Sensex crosses 18,000 mark as auto sales, macro data cheer

Healthy auto sales, strong manufacturing and services sector data, revival of the monsoon rains in the crucial sowing month of July, sustained buying by foreign funds and firm global equities, boosted the domestic bourses as the barometer index BSE Sensex moved past the psychological 18,000 level. The Sensex and the 50-unit S&P CNX Nifty scaled 2-1/2-year highs on Thursday, 5 August 2010.



The vital monsoon rains were 16% above normal in the week to Wednesday, 4 August 2010, the second highest in the current season, the weather office said on Thursday, 5 August 2010. Rains were 38% above normal in the week to 28 July 2010, the highest in this season.

Foreign funds continue to mop up Indian equities. Foreign funds bought equities worth a net Rs 2097.26 crore in the first four trading days this month, till 5 August 2010, absorbing selling of Rs 789.03 crore from domestic funds, as per data from the stock exchanges.

Foreign funds bought shares worth a net Rs 8320.50 crore in July 2010, while domestic funds sold shares worth a net Rs 6323.13 crore in July 2010. Foreign funds had pumped in Rs 7713.97 crore in equities in June 2010, absorbing selling by domestic funds in that month. Domestic funds had dumped shares worth a net Rs 4777.05 crore in June 2010.

The results announced so far have been mixed. The combined net profit of a total of 2080 companies fell 9.2% to Rs 57,560 crore on 20.7% rise in sales to Rs 7,07,925 crore in Q1 June 2010 over Q1 June 2009.

On the macro front, the surging services industry expanded for the 15th month in July, but at a slower pace than the two-year peak in June, with only growth in input prices picking up speed, a survey showed on Wednesday, 4 August 2010. The HSBC Markit Business Activity Index, based on a survey of 400 Indian firms, eased to 61.7 in July from 64 the previous month, staying comfortably above the 50 mark that divides growth from contraction.

The BSE Sensex rose 275.70 points or 1.54% to 18,143.99 in the week ended Friday, 6 August 2010. The 50-unit S&P CNX Nifty rose 71.65 points or 1.33% to settle at 5,439.25.

The BSE Mid-Cap index 1.71% and the BSE Small-Cap index 2.52%. Both these indices outperformed the Sensex.

Trading for the week began on an upbeat note. The key benchmark indices jumped on Monday, 2 August 2010, boosted by strong auto sales in July 2010 and after data showed manufacturing activity picked up pace in the month just gone by. Revival of the monsoon rains in the crucial sowing month of July and sustained buying by foreign funds also underpinned sentiments. The BSE 30-share Sensex rose 212.92 points or 1.19% to 18,081.21. The S&P CNX Nifty rose 64.05 points or 1.19% to 5,431.65.

The key benchmark indices eked out small gains on Tuesday, 3 August 2010, rising for the second straight day, as banking stocks and index heavyweight Reliance Industries (RIL) rose. The BSE 30-share Sensex was up 33.62 points or 0.19% to 18,114.83. The S&P CNX Nifty was up 7.90 points or 0.15% to 5,439.55.

The key benchmark indices scaled 2-1/2-year highs on Wednesday, 4 August 2010, on strong services sector data and on revival of monsoon rains in the crucial sowing month of July 2010. The Sensex jumped 102.61 points or 0.57% to 18,217.44. The S&P CNX Nifty rose 28.30 points or 0.52% to 5,467.85.

A likely increase in interest rates by the Reserve Bank of India (RBI) at a mid-quarter policy review on 16 September 2010 triggered profit taking on Thursday, 5 August 2010 after the key benchmark indices struck 2-1/2-year highs at the onset of the trading session. The BSE 30-share Sensex declined 44.61 points or 0.24% to 18,172.83. The S&P CNX Nifty fell 20.75 points or 0.38% to 5,447.10.

After holding steady through the day, stock indices ended lower on Friday, 6 August 2010 as investors chose to book some profits ahead of the weekend and in view of US payroll data. The BSE 30-share Sensex declined 28.84 points or 0.16% to 18,143.99. The S&P CNX Nifty fell 7.85 points or 0.14% to 5439.25.

India's largest truck maker by sales Tata Motors was the leading Sensex gainer last week. The stock rose 5.70% to Rs 894.35. Tata Motors will unveil its Q1 June 2010 consolidated results on 10 August 2010.

India's third largest software outsourcer by sales Wipro was the second biggest gainer from the Sensex pack. It rose 5.43% to Rs 433.7. IT stock were in demand after IT major Cognizant reported stellar results and raised its guidance significantly.

Cognizant Technology Solutions Corporation has beaten its larger peers by a huge margin in the April-June 2010 quarter. Sequentially, net profit in the April-June period rose 13.7% to $172.2 million on a 15.2% growth in revenue to $1.11 billion. The Chennai-based firm revised its 2010 guidance upwards, saying that its revenue will now grow by 36%, instead of 25% earlier.

India's largest private sector bank by market capitalisation ICICI Bank was the third biggest gainer from the Sensex pack. The stock rose 5.24% to Rs 951.85 after the company announced the first quarter results on Saturday, 31 July 2010.

ICICI Bank's net profit rose 16.80% to Rs 1025.98 crore in Q1 June 2010 over Q1 June 2009. ICICI Bank's net interest income rose 0.3% to Rs 1991 crore. Non-interest income declined 19.6% to Rs 1680 crore. Within non-interest income category, fee income rose 7.12% to Rs 1413 crore. The treasury income declined sharply to Rs 104 crore from Rs 714 crore in Q1 June 2009. Lease and other income surged to Rs 163 crore from Rs 57 crore in Q1 June 2009.

Bharti Airtel (up 5.02%), State Bank of India (up 4.64%), Housing Development Finance Corporation (up 2.98%), TCS (up 2.93%) and ITC (up 2.86%), were the other major Sensex gainers.

India's second largest telecom operator by sales Reliance Communications was the top loser from the Sensex pack last week. The stock fell 3.14% to Rs 172.85. A committee set up by the telecom ministry has reportedly endorsed the findings of an earlier audit report that had said Reliance Communications (RCom) had shown lower-than-actual revenues in 2006-07 and 2007-08. The panel's report must be cleared by the telecom ministry's legal department before RCom is asked to pay more licence fees.

India's largest tractor maker by sales Mahindra & Mahindra declined 1.84% to Rs 649.35. It was the second biggest loser from the Sensex pack last week.

Drug maker Cipla fell 1.53% to Rs 321.6. It was the third biggest Sensex loser. HDFC Bank (down 1.50%), Tata Steel (down 1.11%), ONGC (down 0.87%), ACC (down 0.80%), NTPC (down 0.65%) and Jaiprakash Associates (down 0.30%), were the other major Sensex losers.

India's largest private sector company by market capitalisation Reliance Industries fell 0.92% to Rs 1000.30. The company said before market hours on Thursday, 5 August 2010, one of its units had signed definitive agreements to enter into a Marcellus Shale gas joint venture with United States-based Carrizo Oil & Gas Inc. RIL will pay a total $392 million, comprising $340 million of cash and $52 million of drilling carry obligations, the company said.

Under the deal, Reliance will acquire a 60% interest in Marcellus Shale acreage in Central and Northeast Pennsylvania that is currently held in an equal joint venture between Carrizo and an affiliate of Avista Capital Partners. Reliance will acquire all of Avista's stake and 20% of Carrizo's stake in the existing joint venture, the statement said.