Sensex surges 528 points

The market settled with gains for the week, after posting losses for the previous two weeks, as buying resumed. A decline in inflation, firm global markets, steady industrial production data also were the key factors contributing to the rally.

The BSE 30-share Sensex surged 528 points (4.11%) for the week ended 13 April, to 13,384.08, while the S&P CNX Nifty gained 165 points (4.43%), to end at 3,917.35.

The week began on highly bullish, with the Sensex vaulting 321.66 points, to settle at 13,177.74. A combination of factors like declining crude oil prices, firm global markets, and a report that Indian corporates remain bullish regarding the growth prospects boosted domestic bourses. Shares from metal, FMCG, IT, cement, banking, telecom and auto sectors edged higher.

The barometer index rose a marginal 11.80 points, a day later, to settle at 13,189.54, after remaining highly volatile throughout the day.

On 11 April, the Sensex settled with a 6.30 points loss, at 13,183.24, as selling began in the latter half of the day’s trading session. However, losses were marginal. While metal and capital goods lifted the market, banking and IT shares pulled it lower.

The BSE lost a further 69.43 points, to 13,113.81, the next day, as caution gripped the bourses before IT bellwether Infosys’ results. A weak trend in global markets also pulled the domestic bourses lower.

The 30-share BSE Sensex jumped 270.27 points, to 13,384.08, on 13 April, powered by IT bellwether Infosys, whose results and guidance put street estimates to shame. Stocks from the auto and banking sector had also joined in the rally.

Infosys Technologies advanced 4.75% to Rs 2087.60. 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's quarter.

As per Indian GAAP, Infosys 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.

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.

The Infosys effect boosted frontline IT pivotals. Satyam Computer gained 5.60% to Rs 481.55 and TCS rose 5.53% to Rs 1262.65.

Reliance Communications advanced 6.24% to Rs 421.50. RCL added 1.2 million new wireless subscribers in March 2007. The company said its ARPU (average revenue per user) was expected to increase by 12%, as a result of the re-verification exercise, making it one of the top-three players in India in terms of ARPU.

India’s largest private sector steel manufacturer, Tata Steel, surged 9.79% to Rs 511.25. Reports appeared in the media that the Tata group firm is likely to launch a rights issue of nearly Rs 3500 crore to part-finance its $ 12.15 billion acquisition of Anglo-Dutch steelmaker Corus Group, the payment for which is to be done today. The rights issue may be priced at around Rs 400 a share. If approved, this will be the third rights issue by Tata Steel in the last 22 years. The company issued a 1:3 rights offer in 1988 and 2:5 offer in 1993.

Tata Motors advanced 5.83% to Rs 726. The company is planning to distribute trucks through the Italian company's worldwide distribution network. As a reciprocal arrangement, dealers of Tata Motors will sell select Iveco models, especially their light commercial vehicles in India. It also 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.

Suzlon Energy jumped 13.78% to Rs 1104.30. It has raised the bid for acquiring the German wind-turbine maker. Suzlon Energy also acquired 6,27,000 shares, constituting 7.7% of the share capital of REpower at a price of up to Euro 150 per share. As a result of this acquisition, the voluntary offer for acquiring up to 100% stake in Repower stands revised upwards, to Euro 150 per share.

On 11 April, Gremach Infrastructure Equipments & Projects settled at Rs 83.95, a discount over the IPO price of Rs 86. The stock debuted at Rs 92 on BSE, hit a low of Rs 80.70 and also a high of Rs 100. The counter clocked high volumes of 1.03 crore shares on BSE, on that day. The company had priced its IPO at the higher end of the revised price band of Rs 72 - Rs 86 per share.

Real estate developer, Orbit Corporation, settled at Rs 127.95, on BSE on 12 April 2007. The scrip debuted at Rs 90 compared to the IPO price of Rs 110. It also hit a low of Rs 90 and a high of Rs 137. As many as 1.44 crore shares changed hands in the counter on BSE on that day.

On 13 April, 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 on the day of debut itself.

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, 13 April. 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.

Also 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 can pose risks to price stability. Euro region inflation stood at 1.9% in March, well within ECB's 2% target.

In an important development, more than 500 member brokers have agreed to sell a 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.

As per data released on 11 April, industrial production rose 11% in February 2007 from a year earlier, slightly lower than 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.

The Bank of Japan kept interest rates unchanged for a second month after consumer prices fell and recent data signaled US economic growth may slow. Governor Toshihiko Fukui and his policy board colleagues voted unanimously to hold key overnight lending rate at 0.5%, the lowest among major economies, the bank said in a statement today in Tokyo on 10 April 2007.