IT, power generation stocks advance

Key benchmark indices edged higher in choppy trade on hopes the government will speed up its long-awaited reforms program after Prime Minister Manmohan Singh took additional charge of the finance ministry after Pranab Mukherjee on Tuesday resigned as finance minister to contest the presidential polls next month. The barometer index, BSE Sensex, settled below the psychological 17,000 mark, having alternately moved above and below that mark in intraday trade. The Sensex advanced 61.18 points or 0.36%, up 36.96 points from the day's low and off 61.51 points from the day's high. The market breadth was positive. Software pivotals were mostly higher on upbeat data on housing market in the United States. Metal stocks rose on speculation China will introduce additional economic stimulus. Index heavyweight Reliance Industries (RIL) moved into positive zone from negative zone in late trade. Shares of public sector oil marketing companies (PSU OMCs) were mostly lower on reports PSU OMCs are likely to slash the price of petrol due to falling international crude oil prices. Truck major Tata Motors fell on reports that a top-level government panel has recommended an overhaul of the diesel subsidy system. Interest rate sensitive banking stocks were mostly higher. Realty shares extended recent gains triggered by the Competition Commission of India last week directing cement firms to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. FMCG stocks rose on reports sowing of most Kharif crops has been satisfactory so far. Power generation stock extended this month's gains as lower international coal prices could boost profitability. Shares of power financing firms surged. Shares of logistics services providers also gained. Media shares rose for second day in a row. Tyre shares rose as lower rubber prices could boost profitability of tyre makers. Sugar shares rose as world sugar prices rose. The market opened on a firm note on reports Prime Minister Manmohan Singh will take charge of the Finance Ministry portfolio after Pranab Mukherjee on Tuesday, 26 June 2012, resigned his post as finance minister to contest the presidential polls next month. The market pared gains in morning trade. The market held positive zone in mid-morning trade. A bout of volatility was witnessed as key benchmark indices regained strength after paring gains to hit fresh intraday lows in mid-morning trade. The market extended gains in afternoon trade. Volatility continued as key benchmark recovered soon after paring intraday gains to hit fresh intraday lows in mid-afternoon trade. Prime Minister Manmohan Singh has decided to take additional charge of the finance ministry after Pranab Mukherjee on Tuesday resigned as finance minister to contest the presidential polls next month. The shift comes at a time when the economy is going through a slowdown amid deteriorating domestic conditions and euro-zone troubles. Mr. Singh, who is highly regarded for initiating India's first major economic overhauls as then-finance minister in 1991, may take some politically tough decisions, such as raising fuel prices to cut subsidies that are straining government finances. Easing rules on foreign direct investment in sectors such as retail and civil aviation could also be high on his agenda as the government looks to revive its sagging image ahead of general elections in 2014. Mr. Mukherjee is the leading contender in the July 19 presidential election, having been nominated by the Congress party-led United Progressive Alliance government for the largely ceremonial post. The stock market may remain volatile tomorrow, 28 June 2012 as traders roll over positions from the near-month June 2012 series to July 2012 series. The June 2012 derivatives contracts expire tomorrow, 28 June 2012. The BSE Sensex advanced 61.18 points or 0.36% to settle at 16,967.76, its highest closing level since 22 June 2012. The index jumped 122.69 points at the day's high of 17,029.27 at the onset of the trading session. The index rose 24.22 points at the day's low of 16,930.80 in late trade. The S&P CNX Nifty advanced 21.10 points or 0.41% to settle at 5,141.90, its highest closing level since 22 June 2012. The index hit a high of 5,160.10 in intraday trade. The Nifty hit a low of 5,129.25 in intraday trade. The market breadth, indicating the overall health of the market, was positive. On BSE, 1,454 shares gained and 1,301 shares declined. A total of 152 shares were unchanged. The BSE Mid-Cap index rose 0.36%, matching the Sensex's rise. The BSE Small-Cap index rose 0.32%, underperforming the Sensex. The total turnover on BSE amounted to Rs 1628 crore, higher than Rs 1562.39 crore on Tuesday, 26 June 2012. Among the 30-share Sensex pack, 25 advanced while the rest of them declined. Sun Pharmaceutical Industries (up 1.34%), Coal India (up 0.94%) and Dr Reddy's Laboratories (up 0.44%), edged higher from the Sensex pack. Index heavyweight Reliance Industries (RIL) rose 0.17% to Rs 725. The stock came off the day's low Rs 717.90. RIL today, 27 June 2012, said it has bought back 3 crore shares for Rs 2144.73 crore till 22 June 2012. Under the ongoing share buyback program, RIL has set a maximum buyback price of Rs 870. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai early this month that the company's buyback program represents a highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future. Essar Oil rose 0.75%, with the stock recovering on bargain hunting after 3-day 5.73% slide. Shares of public sector oil marketing companies (PSU OMCs) were mostly lower on reports they are likely to cut the price of petrol from 1 July 2012 due to falling international crude oil prices. Indian Oil Corporation (IOC) (down 0.38%) and HPCL (down 0.19%) edged lower. BPCL rose 0.23%. Most auto stocks rose. India's largest utility vehicles maker Mahindra & Mahindra (M&M) rose 0.09%. The company early this month said it has received an overwhelming 7,200 plus bookings for its cheetah-inspired XUV500 from customers within just 2 days of opening all India bookings for the vehicle. All India bookings for the XUV500 were opened from 8 June 2012. India's second largest motorcycle maker by sales Bajaj Auto rose 0.06%. The company early this month said its total sales fell 2% to 3,52,219 units in May 2012 over May 2011, as exports to Sri Lanka were nil in May 2012 against a typical monthly average of 10,000 motorcycles and 3-wheelers each per month. The company expects recovery in Sri Lankan exports from July 2012 onwards. The company's exports rose 3% to 1,30,573 units in May 2012 over May 2011. India's largest motorcycle maker by sales Hero MotoCorp (HMCL) rose 0.12%. India's top small-car maker by sales Maruti Suzuki India gained 0.39%. India's largest truck maker by sales Tata Motors lost 3.18% to Rs 238.75 on reports that a top-level government panel has recommended an overhaul of the diesel subsidy system. The panel has recommended that the government should fix a band for the subsidy it pays on fuel sales. With a fixed subsidy, the price of diesel would then fluctuate as international prices move. Ongoing euro-zone debt worries also weighed on the counter. Tata Motors derives almost two-third of its revenue from its British unit Jaguar Land Rover. Software pivotals were mostly higher on upbeat data on housing market in the United States. US is the biggest outsourcing market for the Indian IT firms. India's largest IT company by revenue, Tata Consultancy Services (TCS), gained 0.72%. India's second largest software services exporter by revenues, Infosys, rose 1%. India's third largest software services exporter by revenue, Wipro, shed 0.51%. Educomp Solutions fell 2.99% on profit booking after the stock surged 30.10% in the preceding eight sessions. Redington (India) rose 0.65% after the company said its subsidiary acquired a 2.3-lakh square feet building in Chennai. The announcement was made after market hours on Tuesday, 26 June 2012. Metal stocks rose on speculation China will introduce additional economic stimulus. China is the world's largest consumer of copper and aluminum. Hindustan Zinc (up 1.07%), Jindal Steel & Power (up 0.17%) and Sail (up 0.63%), edged higher. Private sector steel major Tata Steel gained 2.52% to Rs 420.75 and was the top gainer from the Sensex pack. The stock rose on bargain hunting after falling 4.61% in the preceding three trading sessions. Private sector aluminium major Hindalco Industries rose 1.26% ahead of its audited consolidated results for the year ended 31 March 2012 today, 27 June 2012. Shares of iron ore major Sesa Goa and copper major Sterlite Industries gained. Sesa Goa jumped 3.41%. The company on Monday said valid voting of 91.70% representing 79.12% votes in value voted in favor of the resolution approving the a proposal to merge their firm with Vedanta Resources flagship Sterlite Industries and its various subsidiaries. The merger will create the world's seventh largest diversified metals and mining conglomerate. At least 75% of shareholders need to approve the merger for it to become effective. Sterlite Industries (India) advanced 1.74%. The company on Monday said shareholders have approved the scheme of amalgamation and arrangement with valid voting of 89.75% representing 92% votes in value voted in favor of the resolution approving the scheme. Gujarat NRE Coke rose 1.92% after the company said its board of directors has allotted 5 crore convertible warrants to promoter/promoter group entities. The company made this announcement after market hours on Tuesday, 26 June 2012. Interest rate sensitive banking stocks were mostly higher. India's largest private sector bank by net profit ICICI Bank rose 0.38%. India's second largest private sector bank by net profit HDFC Bank gained 0.77%. India's largest commercial bank in terms of branch network State Bank of India (SBI) shed 0.19%. Kotak Mahindra Bank shed 1.26%. The private sector bank announced that the Reserve Bank of India has advised the bank that the promoter shareholding, currently at 45.21%, be brought down to 20% by 31 March 2018. RBI has also indicated to the bank that it will take a view on dilution over the next two years thereafter, from 20% to 10% or such other percentage depending upon the prescription of promoter holding in the new bank guidelines. Bhel extended Tuesday's gains triggered by new order win. The stock was up 0.59%. Bhel said during trading hours on Tuesday, 26 June 2012, it has won a contract for the electro-mechanical equipment package for a 1,020 megawatts (MW) hydroelectric project in Bhutan. The contract is valued at Rs 950 crore. This contract will further strengthen Bhel's presence in the overseas hydro business segment, Bhel said in a statement. Bhel's globalisation strategy is already yielding rich dividends and the company has established its footprints in six continents of the world spanning over 75 countries, Bhel said. Power generation stock extended this month's gains as lower international coal prices could boost profitability. NTPC (up 0.91%), Adani Power (up 2.58%), JSW Energy (up 5.82%), GMR Infrastructure (up 0.67%), CESC (up 0.68%), edged higher. Fall in international coal prices this year could boost profitability of those power generation firms which buy imported coal in the spot market. Coal is the largest source of energy for electricity generation. Reliance Power gained 1.48%. The stock extended Tuesday's 2.01% gain triggered by the company commissioning the first of the two units of its 600 megawatts Butibori thermal power project near Nagpur in Maharashtra Tata Power Company advanced 2.46% and Reliance Infrastructure gained 1.65% after the Delhi Electricity Regulatory Commission (DERC) on Tuesday approved a steep tariff hike in Delhi. New Delhi's electricity regulator has approved higher electricity tariffs in the country's capital, by an average of 20.8%, starting July 1 to help them narrow losses. On average, the electricity tariffs for industrial and household consumers will rise to Rs 6.63 a kilowatt hour from Rs 5.49 a kilowatt hour. The four electricity distribution companies that operate in New Delhi -- Reliance Infrastructure's BSES Rajdhani Power and BSES Yamuna Power and Tata Power Company's Delhi Distribution along with provincial government's New Delhi Municipal Council had sought the raise, citing the need to cut their electricity distribution losses. Shares of Power financing firms were in demand. Power Finance Corporation gained 5.09%. Rural Electrification Corporation rose 4.03%. Shares of logistics services providers rose. Aegis Logistics (up 2.55%), Allcargo Logistics (up 1.48%), Container Corporation of India (up 1.81%), and Arshiya International (up 0.11%) gained. Gateway Distriparks rose 2.80% after Morgan Stanley Asia (Singapore) Pte bought 9.5 lakh shares of the company at Rs 131 per share in a bulk deal on Tuesday, 26 June 2012 on the BSE. Realty shares extended recent gains triggered by the Competition Commission of India last week directing cement firms to cease and desist from indulging in any activity relating to agreement, understanding or arrangement on prices, production and supply of cement in the market. Cement is a key raw material in housing construction. HDIL (up 0.66%), DLF (up 0.08%), Sobha Developers (up 2.46%), Oberoi Realty (up 0.12%), and Indiabulls Real Estate (up 0.35%) gained. Unitech shed 0.71%. FMCG stocks rose on reports sowing of most Kharif crops has been satisfactory so far. FMCG firms derive substantial sales from rural India. Tata Global Beverages (up 1.30%), Colgate Palmolive India (up 1.81%), Marico (up 1.25%) and Nestle India (up 0.63%), edged higher. Index heavyweight and cigarette major ITC rose 0.26% to Rs 247.90. The stock had scaled a record high of Rs 253.80 in intraday trade on 25 June 2012. India's largest FMCG firm by sales Hindustan Unilever rose 0.24% to Rs 452.15. The stock had hit a record high of Rs 464 in intraday trade on 22 June 2012. Tyre shares rose as lower rubber prices could boost profitability of tyre makers. J K Tyre & Industries (up 1.31%), TVS Srichakra (up 3.13%), CEAT (up 1.30%), MRF (up 0.82%) and Apollo Tyres (up 1.08%) edged higher. Rubber futures have plunged in Tokyo this quarter. Natural rubber is key raw material in the manufacture of tyres. Sugar shares rose as world sugar prices rose. Dhampur Sugar Mills (up 4.98%), Shree Renuka Sugars (up 2.49%), Dwarikesh Sugar Industries (up 1.45%), Balrampur Chini Mills (up 1.24%), and Bajaj Hindusthan (up 1.06%), edged higher. Raw-sugar futures for October delivery rose 1.5% to 20.23 cents a pound in New York on Tuesday, the biggest gain in a week. Output in Brazil's Center South, the world's largest producing region, tumbled 32 percent in the first half of this month after rain hindered harvesting, Unica, an industry group, said on Wednesday, 27 June 2012. Media shares rose for second day in a row. Zee Entertainment Enterprises (up 1.71%), Dish TV India (up 2.91%), NDTV (up 0.76%), T V Today Network (up 1.74%) and Raj Television Network (up 0.94%), edged higher. The sunset date for conversion of cable systems from analogue to digital has been postponed by four months to 31 October 2012. The earlier deadline for Phase I digitisation in four metros -- New Delhi, Mumbai, Kolkata and Chennai -- was 30 June 2012. Strides Arcolab jumped 2.8% after the company said it has redeemed the outstanding $80 million foreign currency convertible bonds on due date. The company made this announcement during trading hours today, 27 June 2012. SBI was the top traded counter on the BSE with turnover of Rs 94.95 crore followed by JSW Steel (Rs 35.34 crore), Wockhardt (Rs 34.03 crore), Tata Motors (Rs 33.03 crore) and HDIL (Rs 32.88 crore). Sybly Industries was the volume topper on the BSE with volume of 1.19 crore shares followed by Kingfisher Airlines (1 crore shares), Manappuram Finance (92.64 lakh shares), Aqua Logistics (43.41 lakh shares) and Cals Refineries (42.48 lakh shares). The Reserve Bank of India (RBI) on Monday, 25 June 2012, announced hike of the foreign investment cap on government bonds by $5 billion and hike of limit on overseas commercial borrowings by $10 billion. The RBI also allowed sovereign wealth funds, multilateral agencies, endowment funds, insurance and pension funds as well as foreign central banks to invest in government bonds. These measures are aimed at attracting foreign funds and arresting the recent sharp slide of the rupee against the US dollar. The government also said on Monday, 25 June 2012, that the withholding tax would be liberalized as announced in the 2012-13 Budget. In Budget 2012-13, Finance Minister Pranab Mukherjee had proposed to reduce the rate of withholding tax on interest payments on external commercial borrowing (ECBs) from 20% to 5% for three years, for certain stressed infrastructure sectors. Moody's Investors Service on Monday, 25 June 2012, said it is maintaining its stable outlook on India's sovereign rating as the growth slowdown and deteriorating business sentiment in the economy are likely to be temporary. Moody's said India's Baa3 rating already reflected challenges such as a weak fiscal performance of the government, high inflation and an uncertain investment policy environment, which have characterized the economy for decades. Moody's said the slowdown in growth and high inflation will hurt India's credit profile, but not enough to lead to a revision in its rating. India's limited foreign currency debt is also likely to shield the government from any significant increase in its external debt burden due to the sharp fall in the rupee, the ratings firm added. The India Meteorological Department (IMD) on Friday, 22 June 2012, cut the expected quantum of total rainfall in the country for 2012. The timing, distribution and quantity of the rains are vital to India's agricultural sector and economy, as more than 60% of the country's farmland is rain-fed. IMD said monsoon rains in 2012 would be 96% of the long-term average overall, down from its April forecast of 99%. Rainfall in the northwestern grain bowl region is likely to be a slightly deficient at 93% of the long-term average this season. The weather office has forecast normal rains in July and August, key months for planting and maturing of crops. July rains this year are likely to be 98% of the long period average, while the rainfall in August is forecast to be 96% of the average. As per reports, sowing of most Kharif crops has been below last year's level so far, except sugarcane where it increased. The monsoon rains -- which make up around 70% of India's annual rainfall -- are crucial to the nation's agriculture sector and broader economy. The next major trigger for the stock market is Q1 June 2012 corporate earnings, which will start trickling from the second week of July 2012. HDFC announces Q1 results on 11 July 2012. Infosys announces its Q1 results on 12 July 2012. HDFC Bank declares its Q1 results on 13 July 2012. Bajaj Auto reports Q1 results on 18 July 2012. Prime Minister Manmohan Singh at the G20 Plenary Session last week said that the Indian government is determined to create an environment that will boost investor sentiment and promote an atmosphere conducive to enterprise and creativity. He said that the government's policies will be transparent, stable and designed to provide a level playing field to both domestic and foreign investors. Singh said that the government is focusing heavily on infrastructure investment and it has set ambitious targets to keep infrastructure investment on track and also put in place a problem resolution mechanism to overcome implementation bottlenecks. Like other countries, we too allowed the fiscal deficit to expand after 2008 to impart a stimulus. We are now focussing on reversing the expansion. Singh said that the government is determined to take tough decisions, including on controlling subsidies. European stocks edged higher on Wednesday after upbeat data on housing market in the United States, the word's biggest economy and on speculation China will introduce additional economic stimulus. Key benchmark indices in UK, France and Germany were up by 0.27% to 0.41%. Italy saw borrowing costs jump sharply as it sold 9 billion euros ($11.2 billion) of six-month Treasury bills at auction on Wednesday, a day ahead of a sale of five- and ten-year government bonds. The auction produced an average yield of 2.96%, up from 2.10% in a previous sale in late May. Bids exceeded supply 1.61 times, matching the bid-to-cover ratio produced in last month's auction, the Treasury said Adding to this week's raft of European developments, Egan-Jones Ratings on Tuesday lowered Germany's sovereign rating from AA- to A+ and issued a negative watch on the rating on expectations the country will be left with significant uncollectable receivables due to its exposure to the euro zone. The ratings agency said that Chancellor Angela Merkel is fighting a losing battle in resisting calls for EU bonds and pushing for fiscal controls until euro-area countries agree to broad oversight of their budgets Tuesday also saw the release of a document outlining a path to tighter fiscal integration across the euro zone and a European banking union. The seven-page document published on the EU's website on Tuesday said euro-zone countries should be in a position to require changes in budgetary envelopes if they are in violation of fiscal rules, keeping in mind the need to ensure social fairness. The EU road map also calls for a criteria-based and phased process toward the issuance of common debt. It also calls on euro-zone countries to turn oversight of banks over to a European regulator, such as the European Central Bank. In return a European deposit insurance program "would strengthen the credibility of the existing arrangements and serve as an important assurance that eligible deposits of all credit institutions are sufficiently insured," the report said. The EU outline calls for an interim report to be presented in October, with a final report on the road map due at a December summit meeting. A key two-day summit of the European Union to discuss the ongoing European debt crisis begins tomorrow, 28 June 2012. German chancellor Angela Merkel on Monday, 25 June 2012, dashed any lingering hope in financial markets that Europe would issue common euro-zone bonds to underpin its single currency after Spain formally sought a financial rescue. Ms Merkel, who leads Europe's biggest economy and the main contributor to its rescue funds, said sharing debt liability within the 17-nation euro-zone would be economically wrong and counterproductive. Ahead of the European Union (EU) summit, more signs of distress in the region's financial system emerged on Monday, 25 June 2012, when Cyprus joined the ranks of European countries seeking financial aid and Spain formally asked for help for its banking system. European nations will take all necessary measures to safeguard the integrity and stability of the euro zone, improve the functioning of financial markets and break the feedback loop between sovereign debts and banks, according to the statement released at the end of the G20 summit in the Mexican resort of Los Cabos on 19 June 2012. Most Asian stocks edged higher on Wednesday, 27 June 2012, on speculation China will introduce additional economic stimulus. Key benchmark indices in Singapore, Japan, Taiwan, Hong Kong and Indonesia were up by 0.63% to 1.38%. Key benchmark indices in South Korea and China were down by 0.01% and 0.23% respectively. China may introduce more proactive policies to ensure stable growth, the China Securities Journal said in a commentary published on the front page of the newspaper today, 27 June 2012. Policies to stabilize foreign trade, expand infrastructure investment, fine-tune monetary policies and structurally reduce taxes may be introduced, according to the commentary. China is the world's second biggest economy after the US. Trading in US index futures indicated a slightly lower opening of US stocks on Wednesday, 27 June 2012. US markets ended higher on Tuesday after upbeat data on the housing market.