Sensex rebounds as US stocks stage strong intraday recovery

The key benchmark indices jumped during the 90-minutes special trading session held today, 6 February 2010, tracking a strong intraday rebound of US stocks on Friday, 5 February 2010. The US unemployment rate surprisingly fell to a five-month low in January 2010, data showed on Friday. The BSE 30-share Sensex rose 124.72 points or 0.79%, off close to 35 points from the day's high and up close to 110 points from the day's low.

Index heavyweight Reliance Industries (RIL) edged higher. Metal, realty, infrastructure, IT, auto and banking stocks gained. All the sectoral indices on BSE were in the green. The market breadth was strong.

Indian stock tumbled over the past few weeks as stocks fell worldwide. From a recent high of 17686.24 on 5 January 2010, the Sensex tanked 1895.31 points or 10.71% to settle at 15790.93 on Friday, 5 February 2010.

The top two stock exchanges, the National Stock Exchange (NSE) and the BSE held a special 90-minute trading session today, 6 February 2010, to enable the National Stock Exchange test an upgraded trading system. The trading in the cash and futures market began at 11:00 IST and ended at 12:30 IST

Chairman of the prime minister's economic advisory council C. Rangarajan on Friday said the government is no hurry to roll back economic stimulus measures in one go. He also said that efforts will be made in the budget later this month to lower the fiscal deficit. It has been pointed out repeatedly that the process of exit must be gradual, coordinated and must not be sudden, should not disrupt the economy and efforts will be made to bring down the fiscal deficit in the coming budget, Rangarajan said.

India can gradually start raising interest rates as Asia's third-largest economy is among the first to recover after the global financial crisis, the International Monetary Fund (IMF) said in a report published on Thursday 4 February 2010 on its website. India's economy is one of the first in the world to recover and the central bank should take a gradual approach to ensure the recovery reaches its full potential, the IMF report said.

The International Monetary Fund sees the Indian economy coming back to potential by 2010-11 to log 8% growth from the current year's 6.75 per cent. Still, the IMF's assessment of GDP growth for the current fiscal is in contrast to the government's projection of more than 7% and the RBI's latest forecast of 7.5%

Following rising prices of potato and pulses, food inflation rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week, government data released on Thursday showed. The inflation for primary articles, which include food and non-food items, marginally eased to 14.56% in the reporting week from 14.66% in the previous week. The fuel price index rose 5.88%

Pronab Sen, the country's chief statistician, said on Wednesday the government should wait till May to roll back stimulus, as the strength of the demand recovery visible in available data may not be for real, pulling the finance minister, Pranab Mukherjee, away from a policy direction which the Reserve Bank of India (RBI) desires.

European stocks declined for a third day on Friday, 5 February 2010, extending the biggest weekly slump in 11 months, on concern efforts by Greece, Portugal and Spain to reduce their deficits will hurt the region's economic recovery. The key benchmark indices in France, Germany and UK fell by between 0.03% to 1.79%.

European Central Bank President Jean-Claude Trichet has struggled to convince investors the euro region shouldn't be punished for Greece's budget problems. As Greece tries to control a record deficit and stem a slide in its bonds, Trichet said the economy of the 16-nation euro area is solid and its budget shortfall will probably be smaller than those of the US and Japan this year.

US stocks rose on Friday, with the Dow Jones Industrial Average erasing a 167-point drop in the final hour of trading, on speculation the European Union may propose a solution for Greece's budget deficit. The Dow Jones Industrial Average gained 10.05 points, or 0.1%, to 10,012.23. The Nasdaq Composite Index was up 15.69 points, or 0.74%, to 2141.12. The Standard & Poor's 500 Index was up 3.08 points, or 0.29%, to 1066.19.

The US unemployment rate surprisingly fell to a five-month low of 9.7% in January 2010 and factory payrolls grew for the first time since 2007, hinting at a labour market recovery even though the economy lost 20,000 jobs.

Closer home, the BSE 30-share Sensex rose 124.72 points or 0.79% to 15,915.65. The index rose 16.82 points at the day's low of 15,807.75 in early trade. The Sensex rose 160.14 points at the day's high of 15,951.07 at the fag end of the trading session.

The S&P CNX Nifty rose 38.60 points or 0.82% to 4757.25.

The market breadth, indicating the overall health of the market was strong. On BSE, 1806 shares advanced as compared with 657 shares that declined. A total of 56 shares remained unchanged.

From the 30 share Sensex pack, 25 rose and one fell.

The BSE Mid-Cap index rose 1.59% and the BSE Small-Cap index rose 1.74%. Both the indices outperformed the Sensex. The BSE clocked a turnover of Rs 825 crore.

Index heavyweight Reliance Industries (RIL) rose 1.66% on bargain hunting after the stock fell 3.74% on Friday. As per reports, RIL has submitted a $2 billion expression of interest for Value Creation Inc, a Canada-based private firm which holds oil sands assets.

Infrastructure stocks rose on reports the government is considering new guidelines for private equity investment in infrastructure companies in an attempt to open new sources of equity funding for the sector. The move comes in the backdrop of the poor response from private companies and banks in financing projects, especially those in sectors like highways and urban transport and infrastructure. Larsen & Toubro, Bharat Heavy Electricals, Jaiprakash Associates, Era Infra Engineering rose by between 0.52% to 2.16%.

Simplex Infrastructures gained 0.29%, after the company said one of the promoter group companies revoked a substantial portion of pledged shares.

Auto stocks rose on strong vehicle sales in the month of January 2010. Tata Motors, Mahindra and Mahindra, Maruti Suzuki India, TVS Motor Company, Hero Honda Motors, Bajaj Auto rose by between 0.07% to 1.27%.

Banking stocks rose on bargain hunting. India's largest private sector bank by net profit ICICI Bank rose 0.85%. The bank's American depository receipt (ADR) slumped 3.54% on the New York Stock Exchange on Friday, 5 February 2010.

India's largest private sector bank by net profit HDFC Bank was flat at Rs 1573.10. The bank's American depository receipt (ADR) slumped 3.77% on the New York Stock Exchange on Friday, 5 February 2010.

India's largest bank by net profit and branch network State Bank of India rose 1.02%.

IT pivotals gained after a mixed US job data for January 2010. US is a key market for Indian IT firms. India's second largest IT exporter by sales Infosys rose 1.31%. Its ADR rose 0.57% on Friday.

India's third largest software services exporter Wipro rose 1.42%. Its ADR fell 1.11% on Friday. As per recent reports, Wipro Consumer Care and Lighting, the FMCG arm of Wipro, is in advanced talks to buy Nigeria-based skincare company, Tura International.

India's largest IT exporter by sales Tata Consultancy Services rose 0.81%. Reportedly TCS' Passport Seva Project, which aims to issue passports in flat three days, is all set to be launched in a week or two.

The National Association of Software and Service Companies (Nasscom) has projected export revenue to grow 13% to 15% to $56-$57 billion in the year to March 2011, below the previous outlook for $60-$62 billion.

Realty stocks rose on bargain hunting. DLF, Unitech, Indiabulls Real Estate, Anat Raj Industries and Housing Development & Infrastructure rose by between 2.15% to 6.76%.

Metal stocks also rose on bargain hunting after a recent sharp fall. Sterlite Industries, Hindalco Industries, National Aluminium Company, Sesa Goa and Hindustan Zinc rose by between 1.16% to 2.82%.

Tata Steel the world's eighth-largest steel maker rose 2.03% after the company said on Friday steel sales from its Indian operations rose 9% in to 5,56,000 tonnes in January 2010 over January 2009. Crude steel output for the month rose 14% from a year ago to 5,96,000 tonnes.

The Indian operations account for about a quarter of the group's total annual capacity of 30 million tonnes, which includes unit Corus, Europe's second-largest steelmaker. Sales of long products, used in construction, rose 10 % in January from a year earlier, while sales of flat products, used in automobiles and consumer goods, increased 8 %, the company said in a statement.

McNally Bharat Engineering Company rose 1.11%, after the company bagged two orders aggregating Rs 56.64 crore from Hindalco for its smelter projects.

Indo Asian Finance was locked at 5% upper limit at Rs 27.35, after the company's board approved issue of bonus shares in the ratio of 2:1.