Sensex jumps 270 points on buying in IT, auto, banking

Leaving behind a previous two lacklustre sessions, the BSE Sensex went on a rampage today, powered by IT bellwether Infosys whose results and guidance beat street estimates. Stocks from the auto and banking sector had also participated in the rally.

The Sensex remained strong throughout the day, and crossed the 13,400 mark on the back of improving inflation, the data for which was released at noon.

The 30-share BSE Sensex jumped 270.27 points (2.06%), to 13,384.08. The benchmark index had opened higher, at 13,163.02, and surged to 13,421.05. The Sensex's low for the day was at 13,119.88.

The NSE Nifty surged 87.50 points (2.28%), at 3,917.35.

As per provisional data, FIIs were net buyers to the tune of Rs 238.50 crore today.

The market-breadth was strong and as much in sync with the overall market. Buying had spilled over to small-cap and mid-cap counters. For 1,566 shares advancing, 997 had declined. As many as 85 scrips remained unchanged.

The BSE Mid-Cap Index ended at 5,576.50, up 64.1 points (1.16%), while the BSE Small-Cap Index settled at 6,756.46, a gain of 74 points (1.11%).

In the 'A' group, 162 shares advanced and 49 shares declined, while two scrips remained unchanged. In the 'B1' Group, 448 shares advanced and 247 shares declined, while 21 shares remained unchanged. The 'B2' group had 482 shares which had gained, 341 that had lost, and 35 shares which were unchanged.

While only 80 shares advanced, 20 shares declined from the BSE 100 Index.

In the BSE 200 Index, against 157 stocks that advanced, 42 had declined. Just one scrip remained unchanged from this pack.

The BSE 500 Index showed 349 advancers and 147 decliners. A total of four scrips also remained unchanged in this pack.

The total turnover on BSE amounted to Rs 4713 crore. Total market turnover increased to Rs 47655.98 crore compared to Rs 30,270.22 crore on Thursday.

Among the 30-Sensex pack, 24 advanced while the rest declined.

The Infosys effect boosted frontline IT pivotals. The BSE IT Index surged 3.94%, to 5,071.72, and was the top-gainer among the sectoral indices on BSE. The top-gainer among the lot was Satyam Computer, up 8.50% to Rs 484, on high volumes of 22.10 lakh shares. Wipro rose 5.20% to Rs 568, and TCS gained 5.66% to Rs 1269.

Infosys Technologies advanced 1.83% to Rs 2081, on a volume of 13.54 lakh shares. Infosys Technologies struck a high of Rs 2121, and a low of Rs 2027.10, so far in the day. The IT bellwether also reported 16.3% sequential growth in net profit for Q4 March 2007, at Rs 1144 crore compared to Rs 983 crore in Q3 December 2006. The net profit for Q3 March 2007, was boosted by extra-ordinary income of Rs 124 crore, arising from a reversal of tax provisions. Revenue rose 3.2% to Rs 3772 crore from Rs 3655 crore in the previous year quarter.

As per Indian GAAP, Infosys has predicted an EPS of Rs 80.29 to Rs 81.58 for FY 2008, a growth of 20 - 22%, compared to an EPS of Rs 66.86 in FY 2007. The company had forecast 22.6 - 24.6% growth in revenue for FY 2008, between Rs 17038 crore and Rs 17308 crore. Infosys has considered the rupee-dollar conversion rate at 43.10.

For Q1 June 2007, Infosys Technologies expects an EPS of Rs 17.84, an year-on-year growth of 24.2%. It also expects the revenue of Rs 3896 crore - Rs 3913 crore, a year-on-year growth of 29.2 – 29.8%.

Infosys gave a strong guidance in dollar terms as per US GAAP. It expects the consolidated earnings per American Depositary Share (excluding tax reversal of $29 million in fiscal 2007), between $1.86 and $1.89 for FY 2008, an year-on-year growth of 25.7 - 27.7%. Infosys expects consolidated revenue between $3.95 billion and $4.02 billion, a year-on-year growth of 28 - 30%.

For Q1 June 2007, Infosys expects the consolidated earnings per American Depositary Share at $0.41, a year-on-year growth of 28.2%. It expects revenue between $904 million and $908 million, a year-on- year growth of 37 - 37.6%.

Infosys added 34 new clients during the quarter. There was a gross addition of 5,992 employees (net 2,809) for the quarter and 30,946 employees (net 19,526) for the year by Infosys along with its subsidiaries.

Second line IT counters also came to the party. While Geometric Software rose 7.82% to Rs 125.45, HCL Technologies advanced 7.30% to Rs 308.05.

Tata Motors gained 2.31% to Rs 726, after the company said on Friday it had received an order for supplying 500 buses to the Delhi Transport Corporation. The order from Delhi Transport Corporation is for supplying low-floor, CNG-run buses. The delivery will begin from the second half of 2007, Tata Motors said.

Index heavyweight, Reliance Industries (RIL), advanced 1.97% to Rs 1415, on a volume of 4.99 lakh shares. It had recovered sharply from an early low of Rs 1381.85.

Cigarette major ITC was the top-loser, down 1.67% to Rs 153.50, on a volume of 19.77 lakh shares.

NTPC slumped 1.63% to Rs 157.30, while Cipla lost 0.37% to Rs 231.75.

Credit rating agency ICRA settled at a huge premium, at Rs 797.60, on BSE. ICRA's issue price was Rs 330 per share. The stock listed on BSE at Rs 550, which was also the day's low. The debuting stock then shot up to a high of Rs 880.10. As many as 1.24 crore shares changed hands in the ICRA counter on BSE.

The ICRA IPO had received an overwhelming investor response. It was subscribed 75 times. The IPO met with strong response from a cross section of market participants, institutional investors, retail investors and high networth individuals.

Ratings firm CRISIL jumped to its maximum permissible level of 5%, to Rs 2913.55, following an eye-catching debut by rival ICRA. The debutante scrip settled at a huge 142% premium today. The current price of Rs 797.60 discounts its April-December (9-month) 2006 annualised EPS of Rs 15.90, by a PE multiple of 50.18.

CRISIL deserves higher PE multiple than ICRA due to its strong parentage and its top-position in the credit ratings business. Based on Thursday (12 April)’s closing price of Rs 2774.85, CRISIL’s PE multiple as per its FY 2006 (year ended December 2006) EPS of Rs 91.80, stood at 30.2. The US ratings agency, Standard & Poor’s, holds 55.08% stake in CRISIL.

Also CRISIL is over four times larger than ICRA, is growing at a faster rate than ICRA, and perceived as more aggressive. CRISIL has made greater headway in non-rating and international business.

Another sector to strike a chord with the investors was the banking sector, which had been pummelled in the past few months. The drop in inflation triggered a rally in banking stocks. The BSE Bankex was up 2.6%, at 6,639.84. State-run State Bank of India (SBI) gained 3.40% to Rs 1000.80, on a volume of 5.80 lakh shares on BSE. ICICI Bank (up 2.60% to Rs 871), HDFC Bank (up 2.30% to Rs 980), Bank of India (up 4.02% to Rs 180), PNB (up 3.95% to Rs 459.60), Canara Bank (up 3% to Rs 196), Federal Bank (up 2.03% to Rs 234) were the other gainers from the banking space.

The BSE Auto Index closed at 4,818.16, up 3%. M&M (up 3.81% to Rs 746), Bajaj Auto (up 4.28% to Rs 2450) and Hero Honda (up 2.80% to Rs 646) advanced.

Agro-chemicals maker Rallis India surged 7.50% to Rs 281, on reporting strong Q4 March 2007 results. Rallis India posted a surge in net profit for the March 2007 quarter to Rs 9.78 crore (Rs 3.07 crore). Net sales rose 11.1% to Rs 131.23 crore from Rs 118.05 crore in the year ago quarter.

Apollo Tyres rose 1.05% to Rs 279.10, after the company said its board will consider a stock-split proposal along with FY 2007 results on 1 May 2007.

Pyramid Saimira Theatre (PSTL) surged 10% to Rs 331.65, after the company announced RM 10 million investment plans to digitialize about 50 theatre screens in Malaysia. The company also announced that it would be producing its first Tamil film in Malaysia, which will be released internationally.

India's wholesale price index rose 5.74% in the 12 months to 31 March 2007, lower than previous week's increase of 6.39%, data showed on Friday. The figure was below forecast of an annual 5.81% in an analyst poll. The annual inflation rate was 3.98% during the corresponding week of the previous year.

The Nikkei Average lost 1.01% on Friday, as Fast Retailing Co., and other retailing scrips fell following their earnings reports, while auto shares such as Toyota Motor Corp., slid amid concerns about the US economy. The Nikkei was down 176.47 points, at 17,363.95.

The European Central Bank (ECB) kept key interest rates unchanged as expected on Thursday (12 April) in Frankfurt, but ECB President Jean-Claude Trichet signaled an increase in June. The ECB's 19-member governing council decided to hold interest rates unchanged after raising its main refinancing rate to 3.75% from 3.50% on 8 March 2007.

However, Trichet signaled another rate rise due to inflation risks. His remarks were in line with analysts' expectations that another rate hike was likely in June. Trichet reiterated that the 13-nation euro region is in a period of robust growth and the central bank's monetary policy remains "on the accommodative side." Trichet warned that higher oil prices and a hike in wages could pose risks to price stability. Euro region inflation stood at 1.9% in March, within the ECB's 2% target.

As per data released on Thursday (12 April), industrial production rose 11% in February 2007 from a year earlier, slightly lower than an upwardly revised annual growth of 11.4% in January 2007. Manufacturing production, which represents more than 75% of industrial output, rose 12.3% in February from a year earlier, compared with a revised 12.1% annual growth in January.

US stocks rose on Friday, after biotechnology company, MedImmune Inc.'s, announced it was seeking a buyer, fanning speculation of more deals in the sector. The Nasdaq Composite Index rose 21.01 points, or 0.85%, to close at 2,480.32, with biotechnology shares rising strongly. The Dow Jones Industrial ended up 68.34 points (0.55%), at 12,552.96, and the S&P 500 Index finished up 8.93 points (0.62%), to 1,447.80.

Oil prices rose above $64 a barrel in Asian trading on Friday, after a surge in the previous session, reacting to warnings that OPEC production was at its lowest point in two years. Light, sweet crude for May delivery rose 19 cents, to $64.04 a barrel in electronic trading on the New York Mercantile Exchange (NYMEX) midmorning in Singapore.

The contract rose almost $2 on Thursday, to close at $63.85 a barrel, after the International Energy Agency (IEA) warned output by the Organisation of Petroleum Exporting Countries (OPEC) had slid to its lowest level in more than two years on production outages and self-imposed cuts.

In an important development, more than 500 member brokers have agreed to sell part of their holdings in the Bombay Stock Exchange (BSE) to bring it down to 49%, as per the demutualisation guidelines.

The BSE also announced receiving overwhelming interest from investors around the globe and the country, to purchase the remaining 41% stake. Two foreign exchanges, Deutsche Borse and Singapore Stock Exchange (SGX), picked up 5% each in Asia’s oldest exchange earlier this year.

The BSE has received interest from over 20 domestic financial institutions, foreign funds, domestic corporates and HNIs, for substantially more than what is required for achieving the demutualisation of BSE, the exchange said in a release. LIC, SBI, Exim Bank and Carlyle are said to be among 20, who have agreed to pick up stake in the bourse. Post-placement, the BSE will go in for an initial public offer to list its shares on the bourses, reports added.

It was widely believed that BSE will have to issue new shares to a clutch of investors to meet the deadline of 17 May 2007, set for broker-members of the exchange to dilute at least 51% stake set by the government. BSE also will go for a public issue later this year.

Upon reviewing the interest received, the BSE proposes to finalise the sale of 41% shares to select investors at Rs 5200 per share, the same price at which it sold shares to strategic partners, in order to widen the profile of stakeholders.