Market extends gains for the second straight day

The key benchmark indices extended gains for the second straight day to hit one-week highs buoyed by firm global stocks. The BSE Sensex was up 221.46 points or 1.23%, up close to 180 points from the day's low and off close to 35 points from the day's high. The market breadth was strong. Index heavyweight Reliance Industries (RIL) edged higher. Banking and realty stocks gained for the second straight day on
bargain hunting after recent steep slide.



Metal stocks rose on firm global commodity prices. Hindalco Industries surged after the company's US subsidiary Novelis reported turnaround Q4 March 2011 results. Tata Motors slumped after the commercial vehicles (CV) major said current macro economic factors like high inflation, rising interest rates and slower industrial growth have the potential to adversely impact CV demand. Reliance Communications (RCom) surged after the company said it has drawn the third and final tranche of Rs 1200 crore from China Development Bank.

The market pared gains after a firm start. The market trimmed gains once again after regaining strength to hit a fresh intraday high in morning trade. The Sensex surged to hit fresh intraday high in mid-morning trade. It pared gains later. Firmness prevailed in early afternoon trade. Upbeat start from European markets helped the barometer index BSE Sensex hit one-week high in afternoon trade. The market extended gains in mid-afternoon trade. The market held firm in late trade.

The BSE Sensex was up 221.46 points or 1.23% to 18,266.10, its highest closing level since 20 May 2011. The Sensex jumped 254 points at the day's high of 18,298.64 in mid-afternoon trade. The index rose 42.52 points at the day's low of 18,087.16 in early trade.

The S&P CNX Nifty was up 63.75 points or 1.18% to 5,476.10, its highest closing level since 20 May 2011. The Nifty hit a high of 5,485.80 in intraday trade.

The BSE Mid-Cap index rose 1.48% and outperformed the Sensex and the BSE Small-Cap index gained 0.89% and underperformed the Sensex.

The market breadth, indicating the health of the market, was strong. On BSE, 1716 shares advanced while 1085 shares declined. A total of 130 shares remained unchanged.

Among the 30-member Sensex pack, 23 stocks advanced while rest of them declined.

BSE clocked turnover of Rs 2564 crore, lower than Rs 2679.76 crore on Thursday, 26 May 2011.

Index heavyweight Reliance Industries (RIL) gained 1.4% on reports the company has submitted an expression of interest to buy Australia's Premier Coal, a division of ASX-listed Wesfarmers Group. Premier Coal has proven coal reserves of 129 million tonnes and currently produces 4 million tonnes of coal. Separately, RIL and DE Shaw joint venture (JV) reportedly plans to offer the entire spectrum of financial services, including retail, investment banking and broking. It will initially focus on institutional and asset management business

India's largest oil exploration firm by sales ONGC advanced 3.17%, extending Thursday's 4.44% surge triggered by reports the subsidy share of upstream oil companies for the year ending March 2012 (FY 2012) will be restored to 33% from 38.5% in the year ended March 2011 (FY 2011). The ONGC stock had tumbled recently after the government increased the subsidy burden of upstream oil companies on fuel sales to 38.5% from 33% earlier.

ONGC announces its year ended March 2011 results on Monday, 30 May 2011. ONGC has reportedly hired a global consultancy firm to come up with a redevelopment plan for the Bombay High oilfield to arrest decline in production.

Shares of state-run oil marketing firms rose on reports a panel of ministers led by Finance Minister Pranab Mukherjee will meet on 9 June 2011 and discuss increase in diesel, kerosene and cooking gas prices. A price hike, if any, will reduce under recoveries. BPCL gained 2.31% and Indian Oil Corporation advanced 4.45%.

HPCL surged 4.88% after net profit rose 48.2% to Rs 1122.66 crore on 26.6% rise in net sales to Rs 39666.84 crore in Q4 March 2011 over Q4 March 2010. The company announced the results after market hours on Thursday, 26 May 2011.

India's second largest listed cellular services provider by sales Reliance Communications (RCom) jumped 5.66% after the company said it has drawn the third and final tranche of Rs 1200 crore from China Development Bank. The company made this announcement during trading hours today, 27 May 2011. RCom said the Chinese loan will help it refinance short-term rupee borrowings, which will result in substantial saving in interest costs apart from extending the company's debt maturity profile.

Reliance Power (RPower) jumped 4.98% after company announced during market hours today that consolidated net profit jumped 101.96% to Rs 186.63 crore on 624.54% spurt in total income to Rs 598.18 crore in Q4 March 2011 over Q4 March 2010. Net Profit rose 11% to Rs 760 crore on 124% rise in total income to Rs 1892 crore in the year ended March 2011 over the year ended March 2010.

Most FMCG stocks rose in a firm market. ITC, Nestle India and United Spirits rose by between 1.15% to 3.19%.

Realty stocks rose for the second straight day on bargain hunting. Ackruti City, DLF, Indiabulls Real Estate and Unitech rose by between 1.86% to 4.19%.

Housing Development & Infrastructure surged 3% after net profit rose 10.95% to Rs 197.32 crore on 20.65% increase in income from operations to Rs 523.71 crore in Q4 March 2011 over Q4 March 2010. The result hit the market during trading hours.

India's second largest software services exporter Infosys rose 0.31% on bargain hunting. The stock was under selling pressure recently after the IT firm on Tuesday said it had received a subpoena from a grand jury in a US district court that requires the company to provide certain documents and records related the company's sponsorships for and uses of B1 business visas. Infosys said it intends to comply with the subpoena and to cooperate with the investigation.

India's largest software services exporter TCS gained 0.79%, with the stock gaining for the second straight day.

India's third largest software exporter Wipro gained 1.38%, with the stock snapping four days' losses. Wipro Infrastructure Engineering -- a division of company has signed an agreement with Spanish Company CESA for the manufacture of precision engineered components for the aerospace and defence sector. The agreement involves transfer of technology as well as manufacturing workload for aerospace actuators and related precision engineering components from CESA to Wipro. The announcement was made after trading hours on Wednesday.

Banking stocks rose for the second straight day on bargain hunting after recent steep slide. India's largest private sector bank by net profit ICICI Bank jumped 4.23%. The bank announced on 20 May 2011 that it has successfully priced issue of 5.5 year $1 billion international bond offering. The bonds carry a coupon rate of 4.75%.

India's second largest private sector bank by net profit HDFC Bank gained 1.39%. The bank raised its base rate by 55 basis points (bps) to 9.25% per annum and prime lending rate (PLR) by 50 bps to 17.75% effective 12 May 2011.

India's largest commercial bank by branch network State Bank of India (SBI) rose 2.09%, on bargain hunting after recent steep losses triggered by weak Q4 results. Net profit slumped 98.88% to Rs 20.88 crore on 18.07% rise in total income to Rs 26536.84 crore in Q4 March 2011 over Q4 March 2010. The result was announced on 17 May 2011.

Metal stocks gained on firm global commodity prices. Jindal Steel & Power, Sesa Goa, Sail, JSW Steel, Hindustan Zinc, Nalco and Sterlite Industries gained by between 0.24% to 3.79%.

India's largest steel maker by sales Tata Steel gained 2.23% extending Thursday's near 2% rise triggered by turnaround results for the year ended March 2011 (FY 2011). The company reported consolidated net profit of Rs 8982.69 crore in the year ended March 2011 compared with a net loss of Rs 2099.22 crore in the year ended March 2010. The company's total income rose 15.59% to Rs 119734.10 crore in the year ended March 2011 over the year ended March 2010. The result was announced after trading hours on Wednesday.

Hindalco Industries surged 5.78% after company's US subsidiary Novelis reported turnaround Q4 March 2011 results. Novelis reported net profit of $50 million for Q4 March 2011 as against a net loss of $1 million for Q4 March 2010. Top-line jumped 22.3% to $2.96 billion in Q4 March 2011 over Q4 March 2010. The turnaround result was largely due to higher prices and portfolio optimization.

Regarding the outlook for the year ending March 2012 (FY 2012), Novelis said it expects continued strong demand in its key product segments in FY 2012. As a result, capital expenditure for FY 2012 is projected at between $550 million to $600 million. The majority of this capital expenditure is earmarked for strategic investments, which include Brazilian and Asian rolling mill expansions; strategic automotive capacity increase in North America; and recycling initiatives across the operating regions. Novelis said it plans to primarily use its strong operating cash flow to fund these capital expenditures.

Reliance Infrastructure (R-Infra) gained 3.85% after the firm said after market hours on Thursday, 26 May 2011, it bought-back 2 lakh equity shares on Thursday under its buy-back programme. The company has so far bought 18 lakh shares under the buy-back program aggregating Rs 115.58 crore. The company has set aside Rs 1000 crore for share buyback.

India's largest commercial vehicles (CV) maker by sales, Tata Motors, slumped 6.25% and was the top loser from the Sensex pack after the company said at the time of announcing the year ended March 2011 (FY 2011) results after trading hours on Thursday, 26 May 2011, that the current macro economic factors like high inflation, rising interest rates, slower industrial growth have the potential to adversely impact CV demand. The company also said that commodity prices and concerns about rising costs continue for the CV division.

The company said freight rates continue to appear healthy with demand in haulage segments being robust. Increase in infrastructure spending could propel demand for MHCV trucks, it said. Services and agriculture sector along with rural connectivity, proliferation of hub & spoke model and demand of passenger applications is expected to drive growth in LCV/SCV segment. Tata Motors said it proposes to ramp up production of Ace family vehicles via additional capacity in Dharwad. In May 2011, the Ace family was expanded to include Magic Iris and Ace Zip. Tata Motors said future products in pipeline for the year ending March 2012 (FY 2012) include variants from MHCV and Prima range and World LCV range. Tata Motors also intends to extend export potential for CVs.

With regard to the outlook on its passenger vehicles (PV) division, Tata Motors said increased focus on rural markets is expected to drive volume growth. The company said it will continue transformation and strengthening of the existing product portfolio through improved value propositions and exploiting emerging trends. The company said it will leverage young product portfolio to strengthen market position. Tata Motors intends to further expand sales and service network in India and enhance customer care.

Tata Motors said it will sustain low cost base with continuous cost reduction efforts in its PV division. The company intends to extend export potential of PVs and commence exports of the Tata Nano. Tata Motors said future products in pipeline for FY 2012 include Nano variants, a Vista refresh, Manza limited edition, New Safari and Aria 2WD.

Tata Motors said competitive intensity and increasing costs in the passenger vehicle segment could pose a risk to operating margins going ahead. While disposable incomes and consumption has risen, higher inflation, interest costs and fuel price increases have the potential to adversely impact demand for passenger vehicles in India, Tata Motors said.

With regard to the outlook on its British unit Jaguar Land Rover (JLR), Tata Motors said it will continue to work on profitable volume growth, managing costs and improving efficiencies to sustain the growth momentum. The company said it will emphasis on growth markets viz. China, Russia, India and Brazil for the two luxury brands -- Jaguar and Land Rover. The company said external geopolitical and economic factors including exchange rate, could impact volumes and profitability of JLR going ahead.

Tata Motors' consolidated net profit jumped 260.7% to Rs 9274 crore on 33.1% growth in revenue (net of excise) to Rs 123133 crore in the year ended March 2011 over the year ended March 2010. The company's board also approved a 5-for-1 stock split.

Other auto stocks were mixed. India's largest car maker by sales Maruti Suzuki India fell 0.03%. India's top bike maker by sales Hero Honda Motors declined 0.8% after jumping 3.97% on Thursday.

India's second largest bike maker by sales Bajaj Auto rose 1.47%, with the stock gaining for the second straight day. Net profit surged 164.89% to Rs 1400.39 crore on 23.54% rise in total income to Rs 4199.97 crore in Q4 March 2011 over Q4 March 2010. Huge extraordinary (EO) income boosted Bajaj Auto's net profit in Q4 March 2011. The company announced the results last week.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) gained 2.85% ahead of its year ended March 2011 result on Monday, 30 May 2011.

Power Finance Corporation fell 0.25% to Rs 199.45 after shares of the company which were issued in the recently concluded follow-on public offer were admitted to dealing today, 27 May 2011. The stock hit 52 week low of Rs 191.40 today. The company had issued shares at Rs 203 per share for qualified institutional buyers and non institutional investors while retail investors and employees were issued shares at Rs 192.85 per share.

Shares of pharmaceutical firm Aanjaneya Lifecare settled at Rs 311.25, a 33.01% premium over the initial public offer price of Rs 234. Shares of Aanjaneya Lifecare listed on the BSE at Rs 229.45, a 1.94% discount to the initial public offer (IPO) price of Rs 234.

Aanjaneya Lifecare clocked highest volume of 2.35 crore shares on BSE. Power Finance Corporation of India (1.08 crore shares), Cals Refineries (101 crore shares), Sanraa Media (96.02 lakh shares) and Asahi Infrastructure (84.12 lakh shares) were the other volume toppers in that order.

The Q4 March 2011 results announced so far have been a mixed bag. The combined net profit of a total of 2646 companies rose 15.2% to Rs 79407 crore on 23.1% rise in sales to Rs 860537 crore in Q4 March 2011 over Q4 March 2010.

On the macro front, the food price index rose 8.55% in the year to 14 May 2011, government data showed on Thursday, picking up pace from an annual rise of 7.47% a week ago. The gain in food prices will increase pressure on the Reserve Bank of India (RBI) to raise policy rates when it undertakes mid-quarter monetary policy review on 16 June 2011. The fuel price index climbed 12.11%, unchanged from a week earlier. The primary articles price index was up 11.60%, compared with an annual rise of 10.94% a week earlier.

The government unveils Q4 March 2011 GDP data on Tuesday, 31 May 2011.

European markets edged higher Friday with traders taking their cues from firmness in US and Asian markets on the back of rising commodity prices. The key benchmark indices in UK, Germany and France were up by between 0.43% to 1.02%.

Most Asian stocks rose on Friday, tracking overnight gains in US stocks. The key benchmark indices in Hong Kong, Indonesia, Singapore, South Korea, and Taiwan rose by between 0.25% to 0.95%. The key benchmark indices in China and Japan fell 0.98% and 0.42% respectively.

Fitch Ratings said on Friday it has cut Japan's outlook to negative from stable, citing considerable downside risk for its public finances from still unknown costs of containing a crisis at the crippled nuclear power plant in Fukushima.

Trading in US index futures indicated that the Dow could fall 2 points at the opening bell on Friday, 27 May 2011. US index futures reversed initial gains.