Bourses laud RBI's decision on rates

The Reserve Bank of India (RBI)’s decision to keep all policy rates - the CRR, repo, reverse repo and bank rates -- unchanged brought cheer on the bourses today. The benchmark Sensex surged to a two-month high, and the barometer index settled above the psychologically important 14,000 mark. Speculative buying, as well as short-covering in the derivatives aided the surge, especially in banking shares.

PSU banks vaulted as the RBI's decision to hold rates steady allayed fears of a squeeze on their profitability. Stocks from other interest rate sensitive sectors, namely, auto, housing finance and real estate looked up. Reliance Industries (RIL) and Bharti Airtel struck all-time highs. But IT shares slipped as the rupee rose to a fresh nine-year high against the dollar, soon after the central bank opted to hold short-term rates steady.

The 30-share BSE Sensex jumped 208.39 points (1.5%), to finish at 14,136.72, its highest closing in two months since 21 February 2007. The Sensex had struck 14,000 in intra-day trade on Monday (23 April) but failed to settle above that level.

The S&P CNX Nifty advanced 56.70 points (1.39%), to 4,141.80. The Nifty April futures were at 4,142.90 and the Nifty May futures at 4,139.

As per provisional data, FIIs were net buyers to the tune of Rs 340 crore today. Domestic institutional investors were net buyers to the tune of Rs 184 crore today.

The BSE clocked a turnover of Rs 5104 crore compared to Monday’s Rs 4098 crore. Turnover on NSE’s futures & options segment surged to Rs 50866.94 crore from Monday’s Rs 33404.76 crore as rollover gathered steam ahead of Thursday (26 April)’s expiry of April 2007 derivative contracts.

Barring the BSE IT Index, the other sectoral indices on BSE ended in the green. The top-gainer in percentage terms was the banking sector index, the BSE Bankex. The Bankex surged 279.56 points (4.06%), to settle at 7,161.40. The next major gainer was the Auto index. It rose 79.12 points (1.65%), to 4,882.03. The Metal Index rose 147.03 points (1.49%), to 10,043.87, due to a surge in Tata Steel.

On the back of gains in Reliance Industries (RIL) and ONGC, the BSE Oil & Gas Index advanced 100.75 points (1.42%), to settle at 7,203.64. The IT Index lost 35.57 points (0.7%), to finish at 5,027.29.

The market-breadth was almost even. Against 1,274 scrips that rose on BSE, 1,279 declined. Also, 75 stocks were unchanged.

Small-cap and mid-cap indices nudged higher. The BSE Small-Cap Index rose 32.71 points (0.47%), to settle at 7,003.63. The BSE Mid-Cap Index gained 42.90 points (0.75%), at 5,745.34.

In its monetary policy announced today, the RBI reduced interest rate ceilings on non-resident deposits and proposed allowing companies to repay more foreign borrowings ahead of schedule. The central bank proposed increasing the aggregate ceiling for overseas investment by mutual funds to $4 billion from $3 billion and increased the foreign portfolio investment limit for listed firms.

The central bank forecast that annual wholesale price inflation, which was running just above 6% in early April 2007, will be close to 5% at the end of March 2008. The RBI forecast GDP growth at 8.5% in the fiscal year ending March 2008, lower than the 9.2% expected for 2006/07.

The apex bank Governor Dr Y V Reddy also took a number of initiatives toward capital account convertibility and encouraged hedging of price risk on global commodity exchanges. He also put in place measures to develop the corporate bond market, futures contract, establishment of credit information companies and a number of steps to help distressed farmers and micro-finance.

Finance Minister P Chidambaram said on Tuesday the central bank's monetary policy would help moderate inflation without hurting growth. He said controlling inflation below 5% was an "aggressive task".

Asian stocks were mixed on Tuesday. Key benchmark indices in Hong Kong, China, South Korea and Taiwan rose between 0.08% to 0.8%. Key benchmark indices in Japan, and Singapore dropped between 0.02- 0.41%.

US stocks fell on Monday after oil prices rose and a General Motors executive said the crisis in US mortgage lending hurt US auto sales this month, stirring concerns of an even wider economic impact. The Dow Jones industrial average was down 42.58 points, or 0.33%, at 12,919.40. The Standard & Poor's 500 Index was down 3.42 points, or 0.23%, at 1,480.93. The Nasdaq Composite Index was down 2.72 points, or 0.11%, at 2,523.67. Earlier during the day, the Dow industrials hit an intraday record high of 12,983.92.

Corporate results for Q4 March 2007 announced so far have been strong, which along with strong FY 2008 guidance by IT bigwigs Infosys and Satyam Computer, firm global bourses and continued FII-buying have boosted the bourses this month. The Sensex had tanked 617 points in a single trading session on 2 April 2007, following the Reserve Bank of India (RBI)’s surprise hike in interest rates announced after trading hours on 30 March 2007. From a low of 12,455.37 on 2 April 2007, the Sensex has collected 1,681.35 points (13.4%) in a short while.

The Sensex’s all-time peak is of 14,723.88, which had been reached on 9 February 2007. Its all-time closing high is 14,652.09 of 8 February 2007.

FIIs have stepped up buying after Infosys gave strong guidance for FY 2008 in dollar terms, putting to rest concerns about the impact of a slowdown in the US on India's IT sector. Their inflow for April 2007, till Monday (23 April 2007), aggregated Rs 5051.20 crore.

In today’s trade, PSU banks spurted on the RBI's decision to hold rates steady. State Bank of India (SBI) gained 7% to Rs 1135, Indian Bank jumped 11% to Rs 106.25, Canara Bank rose 10.6% to Rs 223.75, Bank of India gained 8% to Rs 198.90, Oriental Bank of Commerce (OBC) rose 7.6% to Rs 207, Punjab National Bank (PNB) gained nearly 7% to Rs 506 and Bank of Baroda advanced 6% to Rs 239.

Among private sector banks, ICICI Bank rose 3% to Rs 947, and HDFC Bank gained 2.4% to Rs 1011.90. After trading hours, HDFC Bank reported 31% growth in net profit in March 2007 quarter at Rs 344 crore (Rs 263 crore).

Housing finance firms advanced after the central bank lowered a risk weightage on housing loans up to 20 lakh from 75% to 50%. RBI said the reduction was a temporary measure. HDFC gained 2.6% to Rs 1714.90.

Car major Maruti Udyog gained amid volatility in afternoon trade, when it announced Q4 March 2007 results. The stock surged 4.3% to Rs 801. Maruti Udyog (MUL) today reported 24% growth in net profit in Q4 March 2007, at Rs 449 crore against Rs 361 crore in the corresponding quarter a year ago.

Other rate sensitive auto shares too nudged higher. Tata Motors gained 3.9% to Rs 746, Mahindra & Mahindra gained 1.7% to Rs 744, and Bajaj Auto advanced 1.6% to Rs 2449.

Bharti Airtel gained 4% to Rs 875. It struck a high of Rs 882, which is a lifetime high for the scrip. The company on Monday announced the pan-India launch of comprehensive telecom and networking solutions for small and medium businesses.

Reliance Industries rose nearly 2% to Rs 1583. The stock struck a high of Rs 1588, which is a record high for the scrip. Oil exploration major, ONGC, gained 1.7% to Rs 949.65, tracking firm global crude oil prices.

IT shares slipped due to worries over a rising rupee against the US dollar. Wipro lost nearly 2% to Rs 556, TCS shed 1.2% to Rs 1230, Satyam Computer shed 0.8% to Rs 476.50 and Infosys shed 0.4% to Rs 2058. A stronger rupee directly impacts the revenue and profits of IT firms as they derive a lion’s share of revenue from exports.

The Indian rupee soared more than 1% against the dollar on Tuesday to a fresh nine-year high, with the market undeterred by central bank steps to try and ease upward pressure on the currency. The rupee climbed as far as 41.15 per dollar, its highest level since May 1998.

Tata Steel extended its gains, as investors shrugged off equity dilution concerns and instead focused on the attractive price of its rights issue. The stock was up nearly 4% to Rs 578.80. The company, last week, announced a 1:5 rights issue at Rs 300 per share.

Gujarat Ambuja Cements gained nearly 4% to Rs 119.40 and ACC rose 2.4% to Rs 816. Holcim, the world's second-biggest cement maker, has raised its stake in Gujarat Ambuja Cements (GACL) to nearly 30% in a deal worth approximately Rs 322 crore. Around 27.96 million GACL shares, constituting roughly 1.8% of its equity, was traded in a block deal on the Bombay Stock Exchange at Rs 115 per share on Monday (23 April 2007). Holcim owns nearly 28% in Ambuja Cements and this stake will rise to nearly 30% after the latest deal.

Tanla Solutions extended its gains post results. The stock was up by its 2% daily limit at Rs 416.80. During trading hours on 19 April 2007, Tanla Solutions reported 48% sequential rise in consolidated net profit in Q4 March 2007 to Rs 34.04 crore from Rs 23.04 crore in Q3 December 2006. Sales rose 38% to Rs 78.04 crore from Rs 56.73 crore in Q3 December 2006.

Supreme Petrochem rose 0.4% to Rs 21.60. The company today reported a 5.9% fall in net profit in the March 2007 quarter, at Rs 9.16 crore from Rs 9.73 crore.

Sesa Goa dropped 3% to Rs 1690.10. Vedanta Resources has bought Mitsui's 51% stake in Sesa Goa for nearly $981 million. The offer price works out to Rs 2036 per share. The winning bid is at a premium of nearly 17% to the last traded price of Rs 1742 of Sesa Goa.

Zensar Technologies ended flat at Rs 272. The company today reported 3.5% year-on-year fall in net profit in the March 2007 quarter to Rs 12.53 crore (Rs 12.99 crore).

ABB rose 1.8% to Rs 3979.80, extending its pre-results' rally. ABB unveils Q1 results on 26 April 2007. Six brokerages expect 26.8 - 50.7% growth in ABB’s Q1 net profit, between 65 crore and Rs 77.30 crore, compared to a net profit of Rs 51.30 crore in Q1 March 2006. Sales are seen rising 25 - 49.2%, between Rs 1003.60 crore and Rs 1198.20 crore from Rs 802.91 crore in the March 2006 quarter.

CEAT jumped 11% to Rs 152.45, on expectation that the spin-off of its investment business will unlock value for members. The stock rose on a volume of 19.9 lakh shares on BSE. As per the plans for a spin-off, CEAT shareholders will get 75 shares in CEAT and 25 shares in the investment firm for every 100 shares held in CEAT. CEAT had also on Monday (23 April) reported a sharp jump in net profit in the January-March 2007 quarter to Rs 23.41 crore.

MTNL dropped almost 7% to Rs 151. The company today reported 47% growth in net profit in the March 2007 quarter at Rs 206.32 crore (Rs 140.27 crore). Net sales declined 16.9% to Rs 1199.97 crore from Rs 1445.28 crore.

Parsvnath Developers jumped 8.5% to Rs 322, after the company said it had secured a project for a shopping mall and metro station at the Commonwealth Games Village complex near New Delhi at a cost of about Rs 160 crore.

Eicher Motors jumped 10% to Rs 250, after two block deals for a total of 16.7 lakh shares (5.94% equity) were executed on BSE. The deals were struck at Rs 234 and Rs 235 per share. Details of buyers and sellers were not known immediately.

Indiabulls Financial Services was down 3% at Rs 472.15, on concerns of equity dilution after the firm said it planned to raise additional capital through an issue of global depositary receipts (GDRs). The firm did not specify the quantum of funds it planned to raise through the issue.

Interest rate sensitive real estate shares surged. Unitech jumped 10% to Rs 439.05, Ansal Infrastructure gained 5% to Rs 270.80, Mahindra Gesco Developers rose 7.6% to Rs 657, Indiabulls Real Estate gained 6.7% to Rs 324.65, Sobha Developers gained 5.9% to Rs 864 and Akruti Nirman rose 4.6% to Rs 397.45.

Sun TV lost 1.4% to Rs 1625. The company’s board today approved a liberal 1:1 bonus issue.

Kale Consultants gained 0.8% to Rs 106.35. It has bagged a deal from Sweden-based SAS Cargo, to implement its CSP-AMBER cargo revenue accounting solution.

Siemens jumped nearly 6% to Rs 1124.90. It came off an early low of Rs 1020. After trading hours on Monday, Siemens reported 8.5% drop in net profit in Q2 March 2007 at Rs 108 crore. The drop in net profit is due to lower other income and also due to a fall in operating margins. Sales jumped 91% to Rs 2129 crore.

Siemens’ outstanding order-book, at the end of March 2007, stood at Rs 10800 crore. During the quarter, new orders rose 22% to Rs 1950 crore. Siemens has also signed a share purchase agreement to acquire 77% of Chennai-based iMetrex Technologies, an electronic security and buildings automation company.

KEC International dropped 4.3% to Rs 545.25, even as it reported strong Q4 March 2007 results. KEC International reported a surge in net profit in the March 2007 quarter at Rs 30.18 crore (Rs 16.04 crore). Net sales rose 33.9% to Rs 640.92 crore (Rs 478.38 crore).

Hinduja TMT plunged to Rs 599.35, following resumption of trading in the scrip. The stock exchanges had set Rs 901 as the base price for the scrip. Since derivative products are available in this counter, it will have no daily price band. A temporary 20% price band was applied at Rs 720.85, when the stock plunged soon after relisting. The price band was shortly removed and the stock fell further.

Suprajit Engineering gained 0.5% to Rs 162.60, after the company said Tuesday it had signed a technical collaboration agreement with Korea's Michang Cable Company to manufacture gear shifters and cables.

Grindwell Norton surged 4% to Rs 128. The company reported 33.6% growth in net profit in the March 2007 quarter at Rs 14.30 crore (Rs 10.70 crore). Net sales rose 24.9% to Rs 103.20 crore from Rs 82.60 crore.

West Coast Paper surged nearly 6% to Rs 388. West Coast Paper Mills posted a 44% jump in January-March 2007 quarter net profit to Rs 17.50 crore due to improved volumes and cost savings.

Rolta India jumped 10.3% to Rs 424.40 after the company reported 26.5% rise in net profit in the March 2007 quarter at Rs 46.94 crore (Rs 37.11 crore). Total income rose to Rs 153.04 crore from Rs 118.44 crore.

The major Q4 results scheduled tomorrow are Infrastructure Development Finance Company, National Aluminium Company, Grasim Industries, and Reliance Energy.