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Tuesday, September 10, 2013

Sensex advances 9.66% in four days; scales nearly seven week high

Key benchmark indices galloped as the rupee extended recent recovery against the dollar on receding geopolitical risks from Syria. Gains in global stocks also underpinned sentiment. The barometer index, BSE Sensex, scaled nearly seven week closing high, with the index closing a tad lower from the psychological 20,000 mark after kissing that mark in late trade. The CNX Nifty hit 6-1/2 week closing high. The S&P BSE Sensex was up 727.04 points or 3.77%, up close to 550 points from the day's low and off about 15 points from the day's high. The market breadth, indicating the overall health of the market, was strong. All the thirteen sectoral indices on BSE were trading in the green.

Indian stocks gained for the fourth straight day today, 10 September 2013. The Sensex has garnered 1,762.44 points or 9.66% in four trading days from a recent low of 18,234.66 on 3 September 2013. The Sensex has gained 1377.38 points or 7.39% in September 2013 so far (till 10 September 2013). The Sensex has risen 570.39 points or 2.93% in calendar 2013 so far (till 10 September 2013). From a 52-week high of 20,443.62 on 20 May 2013, the Sensex has fallen 446.52 points or 2.18%. From a 52-week low of 17,448.71 on 28 August 2013, the Sensex has risen 2,548.39 points or 14.6%.

Coming back to today's trade, index heavyweight and cigarette maker ITC surged. Reliance Industries also edged higher. Auto stocks led today's market rally. Tata Motors surged to record high after its UK-unit Jaguar Land Rover today, 10 September 2013 reported strong sales in August 2013. Capital goods gained on fresh buying.

The market sentiment was also boosted by data showing that foreign funds remained net buyers of Indian stocks on Friday, 6 September 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 1093.40 crore from the secondary equity markets on Friday, 6 September 2013, as per the data from the Securities & Exchange Board of India (Sebi).

In the foreign exchange market, the rupee rose sharply on Tuesday as receding geopolitical risks from Syria and strong exports in August helped lift the currency. The partially convertible rupee was hovering at 64.05, stronger than its close of 65.24/25 on Friday, 6 September 2013. Financial markets were closed on Monday, 9 September 2013, on account of Ganesh Chaturthi. The rupee has seen a steep recovery from an all time low of 68.85 hit on 28 August 2013. Rupee depreciation fuels inflation, increases import bill and current account deficit. It also increases the government's spending on fuel subsidies, potentially widening the fiscal deficit.

The S&P BSE Sensex was up 727.04 points or 3.77% to 19,997.10, its highest closing level since 24 July 2013. The index surged 742.63 points at the day's high of 20,012.69 in late trade. The index gained 174.60 points at the day's low of 19,444.66 in early trade.

The CNX Nifty was up 216.35 points or 3.81% to 5,896.75, its highest closing level since 25 July 2013. The index hit a high of 5,904.85 and a low of 5,738.20 in intraday trade.

The BSE Mid-Cap index rose 1.37% and the BSE Small-Cap index gained 1.1%. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 2262 crore, higher than Rs 2093.75 crore on Friday, 6 September 2013.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,502 shares gained and 829 shares fell. A total of 143 shares were unchanged.

Among the 30-share Sensex pack, 27 stocks gained and only three of them declined.

Auto stocks led today's market rally. Tata Motors jumped 9.89% to Rs 349.20 after striking a record high of Rs 352 in intraday trade today, 10 September 2013. It was the top gainer from the Sensex pack. The company's unit Jaguar Land Rover (JLR) today, 10 September 2013 reported 28% rise in sales in August 2013 over August 2012 to 27,852 vehicles, also its best ever August sales performance. During the first eight months of the year, JLR sales rose 16% to 269,653 vehicles over the previous corresponding year ago period.

Commenting on the August performance Phil Popham, Jaguar Land Rover Group Sales Operations Director said: "August has proven to be another incredibly strong month for Jaguar Land Rover with sales growth from both our established and new model lines.

The Jaguar XJ and XF, the Range Rover Evoque and the Land Rover Freelander are up significantly whilst the new Range Rover and F-TYPE continue to attract new buyers to our brands. This is further evidence that we are offering customers our most accomplished product line up to date."

Meanwhile, PT Tata Motors Distribusi Indonesia (TMDI), wholly owned subsidiary of Tata Motors today, 10 September 2013 announced its foray into the Indonesian automotive industry with the launch of three new exciting Tata passenger vehicles -- the Tata Aria, the Tata Vista and the Tata Safari Storme. These three models, launched today, are the new-age range of Tata's extensive passenger vehicles which are unique, quality products, perfectly matched, to meet growing demand among Indonesian consumers of contemporary, next-generation car offerings, seven-seat crossover variants, and tough, durable SUV's. With these three debut products, TMDI believes that Indonesian consumers will be able to enjoy best vehicle experience.

Tata Motors announced on 9 September 2013 its partnership with DRB-HICOM, Malaysia's biggest conglomerate, for the import, distribution and assembly of Tata Motors Commercial Vehicles in Malaysia, an important milestone in the continued expansion of the company's global footprint.

As part of the agreement, Tata Motors signed a Distribution Agreement (DA) and Technology License Agreement (TLA) with USF-HICOM (Malaysia) Sdn. Bhd., a subsidiary of DRB-HICOM Berhad. Tata Motors also signed another Importation Agreement (IA) with another DRB-HICOM subsidiary, DRB-HICOM Auto Solution Sdn. Bhd. (DHAS) and USF-HICOM.

Maruti Suzuki India gained 3.71%. The company said during market hours on Friday 6 September 2013 that its production jumped 62.63% to 91,261 units in August 2013 over August 2012. The company said on 2 September 2013 that its total sales spurted 61.2% to 87,323 units in August 2013 over August 2012. Domestic sales rose 51.6% to 76,018 units in August 2013 over August 2012. Exports spurted 180.9% to 11,306 units in August 2013 over August 2012.

Mahindra & Mahindra (M&M) advanced 5.42%.

Ashok Leyland rose 1.31%.

Two-wheeler major Hero MotoCorp surged 7.22%. Bajaj Auto gained 3.74%.

Index heavyweight and cigarette maker ITC jumped 6.07% to Rs 335.40.

Reliance Industries rose 2.43% to Rs 888.65.

Capital goods gained on fresh buying. ABB (up 16.05%), BEML (up 1.87%), Bharat Electronics (up 1.48%), Crompton Greaves (up 1.88%), L&T (up 7.11%), Siemens (up 6.53%) and Thermax (up 3.37%) gained.

Bharat Heavy Electricals (Bhel) rose 0.74% to Rs 142.60 in volatile trade, with the stock extending recent gains. The stock lost as much as 3.21% at the day's low of Rs 137 so far during the day. The stock rose as much as 3.42% at the day's high of Rs 146.40 so far during the day. Shares of Bhel had rallied 18.55% in prior three sessions to settle at Rs 141.55 on Friday, 6 September 2013, from a recent low of Rs 119.40 on 3 September 2013.

Meanwhile, Bhel said after market hours on Friday, 6 September 2013, that consequent upon the merger of Bharat Heavy Plate & Vessels (BHPV) with the company, the BHPV plant is renamed as Heavy Plates & Vessels Plant (HPVP) and designated as the 17th manufacturing unit of Bhel located at Vishakhapatnam, Andhra Pradesh.

HCL Technologies rose 4.27% to Rs 1059.85 after striking a record high of Rs 1071 in intraday trade. Anglo American, one of the world's largest mining companies and HCL Technologies announced after market hours today, 10 September 2013, entering into an engagement where HCL will deliver IT services for Anglo American businesses across the globe. As a part of this contract, HCL will transform Anglo American's end user computing and data center landscape to improve operational efficiency, business agility and the user experience. The scope of service covers end to end infrastructure services, including data centre and hosting services, email services, service desk, local area network and security management, end user computing and on-site IT services, utilizing hybrid on-premise and cloud delivery models.

Metal and mining stocks gained after data showed China's industrial output grew at the fastest pace in 17 months in August. China is the World's largest consumer of copper and aluminum. Sesa Goa (up 6.3%), Hindustan Zinc (up 3.42%), Tata Steel (up 2.94%), Sail (up 0.1%), Hindalco Industries (up 1.94%) and JSW Steel (up 2.14%), edged higher.

Jindal Steel & Power rose 2.04% to Rs 238.10. The company after market hours on Friday, 6 September 2013 announced buyback of its shares worth Rs 1000 crore at the maximum price of Rs 261 a share. The buyback process will be through open market transaction and will open on 16 September 2013. The company said in a statement to the stock exchanges that at the maximum quantity of shares that can be bought back would be 3.83 crore equity shares. The company's board had approved the resolution for buy back on 30 August 2013.

Realty stocks also gained. DLF (up 3.81%), HDIL (up 2.83%), Sobha Developers (up 8.96%), and Unitech (up 1.47%), gained.

Cipla rose 0.34% to Rs 439.10 after hitting a record high of Rs 446.50 in intraday trade today, 10 September 2013.

Bank stocks were in demand on renewed buying. The new Reserve Bank of India (RBI) chief Raghuram Rajan on Wednesday, 4 September 2013, said that RBI will shortly issue the necessary circular to completely free bank branching for domestic scheduled commercial banks in every part of the country and also said that there is need to reduce the requirement for banks to invest in government securities in a calibrated way so as to ensure the flow of credit to the productive sectors of the economy.

Among PSU bank stocks, Canara Bank (up 1.34%), Union Bank of India (up 1.16%), Bank of India (up 4.14%) and Punjab National Bank (up 3.92%) edged higher.

But, State Bank of India fell 0.11%.

Among private bank stocks, Yes Bank (up 4.39%), Kotak Mahindra Bank (up 3.08%), ICICI Bank (up 1.1%), Federal Bank (up 1.17%), and HDFC Bank (up 3.51%), edged higher.

Axis Bank jumped 4.69%. The bank before market hours today, 10 September 2013 said that the Reserve Bank of India (RBI) has withdrawn restrictions with immediate effect on foreign institutional investors (FIIs) on buying shares of Axis Bank as the overall foreign share holding in Axis Bank fell below the prescribed limit of 49%. Foreign share holding in Axis Bank under the portfolio investment scheme have gone below the prescribed threshold limit stipulated under the extant FDI Policy, the RBI said in a statement. Total foreign holding in Axis Bank was 48.96% as at 30 June 2013, of which 40.70% was held by FIIs.

Telecom stocks surged after the sector regulator on Monday, 9 September 2013, recommended sharp cuts in reserve prices for the next round of spectrum auctions.

Bharti Airtel (up 8.15%), Idea Cellular (up 5.56%), MTNL (up 10.37%), and Reliance Communications (up 1.65%) gained.

Tata Teleservices (Maharashtra) declined 0.77%.

TRAI slashed the combined spectrum auction reserve price in the premium 900 MHz band in the circles of Delhi, Mumbai and Kolkata by about 79% to Rs 650 crore per MHz against Rs 3074.18 crore per MHz earlier.

It recommended an about 60% cut in the pan-India reserve price for the 2G spectrum (1800 MHz) auctions compared to its previous suggestions.

The Telecom Regulatory Authority of India (TRAI) also said no spectrum would be reserved for existing players when their licences expire and suggested that airwaves can be traded.

India's trade deficit narrowed to $10.9 billion in August, helped by a double digit rise in merchandise exports, provisional government data showed on Tuesday, offering some respite for the troubled rupee currency. Merchandise exports rose 12.97% in August to $26.14 billion from a year earlier. Imports fell 0.68% year-on-year to $37.05 billion.

European stocks advanced to a three-week high on Tuesday as data showed Chinese industrial production and retail sales rose in August, adding to signs the global economy is rebounding. Key benchmark indices in France, Germany and UK rose by 0.74% to 1.71%.

Asian stocks hit three-month high on Tuesday ahead of a fresh round of Chinese economic data and signs that Syrian tensions are easing. Key benchmark indices in China, Taiwan, Hong Kong, Indonesia, South Korea, Singapore and Japan rose by 0.22% to 3.98%.

China's industrial output grew at the fastest pace in 17 months in August, adding to signs of a rebound this quarter that include a pickup in export gains. Factory production rose 10.4% from a year earlier, the National Bureau of Statistics said in a statement in Beijing today. Retail sales rose 13.4% in August higher than 13.2% gain in the previous month.

Trading in US index futures indicated that the Dow could gain 77 points at the opening bell on Tuesday, 10 September 2013. US markets ended higher on Monday, helped in part by hopes that the threat of a US military intervention in the Middle East could be abating.

Russia on Monday proposed to work with Damascus to put its chemical weapons under international control, a move that President Barack Obama said could be "potentially positive".

Investors across the globe are eyeing the next policy meeting of the Federal Open Market Committee (FOMC) scheduled this month, with their focus squarely on the timing of tapering of Federal Reserve's bond purchases. The FOMC holds a two-day policy meeting on 17-18 September 2013 to decide on interest rates in the United States. The US central bank currently buys $85 billion a month in US debt and mortgage-backed securities in a bid to hold interest rates low and encourage economic growth. Federal Reserve Chairman Ben Bernanke has on several occasions stressed that the tapering process is dependent on an improvement in data. Fed's bond-buying program has kept global markets flush with liquidity in recent years.