Nifty scales over six-month closing high; cement shares rally

Key benchmark indices gained for the fifth straight trading session as the Congress led coalition government at the centre got a relief after a special court investigating the telecom licenses scam on Saturday, 4 February 2012, dismissed a petition to investigate Home Minister P Chidambaram's alleged role in a 2008 telecom scandal. The barometer index, BSE Sensex, jumped 102.35 points or 0.58%, off about 125 points from the day's high and up close to 110 points from the day's low. The market breadth was strong. The Sensex attained its highest closing level in almost 14-1/2 weeks and the 50-unit S&P CNX Nifty attained its highest closing level in more than six months.

The Sensex has jumped 844.01 points or 5% in five trading sessions from a recent low of 16,863.30 on 30 January 2012. The Sensex has surged 2,252.39 points or 14.57% in calendar 2012 so far. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,571.45 points or 16.98%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,103.83 points or 10.61%.



Coming back to today's trade, cement shares surged after cement firms reported higher dispatches for the month just gone by. FMCG giant Hindustan Unilever (HUL) reversed initial gains after strong Q3 results on profit taking. TCS gained after the company won a new order in Europe. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. Realty shares extended recent gains. L&T gained after winning a large order. Shares of firms whose fortunes are linked to orders from railway surged on reports that the finance ministry has approved loan of Rs 3000 crore to Indian Railways. Banking stocks extended recent strong gains. National Aluminium Company fell after weak Q3 results.

The market surged to its highest level in almost 14-1/2 weeks at the onset of the trading session as the Congress led coalition government at the centre got a relief after a special court investigating the telecom licenses scam on Saturday, 4 February 2012, dismissed a petition to investigate Home Minister P Chidambaram's alleged role in a 2008 telecom scandal. The market regained strength after trimming initial gains to hit fresh intraday low in morning trade. The market held firm in mid-morning trade.

The market once again trimmed gains to hit fresh intraday low in early afternoon trade. The market was range bound in afternoon trade. A bout of volatility was witnessed in mid-afternoon trade as key benchmark indices trimmed intraday gains as European shares dropped in early trade there. High volatility was witnessed in late trade as key benchmark indices regained positive zone after paring intraday gains to slip into the red for a brief period in mid-afternoon trade.

Data showing continued purchases of Indian stocks by foreign institutional investors (FIIs) boosted sentiment. FIIs bought shares worth Rs 1074.21 crore on Friday, 3 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth Rs 4691.93 crore in first three trading sessions this month, as per provisional data from the stock exchanges. FIIs made substantial purchases of Indian stocks 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 BSE Sensex jumped 102.35 points or 0.58% to settle at 17,707.31, its highest closing level since 31 October 2011. The index surged 224.76 points at the day's high of 17,829.72 at the onset of the trading session. The index fell 9.86 points at the day's low of 17,595.10 in mid-afternoon trade.

The S&P CNX Nifty jumped 35.80 points or 0.67% to settle at 5,361.65, its highest closing level since 3 August 2011. The index hit a high of 5,390.05 and a low of 5,327.25 in intraday trade.

BSE clocked turnover of Rs 3180 crore, higher than Rs 2,930.76 crore on Friday, 3 February 2012.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,852 shares rose and 1,064 fell. A total of 100 shares were unchanged.

Among the 30-member Sensex pack, 21 rose while rest of them fell.

Index heavyweight Reliance Industries (RIL) fell 0.6% to Rs 832.75, with the stock reversing initial gains. The stock was volatile. The stock hit a high of Rs 849 and a low of Rs 824. RIL said on 30 January 2012, that it proposes to buy-back its shares from the existing shareholders/beneficial owners other than the promoters/persons who are in control of the company from the open market. The company proposes to buy-back up to a maximum of twelve crore shares and a minimum of three crore shares. The buyback programme started on 1 February 2012 and will end on 19 January 2013.

The maximum price for buyback has been set at Rs 870 per share. The company has set aside Rs 10440 crore for share buyback, which represents approximately 7.22% of the company's total paid-up equity capital and free reserves as on 31 March 2011.

Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange jumped 2.45% on Friday, 3 February 2012. Hindustan Zinc, Tata Steel, Sail, JSW Steel, Sterlite Industries, Hindalco Industries, NMDC, and Jindal Steel & Power rose by between 0.12% to 5.12%.

National Aluminium Company fell 2.9% after company announced during market hours today that net profit fell 79.98% to Rs 51.22 crore on 3.06% growth in total income to Rs 1579.51 crore in Q3 December 2011 over Q3 December 2010.

Hindustan Copper fell 0.94%, with the stock reversing initial gains after the company announced after market hours on Friday, 3 February 2012, that net profit fell 2% to Rs 79.14 crore on 12.2% growth in net sales to Rs 344.58 crore in Q3 December 2011 over Q3 December 2010.

Banking stocks extended recent strong gains. From a recent low of 9153.39 on 30 December 2011, the BSE Bankex had jumped 27.2% to settle at 11,643.83 on Friday, 3 February 2012. India's largest private sector bank by branch network ICICI Bank rose 1.43%, with the stock gaining for the third straight day. The bank's net profit rose 20.26% to Rs 1728.10 crore on 24.14% increase in total income to Rs 10483.73 crore in Q3 December 2011 over Q3 December 2010. The result was announced on 31 January 2012.

ICICI Bank said advances increased by 19% year-on-year to Rs 246157 crore as on 31 December 2011 from Rs 206692 crore as on 31 December 2010. The bank said its Current and savings account (CASA) ratio increased to 43.6% at 31 December 2011, from 42.1% as on 30 September 2011. Net non-performing asset ratio decreased to 0.7% at 31 December 2011 from 0.8% at 30 September 2011 and 1.16% as at 31 December 2010. The bank had strong capital adequacy ratio of 18.88% and Tier-1 capital adequacy of 13.13% as on 31 December 2011.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) gained 2.85%, with the stock gaining for the second straight day. SBI recently said that the Government of India has agreed to inject approximately Rs 7900 crore into bank by way of preferential allotment of equity shares to help SBI achieve minimum 8% Tier I CAR by 31 March 2012. The country's biggest lender by assets didn't say when the government would infuse the capital. The government currently owns 59.40% of SBI.

India's second largest bank by net profit HDFC Bank rose 0.07%, with the stock reversing initial gains. HDFC 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. The result was announced on 19 January 2012.

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.

Among other banking stocks, Canara Bank, Union Bank of India and Bank of Baroda rose by between 3.01% to 5.79%.

The Reserve Bank of India (RBI) has reportedly marginally relaxed limits on net open foreign exchange positions for many banks that had large open positions before the central bank imposed restrictions in December 2011. The sharp fall in the rupee against the dollar last year prompted the RBI to impose restrictions on speculative trading by reducing the net overnight open position limit of banks.

Power Finance Corporation jumped 5.13% after the company announced after market hours on Friday, 3 February 2012, that net profit rose 68.2% to Rs 1107.91 crore on 27.2% growth in operating income to Rs 3283.64 crore in Q3 December 2011 over Q3 December 2010.

FMCG major Hindustan Unilever (HUL) fell 3.49%, reversing initial gains on profit taking. The stock had witnessed a pre-result rally on expectations of good results. The company said its profit after tax but before exceptional items jumped 30% to Rs 762 crore on 15.62% increase in total income to Rs 6017.71 crore in Q3 December 2011 over Q3 December 2010. The result was announced during trading hours today, 6 February 2012.

HUL said the company's domestic consumer business grew at 16.5% in Q3 December 2011, with strong underlying volume growth of 9.1%. All segments delivered double digit growth, the FMCG giant said. Inflationary pressures during the quarter were primarily on account of currency depreciation HUL said adding that cost pressures were managed dynamically through aggressive savings programmes coupled with judicious pricing. Cost of goods sold was up by 140 basis points (bps). Brand investment continued to be competitive with A&P at 11.8% of turnover in Q3 December 2011, HUL said.

Commenting on the 3rd quarter results, Harish Manwani, Chairman, HUL said: "We have delivered another strong quarter of competitive growth with improvement in margins. The results, delivered against a backdrop of an uncertain economic environment, are reflective of the strength of our brands, consistency in our strategy and relentless focus on execution. We will continue to manage our business dynamically to deliver competitive, profitable and sustainable growth."

Realty stocks extended recent strong gains. Peninsula Land, HDIL, Indiabulls Real Estate, Anant Raj Industries, Oberoi Realty, DLF, Phoenix Mills, Sunteck Realty, Parsvnath Developers and D B Realty rose by between 0.25% to 12.03%.

From a recent low of 1,388.61 on 6 January 2012, BSE Realty index surged 28.49% to settle at 1,784.17 on 3 February 2012.

Unitech surged 13.08%, with the stock extending Friday's 3.59% gains. Norway's Telenor ASA today, 6 February 2012, warned that it has the option to quit its India business if efforts fail to find a solution to the problems arising from a Supreme Court order cancelling the company's telecom licenses. But, as of now, Telenor doesn't plan to slow its operations in India, Sigve Brekke, executive vice president and head of Asian operations, told reporters. Telenor--which runs a telecom joint venture called Unitech Wireless--is now in talks with the telecom regulator and the government to decide on the way forward.

The Supreme Court last week ordered the cancellation of 122 telecom licenses, including 22 belonging to Unitech Wireless, saying their allocation in 2008 was an "arbitrary and unconstitutional exercise," which facilitated corruption. The order will be effective in four months.

Unitech, last week, said that the Supreme Court verdict pertains to the telecom venture Uninor, which was issued 2G licenses in accordance with the government policy. Unitech is separate entity from Uninor and it will continue to focus on its real estate business, the company said.

L&T rose 2.14% after the company said during market hours today that it has bagged a Rs 1937 crore order from GVK group for design, engineering, procurement and construction for 4 laning of a major portion of Shivpuri-Dewas section of NH-3 in Madhya Pradesh totaling 235 kilometer. The project has to be completed in 27 months.

Among other capital goods stocks, Siemens, Usha Martin, Bhel, Praj Industries, and Punj Lloyd rose by between 0.86% to 3.86%.

Shares of firms whose fortunes are linked to orders from railway surged on reports that the finance ministry has approved loan of Rs 3000 crore to Indian Railways. Kernex Microsystems, Stone India, Titagarh wagons, BEML, Kalindee Rail Nirman, and Texmaco rose 0.87% to 6.71%.

Tyre shares rallied on good vehicle sales in January 2012. Apollo Tyres, CEAT, JK Tyre & Industries, and MRF rose by between 2.2% to 5.7%.

Upstream oil companies were mixed after reports that the government has hiked the subsidy sharing burden of upstream oil companies. GAIL India fell 0.74%. ONGC rose 0.87% and Oil India rose 2.33%. A higher subsidy outflow, which goes to compensate the losses of oil marketing companies (OMCs) that sell fuel at below market prices, will hurt the bottom line of public sector upstream companies. The share of subsidy burden for upstream oil companies has been fixed at 37.91% for the first nine months (April-December) of this fiscal (FY 2012), which is significantly higher than the 33% fixed for the first two quarters earlier, reports suggest.

Auto stocks extended recent gains triggered by good vehicle sales in the month just gone by. India's largest car maker by sales Maruti Suzuki India rose 1.55%, with the stock gaining for the fourth straight day. The car major last week said its total sales rose 5.2% to 1.15 lakh units in January 2012 over January 2011. Domestic sales rose 0.6% to 1.01 and exports jumped 54.3% to 14,386 units in January 2012 over January 2011.

Maruti early this month introduced a shorter, cheaper version of its Swift Dzire sedan as part of efforts to retain its position as the country's largest car maker by sales. The new Dzire is 3.95 meters in length, qualifying it for a lower federal excise tax, compared with the current 4.1 meter-long model. The government imposes a 10% tax on cars measuring up to 4 meters in length. These cars can have a diesel engine of only up to 1.5 liters or a gasoline engine of up to 1.2-liters. An excise tax of 22% is imposed on cars beyond 4 meters in length.

India's largest utility vehicles and tractors maker Mahindra & Mahindra (M&M) fell 0.1%, with the stock snapping a four-day winning streak. The company's total automotive sales rose 22% at 44,717 in January 2012 over January 2011. The company's domestic sales stood at 41,369 units during January 2012, as against 34601 units during January 2011, an increase of 20%. Exports jumped 95% at 3,348 units while the 4-wheeler commercial segment which includes the passenger and load categories registered a growth of 35% at 13,725 units in January 2012 over January 2011.

The company's tractors sales, however, registered a decline. Domestic tractor sales in January 2012 stood at 17,950 units, as against 19430 units during January 2011. Total tractor sales (domestic plus exports) in January 2012 stood at 19,354 units, as against 20,499 units for the same period last year. Exports for the month stood at 1404 units, having registered a growth of 31%, M&M said in a statement. The company announced the monthly sales data early this month.

India's largest commercial vehicle maker by sales Tata Motors rose 1.25%. The company's total sales rose 16% to 87,465 units in January 2012 over January 2011. The company announced the monthly sales data early this month.

India's largest motorcycle maker by sales Hero MotoCorp rose 0.24%. The company reported 11.5% growth in sales to 5.20 lakh units in January 2012 over January 2011. The company announced the monthly sales data early this month.

Bajaj Auto gained 1.84%, with the stock gaining for the second straight day. The company said during market hours on Thursday, 2 February 2012, that its total vehicle sales rose 8% to 3.37 lakh units in January 2012 over January 2011. The company announced the monthly sales data early this month.

IT stocks were mixed. India's largest software services exporter by revenue TCS rose 2.04% after the company announced at the fag end of the trading session today that it has won a multi-year, multi-million euro contract from Europcar, the car rental leader in Europe. Europcar Information Services, Europcar's IT subsidiary, has selected TCS to manage strategic IT services development for its French operations. The company said last week that it has inaugurated its Silicon Valley Customer Collaboration Center in Santa Clara, California. TCS had also said last week that Diligenta, its UK based subsidiary, has successfully completed a multi-year, multi-million dollar transformation project at Phoenix Group, the UK's largest specialist consolidator of closed life funds.

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 result was announced on 17 January 2012. 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 fell 0.13%, with the stock reversing initial gains. 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.

India's third largest software services exporter by revenues Wipro fell 0.07%. Wipro reported 12% growth in consolidated net profit to Rs 1456.40 crore on 10% growth in sales to Rs 9997.20 crore in Q3 December 2011 over Q2 September 2011. 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. The company announced the 3rd quarter results on 20 January 2012.

Cement stocks gained for the third straight day after monthly dispatches data. Jaiprakash Associates rose 2.1%. The company's cement dispatches rose 27% to 1.96 million tonnes in January 2012 over January 2011.

ACC rose 4.72% to Rs 1327.90. The stock hit a 52-week high of Rs 1,359 today. The company said during market hours on Thursday, 2 February 2012, that its cement dispatches rose 8.78% to 2.23 million tonnes in January 2012 over January 2011. ACC's cement production rose 9.22% to 2.25 million tonnes in January 2012 over January 2011.

Ambuja Cements rose 4.26% to Rs 179.90. The stock hit a record high of Rs 181.50 today. The company's cement dispatches rose 3.8% to 1.91 million tonnes in January 2012 over January 2011.

UltraTech Cement jumped 6.93% to Rs 1363.05. The stock hit a record high of Rs 1383 today. The company's cement dispatches rose 11.2% to 3.72 million tonnes in January 2012 over January 2011.

India Cements rose 0.64% after net profit surged 162.27% to Rs 56.31 crore on 20.55% increase in net sales to Rs 941.52 crore in Q3 December 2011 over Q3 December 2010. The result was announced during trading hours today, 6 February 2012.

Airline stocks jumped on reports a Group of Ministers will meet later this week to give final touches on allowing investments in Indian carriers by foreign airlines, direct import of jet fuel by Indian carriers and Air India's financial restructuring plan. Jet Airways and Kingfisher Airlines rose by between 1.38% to 6.56%. But, SpiceJet fell 0.4%.

Sun Pharmaceutical Industries fell 1.79% to Rs 546.30. The stock hit a record high of Rs 565.75 today.

Avance Tech clocked highest volume of 1.58 crore shares on BSE. SpiceJet (1.52 crore shares), Unitech (1.34 crore shares), Cals Refineries (1.04 crore shares) and Dazzel Confindiv (57.95 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 158.02 crore on BSE. ICICI Bank (Rs 71.36 crore), JSW Steel (Rs 66.89 crore), Tata Motors (Rs 65.49 crore) and L&T (Rs 57.66 crore) were the other turnover toppers in that order.

India is facing some challenges on its stable rating outlook and the balance of risk factors for its rating may be shifting slightly toward the negative, said Standard & Poor's Ratings Services today, 6 February 2012, in a report titled "Several Factors Could Weigh On India's Current Stable Sovereign Rating In 2012." High inflation, a weak government fiscal position, and slower economic growth have hurt investor confidence in the rupee, triggered a capital outflow, and weighed on the stable sovereign outlook on India in 2012, the report said. S&P has an investment grade BBB- rating with a stable outlook on India.

The 3rd quarter earnings season is at its peak. Mahindra & Mahindra and GMR Infrastructure unveil Q3 results tomorrow, 7 February 2012. Bharti Airtel, ONGC, Power Grid Corporation of India and Tech Mahindra unveil Q3 results on Wednesday, 8 February 2012. Tata Steel, Hindalco, ACC, Ambuja Cements and HPCL unveil quarterly results on Thursday, 9 February 2012.

DFL, Tata Power, BPCL, Reliance Communications (RCom), Britannia Industries, Sun TV Network, Essar Oil and Neyveli Lignite Corporation unveil Q3 results on Friday, 10 February 2012. JSW Steel announces consolidated Q3 results on Friday, 10 February 2012. The company has already announced its stand-alone results.

Aditya Birla Nuvo, Oil India and Ashok Leyland announce Q3 results on Saturday, 11 February 2012. State Bank of India, Cipla, Reliance Power, Indian Oil Corporation, Coal India, Sun Pharmaceuticals Industries and Steel Authority of India (Sail) unveil Q3 results on 13 February 2012. Tata Motors, Jaiprakash Associates and Shipping Corporation of India unveil Q3 results on 14 February 2012. Ranbaxy Laboratories announces Q4 December 2011 results on 23 February 2012.

A trial court Saturday, 4 February 2012, dismissed a petition to investigate Home Minister P Chidambaram's alleged role in a 2008 telecom scandal, handing a much-needed victory to the Congress party-led national government. The scandal, which revolves around alleged fraud in the distribution of second-generation cellphone licenses, has destabilized the Congress government over the past 18 months. The Supreme Court citing the manner of the allocation recently ordered the scrapping of more than 100 licenses, putting at risk millions of dollars of investment by foreign telecom companies. Former Telecommunications Minister A Raja was arrested last year for his alleged role in the scandal. Mr. Raja, although a former minister in the Congress-led coalition, is a member of a smaller regional party.

The court ruled on Saturday that there was insufficient evidence to make Mr. Chidambaram a co-defendant alongside Mr. Raja and other politicians and corporate executives who are being investigated. Mr. Chidambaram has denied any wrongdoing.

India's services sector grew at its fastest pace in six months during January 2012 as new business swelled, extending the previous couple of months' positive trend into the new calendar year, a survey showed on Friday, 3 February 2012. The HSBC Business Activity Index, compiled by Markit and based on a survey of around 400 firms, bounced to 58 in January from 54.2 in December. That was the third month the index has been above the 50-mark separating growth from contraction.

India's manufacturing sector grew at its fastest pace in eight months in January 2012 as factory output surged the most on record on increased domestic and foreign demand, a survey showed last week. The HSBC manufacturing purchasing managers' index (PMI), compiled by Markit, jumped to 57.5 from 54.2 in December. The factory output sub-index jumped to 62.9 in January from 55.8 in December, the biggest rise from one month to the next on record. Both the output and the new orders indexes rose to their highest level since May last year.

India's trade deficit widened to $12.7 billion in December from $8.0 billion a year earlier as export growth slowed due to falling global demand. But imports, specially in the non-oil segments, continued to grow. For the April-December period, the trade gap was $133.2 billion, compared with $96.2 billion a year earlier. India's merchandise exports in December grew 6.7% from a year earlier to $25.0 billion while imports rose 19.8% to $37.7 billion.

The government last week lowered slightly its estimate of the country's growth in gross domestic product for the last fiscal year ended 31 March 2011, to 8.4% from 8.5%.

The Union Budget 2012-13 is likely to be presented in the parliament in mid-March 2012. The annual budget is usually presented on the last working day of February. However, the budget is likely to delayed this time due to the ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012.

European stocks edged lower on Monday, 6 February 2012, as investors paused for breath following Friday's bumper gains and turned their attention to Greece's debt restructuring talks, which for now seem deadlocked. Key benchmark indices in France, Germany and UK shed by between 0.31% to 1.04%.

Talks between Greek political party leaders were set to resume Monday, after a marathon meeting Sunday reportedly failed to reach an agreement on the terms required to receive new bailout funds. Greece's three political parties have to agree on further austerity measures and economic reforms outlined by the European Union, the European Central Bank and the International Monetary Fund in return for more aid.

Asian stocks were mixed on Monday, after last week's rally, after data showed higher-than-expected US jobs growth. Key benchmark indices in China, Japan, South Korea, and Singapore rose by between 0.03% to 1.10%. Key benchmark indices in, Hong Kong, Taiwan and Indonesia fell by between 0.23% to 1.02%.

Trading in US index futures indicated that the Dow could fall 49 points at the opening bell on Monday, 6 February 2012. US stocks rose on Friday as the US economy added more jobs than expected last month, driving the Nasdaq Composite to an 11-year high and pushing the Dow to its highest close in nearly four years. The latest data showed non-farm payrolls rose 243,000 last month, marking the biggest gain since April. The jobless rate fell from 8.5% to 8.3%, the lowest it has been since February 2009.