Market jumps as euro-zone debt worries ease after EU growth, bank plan

Key benchmark indices jumped on the last trading session of the month after European Union (EU) leaders agreed on a growth and bank recapitalization plan for Europe which is designed to alleviate the worst of the debt crisis gripping euro-zone. The barometer index, BSE Sensex, surged past the psychological 17,000 level. The Sensex attained its highest closing level in more than 10 week. The 50-unit S&P CNX Nifty attained its highest closing level in 10-weeks. The Sensex jumped 439.22 points or 2.59%, up 295.37 points from the day's low and off 18.50 points from the day's high. The market breadth was strong. All the 13 sectoral indices on BSE were in the green. Index heavyweight Reliance Industries advanced. The Sensex jumped 1,211.45 points or 7.46% in June 2012 (till 29 June 2012). The barometer index has gained 1,975.06 points or 12.77% in calendar 2012 so far (till 29 June 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,294.12 points or 15.15%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 1,701.72 points or 8.89%. Coming back to today's trade, cigarette major ITC, pharma major Sun Pharmaceutical Industries and private sector banking firm HDFC Bank scaled record highs. Metal stocks edged higher as global commodity prices rose after European leaders today, 29 June 2012, unveiled a series of measures aimed at introducing stability to Europe's financial markets. Software pivotals rose after European leaders unveiled a plan to address Europe's distressed banking sector. Banking stocks surged. Shares of two-wheeler makers and car major Maruti Suzuki India rose after state-run oil marketing companies (PSU OMCs) announced reduction in petrol prices by Rs 2.46 per litre effective today, 29 June 2012. Cairn India slumped on massive volumes on buzz Cairn Energy has offloaded part of its stake in the firm through bulk deals on BSE today, 29 June 2012. State-run oil marketing companies (PSU OMCs) were mostly lower after they announced reduction in petrol prices. Cement and construction stocks rose as Prime Minister Manmohan Singh early this month laid out ambitious infrastructure development plans for the current fiscal year. Media major Zee Entertainment Enterprises hit a 52-week high. Power generation stocks rose as lower international coal prices could boost profitability. India's largest engineering & construction firm by sales L&T jumped over 4% after the company announced bagging new orders for its construction division. Power equipment major Bharat Heavy Electricals also surged over 4%, with the stock extending its recent gains triggered by the company securing a contract worth Rs 950 crore for a 1,020 megawatts hydroelectric project in Bhutan. The market opened on a firm note after European Council President Herman van Rompuy said during early hours of Friday morning in Brussels, Belgium that Europe will present a proposal for a single supervisory mechanism for the region's banking system. The Sensex surged past the psychological 17,000 level. The Sensex extended initial gains to scale its highest level in more than 8 weeks in morning trade. The market held firm in mid-morning trade. Key benchmark indices pared gains after hitting fresh intraday highs in early afternoon trade. Firmness continued in afternoon trade. The market remained firm in mid-afternoon trade. The market extended gains in late trade. European leaders today, 29 June 2012, unexpectedly announced a raft of measures designed to alleviate the worst of the current debt crisis gripping euro-zone. European Union leaders announced a plan for a single financial supervisor for the region, as part of a range of short-term measures to try to stabilize markets, amid the ongoing debt crisis gripping the region. European banks will now have the possibility of direct recapitalization, he said, with financial assistance provided by the region's current bailout fund -- the European Financial Stability Facility (EFSF) -- until the new European Stability Mechanism (ESM) becomes available. Loans will be transferred from the EFSF to ESM without a change in seniority of the debt, he said. The BSE Sensex jumped 439.22 points or 2.59% to settle at 17,429.98, its highest closing level since 19 April 2012. The index jumped 457.72 points at the day's high of 17,448.48 in late trade. The index rose 143.85 points at the day's low of 17,134.61 in early trade. The S&P CNX Nifty jumped 129.75 points or 2.52% to settle at 5,278.90, its highest closing level since 20 April 2012. The index hit a high of 5,286.25 and a low of 5,189 in intraday trade. The market breadth, indicating the overall health of the market, was strong. On BSE, 1,890 shares gained and 1,015 shares declined. A total of 140 shares were unchanged. The BSE Mid-Cap index rose 1.62% and the BSE Small-Cap index rose 1.31%. Both these indices underperformed the Sensex. The total turnover on BSE amounted to Rs 3936 crore, lower than Rs 4307.29 crore on Thursday, 28 June 2012. Coal India was the lone loser from the 30-share Sensex pack. Shares of state-run coal miner Coal India fell 0.72% to Rs 345.40. Index heavyweight Reliance Industries (RIL) rose 2.18% to Rs 735. RIL on Wednesday, 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. Cairn India slumped 6.2% to Rs 307.20 on massive volumes of 6.12 crore shares on BSE, compared with average daily traded volume of 2.80 lakh shares in the past two weeks. As per market buzz Cairn Energy has offloaded part of its stake in the firm through bulk deals on BSE today, 29 June 2012. Last year, Cairn Energy sold controlling stake in Cairn India to London-listed miner Vedanta Resources in an $8.7 billion deal, but still retained 21.79% shareholding in the Indian company, as of 31 March 2012. State-run oil marketing companies (PSU OMCs) were mostly lower after they announced reduction in petrol prices by Rs 2.46 per litre effective today, 29 June 2012. HPCL (down 0.33%) and BPCL (down 0.98%) declined. Indian Oil Corporation rose 0.75%. The reduction in price will vary from Rs 2.46 per litre to Rs 3.22 per litre, depending upon local taxes in different states. The cut is based on global crude prices and the exchange rate of the rupee against the dollar. Metal stocks edged higher as global commodity prices rose after euro zone leaders unveiled a series of measures aimed at introducing stability to Europe's financial markets. Tata Steel (up 3.48%), Hindustan Zinc (up 4.03%), JSW Steel (up 1.20%) and Sail (up 2.32%), edged higher. India's largest sponge iron maker by capacity Jindal Steel & Power jumped 8.56% to Rs 468.70 and was the top gainer from the Sensex pack. Private sector aluminium major Hindalco Industries rose 3.86%. The company on Wednesday, 27 June 2012, reported a strong 38% growth in consolidated net profit to Rs 3397 crore on 12% growth in revenue from operations to Rs 80821.40 crore in the year ended March 2012 (FY 2012) over the year ended March 2011 (FY 2011). The result was announced after market hours on Wednesday, 27 June 2012. The company said the growth in net profit was primarily attributable to strong performance of copper business in India and also due to strong performance of its US unit Novelis. The top line growth was driven by better product mix and depreciating rupee, Hindalco said. Hindalco Industries said that despite economic headwinds during the year, the balanced portfolio approach, low cost operation and strong value added businesses resulted in commendable performance. With the low cost advantage and formidable global presence in aluminium downstream, Hindalco is well set for being the Last Man Standing and the First Man Forward, Hindalco said. Hindalco Industries' US based wholly owned subsidiary, Novelis Inc., reported strong operating results in FY 2012 despite challenging market conditions globally. The premium product portfolio, long-term customer base and focused business model enabled Novelis to produce solid results for the year. Hindalco Industries also said that the company has completed issuance of Secured Redeemable Non-convertible Debentures amounting to Rs 1500 crores on private placement basis at the coupon of 9.55% per annum. The proceeds of the issue will be used, for general, business purposes including capital expenditure, working capital, refinancing of existing debt. The debentures are proposed to be listed on WDM segment of National Stock Exchange of India, Hindalco said. Shares of iron ore major Sesa Goa and copper major Sterlite Industries gained. Sesa Goa rose 2.99%. The company early this week 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. Sterlite Industries (India) advanced 4.96%. The company early this week 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. India's largest power equipment maker by sales Bharat Heavy Electricals surged 4.63%, with the stock extending recent gains triggered by the company securing a contract worth Rs 950 crore for a 1,020 megawatts hydroelectric project in Bhutan. Bhel announced the order win early this week. India's largest engineering & construction firm by sales L&T gained 4.24%. During market hours today, 29 June 2012, L&T said that the infrastructure vertical of its construction division has won a major order valued at Rs 2040 crore from a leading infrastructure developer. The highway project will be executed on EPC (Engineering, Procurement & Construction) mode, L&T said. The scope of work involves six laning of the existing road, including construction of rail over bridges, underpasses, flyovers, major bridges and viaducts. The mega project is a part of National Highway system being developed under the National Highways Development Programme (NHDP), L&T said. The company also said during market hours today, 29 June 2012, its construction division has won new orders valued at over Rs 1002 crore in June 2012. Power generation stocks rose as lower international coal prices could boost profitability. Adani Power (up 5.05%), JSW Energy (up 1.75%), GVK Power & Infrastructure (up 3.99%), NTPC (up 1.53%), CESC (up 1.16%) gained. 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. Tata Power Company advanced 6.16% and Reliance Infrastructure rose 4.16%. The Delhi Electricity Regulatory Commission (DERC) early this week 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 these companies narrow their 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. Tata Power Company said after market hours on Thursday, 28 June 2012, it has completed the purchase of 51% equity shares of Tata BP Solar India, which were held by BP Alternative Energy Holdings. Consequently, Tata BP Solar India is now a wholly owned subsidiary of the company. State-run Power Grid Corporation of India rose 3.65% after the company said during market hours today, 29 June 2012, its board has cleared expansion plans aggregating Rs 1631.51 crore. NHPC rose 1.39%. The company said after market hours on Thursday, 28 June 2012 that unit No. 2 & 3 with an installed capacity of 77 megawatts (MW) each of Chamera Hydro Electric Project (Stage III) will come under commercial operation from June 30, 2012 after successful trial run and demonstration of peaking capacity. Interest rate sensitive banking stocks rose on fresh buying. India's second largest private sector bank by net profit HDFC Bank gained 2.74% to Rs 562. The stock hit a record high of Rs 565 in intraday trade today, 29 June 2012. India's largest private sector bank by net profit ICICI Bank jumped 3.88%. India's largest commercial bank in terms of branch network State Bank of India (SBI) rose 2.36%. Dena Bank rose 1.92% after the state-run bank said it has raised Rs 850 crore of Tier II capital by way of Lower Tier II Bonds in the nature of promisory notes on private placement basis. The state-run bank made this announcement during trading hours today, 29 June 2012. The Reserve Bank of India (RBI) unveiled its fifth Financial Stability Report on Thursday, 28 June 2012. The report said that though the Indian financial system remains robust, risks to financial stability have increased over the past six months due to worsened global and local economic conditions. RBI said that banks remain resilient to credit, market and liquidity risks and would be able to withstand macroeconomic shocks, given their comfortable capital adequacy positions. Asset quality concerns, however, persist and liquidity pressures have intensified. Credit and deposit growth in the banking sector have decelerated while banks' reliance on borrowed funds has increased. Distress dependencies between banks have risen. The analysis of the network of the Indian banking system reveals that the systemic importance of the most connected banks has increased, warranting a closer monitoring of the banks. RBI added that there could be unintended consequences of the implementation of the reform measures for emerging economies, like India, e.g. due to the deleveraging induced by the new capital and liquidity standards. Banks in India will migrate to Basel III from a position of relative strength but there could be challenges in the form of higher cost of capital. The new Principles for Financial Market Infrastructure, issued by the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO), propose stringent risk management requirements, which could necessitate a relook at the risk management practices of domestic central counterparties, RBI said. Shares of two-wheeler firms were in demand after state-run oil marketing companies (PSU OMCs) announced reduction in petrol prices by Rs 2.46 per litre effective today, 29 June 2012. India's second largest motorcycle maker by sales Bajaj Auto rose 1.13%. India's largest motorcycle maker by sales Hero MotoCorp (HMCL) advanced 2.40%. TVS Motor Company gained 7.21%. Small-car maker Maruti Suzuki India advanced 5.05% after PSU OMCs announced reduction in petrol prices by Rs 2.46 per litre effective today, 29 June 2012. India's largest utility vehicles maker Mahindra & Mahindra (M&M) gained 2.37%. 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. Tata Motors, India's biggest auto maker by revenue, rose 0.67%. Tata Motors has stopped production of medium and heavy trucks at its Jamshedpur unit starting Thursday, 28 June 2012. The closure of production is for three days till Saturday, 30 June 2012, as the company wants to avoid piling up stocks amid tepid demand. Earlier this week, Tata Motors shut its truck factory in Pune, Maharashtra for three days to align production with demand. India's largest pharmaceutical firm by market capitalization Sun Pharmaceutical Industries surged 2.87% to Rs 634.05. The stock hit a record high of Rs 643 in intraday trade today, 29 June 2012. Index heavyweight and cigarette major ITC rose 3.38% to Rs 259.95, a record high. Software pivotals rose after European leaders unveiled a plan to address Europe's distressed banking sector. Europe is the second biggest outsourcing market for Indian IT services firms after the US. India's largest IT company by revenue, Tata Consultancy Services (TCS), rose 1.22%. India's second largest software services exporter by revenues, Infosys, rose 0.59%. India's third largest software services exporter by revenue, Wipro, advanced 0.11%. Oracle Financial Services Software surged 6.48%. The company after market hours on Thursday, 28 June 2012, said it has introduced Oracle FLEXCUBE 12.0, the latest version of the Oracle FLEXCUBE banking platform. Cement stocks gained across the board as companies from this sector will start unveiling monthly cement dispatches data for June 2012 from Sunday, 1 July 2012. ACC (up 4.10%), Ambuja Cements (up 0.58%), Jaiprakash Associates (up %), UltraTech Cements (up 0.45%), India Cements (up 2.86%), Shree Cements (up 4.86%) and Madras Cement (up 7.52%) gained. The Competition Commission of India (CCI) last week levied a penalty of over Rs 6000 crore on 11 cement companies due to violation of the provisions of the Competition Act, 2002, which deals with anti-competitive agreements including cartels. The order was passed pursuant to investigation carried out by the Director General upon information filed by Builders Association of India. CCI has imposed penalty on 11 cement manufacturers at 0.5 times of their profit for the year 2009-10 and 2010-11. ACC has said that the company feels aggrieved by this order and it will appeal against it before the Competition Appellate Tribunal. For ACC, the penalty works out to Rs 1147.59 crore. UltraTech Cement has said the company will take appropriate action after having fully examined the order. For UltraTech Cement, the penalty works out to Rs 1175 crore. Ambuja Cements said the CCI has fined the company Rs 1163 crore. The company said it contests the allegations and findings against the company. Ambuja Cements has said it will appeal against this order to the Appellate Tribunal and will seek a stay on the penalty. 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. DLF (up 2.14%), Unitech (up 4.50%), Oberoi Realty (up 0.62%), Indiabulls Real Estate (up 6.24%), and Omaxe (up 1.76%), gained Jaiprakash Power Ventures rose 0.29%. Bids were received for a total of 3.26 crore shares on BSE and NSE for promoters' offer for sale held today. Jaypee Infra Ventures -- the promoter of Jaiprakash Power Ventures -- had proposed selling 2.9 crore of Jaiprakash Power Ventures through the Offer for Sale (OFS) mechanism on the separate window provided by the stock exchanges for this purpose. The floor price for the offer for sales was set at Rs 33.50. Zee Entertainment Enterprises gained 5.69% to Rs 148.60. The stock hit 52-week high of Rs 149 in intraday trade today, 29 June 2012. Cairn India clocked highest volume of 6.12 crore shares on BSE. Lanco Infratech (1.01 crore shares), Sybly Industries (83.36 lakh shares), Cals Refineries (67.34 lakh shares) and Kingfisher Airlines (54.46 lakh shares) were the other volume toppers in that order. Cairn India was the top traded counter on the BSE with turnover of Rs 1887.01 crore followed by SBI (Rs 134.19 crore), L&T (Rs 69.02 crore), ICICI Bank (Rs 68.16 crore) and Axis Bank (Rs 57.08 crore). The Indian government on Thursday, 28 June 2012, issued draft guidelines for implementing the controversial anti-avoidance tax proposal. A panel of seven members suggested that the provisions be applied from 1 April 2013, and that the onus of proving wrongdoing should be on the authorities. The panel has proposed that to avoid the indiscriminate application of the General Anti-Avoidance Rules (GAAR) provisions and to provide relief to small taxpayers, there should be monetary threshold for invoking the GAAR provisions. The anti-avoidance rules and a retrospective tax amendment -- both proposed in the federal budget in March -- have rattled investor confidence and sparked a wave of criticism both domestically and overseas. Prime Minister Manmohan Singh, who took charge as the finance minister on Wednesday, 27 June 2012, has already identified problems on the tax front as having contributed to a general negative mood. The panel has suggested that GAAR provisions should be invoked on a foreign institutional investor (FII), if it chooses to take a treaty benefit, but would not in any case be invoked in the case of the non-resident investors of the FII. The panel suggested that the GAAR provisions are meant for cases of tax evasion, not avoidance, or tax mitigation, where a tax payer takes advantage of a fiscal incentive allowed by a tax law. In a case where only a part of an arrangement is not allowed, the provisions will be limited to only that part, the panel proposed. Consistency of approach is essential for invoking GAAR, and the panel felt that there should be absolute certainty about the time limits during which the various actions under the provisions are to be completed. The Prime Minister's office (PMO) today, 29 June 2012, clarified that the GAAR guidelines that have been put up on the government website from the official level of the Finance Ministry and shared with some stakeholders are only draft guidelines and have been put out for receiving wide-ranging feedback and for discussion purposes only. These guidelines have not been seen by the Prime Minister and will be finalised with the approval of the Prime Minister only after considering the feedback received. Prime Minister Dr. Manmohan Singh on Wednesday, 27 June 2012, met senior officials from the Finance Ministry after taking over the Finance portfolio to chalk out plan for the country's economic revival. He stressed that reviving investor sentiment is on top of his priorities as the country is passing through challenging times, economically. Singh said India needs to work towards making the country resilient in meeting external challenges. In the short run, there is a need to revive investor sentiment, both domestic and international, Singh said. Prime Minister Manmohan Singh took additional charge of the finance ministry after Pranab Mukherjee on Tuesday, 26 June 2012 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. 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 next major trigger for the stock market is Q1 June 2012 corporate earnings, which will start trickling from the second week of July 2012. A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growth. 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. European stocks surged on Friday, 29 June 2012, after the European leaders struck a deal on a 120 billion euro ($149 billion) growth package and agreed that the euro zone's bailout funds should be able to directly recapitalize the region's ailing banks. Key benchmark indices in France, Germany and UK rose by between 1.29% to 2.81%. European Commission President Herman van Rompuy said at a press conference early Friday that the mechanism will involve the European Central Bank and that there will be the possibility of direct recapitalization for European banks. Financial assistance will be provided by the European Financial Stability Facility until the European Stability Mechanism becomes available, he said. Europe is trying to do what's necessary in order to break the negative cycle for the region, he said. European leaders began a two-day summit in Brussels on Thursday, 28 June 2012, to find ways to resolve the ongoing euro-zone debt crisis. Van Rompuy said that the Eurogroup is strongly committed to doing what's necessary to ensure the region's financial stability. German retail sales unexpectedly fell for a second month in May as the sovereign debt crisis worsened, damping the economic outlook. Sales, adjusted for inflation and seasonal swings, dropped 0.3% from April, when they declined 0.2%, the Federal Statistics Office in Wiesbaden said today. Asian shares surged on Friday, 29 June 2012, after a late Thursday night meeting of European leaders came up with a plan for a single financial supervisory mechanism for the European region to help stabilize markets. Key benchmark indices in Singapore, South Korea, Japan, China, Taiwan, Hong Kong and Indonesia were up by 1.11% to 2.19%. A batch of Chinese economic data due out over the next few weeks will cast new light on the scale of the ongoing economic slowdown in the world's second biggest economy. Kicking off the parade of data is an official manufacturing survey for June 2012 due on Sunday, 1 July 2012. Other figures due out later, over a five-day period from July 9 include second quarter gross domestic product, as well as such indicators as June fixed-asset investment, inflation, industrial production and bank lending. Trading in US index futures indicated that the Dow could jump 129 points at the opening bell on Friday, 29 June 2012. US markets pared most of their losses in trade on Thursday on talk of progress by European leaders in easing the region's debt crisis