198-point surge takes Sensex to 3-week high

A rally in interest-rate-sensitive banking, auto and real-estate shares, telecom stocks and index heavyweight Reliance Industries (RIL) boosted the market in a volatile trading session.

The BSE 30-share Sensex’s surge materialised in the last one hour of trading. Earlier, the market was volatile till mid-afternoon trade. After a strong debut on higher Asian markets, the Sensex had pared gains shortly, before recovering again in mid-morning trade. It came off higher level in the afternoon trade, when the Sensex wiped out almost its entire gains. The market once again bounced back from the lower level in mid-afternoon trade.

The Sensex vaulted 197.98 points, or 1.4%, to settle at 14,127.31, its highest closing in about three weeks since 26 April 2007. The Sensex moved 222.48 points between a low of 13,936.88 and high of 14,159.36.

The S&P CNX Nifty advanced 50.65 points, or 1.23%, to 4170.95. Nifty May 2007 futures provisionally ended at 4,195.35, at a premium of 24.40 points over spot price. On Tuesday, 15 May 2007, the Nifty had settled at 10 points premium over spot price.

The market breadth was strong and select side counters spurted: 1,626 shares rose on BSE as compared to 987 shares that declined, while 66 shares were unchanged. Gainers outpaced losers by a ratio of 1.64:1.

BSE clocked a turnover of Rs 5151 crore compared to average daily turnover of Rs 4290 crore in the first nine trading sessions of this month (from 3 to 15 May 2007). The average daily turnover was Rs 3931 crore in April 2007.

All the sectoral indices on BSE barring IT clocked gains today. The banking sector index, Bankex, was the top gainer in percentage terms. It rose 222.32 points, or 3%, to settle at 7,413.32. Rally in PSU banks and recovery in ICICI Bank have boosted Bankex over the past few days. From a recent low of 6752.64 on 8 May 2007, it had risen 660.68 points, or 9.7%, in a short span.

The BSE Oil & Gas index gained 110.78 points, or 1.5%, to settle at 7,401.56, led by gains in Reliance Industries (RIL). The BSE Capital Goods index rose 148.87 points, or 1.5%, to 10,082.93, led by gains in L&T and Bhel. The BSE FMCG index advanced 20.96 points, or 1.15%, to 1,838.68.

The BSE IT sector lost 26.12 points, or 0.5%, to 4,847.07 on rupee’s rise versus the US dollar. IT stocks were also hit by reports that two US Senators had claimed that Indian IT firms were misusing the H-1B visa programme.

Both the Small-Cap Index and Mid-Cap indices, which have been in recovery mode since early last month, extended gains. The Small-Cap Index rose 103.08 points, or 1.45%, to 7,205.96, and the Mid-Cap index advanced 85.98 points, or 1.44%, to 6,041.33.

European shares, though subdued, rebounded from their lows. Key benchmark indices in London, Germany and France were down by between 0.1% to 0.3% compared to the early fall of 0.4% to 0.5%. In Asia, Chinese shares recovered from Tuesday’s (15 May 2007) sharp fall. The Shanghai Composite ended 2.2% higher. Other Asian markets were also in the green but the gains were muted.

In recent days, a spate of merger and acquisition activity as well as increasingly eye-popping takeover bids have helped propel many global indices to record highs. However, the sharp and swift surge has raised concerns of a steep correction.

A strong rebound on the domestic bourses had materialised last month as the initial Q4 March 2007 results were strong and Infosys issued a strong guidance for FY 2008 on 13 April 2007. From 12,455.37 on 2 April 2007, the Sensex had surged 1,773.51 points (14.2%) to 14,228.88 on 26 April 2007. It has since then turned volatile.

In today’s trade, State Bank of India (SBI) jumped 5% to Rs 1288. The stock gained for the second day in a row today, 16 May 2007. The Lok Sabha, on Tuesday, 15 May 2007, passed the State Bank of India (Subsidiary Bank Laws) Amendment Bill, 2006. The amendment bill will allow SBI to reduce its stake in subsidiary banks to 51%, from the existing 55%.

Select other PSU banks surged. Dena Bank jumped 11.9% to Rs 45, UCO Bank 8% to Rs 25.40, Oriental Bank of Commerce 7.5% to Rs 223, Bank of Maharashtra 5.8% to Rs 47 and Andhra Bank 3.6% to Rs 91.90.

ICICI Bank was up almost 4% to Rs 921. The private sector bank on Tuesday, 15 May 2007, filed a draft prospectus with Sebi to seek approval for raising Rs 17,500 crore through an equity issue in the domestic and overseas market.

HDFC Bank rose almost 2% to Rs 1030.30. Two large block deals were executed in the stock on two exchanges NSE and BSE: A block deal of 15.5 lakh shares at Rs 1,019.80 on NSE and another large block deal of 15.35 lakh shares at Rs 1,014 on BSE.

RIL rose 2.2% to Rs 1634.40, a lifetime closing high. The company said on Tuesday, 15 May 2007, it had made two gas discoveries in separate blocks off the east and west coasts of the country. The commerciality of the above discoveries is currently under evaluation.

Tata Motors gained almost 3% to Rs 734.60, ahead of its Q4 results. It unveils Q4 March 2007 results on Friday, 18 May 2007.

Bajaj Auto advanced nearly 2% to Rs 2686 ahead its board meet on Thursday, 17 May 2007,to consider proposal to split the company into two and Q4 March 2007 results

L&T gained 2.2% to Rs 1711 after announcing today, 16 May 2007, that it would unveil its Q4 March 2007 results on 29 May 2007.

United Spirits gained almost 8% to Rs 904 after the UB group company said it had acquired Scottish spirits maker Whyte & Mackay for 595 million pound sterling.

Real estate stocks rose on renewed speculative buying. Peninsula Land jumped 15.7% to Rs 443, Ansal Infrastructure rose 10.7% to Rs 355, Unitech gained almost 10% to Rs 534.40, Parsvnath Developers rose 7% to Rs 332, Mahindra Gesco Developers rose 6.8% to Rs 635, and Sobha Developers gained 5% to Rs 911. Most of these stocks have the entered futures & options segment from 14 May 2007.

Alfa Laval India spurted 16% to Rs 1125 after Swedish engineering group Alfa Laval said today, 16 May 2007, it was raising its bid for the outstanding shares in its Indian subsidiary. Alfa Laval raised its public offer to Rs 1,300 per Alfa Laval India share from the initial offer of Rs 875. The Swedish firm owns 64% of Alfa Laval India. Alfa Laval repeated it intended to raise its stake to 90%.

Bajaj Electricals jumped 20% to Rs 503.60 after scheduling a board meet on 29 May 2007 to consider a bonus issue.

A host of media shares were in demand. UTV Software Communications jumped 20% to Rs 405. A block deal of 1.31 lakh shares was executed in the stock at Rs 405 on BSE. In addition to UTV Motion Pictures, UTV Software Communications has reportedly launched a second brand, Spotboy Motion Pictures, in the motion pictures space.

Balaji Telefilms advanced 9.5% to Rs 194.70 ahead of its Q4 Mach 2007 results scheduled today, 16 May 2007. The stock had seen a solid pre-results rally on expectations of good Q4 numbers.

But Shringar Cinema flopped almost 10% to Rs 59 even as it reported turnaround results after trading hours on Tuesday, 15 May 2007.

Motherson Sumi Systems gained 1.8% to Rs 109 after it said on Tuesday, 15 May 2007, it bought the business and assets of Australia's Empire Rubber. The buyout of the rubber extruded components maker would yield revenue of Australian dollar 35 million annually.

Micro Technologies dropped 1.5% to Rs 254 after the company said today, 16 May 2007, its board had approved raising up to $20 million through qualified institutional placement, convertible bonds or depositary receipts. The board also approved allowing foreign institutional investors to invest in up to 49% of the company's paid-up equity share capital.

Glenmark Pharmaceuticals rose almost 3% to Rs 644.50 after the company said today, 16 May 2007, it had approval from the US Food and Drug Administration to sell pravastatin sodium oral tablets, which it said was a generic version of Bristol Myers Squibb Co.'s brand Pravachol. Pravachol has annual sales of over $861 million.

Oil marketing firms lost ground after after Petroleum and Natural Gas Minister Murli Deora said on Tuesday, 15 May 2007, there was no immediate plan to raise domestic retail prices of petroleum products. HPCL lost 2% to Rs 296.05 and BPCL shed 0.8% to Rs 371. But Indian Oil Corporation rose nearly 3% to Rs 493.

Agro Tech Foods jumped 8.7% to Rs 107.10. It rose for the second day in a row after it had reported strong Q4 results after trading hours on Monday, 14 May 2007. Agro Tech Foods reported an 87.50% growth in net profit to Rs 7.50 crore in Q4 March 2007.

Tata Teleservices Maharashtra lost almost 5% to Rs 27.15 after the National Stock Exchange (NSE) banned taking fresh positions in its derivative contracts as they had crossed the 95% market-wide position limit.

Metallurgical coke producer Gujarat NRE Coke jumped almost 5% to Rs 49.40 after its unit acquired a coking coal mine in Australia for $41 million.

Over the next few months, the progress of the June-September monsoon will hold the key to the direction of the domestic bourses. The Indian meteorological department on Monday, 14 May 2007, forecast annual monsoon rains would arrive in Kerala on 24 May 2007. The weather office said last month that this year's monsoon rains were likely to be 95% of the long-term average, with a 5% margin of error. The annual monsoon is vital for India's economic health as it provides the main source of water for agriculture, which generates more than a fifth of gross domestic product (GDP).

Some important March 2007 quarter results are scheduled this week and the market will take its cue from these results. Bajaj Auto and Tata Steel report Q4 results on Thursday, 17 May 2007. The board of Bajaj Auto will also consider proposal to split the company into two. Tata Motors and Dr Reddy’s Laboratories unveil Q4 results on Friday, 18 May 2007.