Sensex, Nifty scale 10-week highs

Key benchmark indices reached their highest closing level in more than 10 weeks as the Reserve Bank of India (RBI)'s latest move to cut the cash reserve ratio (CRR) requirement for banks by 50 basis points to 5.5% from 6% at a quarterly policy review today, 24 January 2012, boosted investor sentiment. The barometer index, BSE Sensex, settled a tad below the psychological 17,000 mark, having alternately moved above and below that mark in intraday trade. The Sensex jumped 244.04 points or 1.46%, off about 55 points from the day's high and up about 225 points from the day's low. Also boosting the sentiment was a statement from the central bank that the reduction in CRR can be viewed as a reinforcement of the guidance that future rate actions will be towards lowering interest rates.



The Sensex has jumped 1,540.85 points or 9.96% so far in this month. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,815.37 points or 14.21%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,859.91 points or 12.28%.

Coming back to today's trade, interest rate sensitive banking stocks rallied after the Reserve Bank of India (RBI) at its monetary policy review today, 24 January 2012, cut the cash reserve ratio (CRR) for banks by 50 basis points. Metal stocks rose after LMEX, a gauge of six metals traded on the London Metal Exchange rose 1.43% on Monday, 23 January 2012. The market breadth was positive. All the 13 sectoral indices on BSE were in the green.

Index heavyweight Reliance Industries (RIL) edged higher after the company said its share buyback programme will begin from 1 February 2012. India's largest engineering and construction firm by sales, L&T, extended Monday's gains triggered by strong Q3 results. Other capital goods shares also rose. Construction stocks, too, surged. IT stocks rose on recent slew of positive economic data in the US, the biggest outsourcing market for the Indian IT firms.

The market edged higher in early trade to hit highest level in nearly seven weeks. The market regained strength after paring initial gains to hit fresh intraday low in morning trade. The market surged to hit fresh seven-week high in mid-morning trade. The market extended gains to hit 10-week high in early afternoon trade. Key benchmark trimmed gains in mid-afternoon trade. The market further trimmed gains in late trade.

The Reserve Bank of India (RBI) kept its key lending rate viz. the repo rate unchanged at 8.5% at Third Quarter Review of Monetary Policy 2011-12 announced today, 24 January 2012. RBI has cut the baseline projection of GDP growth for 2011-12 to 7% from 7.6%. The growth-inflation balance of the monetary policy stance has now shifted to support growth, while at the same time ensuring that inflationary pressures remain contained, the central bank said. The central bank said that as a result of the reduction in the CRR by 50 basis points, around Rs 32000 crore of primary liquidity will be injected into the banking system. The central bank said the large structural deficit in the system presents a strong case for injecting permanent primary liquidity into the system.

The reduction in CRR can be viewed as a reinforcement of the guidance that future rate actions will be towards lowering interest rates, RBI said. However, the timing and magnitude of future rate actions is contingent on a number of factors, RBI said. In the absence of credible fiscal consolidation, the Reserve Bank of India will be constrained from lowering the policy rate in response to decelerating private consumption and investment spending, it said. The forthcoming Union Budget must exploit the opportunity to begin this process in a credible and sustainable way, the RBI said.

High volatility is expected on the bourses in the near term as traders roll over positions in futures & options (F&O) segment from the near-month January 2012 series to February 2012 series. The near-month January 2012 F&O contracts expire tomorrow, 25 January 2012. The stock market remains closed on Thursday, 26 January 2012, on account of Republic Day.

The BSE Sensex jumped 244.04 points or 1.46% to settle at 16,995.77, its highest closing level since 14 November 2011. The index gained 298.59 points at the day's high of 17,050.32 in early afternoon trade. The index rose 18.28 points at the day's low of 16,770.01 in morning trade.

The S&P CNX Nifty jumped 81.10 points or 1.61% to settle at 5,127.35, its highest closing level since 14 November 2011. The index hit a high of 5,141.05 and a low of 5,049.80 in intraday trade.

The BSE Mid-Cap index rose 1.38% and the BSE Small-Cap index gained 0.7%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 4664 crore, sharply higher than turnover of Rs 2159.90 crore on Monday, 23 January 2012.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,596 shares advanced and 1,217 shares declined. A total of 134 shares were unchanged.

Among the 30-member Sensex pack, 22 gained while the rest declined. Coal India, Sun Pharmaceutical Industries and NTPC fell by between 0.94% to 1.35%.

Index heavyweight Reliance Industries (RIL) gained 1.58% after the company said its share buyback will begin on 1 February 2012 and close on 19 January 2013. Its controlling shareholders, who own 44.7% of the equity, will not participate in the offer. RIL had said last week that it will buyback up to 12 crore shares at a maximum price of Rs 870 and payable in cash upto an aggregate amount not exceeding Rs 10440 crore from the open market through stock exchanges.

The RIL stock had lost 2.82% on Monday after the company reported weak Q3 December 2011 results after trading hours on Friday, 20 January 2012. RIL's net profit fell 13.6% to Rs 4440 crore on 40.2% growth in turnover to Rs 87480 crore in Q3 December 2011 over Q3 December 2010.

Metal stocks rose after LMEX, a gauge of six metals traded on the London Metal Exchange rose 1.43% on Monday, 23 January 2012. Bhushan Steel, Jindal Steel & Power, JSW Steel, Tata Steel, Nalco, Sail, Hindustan Zinc and Hindalco Industries rose by between 0.5% to 4.55%.

Sterlite Industries (India) gained 3.11% on bargain hunting after the stock tumbled 5.36% on Monday. The company reported weak Q3 results at the fag end of the trading session on Monday. Consolidated net profit fell 17.03% to Rs 913.52 crore on 23.96% increase in total income to Rs 10921.11 crore in Q3 December 2011 over Q3 December 2010. Consequent to acquisition of zinc business at Namibia, South Africa and Ireland in the second half of the FY 2010-11, the results for the quarter and nine months ended 31 December 2011 are not strictly comparable with corresponding previous periods.

India's largest engineering and construction firm by sales, L&T, rose 5.64%, with the stock extending Monday's 0.3% gains triggered by strong Q3 results. The stock was the top gainer from the Sensex pack. The company announced during market hours on Monday that recurring profit after tax (PAT) rose 22% to Rs 992 crore on 23% growth in gross revenue to Rs 14155 crore in Q3 December 2011 over Q3 December 2010. The company said that order inflow rose 28% to Rs 17129 crore in Q3 December 2011 over Q3 December 2010. The company's order book stood at Rs 145768 crore as on 31 December 2011.

Strong Q3 results from L&T boosted other capital goods stocks. BGR Energy Systems, Gammon India, Suzlon Energy, Punj Lloyd, Alstom Projects, Usha Martin, ABB, Praj Industries, Crompton Greaves, BEML, Pipavav Defence, SKF India and Bharat Electronics rose by 0.45% to 7.62%. Power equipment major Bhel fell 0.16%.

Construction stocks surged. Patel Engineering, Hindustan Construction Company, NCC, IRB Infrastructure Developers rose by between 3.02% to 10.6%.

Interest rate sensitive banking stocks rallied after the Reserve Bank of India (RBI) at its monetary policy review today, 24 January 2012, cut cash reserve ratio (CRR) for banks by 50 basis points to 5.5% from 6%. The reduction in the CRR would ease tight liquidity in the banking system. Kotak Mahindra Bank rose 3.72% on strong Q3 results. Consolidated net profit rose 20.61% to Rs 462.62 crore on 16.88% increase in total income to Rs 3123.30 crore in Q3 December 2011 over Q3 December 2010. The result was announced during trading hours on Monday.

India's largest private sector bank by branch network ICICI Bank rose 3.3%, with the stock extending recent gains. The bank unveils Q3 results on 31 January 2012.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) gained 5.19%. SBI has received Finance Ministry's approval for a capital infusion of Rs 6000 crore to Rs 8000 crore, a television channel reported early last week, citing the bank's chairman. The capital infusion will be made by 31 March 2012, Pratip Chaudhuri was reported as saying.

Axis Bank rose 3,57% on strong Q3 results. Net profit rose 23.66% to Rs 1102.27 crore on 44.54% increase in total income to Rs 7206.77 crore in Q3 December 2011 over Q3 December 2010. The result was announced during trading hours on Friday, 20 January 2012.

India's second largest bank by net profit HDFC Bank gained 0.95%. During market hours on Thursday, 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.

PSU bank stocks jumped. Bank of India, Punjab National Bank, Bank of Baroda and Canara Bank jumped 3.13% to 9.6%.

Yes Bank rose 4.03% after net profit rose 32.95% to Rs 254.09 crore on 47.19% increase in total income to Rs 1895.49 crore in Q3 December 2011 over Q3 December 2010.

IT stocks rose on recent slew of positive economic data in the US, the biggest outsourcing market for the Indian IT firms. India's third largest software services exporter by revenues Wipro advanced 0.72%. Before trading hours on Friday, 20 January 2012, Wipro reported 12% growth in net profit to Rs 1456 crore in Q3 December 2011 over Q2 September 2011. The results are as per International Financial Reporting Standards. Wipro expects revenues from IT services business to grow 1% to 3% at $1.52 billion to $1.55 billion in Q4 March 2012 over Q3 December 2011.

India's largest software services exporter by revenue TCS rose 0.85%. 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. 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.

India's second largest software services exporter by revenue Infosys gained 0.78%. 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.

Idea Cellular jumped 6.81%, extending Monday's 3.68% gain triggered by strong Q3 results. Consolidated net profit jumped 90.03% to Rs 200.98 crore on 8.95% increase in net sales to Rs 5,020.37 crore in Q3 December 2011 over Q2 September 2011. The Q3 result was announced during market hours on Monday.

Strong Q3 results from Idea Cellular boosted other telecom stocks. MTNL, Tata Teleservices (Maharashtra), Reliance Communications, and Bharti Airtel rose by between 0.98% to 4.01%.

Interest rate sensitive auto stocks edged higher after RBI said the reduction in CRR can be viewed as a reinforcement of the guidance that future rate actions will be towards lowering interest rates. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 3.56%. 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.

India's largest truck maker by sales Tata Motors rose 1.44%. 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 car maker by sales Maruti Suzuki India fell 0.43% on profit taking after the stock jumped nearly 6% on Monday. The rally in the stock on Monday was triggered after comments from the company's Chairman R.C. Bhargava that the steep fall in the company's Q3 December 2011 earnings represents the bottom of a period of bad news and that the company would fare better in Q4 March 2012. The company announced during market hours on Monday that net profit fell 63.6% to Rs 205.60 crore on 17.4% decline in net sales (net of excise) to Rs 7663.60 crore in Q3 December 2011 over Q3 December 2010.

Maruti Suzuki said its total vehicle sales in the domestic market declined 29.43% to 2.11 lakh units in Q3 December 2011 over Q3 December 2010. Total exports fell 11.02% to 27,725 units. Maruti said vehicle sales during the quarter were impacted by sluggish market conditions caused by higher fuel prices and interest rates. Additionally, the company lost around 40,000 units in production due to labour unrest at the Manesar plant. The company said depreciation of rupee during the quarter adversely impacted the bottomline through higher cost of imports for the company and its vendors and royalty.

India's second largest bike maker by sales Bajaj Auto gained 0.27%. Profit after tax (PAT) jumped 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. The company announced the results during trading hours on Thursday, 19 January 2012.

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 rose 1.05% in volatile trade. During market hours on Thursday, 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.

Interest rate sensitive realty stocks edged higher after RBI said the reduction in CRR can be viewed as a reinforcement of the guidance that future rate actions will be towards lowering interest rates. Purchases of both residential and commercial property are largely driven by finance. Unitech, HDIL, Indiabulls Real Estate and Sobha Developers rose by between 1.97% to 5.91%. But, realty major DLF fell 0.23%.

UltraTech Cement rose 1.02% on strong Q3 results. The company on Saturday, 21 January 2012, reported 93.4% growth in profit after tax to Rs 617 crore on 23% growth in net sales to Rs 4572 crore in Q3 December 2011 over Q3 December 2010. The stock had hit a record high of Rs 1,280.50 on Monday, 23 January 2012.

UltraTech Cement said the quarter witnessed improved demand growth of around 10% on account of a lower base effect in the corresponding period of the previous year. The sector capacity utilisation during the quarter improved to 73% as compared to 68% in the preceding quarter. Although post-monsoon, the pricing scenario indicated some improvement, the uncertain price scenario is expected to continue, UltraTech Cement said in a statement.

Variable cost rose by 16%, mainly on account of increase in energy cost. This is attributable to the 30% rise in the price of domestic coal by Coal India during Q4 March 2011, continuous spike in prices of imported coal as also the rupee devaluation by approximately 14%. Energy cost is expected to escalate with the change in pricing mechanism from Useful Heat Value (UHV) to Gross Calorific Value (GCV) implemented by Coal India with effect from 1 January 2012. This will put pressure on the company's margins, UltraTech Cement said.

The company has a capital outlay of over Rs 11000 crores to be spent on various projects. These include, among others -- clinkerisation plants through brownfield expansion at Chhattisgarh and Karnataka together with additional grinding units, installing waste-heat recovery systems, instituting bulk packaging terminals, and setting up of readymix concrete plants. The progress on expansion of capacity at Chhattisgarh and Karnataka are almost in line with the schedule. These are expected to be operational by Q1 FY 2014, and will augment the company's cement capacity by 9.2 mtpa bringing it to a total of 59 mtpa. The expansion projects are being funded through a judicious mix of internal accruals and borrowings, UltraTech Cement said.

With regard to future outlook, UltraTech Cement said cement demand is likely to grow around 8% per annum. However, the surplus scenario is likely to continue over the next three years, the company said in a statement. At the same time, growing input costs will result in a squeeze in margins, the company added.

Shares of other cement makers extended gains after strong Q3 results from UltraTech Cement. ACC, Ambuja Cement and Jaiprakash Associates rose by between 0.97% to 4.3%.

Shree Cement fell 0.75% Net profit surged 115.3% to Rs 59.19 crore on 61.4% growth in net sales to Rs 1258.56 crore in Q3 December 2011 over Q3 December 2010. The company announced the results after market hours on Monday, 23 January 2012.

Grasim Industries fell 1.28% ahead of its Q3 results today. Biocon gained 2.55% ahead of its Q3 results today.

Cairn India rose 1.93%. The company announced after market hours today that consolidated net profit rose 12.52% to Rs 2261.93 crore on 12.13% growth in total income to Rs 3510.58 crore in Q3 December 2011 over Q3 December 2010.

Rahul Dhir, Managing Director and Chief Executive Officer, Cairn India said: "The commencement of production from the Bhagyam field is yet another significant milestone for the Cairn-ONGC Joint Venture in Rajasthan. With the support of the Government of India and the Government of Rajasthan, the Cairn-ONGC Joint Venture is well placed to further develop the hydrocarbon-rich Barmer Basin in Rajasthan, increase of production and create value for our nation. Our successive discoveries in Sri Lanka have established a working hydrocarbon system in the frontier Mannar Basin. This success demonstrates Cairn India's strong skill set, which we will continue to leverage for future opportunities. We have also notified the Sri Lankan Government about our intention to enter the second phase of exploration. With the new board now in place, Cairn India remains well poised for the next phase of growth".

Areva T&D clocked highest volume of 9.06 crore shares on BSE. Cals Refineries (1.03 crore shares), Suzlon Energy (81.97 lakh shares), IFCI (75.88 lakh shares) and Essar Oil (72.95 lakh shares) were the other volume toppers in that order.

Areva T&D clocked highest turnover of Rs 1592.62 crore on BSE. SBI (Rs 314.97 crore), L&T (Rs 132.53 crore), ICICI Bank (Rs 105.85 crore) and Axis Bank (Rs 72.75 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.

Bank of Baroda, Sesa Goa, Union Bank of India, Rural Electrification Corporation, Indian Hotels and Tata Communications unveil Q3 results on Wednesday, 25 January 2012. Bharat Heavy Electricals (Bhel), NTPC, Bank of India, Pfizer and Canara Bank unveil Q3 results on Friday, 27 January 2012. LIC Housing Finance, and Indian Bank unveil Q3 results on 30 January 2012.

ICICI Bank, Punjab National Bank, IDBI Bank, Dabur India, TVS Motor, NMDC and Siemens unveil quarterly results on 31 January 2012. Mahindra Satyam announces Q3 reusults on 1 February 2012. ONGC, Marico and Corporation Bank announce Q3 results on 2 February 2012. Dr. Reddy's Laboratories, Power Finance Corporation and HPCL report Q3 results on 3 February 2012. National Aluminium Company and India Cements announce Q3 results on 6 February 2012.

Mahindra & Mahindra and GMR Infrastructure unveil Q3 results on 7 February 2012. Hindalco, ACC and Ambuja Cements unveil quarterly 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. Steel Authority of India (Sail) unveils Q3 results on 13 February 2012. Shipping Corporation of India announces Q3 results on 14 February 2012.

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 stocks edged lower Tuesday, 24 January 2012, as Greece and its private creditors continued to negotiate over the terms of a hoped-for debt-swap deal. Key benchmark indices in France, Germany and UK fell by between 0.84% to 1.07%.

Talks between Greece and its private debt holders to write down the country's debt by euro 100 billion ($129.5 billion) have yet to result in a final agreement and negotiations stalled over the weekend. Creditors have pushed for a coupon above 4% to swap the current debt with new instruments with half the face value, but euro-zone finance ministers on Monday rejected the offer. Luxembourg Prime Minister Jean-Claude Juncker said the average coupon should be "clearly below 4%", according to media reports.

Further weighing on negative sentiment on European bourses on Tuesday were reports that Portugal might need a second bailout. Portugal must repay euro 9 billion in debt due Sept. 2013.

Asian stocks rose for a sixth day on Tuesday, the longest winning streak in seven weeks. Key benchmark indices in Japan and Indonesia rose by between 0.2% to 0.22%.

The Chinese markets are closed for the whole of this week, while Hong Kong bourses are shut for three days starting Monday, 23 January 2012, for Lunar New Year holidays. The stock market in Taiwan which has been shut since 19 January 2012 for Lunar New Year holidays remains closed for the whole of this week. Stock markets in South Korea and Singapore are also shut for the Lunar New Year holiday.

Trading in US index futures indicated that the Dow could fall 53 points at the opening bell on Tuesday, 24 January 2012. US stocks finished almost flat on Monday as investors took a break from a recent rally, awaiting earnings from bellwethers such as Apple later in the week and the outcome of a two-day Federal Reserve meeting which ends on Wednesday.

The Federal Open Market Committee (FOMC) holds a meeting on US interest rates on 24-25 January 2012. FOMC has held its funds rate target inside a record-low range of 0% to 0.25% since December 2008. The committee at its past four policy meetings indicated it intends to hold the rate stable until at least the middle of 2013. The US central bank will begin a new practice of announcing policymakers' interest-rate projections when this week's meeting ends on Wednesday.