Market at 4 week closing high

The recent resumption of buying by foreign funds along with upbeat global markets helped Indian bourses scale 4 week closing high. The BSE Sensex was up 202.19 points or 1.2%, up close to 140 points from the day's low and off close to 90 points from the day's low. BSE Sensex regained psychological 17,000 mark. The market breadth, indicating the overall health of the market, was strong.



Today's buying was broad based as reflected by gains in 12 of the 13 sectoral indices on the BSE. Index heavyweight Reliance Industries (RIL) extended Tuesday's rally after the company's partner BP Plc reportedly said it is confident of raising natural gas production from its eastern offshore KG-D6 block in two years time. Banking stocks gained on bargain hunting after recent steep losses triggered by concerns that elevated interest rates may restrict loan growth. Jaiprakash Associates jumped close to 8% on report it was in talks to sell up to 26% stake in its cement business to Mexico's Cemex and South America's Votorantim Group.

The BSE Sensex was up 202.19 points or 1.2% to 17,065, its highest closing level since 10 August 2011. The index gained 294.40 points at the day's high of 17,157.21 in mid-afternoon trade. The index rose 59.50 points at the day's low of 16,922.31 in early trade.

The S&P CNX Nifty was up 60.35 points or 1.19% to 5,124.65, its highest closing level since 11 August 2011. The index gyrated between 5,154.50 and 5,076.30 during the day.

The BSE Mid-Cap index rose 1.24% and the BSE Small-Cap index gained 1.53%. Both these indices outperformed Sensex.

The total turnover on BSE amounted to Rs 2738 crore slightly lower than Rs 2757.35 crore on Tuesday, 6 September 2011.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1933 shares advanced and 925 shares declined. A total of 105 shares remained unchanged.

Among the 30-member Sensex pack, 24 gained while only six of them declined.

Index heavyweight Reliance Industries (RIL) advanced 1.32% to Rs 831.70, off day's high of Rs 841.80. The stock extended Tuesday's 4.05% rally triggered after the company's partner BP Plc reportedly said it is confident of raising natural gas production from its eastern offshore KG-D6 block in two years time. BP last month completed a $7.2 billion acquisition of a 30% stake in 21 oil and gas blocks that RIL operates in India.

BP will pay RIL an aggregate consideration of $7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts, the two companies said in a joint statement. Further performance payments of up to $1.8 billion could be paid based on exploration success that results in development of commercial discoveries, the two companies said.

India's largest oil exploration firm by market capitalization ONGC rose 0.56% after the state-run firm filed the prospectus for its follow-on public offer with the Securities and Exchange Board of India (Sebi) on Monday, 5 September 2011. The 5% stake sale will include an offer of 41.92 crore shares to the public and a reservation of 85.53 lakh shares for employees, the firm said.

India's largest dam builder by sales Jaiprakash Associates shot up 7.7% on reports the company is exploring the option to rope in a strategic partner for its cement business. It was the top gainer from the Sensex pack. According to reports, Jaiprakash Associates is open to diluting up to 26% in the cement business. The firm has reportedly roped in a clutch of investment bankers to advise on any strategic stake sale. Preliminary talks have already begun with large South America conglomerates such as Cemex and Votorantim Group, who have a global presence but are also looking at a bigger India play. A deal, if any, may still take some time to fructify, reports added.

The company reacting to the news said after market hours today that in an expanding organization like ours, exploring various opportunities is a continuous process. As a sequel to this effort, company keeps examining various proposals. As regards the report that the company is exploring the option to dilute upto 26%, the company said that report itself contains the comments of its Executive Chairman, who had in fact denied there being any plan to rope in anybody or any partner.The company added that it has in place a restructuring committee of directors, which examines various proposals from time to time to enhance the shareholders' value and it confirmed that no such proposal has so far been put up to the said restructuring committee.

Banking pivotals gained on bargain hunting after recent steep losses triggered by concerns that elevated interest rates may restrict loan growth. India's largest private sector bank by net profit ICICI Bank rose 0.83% and India's second largest private sector bank by net profit HDFC Bank advanced 3.42%. India's largest bank by branch network and net profit State Bank of India (SBI) vaulted 2.43%.

According to the central bank's data, deposits grew 17.5% or by Rs 17798 crore to over Rs. 56.62 lakh crore during the one-year period till 26 August 2011 compared with Rs. 48.18 lakh crore as on 27 August 2010. Credit offtake grew by 20.7% to over Rs. 41 lakh crore during the one-year period ending 26 August 2011.

India's largest mortgage lender by total income Housing Development Finance Corporation (HDFC) gained 1.78%. Reportedly HDFC on Monday launched dual-rate home loans named ‘Fixed First' where interest rates are fixed for the first three or five years and then shifted to floating rates.

Most auto stocks gained. India's largest small car maker by sales Maruti Suzuki India advanced 2.04%. Maruti's sales declined 13% to 91,442 vehicles in August 2011 over August 2010 hurt by disruption in production at Manesar plant caused by the labour unrest in end-August.

India's largest truck maker by sales Tata Motors rose 0.42%. Tata Motors sold 64,078 vehicles in August 2011, 3% down on last year. Car sales fell 33% to 16,829 vehicles but sales of trucks and buses grew 21% to 43,045 units. Tata Motors sold 1,202 units of its Nano minicar in August 2011, down 85% on year, as its Gujarat factory remained shut for two weeks for routine maintenance. Exports also fell 18% to 4,204 vehicles.

Sales of passenger cars in India are likely to slow further, as hardening interest rates, high fuel prices and increasing cost of vehicles dent consumer confidence, industry body Society of Indian Automobile Manufacturers (SIAM) said on Wednesday. Passenger vehicle sales, which include cars, vans and SUVs, fell 5.7% in August, the second drop in two and a half years, SIAM said.

India's largest tractor maker by sales Mahindra and Mahindra (M&M) lost 0.99%. The M&M stock had surged 3.31% on Tuesday buoyed by reports that the company has raised prices by up to 2% for its entire range of products last month to offset the impact of high raw material costs. Separately another report showed M&M plans to make acquisitions in Britain and in Europe to bolster its software and outsourcing business. The company's sales rose 30.38% to 37,684 units in August 2011 over August 2010. The maker of the Xylo, Scorpio and Bolero models exported 1,928 autos, up 18% on year.

India's largest two wheeler maker by sales Hero MotoCorp was flat at Rs 2167.60. The stock had scaled a record high of Rs 2206 on 6 September 2011. The company's sales rose 19% to 5.03 lakh units in August 2011 over August 2010.

India's second largest two wheeler maker by sales Bajaj Auto shed 0.2% to Rs 1640. The stock had hit a record peak of Rs 1694.90 on 6 September 2011. The company's total sales rose 16% to a record 3.82 lakh units in August 2011 over August 2010. Motorcycle sales jumped 17% to a record 3.38 lakh units in August 2011 over August 2010.

Software stocks were mixed. India's second largest software services exporter Infosys shed 0.53%. The chief executive of Infosys said last month that the economic worries in the US and Europe were delaying decisions and clients may not spend all of their information-technology budgets for this year.

India's largest software services exporter TCS was flat. The company has reportedly put in a $500-million bid to buy a controlling stake in the information technology unit of German flagship airline Lufthansa.

TCS after market hours on Monday announced that Westpac has selected TCS' BaNCS Insurance to assist the financial institution to upgrade and transform the life insurance software platform to drive growth in New Zealand.

India's third largest software services exporter Wipro rose 1.93%.

Metal stocks rose on bargain hunting after the recent losses. Sterlite Industries, Welspun Corp, Bhushan Steel, Sail, Hindalco Industries, Hindustan Zinc, Jindal Steel & Power, Tata Steel and JSW Steel rose by between 0.65% to 4.3%.

Interest rate sensitive realty stocks edged higher on bargain hunting after the recent decline trigerred by worries that higher interest rates will dent demand for residential and commercial property. Purchases of both residential and commercial property are largely driven by finance. Phoenix Mills, DLF, HDIL, Indiabulls Real Estate and Unitech gained by between 0.82% to 7.17%.

Capital goods stocks extended recent gains. BEML, Bhel, Larsen & Toubro, ABB, Siemens, Thermax, and Punj Lloyd rose by between 0.98% to 3.09%.

Sugar stocks gained as global sugar prices rose to a 3-1/2-month high on Tuesday. Shree Renuka Sugars, Bajaj Hindusthan and Balrampur Chini Mills rose by between 0.27% to 3.89%.

Resurgence Mines clocked highest volume of 1.24 crore shares on BSE. Unitech (86.21 lakh shares), Shree Ashtavinayak Cine Vision (65.33 lakh shares), Jaiprakash Associates (62.82 lakh shares) and Everonn Education (53.66 lakh shares) were the other volume toppers in that order.

Everonn Education clocked highest turnover of Rs 132.91 crore on BSE. SBI (Rs 113.36 crore), Tata Coffee (Rs 79.11 crore), RIL (Rs 63.97 crore) and Larsen & Toubro (Rs 47.27 crore) were the other turnover toppers in that order.

Meanwhile market shrugged off a news of tragic bomb blast in New Delhi. A powerful bomb placed in a briefcase outside the High Court in New Delhi killed at least 10 people and wounded 47, the deadliest attack in India in almost two months.

Foreign institutional investors (FIIs) bought shares worth Rs 431.48 crore on Tuesday, 6 September 2011, as per provisional data from the stock exchanges. Domestic institutional investors (DIIs) sold shares worth Rs 415.17 crore on that day. FIIs bought shares worth Rs 1,723.09 crore in first three trading sessions of September 2011

The government moved a step closer to an overhaul of century-old land acquisition laws on Wednesday by introducing a long-delayed bill in parliament that aims to draw infrastructure investment while compensating farmers and land-owners. The current parliamentary session ends on Friday, 9 September 2011 and the bill is unlikely to be passed before parliament reconvenes later this year. Compulsory land acquisition for the public good is a contentious issue as crowded India seeks to industrialize, with major factories, housing and transport projects held up by conflicts over land.

Moody's Investors Services affirmed its Baa3 rating for India's foreign currency government debt and its Ba1 rating for local currency debt in an annual credit analysis released on Monday, 5 September 2011. The ratings firm assigned a positive outlook to India's rupee-denominated bonds, saying it will consider a unified Baa3 rating for all bonds if India improves its fiscal position and its commitment to strengthening the domestic market. The outlook for foreign-currency debt is stable.

The report was upbeat about India's ability to weather a global economic downturn. "While it is not immune to an international growth slowdown, the strength of domestic demand and the diversity of the economy provides a buffer against a deceleration in globally exposed sectors," the report said. It noted that India's foreign currency reserves equal four times its foreign debt obligations.

A debt-to-GDP ratio of 71% is cause for concern, as interest on this debt eats up 25% of India's revenues annually. However, "Moody's expects that continued GDP growth and incremental fiscal consolidation efforts will continue to lower the government debt/GDP ratio," the report said.

India's services sector grew at its slowest pace in more than two years in August 2011, throttled by feeble expansion in new business as a faltering global economy and tight domestic monetary conditions weighed, a survey showed on Monday, 5 September 2011. The HSBC Markit Business Activity Index, based on a survey of around 400 companies, slumped to 53.8 in August from 58.2 in July, the index's biggest one-month decline since January 2009. It was also the weakest growth since June 2009, but the index has stayed above the 50 mark that separates growth from contraction for 28 consecutive months.

The new business sub-index fell to its lowest level in three months in August, at 54.9 from July's 59.3, as dampening global economic conditions knocked orders. Expectations for new business were also scaled back in August. The survey also showed a reduction in service sector employment levels for the second consecutive month as new business growth slowed while input costs and output prices continued to march ahead.

India's manufacturing activity in August 2011 slowed to a 29-month low as exports took a beating amid the lingering uncertainty in the global economic environment, a survey showed Friday, 2 September 2011. The seasonally adjusted HSBC Purchasing Managers' Index, prepared by Markit, fell to 52.6 in August from 53.6 in July. The pace of new order flows in August decelerated to the slowest in 29 months as export orders contracted at the sharpest rate since the series was started, HSBC said.

Production backlogs fell for the first time since March 2010 as pressure on operating capacity subsided. Also, inflationary pressures intensified as both input and output prices rose.

Food inflation firmed up to 10.05% in the week ended 20 August 2011, the highest in nearly six months and up from 9.8% rise in the previous week. The data highlights a prolonged battle against inflation that could prompt the Reserve Bank of India to raise its policy interest rate for the 12th time since March 2010 when it next meets to review monetary policy on 16 September 2011.

Exports surged 81.79% to $29.3 billion while imports jumped 51.5% to $40.4 billion in July 2011 over July 2010, leaving a trade deficit of $11 billion, data showed last week.

European stock markets were trading higher on Wednesday in a rebound bid after recent waves of selling. The key benchmark indices in France, Germany and UK were up by between 1.86% to 2.97%.

The European Central Bank (ECB) is expected to keep its key interest rate unchanged at 1.5% at its monthly policy meeting on interest rates on Thursday, 8 September 2011. On the same day, the Bank of England's (BOE) Monetary Policy Committee is also expected to maintain its key benchmark rate at 0.5%, the thirty-first consecutive month at such a rate.

Asian markets edged higher on Wednesday as the yen weakened and valuations fell to the cheapest level since 2008. The key benchmark indices in Taiwan, Japan, South Korea, China, Hong Kong, Singapore and Indonesia were up by between 1.71% to 3.78%.

US markets declined on Tuesday on fears Europe still has failed to tackle its debt crisis. The Dow Jones Industrial Average fell 100.96 points, or 0.90%, to 11,139.30. The S&P 500 slid 8.73 points, or 0.74%, to 1165.24. The Nasdaq fell 6.50 points, or 0.26%, to 2473.83.

US President Barack Obama is scheduled to give a speech on Thursday, 8 September 2011, to propose steps to stimulate hiring in the backdrop of US unemployment crisis.

Trading in US index futures indicated that the Dow could gain 114 points at the opening bell on Wednesday, 7 September 2011.