Sensex gains 1% as world stocks rise on strong Chinese economic data

Key benchmark indices snapped three-day losing streak as world stocks rose on stronger-than-expected Chinese Q2 June 2011 GDP data. The latest data showing a strong 9.5% expansion of the Chinese economy in Q2 June 2011 helped offset euro-zone debt worries triggered by Moody's Investors Service downgrading Ireland to junk status on Tuesday, 12 July 2011. The BSE Sensex jumped 184.40 points or 1%, up close to 130 points from the day's low and off close to 30 points from the day's high. The market breadth was strong.

Except the BSE IT index, all the other sectoral indices on BSE were in green. Telecom pivotals and auto stocks were in demand on fresh buying. Bank stocks rose on bargain hunting after a recent decline triggered by fears about the spread of Europe's debt crisis. Index heavyweight Reliance Industries (RIL) extended intraday gains in late trade.



Shares of tyre makers rose after CEAT recently raised prices of tyres by 2% to 2.5% across categories and said margins are likely to improve from Q2 September 2011 due to a fall in prices of rubber, a key raw material. Media shares rose on renewed buying.

The market moved higher in early trade tracking a recovery in Asian equities. The market pared gains in morning trade after hitting fresh intraday high. A bout of volatility was witnessed as the market struck fresh intraday high in mid-morning trade. Key benchmark indices pared gains soon after hitting fresh intraday highs in mid-morning trade as European contagion fears lingered. The market regained strength in afternoon trade as European stocks rose in early trade. The market once again came off highs in mid-afternoon trade. Intraday volatility continued as the market surged to fresh intraday high in late trade.

The BSE Sensex jumped 184.40 points or 1% to 18,596.02, its highest closing level since 11 July 2011. The Sensex gained 214.79 points at the day's high of 18,626.41 in late trade. The index rose 53.78 points at the day's low of 18,465.40 in early trade.

The S&P CNX Nifty was up 59.30 points or 1.07% to 5,585.45, its highest closing level since 11 July 2011. The Nifty hit a high of 5,596.15 in intraday trade.

The BSE Mid-Cap index rose 1.3% and outperformed the Sensex. The BSE Small-Cap index gained 0.97% and underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,863 shares advanced and 1,024 shares declined. A total of 126 shares remained unchanged.

Among the 30-member Sensex pack, 26 stocks gained while the rest of them declined.

The total turnover on BSE amounted to Rs 2273 crore, lower than Rs 2848.98 crore on Tuesday, 12 July 2011.

Index heavyweight Reliance Industries (RIL) advanced 1.89% to Rs 864.55 on reports the Cabinet Committee on Economic Affairs (CCEA) is likely to clear RIL's sale of a 30% stake in 23 of its oil and gas blocks in India to BP PLC this week. Reports last week indicated that the petroleum ministry had recommended the $7.2 billion RIL-BP deal to CCEA for an unconditional approval.

India's largest oil exploration firm by net profit ONGC surged 1.97%, extending four-day 3.03% advance triggered by speculation the company's follow-on public offer (FPO) has been postponed. As per reports, the government has deferred the FPO of ONGC fearing tepid response from overseas investors due to summer holidays. The FPO is likely hit the market in September 2011.

Interest rate sensitive realty shares gained on bargain hunting after a recent fall triggered by fears high interest rates will hit property demand. Orbit Corporation, Housing Development & Infrastructure (HDIL), Indiabulls Real Estate, Parsvnath Developers and Sobha Developers rose by between 0.74% to 6.01%.

India's largest real estate by sales DLF jumped 2.95% on reports HCL Group is in advanced discussions with the company to acquire a substantial stake in DLF Pramerica Life Insurance Company for about Rs 450 crore in a two-phase transaction. It was the top gainer from the Sensex pack.

Higher borrowing costs will make purchases of residential housing costlier for the buyer through the financing option. Most commercial banks have raised lending rates recently.

Telecom stocks were in demand. India's largest listed cellular services provider by sales Bharti Airtel surged 1.72% on reports the company is considering of raising up to $1 billion through an initial public offering (IPO) of its mobile tower arm Bharti Infratel. Bharti Infratel deploys, owns and manages passive infrastructure in 11 telecom circles in India. It also holds 42% share in Indus Towers (a joint venture between Bharti, Vodafone and Idea). Indus Towers is the world's top telecom tower firm with more than 1,10,000 towers.

India's second largest listed cellular services provider by sales Reliance Communications gained 1.60%. Idea Cellular gained 2.99%.

India's largest power generation firm by capacity NTPC rose 1.58% after the company's chairman and managing director Arup Roy Choudhury said the state-run firm plans to make a final bid for a stake in Australian miner Bandanna Energy by 29 July 2011. In May, Bandanna Energy said it received several preliminary bids for its assets, which include 16 exploration permits in the Bowen and Galilee basins of the coal-rich Queensland state, plus licenses to explore for minerals and oil shale.

Choudhury also said that NTPC has cut its generation capacity target to 70 gigawatts by March 2017, from 75 GW earlier, due to coal supply and land acquisition issues.

Auto stocks rose on renewed buying. The BSE Auto index rose 1.58% and outperformed the Sensex. India's largest truck maker by sales Tata Motors rose 1.85%. Reportedly, the company will start construction of a vehicle assembly plant in South Africa next week.

India's largest tractor maker by sales Mahindra & Mahindra gained 2.2%. The company, early this month, reported 29.11% jump in its total sales at 35,584 units in June 2011 over June 2010. Mahindra & Mahindra (M&M)'s domestic sales grew 28.69% to 33,772 units and exports surged 37.38% to 1,812 units in June 2011 over June 2010.

India's largest small car maker by sales Maruti Suzuki India shot up 1.25% on reports the Japanese parent Suzuki Motor Corp is considering a plan to raise its stake in the company by 5% through open-market purchases over a year. The report said Suzuki will likely buy the stake from financial institutions via block deals on the stock exchanges. Suzuki Motor Corp holds 54.21% stake in Maruti Suzuki India (as at end 30 June 2011).

India's largest bike maker by sales Hero Honda Motors advanced 0.83%. The company, early this month, 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 had said in a statement recently.

India's second largest bike maker by sales Bajaj Auto climbed 1.64% as the company is seen reporting good Q1 June 2011 results tomorrow, 14 July 2011, on the back of a decent volume growth and a hike in vehicle prices during the quarter. According to a poll of 6 brokerages carried out by Capital Market, Bajaj Auto's net profit is seen rising 24.6% to Rs 735.50 crore on 25.2% growth in total operating income to Rs 4870.90 crore in Q1 June 2011 over Q1 June 2010.

Shares of tyre makers gained after CEAT recently raised prices of tyres by 2% to 2.5% across categories and said margins are likely to improve from Q2 September 2011 due to a fall in prices of rubber, a key raw material. JK Tyre & Industries, MRF, Apollo Tyres and CEAT gained by between 0.46% to 2.83%

Bank stocks rose on bargain hunting after a recent decline triggered by fears about the spread of Europe's debt crisis. BSE Bankex gained 1.09% and outperformed the Sensex. India's second largest private sector bank by net profit HDFC Bank increased 1.44%. The bank has reportedly increased the base rate by 25 basis points to 9.5% and benchmark prime lending rate to 18%. The new rates will be applicable from Tuesday, 12 July 2011. The bank has also increased it deposit rate for the one-year-16-days bucket by 75 basis points to 9.25% from 8.50%, reports added.

India's largest commercial bank by branch network State Bank of India (SBI) advanced 1.34%. SBI has recently raised base rate by 25 basis points (bps) from 9.25% per annum to 9.50% per annum. The bank has revised the Benchmark Prime Lending Rate upwards by 25 bps from 14% to 14.25%. The bank has also revised upwards deposit rates on some maturities by up to 100 basis points.

India's largest private sector bank by net profit ICICI Bank rose 0.67%. ICICI Bank raised its base rate by 25 basis points to 9.5% per annum with effect from 4 July 2011. The private sector bank 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.

Bank of Baroda rose 0.55%. The state-run bank on Tuesday announced a hike in interest rates on short duration fixed deposits. The bank has also raised its lending rates. It has raised base rate by 25 basis points to 10.25% and Benchmark Prime Lending Rate (BPLR) by 25 basis points to 14.50%.

Kotak Mahindra Bank vaulted 3.18%. The private sector bank has raised its base rate by 25 basis points to 9.5% per annum from 13 July 2011. The bank has also raised its benchmark prime lending rate by 25 basis points.

BSE IT index fell 0.05% and underperformed the Sensex. IT bellwether Infosys Technologies slipped 0.36%, extending Tuesday's near 5% slide triggered by disappointing Q1 June 2011 results. Consolidated net profit as per International Financial Reporting Standards fell 5.3% to Rs 1722 crore on 3.2% growth in revenue to Rs 7485 crore in Q1 June 2011 over Q4 March 2011. The result was announced before trading hours on Tuesday, 12 July 2011.

Infosys has revised upwards its dollar earnings guidance for the year ending March 2012 (FY 2012) even as it has left its dollar revenue guidance unchanged. The company now expects 10% to 11.5% growth in earnings per American Depositary Share (EPADS) at $2.88 to $2.92 in FY 2012 over the year ending March 2011 (FY 2011). As stated earlier, the company expects 18% to 20% growth in revenue at $7.13 billion to $7.25 billion in FY 2012 over FY 2011

Infosys has forecast an up to 1.49% growth in non-annualized EPADS at $0.67 to $0.68 for Q2 September 2011 from $0.67 in Q1 June 2011. The company has forecast 3.5% to 5.02% growth in revenue at between $1.73 billion to $1.755 billion in Q2 September 2011 over Q1 June 2011.

Infosys has revised its rupee EPS guidance for FY 2012 upwards. The company has projected 7.3% to 8.9% growth in EPS at between Rs 128.20 to Rs 130.08 in FY 2012 over FY 2011. The company has slightly revised upwards its revenue growth guidance for FY 2012. The company has projected 15.5% to 17.5% growth in revenue at between Rs 31777 crore and Rs 32311 crore in FY 2012 over FY 2011.

Infosys has forecast between a 1.65% decline to a 0.03% rise in non-annualized EPS at between Rs 29.64 to Rs 30.15 in Q2 September 2011 over Q1 June 2011. The company has forecast 2.85% to 4.34% growth in revenue at between Rs 7699 crore to Rs 7810 crore in Q2 September 2011 over Q1 June 2011.

India's largest software services exporter TCS rose 0.36%. The company unveils its Q1 June 2011 results tomorrow, 14 July 2011. India's third largest software services exporter Wipro shed 0.17%. The firm declares its Q1 June 2011 results on 20 July 2011.

Consumer durables stocks rose on renewed buying. Videocon Industries, Titan Industries, Rajesh Exports, Gitanjali Gems and Blue Star rose by between 0.91% to 4.3%.

Pharma stocks also rose in a firm market. Biocon, Cipla, Lupin, Biocon, Sun Pharmaceutical Industries and Ranbaxy Laboratories gained by between 0.01% to 3.06%.

Dr Reddy's Laboratories added 3.26% after company said during market hours today that it has received final approval from the US drug regulator to market Fondaparinux sodium injection in multiple strengths.

Capital goods stocks also edged higher. Larsen & Toubro, Praj Industries, BEML and Gammon India rose by between 0.38% to 2.77%.

India's largest power equipment maker by sales Bharat Heavy Electricals rose 0.06% after the government today, 13 July 2011, invited bids from investment bankers to manage the company's follow-on public offer. The government proposes to sell a 5% stake in the power equipment maker. It currently holds 67.72% of the company. To make the shares affordable to investors, the company will split each of its shares into five before the follow-on public offer (FPO). The last date for investment bankers to submit bids is 15 July 2011.

Mining and metal stocks gained after LMEX, a gauge of six metals traded on London Metal Exchange, rose 1.02% to $4,200.90 on Tuesday, 12 July 2011. Hindalco Industries, Tata Steel, National Aluminium Company, Sterlite Industries (India), Coal India, Sesa Goa, Jindal Steel and Power and Steel Authority of India gained by between 0.49% to 1.88%.

Sugar stocks gained mirroring rally in global sugar prices. Shree Renuka Sugars, Bajaj Hindusthan and Balrampur Chini Mills rose by between 3.44% to 4.13%. London's white sugar futures hit a record high and raw sugar jumped more than 5% on Tuesday as fears of a shrinking cane crop from the world's leading sugar producer, Brazil, spurred investor buying.

Cals Refineries clocked highest volume of 0.61 crore shares on BSE. Readymade Steel (3.39 crore shares), Rushil Decor (1.22 crore shares), Birla Cotsyn (71.13 lakh shares) and Resurgence Mines (60.84 lakh shares) were the other volume toppers in that order.

Readymade Steel clocked highest turnover of Rs 225.79 crore on BSE. Rushil Decor (Rs 189.50 crore), State Bank of India (Rs 59.80 crore), Infosys (Rs 45.08 crore) and Coal India (Rs 44.08 crore) were the other turnover toppers in that order.

Today's recovery in share prices followed a three-day slide triggered by escalating euro-zone debt worries. The BSE Sensex had lost 666.68 points or 3.49% in three trading sessions to a 2-1/2-week closing low of 18,411.62 on Tuesday, 12 July 2011, from a recent high of 19,078.30 on 7 July 2011.

As the crucial corporate earnings season has begun, investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when Indian 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.

IT giant TCS and two-wheeler major Bajaj Auto declare Q1 results on Thursday, 14 July 2011. HDFC Bank, Ashok Leyland and Crompton Greaves report Q1 results on 19 July 2011. Wipro, Dr Reddy's Lab and Exide Industries are set to announce Q1 results on 20 July 2011. Zee Entertainment Enterprises, JSW Energy, Biocon, Hero Honda, Hindustan Zinc and Kotak Mahindra Bank unveil Q1 results on 21 July 2011. Private sector bank Axis Bank reports Q1 results on 22 July 2011. Godrej Consumer Products reports Q1 earnings on 23 July 2011. Rural Electrification Corporation announces Q1 results on 25 July 2011.

Car major Maruti Suzuki, steel major JSW Steel, decorative paints major Asian Paints and Shriram Transport Finance Company are set to unveil Q1 results on 26 July 2011. Infrastructure Development Finance Company (IDFC) and Lupin unveil Q1 results on 27 July 2011. Cement major Ambuja Cements unveils results on 28 July 2011. ICICI Bank and Power Finance Corporation unveil Q1 results on 29 July 2011. M&M announces Q1 results on 8 August 2011. ABB announces Q2 results on 9 August 2011. Tata Power unveils Q1 results on 10 August 2011.

On the macro front, the government unveils data on headline inflation for June 2011 tomorrow, 14 July 2011. According to a poll carried out by Capital Market, economists expect inflation at 9.7% for June 2011, much above the Reserve Bank of India's perceived comfort level of 5% to 6%.

Industrial output in May 2011 rose a slower-than-expected 5.6% from a year earlier, government data showed on Tuesday. April's industrial output growth was revised downwards to 5.8% from 6.3%. Manufacturing output, which constitutes about 80% of the industrial production, rose an annual 5.6% in May 2011, compared with a revised 6.3% growth a month earlier.

Merchandise exports jumped 46.4% to $29.2 billion in June 2011 over June 2010, Commerce Secretary Rahul Khullar said late last week. Imports in June rose 42.4% to $36.9 billion. The trade gap in June almost halved from a month earlier to $7.7 billion. It was at $15 billion in May. The government has set a target of merchandise exports of $300 billion in the fiscal year through March 2012, after shipments topped the government's estimate and rose to a record high of $245.9 billion last year.

The annual monsoon covered the whole of India by 9 July 2011--a week earlier than the usual 15 July--but the total rainfall so far is 1% below normal, the weather department said on Sunday, 10 July 2011. The slight drop in rainfall is due mainly to a deficit of rains in Gujarat, Maharashtra and Andhra Pradesh. Gujarat is the country's largest cotton and groundnut producer, while Maharashtra is the top sugar producer and Andhra Pradesh is a key rice producer. Rainfall in Gujarat was 60% below normal at 96.2 millimeters, while that in Andhra Pradesh was about 15% below normal.

The country's oilseed sowing area until 8 July 2011 was 5.43 million hectares, down from 5.86 million hectares a year earlier. 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.

The finance ministry has urged other ministries to cut expenditure by trimming spending on conferences, overseas travel and purchase of new vehicles so as to help the government meet its budget deficit target. These measures are intended at promoting fiscal discipline without restricting the operational efficiency of the government, Expenditure Secretary Sumit Bose said in a memo. The finance ministry also said no cash from the central government will be transferred to states if the states fail to provide details about how the funds will be spent.

European stocks advanced on Wednesday, 13 July 2011, as well-received data from China helped offset euro-zone debt worries triggered by Moody's Investors Service downgrading Ireland to junk status on Tuesday, 12 July 2011. The key benchmark indices in Germany, and France were up by between 0.04% and 0.29%. UK's FTSE 100 fell 0.05% in volatile trade.

Moody's said on Tuesday that there is a "growing possibility" that, after the current support program from the European Union and International Monetary Fund ends at year-end 2013, Ireland is likely to need further rounds of official financing before it returns to the private market.

Asian stocks rose on Wednesday, 13 July 2011, after the latest data showed a modest slowing in Chinese economic growth, delivering a boost to local markets and those of key trading partners. The key benchmark indices in Hong Kong, Japan, China, Indonesia, Singapore and South Korea were up by between 0.37% to 1.48%. Taiwan's Taiwan Weighted shed 0.03%.

China's gross domestic product expanded at a faster-than-expected rate of 9.5% in the April-June quarter from the year-ago period, data released today, 13 July 2011, showed. The strong data helped ease fears that the economy may be headed for a hard landing.

Trading in US index futures indicated that the Dow could rise 57 points at the opening bell on Wednesday, 13 July 2011. US stocks dropped on Tuesday, 12 July 2011, after Moody's Investor Service downgraded Ireland's debt to junk status.

Meanwhile, minutes of the Federal Reserve's latest meeting showed that a minority of members supported providing extra stimulus for the economy.