Nifty scales 9-week closing high

After taking a breather on Friday, 1 July 2011, the market regained its recent winning streak at the onset of the week, as data showing sustained buying by foreign funds over the past few days boosted investor sentiment. The 50-unit S&P CNX Nifty attained its highest closing level in 9 weeks. The BSE Sensex advanced 51.68 points or 0.29%, up close to 30 points from the day's low and off close to 120 points from the day's high. The market breadth was strong. Index heavyweight Reliance Industries (RIL) edged higher.



Realty, construction and pharma stocks rose. Reliance Infrastructure (R-Infra) jumped close to 7% on reports that the Maharashtra state government has issued the order to allot the Worli-Haji Ali Sea Link project to Reliance-Hyundai consortium. Realty major DLF surged 6%. Most auto stocks rose. Banking stocks rose across the board, with shares of private sector bank HDFC Bank hitting a record high.

The market surged amid a bout of initial volatility, tracking gains in Asian shares. The market pared gains in morning trade. A bout of volatility was witnessed as the key benchmark indices recovered after hitting fresh intraday lows in mid-morning trade. The market retained positive zone in early afternoon trade. A bout of volatility was witnessed in afternoon trade as the key benchmark indices once again trimmed gains as European stocks dropped in early trade. The market retained positive zone in mid-afternoon trade.

The BSE Sensex rose 51.68 points or 0.29% to 18,814.48. The Sensex jumped 179.62 points at the day's high of 18,942.42 in early trade. The index rose 19.08 points at the day's low of 18,781.88 in mid-morning trade.

The S&P CNX Nifty was up 23.30 points or 0.41% to 5,650.50, its highest closing level since 2 May 2011. The Nifty hit high of 5,679.65 in intraday trade.

The BSE Mid-Cap index rose 0.92% and the BSE Small-Cap index gained 1.1%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2990 crore, higher than Rs 2756.53 crore on Friday, 1 July 2011.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,758 shares advanced while 1,089 shares declined. A total of 111 shares remained unchanged.

Among the 30-member Sensex pack, 19 stocks rose while the rest of them fell.

Reliance Infrastructure surged 6.84% and was the top gainer from the Sensex pack. The stock surged on reports that the Maharashtra state government has issued orders to allot the Rs 4301-crore Worli-Haji Ali Sea Link project to Reliance-Hyundai consortium. The consortium will collect toll for a period of 40 years. The toll rates, with the base year as 2008, will be revised every three years.

Maharashtra State Road Development Corporation (MSRDC) will reportedly pay the viability gap funding (VGF) of Rs 1392 crore.

BSE Realty index jumped 3.66% and outperformed the Sensex. Real estate developer DLF jumped 6.01%, extending its rally to the second straight day triggered by reports that the company plans to sell its shareholding in two IT special economic zones in Pune and Noida for Rs 1300 crore.

Among other real estate stocks, Indiabulls Real Estate, Unitech, HDIL, Anant Raj Industries and Ackruti City rose by between 0.96% to 13.6%.

Sobha Developers jumped 6.17% after the company bought 40.5% stake in a special purpose vehicle from Dubai-based Pan Atlantic Investments for an undisclosed amount.

Index heavyweight Reliance Industries (RIL) rose 0.7% on reports its retail subsidiary Reliance Retail has hired two former executives of the China operations of US-based Wal-Mart Stores Inc. to head its retail business ahead of an expected opening up of foreign direct investment in the retail sector in India. In June 2011, RIL Chairman Mukesh Ambani told shareholders the company planned to invest aggressively in retail and would launch a 'cash-and-carry,' or wholesale business. Reliance Retail operates more than 1,000 retail stores across India. Reliance Retail, which was set up in 2006, sells products ranging from fruits and vegetables to electronic goods and jewelry.

The RIL stock had tumbled 3.95% on Friday, 1 July 2011, on reports the Central Bureau of Investigation (CBI) searched the house V.K. Sibal, the former chief of the Directorate General of Hydrocarbons, the upstream regulator, after the state auditor said in a report there may have been inflated costs for some of Reliance Industries' exploration activities. Sibal was the chief of the Directorate General of Hydrocarbons when the costs were approved. 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 has already clarified that 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.

Oil and Natural Gas Corporation (ONGC) rose 0.33%, extending Friday's gain of 0.86%, as the firm's earnings will get a boost if Cairn Energy and Vedanta Resources accept the conditions set by the government for the Cairn India deal. The Cabinet Committee on Economic Affairs (CCEA) on Thursday, 30 June 2011, granted conditional approval to Vedanta Resources' plan to buy British oil explorer Cairn Energy's Indian assets. CCEA approved the deal subject to the condition that Cairn India has to equally and retroactively share royalty payments with Oil and Natural Gas Corporation (ONGC) on crude-oil production from its main oil-producing block in Rajasthan, reports suggest.

ONGC, which holds a 30% stake in the block, currently pays the entire royalty under rules that had been meant to attract foreign investment in the oil-and-gas sector. Cairn India with the remaining 70% stake is the operator of the block. Shares of Cairn India fell 0.6% to Rs 323.70.

Banking stocks rose across the board. BSE Bankex gained 1.09% and outperformed the Sensex. State Bank of India, Bank of India, Bank of Baroda and Punjab National Bank gained by between 0.25% to 3.07%.

India's second largest private sector bank by net profit HDFC Bank gained 1.42% to Rs 2532.30. The stock hit record high of Rs 2539.80 today.

India's largest private sector bank by net profit ICICI Bank rose 0.4%, with the stock gaining for the ninth straight day after the private sector bank raised its base rate by 25 basis points to 9.5% per annum with effect from today, 4 July 2011. The bank has also raised its benchmark prime lending rate (BPLR) and its floating reference rate (FRR) for consumer loans, including home loans. BPLR and FRR are used for determining interest rates on loans and advances sanctioned up to 30 June 2010.

Consumer durables stocks extended recent gains. Gitanjali Gems, Titan Industries and Blue Star rose by between 1.48% to 2.06%.

Many construction shares rose. Unity Infra, Jaiprakash Associates, Hindustan Construction Company, IRB Infrastructure Developers, Patel Engineering and Nagarjuna Construction Company rose by between 0.7% to 5.05%.

Pharma stocks also edged higher. Ranbaxy Laboratories, Dr Reddy's Laboratories, Cipla and Biocon, gained by between 0.07% to 2.34%.

Mot auto stocks rose. India's largest car maker by sales Maruti Suzuki rose 1.09%, reversing initial losses. The company's total sales declined 8.8% to 80,298 units in June 2011 over June 2010. The company said production was adversely impacted due labour strike at Manesar plant in June 2011. There was no production for 10.5 days due to the strike. Another reason for lower production was planned shutdown at its units. The company announced the monthly sales data during trading hours on Friday, 1 July 2011.

India's largest tractor maker by sales Mahindra & Mahindra rose 1.45%. The company on Friday, 1 July 2011, reported 29.11% jump in its total sales at 35,584 units in June 2011 over June 2010. Domestic sales grew 28.69% to 33,772 units and exports surged 37.38% to 1,812 units in June 2011 over June 2010. "We are happy with the 29% growth that we have clocked in June 2011, given the pressures of increasing interest rates and commodity prices," M&M Chief Executive (Automotive Division) Rajesh Jejurikar said.

India's largest truck maker by sales Tata Motors rose 1.76%. The company's total sales declined 0.7% to 66,358 units in June 2011 over June 2010. The company unveiled the monthly sales data during trading hours today, 1 July 2011.

Hero Honda Motors fell 0.36%, reversing initial gains. The company reported 20.12% jump in sales at 5.12 lakh units in June 2011 over June 2010. "This is the first time the company has sold five lakh-plus units in each of the three months of a quarter. Sequentially, this is the fourth consecutive month of five lakh-plus sales for the company," Hero Honda said in a statement. For the April-June period of this fiscal, the company saw its highest-ever quarterly sales at 15,29,577 units compared to 12,34,039 units in the same period last financial year, up 23.95%.

India's second largest motorcycle maker by sales Bajaj Auto was flat. The company said its total sales rose 16% to 3.66 lakh units in June 2011 over June 2010. Motorcycle sales rose 14% to 3.22 lakh units and commercial vehicle sales jumped 34% to 43,830 units in June 2011 over June 2010. Total sales rose 18% to a record 10.92 lakh units in Q1 June 2011 over Q1 June 2010. The company announced the monthly sales data during trading hours today, 4 July 2011.

India's largest steel maker by sales Tata Steel fell 0.86% after the stock turned ex-dividend today, 4 July 2011, for dividend of Rs 12 per share for the year ended March 2011. Before turning ex-dividend, the stock offered a dividend yield of 1.99% based on the closing price of Rs 602 on Friday, 1 July 2011.

Most other metal shares rose. JSW Steel, Hindustan Zinc, Sterlite Industries, Hindalco Industries, Sail, and Nalco rose by between 0.06% to 1.9%.

Jindal Steel & Power fell 0.21% reversing initial gains triggered by the company's announcement that its subsidiary Jindal Steel Bolivia has commenced the dispatch of iron ore from its El-Mutun mines in Puerto Aguirre, a river port in Bolivia. Iron ore from these mines will be exported mainly to China, the Middle East, and European and South American countries.

Jindal Steel Bolivia had secured the development rights of 20 billion tons of iron ore of El Mutun mines in 2007. The 40-year contract that gave the company the right to mine the reserves of iron ore also includes setting up an integrated 1.7 million tonnes per annum (MTPA) steel plant, a 6 MTPA sponge iron and 10 MTPA iron ore pellet plant in Bolivia with a investment of $2.1 billion.

Capital goods heavyweights fell on profit taking. Larsen & Toubro and Bharat Heavy Electricals shed 1.15% and 0.46%, respectively.

Jaiprakash Associates rose 1.72% after the company's cement shipments rose 3% to 13.7 lakh tonnes in June 2011 over June 2010. The company has capacity to produce 21.3 million tonnes of cement a year.

UltraTech Cement gained 1.16% after the company, a part of the Aditya Birla Group, on Saturday reported an increase of 2% in its cement dispatches at 32.20 lakh tonnes in June 2011 over June 2010. Production rose 1.9% to 32.15 lakh tonnes.

UltraTech Cement's cumulative dispatches during the April-June period of this year stood at 96.60 lakh metric tonne as against 98.89 lakh metric tonne during the first three months of 2010, registering a decline of 2.31%

Sun TV Network fell 3.27% after the Chennai police on Sunday, 3 July 2011, arrested Hansraj Saxena, chief executive officer of Sun Pictures, a division of Sun TV Network, for allegedly cheating a film distributor to the tune of Rs 82.53 lakh towards distribution of the film "Theeradha Vilayattu Pillai". Sun TV said it is examining the complaint and FIR filed against Saxena and is taking necessary legal recourse as may be required.

Most IT stocks rose on strong economic data in the US, key market for Indian IT firms. Infosys, Wipro, Patni Computer Systems and HCL Tech rose by between 0.16% to 3.46%.

Sugar shares surged following reports that the government might allow decontrol of sugar prices. Shree Renuka Sugar, Bajaj Hindusthan and Balrampur Chini Mills rose by between 3.83% to 6.5%. As per reports, the Indian government is expected to discuss sugar decontrol in a meeting in the next eight to ten days. With decontrol, the government will give up its control over the sector and sugar prices will be determined by the market forces.

Redington India clocked highest volume of 5.09 crore shares on BSE. Cals Refineries (3.89 crore shares), Birla Cotsyn (1.1 crore shares), Infomedia 18 (69.28 lakh shares) and Mahindra Satyam (57.76 lakh shares) were the other volume toppers in that order.

Redington India clocked highest turnover of Rs 451.04 crore on BSE. VIP Industries (Rs 119.87 crore), Jubilant FoodWorks (Rs 87.74 crore), DLF (Rs 68.50 crore) and State Bank of India (Rs 54.65 crore) were the other turnover toppers in that order.

The market has witnessed a solid surge recently. The BSE Sensex has jumped a staggering 1,263.85 points or 7.2% in 8 trading sessions from a recent low 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.

Foreign institutional investors (FIIs) bought shares worth a net Rs 2677.30 crore during two trading sessions from Thursday, 30 June 2011 and Friday, 1 July 2011, the latest data released by the Securities & Exchange Board of India showed. FII inflow totaled Rs 4572.20 crore in June 2011.

The market soon enters the crucial period of corporate earnings. Investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when firms are witnessing cost pressures amid rising interest rates and staff costs. 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% on all routes across India following the recent hike in diesel prices.

Housing finance major HDFC unveils Q1 June 2011 results on Friday, 8 July 2011. IT bellwether Infosys Technologies will unveil Q1 results on 12 July 2011. IT giant TCS unveils Q1 results on 14 July 2011. Dr Reddy's Lab announces Q1 results on 20 July 2011. Biocon unveils Q1 results on 21 July 2011. Private sector bank Axis Bank reports Q1 results on 22 July 2011.

The manufacturing sector lost steam last month with marked declines in output indicating taut monetary conditions may be taking hold even as prices remained at elevated levels, a survey showed on Friday, 1 July 2011. The HSBC Markit Purchasing Managers' Index, based on a survey of around 500 companies, showed a sharp fall to 55.3 in June from 57.5 in May, its lowest level since September last year and the steepest monthly fall since November 2008.

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 India Meteorological Department (IMD) on Thursday, 30 June 2011, said widespread rainfall is expected over Uttar Pradesh, the largest sugarcane growing state, in the next three to five days. The IMD said a slight increase in rainfall activity is also expected in the southern regions, while scattered rains are likely over central parts. Rainfall from the start of the monsoon season until 30 June 2011 was 182 millimeters, 11% above the long-term average.

According to reports, there could be a lull in the rains in the first week of July 2011 and that may continue until mid-July 2011. Rainfall in the month of July is considered crucial as 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.

Merchandise exports rose 56.9% to $25.9 billion in May 2011 from a year earlier, according to provisional data issued Friday by the Ministry of Commerce. Imports rose 54.1% to $40.9 billion, largely due to a rise in non-oil imports, which were up 71% from a year earlier at $30.75 billion. Oil imports in May rose 18.6% to $10.2 billion.

During the April-May period--the first two months of the current fiscal year--exports rose 45.3% to $49.8 billion, while imports rose 33.3% to $73.7 billion.

European stocks rose on Monday, 4 July 2011, as most sectors posted a modest rise, though losses for banks such as Credit Agricole SA and Commerzbank AG helped put a cap on gains. The key benchmark indices in Germany and UK rose by between 0.16% to 0.36%. France's CAC 40 fell 0.16%.

Global rating agency S&P on Monday said two options proposed by the Federation Bancaire Francaise (FBF) to ease repayment terms on Greek debt could constitute a default for the country. The news comes after euro-zone finance ministers approved over the weekend the disbursement of the next tranche of aid for Greece, with the IMF expected to approve its part of the loan in coming days. The Greek government secured parliamentary approval for additional austerity measures last week, paving the way for the disbursement of more aid.

Asian stocks advanced on Monday, 4 July 2011, as exporters climbed after US manufacturing unexpectedly accelerated in June 2011. The key benchmark indices in China, Hong Kong, Indonesia, Japan, Singapore, South Korea and Taiwan were up by between 0.4% to 1.94%.

Thai stocks jumped after a decisive electoral victory for a party headed by former prime minister Thaksin Shinawatra's younger sister, Yingluck Shinawatra.

US markets are closed on Monday, 4 July 2011, for Independence Day holiday.