Market extends gains for the third day

Stocks extended gains for the third straight session as world equities rose after China on Thursday, 27 May 2010, denied reports that it would pare euro-bond holdings. The BSE 30-share Sensex was up 196.66 points or 1.18% to 16,863.06, up 170.40 points from the day's low and off 28.11 points from the day's high. The market breadth was strong.

From a recent low of 16,022.48 on Tuesday, 25 May 2010, the Sensex has jumped 840.58 points or 5.24% in the past three trading sessions. The Sensex has lost 1,106.96 points or 6.16% from a recent peak of 17,970.02 on 7 April 2010. The barometer index has lost 601.75 points or 3.44% in calendar 2010 after jumping 81% in 2009.

Coming back to today's trade, metal shares gained following rise in metal prices in London on Thursday. Banking stocks advanced on fresh buying. IT pivotals gained, reversing early losses, on the back of firm ADRs on Thursday, 27 May 2010. Oil exploration stocks gained after crude oil rose on Thursday. Realty stocks extended gains for the third day in a row. Sugar stocks gained on reports global prices may rise on speculation that importers will boost purchases of the sweetener. Six stocks in which trading began in the derivatives segment from today, 28 May 2010, were mixed.

Intraday volatility was high. The market opened on a firm note tracking gains in Asian stocks. The market soon pared gains on profit taking. The market regained strength in morning trade. Stocks once again pared gains later. The market recovered from lower level in mid-morning trade. The market moved in a range later. The Sensex surged to a fresh intraday high in mid-afternoon trade. The market pared gains at the fag end of the trading session soon after hitting a fresh intraday high.

NSE's volatility index India VIX declined sharply, extending a two-day steep slide. India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, dropped 8.89% to 26.43. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days

Standard Chartered's Indian depository receipts (IDRs) issue was fully bid. The issue was subscribed 2.17 times by 16:00 IST, getting bids for 44.34 crore shares as against 20.40 crore IDRs on offer. The issue closes today.

As per government data released today, 28 May 2010, food inflation rose 16.23% in the year through 15 May 2010, lower than previous week's annual rise of 16.49%. The fuel price inflation also slowed to 12.08% from the previous week's 12.33%. The primary articles index was up 15.90%, compared with the previous week's annual reading of 16.19%.

The government unveils fourth quarter March 2010 GDP data on Monday, 31 May 2010.

European shares moved higher for the third straight session on Friday, with mining stocks continuing to outperform the broader market. The key benchmark indices in France, Germany and UK rose by between 0.20% to 0.56%. UK market remains closed on Monday, 31 May 2010, on account of Spring Bank Holiday

Asian stocks extended gains for the third straight session on Friday after China reassured its commitment to investing in Europe. Key benchmark indices in Hong Kong, South Korea, Japan and Taiwan were up by between 0.72% to 1.73%. However, China's Shanghai Composite declined marginally by 0.01%, reversing early gains. Markets in Singapore, Indonesia, Thailand and Malaysia were closed for a public holiday.

US markets rallied on Thursday, 27 May 2010 after China said it remains a long-term investor in Europe. China's State Administration of Foreign Exchange put aside rumors that it has lost faith in euro-zone bonds and reiterated that it remains a long term investor in Europe. The Dow Jones Industrial Average rallied 284.54 points or 2.85% to 10,258.99. The Nasdaq index rose 81.80 points or 3.73% to 2,277.68 and the S&P 500 advanced 35.11 points or 3.29% to 1,103.06.

In economic data, the commerce department on Thursday reported that US gross domestic product rose at an annualised rate of 3% in the first quarter, a downward revision from last month's initial estimate of 3.2% growth. The US economy had expanded at a 5.6% pace in Q4 2009.

Separately, new applications for state jobless benefits dropped to 460,000 in the week ending 22 May 2010 from 474,000 in the prior week, the Labor Department said.

Trading in US index futures indicated that the Dow could gain 8 points at the opening bell on Friday, 28 May 2010. US markets are closed on Monday, 31 May 2010, for the Memorial Day holiday.

Back home, the Reserve Bank of India (RBI) on Wednesday, 26 May 2010, eased rules to boost liquidity at banks to avoid a cash crunch because of payments for corporate advance tax and license fees for third-generation mobile-phone spectrum. As per RBI's circular released on 26 May 2010, banks can borrow as much as 0.5% of their deposits from the central bank under the repurchase agreement till 2 July 2010. In addition, RBI said that as an ad hoc measure, banks can seek a waiver for any shortfall in maintenance of the prescribed 25% statutory liquidity ratio (SLR) while availing the temporary facility.

Besides, the central bank has decided to conduct two rounds of liquidity adjustment facility (LAF) operations till 2 July 2010. Through LAFs, that are conducted at least once a day, banks can avail of funds through the repo window or park surplus cash through the reverse repo route.

China, India, Brazil and Russia are powering ahead, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday, 26 May 2010, revising upwards its growth outlook for all four largest emerging economies. The OECD revised India's GDP growth forecast for 2010 to 8.2% from its earlier estimate of 7.3%. It also raised the growth forecast for 2011 to 8.5% from its earlier estimate of 7.6%. The OECD also said that underlying inflationary pressures are likely to persist given the strong outlook for demand.

In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.

Prime Minister Manmohan Singh early this week said inflation is showing signs of moderating and the government expects to achieve a medium term target of 10% GDP growth annually. The Prime Minister said he expects inflation to moderate to 5-6% by December 2010. Singh expects 8.5% GDP growth in the year ending March 2011 (FY 2011).

The RBI expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.

The monsoon rains are likely to hit the country's southern coast in three to four days, the India Meteorological Department said in its latest forecast on Thursday. Conditions are becoming favourable for onset of southwest monsoon over Kerala during next 3-4 days, the weather office said.

The weather office had said late last week that rains were on track to hit the country's southern coast on 30 May 2010, and the Laila cyclone in the Bay of Bengal would not derail the vital June-September rainfall. The India Meteorological Department (IMD) in late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.

The fourth quarter corporate results season is almost over. The combined net profit of a total of 2,675 companies rose 11.50% to Rs 79540 crore on 25.30% rise in sales to Rs 825519 crore in the quarter ended March 2010 over the quarter ended March 2009.

The BSE 30-share Sensex was up 196.66 points or 1.18% to 16,863.06. The index rose 224.70 points at the day's high of 16,891.17 in late trade. The Sensex rose 26.26 points at the day's low of 16,692.66 in early trade.

The S&P CNX Nifty was up 63.45 points or 1.27% to 5,066.55 as per provisional closing

The market breadth, indicating the overall health of the market, was strong. On BSE, 1930 shares advanced as compared with 936 that declined. A total of 100 shares remained unchanged.

The BSE Mid-Cap index rose 1.65% to 6,756.01 and the BSE Small-Cap index rose 1.39% to 8,494.45. Both the indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 3962 crore, higher than Rs 3,824.08 crore on Thursday.

Among the 30-share Sensex pack, 24 advanced while the rest fell.

Index heavyweight Reliance Industries (RIL) rose 0.99% to Rs 1032. The stock rose in volatile trade, swinging in a band of Rs 1015 and Rs 1037 during the day. The company during market hours today said it made a fifth oil discovery in Cambay basin in Gujarat.

Oil exploration stocks gained after crude oil rose on Thursday, 27 May 2010. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

Cairn India rose 1.21%, boosted by strong results. Cairn India's consolidated net profit jumped 53% to Rs 1051.10 crore on 45% increase in operating revenue to Rs 1623 crore in the year ended March 2010 over the year ended March 2009. The results were announced after trading hours on Thursday

India's largest oil & gas exploration firm by sales Oil & Natural Gas Corporation was unchanged at Rs 1125 ahead of its year ended March 2010 results today.

Oil prices rallied for a second day on Thursday as investors set aside worries for now about the European debt crisis and focused on rising stock markets and improving economic data. Benchmark crude for July delivery rose $3.04 to $74.55 a barrel on the New York Mercantile Exchange.

Metal shares surged after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 2.96% to 3,204.10 on Thursday, 27 May 2010.

India's largest non-ferrous metal producer by sales Sterlite Industries jumped 5.91% to Rs 682.90 and was the top gainer from the Sensex pack.

India's largest private sector aluminium maker by sales Hindalco Industries rose 1.01% after its US subsidiary Novelis clawed back into profits. The world's largest producer of aluminium rolled products reported a net income of $405 million for the fiscal year 2010 as against a net loss of $1.9 billion it suffered last year.

However, India's largest steel maker by sales Tata Steel slipped 0.30% to Rs 491.50, off day's high of Rs 508.80 on profit booking. Tata Sons, the main investment firm of the Tata Group, is likely to inject around Rs 1,350 crore in Tata Steel through a preferential share-cum-warrant issue to part-finance the steel maker's future growth plans. The Tata Steel board on Thursday, 27 May 2010, decided to make the preferential allotment of 1.5 crore equity shares along with a 1.2 crore warrant issue to Tata Sons. The warrants can be converted into equity shares at a later stage at a pre-determined price.

National Aluminium Company (up 1.83%), Hindustan Zinc (up 3.24%), Sesa Goa (up 11.07%), Jindal Steel & Power (up 4.83%), rose.

Steel Authority of India (Sail) rose 3.05% after net profit jumped 40.3% to Rs 2084.90 crore in Q4 March 2010 over Q4 March 2009. The result was announced during trading hours today.

India's largest cigarette maker by sales ITC rose 2.45% at Rs 281.90. The scrip hit an all time high of Rs 283.10 today. ITC said at the time of announcing Q4 March 2010 results on Friday, 21 May 2010, that a meeting of the board of directors will be held on 18 June 2010 to consider issue of bonus shares.

The cigarette major's profit rose 27% to Rs 1028.22 crore in Q4 March 2010 over Q4 March 2009. The company announced the result during market hours on Friday, 21 May 2010.

India's largest listed cellular services provider by sales Bharti Airtel fell 0.40%. As per reports, the company is seeking funds from its bankers to pay for its $9-billion buy of Kuwaiti telecom Zain's African assets.

India's top truck maker by sales Tata Motors gained 0.75% to Rs 748.50. The stock came off the day's high of Rs 774. The company reported a consolidated net profit of Rs 2571.06 crore in the year ended March 2010 as against a net loss of Rs 2505.25 crore in the year ended March 2009. Net sales rose 30.7% to Rs 91893.45 crore in the year ended March 2010 over in the year ended March 2009. Surge in consolidated net profit was helped by rising sales and profitability at its Jaguar Land Rover (JLR) unit. The result was announced after market hours on 27 May 2010.

Other auto stocks saw mixed trend. India's largest tractor maker by sales Mahindra & Mahindra rose 3.61%, extending two-day gains after the company during market hours on Wednesday, 26 May 2010, said it has entered into high growth electric car segment by acquiring a majority 55.2% equity stake in Reva Electric Car Company. The company announces its Q4 result on Saturday, 29 May 2010.

India's largest small car maker by sales Maruti Suzuki India lost 1.01% to Rs 1220.20 and was the top loser from the Sensex pack.

Amtek India jumped 3.91% after Amtek Auto bought 26.25% stake in the company through block deals on the Bombay Stock Exchange at an average price of Rs 64.83 a share. The announcement was made during trading hours today, 28 May 2010.

Reliance Infrastructure rose 0.75% and Reliance Power gained 1.03%. Reliance Infrastructure during market hours today announced transfer of 433 megawatt of generation assets in favor of Reliance Power. The transfer of assets has been valued at Rs 1095 crore. Both companies belong to the group controlled by billionaire Anil Ambani.

Banking stocks gained on fresh buying, reversing initial fall. India's largest private sector bank by net profit ICICI Bank rose 0.40% to Rs 860, off day's low of Rs 848.

India's largest commercial bank by net profit and branch network State Bank of India rose 0.69% to Rs 2231.05 after declining to day's low of Rs 2202.85. Canara Bank (up 1.12%), Vijaya Bank (up 3.22%), and Bank of India (up 2.33%), rose.

However, India's second largest private sector bank by net profit HDFC Bank declined 0.58% to Rs 1884, retreating from day's high of Rs 1920.

IT pivotals gained, reversing early losses, on the back of firm American depository receipt (ADRs) on Thursday, 27 May 2010. India's second largest software services exporter by sales Infosys gained 1.27% to Rs 2677.15, off day's low of Rs 2638. Its ADR rose 4.19% on Thursday.

India's third largest software services exporter by sales Wipro rose 1.07% to Rs 664.10, off the day's low of Rs 655.15. Its ADR rose 6.9% on Thursday. India's largest software services exporter by sales TCS rose 1.11% to Rs 749.25, off the day's high of Rs 737.

Realty stocks extended gains for the third running day. DLF (up 2.98%), Parsvnath Developers (up 11.46%), Unitech (up 2.74%), Orbit Corporation (up 4.52%), rose.

Early this week, Lodha Developers paid more than twice the asking price to win a 25,000-square meter plot of land in the central Mumbai suburb of Wadala for Rs 4050 crore.

Omaxe jumped 3.07% after the company reported a net profit of Rs 41.30 crore in Q4 March 2010 compared with net loss of Rs 31.83 crore in Q4 March 2009. The result was announced after market hours on Thursday, 27 May 2010.

Housing Development & Infrastructure jumped 8.34% after net profit surged 187.20% to Rs 177.84 crore on 19.50% increase in total income to Rs 464.46 crore in Q4 March 2010 over Q4 March 2009. The result was announced during trading hours today, 28 May 2010.

Six stocks in which trading began in the derivatives segment from today, 28 May 2010, were mixed. Exide Industries (up 0.13%), Ruchi Soya Industries (up 4.48%), and Sobha Developers (up 2.72%), gained. However, Jindal Southwest Holdings (down 0.15%), Gujarat Mineral Development Corporation (down 1.92%), and Hexaware Technologies (down 1.79%), declined.

Sugar stocks gained on reports global prices may rise on speculation that importers will boost purchases of the sweetener. Uttam Sugar (up 4.95%), Bajaj Hindusthan (up 6.59%), Balrampur Chini Mils (up 3.01%), Triveni Engineering & Industries (up 5.07%), and Sakthi Sugar (up 15.14%), gained.

Shree Renuka Sugars galloped 9.98% on reports the company's billion-dollar acquisition of the world's largest sugar producer is on the verge of collapsing. The stock surged as concerns of assuming huge debt in the books of the firm arising from the large acquisition, receded.

D B Corp rose 1.57% as its net profit jumped 45.8% to Rs 40.95 crore on 9.3% rise in net sales to Rs 244.83 crore in Q4 March 2010 over Q4 March 2009. The company announced the result after market hours on Thursday, 27 May 2010.

Sun TV Network rose 0.82% after net profit surged 29.8% to Rs 567.38 crore on 31.69% rise in total income to Rs 1437.52 crore in the year ended March 2010 over the year ended March 2009. The company announced the result during market hours today, 28 May 2010.

Pantaloon Retail (India) jumped 5.61% after company said a board meeting will be held on 31 May 2010 to consider raising funds by various routes. The company announced the board meeting after market hours on Thursday, 27 May 2010.

Blue Star rose 2.42% after the company said its board will meet on Monday, 31 May 2010, to consider a proposal for purchase of a business. No other details were disclosed. The announcement was made after market hours on Thursday, 27 May 2010.

Areva T&D India jumped 7.33% to Rs 287 after the company's foreign promoter fixed the open offer price at Rs 295.34 per share to acquire up to 4.78 crore shares, or 20% equity capital of the company. The open offer was announced at the onset of trading session today, 28 May 2010.

Neyveli Lignite Corporation rose 3.33% after net profit rose 51.92% to Rs 1247.46 crore on 17.41% rise in total income to Rs 4719.76 crore in the year ended March 2010 over the year ended March 2009. The company announced the result after market hours on Thursday, 27 May 2010.

Apollo Tyres jumped 7.06% after net profit soared 151.50% to Rs 116.17 crore on 18.20% increase in net sales to Rs 1312.78 crore in Q4 March 2010 over Q4 March 2009. The result was announced during trading hours today, 28 May 2010.

Amtek India clocked the highest volume of 3.56 crore shares on BSE. Cals Refineries (2.60 crore shares), Birla Power Solutions (2.23 crore shares), Pipavav Shipyard (89.39 lakh shares), and Sesa Goa (69.84 lakh shares) were the other volume toppers in that order.

Sesa Goa clocked the highest turnover of Rs 255.37 crore on BSE. Amtek India (Rs 231.89 crore), Tata Steel (Rs 176.16 crore), Tata Motors (Rs 122.76 crore) and State Bank of India (Rs 91.73 crore) were the other turnover toppers in that order.