Sensex scales 28-1/2-week high as bank stocks advance

Key benchmark edged higher in choppy trade as world stocks rose on renewed hopes for a Greek bailout and as fresh US economic data spurred investors into riskier assets. The 50-unit S&P CNX Nifty attained its highest level in more than 29 weeks. The barometer index, BSE Sensex, attained 28-1/2-week closing high. The Sensex jumped 135.36 points or 0.75%, off 133.71 points from the day's high and up 54.79 points from the day's low. The market breadth turned negative from positive in late trade.

The Sensex has jumped 1,095.80 jumped points or 6.37% in February 2012 so far. The barometer index has surged 2,834.43 points or 18.33% in calendar 2012 so far. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 3,153.49 points or 20.83%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 1,521.79 points or 7.68%.



Coming back to today's trade, 10 out of 13 sectoral indices on BSE edged higher. Interest rate sensitive banking stocks rose as a further decline in inflation in January 2012 reinforced expectations that the central bank will start cutting interest rates in the coming months to revive slowing economic growth. Shares of power equipment makers surged as a favourable court ruling has paved the way for state-run power generation major NTPC to place bulk orders for boilers based on supercritical technology. Power generation stocks extended their recent rally triggered by Prime Minister Manmohan Singh on Wednesday, 15 February 2012, initiating clearance of coal supplies to power generation firms.

IT shares edged higher on strong economic data in the US, with TCS hitting a record high. Cement stocks extended recent gains, with UltraTech Cement and Shree Cement hitting record highs. Auto stocks fell on profit taking after recent strong gains. Telecom stocks were mixed.

Key benchmark indices surged in early trade on firm Asian shares. The market extended initial gains in morning trade. The 50-unit S&P CNX Nifty scaled its highest level in more than 29 weeks. The barometer index BSE Sensex hit its highest level in 28-1/2 weeks. A bout of volatility was witnessed as key benchmark indices pared gains after hitting fresh intraday highs in morning trade. Key benchmark indices held firm amid range bound early afternoon trade. The market held firm in afternoon trade. Key benchmark indices pared gains to hit fresh intraday lows in mid-afternoon trade. The market regained strength in late trade.

The BSE Sensex jumped 135.36 points or 0.75% to settle at 18,289.35, its highest closing level since 1 August 2011. The index jumped 269.07 points at the day's high of 18,423.06 in morning trade. The index rose 80.57 points at the day's low of 18,234.56 in mid-afternoon trade.

The S&P CNX Nifty jumped 42.35 points or 0.77% to settle at 5,564.30, its highest closing level since 26 July 2011. Nifty hit a high of 5,606.70 in intraday trade. Nifty hit a low of 5,545.20 in intraday trade.

The market breadth, indicating the overall health of the market, turned negative from positive in late trade. On BSE, 1,601 shares declined and 1,449 shares advanced. A total of 115 shares were unchanged. The market breadth was strong earlier in the day.

The BSE Mid-Cap index shed 0.05% and the BSE Small-Cap index fell 0.21%. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 4406 crore, higher than Rs 3619.98 crore clocked on Thursday, 16 February 2012.

Among the 30-share Sensex pack, 19 gained while the rest declined.

Index heavyweight Reliance Industries (RIL) rose 0.41% to Rs 815.50. The stock was volatile. The scrip hit a high of Rs 825.80 and low of Rs 809.95. RIL has reportedly shut a sixth well at its gas fields in the D6 block, off the country's east coast, due to water ingress, and any clarity on the likely output from these fields will emerge only by August 2012. RIL, the operator of the D6 block, had earlier shut five of 18 producing wells at D1 and D3 gas fields until December. The D6 field's current output is about 37 mmscmd.

India's largest power generation company by capacity, NTPC gained 1.96%. The company's chairman Arup Roy Choudhury on Thursday, 16 February 2012, said that the company's gas-based power stations are operating at 60% of capacity due to fuel shortages. Against its requirement of 19 million metric standard cubic meter per day (mmscmd) of gas, NTPC is getting just 14.3 mmscmd.

Meanwhile, NTPC has won a court case against utility boilers-maker Ansaldo Caldaie Boilers, a unit of Italian boiler maker Ansaldo Caldaie SpA. The process of awarding equipment order for NTPC's nine units of 660 MW each was delayed by more than a year after Ansaldo Caldaie moved the Delhi High Court following its disqualification on technical grounds. The high court had upheld Ansaldo's plea that it was wrongly disqualified, against which NTPC moved the Supreme Court.

NTPC had floated tender in October 2009 for the supply of 11 supercritical boilers -- nine for its own projects and two for Damodar Valley Corporation (DVC). These projects are envisaged for implementation under the 12th Five-year capacity addition programme. Besides Ansaldo, three bidders -- Bharat Heavy Electricals (Bhel), a consortium of Larsen & Toubro Power and Mitsubishi Heavy Industries and a JV between BGR Energy and Hitachi Power Europe GmbH -- had qualified in the first phase of bidding. NTPC will now invite price bids for supercritical boilers from these three bidders.

Shares of power equipment makers surged as a favourable court ruling has paved the way for state-run power generation major NTPC to place bulk orders for boilers based on supercritical technology. India's largest power equipment maker by sales Bhel jumped 6.21% to Rs 302.55 and was the top gainer from the Sensex pack. The stock came off day's high of Rs 325.50.

India's biggest engineering & construction firm by order book, Larsen & Toubro gained 0.76% to Rs 1458, after striking an intraday high of Rs 1529.80.

Coal India gained 1.25%. The stock had dropped 5.44% on Thursday after Singh on Wednesday, 15 February 2012, directed the state-run coal giant to sign fuel supply agreements (FSAs) with power plants that have entered into long-term PPAs with power distribution companies and have been commissioned/would get commissioned on or before 31 March 2015. Singh has directed Coal India to guarantee supplies to the private power sector in a bid to alleviate the nation's chronic energy shortages.

For power plants that have been commissioned up to 31 December 2011, Coal India will sign FSAs before 31 March 2012. The FSAs will be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years with trigger level of 80% for levy of disincentive and 90% for levy of incentive. In case of any shortfall in fulfilling its commitment under the FSAs from its own production, Coal India will arrange for supply of coal through imports or through arrangement with State/Central PSUs who have been allotted coal blocks. The proposed course of action has been approved by the Prime Minister.

A statement from the Prime Minister's office on Wednesday, 15 February 2012, said that these arrangements will provide relief to power plants with estimated capacity of more than 50,000 megawatts (MW). The proposed set of arrangements is being seen as a major step forward in solving the problems of power sector in the country and is likely to boost investors' confidence in India's power sector, the statement added. It will help not only in achieving power generation capacity targeted in the 12th Plan but also assist in achieving the targeted growth of GDP, according to the statement.

Power generation stocks extended their recent rally triggered by Prime Minister Manmohan Singh on Wednesday, 15 February 2012, initiating clearance of coal supplies to power generation firms. Tata Power Company (up 4.98%), Adani Power (up 4.78%), Reliance Power (up 3.87%), Lanco Infratech (up 11.58%), GMR Infrastructure (up 0.93%), GVK Power & Infrastructure (up 2.67%), CESC (up 2.08%), and JSW Energy (up 8.21%) gained.

Rural Electrification Corporation (REC) rose 3.33%. The board of REC has approved raising Rs 1500 crore through a public issue of tax free secured redeemable non-convertible bonds of face value Rs 1000 each in the year ending March 2012, with an option to retain over subscription up a total amount of Rs 3000 crore.

IT shares edged higher on strong economic data in the US, the biggest outsourcing market for Indian IT firms. India's second largest software services exporter by revenue Infosys gained 2.03%. India's third largest software services exporter by revenues Wipro rose 2.61%.

India's largest software services exporter by revenue, TCS, rose 0.09% to Rs 1,227. The stock scaled a record high of Rs 1,252.95 in intraday trade today, 17 February 2012. The company's chief executive N. Chandrasekaran said in a recent media interview that the company expects business momentum to strengthen next fiscal year as clients have started loosening their purse strings despite economic uncertainties.

Auto stocks fell on profit taking after recent strong gains. India's largest car maker by sales Maruti Suzuki India declined 2.74% on profit taking after three-day 10.74% advance. Commercial vehicles maker Ashok Leyland fell 2.67%.

India's largest motorcycle maker by sales Hero MotoCorp lost 3.87% to Rs 2,103.90, after four-day 11.11% rally.

India's second largest motorcycle maker by sales Bajaj Auto dropped 1.03%.

India's largest utility vehicles maker Mahindra & Mahindra (M&M) rose 2.69%

India's largest truck maker by sales Tata Motors declined 0.58%, with the stock extending Thursday's 3.67% losses. Tata Motors' global vehicle sales rose 21% to 1.19 lakh units in January 2012 over January 2011. Sales of its Jaguar Land Rover brands, rose 44% to 29,293 units in January 2012 over January 2011. The marquee brands, which Tata Motors bought from Ford Motor Co. in 2008, are now the biggest contributors to the company's revenue.

Robust demand for Jaguar Land Rover vehicles helped Tata Motors post a 26% growth in worldwide passenger vehicle sales to 66,785 units in January 2012 over January 2011. Tata Motors' global sales of trucks and buses increased 15% to 53,014 units in January 2012 over January 2011. Tata Motors announced the global sales data for January 2012 during trading hours on Wednesday, 15 February 2012.

Tata Motors' consolidated net profit jumped 40.5% to Rs 3405.55 crore on 44.6% growth in net sales to Rs 45199.29 crore in Q3 December 2011 over Q3 December 2010. The result was announced early this week. Tata Motors said revenue grew on the back of growth in volumes, improved product and market mix.

India's largest non-ferrous metals maker by capacity Sterlite Industries (India) rose 2.94%. The company during market hours on Wednesday, 15 February 2012, said that a US bankruptcy court has rejected its claim for a refund of $50 million it had paid as part of a process to acquire US-based miner Asarco LLC. With the rejection of the claim, Sterlite will have to pay a total of $132.75 million in damages to Asarco for its unsuccessful takeover bid in 2009. Sterlite lost a bidding war for Asarco after a Texas bankruptcy court approved a rival restructuring plan for the company proposed by Asarco's parent, Grupo Mexico SAB.

Interest rate sensitive banking stocks gained as a further decline in inflation in January 2012 reinforced expectations that the central bank will start cutting interest rates in the coming months to revive slowing economic growth.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) surged 3.07%, with the stock extending three-day 10.33% gains. SBI early this week reported 15.38% growth in net profit to Rs 3263.04 crore on 20.46% growth in total income to Rs 29787.37 crore in Q3 December 2011 over Q3 December 2010. SBI's provisioning for non-performing assets jumped 84.16% to Rs 3006.12 crore in Q3 December 2011 over Q3 December 2010.

The bank's ratio of net non-performing assets rose to 2.22% as on 31 December 2011 from 2.04% as on 30 September 2011 and 1.61% as on 31 December 2010. The ratio of gross non-performing assets rose to 4.61% as on 31 December 2011 from 4.19% as on 30 September 2011 and 3.17% as on 31 December 2010.

On a consolidated basis, SBI posted 16.37% growth in net profit to Rs 4318.08 crore on 16.74% rise in total income to Rs 43155.95 crore in Q3 December 2011 over Q3 December 2010.

India's largest private sector bank by branch network ICICI Bank advanced 1.48%.

India's second largest bank by net profit HDFC Bank rose 0.39% to Rs 528.25. The stock had hit a record high of Rs 537.50 in intraday trade on Thursday, 16 February 2012.

Punjab & Sind Bank jumped 3.27% after the bank said its board recommended issuing 1.12 crore equity shares, or 5% equity, on preferential basis to the Life Insurance Corporation of India. The announcement was made after market hours on Thursday, 16 February 2012

Allahabad Bank rose 3.06% after the bank said its board would meet on 22 February 2012 to consider issuing equity shares on a preferential basis to Government of India. The announcement was made after market hours on Thursday, 17 February 2012.

Cement stocks extended recent gains. ACC (up 1.66%) and Ambuja Cements (up 2.50%), edged higher.

UltraTech Cement rose 0.85% to Rs 1,480. The stock hit a record high of Rs 1,489 today, 17 February 2012.

Shree Cement jumped 5.46% to Rs 2,672. The stock hit a record high of Rs 2,674 today, 17 February 2012.

Telecom stocks were mixed. Bharti Airtel (down 0.36%) and Idea Celluar (down 1.72%), declined. MTNL (up 17.98%), and Tata Teleservices (Maharashtra) (up 1.76%), gained.

The government on Wednesday, 15 February 2012, unveiled some points of a new telecommunications policy, including separating licenses from bandwidth and easing mergers and acquisition rules. Communications Minister Kapil Sibal on Wednesday, 15 February 2012, said that the government has decided to allow mergers and acquisitions where the resultant entity won't have a market share of more than 35% or over 25% of bandwidth in a telecom service area. Operators will also now have to pay a unified license fee across all telecommunication services at 8% of adjusted gross revenue. Telecom operators currently pay 6%-10% of their revenue as license fees for basic mobile services, depending on the areas they operate in.

The new telecom policy comes as the government tries to clean up the telecom sector following allegations of large-scale rigging in a sale of licenses and bandwidth in 2008. The Supreme Court recently canceled all the 122 licenses allotted without auction since 2008.

Reliance Communications (RCom) rose 1.36%. During market hours on Thursday, 16 February 2012, RCom said it has received RBI approval for the refinancing being provided by ICBC, CDB and EXIM for redemption of its outstanding FCCBs. The outstanding FCCBs of $1.182 billion (approximately Rs 5825 crore), will be redeemed on the due date of 1 March 2012. RCom said it will benefit from extended loan maturity of 7 years and attractive interest rate of about 5%.

SBI was the top traded counter on BSE with turnover of Rs 243.12 crore followed by Bhel (Rs 168.72 crore), RIL (Rs 126.62 crore), L&T (Rs 124.13 crore), and Reliance Power (Rs 85.19 crore).

Lanco Infratech was the volume topper on BSE with volume of 3.45 crore shares followed by Cals Refineries (1.28 crore shares), Suryachakra Power (1.12 crore shares), IFCI (96.22 lakh shares), and GVK Power & Infrastructure (89.14 lakh shares).

The stock market remains closed on Monday, 20 February 2012, on account of Mahashivratri.

Foreign institutional investors (FIIs) bought shares worth a net Rs 184.31 crore on Thursday, 16 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 11611.84 crore in this month so far (16 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).

A further decline in inflation in January 2012 has reinforced expectations that the central bank will start cutting interest rates in the coming months to revive slowing economic growth. The wholesale price index (WPI) rose a slower-than-expected 6.55% in January 2012 from 7.47% rise in December 2011, government data showed early this week. The annual reading for November 2011 was revised upwards to 9.46% from 9.11% reported earlier.

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.

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 edged higher on Friday, 17 February 2012, as renewed hopes for a Greek bailout and fresh US economic data spurred investors into riskier assets. Key benchmark indices in UK, Germany and France were up by between 0.31% to 0.88%.

Bank stocks led the gains in Europe on Friday, 17 February 2012, on reports that the European Central Bank and European officials were moving closer to an agreement to close Greece's funding gap, which could clear way for approval of a second bailout. A bailout package could get approval as soon as Monday, 20 February 2012, erasing fears that the money would be delayed until April 2012. The positive sentiment was further boosted by a round of upbeat jobs and manufacturing data from the US, suggesting that the world's largest economy is recovering.

Asian shares edged higher on Friday, 16 February 2012, following strong gains on Wall Street overnight triggered by improved US economic data. Key benchmark indices in Taiwan, South Korea, China, Hong Kong, Indonesia, Singapore and Japan were up by between 0.01% to 1.58%.

Trading in US index futures indicated a flat opening of US stocks on Friday, 17 February 2012. US shares settled near four-year highs on Thursday, 16 February 2012, on strong US economic data. The Dow Jones Industrial Average advanced 123.13 points, or 1%, to 12,904.08. The Standard & Poor's 500-stock index rose 14.81 points, or 1.1%, to 1,358.04. The Nasdaq Composite index rose 44.02 points, or 1.5%, to 2,959.85.

Weekly applications for unemployment benefits dropped 13,000 to a seasonally adjusted 348,000, the US Labor Department said on Thursday.