Sensex jumps 7.3% in six days as FIIs resume buying

Key benchmark indices extended their winning streak into the sixth straight day to attain their highest closing level in more than 8-weeks as data showing sustained buying by foreign funds over the past few sessions, firm global stocks and easing of food inflation in mid-June 2011 boosted sentiments. The BSE Sensex jumped 152.01 points or 0.81%, off close to 30 points from the day's high and up close to 120 points from the day's low. High volatility was witnessed in late trade as traders rolled over positions in the derivatives segment from June 2011 series to July 2011 series. The near-month June 2011 derivatives contracts expired today, 30 June 2011.




World stocks rose after the Greece parliament on Wednesday, 29 June 2011, approved harsh austerity measures, which could pave the way for the debt-laden European nation secure emergency international financial aid and avoid a debt default.

Index heavyweight Reliance Industries (RIL) edged higher. FMCG stocks gained with ITC and Hindustan Unilever hitting record highs. Realty, banking and metal stocks rose. The market breadth was positive.

The market surged to its highest level in more than 8 weeks at the onset of the trading session on firm Asian stocks. A bout of volatility was witnessed in morning trade as the key benchmark indices pared gains. The market moved in a tight range in positive terrain in mid-morning trade. A bout of volatility was witnessed as the market regained strength after paring gains to hit fresh intraday low in early afternoon trade after the latest government data showed food inflation eased in mid-June 2011.

The market retained positive zone in afternoon trade as European stocks rose at the onset of the trading session. The market held positive territory in mid-afternoon trade. Immense volatility was witnessed in late trade as the key benchmark indices trimmed gains after hitting 8-week highs.

Foreign institutional investors (FIIs) bought shares worth a net Rs 771.80 crore on Wednesday, 29 June 2011, compared with an inflow of Rs 1016.10 crore on Tuesday, 28 June 2011. FII inflow in June 2011 totaled Rs 4572.20 crore (till 29 June 2011). FIIs had offloaded shares worth a net Rs 6614.40 crore in May 2011. FII inflow in calendar 2011 totaled Rs 2670.40 crore (till 29 June 2011).

The BSE Sensex surged 152.01 points or 0.81% to settle at 18,845.87, its highest closing level since 2 May 2011. The Sensex jumped 179.53 points at the day's high of 18,873.39 in late trade. The index rose 29.28 points at the day's low of 18,723.14 in mid-morning trade.

The S&P CNX Nifty was up 46.95 points or 0.84% to 5,647.40, its highest closing level since 2 May 2011. The Nifty hit high of 5,657.90 in late trade.

The BSE Mid-Cap index rose 0.32% and the BSE Small-Cap index gained 0.57%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 2662 crore, lower than Rs 3088.41 crore on Wednesday, 29 June 2011.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,514 shares advanced while 1,347 shares declined. A total of 133 shares remained unchanged. The breadth was much stronger at the onset of the trading session.

Among the 30-member Sensex pack, 21 stocks rose while the rest of them fell. Jaiprakash Associates, Tata Power Company, Reliance Communications and Larsen & Toubro rose by between 1.22% to 3.79%.

Index heavyweight Reliance Industries (RIL) rose 1.39%, with the stock gaining for the second straight day, on expectations of good Q1 June 2011. 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.

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 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 clarified that it has fully complied with the requirements in its production-sharing contract at all times in conducting petroleum operations.

State-run ONGC fell 1.62%, with the stock extending Wednesday's slide triggered by reports that the company's board has approved a follow-on public offer (FPO). The company expects to launch the offer in July 2011. The stock was the top loser from the Sensex pack today.

Bank stocks extended recent gains as the latest data showed that credit offtake remains strong. Credit offtake from banks grew by 20.9% to over Rs 41 lakh crore during the one-year period ended 17 June 2011. According to the RBI data, credit offtake during the period stood at Rs 41.23 lakh crore against Rs 34.10 lakh crore in the same period of the previous year.

India's largest commercial bank by branch network State Bank of India (SBI) rose 1.07%, with the stock gaining for the sixth straight day. 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 gained 0.55%, with the stock gaining for the seventh straight day. The bank aims to grow its loan book by 18%-20% in the current financial year, its chief financial officer N.S. Kannan, said in an interview early this week.

India's second largest private sector bank by net profit HDFC Bank added 0.63%, with the stock gaining for the sixth straight day. The bank's advance tax reportedly rose 26.98% to Rs 400 crore in Q1 June 2011 over Q1 June 2010.

Most metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange, gained 2.06% on Wednesday, 29 June 2011. Sail, Hindustan Zinc, JSW Steel and Jindal Steel & Power rose by between 0.36% to 3.13%.

India's largest steel maker by sales Tata Steel gained 1.23%, with the stock extending Wednesday's 2.38% rally triggered by comments from the company's managing director Hemant Nerurkar on Tuesday, 28 June 2011, that operating profit at the company's European unit will rise by two-thirds of its current level to $100 a metric tonne over the next three years. Tata Steel Europe generates earnings of $60 per tonne before interest, tax, depreciation and amortization at present. Nerurkar said higher operating margin at the European unit will be driven by increase in value-added products and control over costs.

Cipla fell 0.47% after company said during market hours today that it has received an order from a United States District Court, Middle District of Georgia against a petition filed by Merial that the sales of its animal healthcare product PetArmor Plus allegedly infringed a patent held by Merial. Future sales of PetArmor Plus have been suspended in the United States, the company said in a statement, adding it is in the process of filing an appeal against the order.

FMCG stocks extended Wednesday's gains triggered by expectations that a strong monsoon will boost demand from rural areas and also reduce input prices. India's largest FMCG company by sales Hindustan Unilever was up 3.18% to Rs 342.75. The stock hit a record high of Rs 346.50 today.

Among other FMCG stocks, United Spirits, Britannia Industries and Nestle India gained by between 0.78% to 2.57%.

India's largest cigarette maker by sales ITC was up 1.61% to Rs 202.45. The stock hit a record high of Rs 203.40 today.

Realty stocks rose for the second straight day on bargain hunting. HDIL, Ackruti City, DLF, Indiabulls Real Estate, and Unitech rose by between 0.5% to 2.73%. The ASK Group has reportedly raised Rs 520 crore through the first close of its second real-estate fund. The fund will invest in urban and suburban projects up to 12 months ahead of the projects' launch.

Auto stocks were mixed ahead of the release of monthly sales volume data for June 2011, which will start trickling in from tomorrow, 1 July 2011.

India's largest commercial vehicles maker, Tata Motors fell 0.43%, with the stock snapping four days' gains. As per recent reports, the Supreme Court has ordered the West Bengal state government not to proceed with the distribution of land to farmers who sold their plots to allow Tata Motors to set up a manufacturing facility in the town of Singur. It may be recalled that the Calcutta High Court had refused to stay a law enacted by the West Bengal state government to take over 997.17 acres of land allotted to Tata Motors to build a facility to manufacture the Nano, the world's cheapest passenger car. Tata Motors therefore moved Supreme Court.

Tata Motors' advance tax reportedly fell 4.61% to Rs 62 crore in Q1 June 2011 over Q1 June 2010.

India's top small car maker by sales Maruti Suzuki India declined 1.54%, snapping four days' gains. The stock had recovered recently after hitting 52-week low of Rs 1,087.15 in intraday trade on 24 June 2011 when concerns of intense competition in the small-car segment hit the counter.

Toyota Motor Corp. entered India's small-car market early this week with its model Etios Liva. The new car will supplement the Etios sedan, which was introduced in December, and will compete with industry leader Maruti Suzuki India's Swift, Ford's Figo, Volkswagen's Polo and Hyundai's i20 hatchback models.

Hero Honda Motors rose 1.63%, with the stock gaining for the second straight day. The company late last week 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.

Tractor and utility vehicles maker Mahindra & Mahindra (M&M) rose 1.42%. The company's advance tax reportedly rose 42.85% to Rs 90 crore in Q1 June 2011 over Q1 June 2010.

Bajaj Auto rose 0.28%, reversing initial losses. The stock had turned ex-dividend on Wednesday, 29 June 2011, for dividend of Rs 40 per share for the year ended March 2011.

IT stocks gained on renewed buying. Infosys, HCL Tech and Tech Mahindra rose by between 0.89% to 1%. TCS rose 0.92% in volatile trade after the company said during market hours today that PostFinance, Switzerland will deploy company's banking solution to overhaul part of its operations. Wipro fell 0.61%.

The National Association of Software and Services Companies (Nasscom), last week, reiterated its forecast of a 16%-18% growth in export revenue for IT outsourcing services in this fiscal year that began on 1 April 2011.

Consumer durables stocks edged higher on renewed buying. Blue Star, Videocon Industries, Rajesh Exports, Gitanjali Gems and Rajesh Exports rose by between 0.39% to 3.2%.

Shares of fertiliser companies rose on reports the Union Cabinet may consider giving fertiliser firms freedom to fix maximum retail price of di-ammonium phosphate at a meeting later today, 30 June 2011. Rashtriya Chemicals and Fertilizers, Chambal Fertilisers and Chemicals, National Fertilizer, Nagarjuna Fertilizers and Chemicals, Deepak Fertilisers and Petrochemicals Corporation, GSFC, Tata Chemicals, Coromandel International Zuari Industries rose by between 0.85% to 5.67%.

Airline stocks fell as higher crude oil prices raised concerns about higher operating costs. Jet Airways, and SpiceJet fell by between 1.89% to 3.09%. Kingfisher Airlines rose 1.65% reversing initial losses. Jet fuel constitutes about 50% of the operating cost for airliners. Jet fuel prices are linked to crude oil prices.

Cals Refineries clocked highest volume of 1.58 crore shares on BSE. Timbor Home (82.10 lakh shares), GTL (68.39 lakh shares), Shree Ashtavinayak Cine Vision (64.15 lakh shares) and Lanco Infratech (60.75 lakh shares) were the other volume toppers in that order.

Jubilant Foodworks clocked highest turnover of Rs 142.80 crore on BSE. State Bank of India (Rs 109.16 crore), Lovable Lingerie (Rs 76.99 crore), Bata India (Rs 68.44 crore) and GTL (Rs 62.06 crore) were the other turnover toppers in that order.

The BSE Sensex has jumped a staggering 1,295.24 points or 7.3% in just 6 trading sessions from its close of 17,550.63 on 22 June 2011. Resumption of buying by foreign funds aided the strong rally. The substantial inflow from FIIs recently followed a sustained outflow earlier.

Expectations for Q1 June 2011 results will start building as the first quarter draws towards a close. Housing finance major HDFC kicks off the results season on 8 July 2011. IT bellwether Infosys Technologies will unveil Q1 results on 12 July 2011.

A hike in transportation costs will add to cost pressure of India Inc. As per reports, freight rates have gone up by 8% to 9% with immediate effect on all routes across India following the latest hike in diesel prices.

As per reports, capital expenditure projects worth a whopping Rs 8 lakh crore are expected to be completed in the year ending March 2012 (FY 2012). Many of these projects have rolled over from the previous year, reports added.

The Reserve Bank of India (RBI) has decided to allow companies to issue equity and preference shares under the government's foreign direct investment scheme to fund certain transactions. The clearance is for imports of capital goods and other machineries and equipment, the central bank said in a release. All such conversions of import payables into foreign direct investment should be completed within 180 days from the date of the shipment of goods.

The key monsoon rains were 10% above normal in the past week to 29 June 2011, slowing from the 23% above average rains in the previous week, the weather office said on Thursday. The slowing rains reflect a weakness in the monsoon over south and western India's rice, oilseed and cotton areas. In the rice and cotton areas of Andhra Pradesh, rains were 42% to 51% below normal in the past week while in the oilseed areas of Gujarat there were very low rains.

The IMD recently 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.

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.

The wholesale price index for primary articles fell 0.4% to 197.4 in the week ended 18 June 2011 from a provisional 198.1 in the previous week, according to the latest data issued by the Ministry of Commerce and Industry. On a year-on-year basis, prices of primary articles were up 11.84%, slower than the 12.62% rise recorded in the week ended 11 June 2011, the data showed.

In the week to 18 June 2011, the food articles index decreased 0.8% to 189.8 from 191.3 in the previous week. The year-on-year inflation for food articles decelerated sharply to 7.78% from 9.13%. The fuel products index rose 0.2% to 160.2 in week ended 18 June 2011 from 159.9 in the previous week.

Going ahead, the inflation may remain high due to the recent hike in diesel, kerosene and LPG prices. The Indian government late last week announced a hike in the price of diesel by Rs 3 a litre, kerosene Rs 2 a litre and cooking gas by a steep Rs 50 a cylinder.

The government is committed to push 9% annual economic growth, Prime Minister Manmohan Singh said Wednesday, reiterating his resolve to develop infrastructure and public healthcare to help achieve the aim. "Our savings rate is about 34%-35% of our gross domestic product, with an investment rate of 36%-37%, we can manage to have a growth rate of 9%," Singh told a group of journalists. To retain the brisk economic growth pace, India needs to adopt some systemic reforms that will help plug a mammoth subsidy drainage, the prime minister said.

The prime minister said the government is committed to weed out corruption. "We can deal with corruption, we can deal with black money, but quite frankly it is wrong for anyone to assume there is a magic wand which will lead to an instant solution of these difficult societal problems," Singh said.

Finance Minister Pranab Mukherjee said in a media interview on Wednesday that foreign direct investment in India will pick in the second half of 2011. He said investment flows into India have consistently slowed in the first half of each year and picked up in the second half when heavy rains boost the agriculture sector and "create the sentiment in the market for larger accumulations." He said much of the jump in food prices is due to domestic supply bottlenecks, which increased reliance on imports. Officials have taken steps to address the problem.

European stock markets rose Thursday, with market attention focused on another parliamentary vote in Greece, as financial shares advanced led by Lloyds Banking Group PLC. Key benchmark indices in UK, France and Germany were up by 0.08% to 0.6%.

Greek lawmakers on Wednesday, 29 June 2011, approved a five-year package of spending cuts, tax increases and state asset sales by a comfortable margin of 155 votes to 138 in a roll-call vote, handing a significant victory to embattled Prime Minister George Papandreou. The Greek parliament is again due to vote today, 30 June 2011, on a plan to implement these austerity measures. Approval of the austerity measures means that Greece is closer to receiving the next tranche of aid due to the country from the European Union and the International Monetary Fund.

Asian stocks edged up on Thursday as investors heaved a sigh of relief after Greece moved a step closer to avoiding a default by adopting harsh austerity measures. The key benchmark indices in Japan, China, Hong Kong, Indonesia, Singapore, South Korea and Taiwan were up by between 0.3% to 1.53%.

Trading in US index futures indicated that the Dow could gain 30 points at the opening bell on Thursday, 30 June 2011. The US Federal Reserve has decided to end its $600 billion bond-buying program at the end of this month, as per schedule.