Steel shares rally

The key benchmark indices surged as world stocks rose. The BSE 30-share Sensex jumped 99.09 points or 0.55%, off close to 35 points from the day's high and up close to 105 points from the day's low. The Sensex settled below the psychological 18,000 mark after crossing that level in early afternoon trade. Realty, capital goods, consumer durables, metal and auto stocks rose.



NSE's volatility index India VIX, which is a gauge of traders' perception of near-term risks in the market based on options prices, declined for the second day in a row. The index shed 1.86% to 20. It had lost 1.59% to 20.38 on Tuesday, 20 July 2010. The index had jumped 5.12% to 20.71 on Monday, 19 July 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 edged higher in early trade on firm Asian stocks. Firmness prevailed in morning trade. The Sensex hit a fresh intraday high in mid-morning trade. The market extended gains in early afternoon trade. The market came off the higher level in afternoon trade. The market came off the lows in mid-afternoon trade. Stocks were range bound in late trade.

The Q1 results announced so far have been decent. The combined net profit of a total of 210 companies rose 34% to Rs 13155 crore on 18.4% rise in sales to Rs 79955 crore in Q1 June 2010 over Q1 June 2009.

Foreign funds today, 21 July 2010, bought equities worth a net Rs 362.44 crore, as per provisional data from the stock exchanges. Domestic funds sold shares worth a net Rs 302.68 crore.

Foreign funds have made substantial purchases of Indian stocks this month. India dedicated equity funds registered inflows of $114 million during the week ended 14 July 2010, which is a 13-week high, as per the latest data from global fund tracker EPFR Global.

Foreign funds have bought Indian equities worth a net Rs 5878.35 crore this month so far, till 21 July 2010, as per data from the stock exchanges. Foreign funds had pumped in Rs 7713.97 crore in equities in June 2010.

Domestic funds have sold shares worth a net Rs 3027.13 crore this month so far, till 21 July 2010. They had sold equities worth a net Rs 4777.05 crore in June 2010.

European shares climbed on Wednesday boosted by technology stocks, as strong results from Apple improved sentiment. The key benchmark indices in UK, France and Germany were up by 0.93% to 1.56%.

Most Asian stocks rose on Wednesday as investors cheered Apple's strong earnings and on optimism that China may roll back policy tightening measures later this year. The key benchmark indices in Hong Kong, Indonesia, South Korea and China, were up by 0.26% to 1.1%. But, key benchmark indices in Japan, Singapore and Taiwan fell by between 0.14% to 0.76%.

US index futures reversed initial losses. Trading in US index futures indicated that the Dow could rise 15 points at the opening bell on Wednesday, 21 July 2010.

US stocks staged a late-day rebound to end higher on Tuesday, shrugging off disappointment over some company earnings reports and a drop in U.S. housing starts, as investors bought beaten-down shares amid speculation the Federal Reserve will take steps to spur lending. The Dow Jones Industrial Average rose 75.53 points, or 0.74% to 10,229.96. The Standard & Poor's 500 Index gained 12.23 points, or 1.14% to 1,083.48. The Nasdaq Composite Index added 24.26 points, or 1.10% to 2,222.49.

After trading hours in the US on Tuesday, 20 July 2010, Apple posted a 78% surge in third-quarter profit as customers flocked to the new iPad tablet computer.

In economic news, housing starts fell more than expected in June, the government said, but applications for building permits, a measure of future activity, unexpectedly rose. Federal Reserve Chairman Ben Bernanke gives his semi-annual report on the economy to the Congress today and tomorrow amid diminishing expectations that interest rates will rise soon.

Back home, Finance Minister Pranab Mukherjee on Wednesday, 21 July 2010, said the government plans to keep the central good and services tax (GST) concessional rate for goods at 6% in 2011/12. The government is set to bring the direct taxes code bill and the constitutional amendments required to roll out GST in the forthcoming Monsoon session of the Parliament beginning next week. GST will replace the excise duty and service tax at the central level and value-added tax at the state level and some other local levies, thereby helping create a pan-India market for goods and services.

In a sharp variation from International Monetary Fund's upbeat assessment of growth prospects for India in 2010, the Asian Development Bank (ADB) on Tuesday retained its growth estimate for India at 8.2%. The ADB also stuck to its China's forecast at 9.6% but marginally revised that for the Asian region to 7.9%. International Monetary Fund (IMF) has upgraded India's growth projection to as high as 9.5% from 8.8% estimated earlier.

Analysts expect another 25 basis points rate hike by the central bank at its quarterly review on 27 July 2010, aimed at anchoring inflation expectations. The Reserve Bank of India (RBI) on 2 July 2010, hiked the repo rate by 25 basis points to 5.5% from 5.25%, with immediate effect. It also hiked the reverse repo rate, at which it absorbs excess cash from the banking system, by an equal 25 basis points to 4% from 3.75%. The central bank said the latest rate hike was a part of the calibrated exit from the expansionary monetary policy.

The latest data showed that the fuel price index rose 14.27% in the year to 3 July 2010 and the food price index climbed 12.81%. Fuel price inflation eased from the previous week's annual rise of 18.02% while the pace of food price inflation edged up marginally from last week's 12.63%. Food inflation edged up because of higher rice and wheat prices. The primary articles index was up 16.25% compared with the previous week's reading of 16.08%.

The headline inflation rose lower-than-expected 10.55% in June 2010. The rate of increase was higher than May's rise of 10.16%. Inflation for April 2010 was revised upwards to 11.23% from 9.59%.

Investors are closing watching the progress of the monsoon rains. The southwest monsoon was vigorous over Bihar and East Uttar Pradesh and active over West Uttar Pradesh, Uttarakhand, Haryana, Chandigarh & Delhi, Punjab, Konkan & Goa, Rayalaseema, Karnataka and Kerala during past 24 hours, the India Meteorological Department (IMD) said in its daily update on Tuesday, 20 July 2010. The weather office expects widespread rain/thundershowers over western Himalayan region and Indo-Gangetic Plains during next 48 hours and decrease thereafter. It expects widespread rain/thundershowers over west coast in the near term.

The IMD expects fairly widespread rain/thundershowers over northeastern states and Sub-Himalayan West Bengal & Sikkim in the near term. It expects fairly widespread rainfall activity over central India, remaining parts of east India, interior Maharashtra, Gujarat state and Andhra Pradesh, in the near term. The IMD expects fairly widespread rainfall over central, east and northeast India, west coast and along foothills of Himalayas in the near term.

The monsoon rains were 24% below normal in the week ended 14 July 2010. Out of 36 meteorological sub-divisions, rainfall was excess in 8, normal in 4, deficient in 19 and scanty in 5 sub-divisions during the week. Bihar, east Madhya Pradesh, Chhattisgarh, Vidarbha, Andhra Pradesh, Tamil Nadu and Sub- Himalayan West Bengal & Sikkim received good rainfall during the week. Weak monsoon rains in past week will not significantly hurt crop output in the country and the weather outlook is encouraging, Farm Minister Sharad Pawar said on 16 July 2010.

The cumulative seasonal rainfall for the country as a whole during this year's monsoon upto 15 July was 14% below the long period average (LPA). Out of 36 meteorological subdivisions, the rainfall has been excess over 6, normal over 16 and deficient in 14 sub-divisions.

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 weather office expects this year's monsoon rains to be at 102% of the long-period average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.

A committee set up by the stock market regulator Securities & Exchange Board of India (Sebi) has recommended major changes in the existing law governing substantial acquisition of shares and takeovers. The committee headed by C. Achuthan has recommended an increase in the acquisition threshold for the initial trigger of an open offer from the current level of 15% to 25% of the voting capital of a listed company. While no change has been recommended in the annual creeping acquisition limit of 5%, the committee has recommended that creeping acquisition be permitted only to acquirers who already hold more than 25% of the voting capital, subject to the aggregate post-acquisition shareholding not exceeding the maximum permissible non-public shareholding.

The committee has recommended that an open offer should be made for all the shares of the target company to ensure equality of opportunity and fair treatment of all shareholders, big and small. The exception to this rule is the size of an open offer where the same is voluntary in nature. The current regulations mandate a minimum offer size of only 20%.

The BSE 30-share Sensex rose 99.09 points or 0.55% to 17,977.23. The Sensex jumped 134.06 points at the day's high of 18,012.20 in early afternoon trade. The index lost 4.22 points at the day's low 17,873.92 in early trade.

The S&P CNX Nifty rose 31.35 points or 0.58% to 5,399.35.

The BSE Mid-Cap index rose 0.49%. The BSE Small-Cap index rose 0.36%. Both the indices underperformed the Sensex.

Barring the BSE Healthcare index, all the other sectoral indices on BSE rose. The BSE Metal index (up 3.16%), Realty index (up 0.98%), Auto index (up 0.83%), Consumer Durables index (up 0.73%), Oil & Gas index (up 0.71%), Capital Goods index (up 0.68%), IT index (up 0.62%), and PSU index (up 0.61%), outperformed the Sensex. The BSE Power index (up 0.12%), banking sector index Bankex (up 0.04%) and Healthcare index (down 0.27%), underperformed the Sensex.

The market breadth, indicating the strength of the broader market was positive. On BSE, 1554 shares advanced while 1364 shares declined. A total of 108 shares remained unchanged. The breadth was much stronger earlier in the day.

From the 30 share Sensex pack, 19 stocks rose and rest fell.

BSE clocked turnover of Rs 4298 crore, higher than Rs 3838.11 crore on Wednesday, 20 July 2010.

India's largest dedicated housing finance firm by revenue, HDFC fell 1.41%, with the stock falling for the second straight day. Net profit rose 22.95% to Rs 694.59 crore in Q1 June 2010 over Q1 June 2009. Income from operations rose 0.15% to Rs 2797.13 crore in Q1 June 2010 over Q1 June 2009. The results were announced on 14 July 2010.

Index heavyweight Reliance Industries (RIL) rose 0.51%. RIL may reportedly be able to establish more commercially-viable oil and gas finds in the country's largest gas field KG-D6 with the Cabinet allowing the company extra time for drilling wells.

The extension will help RIL complete evaluation works in at least three wells in the KG-D6 block where drilling was not authorised by the concerned regulator Directorate General of Hydrocarbon (DGH) after the company missed the deadline, reports suggest.

RIL and Reliance Natural Resources (RNRL) on 25 June 2010, entered into a new gas supply agreement, as directed by the Supreme Court. The Supreme Court had ordered the two companies to renegotiate the Gas Supply Master Agreement, which was signed between the Ambani brothers as part of the business demerger in 2005. RIL also recently announced its seventh oil discovery in Cambay basin in Gujarat.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.68%, with the stock gaining for the third straight day. L&T on Monday said L&T General Insurance Company, the general insurance arm of the firm, would commence operations soon. The company has received the necessary license from the regulatory authority for commencing general insurance business.

But, India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) fell 0.34%, reversing early gains. The company has signed a 10-year licensing pact with a unit of General Electric to manufacture oil and gas compressors at the Indian firm's facility in south India. The equipment will be sold in India and south Asia.

Bhel recently got an order worth Rs 2665 crore from Dainik Bhaskar Power for setting up a 1,200 megawatts thermal power plant in Chhattisgarh. The company will announce its Q1 result on Friday, 23 July 2010.

Among other capital goods stocks, SKF India, Thermax and Praj Industries rose by between 0.37% to 3.66%.

Some consumer durables stocks rose on sustained hunting. Gitanjali Gems, Rajesh Exports, Videocon Industries and Titan Industries rose by between 0.5% to 2.54%.

Interest rate sensitive realty stocks rose on expectations of good Q1 results on the back of rise in property prices. Anant Raj Industries, DLF, Indiabulls Real Estate, Ackruti City, Unitech, HDIL, Phoenix Mills, Ansal Properties, rose by between 0.33% to 5.27%.

Steel shares surged tracking rally in Asian peers which rose on overnight gains in US steel stocks. The rally in Asian steel shares was also spurred by news on Tuesday, 20 July 2010, that China is aiming to slash the number of steelmakers in the country by about 75%. JSW Steel, Jindal Steel & Power and Steel Authority of India rose 2.46% to 5.39%.

Tata Steel jumped 4% to Rs 531.10. Tata Steel's subsidiary Natsteel Holding recently sold off its entire 27.03% stake in Southern Steel Berhad, Malaysia for $72 million (around Rs 337 crore).

A number of other metal and mining stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange rose 1.69% on Tuesday, 20 July 2010. Sesa Goa, Hindalco Industries, National Aluminum Company, Sterlite Industries and Hindustan Zinc, rose by between 1.4% to 3.9%.

Auto stocks rose on expectations of strong Q1 results. India's largest truck maker by sales, Tata Motors rose 1.04%. Tata Motors' global vehicles sales rose 46% to 91,608 units in June 2010 over June 2009. The figure includes its British luxury unit Jaguar Land Rover, whose sales rose 47% in the month to 20,189 units.

India's largest car maker by sales Maruti Suzuki India rose 0.13%. The company will announce Q1 results on Saturday, 24 July 2010.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 2.47%. The company, last week, said its board of directors at its meeting held on 15 July 2010, was briefed about the company's potential bid for Ssangyong Motors Company, South Korea. A decision on the bid would be taken at the company's next board meeting to be held on 28 July 2010.

Bajaj Auto rose 0.74% ahead of Q1 results on Thursday, 22 July 2010. The board of Bajaj Auto will also consider issue of bonus shares along with the first quarter results.

But, the country's largest two-wheeler maker Hero Honda Motors fell 0.5%, reversing initial gains. The company reported a 16.6% jump in its sales at 4,26,454 in June 2010 over June 2009.

Some healthcare stocks fell on profit taking. Cipla, Dr Reddy's Laboratories, Sun Pharmaceutical Industries and Pfizer fell by between 0.42% to 1.99%.

Banking stocks were mixed. India's biggest commercial bank in terms of branch network, State Bank of India (SBI) fell 0.46%, with the stock falling for the second straight day. The government on 15 July 2010 approved the merger of State Bank of Indore with State Bank of India (SBI).

SBI recently said it has signed a joint venture agreement with State General Reserve Fund (SGRF), Sultanate of Oman to set up a general purpose Private Equity Fund for investing in various assets in India. This is a part of sovereign level collaboration between the Government of India and the Government of Sultanate of Oman. The fund will have initial target corpus of $100 million and is proposed to be expanded in future up to a level of $1.5 billion.

Among other PSU stocks, Bank of India and Punjab National Bank rose by between 0.09% to 2.28%. But, Bank of Baroda fell 0.58%.

India's largest private sector bank by market capitalisation ICICI Bank rose 1.51%. The bank recently announced the pricing of an international bond offering of $500 million. The bank recently set its base rate for loans at 7.5%, effective 1 July 2010 as part of a new rule to set minimum lending rates.

Private sector banking major HDFC Bank fell 0.54%, with the stock falling for the second straight day. Net profit rose 33.92% to Rs 811.72 crore in Q1 June 2010 over Q1 June 2009. The bank announced the results during market hours on Monday.

Kotak Mahindra Bank rose 0.57%, reversing initial losses as consolidated net profit jumped 27% to Rs 327.70 crore in Q1 June 2010 over Q1 June 2009. The private sector bank announced the first quarter results during trading hours today, 21 July 2010.

IT stocks rose after Apple Inc reported a sharp jump in second-quarter profit after trading hours in the US on Tuesday, 20 July 2010. IT major TCS rose 1.53%, extending recent strong gains triggered by stronger-than-expected Q1 June 2010 results announced on Friday, 16 July 2010.

TCS' consolidated net profit as per US accounting standards declined 5.31% to Rs 1844.30 crore on 6.21% growth in revenue to Rs 8217.30 crore in Q1 June 2010 over Q4 March 2010. The company raised its hiring target by 10,000 to 40,000 for 2010-11, reflecting strong demand.

TCS chief executive officer and managing director N Chandrasekaran said Q1 June 2010 was a quarter of complete outperformance at TCS. He said TCS' balance growth in Q1 June 2010 was driven by disciplined execution and strong demand across markets and industry sectors. He said while the management is alert about changing macro dynamics in many markets, TCS' customer-centric business model is very relevant and helps TCS participate in the ongoing recovery.

TCS' chief financial officer and executive director S Mahalingam said TCS' investments in building an extensive front office presence in new markets is helping support and sustain higher growth.

India's third largest IT exporter by sales Wipro rose 1.83%, with the stock gaining for the fourth straight day. The company will announce its Q1 result on Friday, 23 July 2010.

IT bellwether Infosys rose 0.29%. The company announced disappointing Q1 result last week. At the time of announcing the results last week, Infosys warned that the global economic environment continues to be uncertain, even though the company raised its full-year revenue and profit forecasts.

Infosys' consolidated net profit as per International Financial Reporting Standards (IRFS) declined 7% to Rs 1488 crore on 4.3% increase in revenue to Rs 6198 crore in Q1 June 2010 over Q4 March 2010. Operating profit declined 1.9% to Rs 1755 crore in Q1 June 2010 over Q4 March 2010. The operating profit margin (OPM) declined to 28.31% in Q1 June 2010 from 30.09% in Q4 March 2010. During the quarter, the company and its subsidiaries hired as many as 8,859 employees in total, but the net addition to its headcount was just 1,026.

Hindustan Media Ventures settled at Rs 189.20, a premium of 13.98% over the initial public offer price of Rs 166 per share. The stock debuted at Rs 170, a premium of 2.41% over the initial public offer (IPO) price.

FCS Software clocked the highest volume of 2.55 crore shares on BSE. Cals Refineries (2.26 crore shares), Shree Ashtavinayak Cine Vision (1.52 crore shares), Hindustan Media Ventures (1.49 crore shares) and JBF Industries (1.37 crore shares) were the other volume toppers in that order.

Hindustan Media Ventures clocked the highest turnover of Rs 282.73 crore on BSE. JBF Industries (Rs 187.54 crore), Tata Steel (Rs 150.41 crore), TVS Motor Company (Rs 135.80 crore) and Sesa Goa (Rs 104.07 crore) were the other turnover toppers in that order.