Market rises for 2nd consecutive week

The market spurted for the second week in a row on expectations the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on Monday, 18 June 2012, to prop up slowing economy after the latest data showed industrial production grew just 0.1% in April 2012. The market rose for three out of five trading sessions. The barometer index, BSE Sensex rose 230.96 points or 1.38% to 16,949.83. The 50-unit S&P CNX Nifty rose 70.70 points or 1.39% to 5,139.05. The BSE Mid-Cap index fell 0.50%. The BSE Small-Cap index rose 0.40%. Both these indices underperformed the Sensex. Industrial production in April rose a dismal 0.1% from a year earlier as manufacturing output remained weak and mining output shrank, deepening worries of a slowdown in the economy. Manufacturing output, which has a 75.5% weight in the index of industrial production, grew a mere 0.1% from a year earlier in April, government data showed Tuesday (12 June 2012). Capital goods production in April shrank 16.3% while mining output contracted 3.1%. The government slightly revised upwards March industrial output data to a contraction of 3.2% from a contraction of 3.5% reported earlier. Inflation based on the wholesale price index (WPI) accelerated to 7.55% in May 2012 from a year earlier as prices of manufactured products and fuel increased, government data showed Thursday (12 June 2012). Inflation was at 7.23% in April 2012. The government also raised WPI inflation reading for March 2012 to 7.69% from 6.89% reported earlier. Core inflation, or non-food manufacturing inflation, was below 5% in May 2012, far lower than the headline reading. Inflation in India has moderated from 10% in September 2011, but still remains above the central bank's comfort level. The RBI aims to contain inflation expectations below 4.5%. Easing of core inflation, falling crude oil prices, weak industrial production data for April 2012 and a sharp deceleration in GDP growth in Q4 March 2012 have raised expectations that the central bank will cut interest rates to revive economic growth. Global rating agency Standard & Poor's warned that India could become the first BRIC nation to lose its investment-grade rating if the South Asian country doesn't revive its growth and push the pedal on reforms. Setbacks or reversals in India's path toward a more liberal economy could hurt its long-term growth prospects and therefore its credit quality, Joydeep Mukherji, S&P's credit analyst, stated in a report titled 'Will India Be the first BRIC Fallen Angel?' S&P currently rates India BBB-minus, just one notch above junk. The other three BRIC group of emerging nations--Brazil, Russia and China--are also rated investment-grade. S&P had in April this year cut the outlook on India's long-term credit rating to negative from stable and warned that the country could lose its investment-grade status if the government fails to bring its fiscal house in order. Data released on 31 May 2012 showed India's economic growth slowed to its weakest pace in nine years in the January-March quarter, when it expanded 5.3% from a year earlier. For the fiscal year ended March 31, the economy grew 6.5%, below the 6.9% expansion the government had projected. Trading for the week began on a weak note. Key benchmark indices snapped five-day winning streak on Monday, 11 June 2012, after global rating agency Standard & Poor's warned that India could become the first BRIC nation to lose its investment-grade rating if the country doesn't revive its growth. The BSE Sensex shed 50.86 points or 0.3% to settle at 16,668.01. The S&P CNX Nifty shed 14.25 points or 0.28% to settle at 5,054.10. Key benchmark indices surged on Tuesday, 12 June 2012, on expectations the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on 18 June 2012 to prop up slowing economy after the latest data showed industrial production grew just 0.1% in April 2012. The BSE Sensex jumped 194.79 points or 1.17% to settle at 16,862.80. The S&P CNX Nifty jumped 61.80 points or 1.22% to settle at 5,115.90. Key benchmark indices edged higher for the second straight day on Wednesday, 13 June 2012, on rate cut hopes. The BSE Sensex advanced 17.71 points or 0.11% to settle at 16,880.51. The S&P CNX Nifty advanced 5.55 points or 0.11% to settle at 5,121.45. Key benchmark indices snapped two-day winning streak on Thursday, 14 June 2012, as the latest data showed inflation accelerating in May 2012 and after the government revised upwards inflation for March 2012 to 7.69% from a provisional reading of 6.89%. Weakness in global stocks caused by euro-zone debt worries also weighed on sentiment. The BSE Sensex was down 202.63 points or 1.2% to 16,677.88. The S&P CNX Nifty was down 66.70 points or 1.3% to 5,054.75. Key benchmark indices surged on Friday, 15 June 2012, as stocks rose across the globe on reports central banks of major economies are ready to provide liquidity if needed after crucial elections in Greek on Sunday, 17 June 2012. The vote is expected to determine the Greece's future in the euro zone. The BSE Sensex was up 271.95 points or 1.63% to 16,949.83. The S&P CNX Nifty was up 84.30 points or 1.67% to 5,139.05. Among the 30 Sensex shares, 17 shares rose and the rest declined. FMCG major Hindustan Unilever (HUL) was the top Sensex gainer last week. The stock jumped 5.08% to Rs 450.10. The stock hit a record high of Rs 451.75 on Friday, 15 June 2012. India's largest cigarette maker by sales ITC rose 3.50% to Rs 248.10. India's second-largest software exporter by revenue Infosys gained 4.17% to Rs 2520.05. Dansk Supermarked A/S, a leading retailer in the Nordics, has engaged Infosys as its strategic partner to transform its cross-channel commerce program, Infosys said in a release on Tuesday. Through this engagement, Dansk Supermarked A/S which has over 1,300 stores across Denmark, Sweden, Germany and Poland will provide its consumers a seamless and convenient cross-channel shopping experience, Infosys said. Infosys was selected by Dansk Supermarked A/S for its capabilities in delivering end-to-end digital commerce programs for global retailers, Infosys said. This transformation program will start with Bilka.dk, one of Dansk Supermarked's store chains and is expected to help increase Bilka.dk's sales to 2.4 Billion Danish kroner by 2016, Infosys said. India's largest IT company by revenue TCS rose 3.27% to Rs 1271.45. India's largest listed telecom operator by sales Bharti Airtel rose 2.65% to Rs 311.90. Telecom stocks gained last week on reports the Reserve Bank of India (RBI) has approved the proposal to allow mobile phone companies to mortgage spectrum, a move that will allow telcos to use spectrum as collateral and raise funds from banks for the upcoming auctions. The RBI has reportedly said that banks will be allowed to seize spectrum in the event of a default or cancellation of mobile permits. Banks will enjoy the rights to sell, transfer, assign, exchange and dispose of the spectrum without any restraining conditions to protect their interests. Tata Motors rose 0.48% to Rs 240.05. The company said sales of its luxury vehicles -- Jaguar Land Rover -- jumped 35% to 30,094 in May 2012 over May 2011. Tata Motors derives almost two-third of its revenue from its British unit Jaguar Land Rover. Tata Motors' global vehicle sales rose 12% to 96,089 units in May 2012 over May 2011. The company's overall global passenger vehicles sales rose 21% to 51,064 units in May 2012 over May 2011. Commercial vehicle sales rose 3% to 45,025 in May 2012 over May 2011. Meanwhile, Tata Motors on Friday, 15 June 2012, intimated to the Bombay Stock Exchange (BSE) that Chairman Ratan N Tata purchased additional 4.25 lakh equity shares of Tata Motors from open market purchases on Thursday, 14 June 2012, for about Rs 9.94 crore. After the latest acquisition, Ratan N Tata now holds a total of 13.61 lakh ordinary equity shares of Tata Motors and 1.09 lakh 'A' Ordinary shares of Tata Motors, aggregating to 0.05% of voting rights of Tata Motors. India's largest utility vehicles maker Mahindra & Mahindra (M&M) rose 1.39% to Rs 697.40. The company 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 8th June 2012. The XUV500 is now available at more than 100 dealerships across India, including those cities where it had been launched earlier. Small-car major Maruti Suzuki India shed 1.47% to Rs 1,108. The company said that the board of directors of the company has approved a proposal to merge Suzuki Powertrain India (SPIL) with the company. SPIL, which supplies diesel engines as well as transmissions for vehicles to Maruti Suzuki, is a subsidiary of Suzuki Motor Corporation (SMC), Japan. SMC holds 70% share in SPIL and remaining 30% is held by Maruti Suzuki. As per the terms of the proposed merger, SMC will receive one share of MSIL of Rs 5 each for every 70 shares of Rs 10 each it holds in SPIL. There will be no cash outflow from MSIL due to the merger. MSIL proposes to make a fresh issue of about 1.31 crore equity shares to SMC in lieu of SMC's 70% holding in SPIL. Consequent to the merger, SMC's holding in MSIL will go up from 54.2% to 56.2%. With the merger, MSIL will be able to bring its entire diesel engine capacity under a single management control. All key initiatives to strengthen the business, including sourcing, localization, production planning, manufacturing flexibility and cost reduction can be controlled, monitored and improved by the MSIL management, MSIL said in a statement. The proposed merger also promises benefits for the combined entity through synergies in areas like finance, capital structuring, and administration and consequent reduction of transaction costs, MSIL said. Maruti early this month said total sales declined 5% to 98,884 units in May 2012 over May 2011. Hindalco Industries (up 2.58% to Rs 123.40), ONGC (up 2.51% to Rs 265.75), ICICI Bank (up 1.92% to Rs 844.90), Sun Pharmaceutical Industries (up 1.78% to Rs 594.20), HDFC Bank (up 1.77% to Rs 547.85) and Larsen & Toubro (up 1.32% to Rs 1326.30), edged higher from the Sensex pack. Index heavyweight Reliance Industries (RIL) fell 0.38% to Rs 726.60. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai last week that the company has cumulatively bought back a total of 2.7 crore shares under the share buyback programme, which is 22.5% of share buyback target. Ambani said the company's buyback programme represents 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. Ambani said RIL will invest about Rs 1 lakh crore over the five years in expanding its business in India. Ambani said RIL is targeting to double its operating profit in about five years. NTPC (down 3.63% to Rs 150.10), Dr Reddy's Laboratories (down 2.87% to Rs 1575), HDFC (down 1.37% to Rs 646.45), Wipro (down 1.36% to Rs 397.90), Bhel (down 1.2% to Rs 218.60), Jindal Steel & Power (down 0.65% to Rs 437.25) and Tata Power (down 0.64% to Rs 93.55), edged lower from the Sensex pack.