Sensex, Nifty scale highest level in nearly 10 weeks as bulls return

After a long hiatus, bull operators are back on the street. Key benchmark indices rallied on frenzied buying in index pivotals ahead of the commencement of the first quarter corporate earnings season. The barometer index the BSE Sensex surged past the psychological 19,000 mark. The 50-unit S&P CNX Nifty moved past 5,700 level. The Sensex and the Nifty attained their highest closing level in nearly 10 weeks. Data showing sustained buying by foreign institutional investors (FIIs) over the past few days and firm global stocks underpinned sentiment.

The Sensex jumped 351.33 points or 1.88%, up 311.05 points from the day's low and off 19.48 points from the day's high. The market breadth was strong. All the sectoral indices on BSE rose. The BSE Mid-Cap and Small-Cap indices underperformed the Sensex. The government's decision to raise foreign investment ceiling in private FM radio broadcasting firms to 26% from 20% sent shares of FM radio broadcasting services firms surging.



Index heavyweight Reliance Industries (RIL) advanced over 2% on reports the petroleum ministry on Wednesday recommended the $7.2 billion RIL-BP deal to the Cabinet Committee on Economic Affairs (CCEA) for an 'unconditional approval'. IT bellwether Infosys rose as the company is seen revising upwards its revenue and earnings growth forecast for the year ending March 2012 (FY 2012) in rupee terms at the time of announcing Q1 results on Tuesday, 12 July 2011.

Banking giant HDFC Bank struck lifetime high after the bank set record date for stock-split. Engineering and construction major Larsen & Toubro shot up over 3% after a subsidiary completed a private placement of equity shares. Auto stocks extended recent gains triggered by expectations that sales will pick up in the second half of the year. Most metal rose on fresh buying. Telecom pivotals were also in demand. Cement stocks gained as cement dispatches are likely to pick up post monsoon due to acceleration in construction activities, with current year being the last year of the eleventh five-year plan period. Shares of Rushil Decor and Birla Pacific Medspa surged on their debut.

The market edged higher in early trade. Stocks extended gains in early afternoon trade, with the Sensex and the 50-unit Nifty hitting their highest level since 1 July 2011. The market pared gains in afternoon trade. The market regained strength in mid-afternoon trade. Frenzied buying in index pivotals propelled the key benchmark indices to their highest level in more than 9 weeks in late trade.

Foreign institutional investors (FIIs) bought shares worth net Rs 281 crore on Wednesday, 6 July 2011, compared with an inflow of Rs 860.60 crore on Tuesday, 5 July 2011. FII inflow in July 2011 totaled Rs 5003.90 crore (till 6 July 2011). FIIs had bought shares worth a net Rs 4572.20 crore in June 2011. FII inflow in calendar 2011 totaled Rs 7674.30 crore (till 6 July 2011).

The BSE Sensex jumped 351.33 points or 1.88% to settle at 19,078.30, its highest closing level since 29 April 2011. The Sensex jumped 370.81 points at the day's high of 19,097.78 in late trade. The index rose 40.28 points at the day's low of 18,767.25 in early trade.

The S&P CNX Nifty was up 103.50 points or 1.84% to settle at 5,728.95, its highest closing level since 29 April 2011. The Nifty hit a high of 5,737.15 in intraday trade.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1922 shares rose and 987 shares declined. A total of 125 shares remained unchanged.

The BSE Mid-Cap index rose 1.12% and the BSE Small-Cap index rose 1.08%. Both these indices underperformed the Sensex

The total turnover on BSE amounted to Rs 2884 crore, lower than Wednesday's turnover of Rs 3493.58 crore

All the 13-sectoral indices on BSE logged smart gains. The FMCG (up 2.60%), the BSE Realty (up 2.25%), and the BSE Capital Goods (up 2.20%), outperformed the Sensex. The BSE Consumer Durables (up 1.08%), the Bankex (up 1.16%), and the BSE PSU (up 1.28%), underperformed the Sensex.

Index heavyweight Reliance Industries (RIL) advanced 2.19% to Rs 871.35 on reports the petroleum ministry on Wednesday recommended the $7.2 billion RIL-BP deal to the Cabinet Committee on Economic Affairs (CCEA) for an 'unconditional approval'. The deal gives the British energy major a 30% stake in 23 oil and gas fields, including gas-producing KG-D6. Reports added that the Cabinet will take up the issue for a decision next week.

Metal stocks were in demand on fresh buying. India's largest private sector aluminium maker by sales Hindalco Industries jumped 3.79% to Rs 196 and was the top gainer from the Sensex pack.

India's largest sponge iron maker by sales Jindal Steel & Power surged 2.56% on reports the company has acquired an additional 5% in Rocklands Richfields via open offer to boosting its stake in the Australian coal miner to 19.39%.

India's largest private sector steel maker by sales Tata Steel rose 1.51% after the company's sales from its Indian operations rose 14% to 1.59 million tonnes in Q1 June 2011 over Q1 June 2010. The Indian operations account for about a quarter of the group's total annual global capacity of about 28 million tonnes, which includes unit Corus, Europe's second-largest steel maker. Sales of long steel products, used mostly in construction industry, rose 16% during the quarter, while sales of flat products, used in cars and consumer goods, rose 12%. The company's crude steel production in India stood at 1.79 million tonnes for the quarter, up 10%.

National Aluminium Company (up 1.54%), Sesa Goa (up 1.15%), Hindustan Zinc (up 0.88%), JSW Steel (up 2.43%) and Steel Authority of India (up 0.57%), edged higher from the metal sector.

Sterlite Industries (India) declined 0.73% to Rs 170.10 after its ADR lost 1.76% on Wednesday.

India's largest engineering and construction firm by net profit Larsen & Toubro shot up 3.06% after the company during market hours today, 7 July 2011, said its subsidiary L&T Finance Holdings has raised Rs 330 crore by selling six crore equity shares at Rs 55 each to the private equity fund of US-based Capital International.

L&T Finance Holdings is a financial holding company offering a diverse range of financial products and services through its subsidiaries. Its operations are arranged into four business segments viz. the infrastructure finance group, retail finance group, corporate finance group and investment management group. L&T Finance Holdings had filed a Draft Red Herring Prospectus (DRHP) in relation to a proposed initial public offer (IPO).

Indo Asian Fusegear advanced 1.82% after the company said its board will meet on 9 July 2011, to consider buyback of shares. The company announced the board meet after market hours on Wednesday, 6 July 2011.

India's second largest private sector bank by net profit HDFC Bank gained 0.71% to Rs 2563, after striking a record high of Rs 2572, after the bank fixed 16 July 2011 as the record date for 5-for-1 stock split. The bank announced the record date before trading hours today, 7 July 2011. The stock has risen sharply over the past few days as the private sector bank is seen reporting a more than 30% growth in net profit in Q1 June 2011.

India's largest private sector bank by market capitalisation ICICI Bank rose 1.36% to Rs 1089.95, staging a reversal from an early low of Rs 1063.

India's largest commercial bank by branch network State Bank of India (SBI) rose 1.39%. After market hours today, 7 July 2011, the bank informed that it has revised the base rate upwards by 25 basis points (bps) from 9.25% per annum to 9.50% per annum effective from 11 July 2011. The bank has revised the Benchmark Prime Lending Rate upwards by 25 bps from 14% to 14.25% effective from July 11, 2011. The bank has also revised upwards deposit rates on some maturities by up to 100 basis points.

SKS Microfinance hit an upper circuit limit of 20% at Rs 411 after the government released the draft of a bill aimed at developing and regulating microfinance institutions.

IT bellwether Infosys rose 1.57% ahead of its Q1 June 2011 earnings on Tuesday, 12 July 2011. Analysts expect Infosys to revise upwards its revenue and earnings growth forecast for the year ending March 2012 (FY 2012) in rupee terms, with the company seen beating its own guidance for Q1 June 2011 and due to higher pricing.

Salary hike and increase in tax rates due to the expiry of Software Technology Parks of India (STPI) tax benefits is seen pulling Infosys' net profit lower in Q1 June 2011 even as a good revenue growth is expected from the IT bellwether on the back of volume growth and uptick in pricing. A total of 8 brokerages expect a between 1.1% to 7.1% fall in Infosys' consolidated net profit as per International Financial Reporting Standards (IFRS) at between Rs 1689 crore to Rs 1797.20 crore in Q1 June 2011 over Q4 March 2011. Revenue is seen rising 2.6% to 4.67% at between Rs 7435 crore to Rs 7589.20 crore in Q1 June 2011 over Q4 March 2011.

India's largest software services exporter TCS gained 1.11%. The company unveils its Q1 June 2011 results on 14 July 2011.

India's third largest software services exporter Wipro rose 1.58%. The firm declares its Q1 June 2011 results on 20 July 2011.

Polaris Software Lab fell 1.31% after the stock turned ex-dividend today, 7 July 2011, for a dividend of Rs 4.50 per share for the year ended March 2011.

Telecom pivotals were in demand. India's largest listed cellular services provider by sales Bharti Airtel spurted 3.76% after the company said it has decided to restructure its businesses in a bid to improve efficiency in its India and South Asian operations. Bharti Airtel said it will merge its mobile, satellite television, fixed-line and broadband businesses into a single entity.

"The new structure... is aimed at driving greater business and functional synergies, providing a common interface to customers, and creating a de-layered and more agile organization," Bharti Airtel Chairman and Managing Director Sunil Mittal said in a statement. The business units jointly make up 90% of the company's revenue.

India's second largest listed cellular services provider by sales Reliance Communications rose 1.54% on bargain hunting, halting a two-day 3.33% slide.

ITC (up 3.38%), NTPC (up 2.87%), and Reliance Infrastructure (up 2.49%), edged higher from the Sensex pack.

Cement stocks gained as cement dispatches are likely to pick up post monsoon due to acceleration in construction activities, with current year being the last year of the eleventh five-year plan period. ACC (up 3.19%), Ambuja Cement (up 2.29%), UltraTech Cement (up 3.45%), JK Lakshmi Cement (up 1.95%), Shree Cement (up 1.39%), India Cements (up 2.74%), and Madras Cement (up 0.30%), gained.

The government's decision to raise foreign investment ceiling in private FM radio broadcasting firms to 26% from 20% sent shares of FM radio broadcasting services firms surging. Reliance Media World and Entertainment Network India rose 7% and 6.22%, respectively.

Graphite India fell 2.28% after the stock turned ex-dividend today, 7 July 2011, for a dividend of Rs 3.50 per share for the year ended March 2011.

Nilkamal surged 4.96% on reports the company plans to set up a mattress manufacturing facility at Hosur in Tamil Nadu. The mattresses range will be first marketed in the west and south markets followed by the north and east towards the second half of the year, reports added.

Lupin rose 2% after its US subsidiary Pharmaceuticals Inc received tentative approval from the US drug regulator to market Pregabalin capsules in multiple strengths. The company made this announcement during trading hours today, 7 July 2011.

Shares of Rushil Decor settled at Rs 119.65 on BSE, a premium of 66.18% over the initial public offer price of Rs 72. The stock debuted at Rs 81.25, a premium of 12.84% over the initial public offer (IPO) price. The stock hit a high of Rs 124.05 and low of Rs 75. Rushil Decor makes decorative laminated sheets and plain particle board.

Shares of Birla Pacific Medspa settled at Rs 25.35 on BSE, a premium of 153.50% over the initial public offer price of Rs 10. The stock debuted at Rs 10.10, a premium of 1% over the initial public offer (IPO) price. The stock hit a high of Rs 30.70 and low of Rs 10.10. The company is in the business of beauty and health-care treatment.

Rushil Decor clocked highest turnover of Rs 349.15 crore on BSE. Birla Pacific Medspa (Rs 244.14 crore), Delta Corp (Rs 103.96 crore), SKS Microfinance (Rs 75.37 crore) and State Bank of India (Rs 75.28 crore) were the other turnover toppers in that order.

Birla Pacific Medspa clocked highest volume of 13.48 crore shares on BSE. Rushil Decor (3.71 crore shares), Cals Refineries (2.84 crore shares), Birla Cotsyn (1.23 crore shares) and Sanraa Media (1.07 crore shares) were the other volume toppers in that order.

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.

Corporate earnings will begin with housing finance major HDFC unveiling its Q1 June 2011 results on Friday, 8 July 2011. IT bellwether Infosys unveils Q1 results on 12 July 2011. IT giant TCS unveils Q1 results on 14 July 2011. HDFC Bank and Ashok Leyland 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 and Biocon 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. Car major Maruti Suzuki and steel major JSW Steel are set to unveil Q1 results on 26 July 2011. Infrastructure Development Finance Company (IDFC) unveils Q1 results on 27 July 2011. Power Finance Corporation announces Q1 results on 29 July 2011.

Monsoon rains were 25% below normal in the week to 6 July 2011, slowing from the 10% above average rains in the previous week, the weather office said on Thursday. 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.

An Empowered Group of Ministers (EGoM) is reportedly scheduled to meet on 11 July 2011 to consider the crucial Food Security Bill and allow export of food grains.

European stocks rose on Thursday following a late rally on Wall Street and as investors awaited a likely interest-rate hike from the European Central Bank. The key benchmark indices in UK, France and Germany were up by between 0.37% to 0.44%.

The European Central Bank is widely expected to hike interest rates by 25 basis points at a policy meeting later in the global day today, 7 July 2011.

Asian indices edged higher on Thursday following overnight gains on Wall Street. Key benchmark indices in Hong Kong, Indonesia, Singapore and South Korea were up by between 0.06% to 0.78%. The key benchmark indices in Taiwan and Japan were down 0.58% and 0.11%, respectively.

China's Shanghai Composite reversed early gains and declined 0.58% after the country's central bank, post market closing on Wednesday, hiked interest rates by 25 basis points for third time this year to battle surging inflation. The increase will take effect from today, 7 July 2011.

Trading in US index futures indicated that the Dow could gain 31 points at the opening bell on Thursday, 7 July 2011. The key data due this week is US non-farm payrolls for June 2011 on Friday, 8 July 2011. The market expectation is that hiring doubled last month from May's lackluster initial reading of 54,000 non-farm jobs.