Sensex vaults 4.6% in seven trading sessions

The key benchmark indices attained their highest closing levels in more than 31 months on higher European stocks and on gains in US index futures. Data showing sustained buying of Indian stocks by foreign funds and good monsoon rains, underpinned sentiments. The BSE 30-share Sensex jumped 132.95 points or 0.71%, up about 130 from the day's low and off close to 25 points from the day's high. Banking, realty, tea, consumer durables and capital goods stocks rose.



Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. The market breadth was positive.

The BSE Sensex has gained in six out of the past seven trading sessions. From the recent low of 17,971.12 on 31 August 2010, the Sensex has gained 828.54 points or 4.61% in seven trading sessions.

Coming back to today's trade, stocks were volatile. The market cut gains after hitting a 31-month high at the onset of the trading session. Stocks came further off highs in mid-morning trade. A bout of volatility was witnessed in early afternoon trade as the key benchmark indices came off lows. The market held positive zone in afternoon trade. The market surged in mid-afternoon trade as European stocks and US index futures moved into the green from red. The market cut gains, soon after hitting a fresh 31-month high 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 down 0.31% at 15.92. The index had risen 0.88% to 15.97 on Wednesday, 8 September 2010. The index had surged 4.01% to 15.83 on Tuesday, 7 September 2010, a day after sliding 4.04% to 15.22 on Monday, 6 September 2010. The index had lost 1.8% to 15.86 on Friday, 3 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.

The stock market remains closed on Friday, 10 September 2010 on account of Ramzan Id. Data on industrial production for July 2010 will be out on Friday, 10 September 2010. Industrial output rose 7.1% in June 2010, compared with revised 11.3% rise in May 2010.

Foreign institutional investors (FIIs) are in a buying spree in India. FIIs bought share worth a net Rs 281.96 crore on Wednesday, 8 September 2010, as per provisional data from the stock exchanges. Domestic funds sold shares worth a net Rs 98.21 crore on that day.

Foreign funds have bought shares worth a net Rs 1932.75 crore in the first few days this month, as per data from the stock exchanges. The inflow has reached Rs 21427.85 crore in calendar 2010.

The Union Cabinet today approved divestment of stake in state-run Manganese Ore. The timing of the initial public offering would depend on market conditions and the advice given by the lead managers, Home Minister P. Chidambaram said. The Centre, which currently holds 81.57% stake in the firm, will sell 10% while the state governments of Maharashtra and Madhya Pradesh would sell five percent each, the government said in a statement.

The industrial expansion is likely to slow down in coming months, though farm growth would pick up in the second half of the year, Montek Singh Ahluwalia, deputy chairman of the Planning Commission, said on Thursday.

Food inflation accelerated in late August 2010, even as inflation in the Non-Food space declined and remained steady in the Fuel & Power group, data released by the Government showed today, 9 September 2010. Year-on-year inflation in the Food Articles group rose to 11.47% in the year through 28 August 2010, up from 10.86% in the previous week, the Commerce & Industry Ministry said today.

Inflation in the Primary Articles group, too, rose to 15.40% from 15.19% in the week ended 21 August 2010. But, inflation in the Non-Food group fell to 20.43% from 21.29%. Annual inflation in the Fuel & Power group and the Minerals group stood unchanged at 12.71% and 47.79%, respectively.

The yield on the benchmark 10-year 2020 bond was hovering at 7.91%, lower than Wednesday's (8 September 2010) close of 7.94%. The yield on the second most traded, 8.13% 2022 bond was hovering at 8.04%, higher than Wednesday's close of 8.03%.

The global recovery looks to be slowing more than expected as growth weakens in the world's rich economies, and monetary stimulus should be extended or stepped up if the slowdown proves more than momentary, the Organisation for Economic Co-operation and Development said on Thursday. The OECD forecast growth across the G7 group of major economies to average an annualised 1.4% in the third quarter and 1% in the fourth, down from 3.2% and 2.5% in the first and second quarters respectively.

European shares pared initial losses and turned positive on Thursday as stronger banks and miners offset weaker retailers and telecoms. The key benchmark indices in UK, France and Germany were up by between 0.46% to 0.85%.

Investor concerns over the European economy receded a bit after a successful auction of Portuguese government debt on Wednesday, 8 September 2010.

Asian markets were mixed. Shares of banks and property developers led decline in Chinese stocks on persistent concerns that Beijing would roll out further tightening measures. The Shanghai Composite index was down 1.44%. But, Hong Kong's Hang Seng rose 0.37%.

In South Korea, the Seoul Composite rose 0.29% after the Bank of Korea kept interest rates on hold. The Bank of Korea unexpectedly left its benchmark interest rate unchanged amid concerns slowing external demand will hurt exports in Asia's fourth- biggest economy. Governor Kim Choong Soo kept the seven-day repurchase rate at 2.25%, the central bank said in a statement in Seoul today.

Japanese stocks were lifted by gains in both US and European stocks on Wednesday, 8 September 2010. The Nikkei 225 average was up 0.82%. Indonesia markets were shut for a holiday.

Sentiment in Sydney was lifted by better-than-expected employment data for August which indicated a 30,900 rise in jobs compared with market expectations of a 25,000 increase.

US index futures reversed initial losses. Trading in US index futures indicated that the Dow could gain 35 points at the opening bell on Thursday, 9 September 2010.

US stocks rose on Wednesday, 8 September 2010, after the Federal Reserve's Beige Book report indicated the US economic expansion was continuing, albeit with widespread signs of a deceleration compared with preceding periods. The Dow Jones Industrial Average gained 0.5% to close at 10,387.01. The S&P 500 index rose 0.6% to 1,098.87, while the Nasdaq rose 0.9% to 2,228.87.

Investors are eying the US weekly jobless claims data due later in the global for further cues about the strength of the economy.

Closer home, good monsoon rains this season will raise farm output, boost rural incomes and lower food inflation. Good rains in August 2010 and in the first week of September 2010 has strengthened the optimism about a record kharif harvest this season. Further, the weather office's prediction that the monsoon will not start withdrawing before mid-September 2010 has boosted the outlook for the next rabi as well.

The monsoon rains were 26% above normal in the week to 8 September 2010, the weather office said today, 9 September 2010. The weekly reading reflects above-average showers over most parts of the country, except in the eastern region. Total rainfall since 1 June 2010 was 1% above normal.

The kharif sowing is more or less over in most of the country, barring some pockets in the east where soil moisture remained inadequate for seeding till the second half of August 2010. Paddy growers in such tracts of Jharkhand, West Bengal and Bihar are now sowing alternative crops like urad, moong, nigerseed and fodder on the advice of agriculture experts and officials of the state agriculture departments, as per media reports.

The India Meteorological Department (IMD) expects 15% excess rainfall in September 2010, the last month of the four-month monsoon season (June to September). While the traditional high rainfall region in the east and north-east has remained rain deficient in this monsoon this, the usually arid tracts, such as western Rajasthan, Leh and Ladakh in Jammu and Kashmir, Vidarbha, Marathwada, Saurashtra and Kutch, have got excess rainfall in the current monsoon season. This has facilitated extensive sowing of coarse cereals, pulses and cotton in these tracts, as per media reports. High ruling prices of these commodities has also encouraged the farmers to go for these crops.

The good and sustained waterfall since the last week of July, moreover, has refilled most of the reservoirs which were depleted substantially due to last year's drought. According to the Central Water Commission, total water stock in the 81 major reservoirs was 90.777 million cubic metres (BCM) on 1 September 2010. This level is nearly 34% above the last year's corresponding level and 2% above the long period average.

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 BSE 30-share Sensex was up 132.95 points or 0.71% to 18,799.66, its highest closing level since 18 January 2008. The index rose 156.46 points at the day's high of 18,823.17 in late trade. The index rose 2.41 points at the day's low of 18,669.12 in early trade.

The S&P CNX Nifty was up 32.20 points or 0.57% at 5,640.05, its highest closing level since 18 January 2008. The index hit high of 5,647.45 in late trade.

The BSE Mid-Cap index rose 0.68% and the BSE Small-Cap index rose 0.32%. Both these indices underperformed the Sensex.

The banking index Bankex (up 2.19%), Capital Goods index (up 0.82%) and PSU index (up 0.74%), outperformed the Sensex.

The BSE Oil & Gas index (down 0.27%), Healthcare index (down 0.16%), FMCG index (up 0.04%), Auto index (up 0.19%), IT index (up 0.25%), Power index (up 0.36%), Metal index (up 0.41%), Realty index (up 0.49%) and Consumer Durables index (up 0.59%) underperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1573 shares rose while 1381 shares declined. A total of 96 shares remained unchanged. The breadth was much stronger earlier in the day.

From the 30-share Sensex pack, 18 stocks rose while the rest of them fell.

BSE clocked turnover of Rs 4811 crore, lower than Rs 6159.55 crore on Wednesday, 8 September 2010.

Index heavyweight Reliance Industries fell 0.22% to Rs 957.95. The stock was volatile. It hit a high of Rs 967 and a low of Rs 955.10. RIL said on 1 September 2010, it bought additional 26.7 lakh shares or about 0.68% stake in EIH, raising its stake in the hotel chain to 14.8%. RIL had early last week bought a 14.12% stake in EIH from EIH promoters in an off-market deal valued at Rs 1,021 crore, or an average price of Rs 184 a share.

Some high beta realty stocks rose on renewed buying. Indiabulls Real Estate, DLF, Omaxe, Phoenix Mills and Parsvnath Developers rose by between 0.14% to 3.95%.

Banking stocks rose on expectations of pick up in credit offtake in an expanding economy. India's largest bank by net profit and branch network State Bank of India (SBI) rose 3.05% to Rs 2982.50. The stock hit record high of Rs 2999.95 today. State Bank of India recently said the executive committee of the central board of the bank has accorded approval for raising tier II capital by way of public issue of lower tier-II bonds for an amount of Rs 500 crore, with an option to retain 100% oversubscription (green shoe option).

State Bank of India Chairman O.P. Bhatt said on Tuesday, 7 September 2010, that loan quality in the banking sector had deteriorated in the last two years.

India's second largest private sector bank by net profit HDFC Bank rose 2.67%. The bank on Monday, 6 September 2010, raised its benchmark prime lending rate (BPLR) by 50 basis points to 16.25%.

Bank of Baroda and Bank of India rose by between 0.13% and 5.47%. But, Punjab National Bank fell 0.4% in volatile trade.

India's largest private sector bank by net profit ICICI Bank rose 2.48%, reversing initial losses.

Consumer durables stocks rose on renewed buying. Rajesh Exports, Gitanjali Gems and Videocon Industries rose by between 0.19% to 1.93%.

Larsen & Toubro (L&T) rose 0.98%. The company's subsidiary, L&T Infrastructure Finance, is reportedly targeting a disbursement of Rs 5,000-5,500-crore in the current fiscal ending March 2011.

Among other capital goods stocks, ABB, SKF India, BEML, Bharat Electronics, Siemens, Bharat Heavy Electricals, Bharat Bijlee, Jyoti Structures rose by between 0.04% to 3.45%.

Tea plantation firms rose on reports tea prices in India may rise after pest damaged crop in the main growing area of the northern region. Harrisons Malayalam, Jayshree Tea, Mcleod Russel rose by between 0.16% to 8.22%.

Reports citing the Tea Board indicated that production in Assam, which produces half of total tea output, fell 7% to 204.5 million kilograms in the seven months ended July 2010 because of pest attacks.

IT stocks fell on reports the US state of Ohio has banned outsourcing of government IT and back-office projects to offshore locations such as India. The move has raised fears of similar measures by other American states that are struggling to cope with high unemployment rates. India's largest software services exporter by sales TCS fell 0.56%. India's third largest software services exporter Wipro fell 0.49%. Wipro has appointed billionaire founder-chairman Azim Premji's oldest son Rishad Premji as chief strategy officer.

But, India's second largest software services exporter by sales Infosys rose 0.67%.

High beta metal stocks were mixed. Sesa Goa, JSW Steel, National Aluminum Company, Sterlite Industries, Tata Steel, Hindalco Industries fell by between 0.18% to 1.14%. But, Steel authority of India, Jindal Steel & Power, Hindalco Industries, Tata Steel rose by between 0.45% to 2.38%. LMEX, a gauge of six metals traded on the London Metal Exchange rose 0.94% on Wednesday, 8 September 2010.

FMCG stocks rose on expectations good rains will lifted demand for FMCG products from rural markets. The rural market contributes substantially to the sales of FMCG firms. Godrej Consumer Products, United Spirits, Dabur India, Hindustan Unilever, Britannia Industries and Tata Global rose by 0.16% to 2.2%.

Auto stocks were mixed. India's top small car maker by sales Maruti Suzuki India rose 0.49%. The company on Tuesday, 7 September 2010, said it will invest Rs 1925 crore for setting up its second plant at Manesar, Haryana, to take annual production capacity to 1.75 million units from the present 1.2 million units. The expansion will be funded by internal accruals.

Maruti's total sales grew 23.6% to 1.04 lakh vehicles in August 2010 over August 2009. This is the highest ever monthly sales recorded by the company.

India's largest tractor and utility vehicles maker Mahindra & Mahindra (M&M) rose 3.16%, with the stock gaining for the second straight day. M&M's auto sales jumped 29% to 28,903 units in August 2010 over August 2009.

But, Bajaj Auto fell 1.46%, with the stock falling for the third straight day. Total sales rose 55% to 329,364 units in August 2010 over August 2009. India's largest bike maker by sales Hero Honda Motors fell 0.10%. The company reported 2.16% rise in total vehicle sales to 4.24 lakh units in August 2010 over August 2009.

India's largest truck maker by sales Tata Motors fell 1.58%. Total sales rose 32% at 65,938 units in August 2010 over August 2009. However, on a month-month basis, the sales were down 2.7%.

Some auto ancilliary stocks rose on strong vehicle sales in August 2010. Bharat Seats, Ramkrishna Forging, Sona Kayo Steering and Bharat Forge rose by between 0.07% to 5.26%.

Car sales in India rose an annual 33.2% in August, an industry body said on Thursday, as a rapidly expanding economy continues to pull buyers to showrooms. Car firms sold 1,60,794 cars in the month, data from the Society of Indian Automobile Manufacturers (SIAM) showed. Sales of trucks and buses, a barometer of economic activity, rose 28.1% to 52,030 units in August, SIAM said.

Gujarat Pipavav Port (GPPL) settled at Rs 54.05 on BSE, a premium of 17.5% over the initial public offer (IPO) price of Rs 46. The stock debuted at Rs 56.25, a 22.28% premium over the initial public offer (IPO) price.

Gujarat Pipavav Port clocked the highest volume of 5.79 crore shares on BSE. Karuturi Global Solutions (3.13 crore shares), Cals Refineries (3.1 crore shares), Sanraa Media (1.99 crore shares) and Ispat Industries (1.56 crore shares) were the other volume toppers in that order.

Gujarat Pipavav Port clocked the highest turnover of Rs 313.17 crore on BSE. State Bank of India (Rs 203.61 crore), Parekh Aluminex (Rs 160.43 crore), Tata Steel (Rs 135.72 crore) and Midfield Industries (Rs 130.94 crore) were the other turnover toppers in that order.