Market near 1-1/2-week high; Sensex settles above 18,000

Key benchmark indices galloped to attain their highest closing level in almost 1-1/2-week buoyed by firm world stocks. The barometer index BSE Sensex surged past the psychological 18,000 mark. The market edged higher for the second straight day. The Sensex vaulted 513.19 points or 2.89%, up close to 435 points from the day's low and off close to 30 points from the day's high. The market breadth was strong. World stocks rose after Greece reached an agreement with the European Union and the International Monetary Fund over further austerity measures and as comments from China's premier provided reassurance over inflation.



IT stocks rose across the board on Accenture's strong Q3 May 2011 results and after the IT firm raised full-year outlook. Realty shares recovered on bargain hunting after recent steep decline. Hero Honda Motors surged over 6% after the company said its promoter group firm Hero Investments revoked 3.46 crore pledged shares. Index heavyweight Reliance Industries (RIL) recovered from lower level in volatile trade. Banking and metal shares also edged higher.

Infrastructure and construction shares surged after the government said it has finalized the broad structure for setting up the planned $11 billion infrastructure debt fund that is aimed at financing the massive overhaul of the country's creaky infrastructure.

The market advanced in early trade on firm Asian stocks. The market extended initial gains to hit one-week high in morning trade. The market regained strength after trimming gains from the day's high in mid-morning trade. The market once again trimmed gains after surging to its highest level in more than a week in early afternoon trade. The market held firm in afternoon trade as European stocks opened on a firm note. The market surged to fresh intraday high in mid-afternoon trade. The market galloped to fresh intraday high in late trade.

The BSE Sensex jumped 513.19 points or 2.89% to settle at 18,240.68, its highest closing level since 14 June 2011. The index jumped 541.46 points at the day's high of 18268.95 in late trade. The index rose 77.45 points at the day's low of 17,804.94 in early trade.

The S&P CNX Nifty was up 151.25 points or 2.84% to 5,471.25, its highest closing level since 14 June 2011. The Nifty hit a high of 5,477.85 in intraday trade.

The BSE Mid-Cap index rose 2.26% and the BSE Small-Cap index gained 1.8%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 2815 crore, higher than Rs 2525.86 crore on Thursday, 23 June 2011.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,980 shares advanced while 865 shares declined. A total of 115 shares remained unchanged.

Among the 30-member Sensex pack, 28 stocks rose while only two of them fell.

Index heavyweight Reliance Industries (RIL) was down 0.03% to Rs 870.40. The stock hit high of Rs 879.30 and low of Rs 855.45. The stock had risen nearly 3% on Thursday on reports the company has made another natural gas discovery in the D-9 block in the hydrocarbon rich Krishna Godavari (KG) basin. The resource potential of the block is estimated at 5.210 trillion cubic feet (tcf) by RIL's minority partner Hardy Oil. When extracted, a 5 tcf of gas is worth over $20 billion at current market prices, reports added.

The RIL stock had witnessed a sell-off recently following reports a government watchdog has accused the Oil Ministry for favouring RIL by allowing it to double the development cost of its KG-D6 gas field. The stock had hit a 52-week low of Rs 829 in intraday trade on Monday, 20 June 2011. As per recent reports, a draft report of the Comptroller and Auditor General of India (CAG) has questioned the decision of the oil ministry and its technical arm, the Director General of Hydrocarbons (DGH), to allow RIL to raise the development cost of RIL's KG-D6 field. RIL had said last week it has fully complied with the requirements in its production sharing contract at all times in conducting petroleum operations.

RIL's advance tax payment reportedly jumped 38.46% to Rs 900 crore in Q1 June 2011 over Q1 June 2010. Higher advance tax payment normally indicates higher profit for the period under review.

ONGC rose 3.12% on hopes its subsidiary sharing burden will reduce if the recent steep fall in oil prices is sustained or if the government raised fuel prices.

Shares of state-run oil marketing companies (PSU OMCs)--HPCL, BPCL and Indian Oil Corporation jumped 2.74% to 6.15% on reports a meeting of the empowered group of ministers (EGoM), headed by finance minister Pranab Mukherjee is scheduled today, 24 June 2011, to discuss fuel prices. The oil ministry has reportedly sought a reduction in taxes on crude oil and fuel products and has demanded an increase in the prices of diesel and cooking fuels to help PSU OMCs reduce losses on selling fuel products at state-set discounted prices.

Incidentally, crude oil prices declined sharply in New York on Thursday, 23 June 2011, after the US and other members of the International Energy Agency unexpectedly said they would release 60 million barrels of oil onto world energy markets to counter production lost from Libya. The Indian government has been dithering on raising diesel and cooking gas prices, which was last increased a year ago.

Reliance Infrastructure fell 0.84% and was the top loser from the Sensex pack.

India's largest engineering and construction firm by sales Larsen & Toubro gained 4.25% after the company during market hours today said it has bagged orders worth Rs 1610 crore in metallurgical and material handling segment.

Among other capital goods stocks, Punj Lloyd, ABB, BEML, Praj Industries and Bhel rose by between 1.95% to 4.86%.

Construction stocks gained after the government said it has finalized the broad structure for setting up the planned $11 billion infrastructure debt fund that is aimed at financing the massive overhaul of the country's creaky infrastructure. IVRCL Infra, Patel Engineering, Unity Infra, Hindustan Construction Company and IL&FS Transportation Networks rose 2.86% to 7.03%.

The Indian government said Friday it has finalized the broad structure for setting up the planned $11 billion infrastructure debt fund that is aimed at financing the massive overhaul of the country's creaky infrastructure. Under the proposed structure, the fund may be set up either as a trust or a company. If it is controlled as a trust, then the fund will function as a mutual fund, issuing units to investors and will be regulated by the Securities and Exchange Board of India, the government said in a statement. If set up as a company, the fund would be in the form of a non-banking financial company that would issue bonds and will be regulated by the Reserve Bank of India.

The government has set out an ambitious plan to spend $1 trillion by 2017 to build roads, ports and airports, as it looks to revamp its shoddy facilities and boost economic growth to a double-digit rate. The debt fund is expected to provide long-term, low-cost debt for infrastructure projects by tapping into source of savings like insurance and pension funds which have hitherto played a comparatively limited role in financing infrastructure, the government said.

Metal stocks rose across the board as a slump in crude oil prices eased concern the global recovery will falter. Sesa Goa, Hindustan Zinc, Hindalco Industries, Sterlite Industries, Jindal Steel & Power, Sail, JSW Steel and Nalco rose by between 0.43% to 5.84%.

India's largest steel maker by sales Tata Steel surged 3.92% as the company's recent announcement that it has received about $130 million as part of Teesside Cast Products business arbitration settlement triggered bargain hunting in the beaten down stock.

IT stocks rose across the board on Accenture's strong Q3 May 2011 results and after the IT firm raised full-year outlook. Patni Computer, HCL Technologies, Rolta India, TCS, Wipro, MphasiS, Oracle Financial Services Software, Infosys and Mahindra Satyam gained by between 1.05% to 4.92%.

Accenture PLC's fiscal third-quarter profit jumped 28%, easily exceeding analysts' expectations, as the consulting company reported broad revenue growth across all operating groups and geographic regions after gaining market share. Accenture raised its outlook for the year ending August 2011, now seeing earnings of $3.36 to $3.40 a share on revenue growth of 14% to 15% in local currency. Previously, the company projected earnings of $3.22 to $3.30 on revenue growth between 11% and 14%.

The National Association of Software and Services Companies (Nasscom) president Som Mittal on Thursday, 23 June 2011, said that demand for outsourcing services remains strong. Nasscom has reiterated a 16%-18% growth in export revenue for IT outsourcing services in this fiscal year that began on 1 April 2011. "We live in a world of uncertainties, but within that world there is a need for the kind of work we do," Mittal said. His comments come in the wake concerns recently of a cut in outsourcing demand due to a slowdown in the US economy and ongoing visa issues.

Bank stocks rose across the board on bargain hunting. India's largest commercial bank by branch network State Bank of India (SBI) surged 5.95% to Rs 2288.15. The stock had hit a 52-week low of Rs 2,123 in intraday trade on Monday, 20 June 2011. The bank's advance tax reportedly rose 29.41% to Rs 1100 crore in Q1 June 2011 over Q1 June 2010.

India's largest private sector bank by net profit ICICI Bank rose 3.34%, with the stock gaining for the third straight day. The bank's advance tax reportedly rose 11.42% to Rs 390 crore in Q1 June 2011 over Q1 June 2010. India's second largest private sector bank by net profit HDFC Bank rose 2.11%. The bank's advance tax reportedly rose 26.98% to Rs 400 crore in Q1 June 2011 over Q1 June 2010.

Bank of India, Punjab National Bank and Bank of Baroda gained by between 1.19% to 2.21%.

Realty stocks edged higher on bargain hunting after recent steep losses. Unitech, Indiabulls Real Estate, DLF, Sobha Developers and HDIL gained by between 2.85% to 11.58%.

FMCG stocks rose across the board on renewed buying. United Spirits, ITC, Hindustan Unilever, Dabur India, Nestle India, Tata Global Beverages and Marico gained by between 0.31% to 2.64%.

Auto stocks rose in a firm market. India's top small car maker by sales Maruti Suzuki India rose 1.95% to Rs 1121.25. The stock came off a 52-week low of Rs 1,087.15 hit in intraday today. The stock had been under selling pressure recently on concerns arising from intense competition in the small-car segment.

Toyota Motor Corp.'s India unit on Wednesday, 22 June 2011, said it will introduce its Etios Liva small car on 27 June 2011. The Etios Liva will be "competitively priced" and has been positioned in the premium hatchback segment, Toyota Kirloskar Motor said. The company had earlier postponed the introduction of the Etios Liva to June 2011 from April 2011 due to capacity constraints at its factories.

The Etios Liva and the Etios sedan share a common platform. The company introduced the Etios sedan in December last year, which received a better-than-expected response. It deferred the introduction of the Etios Liva to make more units of the Etios sedan and to cut long waiting periods for the model.

India's largest truck and bus maker, Tata Motors rose 2.07% on bargain hunting. The stock had declined recently on reports of lower advance tax payment by the auto major. Tata Motors' advance tax reportedly fell 4.61% to Rs 62 crore in Q1 June 2011 over Q1 June 2010. Tata Motors' global vehicle sales rose 11% to 88,251 units in May 2011 over May 2010. Jaguar and Land Rover sales rose 17% to 22,296 units, driven by a 30% rise in Land Rover sales. The company announced the sales data last week.

Tata Motors has reportedly decided to challenge in court the West Bengal government's decision to reclaim land in Singur. The auto major had abandoned plans in 2008 to build a plant on the land to manufacture its budget car Nano after violent protests by farmers. The company instead decided to set up a unit to manufacture Nano in Gujarat.

India's second largest bike maker by sales Bajaj Auto gained 3.22%. The company's advance tax reportedly rose 13.63% to Rs 125 crore in Q1 June 2011 over Q1 June 2010.

Tractor and utility vehicles maker Mahindra & Mahindra (M&M) rose 3.18%. The company's advance tax reportedly rose 42.85% to Rs 90 crore in Q1 June 2011 over Q1 June 2010.

Hero Honda Motors surged 6.07% after the company said its promoter group firm Hero Investments revoked 3.46 crore pledged shares. Hero Honda Motors said Hero Investments revoked 3.46 crore pledged shares in three tranches on 7, 8 and 10 June 2011. The promoter group firm revoked 1.19 crore shares each from IL&FS Trust Company and IDBI Trusteeship Services and 1.07 crore shares from Axis Trustee Services. Post the revocation, only about 6% of Hero Investments' stake in Hero Honda, which is 52 lakh shares, remain pledged. This works out to 2.6% of Hero Honda's equity.

Shares of air carriers rose on hopes state-run oil marketing companies will cut aviation turbine fuel prices as crude oil prices fell sharply on Thursday, 23 June 2011. SpiceJet, Jet Airways (India) and Kingfisher Airlines jumped by between 7.93% to 19.85%. Jet fuel, whose prices are linked to crude oil, constitutes about half of the operating cost for airliners and fall in crude oil prices augurs well for airline firms.

Sugar scrips gained after a ministerial panel on Thursday, 23 June 2011, reportedly allowed export of additional 5 lakh tonnes of sugar for the current marketing year ending September 2011. Bajaj Hindusthan, Balrampur Chini Mills and Shree Renuka Sugars rose by between 2.76% to 3.96%. The go-ahead given by the Empowered Group of Ministers (EGoM) on food headed by Finance Minister, Pranab Mukherjee on Thursday, 23 June 2011, will enable the domestic sugar industry to take advantage of rising international prices.

Due to rising global demand, the world sugar prices are reportedly ruling high at a premium of Rs 500-600 per quintal in comparison to domestic sugar prices. However, a decision on removing stock holding limit on sugar has been deferred, reports suggest.

Cals Refineries clocked highest volume of 2.93 crore shares on BSE. GTL (1.2 crore shares), Timbor Home (1.14 crore shares), SpiceJet (1.03 crore shares) and GTL Infra (88.21 lakh shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 154.35 crore on BSE. GTL (Rs 132.74 crore), Timbor Home (Rs 108.63 crore), Lovable Lingerie (Rs 100.20 crore) and RIL (Rs 86.58 crore) were the other turnover toppers in that order.

The government has deferred a ministerial meeting to decide on raising diesel and cooking fuel prices to 19:00 IST from about 13:00 IST, as the government is working on its options, Oil Minister Jaipal Reddy said on Friday, 24 June 2011. The oil ministry has reportedly sought a reduction in taxes on crude oil and fuel products and has demanded an increase in the prices of diesel and cooking fuels to help PSU OMCs reduce losses on selling fuel products at state-set discounted prices.

The government has been dithering on raising diesel and cooking gas prices, which was last increased a year ago.

The food price index rose 9.13% and the fuel price index climbed 12.84% in the year to 11 June 2011, data released by the government on Thursday showed. In the previous week, annual food and fuel inflation stood at 8.96% and 12.84% respectively. The primary articles price index was up 12.62% compared with an annual rise of 12.86% a week earlier.

The India Meteorological Department (IMD), early this week, revised downwards the forecast for the vital monsoon rains this year to slightly below normal from the normal forecast given in April 2011. On the flip side, crop output may not be adversely affected significantly due to the onset of the monsoon rains on time this year and expectations that the rains will be well distributed.

The IMD said this year's monsoon rains would be 95% of the long-term average overall, down from its earlier forecast of 98% and just short of the 96-104 percent range which counts as normal monsoon. India, one of the world's largest producers and consumers of crops such as rice, sugar and corn, relies heavily on the June to September monsoon for agricultural output.

Monsoon rains in July 2011 are likely to be 27 centimetres compared with 29 centimetres average over a 50-year period. For August 2011, rains are forecast to be 24 centimetres compared with a long-term average of 26 centimetres. The monsoon season brings about 70% of India's annual rainfall and is crucial for summer-sown crops such as rice, sugarcane, pulses, cotton and oilseeds as about 60% of the country's farmland is rain-fed. The rainfall forecast has been lowered because of weakening La Nina conditions, neutral temperatures over the Indian Ocean region and unfavorable North Atlantic pressure.

Rainfall in July is considered crucial. Sowing of a number of crops starts in June and good July rains determine the soil moisture and ensure proper development of the crops planted in June.

European stocks edged higher on Friday after Greece reached an agreement with the European Union and the International Monetary Fund over further austerity measures and as comments from China's premier provided reassurance over inflation. The key benchmark indices in UK, France and Germany were up by 0.71% to 0.82%.

Greece has secured the approval of the EU, IMF and European Central Bank on its plans for another round of spending cuts and tax hikes. The additional austerity measures are a condition of Greece receiving further bailout cash, however the biggest hurdle will come next week when Prime Minister George Papandreou must persuade the country's law makers to approve the package.

Asian stocks climbed on Friday as European leaders voiced support for Greece and as a slump in energy prices eased concern the global recovery will falter. The key benchmark indices in China, Hong Kong, Indonesia, South Korea, Japan, and Singapore were up by between 0.65% to 2.16%. Taiwan's Taiwan Weighted Average fell 0.40%

Oil prices plunged in New York on Thursday after the US and other members of the International Energy Agency unexpectedly said they would release 60 million barrels of oil onto world energy markets to counter production lost from Libya.

Chinese Premier Wen Jiabao reportedly said on Friday that efforts to curb inflation have worked, with price gains now back within a controllable range.

Trading in US index futures indicated a flat opening of US stocks on Friday, 24 June 2011. The US Federal Reserve on Wednesday, 22 June 2011, reiterated that it was ending its $600 billion bond-buying program at the end of the month.