Nifty attains highest closing level in 22 months

Indian stocks kicked off 2010 on an upbeat note, with key benchmark indices hitting multi-months high as strong auto sales, a jump in manufacturing activity in December 2009, and the latest data showing a surge in exports in November 2009, underpinned sentiment. The BSE 30-share Sensex rose 93.92 points or 0.54%, up close 185 points from the day's low and off close to 25 points from the day's high.

The Sensex struck its highest closing level in 20 months. The 50-unit S&P CNX Nifty attained its highest closing level in 22 months. Global stocks were firm and US index futures surged.

Index heavyweight Reliance Industries (RIL) recovered from lower level on market talks the company has raised Rs 2600 crore by selling 2.5 crore shares at Rs 1,035 each to state-run Life Insurance Corporation of India. Auto stocks also surged after auto firms posted strong December 2009 sales growth. IT, cement, banking, metal and consumer durables stocks also rose. The market breadth was strong.

The market rebounded soon after an initial slide on firm Asian stocks. The market was range bound in early morning trade. The market trimmed gains after hitting fresh intraday highs in morning trade. The market surged to a fresh intraday high in mid-afternoon trade as European stocks surged in early trade. The market pared gains before bouncing back in late trade.

Trading began at 9:00 IST today, 4 January 2010 as the stock exchanges decided to extend trading hours by 55 minutes.

The economy is expected to grow at more than 7.5% in the fiscal year ending March 2010, boosted by better growth in the December 2009 quarter, the finance ministry's chief economic advisor Kaushik Basu said on Monday. The government is not expected to announce any monetary tightening measures for now, he added. "There is no expectation of monetary tightening, nor do I believe there is a reason for it," Basu said." It is a very sector-specific inflation which is taking place," he said, adding, inflation is expected to "peter out" in a few months he added.

Meanwhile, the latest data showed that the rate of growth in manufacturing rose for the first time in three months in December 2009, with activity reaching its highest since May 2009 on sharp rises in new work and output. The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, rose to 55.6 in December from 53.0 in November. The reading was the strongest since May's 55.7, which was the strongest in 2009. A reading above 50 means activity expanded during the month.

The Reserve Bank of India (RBI) will review interest rates at its next policy review scheduled for 29 January 2010 and not before, K.C. Chakrabarty,a deputy RBI governor said on Thursday, 31 December 2009. He further said credit growth will rise to 17-18% when GDP growth reaches 8-9%.

Finance Minister Pranab Mukherjee said on 30 December 2009 that the government needs to strike a balance between economic growth and cutting fiscal deficit. India's fiscal deficit is estimated at 6.8% of gross domestic product for 2009/10 (April-March), higher than 6.2% in the previous year as the government cut tax rates and boosted spending.

Recently C. Rangarajan, Chairman of the Economic Advisory Council to the Prime Minister, raised concern over the rising food inflation, which is at an 11-month high now, stating that the task ahead was to check food inflation. He indicated that the Reserve Bank of India could look at raising the cash reserve ratio (CRR) to suck out excess liquidity from the system, even though the central bank may watch the price movements for some more time before taking any decision on rate hike.

The economy will expand 8% in 2010/11 after growing between 7 and 7.5% in the current fiscal year to end-March, Rangarajan said on Saturday, 2 January 2010. Rangarajan also said the economy would return to an annual growth rate of 9% in the fiscal year to end-March 2012 on the back of an improvement in the world economy and global trade.

Food price index rose 19.83% in the 12 months to 19 December 2009, data released by the government showed on 31 December 2009, showed. The primary article index jumped 15.49% and the fuel price index rose 4.45%. The worst monsoon in nearly four decades and flooding in some parts of the country have pushed up food prices.

Meanwhile, India's exports sector has bounced back with outward trade growing by 18% in November 2009, the commerce ministry said. The export figures turned positive after staying in the red for 13 months. The value of exports in November 2009 jumped to $13.19 billion compared to $11.16 billion.

Data earlier this month showed that 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. 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.

European shares rose on Monday on the first session of the year, extending last year's strong run, with banks, oil producers and drugmakers leading the gainers. The key benchmark indices in France, Germany and UK rose by between 0.62% to 1.03%.

The purchasing managers index for the euro-zone manufacturing sector rose to a 21-month high of 51.6 in December 2009 from a reading of 51.2 in November 2009.

Activity in Britain's factory sector showed a stronger-than-expected rise in December 2009, pushing the manufacturing purchasing managers index to its highest level in 25 months, according to data released Monday. The CIPS/Markit PMI jumped to 54.1 from a reading of 51.8 in November.

Most Asian stocks rose on Monday, 4 January 2010, after Chinese manufacturing expanded in December 2009 and a stronger dollar boosted the earnings outlook for Japanese car and electronics manufacturers. The key benchmark indices in Indonesia, Japan, Taiwan and South Korea rose by between 0.24% to 1.03%. But the key benchmark indices in Hong Kong and Singapore fell by between 0.11% to 0.23%.

Chinese stocks retreated on concerns about rising inflation on the mainland and as investors locked in gains after a four-session rally. The Shanghai Composite was down 1%, after tacking on more than 4% in the previous four sessions. Chinese manufacturing activity climbed for the ninth straight month in December 2009, according to the HSBC purchasing managers' index released Monday, with overall conditions during the December-ended quarter the most robust in the survey's six-year history. The index climbed to 56.1 for the month, compared to 55.7 in November. Measures for labor demand and new orders also suggested a broad-based revival of activity.

South Korean exports increased 33.7% in December from a year earlier, the fastest pace in 17 months, the Ministry of Knowledge Economy said on 1 January 2010.

Singapore's economy shrank for the first time in three quarters. Gross domestic product contracted an annualized 6.8% in the fourth quarter to December from the previous three months after climbing a revised 14.9 % from July to September, the trade ministry said in a statement today.

Trading in US index futures indicated Dow could gain 61 points at the opening bell on Monday, 4 January 2010.

US stocks edged lower on the last trading session of 2009 on Thursday, 31 December 2009. The Dow Jones industrial average fell 120.46 points, or 1.14 % to end at 10,428.05. The Standard & Poor's 500 Index declined 11.32 points, or 1%, to finish at 1,115.10. The Nasdaq Composite Index lost 22.13 points, or 0.97 %, to close at 2,269.15. US markets remained close on Friday, 1 January 2010 on New Year's holiday.

For 2009, US stocks registered their first annual advance in two years, underpinned by strength in technology and natural resource shares on bets that the recovery will brighten the profit outlook.

Top US Federal Reserve officials defended policies leading up to the recent financial crisis, arguing that exotic mortgages and overconfidence in home price gains, not low interest rates, fueled a catastrophic housing bubble. Addressing an economists' conference in Atlanta on Sunday, 3 January 2010, Fed Chairman Ben Bernanke said the US economy is only now recovering from recession, and Fed Vice Chairman Donald Kohn warned the pace of recovery will be slow. This means inflation will remain contained for some time, Kohn said

Bernanke repeated his expression of confidence the Fed is equipped to tap the brakes at the right time. "We have a very robust strategy," he said in response to questions after his speech. "It includes both raising the interest rate that we pay on reserves, plus a number of measures that we have been testing that will allow us to drain reserves from the system. So we're quite confident that we can constrain broader money growth and credit growth as needed to exit from these unusual policies when the time comes," he said.

Kohn said the Fed would have to begin pulling back, however, before things were completely back to normal. "We will need to begin withdrawing extraordinary monetary stimulus well before the economy returns to high levels of resource utilization," he said.

Closer home, the BSE 30-share Sensex rose 93.92 points or 0.54% to 17,558.73, its highest closing since 2 May 2008. The Sensex gained 118.03 points at the day's high of 17,582.84 in mid-afternoon trade. The Sensex fell 86.43 points at the day's low of 17378.38 in early trade.

The S&P CNX Nifty rose 31.15 points or 0.6% at 5232.20, its highest closing since 28 February 2008. It hit a high of 5238.45 in intraday trade. Nifty January 2010 futures were at 5,243, at a premium of 10.50 points as compared to the spot closing of 5,232.20. Turnover in NSE's futures & options (F&O) segment was Rs 42,559.47 crore, sharply lower than Rs 105421.96 crore on Thursday, 31 December 2009.

BSE clocked a turnover of Rs 6198 crore, much higher than Rs 4618 crore on Thursday 31 December 2009.

The market breadth, indicating the overall health of the market was strong. On BSE, 2126 shares advanced as compared with 752 that declined. A total of 71 shares remained unchanged.

Among the 30-member Sensex pack, 23 rose while rest declined.

The BSE Mid-Cap index rose 1.48% and the BSE Small-Cap index rose 1.6%. Both the indices outperformed the Sensex.

Among the sectoral indices on BSE, the BSE Auto index (up 1.88%), the BSE Metal index (up 1.82%), the BSE Consumer Durables index (up 1.81%), the BSE FMCG index (up 1.11%), BSE's banking sector index Bankex (up 0.77%), the BSE Capital Goods index (up 0.72%) and the BSE IT index (up 0.69%), outperformed the Sensex

BSE Power index (up 0.53%), BSE Realty index (up 0.39%), BSE Health Care index (up 0.09%) and BSE Oil & Gas index (down 0.21%), underperformed the Sensex.

A deluge of global liquidity boosted stocks across the globe last 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 rose 7817.50 points or 81.03% in calendar year 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex was up 9398.33 points or 115.16% as on 4 January 2010.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 1.29% to Rs 1075.35. Nevertheless, the stock came off the day's low of Rs 1022. Reliance Industries has reportedly raised $577 million through a share sale, the second big equity fund raising in under four months as it looks to buy bankrupt petrochemicals firm LyondellBasell. Reliance, controlled by India's richest man, Mukesh Ambani, sold 2.5 crore existing treasury shares at a 5% discount to Thursday's market close or at a weighted average price of Rs 1035.10 to state-run Life Insurance Corp of India, reports suggest. The deal follows a $660 million share sale by conglomerate Reliance in September 2009.

Oil exploration firms rose, as oil surged past $80 a barrel amid thin trading volumes on Monday, the first trading day of 2010, partly supported by news that Russia had halted oil supplies to Belarussian refineries. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 0.83%. Cairn India advanced 1.47%. India's second biggest oil and gas exploration firm by revenue, Oil India was flat.

Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms. US crude for February delivery rose 59 cents to $79.95 a barrel in electronic trading.

Cement shares gained on speculation cement prices will increase in the first quarter of calendar year 2010 on rise in infrastructure activity. Ambuja Cement, UltraTech Cement, Birla Corporation rose by between 2.31% to 5.4%.

India's largest cement maker by sales ACC rose 4.87% even as cement shipments fell 1.1% to 18.8 lakh tonnes in December 2009 over December 2008.

Banking stocks extended gains on reports credit offtake has picked up this month. According to the latest Reserve Bank of India (RBI) figures, total loans, including food credit loans to Food Corporation of India for foodgrain procurement and non-food credit (all other loans) amounted to Rs 29,41,293.07 crore as on 19 December 2009. This represents a sequential growth of Rs 34,028 crore since 27 November 2009 compared to a growth of Rs 7,698 crore in the whole of November 2009.

India's largest bank by net profit and branch network State Bank of India rose 0.98%. The state-run bank paid advance tax of Rs 1795 crore versus Rs 1700 crore. India's largest private sector bank by net profit ICICI Bank rose 0.37% even as its ADR fell 0.26% on Thursday. The bank is reportedly raising up to Rs 1200 crore by selling bonds.

India's second largest private sector bank by net profit HDFC Bank rose 0.29% as its ADR rose 0.42% on Thursday, 31 December 2009.

Consumer durables stocks gained on hopes of good earnings on the back of higher sales in Christmas. Videocon Industries, Blue Star, Asian Star Company and Rajesh Exports rose by between 0.11% to 6.21%.

Auto stocks extended recent gains on the back of strong sales in the month of December 2009 and higher advance tax payment in the third quarter.

India's largest tractor marker by sales Mahindra & Mahindra (M&M) advanced 4.52%. 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 top truck maker by sales Tata Motors rose 4.39%. Tata Motors registered 105% growth in sales to 51,627 units in December 2009 over December 2008.

TVS Motors rose 9.59%. The company said its sales rose 34% to 119,701 units in December 2009 over December 2008.

But, India's largest motorcycle maker by sales Hero Honda Motors fell 0.18%. Sales jumped 74% to 375,838 units in December 2009 over December 2008.

Bajaj Auto fell 1.66%. Bajaj Auto sold 2,20,429 two-wheelers in December 2009, registering an 85% growth in sales over the same month last year, when it sold 1,19,215 units.

India's top small car marker by sales Maruti Suzuki India fell 0.57%. Maruti, posted a 51% rise in total sales in at 84,804 units in December 2009 over December 2008.

Metal stocks rose as after LMEX, a gauge of six metals traded on the London Metal Exchange, rose. 0.14% on Thursday, 31 December 2009. Steel makers rose as steel companies are reportedly eyeing higher prices in 2010 as stronger economic growth worldwide drives up demand for the critical building material. Tata Steel, Jindal Steel & Power, JSW Steel rose by between 1.05% to 2.66%.

Steel Authority of India (SAIL) rose 3.14% after company reported a 32% growth in sales at 1.3 million tonne in December 2009 from a year ago

Recently, Tata Steel raised prices by Rs 2,000 a tonne, while state-owned Steel Authority of India (SAIL) withdrew the Rs 750-1,500 per tonne rebate it had started offering in November 2009, following the increase in raw material cost.

Among non ferrous stocks, National Aluminum Company, Stelite Industries, Hindalco Industries rose by between 1.49% to 5.23%.

Software pivotals rose on recent encouraging economic data in the United States. US is the biggest market for Indian IT firms. India's second largest software services exporter Infosys rose 0.35% even as its ADR fell 0.79% on Thursday. India's largest software services exporter TCS rose 0.26%. India's third largest software services exporter Wipro rose 2.09% even as its ADR fell 0.54% on Thursday.

India's largest thermal power generator by sales NTPC declined 1.65% on profit booking after the scrip climbed 13.8% in seven trading sessions to Rs 235.70 on 31 December 2009, from a recent low of Rs 207.05 on 18 December 2009.

Among other prominent power sector stocks, Tata Power Company, Reliance Power, Reliance Infrastructure, Torrent Power rose by between 0.64% to 2.13%.

JSW Energy settled at Rs 100.75, a premium of 0.75% over the initial public offer price of Rs 100. The stock debuted at Rs 102, a premium of 2% over the initial public offer (IPO) price.

Rate sensitive realty stocks rose on reports realty sector holds promise in the year 2010 after a lackluster 2009. India's largest realty player by market capitalization DLF rose 0.97%. On 16 December 2009, the company's board approved merger of its commercial realty arm DLF Assets (DAL) with itself, a move aimed at repaying some of DAL's debt.

Among other realty stocks, Unitech, Housing Development & Infrastructure, Peninsula Land rose by between 0.25% to 1.94%.

India's largest engineering & construction firm by sales Larsen & Toubro rose 0.71% extending Thursday's gains after company said today it won orders worth Rs 987 crore. The company said on Thursday 31 December 2009 it won two orders totaling Rs 580 crore.

Among other capital goods stocks, Bharat Heavy Electricals, BEML and Praj Industries rose by between 0.71% to 2.08%.

Sugar stocks soared as prices of the commodity rose sharply last week. Shree Renuka Sugars, Bajaj Hindusthan Sugar and Industries, Dhampur Sugar and Balrampur Chini rose by between 2.36% to 8.78%. Ex-mill sugar price in the state is at a record high of Rs 3,700 a quintal. Prices have gone up 7-8% in one month, though crushing season is on.

The Union government has allowed duty-free import of raw sugar to tide over the domestic production shortfall. In the 2008-09 season ending October 2009, domestic sugar output fell 42 per cent to 15 million tonne, causing retail sugar prices to more than double. Currently, sugar is selling at Rs 42-43 a kg in retail.

JSW Energy clocked highest volume of 3.51 crore shares on BSE. Cals Refineries (2.56 crore shares), Reliance Industries (1.4 crore shares), FCS Software (1.31 crore shares) and Sanraa Media (1.14 crore shares) were the other volume toppers in that order.

Reliance Industries clocked the highest turnover of Rs 1516.70 crore on BSE. JSW Energy (Rs 353.69 crore), OnMobile Global Solutions (Rs 142.61 crore), Tata Steel (Rs 118.57 crore) and Tata Motors (Rs 109.95 crore) were the other turnover toppers in that order.