RIL, cement stocks lead rally

Indian stocks resumed their winning ways after a day's pause on Thursday, 16 September 2010. The barometer index BSE Sensex and the 50-unit S&P CNX Nifty scaled 32-month closing highs. Firm global stocks and data showing heavy buying by foreign funds recently, underpinned sentiments. Hopes that the central bank may be nearing a pause in its current interest rate tightening cycle, also aided the rally on the domestic bourses. The BSE 30-share Sensex jumped 177.26 points or 0.91%, up 158.04 points from the day's low and off 44.43 points from day's low.



The market breadth was strong. All the 13 sectoral indices on BSE were in green. Metal stocks gained on rise in metal prices on the London Metal Exchange on Thursday, 16 September 2010. Infrastructure stocks gained after a well known industrialist forecast that the growth in construction industry to continue at least for the next decade. Sugar stocks rose on reports of farm ministry considering decontrol of the sector. Realty stocks extended Thursday's gains on follow-up buying.

Auto stocks were mixed. Private sector banking stocks and telecom stocks gained on fresh buying. But, HDFC retraced after striking a record high at the onset of the trading session. Software and auto stocks saw mixed trend. Index heavyweight Reliance Industries (RIL) advanced over 2%.

The market opened on a firm note, tracking gains in Asian stocks. The BSE Sensex surged to a 32-month high in early trade. The market came off the higher level later. The market was range bound in mid-morning trade. Stocks held firm in early afternoon trade. The market held firm in afternoon trade. The market cut gains in mid-afternoon trade on profit booking. The market regained strength in late trade.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was up 3.39% at 19.49. The index had lost 2.99% to 18.85 on Thursday, 16 September 2010. The index had risen 4.46% to 19.43 on Wednesday, 15 September 2010. The index had risen 2.54% to 18.60 on Tuesday, 14 September 2010. The index had jumped 13.94% to 18.14 on Monday, 13 September 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.

Foreign institutional investors (FIIs) are in a buying spree in India. FII inflow in September 2010 totaled Rs 12442.80 crore (till 16 September 2010). FIIs had bought equities worth Rs 11687.50 crore in August 2010. FII inflow in the calendar year 2010 totaled Rs 71824.50 crore (till 16 September 2010).

Global fund tracker EPFR Global today, 17 September 2010, said developing-nation equity funds received inflow of about $3.3 billion in the week to 15 September 2010 as Chinese industrial output gains bolstered sentiment. Inflow into Asia ex-Japan equity funds hit a seven-week high. Flows into India equity funds hit an eight-week high.

Meanwhile, the Union Cabinet on Thursday, 16 September 2010, approved amendments to the Forward Contracts (Regulation) Act 1952, paving the way for the introduction of the Forward Contracts (Regulation) Amendment Bill, 2010 in Parliament. If passed by the both the Houses, it will pave the way for local and foreign institutional investors in commodity futures and bring in new products.

At a mid-term policy review on Thursday, 16 September 2010, the Reserve Bank of India (RBI) signaled that it may be nearing a pause in its current tightening cycle. The central bank said its rate and liquidity actions since October 2009 have been driven by two considerations -- normalisation of the monetary policy stance as the crisis abated and inflation management. The Reserve Bank of India believes that the tightening that has been carried out over this period has taken the monetary situation close to normal, it said. Consequently, the role of normalisation as a motivation for further actions is likely to be less important, the RBI said.

Current and expected macroeconomic conditions will be the more important considerations going forward, the RBI said. The Reserve Bank of India will continue to monitor these conditions, particularly the price situation, and take further action as warranted, the RBI said in a statement.

The RBI on Thursday raised its repo rate, or benchmark lending rate, by a quarter point to 6%, at a mid-term monetary policy review. The central bank also hiked the reverse repo rate, or the rate at which it borrows funds, by half a point to 5%. Both these changes will take place with immediate effect.

India's economic expansion will not be impacted by the central bank's decision to hike policy rates, Montek Singh Ahluwalia, deputy chairman of the Planning Commission said on Thursday

Yield on the benchmark ten-year bond rose for the second day in a row. The yield on the benchmark ten-year bond was hovering at 7.98%, compared with Thursday's (16 September 2010) close of 7.96%. The yield on the second most traded 7.17% 2015 bond was hovering at 7.78%.

European shares edged higher on Friday, as investors' appetite for risk rose after the Spanish Treasury sold euro 4 billion of government bonds on Thursday, 16 September 2010, in a strongly bid tender. The key benchmark indices in France, Germany and UK rose by between 0.77% to 0.88%.

Risk appetite rose after the Spanish auction as the auction results tempered lingering concerns that heavily indebted European nations could face funding crises, as Greece did earlier this year.

Asian stocks rose on Friday as technology shares gained and the yen weakened, boosting Japan's exporters. The key benchmark indices in Indonesia, Hong Kong, South Korea, Singapore, Japan and Taiwan and were up by between 0.30% to 1.29%.

But, China's Shanghai Composite index fell 0.15%, led lower by banking stocks, which fell amid worries over a possible interest rate hike from the People's Bank of China which surfaced after last week's news China's consumer price index rose 3.5% from a year earlier in August 2010, the biggest rise since October 2008.

Trading in US index futures indicate that the Dow could rise 55 points at the opening bell on Friday, 17 September 2010. US markets saw mixed trend on Thursday, 16 September 2010. The Dow Jones Industrial Average rose 22.10 points, or 0.21%, at 10594.83. The S&P 500 slipped 0.41 point, or 0.04%, to 1124.66 and the Nasdaq Composite rose 1.93, or 0.08%, to 2303.25.

Initial US unemployment claims declined by 3000 to 450,000, its lowest level in two months, beating economists' expectations for a rise of 9000.

Closer home, India's exports grew 22.5% to $16.64 billion in August 2010 over August 2009, while imports rose 32.3% to $29.7 billion. As a result, trade deficit, or the difference between exports and imports, widened to $13.5 billion. During the April-August 2010 period, exports posted a growth rate of 28.6% to $85.27 billion over the previous year, while total imports grew by 33.1% to $141.89 billion, according to initial estimates released by the Ministry of Commerce and Industry.

Buoyed by earnings growth in banks, financial services and manufacturing firms, Corporate India has paid 15% higher advance tax in the June-September 2010 quarter over the year-ago period. Companies pay advance taxes in four installments throughout the year based on the business they are doing and hence, the advance tax payments made are seen as a barometer of the companies' performance.

The government's indirect tax collections grew 45% to Rs 27,947 crore in August 2010 over August 2009. For the first five months from April 2010 to August 2010 of the current fiscal, the centre's indirect tax collections grew nearly 46% to Rs 1,24,170 crore over the previous year. The centre has targeted indirect tax collections of Rs 3.15 lakh crore for the fiscal year ending March 2011.

The BSE 30-share Sensex jumped 177.26 points or 0.91% to 19,594.75, its highest closing level since 17 January 2008. The Sensex jumped 221.69 points at the day's high of 19,639.18 in early trade. The index rose 19.22 points at the day's low of 19,436.71 in early trade.

The S&P CNX Nifty jumped 56.25 points or 0.97% to 5,884.95, its highest closing level since 17 January 2008. Nifty struck an intra-day high of 5,898.40 in early trade.

Indian stocks had snapped a seven-day rally on Thursday, 16 September 2010, on profit booking and on negative global cues.

Coming back to today's trade, the market breadth, indicating the health of the market was strong. On BSE, 1846 shares advanced while 1200 shares declined. A total of 99 shares remained unchanged.

The total turnover on BSE amounted to Rs 4949 crore, lower than Thursday's Rs 5264.11 crore

The BSE Mid-Cap index rose 1.43% to 8,104.28 and the BSE Small-Cap index gained 0.93% to 10,238.91. Both these indices outperformed the Sensex.

The BSE Consumer Durables index (up 2.1%), the BSE Healthcare index (up 2.05%), and the BSE Oil & Gas index (up 1.78%), outperformed the Sensex. The BSE IT index (up 0.53%), the BSE Power index (up 0.27%), and the BSE PSU index (up 0.23%), underperformed the Sensex.

Among the 30-share Sensex pack, 24 advanced while only six of them declined. NTPC (down 0.70%), and Bhel (down 0.36%), edged lower from the Sensex pack.

Index heavyweight Reliance Industries (RIL) spurted 2.47% to Rs 1025.60 on reports the company is in advanced talks with US-based Chesapeake Energy to buy a stake in Eagle Ford shale gas project in the US.

Telecom pivotals were in demand. India's second largest listed cellular services provider by sales Reliance Communications jumped 6.55% to Rs 168.45 on bargain hunting after a recent slide. It was the top gainer from the Sensex pack.

India's largest listed cellular services provider by sales Bharti Airtel advanced 3.02% on reports it in talks with other mobile operators to form a strategic alliance to offer third generation services on a pan-India level.

Metal and mining stocks gained as the dollar's decline boosted the appeal of metals as an alternative investment. LMEX, a gauge of six metals traded on the London Metal Exchange, rose 0.74% on Thursday, 16 September 2010, its highest level since 26 April 2010.

JSW Steel (up 5.57%), Steel Authority of India (up 0.07%), Hindustan Zinc (up 1.05%), Tata Steel (up 2.10%), Jindal Steel & Power (up 1.45%), Sterlite Industries (up 2.21%), Hindalco Industries (up 1.37%), Sesa Goa (up 1.16%), and National Aluminum Company (up 0.85%), edged higher.

Ispat Industries jumped 17% on high volume after the company entered into a strategic co-operation agreement with Stemcor, the world's largest independent steel trader.

Software pivotals saw mixed trend. India's second largest software services exporter by sales Infosys rose 0.55% on reports it has won approval for a special economic zone in Bangalore.

India's largest IT exporter by sales TCS gained 2.09%. The company announced before market hours on Wednesday, 15 September 2010, that it has entered into a significant multi-year agreement with SUPERVALU Inc, one of the largest grocery retailers in North America, for full services engagement.

But, India's third largest software services exporter Wipro fell 0.87% to Rs 419.50, off day's high of Rs 429.80. Reportedly, it has received the nod to set up two special economic zones -- one each at the Kodathi village in Bangalore and Mandya district in Mysore.

Auto stocks were mixed. India's top truck maker by sales Tata Motors rose 0.56% after the company's American depository receipts, or ADR gained 2.25% to $23.59 on the New York Stock Exchange on Thursday, 16 September 2010.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) rose 0.88% on reports the company, which recently the preferred bidder for South Korean automaker Ssangyong Motor Company, may introduce as many as three models within four years to attain financial turnaround of Ssangyong.

India's top small car maker by sales Maruti Suzuki India slipped 0.41%. Reportedly, the company is planning to roll out a multi utility vehicle at the start of 2012.

A recent Society of Indian Automobile Manufacturers data showed domestic automobile sales rose 25.24% to a record 12.63 lakh units in August 2010 in over August 2009, boosted by rising incomes, new models and lower borrowing costs. Exports climbed 28% to 191,033 units.

India's largest mortgage lender by total income HDFC slipped 1.01% to Rs 684.05, after striking a record high of Rs 780.05 in early trade. It was the top loser from the Sensex pack.

India's largest bank by net profit and branch network State Bank of India (SBI) fell 0.45% on equity dilution worries. As per media reports, SBI has sought the finance ministry's approval for raising Rs 20000 crore through a follow-on public offering (FPO) or a rights issue. The proposed capital raising would facilitate the bank to improve its capital adequacy ratio from 13.5% as of Q1 June 2010, thereby enabling the bank to grow at a healthy pace over the next couple of years.

India's second largest private sector bank by net profit HDFC Bank rose 0.30% on reports its advance tax payment jumped 41% to Rs 600 crore in Q2 September 2010 from Rs 425 crore in Q2 September 2009. The stock hit a record high Rs 2422.80 today.

India's largest private sector bank by net profit ICICI Bank gained 1.46%. The bank has reportedly paid advance tax of Rs 600 crore in Q2 September 2010 compared with Rs 500 crore in Q2 September 2009.

High beta infrastructure stocks gained after a well known industrialist forecast that the growth in the construction industry would continue at least for the next decade as massive infrastructure projects are going on across the country and many others are in the pipeline.

Larsen & Toubro (up 1.60%), Punj Lloyd (up 1.29%), Gammon India (up 0.12%), GVK Power Infrastructure (up 2.86%), GMR Infrastructure (up 0.77%), Reliance Infrastructure (up 0.94%), Lanco Infratech (up 0.95%), gained.

Realty stocks rose for the second day in a row after the Reserve Bank of India (RBI) on Thursday, 16 September 2010, signalled that it may be nearing a pause in its current tightening cycle. DLF (up 0.57%), Unitech (up 0.63%), Sobha Developers (up 1.91%), HDIL (up 1.35%), Omaxe (up 0.85%), Parsvnath Developers (up 0.29%) edged higher

Cement stocks gained in anticipation of higher demand as the monsoon season draws to a close. ACC (up 3.29%), UltraTech Cement (up 4.25%), Ambuja Cement (up 4.85%), Birla Corporation (up 4.60%), JK Lakshmi Cement (up 1.95%), Shree Cement (up 1.49%), Madras Cement (up 2.58%), India Cement (up 4.87%), surged.

Sugar stocks rose after reports quoting Farm and Agriculture Minister Sharad Pawar indicated that the country's sugar production is likely to exceed 22-23 million tonnes in the forthcoming crop year starting October 2010. Reports added that the Food Ministry will consider decontrol of the sector on expectations of bumper sugar output in the forthcoming year. At present, the sugar sector is under government control, from production till distribution.

Bajaj Hindusthan (up 3.04%), Balrampur Chini Mills (up 3%), Shree Renuka Sugars (up 6.52%), Sakthi Sugar (up 4.30%), Simbhaoli Sugar (up 5.70%), and Uttam Sugar (up 5.09%), surged.

Tea stocks rose on reports a fall in production due to heavy rains and a pest attack has pushed wholesale prices up by up to Rs 25 per kilogram.

Harrisons Malayalam (up 0.16%), Asian Tea & Exports (up 0.45%), Assam Company (up 2.28%), Dhunseri Tea (up 9.39%), Jayshree Tea (up 3.02%), Mcleod Russel (up 1.85%), and Diana Tea Company (up 2%), rose

Tata Steel clocked highest turnover of Rs 139.54 crore on BSE. Reliance Industries (Rs 127.81 crore), Midfield Industries (Rs 98.69 crore), State Bank of India (Rs 93.86 crore), Polyplex Corporation (Rs 74.07 crore) and Ispat Industries (Rs 68.90 crore) were the other turnover toppers in that order.

Cals Refineries clocked the highest volume of 3.46 crore shares on BSE. Ispat Industries (3.16 crore shares), Resurgere Mines (1.88 crore shares), Radhe Developers (1.18 crore shares) and Delta Corp (1 crore shares) were the other volume toppers in that order.