Market scales 5-1/2-week high on strong Chinese Q4 GDP data

Gains in world stocks triggered by stronger-than-expected GDP growth in China, the world's second biggest economy, in the fourth quarter of 2011, strong Q2 December 2011 results from IT major HCL Technologies and data showing buying of Indian stocks by foreign funds over the past few days, triggered a rally on the domestic bourses today, 17 January 2012. The 50-unit S&P CNX Nifty reached its highest closing level in nearly 6 weeks. The barometer index, BSE Sensex, scaled its highest closing level in more than 5-1/2 weeks. The Sensex jumped 276.69 points or 1.71%, off about 35 points from the day's high and up close to 195 points from the day's low. The market breadth was strong. All the 13 sectoral indices on BSE were in green.

Indian shares advanced for the third day in a row today, 17 January 2012. The Sensex has risen 428.54 points or 2.67% in the last three trading sessions from a recent low of 16,037.51 on 12 January 2012. The barometer index has jumped 1,011.13 points or 6.54% so far in this month. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 3,345.09 points or 16.88%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,330.19 points or 8.78%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) gained over 3.5%. IT giant TCS declined ahead of its Q3 earnings today, 17 January 2012. Interest rate sensitive auto stocks rose on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. Car major Maruti Suzuki India jumped over 10% on reports that the company has raised prices of most of its vehicle models to offset the impact of higher input costs and a weak rupee. Metal stocks advanced after data showed the Chinese economy grew at a faster-than-expected pace in the fourth quarter of 2011.

The market opened on a firm note on higher Asian shares. The market witnessed a sustained uptrend as trading progressed. Key benchmark indices hit fresh intraday highs in afternoon trade. The market extended intraday gains to strike fresh intraday high in mid-afternoon trade as European shares rose in early trade. The market pared gains in late trade.

Data showing buying by foreign funds over the past few days underpinned sentiment. Foreign institutional investors (FIIs) bought shares worth Rs 357.68 crore on Monday, 16 January 2012, as per provisional data from the stock exchanges. FII inflow totaled Rs 1913.62 crore in five trading sessions from 10 to 16 January 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 2540.87 crore so far in January 2012, as per provisional data from the stock exchanges.

The BSE Sensex jumped 276.69 points or 1.71% to settle at 16,466.05, its highest closing level since 8 December 2011. The index jumped 312.02 points at the day's high of 16,501.38 in mid-afternoon trade. The index rose 81.51 points at the day's low of 16,270.87 in early trade.

The S&P CNX Nifty jumped 93.40 points or 1.92% to 4,967.30, its highest closing level since 7 December 2011. The index hit a high of 4,975.55 and a low of 4,904 in intraday trade.

The BSE Mid-Cap index rose 1.34% and the BSE Small-Cap index gained 1.07%. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 2673 crore, higher than Monday's (16 January 2012) turnover of Rs 2092.59 crore.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,911 shares advanced and 982 shares declined. A total of 99 shares were unchanged.

Among the 30-member Sensex pack, 24 advanced while the rest of them declined.

HCL Technologies surged 4.61% as consolidated net profit as per US accounting standards jumped 15.3% to Rs 572.70 crore on 12.8% growth in revenue to Rs 5245.20 crore in Q2 December 2011 over Q1 September 2011. The result was announced before trading hours today, 17 January 2012.

Commenting on the results, Vineet Nayar, Vice Chairman & CEO, HCL Technologies said, "HCL continues to increase its market share both qualitatively and quantitatively by leveraging its multi-service capability. On the existing customer front, our Top 10 clients, all of which are Global\Fortune 500 companies, have seen a growth of 4.9%, with 2 clients moving into the US$ 100 million+ category. The Services Adoption Index of these customers is 3.4 out of 5 of HCL's Service Lines. This combined with 18 new transformational deal wins bears testimony to the uniqueness of HCL's business model in the current environment."

Anil Chanana, CFO, HCL Technologies, said, "The sequential margin expansion of 150 bps and EBIT and EPS growth of 42.6% and 29.0% YoY, respectively, in this quarter is a result of our continued investment in business that has resulted in higher returns for our shareholders. Going forward, we remain watchful of the volatile currency movements and will continue with our layered hedging policy".

Most other IT pivotals rose after strong Q2 results from HCL Technologies. India's third largest software services exporter by revenues Wipro gained 1.82%. The company unveils Q3 December 2011 results on 20 January 2012.

India's second largest software services exporter by revenue Infosys rose 0.99%. The company has given a muted guidance for Q4 March 2012. The company has projected a marginal 1.25% growth in non-annualised earnings per American Depositary Share at $0.81 in Q4 March 2012 over Q3 December 2011. The company has projected a flat to 0.22% growth in consolidated revenue in dollar terms at $1.806 billion to $1.81 billion in Q4 March 2012 over Q3 December 2011. The IT major issued its outlook for the quarter ending March 2012 at the time of announcing Q3 December 2011 results last week.

TCS, India's largest software services exporter by revenue, shed 0.28% to Rs 1104.30, off the day's high of Rs 1124.40. The company unveils Q3 results today, 17 January 2012.

Index heavyweight Reliance Industries (RIL) gained 3.78% to Rs 740.35. RIL announces Q3 December 2011 results on Friday, 20 January 2012. RIL after market hours on Monday, 16 January 2012, said it does not comment on speculative media reports. RIL clarified this in a reply to the stock exchanges about media reports which had stated that RIL plans to pick 26% stake in leading cable operators.

Interest rate sensitive auto stocks rose on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. Lower interest rates may help revive demand for vehicles. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.

India's largest small car maker by sales Maruti Suzuki India jumped 10.48% to Rs 1109.95 and was the top gainer from the Sensex pack. The stock jumped on reports that the company has raised prices of most of its vehicle models to offset the impact of higher input costs and a weak rupee. The company has raised prices by between Rs 2,400 and Rs 17,000. The company, however, hasn't raised prices of its mid-sized sedan Dzire.

Maruti on Friday, 6 January 2012, unveiled India's first compact multi purpose vehicle Ertiga at the auto expo. Ertiga's compact dimensions make it easy to park ad maneuver, Maruti said. Maruti had on Thursday, 5 January 2012 unveiled XA Alpha -- a concept for a compact sports utility vehicle (SUV).

India's largest truck maker by sales Tata Motors jumped 1.83%, extending recent strong rally. Tata Motors' global sales rose 33% to 99,853 units in December 2011 over December 2010. Its UK-based Jaguar Land Rover unit sold 30,981 vehicles in December, up 45% from a year earlier. Sales of Jaguar sedans grew 9% to 4,726 autos while those of Land Rover sport-utility vehicles surged 54% to 26,255 units. Tata Motors said it sold 48,099 trucks and buses globally in December, up 28% from a year earlier.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 2.48%. As per reports, M&M will reopen bookings for its latest sport-utility vehicle, XUV500, from 25 January 2012 to meet higher demand. M&M in September introduced the XUV500 and received 8,000 bookings within 10 days, prompting it to stop taking fresh orders as it was working on monthly output of 2,000 units

India's second largest two-wheeler maker by sales Bajaj Auto rose 2.02%. The firm recently unveiled an ultra-low-cost car, its first foray into the four-wheel market. The compact "RE60" boasts of high fuel efficiency and low carbon dioxide emissions, but the firm did not release a price tag.

India's largest two-wheeler maker by sales Hero MotoCorp rose 1.78%. Hero MotoCorp expects double-digit percentage growth in sales for the fiscal year starting in April, Managing Director Pawan Munjal said at recently concluded New Delhi Auto Expo. The company on Friday, 6 January 2012 unveiled its first concept hybrid scooter.

Banking stocks were mixed. India's largest bank by net profit and branch network State Bank of India (SBI) gained 1.44%. SBI has received Finance Ministry's approval for a capital infusion of Rs 6000 crore to Rs 8000 crore, a television channel reported on Monday, 16 January 2012, citing the bank's chairman. The capital infusion will be made by 31 March 2012, Pratip Chaudhuri was reported as saying.

India's largest private sector bank by branch network ICICI Bank shed 0.75% on profit booking after advancing 6.18% in prior six trading sessions. The bank unveils Q3 results on 31 January 2012.

India's second largest private sector bank by branch network HDFC Bank rose 1.32%. The bank unveils Q3 December 2011 results on 19 January 2012.

IDBI Bank rose 2.24% on reports the bank plans to raise $200 million by selling bonds and is seeking partial guarantee from the Asian Development Bank for the proposed issue in what would be the first such instance of the multilateral agency backing an Indian issuer.

Among other banking stocks, Bank of Baroda, Kotak Mahindra Bank, Axis Bank and Punjab National Bank rose by between 2.97% to 3.47%.

ING Vysya Bank rose 0.08% after net profit rose 43.98% to Rs 119.52 crore on 35.4% rise in operating income to Rs 1161.45 crore in Q3 December 2011 over Q3 December 2010. The result was announced after market hours on Monday, 16 January 2012.

Global ratings firm Standard and Poor's on Friday, 13 January 2012, said that the Reserve Bank of India's guidelines on Basel III norms, if implemented, could strengthen the capital and credit profiles of banks in the country. The draft guidelines, which the RBI recently announced, may negatively affect the credit growth of a few banks. But overall, the guidelines--if implemented--will benefit Indian banks' stand-alone credit profiles, S&P said.

In its draft guidelines on Basel III capital regulation norms for banks unveiled recently, the RBI has suggested that Common Equity Tier 1 (CET1) capital must be at least 5.5% of risk-weighted assets (RWAs). Tier 1 capital must be at least 7% of RWAs and total capital must be at least 9% of RWAs, according to the draft guidelines. RBI has suggested capital conservation buffer in the form of Common Equity of 2.5% of RWAs.

The RBI said the implementation period of minimum capital requirements and deductions from Common Equity will begin from January 1, 2013 and be fully implemented as on March 31, 2017. Capital conservation buffer requirement is proposed to be implemented between March 31, 2014 and March 31, 2017. Instruments which no longer qualify as regulatory capital instruments will be phased-out during the period beginning from January 1, 2013 to March 31, 2022.

For OTC derivatives, in addition to the capital charge for counterparty default risk under Current Exposure Method, banks will be required to compute an additional credit value adjustments (CVA) risk capital charge. The parallel run for the leverage ratio will be from January 1, 2013 to January 1, 2017, during which banks would be expected to strive to operate at a minimum Tier 1 leverage ratio of 5%. The leverage ratio requirement will be finalized taking into account the final proposal of the Basel Committee.

The Reserve Bank of India (RBI) on Friday, 13 January 2012, issued guidelines that seek to limit variable pay and stop guaranteed bonuses to senior staff of private sector banks. Variable pay, either in the form of cash or stock-linked instruments, shouldn't exceed 70% of the fixed pay in a year, the Reserve Bank of India said in a press release. Under the guidelines, stock options plans to employees won't be counted as part of variable pay. In cases where the variable pay is in excess of 50% of the fixed pay, 40%-60% of the variable pay must be deferred for at least three years, it said.

The RBI has barred banks from offering guaranteed bonuses, which it said were "not consistent with sound risk management or the pay-for-performance principles." Foreign banks operating in India will have to declare that their executive compensation conforms with the Financial Stability Board principles, RBI said.

Metal stocks advanced after data showed the Chinese economy grew at a faster-than-expected pace in the fourth quarter of 2011. China is the world's largest consumer of copper and aluminum. Sail, Jindal Steel & Power, Nalco, JSW Steel, Hindustan Zinc, Hindalco Industries and Sterlite Industries India gained by between 2.11% to 6.04%.

India's largest private sector steel maker by sales Tata Steel surged 5% as euro-zone debt worries eased. European operations constitute almost 65% of Tata Steel's sales.

Coal India advanced 3.17%. Reportedly the company has canceled, for the second time in about eight months, a tender process for developing two blocks in Mozambique and now plans to seek fresh bids from global mining companies.

Cairn India rose 2.2% as crude oil futures topped $100 a barrel mark in Asian trade today, 17 January 2012. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms like Cairn India. Crude oil futures for February 2012 delivery rose $2.02 to $100.72 a barrel in Asian electronic trading today, 17 January 2012 as France pushed for faster enforcement of a ban on Iranian imports and Saudi Arabia's energy minister said the world's biggest crude exporter wants prices at $100 a barrel.

Capital goods stocks rose on bargain hunting after a steep decline last month. Thermax, ABB, BEML, L&T and Bhel rose by between 1.46% to 5.23%.

Reliance Industrial Infrastructure rose 0.88% after net profit rose 22.5% to Rs 5.99 crore on 16.3% growth in net sales to Rs 15.15 crore in Q3 December 2011 over Q3 December 2010. The company announced the results after market hours on Monday, 16 January 2012.

Interest rate sensitive realty stocks rose on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance. Orbit Corporation, HDIL, Unitech, DLF and Indiabulls Real Estate gained by between 2.11% to 13.62%.

Videocon Industries rose 3.72% after company said during market hours today that Anadarko Petroleum Corporation, USA (Anadarko) has announced another major appraisal success at offshore Mozambique. Videocon Mozambique Rovuma 1, an overseas subsidiary of Videocon Hydrocarbon Holdings (VHHL) holds 10% participating interest (PI) in the block in partnership with Anadarko Petroleum Mozambique Area 1 Lda, an affiliate of Anadarko, who is also the operator of the 2.6-million-acre (approx. 10,500 square kilometer) block with a PI of 36.5%. VHHL is wholly-owned subsidiary of Videocon Industries.

Other partners in the area include Mitsui E&P Mozambique Area 1 (20 percent), BPRL Ventures Mozambique B.V. (10 percent), and Cove Energy Mozambique Rovuma Offshore, Ltd. (8.5 percent). Empresa Nacional de Hidrocarbonetos, E.P. a National Oil company of Mozambique, holds the remaining 15-percent interest and is carried through the exploration phase.

BPRL Ventures Mozambique B.V. is a wholly owned overseas subsidiary of Bharat PetroResources, which in turn is a wholly owned subsidiary of BPCL. Shares of BPCL rose 3.67%.

Reliance Communications gained 2.78%. During market hours today, 17 January 2012, the company said it has tied up refinancing for redemption of outstanding foreign currency convertible bonds (FCCBs) of $1.182 billion, equivalent to Rs 6125 crore. The refinancing is being funded by ICBC, CDB and Exim and other banks. RCom will benefit from extended Loan Maturity of seven years and attractive interest cost of about 5%, the company said. The loan proceeds would be used for refinancing the entire redemption amount of FCCBs which are due for redemption on 1 March 2012. This is the largest refinancing in the history of FCCBs by any Indian corporate, the company added.

Aviation stocks were in demand on reports that a Group of Ministers will today consider a proposal to allow foreign airlines to buy stake into domestic carriers. Recently, a group of secretaries had recommended allowing foreign carriers to buy up to 49% stake in Indian aviation firms. Kingfisher Airlines, Jet Airways (India) and SpiceJet rose by between 4.8% to 10.2%.

Jewellery stocks fell after the president of the Bombay Bullion Association said on Tuesday that the government has raised the import tax on gold to 2% of its value from a flat rate of Rs 300 ($5.8)/10 grams earlier. Rajesh Exports and Titan Industries fell by between 0.08% to 2.26% Also, the import tax on silver has been set to 6% of its value from the earlier flat Rs 1,500 a kilogram, Prithviraj Kothari said. India is the world's largest importer of gold jewelry, and the change in the tax rates is likely to push up local prices.

Cals Refineries clocked highest volume of 2.42 crore shares on BSE. SpiceJet (80.12 lakh shares), Suzlon Energy (63.72 lakh shares), Resurgence Mines (52.84 lakh shares) and Prraneta Industries (48.72 lakh shares) were the other volume toppers in that order.

Tata Steel clocked highest turnover of Rs 99.10 crore on BSE. SBI (Rs 92.46 crore), Tata Motors (Rs 76.76 crore), L&T (Rs 74.34 crore) and RIL (Rs 66.90 crore) were the other turnover toppers in that order.

Investors' focus is currently on Q3 results. Analysts expect weak Q3 December 2011 results due to lower volume growth in a slowing economy, higher raw material costs and higher interest charges. The focus will be on guidance from the company managements on outlook for the remaining part of the year and for the next year.

Jindal Steel & Power announces Q3 results on 18 January 2012. HDFC Bank, Hero MotoCorp and Bajaj Auto unveil Q3 results on 19 January 2012. Reliance Industries, Wipro, ITC, Axis Bank, Jet Airways (India) and Hindustan Zinc unveil Q3 results on 20 January 2012. JSW Steel reports its Q3 standalone results on 20 January 2012. UltraTech Cement, Asian Paints, Zee Entertainment Enterprises and Godrej Consumer Products unveil Q3 results on 21 January 2012. L&T, Maruti Suzuki, Sterlite Industries (India), Idea Cellular, GAIL (India) and Kotak Mahindra Bank unveil Q3 results on 23 January 2012.

Cairn India, Grasim and Biocon unveil Q3 results on 24 January 2012. Bank of Baroda, Sesa Goa, Union Bank of India, Rural Electrification Corporation, Indian Hotels and Tata Communications unveil Q3 results on 25 January 2012. Bharat Heavy Electricals (Bhel), NTPC, Bank of India and Canara Bank unveil Q3 results on 27 January 2012. NMDC announces Q3 results on 30 January 2012.

ICICI Bank, Punjab National Bank, Dabur India and Siemens unveil quarterly results on 31 January 2012. ONGC announces Q3 results on 2 February 2012. Dr. Reddy's Laboratories reports Q3 results on 3 February 2012. India Cements announces Q3 results on 6 February 2012. Mahindra & Mahindra unveils Q3 results on 7 February 2012. Hindalco unveils Q3 results on 9 February 2012. Tata Power and BPCL unveil Q3 results on 10 February 2012. Aditya Birla Nuvo and Ashok Leyland announce Q3 results on 11 February 2012.

Inflation based on the wholesale price index cooled off to 7.47% in December 2011, compared to 9.11% rise in November 2011, government data released on Monday, 16 January 2012, showed. Inflation in December 2011 was the lowest since December 2009. However, prices of manufactured products--a gauge the RBI uses to assess core inflationary pressures--rose 7.41% in December 2011 from a year earlier, and 0.57% from November 2011. Moreover, December's lower inflation print is partly due to a high statistical base a year earlier. That means inflationary pressures could again emerge when the base effect fades in the next few months.

Meanwhile, October 2011 inflation was revised upward to 9.87% from 9.73% reported earlier

At its mid-quarterly monetary policy review meet on 16 December 2011, the RBI left its main lending rate unchanged in order to support faltering economic growth as inflation shows signs of cooling. While inflation remains on its projected trajectory, downside risks to growth have clearly increased, RBI had said in a statement on 16 December 2011. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth, RBI had said.

RBI had said inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. RBI also said that the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead, RBI said. The RBI has raised rates 13 times since March 2010.

Stronger-than-expected growth in industrial production in November 2011 has raised doubts about the timing and pace at which the Reserve Bank of India would likely ease its monetary policy. Industrial output rose 5.9% in November 2011, compared with a revised contraction of 4.74% in October 2011, data released by the government on Thursday, 12 January 2012, showed. Manufacturing output, which constitutes about 76% of the industrial production, grew an annual 6.6% in November 2011. Industrial production had contracted in October 2011, snapping consistent growth for the preceding 29 months in a row.

The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on 2 January 2012. State elections are scheduled between the end of January and early March 2012. The annual budget is usually presented on the last working day of February. The Election Commission on 24 December 2011 announced the dates for the assembly polls in Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. Uttar Pradesh will have polling on February 4, 8, 11, 15, 19, 23 and 28, while Uttarakhand and Punjab will go to polls on January 30. Manipur will have polls on January 28 and Goa on March 3.

India's December exports rose an estimated annual 6.7% to $25 billion, while imports for the month were at $37.8 billion, leaving a trade deficit of $12.8 billion, Trade Secretary Rahul Khullar said on Monday.

European shares edged higher on Tuesday, 17 January 2012, after better-than-expected economic growth data from China buoyed sentiment. Key benchmark indices in UK, Germany and France were up by between 0.9% to 1.72%.

European shares had risen on Monday, 16 January 2012, after a successful debt auction by France, which served to ease worries about the euro-zone economic crisis.

Asia markets rallied on Tuesday, 17 January 2012, after data showed the Chinese economy grew at a faster-than-expected pace in the fourth quarter of 2011. Key benchmark indices in Japan, Taiwan, China, Hong Kong, Singapore, Indonesia, and South Korea rose by between 1.05% to 4.18%.

Data released earlier on Tuesday showed that China's fourth-quarter gross domestic product rose 8.9% from the year-ago period, topping estimates. Monthly data also showed better-than-expected retail sales and industrial production in December.

Trading in US index futures indicated that the Dow could gain 96 points at the opening bell on Tuesday, 17 January 2012. US markets were closed on Monday, 16 January 2012, for the Martin Luther King day holiday.