Market scales highest level since early May 2010

The key benchmark indices logged gains for the fourth running day after global rating agency Fitch Ratings raised India's local currency rating outlook to stable from negative. Firm global stocks also underpinned sentiments. The BSE 30-share Sensex was up 273.22 points or 1.60%, up 219.43 points from the day's low and off 13.01 points from the day's high. The Sensex and the 50-unit Nifty both attained their highest closing levels since early May 2010. The market breadth was strong. Shares of Anil Dhirubhai Ambani group (ADAG) hogged limelight.



Rating agency Fitch today forecast a decline in government debt to GDP ratio to 80% by March 2011 from 83% at the end of March 2010. It also upgraded India's growth forecast to 8.5% in the year to March 2011 from earlier forecast of 7% growth.

Coming back to stocks, NSE's volatility index India VIX, which is a gauge of traders' perception of near-term risks in the market based on options prices, fell for the fourth day in a row. The index declined 8.57% to 22.95. The index had lost 5.28% to 25.10 on Friday, 11 June 2010. 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 opened on a firm note, tracking gains in Asian stocks. The Sensex hit a fresh intraday high in morning trade. The market pared gains later. The key benchmark indices surged to one-month highs in early afternoon trade. The market pared gains in afternoon trade on profit booking. Stocks regained strength in mid-afternoon trade. The market spurted in late trade.

IT stocks were in demand on upbeat economic data in the US, the biggest market for the Indian IT firms. But, auto stocks took a breather on profit booking after a recent rally triggered by robust vehicle sales data for May 2010. Telecom and realty stocks saw mixed trend. Metal and mining stocks rose after prices rose on the London Metal Exchange on 11 June 2010.

Stocks shrugged off data showing a surge in headline inflation, which may force the Reserve Bank of India (RBI) to raise interest rates further. Inflation based on the wholesale price index (WPI) rose an annual 10.16% in May 2010, faster than 9.59% rise in April 2010, government data showed on Monday. Meanwhile, inflation for March 2010 was revised upwards to 11.04% from a provisional rise of 9.9%.

The market has been on a roller coaster ride recently. The Sensex has risen 721.07 points or 4.3% in the past four trading sessions from a recent low of 16,617.10 on 8 June 2010. Earlier, the barometer index had lost 500.59 points or 2.9% in two trading sessions to 16,617.10 on 8 June 2010 from a recent high of 17,117.69 on 4 June 2010. Before the two-day slide, the market had witnessed a strong rebound from lower level. The Sensex had risen 1,095.21 points or 6.83% in eight trading sessions to 17,117.69 on 4 June 2010, from a low of 16,022.48 on 25 May 2010.

Stocks are off recent highs. The Sensex has lost 631.85 points or 3.5% from a recent peak of 17,970.02 on 7 April 2010. The barometer index has lost 0.7% in calendar 2010 so far after jumping 81% in 2009.

Foreign funds today, 14 June 2010, bought stocks worth a net Rs 347.80 crore, as per the provisional data from the stock exchanges. Domestic funds sold shares worth a net Rs 41.43 crore

European stocks rose for the fourth consecutive session on Monday as investor confidence over the global economic recovery grew. Key indices in UK, France and Germany rose by 0.47% to 1.31%.

Asian markets rose for a third consecutive day on Monday as higher confidence among US consumers boosted speculation that demand for products and resources will increase in the world's biggest economy. The key benchmark indices in Japan, South Korea, Indonesia, Hong Kong, Taiwan and Singapore rose by between 0.78% to 1.80%. China's markets are closed from Monday to Wednesday for the Dragon Boat Festival.

US markets rose on Friday, 11 June 2010 after a report found consumers are gaining confidence in the economy. The Dow Jones industrial average rose 38.54, or 0.4%, to 10,211.07. The Standard & Poor's 500 index rose 4.76, or 0.4%, to 1,091.60 and the Nasdaq composite index rose 24.89, or 1.1%, to 2,243.60.

A private survey showed US consumer sentiment index rose to 75.5 in June 2010 from 74.5 in May 2010. This is the index's best reading since January 2008.

Trading in US index futures indicated that the Dow could gain 67 points at the opening bell on Monday, 14 June 2010.

Back home, investors will eye the first installment of the corporate advance tax payment which will give some clue about Q1 June 2010 corporate results. The first installment of corporate advance tax falls due on 15 June every year.

Industrial output rose much faster than expected at 17.6% in April 2010 from a year earlier on strong consumer demand and government spending. March's annual growth rate was revised upwards to 13.9% from 13.5%. Manufacturing output rose 19.4% in April 2010. The industrial output rose 10.4% in the 2009/10 fiscal year (April-March), faster than the 2.6% clocked in the previous fiscal year.

Investors will also keep a close eye on the progress of the monsoon rains. According to the latest update from the India Meteorological Department (IMD), the Southwest monsoon was vigorous over Coastal Andhra Pradesh, South Interior Karnataka and Kerala and active over Nagaland, Manipur, Mizoram & Tripura, Telangana and Coastal & North Interior Karnataka during past 24 hours. The Southwest monsoon has further advanced into most parts of Coastal Andhra Pradesh, remaining parts of North Bay of Bengal, most parts of coastal Orissa, remaining parts of northeastern States, some parts of Gangetic west Bengal and some more parts of Sikkim.

Conditions are favourable for further advance of southwest monsoon into remaining parts of central Arabian Sea, some parts of north Arabian Sea, remaining parts Maharashtra, Karnataka and Andhra Pradesh, southern parts of Gujarat and Chhattisgarh, some more parts of Orissa and Gengetic West Bengal, remaining parts of Sikkim and some parts of Jharkhand and east Bihar during next 2-3 days.

The June-September monsoon is crucial for the country as it irrigates 60% of farms in India. Monsoon rains had hit Kerala on 31 May 2010, a day ahead of schedule. The south-west monsoon usually covers the entire country by mid-July. 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.

Last month, Australia's weather bureau said the El Nino weather pattern was over. El Nino is caused by an abnormal warming of the eastern Pacific Ocean and can play havoc with weather patterns across the Asia-Pacific region.

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.

Data this month showed business activity remained strong for India's vast services sector in May 2010, with a key gauge growing for a 13th consecutive month even as some momentum was lost over the previous month. The HSBC-Markit Business Activity Index stood at 58.2 in May 2010 from a 21-month high of 62.1 in April 2010. A reading above 50 indicates expansion. Services make up about 55% of India's $1.2 trillion economy.

HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian firms, surged to a 27-month high of 59 in May 2010 from 57.2 in April 2010, bolstered by steady growth in output, new orders and employment. The rate of growth had slowed in March 2010 and April 2010.

India's economy grew at 8.6% in the March 2010 quarter driven by robust manufacturing sector on the back of government and consumer spending, data released by the government on Monday, 31 May 2010, showed. 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 quarter 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 BSE 30-share Sensex was up 273.22 points or 1.60% to 17,338.17, its highest closing since 3 May 2010. The index advanced 286.23 points at the day's high of 17,351.18 at the fag end of the trading session. The Sensex rose 53.97 points at the day's low of 17,118.74 in early trade.

The S&P CNX Nifty was up 78.35 points or 1.53% to 5,197.70, its highest closing since 3 May 2010. Nifty hit a high of 5,201.25 at the fag end of the trading session.

Barring the BSE Healthcare index, all the other sectoral indices on BSE were in green. The BSE IT index (up 3.69%), the BSE TECk index (up 2.76%), and the BSE Oil & Gas index (up 1.87%), were the top gainers among the sectoral indices on the BSE.

The BSE Mid-Cap and BSE Small-Cap indices gained 0.91% and 1.30%, respectively. Both these indices underperformed the BSE Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1888 shares advanced as compared with 1008 that declined. A total of 95 shares remained unchanged.

The total turnover on BSE amounted to Rs 3690 crore as compared with Rs 4395.40 crore on Friday, 11 June 2010.

Among the 30-share Sensex pack, 26 advanced while only 4 of them declined.

IT stocks were in demand on upbeat economic data in the US, the biggest market for the Indian IT firms. India's second largest software services exporter by sales Infosys advanced 4.50% to Rs 2,752. It was the top gainer from the Sensex pack.

India's third largest software services exporter by sales Wipro jumped 4.34%. The company has fixed 16 June 2010 as the record date for issue of bonus shares in the ratio of 2:3. India's largest software services exporter by sales TCS rose 3.44%.

HCL Technologies gained 3.20% after the company signed a five year information technology infrastructure outsourcing agreement with Singapore Exchange worth Singapore dollar 110 million. The company made this announcement during trading hours today, 14 June 2010.

Index heavyweight Reliance Industries (RIL) shot up 1.65% to Rs 1063.50, extending a near 5% rally in the preceding three trading sessions. RIL after trading hours on Friday, 11 June 2010, said it has acquired a majority stake in Infotel Broadband Services, which on Friday, 11 June 2010, won nationwide licenses to offer broadband services

RIL will invest about Rs 4800 crore by subscribing to the fresh equity capital to be issued by Infotel. Post investment, RIL will own 95% stake in Infotel, making it a subsidiary of RIL.

Shares of the Mukesh Ambani-led Reliance Industrial Industries surged 16.85%.

Anil Dhirubhai Ambani Group (ADAG) stocks surged on renewed buying following the Ambani brothers' recent agreement to end their differences and non-compete agreements. Reliance Natural Resources (RNRL) (up 17.96%), Reliance MediaWorks (up 11.93%), Reliance Capital (up 6.25%), Reliance Infrastructure (up 3.89%), Reliance Power (up 6.57%) rose.

Shares of state-run oil marketing companies rose even as Oil Secretary S Sundareshan today said the government is yet to decide a date for the next meeting of the ministerial panel on fuel pricing. HPCL (up 4.32%), BPCL (up 3.94%), and Indian Oil Corporation (up 2.67%), edged higher.

The government, last week, a deferred a decision on decontrol of petrol and diesel prices. It may be recalled that a committee headed by Planning Commission member Kirit Parikh committee had in February 2010 recommended freeing pump prices of petrol and diesel and raising kerosene prices by Rs 6 a litre and cooking gas prices by Rs 100 a cylinder

Oil exploration shares rose after crude oil prices gained more than 2% in the Asian electronic trade on Monday, 14 June 2010.

India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) gained 1.19%. India's second biggest oil and gas exploration firm by revenue, Oil India, advanced 4.68% to Rs 1346.70. Cairn India rose 1.10%.

Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms. Light, sweet crude oil gained $1.62 or 2.20%, to $75.40 a barrel in the Asian electronic trade on Monday, 14 June 2010 as renewed optimism about the global economic recovery rekindled appetite for risk, sending stock markets higher and the dollar down.

Engineers India rose 1.33% after the Ministry of Petroleum & Natural Gas approved disinvestment of 3.36 crore shares or 10% equity through an offer for sale. The announcement was made before trading hours today, 14 June 2010.

Telecom stocks saw mixed trend. India's largest listed cellular services provider by sales Bharti Airtel lost 1.77% to Rs 269.70 on profit booking. The stock retreated from day's high of Rs 276. It was the top loser from the Sensex pack.

India's second largest listed cellular services provider by sales Reliance Communications (RCom) gained 3.53% on reports the company may sell a stake in its telecommunications towers unit Reliance Infratel. RCom said after trading hours that it has approved a transformational proposal to restructure Reliance Infratel to create the world's largest independent telecom infrastructure company, which is not owned/controlled by any telecom operator.

RCom and Reliance Infratel are at an advanced stage of discussion with several domestic and international strategic and financial players to finalise the proposal. A deal will announced shortly, RCom said. RCom holds 89.71% stake in Reliance Infratel (as on 31 March 2009).

India's largest FMCG firm by sales Hindustan Unilever gained 0.65% after the company announced after market hours on 11 June 2010 that its board of directors has approved a proposal for buyback of shares at a price not exceeding Rs 280 per share. The company has set aside Rs 630 crore for buyback.

Banking stocks rose on pick up in credit offtake. India's largest bank in terms of branch network State Bank of India rose 0.38%, with the stock gaining for the third straight day. SBI is likely to launch a Rs 20000-crore rights issue in the second half of 2010/11, Chairman O.P. Bhatt said on 9 June 2010.

India's second largest private sector bank by sales HDFC Bank rose 1.62% after its ADR gained 0.95% on Friday, 11 June 2010. India's largest private sector bank by sales ICICI Bank advanced 0.95% after its ADR rose 1.33% on Friday, 11 June 2010.

IDBI Bank (up 4.67%), Bank of Maharashtra (up 4.23%), UCO Bank (up 1.48%), and Union Bank of India (up 0.34%), advanced while Central Bank of India settled unchanged at Rs 146 on reports the government has approved capital infusion of Rs 6211 crore in these five public sector banks to help them in attaining a minimum 8% Tier-I capital by 31 March 2011, and ensure an additional Rs 77637-crore in lending capacity to various sectors of the economy.

Among other PSU stocks, Bank of Baroda rose 0.19%, Bank of India gained 0.77% and Punjab National Bank surged 1.45%.

Metal and mining stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange, rose 0.88% on Friday, 11 June 2010. Tata Steel (up 2.36%), Steel Authority of India (up 1.24%), Hindalco Industries (up 2.72%), Hindustan Zinc (up 1.95%), JSW Steel (up 0.23%), Jindal Steel & Power (up 1.35%), Jindal Saw (up 4.76%), edged higher.

India's largest non-ferrous metal producer by sales Sterlite Industries (India) rose 3.38% after the company fixed 22 June 2010 as the record date for a 2-for-1 stock split and a liberal 1:1 bonus issue. The company announced the record date after market hours on 11 June 2010.

Shares of Mumbai-based realty developers declined on profit booking after Friday's rally which materialised after the Bombay High Court on Thursday, 10 June 2010 dismissed the Maharashtra government's 2008 decision to increase the floor space index (FSI) from 1 to 1.33 to builders executing projects in suburban Mumbai in lieu of a fee.

Ackruti City (down 1.08%), DB Realty (down 2.29%) fell. HDIL ended unchanged at Rs 235.20

Lower FSI is likely to drive Transferable Development Right (TDR) prices higher, which in turn may inflate property prices.

However, other realty stocks edged higher. DLF (up 0.78%), Unitech (up 0.37%), Omaxe (up 1.55%), Indiabulls Real Estate (up 0.85%), and Orbit Corporation (up 0.14%), gained.

Auto stocks took a breather on profit booking after recent sharp upmove triggered on the back of robust vehicle sales data for May 2010. India's top truck maker by sales Tata Motors declined 0.63%. India's largest small car maker by sales Maruti Suzuki India was unchanged at Rs 1357.

India's second largest bike maker by sales Bajaj Auto shed 0.47% to Rs 2283.95. The scrip hit a record high of Rs 2309 in intra-day trade today. India's largest bike maker by sales Hero Honda Motors lost 0.17%.

But, India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 1.44% to Rs 613.10, after striking an all-time high of Rs 616.30. The stock rose today on fresh buying, extending a three-day 5.84% rally.

Dr Reddy's Laboratories lost 3.65% after a US court restrained the drug maker from distributing a generic version of allergy drug Allegra-D. The company made this announcement on Saturday, 12 June 2010.

SpiceJet fell 1.34% after Sun TV promoter Kalanithi Maran bought a 37.7% stake in the low-cost carrier from its promoter Bhupendra Kansagra and US investor WL Ross. The announcement was made before trading hours today, 14 June 2010.

Reliance Natural Resources clocked the highest volume of 3.03 crore shares on BSE. Karuturi Global (2.76 crore shares), HFCL Infotel (1.92 crore shares), Cals Refineries (1.72 crore shares) and SpiceJet (1.26 crore shares) were the other volume toppers in that order.

Reliance Natural Resources clocked the highest turnover of Rs 176.60 crore on BSE. Reliance Industrial Infrastructure (Rs 108.50 crore), Reliance Capital (Rs 93.95 crore), Tata Steel (Rs 81.40 crore) and Reliance Industries (Rs 71.08 crore) were the other turnover toppers in that order.