Market ends higher; Infosys, TCS hit all time high

The volatile trading session ended with gains. The key indices closed near day's high led by gains in software stocks, where sector giants Infosys and TCS touched an all time high today.

Market shrugged off weak global cues on expectations that Indian firms may report good earnings in the third quarter. The BSE 30-share Sensex rose 87.29 points or 0.50%, up close to 233.34 points from the day's low.

The market was volatile. The market opened on a weak note triggered by subdued Asian stocks after China's move to cool lending. It turned positive in morning trade. It again declined in early afternoon trade. However, it turned positive, recovering sharply to hit the fresh day's high in mid-afternoon trade on positive European stocks. Market extended gains in late trade.

High food price inflation may start moderating in seven to 10 days, following the measures unveiled by the government, Farm Minister Sharad Pawar said on Wednesday.

The Indian economy is expected to grow by around 7.75 % in the fiscal year to March 2010, but food price inflation is a major concern, the finance minister said on Wednesday. Pranab Mukherjee also said the government could unload surplus wheat and rice stocks for open market sale.

The industrial output grew at its fastest pace in two years in November, strengthening the case for the Reserve Bank of India (RBI) to tighten policy later this month to temper inflation expectations. The RBI, which reviews its quarterly policy on 29 January 2010, is expected raise banks' cash reserve ratio, the level of deposits that banks must keep in cash. India's industrial output grew at faster-than-expected 11.7 % in November from a year earlier, data showed on Tuesday. The December inflation data, due on 14 January 2010, will be the last important data for the RBI to gauge price pressures

Inflationary pressures seem to be plateauing on the food front, Subir Gokarn, one of RBI's deputy governors, said at a banking conference. Inflationary pressures are relatively concentrated on food and very clearly as (the) economy starts to grow start to utilise whatever slack capacity there is, the risk of food inflation spilling over to wider surge increases, he added.

The finance secretary Ashok Chawla was quoted as saying on Monday the ministry backs administrative steps to tame inflation and wants hike in policy rates only if food inflation escalates into general inflation. Montek Singh Ahluwalia, the deputy chairman of Planning Commission, said the industrial growth for the full 2009/10 would be well above last year's level, but inflation could moderate in the coming months. While government officials said the industrial output growth highlighted recovery was on course, RBI's Gokarn said the recovery is somewhat uneven.

Meanwhile, the government will give financial incentives to exports of around 2,000 products including those in engineering, electronics and chemicals, Trade Minister Anand Sharma said on Tuesday. The boost, to support a nascent recovery in India's exports sector, would cost upto an additional Rs 500 crore ($110 million) in the current fiscal year ending March.

In global news, European shares flip flopped on Wednesday. The key benchmark indices in France and UK were down by between 0.11% to 0.38%. But Germany's DAX rose 0.13%.

Stock markets and commodities fell in Asia on Wednesday after Beijing's surprise decision to raise banks' reserve requirements sparked concerns that China's rapid economic rebound would slow, curbing demand for natural resources and other imported goods from around the region. China's Shanghai Composite fell 3.09%. China will raise the proportion of deposits banks must set aside as reserves by 50 basis points starting 18 January 2010, the central bank said on its Web site last night. The key benchmark indices in Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan fell by between 0.95% to 2.59%.

Trading in US index futures indicated the Dow could gain 4 points at opening trade on Wednesday, 13 January 2010.

U.S. stocks fell in a broad selloff on Tuesday as investors pummeled financials on concerns about a potential government levy on banks, while Alcoa Inc's weaker-than-expected results tempered optimism. Dow Jones industrial average fell 37.86 points, or 0.36 % to end at 10,626.13. The Standard & Poor's 500 Index was down 10.82 points, or 0.94 % at 1,136.16. The Nasdaq Composite Index was down 30.10 points, or 1.30 % at 2,282.31.

The U.S. Federal Reserve will have to raise interest rates as the economy improves or risk losing the public's confidence in its commitment to keeping inflation low and stable, Charles Plosser, president of the Philadelphia Federal Reserve Banksaid on Tuesday.

Charles Plosser, said expectations for future inflation are currently well-anchored, but warned that there is considerable uncertainty clouding the outlook for price pressures over the next two to five years

Closer home, the BSE 30-share Sensex rose 87.29 points or 0.50% at 17,509.80. The barometer index lost 146.05 points at the day's low of 17,276.46 in early trade. At the day's high of 17,528.31, Sensex rose 105.80 points in late trade.

The S&P CNX Nifty rose 23.55 points or 0.45% at 5233.95.

The BSE Mid-Cap index rose 0.60% and the BSE Small-Cap index rose 0.86%.

The market breadth, indicating the overall health of the market was strong. On BSE, 1692 shares advanced as compared with 1195 that declined. A total of 82 shares remained unchanged. The breadth flipped between the positive and negative since early trade.

BSE clocked a turnover of Rs 6504 crore lower than Rs 6203.09 crore on Tuesday 12 January 2010.

Among the 30-member Sensex pack, 15 fell while rest rose.

Index heavyweight Reliance Industries (RIL) rose 0.43% to Rs 1088.35. The stock was volatile. It hit a high of Rs 1091.95 and a low of Rs 1070. The firm raised $763 million through a block sale of 3.3 crore shares. RIL raised $763 million through a block sale of 3.3 crore shares on Monday, the country head of UBS Manisha Girotra said on Monday. Girotra also said the share sale at Rs 1050 each would be the last of block trades by the company for a while. UBS was the sole arranger for the trade.

Reliance, which is bidding for bankrupt LyondellBasell Industries, had previously sold treasury shares to state-owned insurer Life Insurance Corp of India raising $577 million last week. As per reports last week, Reliance had sweetened its offer to buy a controlling stake that valued LyondellBasell at $13.5 billion.

Shares of software outsourcers rose for the second straight day, with Infosys and TCS hitting an all-time today, after encouraging third quarter result from Infosys.

India's largest software services exporter TCS rose 5.23% to Rs 788.25, extending Tuesday's 4.88% gains. It hit an all time high of Rs 796 on the BSE on Wednesday.

India's third largest software services exporter Wipro rose 3.02% extending Tuesday's 4.89% gains. Its ADR rose 5.64% on Tuesday.

IT bellwether Infosys rose 3.82% to Rs 2686.25, extending Tuesday's 3.97% gains after better than expected third quarter result announced by the company on Tuesday. Infosys hit an all time high of Rs 2,700.10 on the BSE.

Infosys' ADR rose 5.14% on Tuesday. Infosys raised its full-year revenue and profit outlook after strong Q3 results and on improving trend for outsourcing orders. The company's consolidated net profit as per Indian accounting standards rose 2.72% to Rs 1582 crore on 2.8% rise in consolidated revenue to Rs 5741 crore in Q3 December 2009 over Q2 September 2009.

Infosys has raised earnings and revenue guidance for the year ending March 2010 (FY 2010) both in rupee and dollar terms. Infosys has forecast a 1.8% to 2% growth in consolidated dollar revenue for FY 2010 compared from a drop it had projected at the time of announcing Q2 September 2009 results. Infosys said FY 2010 consolidated revenue in dollar terms could rise to $4.75 billion to $4.76 billion, from $4.6 billion to $4.62 billion forecast earlier. The consolidated earnings per American depository share for the full year is seen rising 0.4% to $2.26, the company said in a statement.

Infosys CEO and managing director S. Gopalakrishnan said the global economic recovery seems to be led by the US and the financial services segment. Though IT budgets are expected to be flat in 2010, offshore outsourcing is expected to benefit from this recovery, he added. Chief Operating Officer S.D. Shibulal said the contribution to revenues from top ten clients grew by 12.2% during the quarter adding that Infosys' clients are taking decisions much faster.

Metal stocks reversed early losses. Hindalco Industries (up 2.63%), JSW Steel (up 1.10%), Jindal Saw (up 2.84%), Steel Authority of India (up 3.31%), Bhushan Steel (up 5.25%), rose.

Tata Steel, the world's eighth-largest steelmaker rose 2.16% on bargain hunting after falling for last two days. The company said on 5 January 2010 sales from its Indian operations rose 73% in December 2009 to 636,000 tonnes from a year earlier. The Indian operations account for about a quarter of the group's total annual global capacity of 30 million tonnes, which includes unit Corus, Europe's second-largest steelmaker.

Most auto stocks fell on profit taking after the recent surge. India's largest tractor marker by sales Mahindra & Mahindra (M&M) fell 2.91%. M&M marked its entry into the heavy commercial vehicle (HCV) segment with its unveiling of 25 and 31 tonne trucks with its US-based joint venture partner Navistar Inc.

Mahindra & Mahindra, reported 122% rise in its domestic sales to 22,754 units in December 2009 over December 2008. The company sold a total of 24,001 vehicles (domestic plus exports) in December 2009 as against 11,172 vehicles sold in December 2008.

India's largest car maker by sales Maruti Suzuki fell 0.92%. The company is considering to raise prices of its vehicles in about two weeks time, Commercial Business Head S.N. Burman said on Wednesday. Maruti Suzuki's managing director and chief executive officer, Shinzo Nakanishi was quoted by the media as saying on 5 January 2010 that the company will see flat to lower exports next year because of the scrappage of incentives by Europe. He also said there would be lower offtake from Nissan for exports as a result of the removal of incentives.

Nakanishi said the company aims to keep operating margins at 10% in fiscal year 2009/10 but profitability will be impacted by a rise in raw material prices and a rise in the yen.

Maruti Suzuki India reported 50.6% increase in total vehicle sales to 84,804 units in December 2009 over December 2008. Domestic sales rose 36.5% to 71,000 units, while exports surged 223.7% to 13,804 units.

India's largest motorcycle maker by sales Hero Honda Motors fell 1.05%. Hero Honda will comfortably exceed its fiscal 2009/10 sales target of 40 lakh units, its managing director Pawan Munjal said to media on 7 January 2010. Sales jumped 74% to 375,838 units in December 2009 over December 2008.

India's top truck maker by sales Tata Motors was almost flat. Tata Motors has raised prices of some truck and bus models in January 2010 by about 1%. The company expects commercial vehicle sales to remain strong in the next 12 months. The company's chairman Ratan Tata said on 5 January 2010 that the company may consider launching its ultra-cheap Nano car in the United States in three years, following possible sales in Europe by the end of 2011.

Tata Motors registered 105% growth in sales to 51,627 units in December 2009 over December 2008.

Bajaj Auto inched up 0.83%. Its net profit surged 189.20% to Rs 507.29 crore on 57.9% spurt in net sales to Rs 3165.84 crore in Q3 December 2009 over Q3 December 2008.

TVS Motors rose 1.04%. Sales rose 34% to 119,701 units in December 2009 over December 2008.

Banswara Syntex jumped 13.58%, after the company bagged an order for supply of 3-layer water proof breathable fabrics for an undislcosed sum

Rural Electrification Corporation gained 1.43%, after net profit surged 48.78% to Rs 474.07 in Q3 December 2009 over Q3 December 2008.

Cals Refineries reported a highest volume of 6.26 crore shares on the BSE. Himachal Futuristic Communication (4.26 crore shares), GTL Infrastructure (1.50 crore shares), Mahindra Satyam (1.03 crore shares), and Ispat Industries (1.02 crore shares), were the other volume toppers on the BSE.

Infosys Technologies clocked a highest turnover of Rs 182.31 crore on the BSE. Reliance Industries (Rs 180.57 crore), Tata Steel (Rs 170.99 crore), Mahindra Satyam (Rs 120.16 crore), and State Bank of India (Rs 111.06 crore), were the other turnover toppers on the BSE.