Sensex, Nifty scale 4-1/2-week highs on rate cut hopes, PM's infra push

Key benchmark indices rose for the fifth straight trading session and attained their highest closing level in 4-1/2 weeks on hopes 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. Prime Minister Manmohan Singh's announcement of a big push to the infrastructure sector on Wednesday, 6 June 2012, to revive sagging economic growth, aided the rally on the domestic bourses. The 50-unit S&P CNX Nifty regained the psychological 5,000 mark, after falling below that level in intraday trade. The barometer index, BSE Sensex, rose 69.82 points or 0.42%, up close to 235 points from the day's low and off close to 50 points from the day's high. Indian shares gained for the fifth straight trading session today, 8 June 2012. The Sensex has risen 753.71 points or 4.72% in five trading sessions from a recent low of 15,965.16 on 1 June 2012. The Sensex has risen 500.34 points or 3.08% so far in this month (till 8 June 2012). The barometer index has gained 1,263.95 points or 8.17% in calendar 2012 so far (till 8 June 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,583.01 points or 10.45%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 2412.83 points or 12.61%. Coming back to today's trade, the market breadth was positive. Index heavyweight Reliance Industries (RIL) edged higher in volatile trade. IT stocks were mostly lower after Infosys' Executive Co-chairman S. Gopalakrishnan on Thursday said the company is witnessing delays by clients in deciding on their information-technology spending. Interest rate sensitive banking and realty stocks reversed initial losses on hopes 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 data released by the government last week showed India's economy grew 5.3% in Q4 March 2012, its slowest pace of expansion in nearly a decade. FMCG stocks extended recent gains triggered by the arrival of monsoon rains in Kerala early this week. The market edged lower in early trade on weak Asian stocks. A bout of volatility was witnessed as key benchmark indices trimmed initial losses as index heavyweight Reliance Industries (RIL) came off initial lows. Volatility continued as key benchmark indices weakened once again after trimming initial losses to hit fresh intraday highs in mid-morning trade. The market extended losses to hit fresh intraday low in early afternoon trade. The market pared losses in early afternoon trade. The market weakened again to hit fresh intraday low in mid-afternoon trade. A dramatic rebound took key benchmark indices to their highest level in almost 4-1/2 weeks in late trade. Comments from Ashima Goyal, a member of the RBI's technical advisory committee on monetary policy, that RBI has some room to provide a monetary stimulus to the economy, raised hopes the central bank will cut policy rates to prop up slowing economy. Since the economy is growing at far below its potential rate and as manufactured products inflation has fallen, the RBI has room to cut rates, Ms. Goyal said today, 8 June 2012. Manufactured products inflation is seen as a proxy for non-food core inflation. However, Ms. Goyal added that the RBI will have to keep a close watch on the headline inflation print. The BSE Sensex advanced 69.82 points or 0.42% to 16,718.87, its highest closing level since 7 May 2012. The index rose 118.72 points at the day's high of 16,767.77 in late trade. The index declined 164.03 points at the day's low of 16,485.02 in mid-afternoon trade, its lowest level since 6 June 2012. The S&P CNX Nifty was up 18.70 points or 0.37% to 5,068.35, its highest level since 7 May 2012. The index hit a high of 5,084.45 in intraday trade. The index hit low of 4,994.80 in intraday trade, its lowest level since 6 June 2012. The BSE Mid-Cap index rose 0.22% and the BSE Small-Cap index gained 0.2%. Both theses indices underperformed the Sensex. BSE clocked turnover of Rs 1963 crore, lower than Rs 2176.65 crore on Thursday, 7 June 2012. The market breadth, indicating the overall health of the market, was positive. On BSE, 1,371 shares rose and 1,357 shares fell. A total of 118 shares were unchanged. From 30-share Sensex pack, 21 stocks gained and the rest fell. Index heavyweight Reliance Industries (RIL) rose 1.21% to Rs 729.40. The stock was volatile. The stock hit a high of Rs 731.95 and a low of Rs 712.70. RIL chairman Mukesh Ambani said at the company's Annual General Meeting in Mumbai on Thursday, 7 June 2012, 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. FMCG stocks extended recent gains triggered by arrival of monsoon in Kerala early this week. Good monsoon may boost farm incomes and rural consumer spending. FMCG firms derive substantial sales from rural India. Marico, ITC and Hindustan Unilever rose by between 0.56% to 1.36%. Interest rate sensitive realty stocks extended recent gains triggered by hopes 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 data released by the government last week showed India's economy grew 5.3% in Q4 March 2012, its slowest pace of expansion in nearly a decade. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance. DLF, HDIL, and Unitech rose by between 1.24% to 5.89%. Interest rate sensitive banking stocks recovered on hopes 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 data released by the government last week showed India's economy grew 5.3% in Q4 March 2012, its slowest pace of expansion in nearly a decade. India's largest commercial bank in terms of branch network State Bank of India gained 0.56%. The state-run bank said during market hours on Thursday it has decided to revise its retail term deposit interest rates with a reduction by 0.25% in tenors up to 240 days with effect from 8 June 2012. Among other PSU bank stocks, Bank of India, Bank of Baroda and Punjab National Bank gained by between 0.69% to 2.17%. India's second largest private sector bank by net profit HDFC Bank rose 0.2%. India's largest private sector bank by net profit ICICI Bank fell 0.11% to Rs 829, off the day's low of Rs 812.75. IT stocks were mostly lower after Infosys' Executive Co-chairman S. Gopalakrishnan on Thursday said the company is witnessing delays by clients in deciding on their information-technology spending. India's second-largest software exporter by revenue Infosys declined 1.38%. Infosys' Executive Co-chairman S. Gopalakrishnan told reporters on Thursday that company has been witnessing delays by clients in deciding on their information-technology spending, but the company hasn't seen any contract cancellations. In the medium-to long-term, unless and until there is a certainty in the euro zone, it is not good for business, Gopalakrishnan said. When there is uncertainty, companies pull back on investments, even though they are doing well, he added. Overall, the environment continues to be uncertain, he added. India's largest IT company by revenue Tata Consultancy Services (TCS) fell 0.75%. India's third largest software services exporter by revenue, Wipro, rose 0.65%. Auto stocks were mixed. Small-car major Maruti Suzuki India declined 1.66%. The company has reportedly cut the production of its gasoline-powered models by as much as 15% because of weak demand for vehicles which use the fuel that is priced much higher than diesel. Gasoline is about 79% more costlier than diesel in India, where the government subsidizes the sale of diesel and cooking fuels to help control inflation. Maruti early this month said total sales declined 5% to 98,884 units in May 2012 over May 2011. India's largest commercial vehicle maker by sales Tata Motors rose 1.01%, with the stock reversing intraday losses. Tata Motors' total sales (including exports) of Tata commercial and passenger vehicles rose 4% to 64,347 vehicles in May 2012 over May 2011. The company's domestic sales of Tata commercial and passenger vehicles for May 2012 rose 6% to 60,128 units in May 2012 over May 2011. The company announced the monthly sales data early this month. India's largest utility vehicles maker Mahindra & Mahindra (M&M) was flat. The company on Thursday denied allegations of fraud, misrepresentation and conspiracy. M&M during trading hours on Thursday said it has seen the press release issued by the legal firm of Diaz Reus and Targ which claims to represent some US automobile dealers in a suit apparently filed on 4 June 2012 in the US District Court in Atlanta, Georgia against M&M and Mahindra USA Inc. M&M said it cannot comment on this as the matter is in the courts. M&M said some dealers had earlier filed a suit against M&M and Global Vehicles in the US District Court in Missouri. The Missouri Court dismissed all claims against M&M in that suit, M&M said. Significantly, the Missouri Court also ruled that M&M could not be held liable for any action of Global Vehicles with respect to its dealers, M&M said. In a separate related development, an International Arbitral tribunal in February 2012 dismissed similar allegations and claims against M&M made by Global Vehicles, M&M said. M&M is in the process of enforcing that arbitration award, it said. M&M announced on 1 June 2012 that its total automobile sales rose 28.2% to 43,988 units in May 2012 over May 2011. Domestic sales rose 24.2% to 39,938 units. Passenger vehicles 26.7% to 21,154 units. Exports rose 87.2% to 4,050 units in May 2012 over May 2011. Shares of two-wheeler makers were mixed. India's second largest motorcycle maker by sales Bajaj Auto declined 1.06%. The company early this week 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. Hero MotoCorp (HMCL) gained 0.66%. The board of directors of the company recently approved a proposal to merge Hero Investments (HIPL), the investment arm of the Hero Group, into HMCL. The shareholders of HIPL include the partnership firm Brijmohan Lall Om Prakash (BMOP) which holds 71.63%, and private equity (PE) investors BC India Private Investors (19.81%) and Lathe Investment (8.56%). BC India Private Investors is an affiliate of Bain Capital LLC, while Lathe Investment is a wholly-owned subsidiary of Government of Singapore Investment Corporation (GIC). Hero MotoCorp reported its best-ever monthly sales in May 2012, thus underlining the robust momentum the company has sustained since embarking on its solo journey. Marking its 10th consecutive month of over five lakh sales, Hero MotoCorp total sales rose 11.3% to 5,56,644 two-wheelers in May 2012 over May 2011. The company's sales in May this year surpassed its previous highest of 5,51,557, recorded only last month (April 2012). Several construction shares extended Thursday's (7 June 2012) rally triggered by Prime Minister Manmohan Singh, after trading hours on Wednesday, 6 June 2012, announcing a big push to the infrastructure sector to revive sagging economic growth. IL&FS Transportation Networks, Gammon India, Unity Infrastructure, Hindustan Construction Company, NCC, and Valecha Engineering rose by between 0.12% to 9.87%. Engineering and construction major L&T rose 2.53%, with the stock extending Thursday's 0.75% gains. The company announced during trading hours today that L&T Shipbuilding -- a subsidiary of the company -- has bagged orders valued at Rs 483 crore for four specialized commercial vessels in Q1 June 2012. L&T announced during trading hours on Thursday, 7 June 2012, that L&T Construction has bagged new orders worth Rs 2410 crore across various businesses in Q1 June 2012. Among capital goods stocks, Siemens, Thermax, ABB and Bhel rose by between 0.4% to 2.98%. Oil exploration stocks fell as crude futures fell for the second straight day in a row today, 8 June 2012, on speculation the economies of the US and China, the world's biggest crude consumers, will slow and curb fuel demand. Oil India, Cairn India and ONGC shed by between 0.42% to 1.86%. Lower crude oil prices will result in lower realization from crude sales for oil exploration firms. Shares of power generation firms rose for the second straight day as Prime Minister Manmohan Singh on Wednesday laid out ambitious infrastructure development plans for the current fiscal year which includes plans to add a record 18,000 megawatts (MW) of power capacity this year. Tata Power Company, GVK Power & Infra, Lanco Infratech, and JSW Energy rose by between 0.16% to 3.74%. National Thermal Power Corporation (NTPC) rose 0.45%. The company said after market hours on Thursday that Meja Urja Nigam, a joint venture of NTPC and UPRVUN, has achieved financial closure for Meja thermal power project (1320 MW) which is located in the state of Uttar Pradesh. A loan agreement for Rs 7575 crore was signed on 6 June 2012 with consortium of sixteen banks led by State Bank of India and syndicated by SBI Capital Markets, NTPC said. Metal stocks were mixed. Hindalco Industries rose 0.25%. The company will announce its audited consolidated results for the year ended 31 March 2012 on 27 June 2012. Sesa Goa, Sail, Nalco and NMDC gained by between 0.16% to 0.36%. JSW Steel, Hindustan Zinc, Jindal Steel & Power and Bhushan Steel fell by between 0.05% to 1.26%. Tata Steel fell 0.27%. The company's Vice Chairman B. Muthuraman on Thursday said the company plans to invest Rs 30000 crore in a new steel plant in Karnataka which will have a capacity of six million tonnes per annum. Copper and aluminium maker Sterlite Industries rose 3.5% after the Chinese central bank on Thursday, 7 June 2012, announced a surprise cut in interest rates. China is the world's largest consumer of copper and aluminum. Airline stock rallied. Jet Airways, Kingfisher Airlines and SpiceJet gained by between 1.09% to 7.05%. Cipla rose 0.15%. The company said on Thursday a US appeals court had upheld a district court's ruling which last year declared a patent infringement by Cipla over animal healthcare drug PetArmor Plus. The financial implications of this case are yet to be determined, Cipla said. The company is examining options for preferring an appeal against the latest Federal Circuit order, Cipla added. Cipla manufactures PetArmor Plus on behalf of FidoPharm, a unit of pet health company Velcera Inc. The product is used to treat fleas in cats and dogs. Cals Refineries clocked highest volume of 85.15 lakh shares on BSE. HDIL (81.87 lakh shares), SpiceJet (61.89 lakh shares), Suzlon Energy (55.08 lakh shares) and Sybly Industries (53.93 lakh shares) were the other volume toppers in that order. SBI clocked highest turnover of Rs 142.31 crore on BSE. L&T (Rs 75.56 crore), Reliance Capital (Rs 63.18 crore), HDIL (Rs 59.60 crore) and Reliance Infrastructure (Rs 58.47 crore) were the other turnover toppers I that order. Securities and Exchange Board of India (Sebi) Chairman U.K. Sinha today, 8 June 2012, said that the stock market regulator is looking to simplify the recently introduced offer-for-sale process that enables listed companies to auction shares to investors through exchanges. The process allows promoters to sell stakes through stock exchanges instead of conducting a full public offering, saving on paperwork and time. Mr. Sinha also said that Sebi wasn't looking at extending the deadline for all listed companies to increase their minimum public shareholding to 25%. Private-sector companies must cut founders' stake to adhere to the rules by June 13, 2013, while the deadline for state-run firms is Aug. 13, 2013. Foreign institutional investors (FIIs) bought shares worth a net Rs 675.48 crore on Thursday, 7 June 2012, as per provisional figures from the stock exchange. Prime Minister Manmohan Singh on Wednesday laid out ambitious infrastructure development plans for the current fiscal year, in an effort to counter criticism over a perceived policy paralysis that has led India into its worst slowdown in nearly a decade. Singh said that the government plans to award 9,500 kilometer (kms) of roads for construction this year and over 4,000 kms for maintenance under the new system. In Railways, the government plans to award work on the Elevated Rail Corridor in Mumbai, two new Loco manufacturing units and the public private partnership (PPP) stretch of the Dedicated Freight corridor, in addition to redeveloping 4 or 5 stations through PPP mode in the current year. In shipping, Singh said the government has set the challenging task of awarding work for two new major PPP Ports, the first in decades, in addition to capacity addition targets which are three times the targets for the last year. In civil aviation, work will be awarded in the current year on three new Greenfield airports in Navi Mumbai, Goa and Kannur and new international airports at Lucknow, Varanasi, Coimbatore, Trichy and Gaya, Singh said. Also, two new hubs will be developed in the country making India a destination as well as a transit point. In power, the government plans to add a record 18,000 megawatts (MW) of capacity this year, Singh said. Data on first installment of the advance tax payment due on 15 June 2012 could provide cues on Q1 June 2012 corporate earnings. Data on industrial production for April 2012 due on 12 June 2012 and inflation for May 2012 due on 14 June 2012 could provide cues on the central bank's likely policy stance at mid-quarter monetary policy review on 18 June 2012. Industrial production registered a surprise 3.5% contraction in March 2012. The annual rate of inflation, based on monthly wholesale price index (WPI), stood at 7.23% (provisional) for the month of April 2012. Data released by the government last week showed India's economy grew 5.3% in Q1 March 2012, the slowest pace of growth in nearly a decade. The low growth numbers led the Reserve Bank of India's Deputy Governor Subir Gokarn to say early this week that the central bank could further look at cutting interest rates. Gokarn also underlined the need to take some corrective action to rein in India's deficits. The Union Cabinet on Thursday, 7 June 2012, deferred a decision on amending the Pension Fund Regulatory and Development Authority Bill that aims to allow foreign investments in the sector. The bill, which also seeks to set up an authority to regulate retirement funds, has been held up due to a lack of political consensus over allowing foreign investments in pension funds. Although the bill doesn't mention the extent to which foreign investment could be allowed in Indian pension funds, the finance ministry has proposed to set the cap at 26%. A parliamentary panel that examined the bill had accepted the ministry's suggestion. Monsoon rains were 36% below average in the week to June 6, the weather office said on Thursday, reflecting the delay in the arrival of the seasonal rains over Kerala from the usual June 1 start date. European shares declined on Friday, 8 June 2012, with sentiment dented by comments by Federal Reserve Chairman Ben Bernanke that no decision on further stimulus has been made, as well as a Fitch Ratings downgrade of Spain, euro zone's fourth biggest economy. Key benchmark indices in UK, France and Germany were down by 0.97% to 1.02%. Federal Reserve Chairman Ben S. Bernanke in his testimony to Congress on Thursday, 7 June 2012, failed to promise more US easing for the near future. Bernanke said he sees significant risk to the US economic recovery, and that the Fed stands ready to react should the crisis worsen in Europe. The Federal Open Market Committee holds its next policy meeting on June 19-20. Italian industrial production declined in April as demand for the nation's manufactured goods slumped at home and abroad amid Europe's sovereign-debt crisis. Output dropped 1.9% from March, when it rose a revised 0.6%, national statistics office Istat said in Rome today. France's trade deficit was slightly larger in April than March as imports increased more than exports. The euro zone's second largest economy posted a 5.8 billion euro trade deficit in April after a 5.57 billion euro deficit in March. France recorded 37.04 billion euro of exports in April compared with 36.39 billion euro in March. Imports in April totalled 42.84 billion euro compared with 41.96 billion euro in March. The total deficit over the 12 months to the end of April reached 68.3 billion euro. The 2011 trade deficit was 70.6 billion euro. Fitch Ratings on Thursday cut Spain's long-term credit rating to BBB and left it two notches from junk, citing the cost of recapitalizing the country's banking industry and a lengthening recession. Spain, previously rated A, may need as much as 100 billion euros ($126 billion) to bolster its banking system, compared with an earlier estimate of about 30 billion euros, Fitch said. The Spanish economy is set to remain in recession through 2013, the ratings company said, having previously forecast a recovery for next year. Spain is euro zone's fourth largest economy. Greek voters return to the polls on 17 June 2012 after the splintered results of a May 6 parliamentary election left no party able to put together a government. Asian shares edged lower on Friday, hurt by disappointment that Federal Reserve Chairman Ben Bernanke gave no clues on whether a US easing was in the offer. Key benchmark indices in China, Hong Kong, Japan, South Korea, Taiwan, Indonesia and Singapore fell by between 0.4% to 2.09%. The Chinese central bank on Thursday, 7 June 2012, announced a surprise cut in interest rates. The People's Bank of China lowered both its benchmark and deposit rates by a quarter-point, with the move taking effect from Friday, 8 June 2012. The timing of the interest rate cut sparked worries about a slate of upcoming data from China this weekend, including inflation, industrial production and retail sales. China is the world's second biggest economy after the US. The Bank of Korea on Friday left its key policy rate unchanged for the 12th month in a row, as the South Korea's central bank remains caught between threats to economic growth from weak overseas demand and pressure from inflation expectations. Japan revised its economic growth for the January-March quarter sharply upwards to 4.7% from a year earlier, compared to an initial estimate of 4.1% growth, the Cabinet Office said on Friday. Capital spending and private consumption were better than the government's initial estimates last month. On a quarterly basis, Japan's first-quarter GDP grew 1.2%, up from a previous estimate of 1%. However, Japan's April balance-of-payments (BOP) data came in weaker than expected. The current-account surplus for April fell short of consensus estimates, highlighting weak global demand that is depressing exports. Trading in US index futures indicated that the Dow could fall 61 points at the opening bell on Friday, 8 June 2012