Sensex gains 5.75% in four days

Key benchmark indices clocked decent gains in a choppy trade with indices extending last three-day gains, as robust GDP data and steady progress of monsoon lifted investor sentiment. Global cues were supportive with Asian markets closed higher. While European markets turned mixed after a firm start. The BSE 30-share Sensex rose 81.57 points or 0.48%, up close to 30 points from the day's low and off close to 25 points from the day's high. Small and mid-cap stocks attracted buying fancy evident from the strong market breadth. From the recent low of 16022.48 on 25 May 2010, the BSE Sensex gained 922.15 points or 5.75% in four trading sessions.

The market was volatile. It rose in early trade ahead of the key GDP data. It hit the day's high in mid-morning trade after government data showed robust economic performance for the Q4 and year ended March 2010. It pared gains in early afternoon trade. Market moved between the positive and negative terrain in afternoon trade after slipping into the red to hit fresh day's low. Buying demand at lower levels helped market cut losses in mid-afternoon trade. Late buying frenzy propelled market to day's high in late trade.

As per government data released today, India's economy grew at 8.6% in the March quarter driven by robust manufacturing sector on the back of government and consumer spending. The growth was significantly higher than the revised 6.5% expansion in Q3 December 2009 and a 5.8% growth in Q4 March 2009. The manufacturing sector grew 16.3%, farm output rose 0.7%, mining sector expanded 14% and services increased by 8.4% in January-March 2010 from a year earlier.

For the full year to March 2010, the economy expanded 7.4%, above a government forecast of 7.2%. Economic growth had slowed down to 6.7% in year ended March 2009.

The India Meteorological Department (IMD) said today that the monsoon has hit the southern coast. The weather office 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.

PSU stocks gained on renewed buying demand. Auto stocks were in limelight ahead of the release of May 2010 sales figures due to be announced during the week. IT stocks saw mixed trend. But, metal stocks declined after the commodity prices declined on Friday, 28 May 2010. Realty stocks too declined, reversing a three-day rising trend, on profit booking.

European shares turned mixed after ea firm start. France's CAC 40 fell 0.24%. Germany's DAX rose 0.33%. London Stock Exchange remains closed today for a holiday.

Most Asian stocks edged higher, as gains among health-care companies overshadowed declines by commodity-related shares. Key benchmark indices in Indonesia, South Korea, Singapore, Japan and Taiwan were by up between 0.06% to 3.06%. However, indices in China and Hong Kong were down 2.40% and 0.01% respectively.

US markets declined on Friday, 28 May 2010 as a downgrade by Fitch of Spain's credit rating reignited worries about euro-zone debt issues. The Dow Jones industrial average fell 122.36 points, or 1.19%, to 10,136.61. The Standard & Poor's 500 Index shed 13.65 points, or 1.24%, to 1,089.41 and the Nasdaq Composite Index declined 20.64 points, or 0.91 percent, at 2,257.04.

Global ratings firm Fitch Ratings cut Spain's credit rating by one level to AA+ from AAA, saying the country's debt burden is likely to weigh on growth. Fitch cited an inflexible labor market and a restructuring of regional and local savings banks as hindrances to the pace of adjustment. Spain is struggling to lower debt amid a fiscal crisis that prompted the European Union to forge an almost $1 trillion loan package for its weakest economies.

Spain's downgrade follows similar cuts in ratings earlier this month of Greece and Portugal as those nations attempt to grapple with debt problems by implementing austerity measures.

In economic data, personal spending in the U.S. was unchanged last month as Americans used wages to rebuild savings, according to a Commerce Department report. The Institute for Supply Management-Chicago Inc. said its business barometer fell to 59.7 this month from 63.8 in April.

US markets will remain closed on Monday, 31 May 2010, for the Memorial Day holiday. Trading in US index futures showed the Dow could rise 33 points at the opening bell on Tuesday, 1 June 2010.

Back home, government data released on 28 May 2010 showed 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%.

Also data of six core infrastructure industries registered a 5.1% growth in April 2010 compared with 3.7% rise in April 2009. For the financial year ended March 2010, the core sector posted a growth 5.5% as against 3% in the same period last year.

The Reserve Bank of India (RBI) on 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 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 late May 2010 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 fourth quarter corporate results season is almost over. The combined net profit of a total of 3,155 companies rose 14.4% to Rs 86535 crore on 25.2% rise in sales to Rs 9,09,419 crore in the quarter ended March 2010 over the quarter ended March 2009.

The BSE 30-share Sensex rose 81.57 points or 0.48% to 16,944.63. The index rose 108.09 points at the day's high of 16,971.15 in late trade. The Sensex fell 56.56 points at the day's low of 16,806.50 in afternoon trade.

The S&P CNX Nifty rose 19.75 points or 0.39% to 5086.30.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1645 shares advanced as compared with 1171 that declined. A total of 85 shares remained unchanged.

The total turnover on BSE amounted to Rs 3753 crore lower than Rs 3979.07 crore on Friday, 28 May 2010.

Among the 30-share Sensex pack, 19 gained while the rest declined.

The BSE Mid-Cap index rose 1.17% and the BSE Small-Cap index gained 0.62%. Both the indices outperformed the Sensex.

Most of the sectoral indices on BSE rose. BSE PSU index (up 2.7%), BSE Auto index (up 1.87%), Healthcare index (up 1.77%), Oil & Gas index (up 1.66%), Banking sector index Bankex (up 0.75%), FMCG index (up 0.65%), Power index (up 0.51%), BSE Consumer Durables index (up 0.49%), outperformed the Sensex.

BSE Realty index (down 0.89%), IT index (down 0.5%), Capital Goods index (down 0.04%), Metal index (up 0.26%), and underperformed the Sensex.

Index heavyweight Reliance Industries (RIL) rose 1.08% to Rs 1045.05 after moving in a range of Rs 1030.10 -1047.95 during the day. The company during market hours on 28 May 2010 said it made a fifth oil discovery in Cambay basin in Gujarat

India's largest oil exploration firm by sales Oil & Natural Gas Corporation gained 3.21% after its net profit jumped 71.13% to Rs 3776.41 crore on 7.37% rise in net sales to Rs 14713.26 crore in Q4 March 2010 over Q4 March 2009.

Auto stocks were in limelight ahead of the release of May 2010 sales figures due to be announced during the week. India's largest tractor maker by sales Mahindra & Mahindra (M&M) surged 5.03%, extending three-day gains, after net profit rose 36.40% to Rs 570.26 crore on 45.80% surge in net sales to Rs 5278.86 crore in Q4 March 2010 over Q4 March 2009. The company declared its results on Saturday, 29 May 2010. The stock was the top gainer from the Sensex pack.

India's top truck maker by sales Tata Motors gained 0.89%. 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.

India's largest small car maker by sales Maruti Suzuki India rose 1.13%.

Two wheeler makers, Hero Honda Motors and Bajaj Auto rose by between 1.34% to 1.99%.

Some metal shares declined after LMEX, a gauge of six metals traded on the London Metal Exchange, fell 0.81% to 3,178.10 on Friday, 28 May 2010. India's largest non-ferrous metal producer by sales Sterlite Industries lost 2.79% and was the top loser from the Sensex pack.

Hindalco Industries, Hindustan Zinc and Jindal Steel & Power fell by between 0.14% to 0.6%.

IT stocks saw mixed trend on the back of persistent debt worries in the euro zone area. Europe is the second largest export market for Indian IT firms. India's second largest software services exporter by sales Infosys fell 0.64%. India's largest software services exporter by sales TCS slipped 1%.

However, India's third largest software services exporter by sales Wipro rose 0.66%. India's fourth largest software services exporter by sales HCL Technologies gained 1.95%.

Realty stocks declined, reversing a three-day rising trend, on profit booking DLF, Anant Raj Industries, Housing Development & Infrastructure, Sobha Developers, Unitech, Omaxe fell by between 0.11%t o 5.62%.

The rise in realty stocks came after Lodha Developers last week 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.

India's largest dam builder by sales Jaiprakash Associates slipped 1.54% despite consolidated net profit surging 166.31% to Rs 1119.18 crore on 35.90% increase in consolidated total income to Rs 6788.76 crore in the year ended March 2010 over the year ended March 2009. The result was announced before trading hours today, 31 May 2010.

PSU stocks gained on renewed buying demand after the Indian government recently gave its nod to the appointment of merchant bankers and intermediaries to ensure smooth handling of disinvestment in state-run enterprises. Hindustan Copper, State Trading Corporation of India, Dredging Corporation of India, HMT, Nationa Fertilizer rose by between 8.23% to 19.31%.

Shares of state-run oil marketing stocks on reports of a fuel price hike next month. A meeting of the empowered group of minister (eGoM) is scheduled on 7 June 2010 to discuss fuel pricing. HPCL (up 1.06%), BPCL (up 3.26%) and Indian Oil Corporation (up 3.44%), gained.

JM Financial clocked the highest volume of 2.04 crore shares on BSE. Cals Refineries (1.96 crore shares), Suzlon Energy (1.29 crore shares), IFCI (1.23 crore shares) and Sesa Goa (62.78 lakh shares) were the other volume toppers in that order.

Sesa Goa clocked the highest turnover of Rs 239.94 crore on BSE. Tata Steel (Rs 121.20 crore), Hindustan Copper (Rs 104.68 crore), Educomp Solutions (Rs 98.43 crore) and State Bank of India (80.91 crore) were the other turnover toppers in that order.