Market surges on upbeat US economic data

Key benchmark indices jumped in early trade on upbeat US economic data released overnight. United States is the world's biggest economy. The market breadth was strong. All the 13 sectoral indices on BSE were in green. The barometer index, BSE Sensex, was up 141.78 points or 0.76%, off about 50 points from the day's high and up close to 10 points from the day's low. Index heavyweight, Reliance Industries (RIL) rose after the Ministry of Petroleum & Natural Gas after trading hours on Thursday, 1 November 2012, issued detailed clarification regarding KG-DWN-98/3 block allotted to RIL led consortium. Another index heavyweight and cigarette maker ITC also edged higher in early trade. Godrej Consumer Products rose after company said it has completed the acquisition of 51% stake in Darling Group in Kenya. IT major Wipro gained on good Q2 results. India's largest commercial vehicle maker by sales Tata Motors rose after reporting October sales after trading hours on Thursday. Realty major DLF rose after company said it has received the entire amount from Lodha Developers on sale of a land parcel in Mumbai. Asian stocks surged after reports overnight on US employment and manufacturing topped estimates and confidence among American consumers climbed to a four-year high. The market sentiment was also boosted after provisional data showed that Foreign institutional investors (FIIs) remained net buyers of Indian stocks on Thursday, 1 November 2012. FIIs bought shares worth a net Rs 334.61 crore on Thursday, 1 November 2012, as per provisional data from the stock exchanges. At 09:30 IST, the BSE Sensex was up 141.78 points or 0.76% to 18,703.48. The index jumped 187.37 points at the day's high of 18,749.07 in early trade. The index rose 130.45 points at the day's low of 18,692.15 in opening trade. The S&P CNX Nifty was up 45.60 points or 0.81% to 5690.70. The index hit a high of 5,697.70 and a low of 5,685.10 in intraday trade. The market breadth, indicating the overall health of the market, was strong. On BSE, 985 shares rose and 281 shares fell. A total of 60 shares were unchanged. From the 30-share Sensex pack, 29 stocks rose while only one of them fell. Index heavyweight, Reliance Industries (RIL) rose 0.86%. The Ministry of Petroleum & Natural Gas after trading hours on Thursday, 1 November 2012, issued detailed clarification regarding KG-DWN-98/3 block allotted to RIL led consortium. Production sharing contract for the block KG-DWN-98/3 was signed on 14 April 2000 between the Government of India, Reliance Industries and Niko Resources. The oil ministry said that have been speculative reports in the newspapers regarding revision of gas price before 2014 for the Block KG-DWN-98/3 allotted to Reliance Industries (RIL) led consortium. The ministry said that the Government of India has taken a consistent stand from 2010 onwards that the revision can not take place earlier than 2014. The oil ministry further said that its stand with regard to the production and expenditure of the KG-DWN-98/3 block has been consistent from 2006 onwards and there has been no change in the ministry's resolve to protect the government's revenue by proper and regular monitoring of the expenditure and production. As per Initial Development Plan (IDP) approved in November 2004, the recoverable reserves of RIL's Block KG-DWN-98/3 were estimated to be 3.81 trillion cubic ft, with an estimated capital expenditure (Capex) of $2.4 billion. On the request of RIL, it was revised in December 2006 to 10.3 trillion cubic ft with a revised Capex of $8.8 billion. RIL again submitted a revised Field Development Plan in September 2012 bringing back the reserves at 3.4 trillion cubic ft and Capex to $6.2 billion, the Ministry of Petroleum & Natural Gas said adding that the issue is being examined critically by Directorate General of Hydrocarbons (DGH). The ministry added that actual gas production from the block has declined substantially. As per estimate, the production was to reach a level of 81 mmscd in 2012. After reaching a peak of 67 mmscd in 2009-10, the production has declined to 20.5 mmscd in 2012. The decline in production has prompted Government of India to stop proportionate cost recovery by the contractor, which is under arbitration. The ministry will continue to protect the Government's interest in all force, the statement said. The impact of Capex and low production is on the revenue sharing which is dependent on the ratio of revenue and the expenditure, the oil ministry said. There is proposal from RIL for permitting an additional expenditure of $1 billion which has been agreed by the Managing Committee (DGH) subject to the condition that RIL will accept CAG Audit. The government issued the detailed clarification after anti-corruption activist-turned-politician Arvind Kejriwal on Wednesday, 31 October 2012, said that RIL had got undue favours from the government with regard to a contract to develop natural gas fields. RIL has already dismissed the charges as being devoid of any truth or substance. Index heavyweight and cigarette maker ITC gained 1.25% to Rs 282.75. The Ministry of Health and Family Welfare last week notified new pictorial health warnings to be depicted on tobacco product packs which will come into effect from 1 April 2013. The Ministry of Health and Family Welfare said in a statement on 22 October 2012 that three sets of warnings each have been notified for smoking as well as smokeless forms of tobacco product packages. The well-designed health warnings and messages are part of a range of measures to communicate health risks due to tobacco use. Pictorial health warnings communicate health risks in a visible way, provoke a greater emotional response and increase the motivation of tobacco users to quit and to decrease their tobacco consumption, the ministry's statement said. Graphic warning labels have a greater impact than text-only labels and can be recognized by low-literacy audiences and children, the statement added. Shares of ITC had hit record high on 19 October 2012 after the company announced strong Q2 results during trading hours on that day. The stock had hit record high of Rs 299.20 in intraday trade on Friday, 19 October 2012. ITC's net profit after net profit jumped 21.27% to Rs 1836.42 crore on 18.65% growth in income from operations to Rs 7226.58 crore in Q2 September 2012 over Q2 September 2011. Godrej Consumer Products rose 0.59%. The company today, 2 November 2012, said it has completed the acquisition of 51% stake in Darling Group in Kenya. IT major Wipro gained 1.58% on strong Q2 results. On a consolidated basis under International Financial Reporting Standards (IFRS), Wipro's net profit rose 24% to Rs 1611 on 17% increase in total revenue to Rs 10657 crore in Q2 September 2012 over Q2 September 2011. The result was announced before trading hours today, 2 November 2012. IT Services revenue was reported at $1.541 billion in Q2 September 2012, a sequential increase of 1.7% and a year-on-year (YoY) increase of 4.6%. The company said it expects 1.23% to 3.17% growth revenues from IT services business at between $1.56 billion to $1.59 billion in Q3 December 2012 over Q2 September 2012. Azim Premji, Chairman of Wipro, commenting on the results said: "We have chartered a new course for Wipro by demerging our diversified Non IT businesses. I am confident that the demerger will enhance value for all our stakeholders and provide fresh momentum for growth for each of our businesses." Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said: "Our focus on driving significant operational improvements has helped us predominantly mitigate the incremental impact of wage increases and currency volatility." T K Kurien, Executive Director & Chief Executive Officer, IT Business, said: "We have delivered revenues in line with our guidance and are continuing to see consistent improvement in our engagement with customers and employees. Consistent with our strategy to drive business transformation at the intersection of Cloud, Mobility, Analytics, and Social, we are continuing to invest in our Go-To-Market organization in order to engage effectively with both business and technology stakeholders." India's largest commercial vehicle maker by sales Tata Motors rose 0.49%. The company's total sales (including exports) of Tata commercial and passenger vehicles rose 6% to 71,771 vehicles in October 2012 over October 2011. The company's domestic sales of Tata commercial and passenger vehicles rose 7% to 68,145 units in October 2012 over October 2011. Exports declined 13% to 3,626 vehicles in October 2012 over October 2011. The company announced the monthly sales data after trading hours on Thursday, 1 November 2012. The company's sales of commercial vehicles in October 2012 in the domestic market rose 21% to 47,026 units in October 2012 over October 2011. LCV sales jumped 59% to 34,905 units. M&HCV sales declined 28% to 12,121 units. Sales of passenger vehicles for October 2012 were at 21,119 units, lower by 16% over 25,124 units sold in October 2011. There has been encouraging response to the Tata Manza Club Class, now available across the country, and the Tata Safari Storme, now available in the NCR region, Chandigarh and Lucknow, Tata Motors said. DLF rose 1.64% after company said it has received the entire amount from Lodha Developers on sale of a land parcel in Mumbai. DLF after trading hours on Thursday, 1 November 2012, said that in August 2012, DLF along with its three wholly-owned subsidiaries -- DLF Cyber City Developers, DLF Universal and Jawala Real Estates had entered in to an agreement with Lodha Developers for divesting DLF's group's entire stake in Jawala Real Estates, which owned the land, for an enterprise value estimated to be Rs 2700 crore, subject to final adjustments at completion. Upon fulfillment of all conditions by the parties and receipt of payment of all amounts under the agreement totaling to Rs 2727 crore from Lodha, Jawala has ceased to be as subsidiary of the company, DLF said in a statement. The transaction is in line with the company's objective of divesting its non-strategic assets, DLF said. Among other realty stocks, Unitech, D B Realty and HDIL rose by between 0.35% to 2.53%. Asian shares rose on Friday as investor risk appetite returned after overnight data suggested some stabilization in the global recovery trend, particularly in the world's top two economies, the United States and China. Key benchmark indices in Hong Kong, Japan, Indonesia, South Korea, Taiwan and Singapore rose by between 0.05% to 1.24%. China's Shanghai Composite fell 0.26%. US stocks rose on Thursday as bullish consumer confidence and private-sector jobs data gave investors reason to cheer following superstorm Sandy's devastating sweep through the US Northeast. Data from payrolls processor ADP showed US companies added 158,000 workers in October 2012 -- the fastest pace in eight months. In another encouraging sign, US consumer confidence jumped in October to its highest in more than four years, the Conference Board said. The influential US non-farms payroll data for October 2012 is due for release today, 2 November 2012. The results will also likely have an outsized political impact ahead of next Tuesday's US presidential election. Election for a new president in the United States, the world's biggest economy, is scheduled on Tuesday, 6 November 2012. Investors are worried about US fiscal cliff. The "cliff" refers to the year-end deadline for the expiration of hundreds of billions of dollars worth of tax cuts and the triggering of $109 billion in across-the-board spending cuts. The non-partisan Congressional Budget Office has said the scenario could throw the country into recession. Congress created the hazardous deadline of 31 December 2012 in August 2011 when it agreed to a deficit deal as a way out of a deadlock over raising the US debt ceiling.