PSU OMCs edge higher as market recovers

The key benchmark indices edged higher on bargain hunting, as global stocks rose. Higher advance tax payment by India Inc also underpinned sentiment. The BSE Sensex rose 90.80 points or 0.55%, off close to 60 points from the day's high and up close to 45 points from the day's low. Index heavyweight Reliance Industries pared intraday gains in volatile trade. The company today, 22 December 2009, announced a new gas discovery at one of its exploration blocks in the Krishna Godavari basin.

Bargain hunting emerged after a recent slide. From a recent high of 17227.68 on 8 December 2009, the Sensex had lost 626.48 points or 3.63% to settle at 16,601.20 on Monday, 21 December 2009.

Banking and realty stocks gained. Metal stocks also rose tracking higher metal prices on the London Metal Exchange on Monday, 21 December 2009. Shares of public sector oil marketing companies rose after Finance Secretary Ashok Chawla said the government may offer cash instead of bonds to state-run oil firms for compensating them for selling fuel at lower than market price. The market breadth was strong.

The market surged in early trade tracking firm Asian stocks. It soon trimmed gains. The market regained strength in mid-morning trade. The Sensex surged to a fresh intraday high in mid-morning trade. The market cut gains later as Chinese stocks fell extending their recent losses. The Sensex pared gains soon after hitting a fresh intraday high in afternoon trade.

The government could improve upon its aims to slow the growth of greenhouse gas emissions by 2020, the environment minister said on Tuesday after returning from climate change talks in Copenhagen. The government said it was willing to rein in its "carbon intensity" -- the amount of carbon dioxide (CO2) emitted per unit of economic output -- by between 20 and 25% by 2020, from 2005 levels.

The government has signed two loan agreements totalling $850 million with the Asian Development Bank (ADB), the finance ministry said in a statement on Tuesday. The ADB will provide a $700-million loan, in three tranches in as many years, to state-run India Infrastructure Finance Company to fund the country's infrastructure programme. The Manila-based bank will lend $150 million in four tranches over a period of three years, the statement added, for the restructuring and development of Khadi industry, which makes India's traditional handspun fabric.

The government is unlikely to meet the indirect tax receipt target for the current fiscal year that ends in March 2010, Finance Secretary Ashok Chawla said on Tuesday.

Meanwhile, corporate advance tax payments for the October-December 2009 quarter shot up sharply, suggesting a higher profit growth in corporate sector in the third quarter (October-December) of the current fiscal, pointing to a firm broad-based economic recovery. Corporate advance tax payments for the quarter were up 44% to Rs 48,300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter. The company-wise break-up of advance tax collection suggests a broad-based recovery with automobiles, cement, metals and consumer goods, doing well.

The sharp surge in food prices reflects the impact of the drought and inefficient distribution, which could not be addressed by monetary policy, the deputy head of India's Planning Commission Montek Singh Ahluwalia said on Tuesday. While the increase in food prices was to some extent expected, it was a concern -- food prices rose an annual 20 % in early December -- but they should decline in January 2010, Ahluwalia said today.

"From January 2010 you will see a decline a food prices. What you see now is speculative, probably due to the drought situation. The stock situation is relatively OK," Singh said. "Problems such as this cannot be tackled by blunt instruments like monetary policy." "Price increase at the retail level is much more than the increase at the wholesale level. This is because of dysfunctionality in the distribution system," Ahluwalia said. "The ministry is looking into it, but whenever required, we should import," he added.

India's food-price inflation cannot be tackled through monetary and other policy steps, while inflationary expectations will not stay long, Chawla said on Monday. Earlier on Monday, the Prime Minister's economic advisor C Rangarajan said India's central bank may have to raise the cash reserve ratio (CRR) to drain money from the banking system if prices do not decline in December.

India is battling soaring food prices after a poor monsoon and then flooding in parts of the country hit crops. "Unlike previous inflation, this is very sector specific. It is a very peculiar inflation which needs to be attacked at the level of the sector," said Kaushik Basu, chief economic advisor to the finance ministry.

India's central bank governor D Subbarao had earlier said that monetary policy is not the right tool to fix supply problems such as food shortages, but added that if not contained soaring food prices would stoke inflationary pressures in the broader economy.

Food prices surged an annual 20% in early December and rising food prices contributed to a faster-than-expected 4.78% increase in the wholesale price index in November 2009. Last week, Mukherjee had said containing inflation is high on the government's agenda and it is monitoring the price situation.

In overseas news, rating agency Moody's cut Greece's debt to A2 from A1 on Tuesday over soaring deficits, becoming the third major rating agency to downgrade the highly-indebted country's rating this month. Moody's kept Greece on a negative outlook. Its rating is still two notches above that of Fitch and S&P, which earlier this month cut their rating on the indebted country to BBB+, the euro area's lowest level.

European shares advanced for a second straight session on Tuesday, tracking sharp gains on Wall Street and in Asia, with banks featuring among the top gainers. The key benchmark indices in Frnace, Germany and UK rose by between 0.36% to 1.05%.

Britain's gross domestic product contracted by 0.2% in the third quarter, the Office for National Statistics said Tuesday. That's compared to an earlier estimate of a 0.3% quarterly decline.

Asian stocks rose on Tuesday as a weaker yen boosted the earnings outlook for Japanese makers of electronics and cars and after metal prices advanced. The key benchmark indices in Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan rose by between 0.69% to 1.91%. But China's Shanghai Composite fell 2.32% on concerns more initial public offering subscriptions by the year-end could impact market liquidity.

The yen hit a fresh 7-week low against the dollar in Asia Tuesday, as rising long-term US interest rates prompted hedge funds to buy the higher-yielding currency.

Trading in US index futures indicated Dow could gain 34 points at the opening bell on Tuesday, 22 December 2009.

US stocks gained on Monday with the Nasdaq closing at a new 15-month high. Positive earnings and upgrades for Alcoa and Intel triggered gains despite the dollar index gradually gaining traction. The Dow Jones Industrial Average was up 85.25 points, or 0.83% at 10,414.14. The Standard & Poor's 500 Index gained 11.58 points, or 1.05%, to 1,114.05. The Nasdaq Composite Index rose 25.97 points, or 1.17%, to end at 2,237.66, its highest close since September, 2008.

The BSE Sensex rose 90.80 points or 0.55% to 16692. The Sensex rose 136.92 points at the day's high of 16,738.12 in afternoon trade. The Sensex opened with an upward gap of 32.61 points at 16,633.81 which was also the day's low.

The S&P CNX Nifty rose 33.25 points or 0.67% to 4,985.85. It hit a high of 4997.30. Nifty December 2009 futures were at 4,996, at a premium of 10.15 points as compared to the spot closing of 4,985.85. Turnover in NSE's futures & options (F&O) segment was Rs 60,289.04 crore, sharply lower than Rs 70,627.77 crore on Monday, 21 December 2009.

The market breadth, indicating the overall health of the market was strong. On BSE, 1687 shares advanced as compared with 1116 that declined. A total of 84 shares remained unchanged.

Among the 30-member Sensex pack, 17 rose while rest fell.

BSE clocked a turnover of Rs 3616 crore lower than Rs 3878.06 crore on Monday 21 December 2009.

A deluge of global liquidity has boosted stocks across the globe this year. Governments and central banks around the world have injected trillions of dollars in the past one year to pull the world out of a most severe recession since the 1930s Great Depression. The Sensex is up 7044.69 points or 73.02% in calendar year 2009, as on 22 December 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8531.60 points or 104.54% as on 22 December 2009.

Coming back to today's trade, the BSE Mid-Cap index rose 0.78% and the BSE Small-cap index fell 0.99% Both the indices outperformed the Sensex.

The sectoral indices on BSE showed a mixed trend. The BSE Metal index (up 2.87%), the BSE PSU index (up 1.59 %), the BSE Realty index (up 1.51%), the BSE Bankex (up 1.16%), the BSE Power index (up 1%), outperformed the Sensex.

The BSE IT index (down 0.35%), the BSE Healthcare index (down 0.17%), the BSE Auto index (up 0.17%), the BSE Oil & Gas index (up 0.2%), the BSE Consumer Durables index (up 0.33%), the BSE Capital Goods index (up 0.47%), the BSE Teck index (up 0.47%), the BSE FMCG index (up 0.49%), underperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) witnessed alternate bouts of buying and selling to end up just 0.22% to Rs 1018.80. It hit a high of Rs 1029 and a low of Rs 1011.60. Reliance Industries said on Tuesday it had made a gas discovery in one of its exploration blocks in the Krishna Godavari basin off the country's east coast. Reliance Industries holds a 90% interest in the block, which covers an area of 3,288 square kilometres, and Hardy Exploration and Production India holds the rest.

RIL's plans to gain control of the bankrupt petrochemical major LyondellBasell may reportedly come undone if rival billionaire Len Blavatnik has his way. Reliance Industries' (RIL) bid fails to factor in the potential turnaround gains of the bankrupt petrochemicals-maker, said a top official of the part-owner of the LyondellBasell, signalling that RIL may have to revisit its offer, if it has to realise its dream of becoming one of the world's biggest petrochem players. The official from Access Industries, promoted by Russian-born billionaire Len Blavatnik, said the $12 billion at which RIL has reportedly valued LyondellBasell was too low.

Meanwhile, Reliance Industries may reportedly face a probe by the Registrar of Companies (RoC) in a matter related to purchase of shares in it by a group of privately-owned promoter companies in 2000, allegedly using its own funds. The expected probe follows the Securities & Exchange Board of India's report to the government earlier this month seeking 'appropriate action' on those transactions conducted nearly a decade ago.

RIL's advance tax payment rose 82.89% to Rs 834 crore in Q3 December 2009 over Q3 December 2008.

Banking shares rose on firm American depository receipts on Monday. Banking stocks had drifted lower in the past few days on a likely monetary tightening by the RBI. India's largest private sector bank by net profit ICICI Bank rose 1.95% as its ADR rose 1.31% on Monday. ICICI Bank has launched a home-loan scheme under which 8.25% interest rate will be fixed for the first two years. The floating rates will apply after 2 years. These rates will be applicable to loans sanctioned between December 2009 and January 2010.

ICICI Bank's advance tax payment declined by 51.8% to Rs 301 crore in Q3 December 2009 as compared with Rs 625 crore in Q3 December 2008.

India's largest bank by net profit and branch network State Bank of India rose 0.89%. The state-run bank's Q3 advance tax rose 5.59% to Rs 1795 crore over a year ago.

Among other PSU stocks, Punjab National Bank, Bank of Baroda and Bank of India rose by between 0.61% to 2.55%.

But, India's second largest private sector bank by net profit HDFC Bank fell 0.3% even as its ADR rose 1.77% on Monday.

Metal stocks rose after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 1.5% on Monday, 21 December 2009. Sterlite Industries, Hindalco Industries, Hindustan Zinc, Steel Authority of India, National Aluminum Company rose by between 0.22% to 6.47%.

India's largest steel maker by sales Tata Steel rose 3.97% The company's Q3 advance tax rose 160% to 650 crore. The company's European unit Corus recently secured a 350 million euro contract to supply rails tracks to French railway operator SNCF.

Realty stocks rose on bargain hunting after recent fall. Indiabulls Real Estate, Unitech and Omaxe rose by between 0.38% to 2.13%.

India's largest realty player by market capitalization DLF rose 1.47%. DLF recently announced a merger of its commercial realty arm DLF Assets (DAL) with itself, a move aimed at repaying some of DAL's debt. The new structure involves the merger of DLF subsidiary DLF Cyber City Developers with Caraf Builders and Constructions, which is the holding company of DAL. The valuation ratio approved by the board for Cyber City and Caraf is in the ratio of 60:40.

This means that DLF shareholders will have access to 60% and promoters to 40% of the merged entity. However, this will be a cashless transaction. DLF sells commercial property to DAL, which is controlled by KP Singh who owns 78% in the latter along with his son and DLF promoter Rajeev Singh. DAL buys commercial property from DLF and collects lease rentals from it. With this merger, the debt on DLF's books would be an additional Rs 2,460 crore.

Shares of public sector oil marketing companies rose after Finance Secretary Ashok Chawla today said the government is likely to offer cash instead of bonds to state-run oil firms before 31 March 2010 for compensating them for selling fuel at lower than market price. Indian Oil Corporation, BPCL and HPCL rose by between 1.09% to 2.76%.

The oil ministry has sought Rs 20,000 crore of bonds for state-run firms as compensation during the full fiscal year ending March 2010.

IT stocks fell on profit taking. India's largest IT exporter by sales Tata Consultancy Services fell 1.19%. The company's Q3 advance tax surged 37.21% to Rs 177 crore. India's third largest IT exporter by sales Wipro fell 0.01%.

India's second largest software services exporter Infosys Technologies fell 0.27% as its ADR fell 1.02% on Monday. The company's Q3 advance tax surged 166.7% to Rs 400 crore. Infosys Technologies expects revenue growth in the fiscal year starting in April to be better than 2009/10 as a recovery in the global economy spurs investments by its clients, Subhash Dhar, senior vice-president and head of global sales and marketing said recently.

Telecom stocks rose after telecom Minister Andimuthu Raja said on Monday government plans to start auctioning third-generation wireless spectrum as scheduled from 14 January 2010. India's largest mobile services provider by sales Bharti Airtel rose 3.81%. The company's Q3 advance surged to Rs 272 crore compared to Rs 5.5 crore last year.

Among other telecom stocks, Reliance Communications, Idea Cellular and Spice Communications rose by between 1.49% to 2.1%.

Cement stocks fell on profit taking. ACC fell 1.92%. Among other cement stocks, Ultratech Cements and Ambuja Cements, fell by between 0.88% to 2.06%.

Cement prices are reportedly seen hardening in the January-March 2010 quarter as demand from state projects picks up and rural housing drives volume growth. Prices went up by Rs 8-10 for a 50 kg bag southern India late November to Rs 155-175, while a similar hike in Mumbai on 2 December 2009 raised prices to Rs 240-245 per bag.

India's largest thermal power generator by sales NTPC rose 3.27%. The company's Q3 advance tax payment rose 67.93% to Rs 1078 crore. As per reports the government plans to mop up around Rs 11,000 crore from the disinvestment of 5% stake in the utility giant.

Among other power stocks, Reliance Power, Reliance Infrastructure, Tata Power Company rose by between 0.3% to 0.91%.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.5% on bargain hunting after a recent slide. The stock had lost 2.38% on Monday as the company's Q3 advance tax decline 13.46% to Rs 270.crore.

India's largest power equipment maker by sales, Bharat Heavy Electricals (Bhel), was flat after falling 1.36% on Monday after the company's Q3 advance tax fell 21.88% to Rs 500 crore. Bhel on Monday said it had got orders worth Rs 640 crore.

Among other capital goods stocks, ABB, Thermax and Praj Industries rose by between 0.93% to 2.65%.

India's largest cigarette maker by sales ITC rose 1.11%. The company's Q3 advance tax rose 39.39% to Rs 690 crore.

Among other FMCG stocks, Tata Tea, Nestle India, United Spirtis rose by between 0.04% to 1.04%.

Auto stocks rose on strong sales in the month of November 2009 and higher advance tax payment in the third quarter. India's largest small car maker by sales Maruti Suzuki India rose 0.4%. The company's Q3 advance tax rose 196.3% to Rs 400 crore. Suzuki Motor Corp and Volkswagen AG will start detailed discussions over joint projects after 10 January 2010, Suzuki CEO Osamu Suzuki last week. Japan's Suzuki Motor said on 9 December 2009 it will sell a 19.9% stake to Volkswagen (VW) for $2.5 billion and use half the proceeds to buy shares in the German automaker, as the two firms form a formidable force in the auto industry. Japan's Suzuki has a 54.2% stake in Maruti Suzuki India.

Maruti's total vehicle sales spurted 66.60% to 87,807 units in November 2009 over November 2008. Domestic sales spurted 60.10% to 76,359 units, while exports surged 128.60% to 11,448 units in November 2009 over November 2008.

India's second largest bike maker by sales Bajaj Auto rose 1.39%. Bajaj Auto on 9 December 2009 launched a 135 cc Pulsar, pushing the Pulsar brand into the mass segment. Bajaj expects a sell a minimum 30,000 units per month of the new Pulsar model. The automaker had recently refreshed the entire Pulsar lineup and expects total Pulsar sales to cross 80,000 units per month.

The company's total vehicle sales rose 73% to 2.76 lakh units in November 2009 over November 2008. Motorcycles sales jumped 84% to 2.42 lakh units.

India's largest motorcycle maker by sales Hero Honda Motors rose 1.2%. The company's Q3 advance tax rose 44.1% to Rs 213 crore. The company's total vehicle sales jumped 32% to 3.81 lakh units in November 2009 over November 2008.

India's top truck maker by sales Tata Motors was flat. The company on Thursday reported a 62% jump in its total global sales in November 2009 to 75,775 units. The company paid Rs 100 crore as advance tax in third quarter versus Nil same quarter last year.

India's top tractor marker by sales Mahindra & Mahindra (M&M) fell 1.04%. M&M on Monday signed a joint venture agreement with Yueda Group, China's second largest tractor producer, to set up a tractor company with a combined investment of Rs 175 crore. The new company, Mahindra Yueda (Yancheng) Tractor Company (MYYTCL) will be a 51:49 joint venture, where M&M will hold the majority. Investments by both companies will be in the ratio of their stakes in the venture. The plant will be operational in the next 12-15 months.

Car sales in India rose an annual 61% to 1,33,687 in November 2009 over November 2008, boosted by improved consumer sentiment, easier availability of loans and a low sales base a year earlier, an industry body said on Tuesday. Sales of trucks and buses, a gauge of economic activity, doubled to 40,847 units in November from 20,631 a year earlier, data from the Society of Indian Automobile Manufacturers showed.

Cals Refineries clocked highest volume of 4.32 crore shares on BSE. Suzlon Energy (0.97 crore shares), Kasshyap Technologies (0.8 crore shares), Austral Coke & Projects (0.7 crore shares) and Unitech (0.68 crore shares) were the other volume toppers in that order.

Tata Steel clocked the highest turnover of Rs 150.22 crore on BSE. Zandu Pharmaceuticals (Rs 136.69 crore), Suzlon Energy (Rs 81.91 crore), Reliance Industries (Rs 78.86 crore) and Aban Offshore (Rs 73.88 crore) were the other turnover toppers in that order.