Sensex, Nifty extend rally for seventh session; settle at 2-1/2-month highs

The key benchmark indices extended their winning streak for the seventh straight session of trade to attain 2-1/2-month closing high as world stocks rose. The sentiment was also boosted by revival in foreign equity inflows. Hopes for improved relations between India and Pakistan aided the rally. The BSE 30-share Sensex was up 169.38 points or 0.89% to 19,290.18, up 111.41 points from the day's low and off 66.92 points from the day's high. The barometer index BSE Sensex has jumped 1451.13 points or 8.13% in seven trading days from its close of 17,839.05 on 21 March 2011.



Today's rally was broad-based. Except the BSE FMCG index, all the other sector indices on BSE logged gains. The market breadth was strong as small and mid-cap stocks participated in the rally. The mid and small-cap indices on BSE outperformed the Sensex.

IT pivotals were in demand on recent upbeat economic data in the US, the key market for Indian software exporters. Interest rate sensitive realty shares gained as cooling crude oil prices eased worries of a steep interest rate hike by the Reserve Bank of India to cool rising inflation. Banking pivotals extended recent gains after the government last week tabled banking sector amendment bill in parliament. Auto stocks rose ahead of the release of March 2011 sales figures starting 1 April 2011.

Cement shares rallied on optimism that the rebuilding of Japan, the world's third largest economy, will require large amounts of basic materials such as cement. Most metal stocks rose as metal prices rose in the London Metal Exchange. Telecom pivotals extended Tuesday's gains. State-run public sector oil marketing companies (PSU OMCs) rose after crude oil futures fell. Paper shares saw an across the board rally after International Paper, a US-based paper and packaging giant, agreed to buy Andhra Pradesh Paper Mills at a significant premium to the current market price.

Oil & gas heavyweights -- Reliance Industries and ONGC rose for the second running day after they were awarded oil & gas blocks in the government auction that closed on Monday. Shares of PTC India Financial Services settled at 11% discount to the initial public offer price on its debut.

Foreign institutional investors (FIIs) bought shares worth a net Rs 1500.40 crore on Tuesday, 29 March 2011, substantially higher than an inflow of Rs 481.70 crore on Monday, 28 March 2011. FII inflow in March 2011 totaled Rs 5854.30 crore (till 29 March 2011). FIIs had sold equities worth Rs 4585.50 crore in February 2011. FII outflow in the calendar year 2011 totaled Rs 3544.40 crore (till 29 March 2011).

Cooling of oil prices from recent 2-1/2-year high has helped ease inflation worries, aiding rally in Indian stocks which ran into seventh straight session of trade today, 30 March 2011. Oil declined as signs of rising US crude supplies stoked speculation that demand may falter in the world's biggest consumer of the commodity. US crude futures were down 52 cents a barrel or 0.50% to $104.27 a barrel. Oil rose in New York on Tuesday, 29 March 2011, as troops loyal to Muammar Qaddafi dug in to block rebels advancing on his hometown of Sirte. Prices have climbed 23 percent since anti-government protests began on 15 February 2011 in Libya, cutting output in Africa's third-largest producer by two-thirds.

India imports majority of its crude oil requirements and a surge in crude oil prices to 2-1/2-year highs recently had sparked inflation and interest rates worries. High oil prices had also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position.

Hopes for improved relations between India and Pakistan has also aided the rally in Indian stocks this week. Pakistan on Tuesday, 29 March 2011, agreed to allow a team from India to travel to Pakistan to probe the 2008 Mumbai terrorists attacks, a concession meant to ease tensions as the two nations seek a peace deal. The two countries have also agreed to set up a hot line between their home secretaries' offices to allow real-time information sharing on terrorism. The foreign ministers of both nations are expected formally to restart peace talks by July 2011.

The BSE 30-share Sensex was up 169.38 points or 0.89% to 19,290.18, its highest closing since 12 January 2011. The Sensex gained 236.30 points at the day's high of 19,357.10 in afternoon trade. The index rose 57.97 points at the day's low of 19,178.77 in early trade.

The S&P CNX Nifty was up 51.30 points or 0.89% to 5,787.65, its highest closing since 12 January 2011. The Nifty a high of 5,803.15 in intraday trade.

The market breadth, indicating the health of the market, was strong. On BSE, 2081 shares advanced while 813 shares declined. A total of 95 shares remained unchanged.

The total turnover on BSE amounted to Rs 3023 crore, lower than Tuesday's Rs 3,744.99 crore.

The BSE Mid-Cap index rose 1.51% and the BSE Small-Cap index rose 2.20%. Both these indices outperformed the Sensex.

The BSE FMCG index was the lone loser among the 13 sectoral indices on the BSE. The BSE Consumer Durables (up 3.98%), the BSE Realty (up 3.14%), and the BSE Healthcare (up 1.95%), outperformed the Sensex. The BSE TecK (up 0.37%), the BSE Metal (up 0.24%), and the BSE FMCG (down 0.38%), underperformed the Sensex.

Among the 30-member Sensex pack, 27 gained while only three of them declined.

Index heavyweight Reliance Industries (RIL) rose 1.11% to Rs 1034 after gyrating between Rs 1036.80 and Rs 1024 during the day. Reportedly, RIL was awarded two blocks in the ninth round of oil and gas block auctions closed on Monday, 28 March 2011.

India's largest oil exploration firm ONGC rose 0.14% on reports a consortia led by ONGC won 10 blocks in the ninth round of oil and gas block auctions closed on Monday.

State-run public sector oil marketing companies (PSU OMCs) rose after crude oil futures fell. Bharat Petroleum Corporation (up 3.39%), Hindustan Petroleum Corporation (up 3.39%) and Indian Oil Corporation (up 4.60%), surged. Lower crude oil prices will decrease under-recoveries of state-run oil marketing companies on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.

Interest rate sensitive realty shares surged as cooling crude oil prices eased worries of a steep interest rate hike by the Reserve Bank of India to cool rising inflation. Majority of property deals are driven by finance. India's largest realty firm by market capitalization DLF surged 4.60% to Rs 265 and was the top gainer from the Sensex pack.

Unitech (up 5%), Sobha Developers (up 1.05%), HDIL (up 5.31%), Orbit Corporation (up 2.70%), Indiabulls Real Estate (up 2.15%), DB Realty (up 18.24%), edged higher.

IT pivotals were in demand on recent upbeat economic data in the US, the key market for Indian software exporters. India's largest software services exporter TCS soared 1.24% after the company inaugurated its first learning and development centre for campus trainees in Hyderabad on Tuesday, 29 March 2011. The facility is equipped to train 6,000 professionals in a year.

India's second largest software services exporter Infosys rose 0.25% and India's third largest software services exporter Wipro gained 1.39%.

Banking pivotals extended recent gains after the government last week tabled banking sector amendment bill in parliament. India's largest bank by net profit and branch network State Bank of India rose 3.84%. Reportedly, the bank will launch its Rs 20000 crore rights issue after the first quarter of the fiscal year beginning in April 2011. The issue will raise half the amount needed to sustain the bank's growth over the next five years.

India's second largest private sector bank by net profit HDFC Bank rose 1.36%, extending five-day gains. India's largest private sector bank by net profit ICICI Bank was up 1.07%.

Auto stocks were also in demand ahead of the release of March 2011 sales figures starting 1 April 2011. India's largest tractor maker by sales Mahindra & Mahindra (M&M) surged 3.31%, extending four-day 6.27% gains.

India's top truck maker by sales Tata Motors rose 1.04% after its ADR advanced 2.29% on Tuesday, 29 March 2011. India's largest car maker by sales Maruti Suzuki India rose 1.67% while India's second largest bike maker by sales Bajaj Auto gained 0.67%.

India's largest two-wheeler maker by sales Hero Honda Motors rose 0.26% after the Cabinet Committee on Economic Affairs, headed by Prime Minister Manmohan Singh, on Tuesday approved Hero Investment's proposal to receive foreign direct investment (FDI) of Rs 4500 crore. Earlier this month, Hero Investments agreed to buy Honda Motors' 26% stake in Hero Honda Motors for around $851 million, with the Japanese automaker exiting its joint venture in India after more than 26 years.

Most metal stocks edged higher as metal prices rose on the London Metal Exchange. Sterlite Industries (India) (up 0.94%), Tata Steel (up 0.44%), Sesa Goa (up 0.47%), Jindal Saw (up 2.63%), edged higher. Hindustan Zinc (down 3.35%), and Sail (down 0.80%), and Nalco (down 0.35%), declined.

India's largest private sector aluminium maker by sales Hindalco Industries lost 1.13% to Rs 205.45 and was the top loser from the Sensex pack.

Telecom pivotals extended Tuesday's gains on reports Communications and IT Minister Kapil Sibal on Monday met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee to seek their intervention for the loans to telecom companies as the controversial 2G spectrum allocation virtually blocked flow of funds to the telecom companies.

India's largest listed cellular services provider by sales Bharti Airtel rose 0.28%, extending six-day 13.28% rally. India's second largest listed cellular services provider by sales Reliance Communications rose 0.18%, extending Tuesday's 4.18% surge.

Anil Ambani-led power generation major Reliance Infrastructure advanced 0.49%. After market hours on Tuesday, Reliance Infrastructure announced an up to Rs 1000-crore share buy-back offer to buy up to 8.34% shares from public shareholders. The company has set maximum buyback price at Rs 725 a piece. The buyback opens on 5 April 2011 and closes on 13 February 2012.

India's largest power utility firm by capacity NTPC rose 0.51%. After market hours on Tuesday, 29 March 2011, NTPC said that the unit number 3 of 500 megawatt of Simhadri Super Thermal Power Project has been successfully synchronised with grid on 29 March 2011 on coal firing.

Cement shares rallied on optimism that the rebuilding of Japan, the world's third largest economy, will require large amounts of basic materials such as cement. Ambuja Cements (up 9.42%), ACC (up 4.14%), Prism Cement (up 5.03%), India Cements (up 3.21%), Madras Cement (up 5.05%), UltraTech Cement (up 4.73%) and Birla Corporation (up 3.73%), and HeidelbergCement India (up 4.41%), edged higher.

Paper shares saw an across the board rally after International Paper, a US-based paper and packaging giant, agreed to buy the promoter's stake in Andhra Pradesh Paper Mills at a significant premium to the current market price. Andhra Pradesh Paper Mills was frozen at 20% upper circuit at Rs 236.15.

Ballarpur Industries (up 16.69%), West Coast Paper Mills (up 17.11%), JK Paper (up 19.96%), Tamil Nadu Newsprint & Papers (up 9.93%), Rama Newsprint (up 4.83%), Seshasayee Paper and Boards (up 14.55%), Star Paper Mills (up 19.82%) and Sirpur Paper Mills (up 19.92%) surged.

As per the deal announced after market hours on Tuesday, International Paper Co. agreed to acquire L. N. Bangur Group's entire 53.46% stake in Andhra Pradesh Paper Mills for about $257 million. The company also has agreed to a $62 million non-compete payment to the sellers. International Paper also will launch a tender offer to acquire up to an additional 21.5% of Andhra Pradesh Paper Mills for about $104 million.

Shares of PTC India Financial Services settled at Rs 24.90 on BSE, an 11.07% discount to the initial public offer price of Rs 28. The stock debuted at Rs 28, at par with the initial public offer (IPO) price. The stock hit a high of Rs 28 and low of Rs 23.50. On BSE, 2.28 crore shares were traded on the counter.

IL&FS Transportation Networks galloped 8.09% after Road Infrastructure Development Company of Rajasthan (RIDCOR), in which the company holds beneficial interest, won a road development project from the state government of Rajasthan.

State Bank of India was the top traded counter on BSE with turnover of Rs 153.36 crore followed by Titan Industries (Rs 102.17 crore), Tata Coffee (Rs 76.87 crore), PTC Financial Services (Rs 57.46 crore), and Acropetal Technologies (Rs 57.41 crore).

PTC Financial Services clocked highest volume of 2.28 crore shares on BSE. Cals Refineries (1.28 crore shares), Lloyds Steel (1.04 crore shares), Acropetal Technologies (90.53 lakh shares) and Ballarpur Industries (86.88 lakh shares), were the other volume toppers in that order.

Volatility may remain high on the bourses in the near term ahead of the expiry of derivative contracts for the near-month March 2011 series on Thursday, 31 March 2011. The near term major trigger for the market is Q4 March 2011 results which will start trickling in from about mid-April 2011

Billionaire investor and international investment icon Warren Buffett who was in his maiden visit to India last week said that he hopes to spend some money in India. His firm Berkshire Hathaway is looking to park funds in large investment destinations and India fits the bill perfectly, he said. India, according to him, is not an emerging market but a very big country with a large number of significant businesses. He said that Berkshire Hathaway would look at possible acquisitions in India as and when there were opportunities.

European stocks were firm today, 30 March 2011 as investors shrugged off Tuesday's downgrades of Portugal's and Greece's sovereign-debt ratings by Standard & Poor's and anticipated further signs of growth when the US publishes key employment data Friday, 1 April 2011. The key benchmark indices in UK, France and Germany were up by 0.53% to 1.59%.

Asian stocks extended intraday gains with China's Shanghai Composite regaining positive zone on Wednesday as Japanese companies resumed production following the 11 March 2011 earthquake and on speculation economic recovery in the US will boost earnings. The key benchmark indices in Hong Kong, Taiwan, South Korea Singapore, Japan and Indonesia were up by between 0.58% to 2.64%. However, China's Shanghai Composite fell 0.07%.

US markets closed higher on Tuesday on gains in telecom and energy companies. The Dow Jones Industrial Average finished with a gain of 81.13 points, or 0.67%, to 12279.01, while the Standard & Poor's 500-stock index gained 9.25 points, or 0.71%, to finish at 1319.44 and the Nasdaq Composite gained 26.21 points, or 0.96%, to 2756.89.

Trading in US index futures indicated that the Dow could rise 49 points at the opening bell on Wednesday, 30 March 2011.