Market scales six-week closing high; Nifty reclaims 5,000

Key benchmark indices reached their highest closing level in more than six weeks as private sector bank HDFC Bank and two-wheeler makers -- Hero MotoCorp and Bajaj Auto reported strong Q3 results. The 50-unit S&P CNX Nifty regained the psychological 5,000 level. The barometer index, BSE Sensex, jumped 192.27 points or 1.17%, up close to 70 points from the day's low and off about 20 points from the day's high. Data showing substantial purchases of Indian stocks by foreign funds over the past few days boosted investor sentiment. The market breadth was strong. BSE Mid-Cap and Small-Cap indices outperformed the Sensex.

The Sensex has jumped 1,188.82 points or 7.69% so far in this month. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 3,167.40 points or 15.98%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,507.88 points or 9.96%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) extended Wednesday's near 5% rally triggered by the company's announcement that its board will consider and approve on 20 January 2012 a proposal for buyback of the company's equity shares. HDFC Bank rose after strong Q3 December 2011 earnings. Two-wheeler makers -- Bajaj Auto and Hero MotoCorp rose after strong Q3 December 2011 earnings. Software shares were mixed as the rupee hovered at 2-month high against the dollar. Telecom services provider Bharti Airtel dropped on a tax demand Rs 1067 crore from income tax department.

Metal stocks were in demand after strong Chinese economic data announced early this week. Tata Steel edged higher after winning a major contract from Siemens Wind Power to supply 25,000 tonnes of high quality profiled steel plates for wind towers. Capital goods pivotals saw divergent trend.

Data showing substantial purchases of Indian stocks over the past few days underpinned sentiment. Foreign institutional investors (FIIs) bought shares worth Rs 875.85 crore on Wednesday, 18 January 2012, as per provisional data from the stock exchanges. FII inflow totaled Rs 3815.22 crore in seven trading sessions from 10 to 18 January 2012, as per provisional data from the stock exchanges.

The market opened on a firm note on higher Asian stocks. The market soon trimmed initial gains. The market surged in mid-morning trade. The market held firm in early afternoon trade. The market trimmed intraday gains to hit fresh intraday low in afternoon trade. The market surged in mid-afternoon trade. The market held firm in late trade.

The BSE Sensex surged 192.27 points or 1.17% to settle at 16,643.74, its highest closing level since 7 December 2011. The index gained 210.59 points at the day's high of 16,662.06 in early trade. The index rose 120.63 points at the day's low of 16,572.10 in afternoon trade.

The S&P CNX Nifty jumped 62.60 points or 1.26% to settle at 5,018.40, its highest closing level since 7 December 2011. The index hit a high of 5,023.80 and a low of 4,991.40 in intraday trade.

The BSE Mid-Cap index rose 1.43% and the BSE Small-Cap index gained 1.24%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 2498 crore, higher than Wednesday's Rs 2484.53 crore.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,814 shares advanced and 990 shares declined. A total of 125 shares were unchanged.

Among the 30-member Sensex pack, 23 gained while the rest declined.

Index heavyweight Reliance Industries (RIL) gained 1.06% to Rs 785.15, with the stock extending Wednesday's near 5% surge triggered by the company's announcement that its board will consider and approve on 20 January 2012 a proposal for buyback of the company's equity shares. The announcement was made before trading hours on Wednesday, 18 January 2012.

DEN Networks hit an upper circuit limit of 10% on report that a unit of Reliance Industries has brought a 1.14% stake in the company. According to reports, Reliance Strategic Investments, a subsidiary of Reliance Industries (RIL), has bought a 1.14% stake in DEN Networks, one of the two listed cable distribution companies in India.

Metal stocks were in demand after strong Chinese economic data announced early this week. China is the world's largest consumer of copper and aluminum. Sail, Nalco, JSW Steel, Hindustan Zinc and Hindalco Industries gained by between 0.27% to 5.06%.

India's largest non-ferrous metal firm by capacity Sterlite Industries jumped 6.77% and was the top gainer from the Sensex pack.

India's largest sponge iron steel maker by capacity Jindal Steel & Power (JSPL) rose 1.48%. JSPL, after market hours on Wednesday, 18 January 2012, reported 7% growth in consolidated net profit to Rs 1015.88 crore on 37% growth in net sales to Rs 4357.69 crore in Q3 December 2011 over Q3 December 2010. The company's power generation arm -- Jindal Power reported net profit of Rs 481.32 crore on turnover of Rs 881.40 crore in Q3 December 2011. Jindal Power had plant load factor of 102.13% in Q3 December 2011.

JSPL has commissioned 2 units of 135 megawatts (MW) -- one unit at Dongamahua in Raigarh, Chhattisgarh and another unit at Angul in Odisha. With this total 6 units have been commissioned in series of total 10 units of 135 MW, JSPL said.

India's largest private sector steel maker by sales Tata Steel rose 2.44% after the company announced during market hours today that it has secured major contract from Siemens Wind Power to supply 25,000 tonnes of high quality profiled steel plates for wind towers. The company will execute the order between April to September this year.

Coal India rose 3.03%. Reports on Wednesday indicated that the company is not expected to raise prices after it finalises a wage increase agreement with its workers later this month. Coal India had last week said it will sign a five-year agreement with workers' unions to increase wages by 25%, adding about Rs 4000 crore to its annual wage bill.

Interest rate sensitive banking stocks rose on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) gained 1.08%. SBI has received Finance Ministry's approval for a capital infusion of Rs 6000 crore to Rs 8000 crore, a television channel reported early this week, 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 advanced 3.51%. The bank unveils Q3 results on 31 January 2012

India's second largest bank by net profit HDFC Bank rose 0.98%. During market hours today, 19 January 2012, the bank reported 31.4% growth in net profit to Rs 1429.70 crore on 35.6% increase in total income to Rs 8622.64 crore in Q3 December 2011 over Q3 December 2010.

HDFC Bank said its core CASA deposit ratio, adjusted for one-off current account balance of about Rs 4000 crore, was at 47.7% of total deposits as on 31 December 2011. The private sector bank said its asset quality remains healthy. The bank's capital adequacy ratio (CAR) remained strong at 16.3% as on 31 December 2011, against the regulatory minimum of 9%. The bank's Tier-I CAR was 11.2% as on 31 December 2011.

Reliance Capital rose 3.71% after the company during market hours today, 19 January 2012, said Nippon Life Insurance has signed a Memorandum of Understanding (MoU) to acquire 26% stake in Reliance Capital Asset Management (RCAM) for Rs 1450 crore. The transaction pegs the total valuation of RCAM at about Rs 5600 crore.

LIC Housing Finance lost 3.32% on equity dilution worries after the housing finance firm said its board will consider further issue of equity shares through preferential allotment and/or qualified institutional placement along with Q3 December 2011 results on 30 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. 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 gained 2.84%. As per reports the company will buy up to 1 lakh diesel engines a year for three years from the local unit of Fiat SpA under a pact between the Italian car maker and Maruti's parent, Suzuki Motor Corp.

Reports on Tuesday, 17 January 2012 indicated 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.

India's largest truck maker by sales Tata Motors advanced 2.22%. 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) shed 1.68%. Reports on Tuesday, 17 January 2012 indicated the company 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.

Bike makers gained after reporting strong Q3 results today. India's second largest bike maker by sales Bajaj Auto rose 0.85% to Rs 1467.10. The stock came off sharply from the day's low of Rs 1424.30. The company announced during market hours today that its profit after tax (PAT) rose 19% to Rs 795 crore on 21% growth in turnover to Rs 5154 crore in Q3 December 2011 over Q3 December 2010. The company said PAT before exceptional items jumped 25% to Rs 834 crore in Q3 December 2011 over Q3 December 2010.

Bajaj Auto said in a challenging business environment, the company has improved its operating EBITDA margin from 20.1% in Q2 September 2011 to 21% in Q3 December 2011. The improvement in margin was primarily due to higher realization from exports. The company said its operating EBITDA margin of 21% is the best in the industry.

Bajaj Auto said sales of motorcycles during the festive season were satisfactory. However, towards the end of November 2011, the industry witnessed a slowdown, the company said. The company said the overall demand for commercial vehicles remains strong. Bajaj Auto said exports sales continue to be robust and ahead of the company's plan. Overseas markets now contribute over 35% of Bajaj Auto's vehicle sales. Bajaj Auto said it is on course to exceed its target of 1.5 million of exports for the year ending March 2012 (FY 2012).

India's largest two-wheeler maker by sales Hero MotoCorp gained 2.35%. During market hours today, 19 January 2012, the company reported 42.89% growth in net profit to Rs 613.03 crore 16.85% growth in turnover to Rs 6031.45 crore in Q3 December 2011 over Q3 December 2010. Hero MotoCorp said it notched up highest ever quarterly turnover (net sales plus other operating income) in Q3 December 2011.

Commenting on the results, Dr. Brijmohan Lall, Chairman, Hero MotoCorp, said, "Last quarter has been particularly satisfying as we have set new benchmarks of excellence. This should help us realize our larger vision of building a truly global company with a strong Indian foundation. We are optimistic about the New Year and will continue to provide the best technology and products to our customers".

Mr Pawan Munjal, Managing Director & CEO, Hero MotoCorp, said, "It is heartening to see that our sales have been in excess of half a million two-wheelers in every month of the quarter, thus further strengthening our leadership. We are well in line to meet our guidance of over 6 million unit sales for the year ending March 2012 (FY 2012). In FY 2012, the industry has been facing constraints of rising fuel prices, high interest rates and a sharp rupee depreciation, leading to increased input costs impacting the margin. In these challenging times, while the domestic industry is witnessing a growth of 15%, we are Hero MotoCorp are growing faster than that. We have also seen a softening in commodity prices off late, which has, however, been offset by the rupee depreciation. Therefore, while we expect market demand for two-wheelers to remain stable, a lot will depend on the overall economic and political scenario going forward".

Software shares were mixed as the rupee hovered at 2-month high against the dollar. A firm rupee adversely impacts the operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

India's largest software services exporter by revenue TCS was flat at Rs 1075.95. The stock had declined 2.62% on Wednesday after the company's management at a post-result conference call said that out of a total of 130 discretionary projects that the company is pursuing, 50% are facing delays in decision making even as there are no project cancellations so far. The management also said that out of a total of 120 top clients surveyed, two-thirds have flat or marginally increased budgets and remaining one-thirds has reduced budgets. The company said the pipeline is intact but discretionary spend may lag ramp up in volumes in Q4 March 2012.

After market hours on Tuesday, 17 January 2012, TCS reported 21.8% growth consolidated net profit to Rs 2803 crore on 13.5% growth in revenue to Rs 13204 crore in Q3 December 2011 over Q2 September 2011.

India's third largest software services exporter by revenues Wipro rose 0.15%, reversing initial losses. The company unveils Q3 December 2011 results tomorrow, 20 January 2012.

India's second largest software services exporter by revenue Infosys fell 0.71%. 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.

India's largest power equipment maker by sales Bhel declined 2.71% and was the top loser from the Sensex pack. The company unveils its Q3 results on 27 January 2012.

India's largest engineering and construction firm by outstanding order book L&T rose 2.49%.

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, Indiabulls Real Estate and Sobha Developers gained by between 0.37% to 10.4%.

India's largest realty firm by net profit DLF surged 4.62% on reports the company is planning to sell a convention centre project in Delhi and its wind power business for about Rs 1800 crore early next fiscal to reduce debt.

India's largest listed telecom services provider by subscribers Bharti Airtel shed 0.83% after the income tax office raised a tax demand of Rs 1067 crore or $212 million on the company for non-payment of Tax Deducted at Source (TDS) dues in the last four financial years in relation to its overseas operations. The tax demand covers a period of four financial years starting in 2007-08.

"Bharti Airtel is fully compliant on all applicable income tax provisions," the company said in a statement. "This demand notice, pertaining to applicability of withholding tax on payments made to international operators, is not justified and we will take appropriate legal recourse," it said, without elaborating.

FMCG stocks declined in a firm market. ITC and Hindustan Unilever fell 0.24% and 0.19% respectively.

Shares of power generation companies gained after Prime Minister Manmohan Singh on Wednesday, 18 January 2012, pledged help on chronic power shortages in the country after holding a meeting with business leaders on that day. The prime minister's office pledged a "practical, pragmatic and viable solution" to the power generation industry's problems will be found and said a committee would be formed at the secretary level. Reliance Infrastructure, Torrent Power, Reliance Power, CESC, Tata Power Company and NTPC gained by between 2.27% to 9.63%.

Suzlon Energy rose 2.71% after the company said its subsidiary -- REpower Systems SE has secured cumulative orders of 151 megawatts across Europe and North America from 22 October 2011 to 18 January 2012. The company made the announcement before trading hours today, 19 January 2012.

Consumer durables stocks rose. Blue Star, Gitanjali Gems, Rajesh Exports, and Videocon Industries rose by between 0.45% to 1.42%.

Shares of cement companies were in limelight on reports of improved cement demand this month. ACC, India Cements, Ambuja Cements, UltraTech Cement and Jaiprakash Associates gained by between 1.09% to 6.37%.

Education stocks rose on renewed buying. Aptech, NIIT, Zee Learn, Edserv Softsystems and Career Point gained by between 0.59% to 6.3%.

Cals Refineries clocked highest volume of 1.13 crore shares on BSE. Sintex Industries (84.38 lakh shares), GTL (51.22 lakh shares) and SpiceJet (48.22 lakh shares) were the other volume toppers in that order.

RIL clocked highest turnover of Rs 70.54 crore on BSE. SBI (Rs 66.23 crore), Reliance Capital (Rs 66.14 crore), Reliance Infrastructure (Rs 65.58 crore) and Sintex Industries (Rs 62.48 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.

Reliance Industries, Wipro, ITC, Axis Bank, Jet Airways (India) and Hindustan Zinc unveil Q3 results tomorrow, 20 January 2012. JSW Steel reports its Q3 standalone results tomorrow, 20 January 2012. UltraTech Cement, Asian Paints, Zee Entertainment Enterprises and Godrej Consumer Products unveil Q3 results on Saturday, 21 January 2012. L&T, Maruti Suzuki India, 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, Pfizer and Canara Bank unveil Q3 results on 27 January 2012. LIC Housing Finance, Indian Bank, Corporation Bank and NMDC unveil Q3 results on 30 January 2012.

ICICI Bank, Punjab National Bank, Dabur India, TVS Motor and Siemens unveil quarterly results on 31 January 2012. ONGC and Marico announce Q3 results on 2 February 2012. Dr. Reddy's Laboratories, Power Finance Corporation and HPCL report 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. Shipping Corporation of India announces Q3 results on 14 February 2012.

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 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 Reserve Bank of India (RBI) is widely expected to keep its key lending rate viz. the repo rate steady at the Third Quarter Review of Monetary Policy 2011-12 on Tuesday, 24 January 2012, as headline inflation remains high. Data released early this week showed headline inflation eased to two-year low of 7.47% in December 2011 from 9.11% in November 2011. But prices of manufactured products -- a key gauge of core inflationary pressures -- remained elevated.

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.

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.

European markets turned positive, encouraged by Greece's latest negotiations with its bondholders, which boosted the banking sector. The key benchmark indices in UK, Germany and France were up by between 0.22% to 0.79%.

A Greece finance ministry official told reporters on Wednesday, 18 January 2012, that Greece's government could forge an agreement with private creditors by the end of this week after talks resumed in Athens on Wednesday, 18 January 2012 between Greece government and its creditors. Negotiations had collapsed last Friday over the interest rate on new bonds to be offered by Greece.

Portugal on Wednesday managed to sell all of its planned issuance of 2.5 billion euros of treasury bills, while Germany's auction of two-year bonds drew strong demand.

Meanwhile, the International Monetary Fund said it is proposing to raise its lending capacity by as much as $500 billion to safeguard the global economy.

The World Bank warned developing countries on Wednesday to prepare for the "real" risk that an escalation in the euro area debt crisis could tip the world into a slump on a par with the global downturn in 2008/09. In a report sharply cutting its world economic growth expectations, the World Bank said Europe was probably already in recession. If the euro area debt crisis deepened, global economic forecasts would be significantly lower. The World Bank predicted world economic growth of 2.5% in 2012 and 3.1% in 2013, well below the 3.6% growth for each year projected in June.

Asian stocks surged on Thursday, 19 January 2012, after a capital injection by the Chinese central bank into money markets and after the International Monetary Fund unveiled a plan to boost its lending resources. Key benchmark indices in Hong Kong, Indonesia, Singapore, China and South Korea and Japan were up by between 0.57% to 1.31%. The stock market in Taiwan is closed from today, 19 January 2012 for Lunar New Year holidays for 11 days and will re-open on 30 January 2012.

The People's Bank of China offered 183 billion yuan ($29 billion) in 14-day reverse repurchase agreements on Thursday. The capital injection, coming amid tight liquidity conditions ahead of next week's Lunar New Year holidays, pulled short-term borrowing rates lower in Chinese interbank money markets.

The Chinese markets are closed for the whole of next week, while Hong Kong bourses are shut from Monday, 23 January 2012 to Wednesday, 25 January 2012, for Lunar New Year holidays.

Data released 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 14 points at the opening bell on Thursday, 19 January 2012.