Sensex at near 14 month closing high

The market gained for the second straight week as diesel price hike by the Indian government to help improve country's deteriorating fiscal position, US Federal Reserve's QE3 program and Germany's Federal Constitutional Court rejecting calls to block the euro rescue fund increased investors' appetite for riskier assets. Recent strong buying of Indian stocks by foreign finds also supported domestic bourses. The market gained in all five trading sessions in the week just gone by. The barometer index, BSE Sensex, scaled nearly 14 month closing high above 18,000. The 50-unit S&P CNX Nifty hit nearly 7 month closing high. The BSE Sensex jumped 714.62 points or 4.02% to 18,464.27, its highest closing level since 26 July 2011. The 50-unit S&P CNX Nifty surged 218.95 points or 4.08% to settle at 5,577.65, its highest closing level since 21 February 2012. The BSE Mid-Cap index rose 1.66%. The BSE Small-Cap index gained 1.95%. Both these indices underperformed the Sensex. The Cabinet Committee on Political Affairs (CCPA) on Thursday raised price of heavily subsidised diesel by Rs 5 per liter on Thursday to balance its fiscal deficit situation. The diesel price hike will reduce the projected massive under-recoveries of Rs 1,87,127 crore by about Rs 20300 crore of oil marketing firms for the financial year 2012-13 in the wake of high international crude oil prices and sharp depreciation of rupee against dollar. PSU OMCs had suffered under-recovery of Rs 1,38,541 crore during 2011-12. The CCPA left the petrol and kerosene prices unchanged. It also restricted the supply of subsidized LPG cylinders to each consumer to six cylinders (of 14.2 kg) per annum. US Federal Reserve on Thursday announced to buy $40 billion worth of mortgage back securities per month to keep borrowing rates low and would keep its benchmark interest rates "exceptionally low" until the middle of 2015. Concluding its two-day meeting on Thursday, the Federal Open Market Committee (FOMC) said that it will closely monitor incoming information on economic and financial developments in coming months. In particular, the FOMC also decided to keep the target range for the federal funds rate at 0 to 0.25% and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. Germany's Federal Constitutional Court on Wednesday rejected calls to block the ratification of Europe's 500 billion euro ($643.7 billion) permanent rescue fund, the European Stability Mechanism, and the fiscal pact. As expected, the judges attached various conditions to the ESM, saying a total cap on Germany's liabilities under the ESM must be capped for the measure to conform to the country's Basic Law, or constitution. Trading for the week began on a positive note. Key benchmark indices edged higher on Monday, 10 September 2012 to hit their highest closing level in 2-1/2 weeks with market sentiment boosted by recent strong buying of Indian stocks by foreign funds. The BSE Sensex was up 17.13 points or 0.1% to 17,766.78 on that day, its highest closing level since 24 August 2012. Key benchmark indices gained for the fifth straight trading session on Tuesday, 11 September 2012 as data showing that foreign funds remained net buyers of Indian stocks on Monday, 10 September 2012 boosted sentiment. The BSE Sensex was up 86.17 points or 0.49% to 17,852.95 on that day, its highest closing level since 21 August 2012. Key benchmark indices gained for the sixth straight trading session on Wednesday, 12 September 2012 as world stocks rose after Germany's highest constitutional court allowed the country to ratify the euro area's permanent bailout fund. The BSE Sensex was up 147.08 points or 0.82% to 18,000.03 on that day, its highest closing level since 23 February 2012. Key benchmark indices gained for the seventh straight trading session on Thursday, 13 September 2012 as data showing recent strong buying of Indian stocks by foreign funds underpinned sentiment. The BSE Sensex was up 21.13 points or 0.12% to 18,021.16 on that day, its highest closing level since 23 February 2012. Key benchmark indices logged smart gains for eight straight session of trade on Friday, 14 September 2012 after the government signaled pushing long pending reforms on the fast track after hiking steeply diesel prices by Rs 5 per liter on Thursday. The BSE Sensex was up 443.11 points or 2.46% to 18,464.27 on that day, its highest closing since 26 July 2011. From the 30-share Sensex pack, 28 stocks rose and only two of them fell. Cipla tumbled 5.54% and was the top loser from the Sensex pack. The Delhi High Court has recently ruled in favour of Cipla in a patent infringement case filed by Switzerland's Roche Holding AG over Cipla's cancer drug Erlocip. NTPC shed 1.84%. FMCG stocks rose on revival of monsoon rains towards the end of the monsoon season. FMCG firms derive substantial sales from rural India. Index heavyweight and cigarette maker, ITC gained 1.78% to Rs 268.10. The stock scaled a record high of Rs 272.50 in intraday trade Friday, 14 September 2012. ITC had reported strong Q1 June 2012 results. ITC's net profit jumped 20.21% to Rs 1602.14 crore on 15.34% growth in net sales to Rs 6652.21 crore in Q1 June 2012 over Q1 June 2011. Despite series of tax hikes, ITC's performance in cigarettes business remains robust and displays pricing power for the company. FMCG major, Hindustan Unilever (HUL) rose 1.37% to Rs 547.40. The stock hit a record high of Rs 554.35 in intraday trade Friday, 14 September 2012. Index heavyweight Reliance Industries (RIL) jumped 5.72%. RIL has bought back 3.9 crore shares for about of Rs 2793.51 crore till 4 September 2012 under its ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in June 2012 that the company's buyback program represents a highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future. RIL on 27 August 2012 said it has scheduled a planned maintenance turnaround of one of the diesel hydrotreater units of the DTA refinery at its Jamnagar, Gujarat complex for a period of approximately two and half weeks starting 28 August 2012. This opportunity will also be utilised to carry out other maintenance and inspection jobs during the shutdown period, RIL said in a statement. During the period the other diesel hydrotreating unit of the DTA refinery along with other units including crude processing levels are planned at normal levels, RIL said. Interest rate sensitive banking stocks were in demand ahead of the RBI's monetary policy review on Monday, 17 September 2012. ICICI Bank surged 6.95%. The private sector bank cut deposit rates by 50 basis points and the revised rates were effective 11 September 2012. The bank cut rates across maturities ranging from 91 days to less than five years. HDFC Bank gained 3.5%. The bank has reportedly cut interest rates on retail fixed deposits by up to 50 basis points for various maturities. India's largest bank by branch network SBI rose 3.96%. SBI on Wednesday, 5 September 2012, said it has decided to revise downwards interest rates on retail term deposits with effect from Friday, 7 September 2012. The bank has decided to cut interest rates on retail term deposits by between 50 basis points to 100 basis points for various maturities for deposit below Rs 15 lakh. SBI has decided to cut interest rates on retail term deposits by 50 basis points for various maturities of less than 5 years for deposits of Rs 15 lakh to less than Rs 1 crore. Metal shares gained as global metal prices surged. Jindal Steel & Power (up 5.69%), Hindalco Industries (up 10.53%), Tata Steel (up 8.01%) and Sterlite Industries (up 0.36%), gained. Engineering and construction conglomerate L&T jumped 8.38%. During market hours on Friday, 14 September 2012 L&T said has restructured its IT and engineering businesses with a view to accelerate growth in the technology space. L&T Infotech has been reorganised around two business clusters, “industrial” and “services”. L&T Integrated Engineering Services (IES) will be rebranded as L&T Technology Services. As a part of this strategy, it has inducted three US-based professionals - Keshab Panda, Mukesh Aghi and Vivek Chopra will join as directors on the L&T Infotech board. L&T believes this restructure will help the company in growing these businesses, the company said in a press release. Bharti Airtel rose 0.22%. During market hours Friday, 14 September 2012, the company said its subsidiary Bharti Infratel has filed its Draft Red Herring Prospectus with the Securities and Exchange Board of India (Sebi) on 14 September 2012 in relation to its initial public offer of equity shares (the "Issue"). The Issue constitutes a fresh issue of equity shares by Bharti Infratel and an offer for sale portion by Compassvale Investments Pte., GS Strategic Investments, Anadale and Nomura Asia Investment (IB) Pte. Interest rate sensitive auto stocks also rose ahead of RBI's monetary policy review on Monday, 17 September 2012. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. Auto stocks shrugged off government's move to hike diesel prices by Rs 5 per liter on Thursday. Tata Motors jumped 10.01%. The company announced its entry into Indonesia through a wholly-owned subsidiary based in Jakarta, PT Tata Motors Indonesia. A statement from Tata Motors said Indonesia was the largest automobile market in the Association of Southeast Asian Nations (ASEAN) region and the company would enter passenger cars and commercial vehicles segments. Indonesia is a key market for Tata Motors in commercial vehicles and the company will begin to launch its products in Indonesia in 2013. The statement said that by the time of the launch, PT Tata Motors Indonesia expects to have 10-15 dealers nationwide, offering sales, service and spare parts. Over three years, the company would set up a country-wide network of around 60 full-service dealers about 100 other workshops and about 300 more spare parts retailers, the release said. Maruti Suzuki India (up 4.26%) and M&M (up 1.56%), gained. Motorcycle makers rose as the government left the petrol prices unchanged. India's biggest bike maker by sales Hero MotoCorp (HMCL) gained 3.12%. The company on Thursday announced yet another global partnership in keeping with its ongoing endeavor to fast augment its in-house technological and designing capabilities. The company has roped in the renowned Italian two-wheeler design firm “Engines Engineering” to partner with it in bringing HMCL's next-generation product line-up. The Bologna-based firm will impart technological know-how in terms of superior designing for the future products to be launched by HMCL. Bajaj Auto rose 3.55% Software pivotals were in demand as US central bank on Thursday initiated another aggressive stimulus program to stimulate growth in the world's largest economy. US is the key outsourcing markets for Indian IT firms. India's largest software services exporter by revenues Tata Consultancy Services (TCS) rose 2.09%. TCS has re-appointed Mr. S. Mahalingam as the Executive Director and Chief Financial Officer of the company for the period September 6, 2012 to February 9, 2013, subject to the approval of the shareholders. India's second largest software services exporter by revenues Infosys jumped 5.48%. The company said its BPO firm, McCamish Systems has increased its presence in the USA, and in the Voluntary Group Life Insurance Business. The company made this announcement before trading hours on 11 September 2012. McCamish Systems LLC, an Infosys BPO company, specializing in end-to-end, enterprise-wide insurance and retirement business process solutions, has increased its presence in the Voluntary Group Life Insurance business space by commencing operations in Des Moines, Iowa, USA with 87 employees, serving 7 insurers and covering more than 6 lakh insured lives, Infosys said. This has further enhanced Infosys BPO's positioning as a premier provider of end-to-end, enterprise-wide solutions for the insurance and financial services sector, Infosys said in a statement. Infosys on 10 September 2012, announced a definitive agreement to acquire Lodestone Holding AG, a leading global management consultancy firm, for an aggregate enterprise value of CHF 330 million in cash. The acquisition of Lodestone will strengthen Infosys' consulting and systems integration (C&SI) capabilities, by bringing more than 850 employees, including 750 experienced SAP consultants to the company, Infosys said in a statement. Lodestone will add more than 200 clients across industries to the Infosys pool of over 700 clients, Infosys said in a statement. India's third largest software services exporter by revenues Wipro rose 2.48%. Dr Reddy's Laboratories rose 1.19%. The company after market hours on 11 September 2012 said it has launched Metoprolol Succinate Extended-Release (ER) tablets 25 milligram (mg), 50 mg, 100 mg and 200 mg in the US market. The Metoprolol Succinate ER tablets are bioequivalent generic version of AstraZeneca's Toprol-XL tablets. According to IMS Health data, Toprol-XL brand and generic had sales of approximately $1.13 billion in the US for the 12 months ended June 2012. ONGC rose 1.99%. ONGC's wholly-owned subsidiary ONGC Videsh (OVL) has signed definitive agreements for the acquisition of Hess Corporation's 2.7213% participating interest in the Azeri, Chirag and the Deep Water Portion of Guneshli Fields in the Azerbaijan sector of the Caspian Sea (ACG) and 2.36% interest in the Baku-Tbilisi-Ceyhan Pipeline (BTC), for $1 billion. The acquisition is subject to relevant government and regulatory approvals and is expected to close by the first quarter of 2013, OVL said after trading hours on Saturday, 8 September 2012. ACG, which is located in the south Caspian Sea about 95 km off the coast of Azerbaijan, is the largest oil and gas field complex in Azerbaijan and is one of the largest producing oil fields in the world. BP operates ACG and is partnered by State Oil Company of Azerbaijan Republic (SOCAR), Chevron, Statoil, ExxonMobil, Inpex, Turkish NOC - TPAO and Itochu. Average daily production from the field is around 700,000 bopd of crude oil. The 1,768-km BTC Pipeline is one of the main export routes for Caspian crude oil production with a capacity of around 1.0 million bopd to the Ceyhan terminal in the Mediterranean Sea in south east Turkey. The acquisition would mark OVL's entry into oil rich Azerbaijan and is consistent with its stated strategic objective of adding high quality international assets to its existing E&P portfolio, OVL said. The acquisition would bring 9% additional proved reserves to OVL portfolio and also bears significant strategic importance to India in terms of contributing towards India's energy security, OVL said. ONGC has recently formulated its Perspective Plan – 2030 envisaging that the oil and gas production of OVL would increase from the current level of 8.75 MMTOE to 20 MMTOE by FY 2018 and 60 MMTOE by FY 2030. Mr. Sudhir Vasudeva, CMD, ONGC said that the current transaction is the first step towards achieving this goal. The production from this asset during 2011-12 was about 15% of OVL's crude oil production during the same period. The primary business of OVL is to prospect for oil and gas acreages abroad including acquisition of oil and gas fields, exploration, development, production, transportation and export of oil and gas. OVL is a wholly-owned subsidiary of ONGC. The wholesale price index (WPI) rose to a higher-than-expected 7.55% in August 2012 from a year earlier, mainly driven by higher food prices due to deficient monsoon, government data showed on Friday. This compares with provisional figure of 6.87% for July and 9.78% during the corresponding month of the previous year. The government also revised upwards June inflation to 7.58% from 7.25%. Government data released on Wednesday, 12 September 2012, showed the index of industrial production (IIP) grew at 0.1% in July 2012 as against 3.7% in the same month last year. The index, a key measure of industrial output, contracted by 1.8% in June 2012 after growing at 0.1% in April 2012. Merchandise exports declined for the fourth month in a row in August at $22.3 billion, down 9.7% over $24.7 billion in same month last year, provisional trade data released on Thursday showed. Imports in August declined 5.08% to $38 billion ($40 billion), resulting in a marginal increase in trade deficit of $15.7 billion ($15.3 billion). The Reserve Bank of India (RBI) on Tuesday eased the external commercial borrowing (ECB) rules and hiked the maximum limit to $3 billion for one company. RBI also hiked the overseas borrowing cap to 75% of the company's last three-year average forex earnings. The foreign loan cap has also been raised to 75% of last three-year average forex earnings. ECB refers to commercial loans in the form of bank loans, buyers' credit, suppliers' credit, securitised instruments availed of from non-resident lenders with a minimum average maturity of three years. Last month, the Finance Ministry had liberalised the norms for raising funds through ECBs by domestic firms, particularly those in the realty sector. The High Level Committee on ECBs also permitted FIIs to invest up to $5 billion in rupee bonds within the overall corporate bond limit of $45 billion.