Sensex regains 18,000

Firm global markets helped Indian stocks recover from 9-week lows hit in mid-afternoon trade. Intraday volatility was high as traders rolled over positions in the derivatives segment from the near-month May 2011 series to June 2011 series, ahead of the expiry of the May 2011 derivatives contracts on Thursday, 26 May 2011. The BSE 30-share Sensex was up 18.64 points or 0.1%, up close to 80 points from the day's low and off close to 100 points from the day's high.



The Sensex regained the psychological 18,000 mark, a day after falling below that mark on Monday, 23 May 2011. The S&P CNX Nifty skidded below 5,400 mark after regaining that mark earlier in the day. The market breadth, indicating the health of the market, was negative.

FMCG stocks declined. Realty major DLF also fell ahead of its Q4 results due today. Other realty stocks also declined. Capital goods stocks rose. Banking, IT and auto stocks were mixed. Index heavyweight Reliance Industries (RIL) edged higher.

The market was volatile. The Sensex surged in early trade as bargain hunting emerged after a recent steep slide. The market came off highs later. The key benchmark indices regained strength after hitting fresh intraday lows in morning trade. The market once again trimmed gains in mid-morning trade. The market held positive zone in early afternoon trade. The market hit a fresh intraday high in afternoon trade. The market reversed direction in mid-afternoon trade. The market once again regained positive terrain in late trade.

The BSE 30-share Sensex was up 18.64 points or 0.1% to 18011.97. The index rose 117.06 points at the day's high of 18,110.39 in afternoon trade. The Sensex fell 59.39 points at the day's low of 17,933.94 in mid-afternoon trade, its lowest closing level since 22 March 2011.

The S&P CNX Nifty was up 8.30 points or 0.15% to 5,394.85. The Nifty hit low of 5,367.45 in intraday trade, its lowest level since 21 March 2011.

The BSE Mid-Cap index was flat. The BSE Small-Cap index fell 0.04%. Both these indices underperformed the Sensex.

The market breadth, indicating the health of the market, was negative. On BSE, 1448 shares declined while 1301 shares advanced. A total of 127 shares remained unchanged.

Among the 30-member Sensex pack, 16 stocks rose while the rest of them declined.

BSE clocked turnover of Rs 2592 crore, lower than Rs 2607.78 crore on Monday, 23 May 2011.

Index heavyweight Reliance Industries (RIL) rose 0.8% to Rs 915.25 after gyrating between Rs 920.95 and Rs 908. RIL's fuel exports reportedly rose 25% in the first half of May 2011 from a month earlier as it shipped more gasoline to the US and demand for jet fuel grew. RIL exported at least 1 million metric tons of fuel products from its Jamnagar, Gujarat facility in the first half of May 2011 from 800,000 tons in the first half of April 2011.

Separately, RIL is reportedly in talks with banks to arrange as much as $1.5 billion in dollar-denominated loans to replace debt maturing in about two years that has higher interest costs.

Reliance Communications rose 0.92% on reports the company added 29.4 lakh cellular users in April 2011 to have a total mobile subscriber base of 13.87 crore.

Reliance Infrastructure declined 1.88% and was the top loser from the Sensex pack.

India's largest realty firm by sales DLF shed 1.84% ahead of its Q4 results due today. Among other realty stocks, Unitech, Indiabulls Real Estate and Orbit Corporation fell by between 0.19% to 2.22%.

Cigarette major ITC fell 1.45% on profit taking. ITC's net profit rose 24.63% to Rs 1281.48 crore on 16.53% rise in total income to Rs 6062.15 crore in Q4 March 2011 over Q4 March 2010. The company announced Q4 results on Friday, 20 May 2011.

India's biggest FMCG firm in terms of revenue, Hindustan Unilever, fell 0.54%.

India's largest engineering and construction firm by sales Larsen & Toubro gained 1.75% on healthy order book position at the firm. L&T said at the time of announcing Q4 March 2011 results on Thursday, 19 May 2011, that it is well positioned to sustain the revenue growth momentum in the medium term given its excellent execution capabilities, presence in diverse sectors of the economy, a healthy order book and leadership position in most of the sectors where it operates.

As on 31 March 2011, the company's order book stood at Rs 130217 crore, which is almost 3 times its net sales of Rs 43495.93 crore for the year ended March 2011, giving strong revenue visibility. The company's order inflow rose 27% in Q4 March 2011. The company said the completion of the several expansion projects underway will strengthen its position of pre-eminence in its various businesses. The company also said that intense competition and spiraling input costs may exert some pressure on the operating margin going forward.

Meanwhile, company said today that its shareholders have passed the ordinary resolution for transfer of Electrical & Automation Business of the company to a subsidiary or associate company or to any other entity. The board of Larsen & Toubro (L&T) at its meeting held on 6 April 2011 had approved transfer of the electrical and automation business of the company to a subsidiary or associate company or to any other entity as a going concern. L&T said this restructuring of the business is required so that it is able to realize its full growth potential and participate comprehensively in the growth of the industry.

The electrical and automation business of L&T offers products and solutions in the electrical distribution and industry automation space. This division is a leader in low voltage switchgear market in India. Over the years, the division has extended the portfolio to become an integrated solutions provider for its customers.

India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) rose 0.73% on bargain hunting after the stock slumped 6.69% on Monday on worries of pricing of the proposed follow-on public offer (FPO) at a discount to the ruling market price. The company's board on Monday approved disinvestment of 5% of the paid up equity capital of the company out of Government of India's shareholding, with reservation of 10% of the issue for employees, subject to the approval of the Government of India. Usually, a large follow-on public offer from a state-run firm is priced at a discount to the ruling market price to attract investors. Government of India holds 67.72% stake in Bhel (as at end March 2011).

Bhel's board of directors recommended a 5-for-1 stock split at the time of announcement of Q4 March 2011 results during trading hours on Monday. Bhel's net profit jumped 46.5% to Rs 2798.04 crore on 32.17% growth in net sales/income from operations to Rs 17921.43 crore in Q4 March 2011 over Q4 March 2010. Net profit rose 39.4% to Rs 6011.20 crore on 26.4% growth in net sales/income from operations to Rs 41578.80 crore in the year ended March 2011 (FY 2011) over the year ended March 2010 (FY 2010).

Among other capital goods stocks, Thermax, ABB and Crompton Greaves rose by between 0.37% to 1.6%.

Banking majors were mixed. India's largest private sector bank by net profit ICICI Bank gained 1.27%. The bank announced on Friday, 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 fell 0.4%, reversing initial gains. 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) dropped 1.39%, extending six-day 14.95% decline on 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.

A committee set up by the Reserve Bank of India (RBI) on introduction of financial holding company (FHC) structure in India has suggested that FHC model should be pursued as a preferred model for the financial sector in India. The FHC model can be extended to all large financial groups -- irrespective of whether they contain a bank or not, the RBI committee report said. Therefore, there can be banking FHCs controlling a bank and non-banking FHCs which do not contain a bank in the group, the report said.

Intermediate holding companies within the FHC should not be permitted due to their contribution to the opacity and complexity in the organisational structure, the report said. The FHC should primarily be a non-operating entity and should be permitted only limited leverage as stipulated by RBI. However, it could carry out activities which are incidental to its functioning as an FHC. The FHCs should be permitted to carry out all financial activities through subsidiaries. The activities in which the FHCs should not engage or should engage only up to a limit, e.g., commercial activities, should be stipulated by the Reserve Bank of India, it said.

The FHC should be well diversified and subject to strict ownership and governance norms. The ownership restrictions could be applied either at the level of their FHCs or at the entity level, depending upon whether the promoters intend to maintain majority control in the subsidiaries wherever it is permissible as per law, the report said.

Power Grid Corporation of India fell 0.55%. Net profit rose 32.13% to Rs 2696.89 crore on 21.27% rise in total income to Rs 9099.80 crore in the year ended March 2011 over the year ended March 2010. The result was announced during trading hours today.

Auto shares were mixed. India's largest car maker by sales Maruti Suzuki India fell 0.43%, reversing initial gains. India's top bike maker by sales Hero Honda Motors rose 1.33%, reversing initial losses.

India's second largest bike maker by sales Bajaj Auto rose 0.39%. 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. The result was announced last week. Huge extraordinary (EO) income boosted Bajaj Auto's net profit in Q4 March 2011.

India's largest truck maker by sales Tata Motors fell 0.64%. The company's global sales rose 12% to 87,114 units in April 2011 over April 2010 on good demand for both commercial and passenger vehicles. The company unveils its year ended March 2011 result on 26 May 2011.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 0.08%, reversing initial losses. The company unveils its year ended March 2011 result on 30 May 2011.

IT stocks were mixed. India's third largest software exporter Wipro fell 0.16%. Nucleus Software Exports today said it has formed a strategic partnership with Wipro to jointly provide product led customized solutions to banking clients. Shares of Nucleus Software jumped almost 8%. India's largest software services exporter TCS declined 1.07%. India's second largest software services exporter Infosys rose 0.33%

Metal stocks were mixed after LMEX, a gauge of six metals traded on the London Metal Exchange, slumped 2.68% on Monday, 23 May 2011. Hindalco Industries, Sail, Sesa Goa and Nalco fell by between 0.95% to 1.96%. Hindustan Zinc, Jindal Steel & Power, Sterlite Industries and Tata Steel rose by between 0.03% to 1.24%.

Sanghvi Forging & Engineering clocked highest volume of 1.46 crore shares on BSE. Mahindra Satyam (64.53 lakh shares), Cals Refineries (58.57 lakh shares), Unitech (56.45 lakh shares) and Teledata Tech (55.87 lakh shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 159.10 crore on BSE. Sanghvi Forging & Engineering (Rs 154.41 crore), TTK Prestige (Rs 103.27 crore), Kirloskar Oil (Rs 71.28 crore) and Bhel (Rs 67.61 crore) were the other turnover 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 2407 companies rose 18.6% to Rs 71748 crore on 23.4% rise in sales to Rs 760692 crore in Q4 March 2011 over Q4 March 2010.

European stock markets rose Tuesday, helped by gains for commodity-related stocks and positive broker opinions on Pernod Ricard SA and K+S AG. The key benchmark indices in UK, Germany and France were up by between 0.17% to 0.65%.

Most Asian equities edged higher in volatile trade on Thursday. The key benchmark indices in Japan, Indonesia, Taiwan, Hong Kong, Singapore and South Korea rose by between 0.09% to 0.29%. China's Shanghai Composite fell 0.25%.

Trading in US index futures indicated that the Dow could gain 22 points at the opening bell on Tuesday, 24 May 2011.