Market rebounds after recent correction

Key benchmark indices edged higher on bargain hunting after the market lost over 5% in the preceding four sessions. Firm global stocks boosted sentiment in today's trade. The barometer index, BSE Sensex, rose 285.37 points or 1.64%, off close to 46 points from the day's high and up close to 201 points from the day's low. Eleven out of 13 sectoral indices on BSE rose. The market breadth was strong. Small-Cap and Mid-Cap indices on BSE outperformed the Sensex.

Bargain hunting emerged after the Sensex lost 983 points or 5.33% in four trading sessions to 17,445.75 on 27 February 2012, from a 30-week high of 18,428.61 on 21 February 2012. The Sensex has jumped 537.57 points or 3.13% in February 2012 so far. The barometer index has surged 2276.20 points or 14.73% in calendar 2012 so far. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,595.26 points or 17.15%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,080.02 points or 10.50%.



Index heavyweight Reliance Industries (RIL) rose nearly 2% on reports RIL and BP PLC will submit a joint plan to the government to develop the D6 natural gas block and its satellite fields as an integrated unit. Power equipment major Bharat Heavy Electricals (Bhel) jumped nearly 7% after the company won a Rs 774-crore ONGC order. Realty and banking stocks rose on renewed buying. IT stocks edged lower. Metal stocks gained as base-metal prices closed mostly higher overnight.

A bout of initial volatility was witnessed as the market regained strength after paring gains after a firm opening. The market extended gains in morning trade. The uptrend continued as the market scaled fresh intraday high in mid-morning trade. The market strengthened further to hit fresh intraday high in early afternoon trade. The market pared gains in early afternoon trade. The market regained strength to hit fresh intraday high in mid-afternoon trade.

The BSE Sensex rose 285.37 points or 1.64% to 17,731.12, its highest closing level since 24 February 2012. The index jumped 331.07 points at the day's high of 17,776.82 in mid-afternoon trade. The index gained 84.69 points at the day's low of 17,530.44 in early trade.

The S&P CNX Nifty rose 94.30 points or 1.79% to 5,375.50, its highest closing level since 24 February 2012. The index hit a high of 5,391.10 and a low of 5,306.45 in intraday trade.

The BSE Mid-Cap index rose 3.40% and the BSE Small-Cap index gained 2.78%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 2,139 shares rose and 765 shares fell. A total of 116 shares were unchanged.

BSE clocked turnover of Rs 2805 crore higher than Rs 2550.63 crore on Monday, 27 February 2012.

Among the 30-share Sensex pack, 24 gained while rest of them fell. ITC (down 0.8%), NTPC (down 0.36%) and Sun Pharmaceutical Industries (down 0.34%), edged lower from the Sensex pack. L&T (up 3.55%), Bajaj Auto (up 3.48%) and Tata Motors (up 4.85%), edged higher from the Sensex pack.

State-run power equipment major Bharat Heavy Electricals (Bhel) jumped 6.74% to Rs 308.65 after the company on Monday, 27 February 2012, said it has won an order worth Rs 774 crore from ONGC for supply of onshore drilling rigs. The order envisages manufacture and supply of 6 state-of-the-art 2000 HP onshore drilling rigs with AC drives.

Index heavyweight Reliance Industries (RIL) rose 1.90% to Rs 796.05 on bargain hunting after Monday's near 5% slide. The stock came off day's high of Rs 799.90. BP PLC and Reliance Industries (RIL) will reportedly submit a joint plan to the government to develop the D6 natural gas block and its satellite fields as an integrated unit. The proposal, which will be submitted in the next few weeks, will seek to maximise the use of existing infrastructure to develop all the fields which haven't been worked on yet, BP India chief Sashi Mukundan told reporters on Monday, 27 February 2012. The proposal is significant in that it will seek approval to develop an entire block as one unit, rather than follow the current practise of getting clearance for one oil or natural gas field at a time.

In 2011, BP purchased a 30% stake in 21 RIL's oil and gas blocks across India, including D6, which is India's biggest gas discovery so far. RIL is facing declining output at D6 due to reservoir complexity, a natural decline in reserves and delays in developing satellite fields. Output at the D1, D3 and MA fields in the D6 block has plunged to about 38 million metric standard cubic meters a day (MMSCMD) from 60 MMSCMD in June 2010. It is estimated that output will fall further to 27.60 MMSCMD in the next financial year starting April, and to 22.60 MMSCMD in the year after that.

RIL last week said its wholly-owned subsidiary Reliance Holding USA, Inc. priced a $500 million reopening of its existing 5.4% Guaranteed Senior Notes due 2022. The additional notes will be consolidated and will form a single series with the $1,000 million 5.4% Guaranteed Senior Notes due 2022 and will be fully and unconditionally guaranteed by RIL. Reliance Holding USA, Inc. will apply the net proceeds to fund its ongoing capital expenditure, to make business investments, to refinance its existing debt and for general corporate purposes.

Metal stocks rose as base-metal prices closed mostly higher overnight. Hindalco Industries (up 4.97%), JSW Steel (up 4.69%), Hindustan Zinc (up 4.21%), Tata Steel (up 3.66%), Nalco (up 3.53%), NMDC (up 3.5%), Sail (up 2.62%), Jindal Steel & Power (up 2.13%) and Bhushan Steel (up 2.04%), edged higher. The BSE Metal index had tumbled 4.86% on Monday, 27 February 2012.

Sterlite Industries rose 4.58% after declining 2.53% on Monday. Sesa Goa rose 2.26%, with the stock recovering from Monday's 10.45% fall. Cairn India declined 2.51%, with the stock extending Monday's 1.23% losses. Vedanta Resources Plc group on Saturday, 25 February 2012, announced the merger of its Indian subsidiaries, Sesa Goa and Sterlite Industries and the proposed consolidation and simplification of the group structure. Sterlite will be merged with Sesa Goa and new entity will be named Sesa Sterlite. Three Sesa Goa shares will be issued for every 5 existing Sterlite Industries shares.

The Vedanta group also announced the consolidation of Vedanta Aluminium (VAL), via the merger of Ekaterina Limited (a Mauritius holding company for Vedanta's 70.5% shareholding in VAL) into Sesa Sterlite. Further, The Madras Aluminium Company (Malco) will be merged into Sesa Sterlite.

Post the merger of Sesa Goa and Sterlite Industries, Sterlite Energy and VAL's aluminium business will be merged into the consolidated Sesa Sterlite. As wholly-owned subsidiaries no shares will be issued in consideration of the mergers. Vedanta's direct holding of 38.8% in Cairn India will be transferred to Sesa Goa, together with the associated debt of $5.9 billion, at cost. Post the transfer, Sesa Sterlite will have a 58.9% shareholding in Cairn India. Post consolidation, the Vedanta group will own a 58.3% shareholding in Sesa Sterlite.

Vedanta said that the consolidation exercise is expected to lead to significant operational, capital and corporate synergies, including economies of scale, leveraging technical expertise, more efficient movement of group cash, improved allocation of capital and corporate cost savings including tax efficiencies. These synergies are expected to generate cost savings of Rs 1000 crore per annum, Vedanta said. The consolidation is expected to be earnings accretive to Sesa Goa, Sterlite Industries and Vedanta shareholders immediately post completion, it said.

Tyre shares rallied. Apollo Tyres (up 9.47%), MRF (up 3.94%), JK Tyre & Industries (up 3.69%), CEAT (up 2.86%), Dunlop India (up 2.1%) and Falcon Tyres (up 1.54%), edged higher.

Reliance Anil Dhirubhai Ambani (ADA) Group shares surged. Reliance Infrastructure (up 11.46%), Reliance Capital (up 9.04%), Reliance Power (up 7.59%), Reliance Communications (up 7.22%), Reliance Broadcast Network (up 5.25%) and Reliance MediaWorks (up 4.97%), edged higher.

IT stocks edged lower. India's largest software services exporter by revenue, TCS shed 1.80% to Rs 1,227.70. The stock had hit a record high of Rs 1,279.20 in intraday trade on Friday, 24 February 2012.

India's third largest software services exporter by revenues Wipro fell 0.93%.

India's second largest software services exporter by revenue Infosys dropped 0.31%. Infosys expects its outsourcing business to face as tough a time in the next fiscal year starting 1 April as it did this year, with the global economic uncertainty making customers go slow on spending. Clients are likely to continue committing smaller portions of their technology budgets for shorter periods in the next fiscal year, a news agency on Tuesday quoted Infosys Chief Financial Officer V. Balakrishnan as saying. The European economy is in a "mess" and it will take a long time to fix it, Mr. Balakrishnan said. Also, businesses fear that the signs of a recovery in the US may not indicate a sustainable economic rebound, he added.

Infosys announced during market hours on Monday, 27 February 2012, that Bharti Airtel has chosen the company as its partner for 'airtel money' -- the country's first of its kind mobile wallet service by a mobile operator. Under this partnership, Infosys WalletEdge -- the mobile commerce platform will enable the ubiquitous mobile wallet service to support cashless payments and settlements needs of diverse customer segments.

Realty stocks rose on renewed buying. HDIL (up 13.77%), D B Realty (up 10.4%), Indiabulls Real Estate (up 9.65%), Phoenix Mills (up 8.43%), Sobha Developers (up 8.33%), Prestige Estates (up 7.96%), Unitech (up 6.64%), Peninsula Land (up 4.16%), Anant Raj Industries (up 3.97%), Godrej Properties (up 2.5%), Oberoi Realty (up 2.07%), Parsvnath Developers (up 0.51%) and Sunteck Realty (up 0.03%), edged higher. From a recent high of 2169.96 on 21 February 2012, the BSE Realty index had tumbled 15.83% in four trading sessions to 1826.45 on Monday, 27 February 2012.

DLF gained 4.78% on reports the company expects sales realisation of about Rs 700 crore from a soon-to-be-launched luxury housing project in Gurgaon.

Property consultants and real estate developers have reportedly demanded industry status to the realty sector in the forthcoming Budget. They have also sought incentives to promote affordable housing segment and an increase in the tax exemption on home loans. To boost supply, they have also asked for a single-window clearance for real estate development projects and foreign direct investment (FDI) in multi-brand retail to create demand for retail space in shopping malls.

Bank stocks surged. India's biggest private sector bank in terms of branch network, ICICI Bank, rose 2.69% after the stock slumped almost 5% on Monday.

State Bank of India jumped 4.92% after declining 3.70% on Monday. The bank on Monday, 27 February 2012, cut interest rates on education loans. Loans of up to Rs 4 lakh will now be charged an interest rate of 13.50%, down from 13.75% earlier, while those between Rs 4 lakh and Rs 7.5 lakh will be charged 13.25%, instead of 14.25% earlier. Loans above Rs 7.5 lakh will be given at an interest rate of 12.00%, a quarter percentage point less than earlier.

SBI's Managing Director Krishna Kumar told the media on Monday, 27 February 2012, that the bank is not considering giving any fresh loans to loss-making Kingfisher Airlines. He said any decision to give fresh loans to Kingfisher depends on discussions within a consortium of banks.

India's second largest bank by net profit HDFC Bank rose 3.29% to Rs 530.20. The stock had hit a record high of Rs 538.85 in intraday trade on 22 February 2012.

Bank of Baroda rose 6.43% after the board of directors of the bank approved issuing up to 5% of pre-issue paid up capital of the bank to Life Insurance Corporation of India (LIC)/mutual funds on preferential basis. The bank announced this after during trading hours on Monday.

Among other banking stocks, Bank of India (up 9.36%), Yes Bank (up 9.14%), Canara Bank (up 8.77%), IDBI Bank (up 6.81%), Axis Bank (up 5.08%), Union Bank of India (up 5.07%), Punjab National Bank (up 4.72%), IndusInd Bank (up 3.82%), Federal Bank (up 1.53%) and Kotak Mahindra Bank (up 1.43%), edged higher.

Shares of companies whose fortunes are linked to orders from Indian Railways jumped ahead of the railway budget this month. Kernex Microsystems (India) (up 19.99%), Stone India (up 19.87%), Kalindee Rail Nirman (Engineers) (up 14.7%), Titagarh Wagons (up 10.46%), Texmaco (up 9.84%), Hind Rectifiers (up 9.81%), Simplex Castings (up 4.92%) and BEML (up 4.04%), edged higher. The railway budget will be presented on 14 March 2012.

United Spirits rose 0.77% to Rs 592.15. Referring to media reports that United Spirits is considering to sell stake in its Glasgow based arm Whyte & Mackay, the Indian company clarified that sale of 49% stake in Whyte & Mackay is one of the several options available to United Spirits to reduce its debt, but no decision has been taken in this regard.

"We wish to clarify further and confirm that the Board has not considered and taken any decision in regard to such sale in Whyte & Mackay," United Spirits said in a statement.

State Bank of India reported a highest turnover of Rs 236.66 crore on BSE. L&T (Rs 77.20 crore), HDIL (Rs 74.20 crore), Tata Motors (Rs 64.94 crore) and ICICI Bank (Rs 58.06 crore), were the other turnover toppers on BSE in that order.

Cals Refineries clocked a highest volume of 1.56 crore shares on BSE. Lanco Infratech (1.41 crore shares), IFCI (87.61 lakh shares), Spicejet (74.38 lakh shares) and HDIL (68.70 lakh shares), were the other volume toppers on BSE in that order.

India's infrastructure sector output grew 0.5% in January from a year earlier, sharply lower than the upwardly revised annual growth of 4.6% in the previous month, government data showed on Tuesday. The infrastructure sector accounts for 37.9% of India's industrial output.

Shops and banks were closed, factories shuttered and traffic was sparse in major cities across the country today, 28 February 2012, on account of an industrial strike, media reports said. Eleven major trade unions have called one-day strike to protest against rampant inflation. They are also protesting against the government's policy of selling stakes in state-owned companies and the lack of social security for non-unionized workers. In New Delhi and Mumbai the effect of the strike was minimal, reports said.

Foreign institutional investors (FIIs) bought shares worth a net Rs 329.09 crore on Monday, 27 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 23767.99 crore in this month so far (27 February 2012), as per provisional data from the stock exchanges. The inflow this month comes on the top of heavy purchases last month. FIIs bought shares worth a net Rs 10357.70 crore in January 2012, as per data from Securities & Exchange Board of India (Sebi).

The initial public offer (IPO) of commodity exchange Multi Commodity Exchange of India (MCX) was subscribed a massive 54.13 times. The IPO closed on Friday, 24 February 2012. MCX has priced its IPO at the upper end of the Rs 860-1,032 a share price band, raising about Rs 663 crore through the issue.

The government is slated to announce Q3 December 2011 gross domestic product (GDP) data at 11:00 IST tomorrow, 29 February 2012. The Indian economy is seen registering a still lower 6.4% growth in Q3 December 2011, as per the median estimate of a poll of economists carried out by Capital Market. GDP grew 6.9% in Q2 September 2011, which was the lowest growth rate in over two years.

The government is working with state governments for early implementation of a goods and services tax (GST), Finance Minister Pranab Mukherjee said on 22 February 2012.

Finance Minister Pranab Mukherjee will present the annual budget for 2012/13 on 16 March 2012, while the railways budget will be presented on 14 March 2012. The budget session of parliament will start on 12 March 2012. The government will present on March 15 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012. The counting of the votes takes place on 6 March 2012, with the results due on the same day.

Reports indicate that the finance ministry is considering a proposal to increase excise duty from 10% to 12%, although still lower than the level before the 2008 financial crisis. The move is aimed at helping the government improve its fiscal situation but it is expected to push up the cost of almost all manufactured goods from food products to consumer durables and automobiles.

European stocks rose on Tuesday as banks rebounded a day ahead of the second long-term refinance operation from the European Central Bank. Key benchmark indices in France, Germany and UK rose by between 0.11% to 0.40%.

The broader banking sector in Europe was up, reversing some of Monday's losses, as investors awaited the outcome of the ECB's three-year refinancing operations, which will be allotted on Wednesday. Banks borrowed 489 billion euros ($657 billion) at the first LTRO in December.

Meanwhile, the European Central Bank on Tuesday said it has temporarily suspended the eligibility of Greek government debt for use as collateral in its lending operations.

German lawmakers approved Monday a politically unpopular second bailout for Greece. The vote on Germany's contribution to the €130 billion rescue package passed with a large majority, despite opposition from within German Chancellor Angela Merkel's Christian Democratic Union.

Credit rating agency Standard & Poor's on Monday cut Greece's long-term ratings to 'selective default', the second ratings agency to proceed with a widely expected downgrade after the country announced a bond swap plan to lighten its debt burden.

Asian stocks edged higher on Tuesday on positive economic data in the US. Key benchmark indices in China, Hong Kong, Indonesia, Singapore, and South Korea rose by between 0.28% to 1.65%.

Japan's Nikkei Average rose 0.92%, reversing intraday losses. Japanese retail sales rose 1.9% in January 2012 from a year earlier compared to December's gain of 2.5%, the Ministry of Economy, Trade and Industry said Tuesday.

Trading in US index futures indicated that the Dow could gain 41 points at the opening bell on Tuesday, 28 February 2012. US stocks ended mostly higher on Monday, as data showed further improvement in the US housing market. An industry group reported that contracts for home resales hit a near two-year high in January.