Sensex pares gain from two-month high

The market edged higher today, extending a recent solid rebound but profit-taking at the higher levels capped gains. Although market-breadth ended positive, it had weakened in the latter part of trading. Subdued European markets pulled the Sensex down from a near two-month peak in afternoon trade.

Tata Steel dropped due to concerns of equity dilution after they unveiled funding plans for the Corus acquisition. PSU banks extended their uptrend. Auto and cement shares dropped. IT pivotals were mixed. Index heavyweight Reliance Industries (RIL) struck a new all-time high.

The 30-share BSE Sensex gained 65.15 points (0.48%), to 13,672.19. It had come off the higher level after surging as many as 155.88 points, to 13,762.92 at 13:15 IST, its highest level since 23 February 2007.

The S&P CNX Nifty advanced 26.65 points (0.67%), to settle at 4,011.60.

Against 1,324 stocks that rose on BSE compared to 1,243 that declined. Just 93 scrips were unchanged. Gainers outpaced losers by a ratio of 1.06:1. In early-afternoon trade, the advance-decline ratio was a 1.65:1.

European markets opened on a subdued note today despite gains in Asian markets. Key benchmark indices in London, Germany and France were down between 0.2 - 0.5%. Asian markets edged up after data eased fears over inflation in the United States, a key export market for the region. Key benchmark indices in Japan, South Korea, and Taiwan were up between 0.4 - 0.8%.

Firm global bourses and continued FII-buying, have boosted the bourses over the past few days after the Sensex tanked 617 points in a single trading session on 2 April 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 gained 1,216.82 points (9.76%) in a short while.

Stocks across the globe have surged over the past few weeks amid growing confidence that the benign backdrop of solid global economic growth and moderate inflation will continue. Global liquidity still remains strong. It has helped global markets recover quickly from recent steep corrections.

FII inflows have picked up after Infosys gave a strong guidance for FY 2008 in dollar terms, putting to rest concerns of the impact of a slowdown in the US on India's IT sector. FIIs were net buyers to the tune of Rs 788.30 crore on Monday (16 April), the day when the Sensex had surged 312 points in a global rally. They were net buyers to the tune of Rs 648.50 crore on Tuesday (17 April). FII inflows for the first few days of April 2007, stand at Rs 3804.30 crore (till 17 April).

Stock-specific activity is likely on the bourses in the near-term, as the earnings reportage season has just begun. On 24 April 2007, the Reserve Bank of India (RBI) will announce an Annual Policy Statement for FY 2007-08. There are concerns among market men that interest rates may go up further since inflation remains above the RBI’s target range of 5 - 5.5%. Higher interest rates raise borrowing costs and impact corporate profits.

In today’s trade, sectoral indices on BSE were mixed. The BSE Healthcare Index added 57.68 points (1.56%), to end at 3,762.60. It was the top-gainer among sectoral indices on BSE. The banking sector index, the BSE Bankex, advanced 72.22 points (1.07%), to 6,810.72. The BSE Tech Index, which is a free-float index comprising IT, telecom and media shares rose 31.14 points (0.85%), to end at 3,677.68

The BSE Auto Index lost 21.74 points (0.45%), to finish 4,843.53. The BSE Metal Index lost 22.29 points (0.24%), to end at 9,415.02.

The BSE clocked a turnover of Rs 3961 crore, compared to Tuesday’s Rs 4565 crore.

Infosys shed 0.3% to Rs 2075. The stock had declined 2.1% to Rs 2081.70 on Tuesday (17 April) after the rupee struck a nine-year high against the US dollar. The rupee’s surge is a cause of concern for IT firms, as it directly impacts their revenue and profits, a lion’s share of which is accounted for by exports.

At the time of announcing Q4 March 2007 results, Infosys had pointed out that its operating margins would be impacted by about 150-160 basis points (bps) due to rupee inflation and by 300 bps on account of wage inflation. The company plans to compensate the impact through improved utilisations, lower losses in subsidiaries and scaled benefit from selling & general as well as administration expenses.

Tata Steel dropped 3% to Rs 511.60. However, the stock came off the lower level attained on losing as much as 6.1% to Rs 496.35, at the onset of the trading session. A whopping 47.4 lakh shares changed hands in the counter on BSE.

Tata Steel said on Tuesday it will raise Rs 3655 crore ($872 million) from a rights issue, to fund a $12-billion acquisition of Anglo-Dutch steelmaker Corus Group. The Indian steelmaker will offer a rights share at Rs 300 each in 1:5 ratio. Tata Steel also plans to raise Rs 4350 crore from the rights issue of preference shares, the company said. It was also looking at a foreign issue of an equity-related instrument to raise up to $500 million, with an issue of global depositary receipts being an option.

Automobile makers slipped. Bajaj Auto lost 3% to Rs 2471. The stock had surged 4.2% in the past two trading sessions following reports that India will enjoy a healthy monsoon. Tata Motors shed 1.1% to Rs 722.

Cement pivotals slipped on profit-taking. Grasim shed 1.5% to Rs 2336 and Gujarat Ambuja Cements (GACL) shed 0.7% to Rs 112.90. Cement scrips had recovered from a lower level over the past few days on expectations of strong March 2007 quarter results from cement firms. ACC unveils results on 19 April 2007, followed by GACL on 20 April 2007.

ONGC gained 1.6% to Rs 905.50. Recently, the company had unveiled its expansion plans.

PSU banks extended gains, triggered by data showing cooling of inflation for the week ended 31 March 2007. State Bank of India gained nearly 3% to Rs 1037, Andhra Bank rose 5% to Rs 82.75, Corporation Bank rose 3% to Rs 312, Bank of India advanced 2.8% to Rs 188.25, and Punjab National Bank gained 1.9% to Rs 476.90. India's wholesale price index rose 5.74% in the 12 months to 31 March 2007, lower than an increase of 6.39% a week earlier, data showed on Friday (13 April 2007).

HCL Tech jumped 6.6% to Rs 322, after reporting strong Q3 March 2007 numbers on completion of trading on Tuesday. The consolidated net profit as per US GAAP rose 15.9% on a sequential basis to Rs 331.80 crore from Rs 286.20 crore in Q2 December 2006. Revenue rose 7.6% to Rs 1577.10 crore from Rs 1465.10 crore.

Dish TV settled at Rs 102.55 on BSE. The stock debuted at Rs 120, which is also its high so far. Dish TV also hit a low of Rs 100. Volumes in the scrip were a huge 1.88 crore shares on BSE. Dish TV has nearly 2 million subscribers and competes with a joint venture between Tata group and News Corp as well as state-owned Prasar Bharti.

Index heavyweight Reliance Industries rose 0.6% to Rs 1485. The stock hit a high of Rs 1495, which is a lifetime high for the scrip. The stock has surged this month after Chairman Mukesh Ambani had said on Monday that the petrochemicals cycle was yet to peak.

NTPC surged 3% to Rs 161.90. The stock hit a high of Rs 163.55, which is a lifetime high for the scrip. A strong 16.8 lakh shares changed hands in the counter on BSE

Telecom stocks advanced on strong growth in new subscriptions in March 2007. Bharti Airtel rose 1.7% to Rs 813 and Reliance Communications gained 0.5% to Rs 435

Siemens dropped 4% to Rs 1065. Siemens announces Q2 March 2007 results on 23 April 2007.

Metal shares extended gains tracking firm global metal prices. Hindalco gained 1.3% to Rs 145.20, Sterlite Industries rose 2.8% to Rs 522.95 and Hindustan Zinc advanced 4% to Rs 667. Copper, zinc and aluminium futures rose 2.5 - 6% on London Metal Exchange (LME) on Tuesday.

Praj Industries dropped 2.3% to Rs 451.75, even as the company announced a liberal 1:1 bonus during trading hours.

GTL jumped nearly 17% to Rs 163, on rumours that the company will announce a buy-back of shares. As many as 28 lakh shares changed hands in the counter on BSE.

Godavari Fertilisers rose 0.9% to Rs 124. The company reported 44% fall in net profit in the March 2007 quarter, to Rs 6.20 crore (Rs 11.07 crore).

Genus Overseas Electronics surged nearly 3% to Rs 290, after reporting a 58% surge in net profit in the March 2007 quarter at Rs 12.63 crore (Rs 8 crore).

Construction firm Valecha Engineering dropped 1.4% to Rs 228.40, even as the company secured orders worth Rs 100 crore, the new set of contract taking the company's order-book close to Rs 1000 crore.

Infotech Enterprises plunged 5% to Rs 366, after the company today reported a surge in net profit in the March 2007 quarter to Rs 20.90 crore from Rs 10.60 crore. Net sales surged to Rs 96.58 crore from Rs 65.20 crore.

Software services firm Prithvi Information Solutions gained nearly 3% to Rs 293, on reporting 49% growth in net profit in the March 2007 quarter to Rs 26.01 crore from Rs 17.50 crore in the March 2006 quarter. Net sales surged 89% to Rs 259.22 crore from Rs 136.97 crore.

TV Today gained 5% to Rs 147.30, as Reliance Capital announced an open offer worth up to Rs 151 crore to raise its stake in the news broadcaster by up to 20%.

Petron Engineering Construction jumped 5.4% to Rs 148, after the company said on Wednesday it had won a contract worth Rs 37.76 crore from China's Sichuan Fortune Project Management Company.

Alfa Laval India dropped nearly 4% to Rs 944, after its Swedish parent shot down rumours that it would revise upwards the open offer price of Rs 875 per share for raising its stake in the Indian subsidiary. The scrip had spurted 9.3% to Rs 981.60 on Tuesday (17 April).

ICRA lost 2% to Rs 889. The stock had dropped on Tuesday after a solid surge since the debut on Friday (13 April). Pent-up demand for the scrip from the IPO, which was subscribed 75 times, had kept the counter ticking.

Wall Street traded mostly higher on Tuesday, briefly pushing the Dow Jones industrials into record territory, after a rise in home construction and a mild reading on consumer inflation encouraged investors to buy. The Dow traded as high as 12,790.02, passing its closing high of 12,786.64 set on 20 February 2007, and approached its trading high of 12,795.93, attained on the same day. Dow Average settled 52.58 points, or 0.41%, up at 12,773.04. Broader stock indicators were mixed. The Standard & Poor's 500 Index rose 3.01 points, or 0.20%, to finish at 1,471.48, while the Nasdaq Composite Index fell 1.38%, or 0.05%, to 2,516.95.

US March housing stats rose 0.8% -- a feeble rise compared with February's 7.6% advance, but much better than the drop investors expected. Building permits also rose. US stocks have had many tumultuous weeks this year due to worries about the financial troubles of the subprime lending sector spilling into the already sluggish housing market.

The US Labour Department's core consumer price index rose 0.1% in March, less than expected, and alleviating some anxiety about the Federal Reserve's need to raise interest rates to curb costs. The overall consumer price index, which takes into account energy and food, rose 0.6% in March -- the largest increase in 11 months -- and was in line with expectations.