Sensex surges 3.35% in broad-based rally

The key benchmark indices recouped a large portion of previous week's steep losses in a single trading session today, 10 May 2010, as global stocks rallied after European leaders on Sunday, 9 May 2010, announced a rescue package to prevent Greece's fiscal woes from triggering a broader sovereign-debt crisis. The BSE 30-share Sensex surged 561.44 points or 3.35%. Metal, realty, auto and banking stocks led the rally. The market breadth was strong. The Sensex had lost 4.5% last week as the Greece debt crisis made investors edgy about its impact on global economic recovery.

NSE's volatility index India VIX, a measure of traders' perception of near-term risks in the market based on options prices, tumbled 11.9% to 24.14. The index had risen sharply last week as share prices slumped. 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.

The market surged in early trade boosted by the euro zone rescue plan announced on Sunday, 9 May 2010. The Sensex regained the psychological 17,000 mark at the onset of the trading session. The Sensex alternatively moved above and below the 17,000 mark as the market moved in a narrow range in morning trade. The market hit a fresh intraday high in mid-morning trade. The market extended gain in early afternoon trade. Blue chips extended gains in afternoon trade tracking rally in European stocks. The market continued its uptrend, with the Sensex hitting a fresh intraday high in mid-afternoon trade. The market extended gains in late trade.

European shares surged on Monday after the European Union on Sunday announced a giant rescue package aimed at containing damage from Greece's debt woes. Key indices in UK, France and Germany jumped by 4.77% to 8.47%.

Asian stocks rose on Monday, 10 May 2010, after European leaders agreed to a giant rescue package in a bid to contain the snowballing worries about the debt levels of Greece and other European nations. The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan rose by between 0.39% to 4.06%.

European Union finance leaders reached agreement Sunday to support struggling countries in the region. The European rescue plan, valued at more than $900 billion (720 billion euros), has three main components. The biggest provision at nearly $570 billion (440 billion euros) takes the form of government-backed loans to shore up confidence in shaky credit markets. A second measure is the expansion of a $77 billion (60 billion euros) stabilization fund. Finally, the International Monetary Fund said it would contribute $284 billion (220 billion euros).

Trading in US index futures indicated that the Dow could surge 416 points at the opening bell on Monday, 10 May 2010.

US stocks fell on Friday on fears of another credit crisis stemming from Greece's souring finances and lingering questions about what triggered the previous session's dramatic plunge. The Dow Jones Industrial Average fell 139.89 points, or 1.33% to end at 10,380.43. The Standard & Poor's 500 Index was down 17.27 points, or 1.53% to end at 1,110.88. The Nasdaq Composite Index finished 54 points, or 2.33% lower at 2,265.64.

Thursday's sell-off drove the Dow average down nearly 1,000 points in intraday trade, its biggest-ever intraday point drop. The fall may have been caused by erroneous trades that showed some shares briefly fell to nearly zero in value. The Dow had ended well off the lows that day.

Meanwhile, the latest data showed US nonfarm payrolls grew at the fastest pace in four years in April. The unemployment rate, however, rose to 9.9%.

Back home, the fourth quarter corporate results announced so far have been fairly encouraging. The combined net profit of a total of 1399 companies rose 29.1% to Rs 43114 crore on 28.8% rise in sales to Rs 404187 crore in the quarter ended March 2010 over the quarter ended March 2009.

Business at Indian service companies rebounded to a 21-month-high in April 2010 on new business and high input prices. The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 62.1 in April, its highest since July 2008, and compared with 58.1 in March 2010.

A recent industry body report showed that business confidence in India improved on the back of economic recovery. The bi-annual Business Outlook Survey of the Confederation of Indian Industry (CII) showed that the Business Confidence Index (BCI) of the Indian industry increased by 1.5 points for the April-September 2010 period, compared to the past six months.

The government will announce the industrial output data for the month of March 2010 on 12 May 2010. Industrial output rose by lower than expected 15.1% February 2010 and also lower than 16.7% rise in January 2010.

On 14 May 2010, the government will unveil data on inflation based on the wholesale prices for the month of April 2010. The headline inflation was 9.9% in March 2010. The RBI has forecast the headline inflation to ease to 5.5% at end-March 2011 on expectations of a normal monsoon.

Inflation based on food prices rose 16.04% in the year through 24 April 2010, slower than previous week's annual rise of 16.61%, the latest government data showed. Fuel prices inflation remained at elevated level. The fuel price index rose 12.69% in the year through 24 April 2010, same as a week ago. The primary articles index rose 13.93% in the year through 24 April 2010.

The Indian Meteorological department (IMD) expects normal rainfall in the June-September monsoon season this year. Rainfall is likely to be 98% of the long-term average, the IMD said on 23 April 2010. 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 holds key.

The Reserve Bank of India 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. A 25 basis points hike in the cash reserve ratio (CRR) with effective from 24 April 2010 will suck out excess liquidity of Rs 12500 crore from the banking system.

In its half-yearly World Economic Outlook, the International Monetary Fund (IMF) has pegged India's GDP growth at 8.75% in calendar 2010 and 8.5% in calendar 2011. According to the IMF, domestic demand in India will strengthen as the labour market improves, and investment is expected to be boosted by strong corporate profitability, rising business confidence and favourable financing conditions.

The BSE 30-share Sensex surged 561.44 points or 3.35% to 17,330.55. The index rose 587.43 points at the day's high of 17,356.54 in late trade. The Sensex rose 30.38 points at the day's low of 16,799.49 in early trade.

The S&P CNX Nifty rose 175.55 points or 3.5% to 5,193.60.

The BSE Mid-Cap index rose 2.4% and the BSE Small-Cap index rose 2.75%. Both these indices underperformed the Sensex.

The BSE Realty index (up 6.17%), Metal index (up 6.06%), Bankex (up 3.95%) outperformed the Sensex. The BSE Healthcare index (down 0.24%), FMCG index (up 1.11%), PSU index (up 1.56%), Consumer Durables index (up 2.11%), BSE Capital Goods index (up 2.13%), IT index (up 2.74%), BSE Oil & Gas index (up 3.15%), Power index (up 3.26%), Auto index (up 3.32%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 2,270 shares advanced as compared to 623 shares that declined. A total of 75 shares remained unchanged.

Among the 30-share Sensex pack, 28 rose while two stocks declined.

BSE clocked turnover of Rs 4019 crore, lower than Rs 4834.36 crore on Friday, 7 May 2010.

Index heavyweight Reliance Industries (RIL) jumped 4.48%, extending Friday's 2.27% gains triggered by a favourable ruling in the Supreme Court on gas dispute with Anil Ambani controlled Reliance Natural Resources (RNRL). RNRL fell 4.93% after tumbling 22.82% on Friday as the company lost the battle. The Supreme Court ordered the two firms to renegotiate a deal based on government policy on gas utilization.

Earlier, the Bombay High Court, in its order dated 15 June 2009 had directed that RNRL will get assured supply of 28 mmscmd of gas from RIL's Krishna-Godavari basin for 17 years at $2.34 per million British thermal units (mBtu). The gas price was 44.28% lower than the price fixed by the government for gas sale from the RIL block in the KG basin at $4.2 mBtu.

Reliance Infrastructure rose 8.49% after a prominent foreign broker maintained overweight rating on the stock with a revised target price of Rs 1,280 per share. The stock staged a strong bounce back. It had lost 7.01% on Friday, 7 May 2010, as shares of Anil Ambani controlled firms slumped after an adverse court ruling on gas dispute with Reliance Industries.

Shares of oil exploration firms rose as crude oil surged more than 4% on Monday, its biggest intraday jump in seven months, on speculation an emergency fund by European policy makers will contain sovereign debt risks and maintain economic growth. Cairn India rose 5.09%. India's second largest oil exploration firm by sales Oil India rose 0.96%. India's largest oil exploration firm by sales ONGC rose 0.59%. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

The rise in crude oil prices, however, weighed in PSU OMCs. HPCL, BPCL and Indian Oil Corporation fell by between 1.79% to 2.12%. Rise in crude oil prices will increase under-recoveries of state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at controlled prices. Crude oil for June delivery rose as much as $3.40, or 4.5% to $78.51 a barrel on Asian electronic trading.

Metal and mining stocks rebounded on bargain hunting after a recent steep slide. JSW Steel, Sesa Goa, Tata Steel, Jindal Saw, National Aluminium Company, Jindal Steel & Power, Sterlite Industries, Steel Authority of India, Hindustan Zinc rose by between 2.46% to 8.38%.

Aluminum maker Hindalco Industries jumped 7.7% ahead of its Q4 result on Tuesday, 11 May 2010.

Prices of base metals recovered on Monday after a recent sharp slide triggered by debt worries in the euro zone.

Interest rate sensitive banking shares rose on bargain hunting after a recent steep fall. India's second largest private sector bank by net profit HDFC Bank rose 4.68%, as the stock recovered from losses in the preceding five trading sessions. Its ADR rose 1.84% on Friday.

India's largest private sector bank by net profit ICICI Bank rose 5.12%, as the stock rebounded from losses in the preceding five trading sessions. Its ADR fell 0.21% on Friday.

India's biggest commercial bank in terms of branch network State Bank of India rose 3.61% on bargain hunting after Friday's 3.61% fall.

India's largest mortgage lender by total income Housing Development Finance Corporation rose 2.25%, rebounding from losses in the preceding three trading sessions. The company's board on 3 May 2010 approved a 5-for-1 stock-split.

Auto shares rose on strong vehicle sales in the month of April 2010. India's largest small car maker by sales Maruti Suzuki India rose 1.52%, with the stock recovering from a two-day slide on reports the firm has asked vendors to cut component costs by 3% in this financial year that could lead to savings of around Rs 700 crore a year for the company.

Maruti's total sales rose almost 30% to 93,058 units in April 2010 over April 2009. Domestic sales rose 23.4% to 80,034 units. The data was unveiled on 1 May 2010.

India's top truck maker by sales Tata Motors rose 6.72%, with the stock rebounding from losses in the preceding five trading sessions. Total sales including exports of commercial and passenger vehicles jumped 52% to 57,202 vehicles in April 2010 over April 2009. Domestic sales rose 49% to 54,065 units. Exports rose 148.8% to 3,137 units.

India's largest tractor maker by sales Mahindra & Mahindra gained 5.81%. Bajaj Auto rose 2.97%. But, India's largest motorbike maker by sales Hero Honda Motors fell 0.21%, reversing early gains.

Car sales in India rose an annual 39.5% to 143,976 cars in April 2010 over April 2009, data from the Society of Indian Automobile Manufacturers (SIAM) showed. Sales of trucks and buses, a barometer of economic activity, rose 64.5 % to 49,086 units in April 2010 over April 2009, SIAM said.

Realty stocks rebounded on bargain hunting after falling sharply in the past few days. Ansal Properties, HDIL, Ackruti City, DLF, Sobha Developers, Indiabulls Real Estate and Unitech rose by between 2.47% to 8.03%.

FMCG shares rose on bargain hunting. Tata Tea, Hindustan Unilever, ITC and United Spirits rose by between 1% to 1.95%,

Cipla fell 6.42%. The stock was the biggest loser from the Sensex pack. The company's net profit rose 8.93% to Rs 275.53 crore in Q4 March 2010 over Q4 March 2009. The result was announced after market hours on Friday, 7 May 2010.

But, other pharma stocks rose. Pfizer, Biocon, Dr Reddy's Laboratories and Sun Pharmaceutical Industries rose by between 1.08% to 2.29%.

Ranbaxy Laboratories rose 1.06% ahead of its Q1 result on Tuesday, 11 May 2010.

Telecom stocks rose on bargain hunting after recent losses. India's largest cellular services provider by sales Bharti Airtel rose 2.31%. India's second largest listed cellular services provider by sales Reliance Communications gained 1.21%.

Capital goods stocks rose on bargain hunting after recent sharp fall. SKF India, BEML, Larsen & Toubro, Bharat Heavy Electricals, Praj Industries, Siemens rose by between 1.72% to 5.67%.

IT pivotals rose after the European Union on Sunday, 9 May 2010, agreed a giant rescue package to contain high public debt in the euro zone area. Europe is the second largest market for Indian IT firms. India's third largest software services exporter Wipro rose 5.18%, with the stock rebounding from a two-day slide. Its ADR fell 1.02% on Friday. India's second largest software services exporter Infosys rose 2.12%, rebounding from a two-day slide. Its ADR fell 0.62% on Friday. India's largest software services exporter TCS rose 3.71%.

Talwalkars Better Value Fitness IPO settled at Rs 162.60 on BSE, at a premium of 27.03% over the issue price of Rs 128. The stock debuted at Rs 138, at a premium of 7.81% over the issue price.

Cals Refineries clocked the highest volume of 4.18 crore shares on BSE. Reliance Natural Resources (3.35 crore shares), Talwalkars Better Value Fitness (1.84 crore shares), Filmcity Media (1.45 crore shares) and Birla Power Solutions (89.91 lakh shares) were the other volume toppers in that order.

Talwalkars Better Value Fitness clocked the highest turnover of Rs 300.54 crore on BSE. Reliance Natural Resources (Rs 168.15 crore), Reliance Industries (Rs 153.18 crore), Tata Steel (Rs 136.52 crore) and Sesa Goa (Rs 75.59 crore) were the other turnover toppers in that order.