points or 98%, as on 6 November 2009.

FII outflow in November 2009 totaled Rs 19.50 crore (till 5 November 2009). FII had bought equities worth Rs 8303.80 crore in October 2009. FII inflow in the calendar year 2009 totaled Rs 68,421.60 crore (till 5 November 2009).

Coming back to today's trade, The BSE Mid-Cap index rose 2.27% and the BSE Small-cap index gained 2.24%. Both these indices outperformed the Sensex.

The BSE PSU index (up 3.91%), the BSE Realty index (up 2.81%), the BSE Metal index (up 2.03%), the BSE Bankex (up 1.75%), BSE Capital Goods index (up 1.7%), the BSE Consumer Durables index (up 1.56%), the BSE Oil & Gas index (up 0.8%), the BSE Healthcare index (up 0.79%), outperformed the Sensex.

The BSE FMCG index (down 0.95%), the BSE Auto index (down 0.06%), the BSE Teck index (up 0.22%), the BSE IT index (up 0.28%), the BSE Power index (up 0.54%), underperformed the Sensex.

Energy giant Reliance Industries rose 0.87% to Rs 1956.75. The stock hit a high of Rs 1973.95 and a low of Rs 1940. The Supreme Court on Thursday resumed its hearing on a gas dispute between the Ambani brothers after one of the judges on Wednesday withdrew from the Supreme Court hearing on gas dispute, citing potential conflict of interest. Reliance Industries' counsel Harish Salve recapitulated the arguments made by him in the past six days and asserted that the company had no choice but to follow the government's gas utilization policy.

RIL's price for the gas from the K-G basin discovered and operated by it was subject to government approval and it cannot be a private arrangement between the two brothers, the counsel told the bench now consisting of Chief Justice K G Balakrishnan and Justices B Sudershan Reddy and P Sathasivam.

The High Court ordered RIL to supply gas to Reliance Natural Resources (RNRL) at a price lower than that fixed by the government. Both Ambani brothers approached the Supreme Court, aggrieved by diverse parts of the judgment. The government also entered the fray, adding to the complexity.

The government on 27 October 2009 allocated additional 50 million cubic metres a day (mmscmd) of gas from Reliance Industries-operated east coast block D6. Power plants and refineries will get the bulk of Reliance Industries' gas from the Krishna-Godavari basin beyond the previously allotted 40 million metric standard cubic metres per day (mmscmd).

The empowered group of ministers (eGoM) also made some allotments for Reliance's petrochemical plants and refineries.

Oil exploration stocks rose as crude oil traded above $80 a barrel today and, poised for a weekly gain, on optimism fuel demand will increase amid improved prospects for an economic recovery in the US, the world's biggest energy consumer. Crude oil for December 2009 delivery rose as much as 47 cents, or 0.6%, to $80.09 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 0.87%. The company on Thursday 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 0.93%. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 0.44%.

Rate sensitive realty shares rose on bargain hunting. Unitech, Omaxe, DLF and Indiabulls Real Estate rose by between 1.55% to 3.57%.

Realty stocks had declined sharply recently after the RBI 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.

Metal stocks advanced as copper prices rose on the London Metal Exchange. Hindalco Industries, Hindustan Zinc and Sterlite Industries rose by between 0.44% to 2.21%.

National Aluminium Company surged 1.34%, after the company hiked the prices of aluminium products by Rs 1000 a tonne reflecting the recent uptrend in prices on the London Metal Exchange.

Steel stocks rose for the second straight day on reports major steel producers have posted strong sales volumes for the month of October 2009. Steel Authority of India (Sail) rose 1.31%. Sail has posted 28% growth in saleable steel volumes to 0.85 million tonnes in October 2009 over October 2008.

Tata Steel, the world's eighth largest steelmaker by output rose 3.08% after company said on Friday steel sales at its Indian operations rose 38% to 462,000 tonnes in October 2009 over October 2008.

But JSW Steel fell 1.78% after jumping 7.34% on Thursday. JSW steel's sales doubled to 0.4 million tonnes in October 2009 over October 2009.

Demand for steel remains strong auto, rural construction and infrastructure sectors. Also demand for construction grade steel has improved post monsoon season, and has resulted into higher sales. Another reason for the surge in sales in October 2009 was lower base effect, as last year demand dropped significantly owing to economic downturn. Most steel companies had cut production in October last year due to the global economic crisis and steep fall in demand.

Banking shares rose on gains in American depository receipts (ADRs). India's largest private sector bank by net profit ICICI Bank rose 0.48% as its ADR rose 1.66% on Thursday. 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 0.77% as its ADR rose 2.04% on Thursday.

India's largest bank by net profit State Bank of India (SBI) rose 3.06%. SBI announced after market hours today that the bank has revised downwards deposit rates by 25-50 bps 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.

Among other PSU banks, Union Bank of India, Bank of India, Bank of Baroda, rose by between 1.5% to 3.46%.

Last week, the RBI did not relax mark-to-market rules for bank's debt holdings at a quarterly policy review on 27 October 2009. The market was been agog with talks over the past few days of the central bank hiking the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM).

The central bank also decided to streamline provisioning requirement on non-performing assets. The RBI, asked banks to ensure by September 2010 that the total provisioning coverage against non-performing or bad loans aren't less than 70% of the outstanding amount.

FMCG stocks fell on profit taking. United Spirits, ITC, Hindustan Unilever, fell by between 1.53% to 2.12%.

Auto stocks also fell on profit taking. Low interest rates and attractive benefits offered by companies pushed up sales of the industry in October 2009. The auto sales figures were announced on 2 November 2009.

India's largest small car marker by sales Maruti Suzuki India fell 1.04%. 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 fell 1.06%. Its total sales grew 18% to 20,011 units last month against 17,014 units in the same period last year.

India's largest bike marker by sales Hero Honda Motors fell 1.98%. 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 second largest bike marker by sales Bajaj Auto fell 0.61% The company reported 51.06% rise in total two-wheeler sales to 2,49,974 units in October 2009 as compared with 1,65,477 units in the same period a year ago.

India's largest tractor maker by sales Mahindra & Mahindra rose 1.03%. 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.

IT stocks fell reversing early gains on a stronger rupee. India's largest software company by sales Tata Consultancy Services (TCS) fell 0.52%. The company recently secured a 150 million pounds software implementation contract for 15 years from Cardiff city council, UK.

India's second largest software company by sales Infosys fell 0.24% even as its ADR rose 1.05% on Thursday. Infosys said on Thursday its chairman's wife sold company shares worth $92 million for setting up a venture capital fund.

Sudha Murthy, wife of Infosys co-founder and chief mentor N.R. Narayana Murthy, sold 20 lakh shares, or about 22% of her total holding, on the Bombay Stock Exchange on Thursday, the company said in a filing. Last month, Narayana Murthy, who co-founded Infosys with six other software engineers in 1981 with $250, had sold a total of 800,000 shares worth $37 million to set up a venture capital fund which he plans to set up in India. The company said the Murthys have confirmed they did not plan to raise further capital for the fund.

But, India's third largest software company by sales Wipro rose 0.11% as its ADR rose 1.36% on Thursday. The company said on Thursday 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.

The rupee strengthened to its highest in more than a week on Friday boosted by gains in regional shares, which could prompt foreign fund inflows into the local share market. The partially convertible rupee was at 46.75/76 per dollar stronger than its previous close of 47.0150/0250. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Construction shares rose on government's thrust on infrastructure. Hindustan Construction Company, Era Infra Engineering, Gammon India, Punj Lloyd, Jaiprakash Associates rose by between 2.22% to 7.94%.

India's largest engineering firm by sales Larsen & Toubro (L&T) rose 2.17% to Rs 1575.50. A large block deal was hit of 42.10 lakh shares at Rs 1566.30 on BSE at about 12:00 IST

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

Shares of public sector firms rose as the government plans divestment of stakes in PSUs. State Trading Corporation, Hindustan Copper, Chennai Petroleum Corporation, Central Bank of India, Power Finance Corporation rose by between 1.59% to 14.84%.

Suzlon Energy clocked the highest volume of 2.36 crore shares on BSE. Cals Refineries (2.09 crore shares), IFCI (1.78 crore shares), Indiabulls Power (1.55 crore shares), Unitech (1.2 crore shares) were the other volume toppers in that order.

Larsen & Toubro clocked the highest turnover of Rs 711.23 crore on BSE. State Bank of India (Rs 187.44 crore), Housing Development & Infrastructure (Rs 178.09 crore), Suzlon Energy (Rs 156.80 crore) and Reliance Capital (Rs 152.06 crore) were the other turnover toppers in that order.