Market settles at over 19-month high; Sensex crosses 19,000 mark

The market settled at over 19-month closing high on hopes that the government would be able to push through a host of reforms measures during the current session of Parliament. Affirmative statement about the Indian economy from ratings agency Moody's also helped the market edge higher. The week's rally was also supported by news that Greece will get bailout fund from the troika of international lenders comprising the European Union, the European Central Bank and the International Monetary Fund (IMF). The BSE Sensex surged 833.33 points or 4.50% to 19,339.90 in the week ended Friday, 30 November 2012, its highest closing level since 27 April 2011. The 50-unit S&P CNX Nifty rose 253.25 points or 4.50% to settle at 5879.85, its highest closing level since 21 April 2011. The BSE Mid-Cap index outperformed the Sensex, rising 4.62% and the BSE Small Cap index underperformed the Sensex, rising 3.10%. The BSE Sensex rose 834.52 points or 4.50% in November 2012. The Sensex has surged 3,884.98 points or 25.13% in calendar 2012 so far (till 30 November 2012). From a record high of 21,206.77 on 10 January 2008, the Sensex is off 1,866.87 points or 8.80%. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 4,204.04 points or 27.77%. Foreign institutional investors (FIIs) have purchased shares worth Rs 9577.20 crore in November 2012 so far (till 29 November 2012). FIIs had bought shares worth a net Rs 11364.20 crore in October 2012. FIIs have bought shares worth net Rs 103272.10 crore in calendar 2012 so far (till 29 November 2012). FIIs offloaded shares worth a net Rs 2714.20 crore in 2011. Trading for the week began on a positive note as the key benchmark indices logged moderate gains to settle at about two-week highs on Monday, 26 November 2012. The BSE Sensex rose 30.44 points or 0.16% to 18,537.01. The S&P CNX Nifty rose 9.30 points or 0.17% at 5,635.90. Key benchmark indices surged on Tuesday, 27 November 2012, with investor sentiment boosted by global credit rating agency Moody's retaining its stable outlook on India's sovereign rating, citing strong economic expansion and a healthy savings and investment rate that exceeded other emerging economies. The market sentiment was also boosted by news that Greece's official creditors, including the International Monetary Fund and European Union, had agreed on a deal to lower the country's debt burden. The BSE Sensex gained 305.07 points or 1.65% to 18,842.08. The S&P CNX Nifty rose 91.55 points or 1.62% to 5,727.45. The stock market remained closed on Wednesday, 28 November 2012, on account of Gurunanak Jayanti. Key benchmark indices logged gains on Thursday, 29 November 2012, boosted by firm global stocks. Market sentiment was also boosted after the deadlock in Lok Sabha ended that day, 29 November 2012, after Speaker Meira Kumar allowed a debate in the Lower House on foreign direct investment (FDI) in multi-brand retail under Rule 184 that entails voting. The BSE Sensex was up 328.83 points or 1.75% to 19,170.91. The S&P CNX Nifty up 97.55 points or 1.70% to 5,825. Key benchmark indices settled at over 19-month closing high on Friday, 30 November 2012, with investor sentiment boosted by gains in global markets. The BSE Sensex was up 168.99 points or 0.88% to 19,339.90. The S&P CNX Nifty was up 54.85 points or 0.94% to 5,879.85. Among the 30 Sensex shares, 28 shares rose and just two stocks declined. Copper maker Sterlite Industries (India) was the top Sensex gainer last week. It surged 12.67% to Rs 108.50. Telecom major Bharti Airtel spurted 10.40% to Rs 337.15. The company announced during market hours on Friday, 30 November 2012, that the Red Herring Prospectus filed by Bharti Infratel, a subsidiary of Bharti Airtel, in relation to its initial public offer of 18.89 crore shares of a face value of Rs 10 each, has been approved by the Registrar of Companies on 29 November 2012. The issue will be opened for subscription on 11 December 2012. The price band for the IPO has been fixed at between Rs 210 to Rs 240 per share. Drug maker Cipla jumped 8.53% to Rs 414. It hit a record high of Rs 415.90 on 30 November 2012. According to reports, Johannesburg Stock Exchange-listed pharmaceutical company, Cipla Medpro SA, has been awarded an antiretroviral (ARV) tender from government worth a combined value of approximately 1.4 billion rand (ZAR) for a two year period commencing 1 January 2013. Reports suggested that Cipla Medpro already has an order to supply South Africa with respiratory medicines, bringing total business with the South African government over the next two years to 2 billion ZAR. Cipla Medpro distributes Cipla's products in the South African market. Last week, Cipla made an indicative proposal for acquiring approximately 51% equity stake in Cipla Medpro South Africa for ZAR 8.55 per share (payable ex the final dividend for the 2012 financial year, which will be capped at a maximum ZAR 0.10 per share). India's third largest software services exporter by revenues Wipro rose 7.17% to Rs 392.95. 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 company announced the result on 2 November 2012. Wipro expects 1.23% to 3.17% growth revenues from IT services business at $1.56 billion to $1.59 billion in Q3 December 2012 over Q2 September 2012. Wipro's board of directors on 1 November 2012 approved demerger of the Wipro Consumer Care & Lighting (including Furniture business), Wipro Infrastructure Engineering (Hydraulics & Water businesses), and Medical Diagnostic Product & Services business (through its strategic joint venture), into a separate company to be named Wipro Enterprises. Wipro will remain a publicly listed company that will focus exclusively on information technology. Wipro Enterprises will be an unlisted company. ICICI Bank rose 7.14% to Rs 1,098.60. The stock hit a 52-week high of Rs 1,104.70 in intraday trade on Friday, 30 November 2012. ICICI Bank has clarified on Friday, 30 November 2012, that it is currently not considering merger or acquisition of any bank. ICICI Bank early this week said it successfully launched and priced a $250 million tap of its $750 million 4.70% 2018 notes originally issued in August 2012. The securities referred were offered only to non-US persons outside the United States under Regulation S of the Securities Act and will be listed on the Singapore Stock Exchange. The notes are fungible with the existing Reg S/144A tranche after the expiration of a 40-day distribution compliance period, taking the total aggregate nominal amount issued under the series to $1 billion. The offering was oversubscribed by 5.6 times and had an order book of $1.4 billion. The notes were offered at an issue price of 102.953%, which is a spread of 318 basis points over equivalent LIBOR. India's largest private sector steel maker Tata Steel rose 5.78% to Rs 385.40. Tata Steel announced restructuring plans, which will lead to the loss of about 900 jobs in the UK, including 580 in South Wales, 155 in Yorkshire, 120 in the West Midlands and 30 in Teesside. The company said that the job cuts are part of its restructuring proposals to improve the competitiveness of its UK operations so they can successfully perform in changing markets. The company is proposing to make changes at a number of steel finishing and processing sites in the UK that would improve its product and service offering for customers. These changes would concentrate services at six distribution and processing hubs, which would benefit from 22 million pounds of new investment and new employment, but would also lead to the closure of 12 sites, including Tafarnaubach and Cross Keys in South Wales. In addition, shift levels at the company's Rotherham and Hartlepool operations will be reduced to match production to lower demand for bar products and pipelines. However, Tata Steel also said it would go ahead with a 250 million pounds investment to rebuild a second blast furnace at Port Talbot, which is expected to be in production in early 2013. The additional capacity will see the company restart a hot-strip rolling mill at its Llanwern site in Newport, South Wales. Engineering and construction major L&T rose 5.06% to Rs 1,667.10. The company announced during trading hours Thursday, 29 November 2012, that its construction division has secured new orders worth over Rs 1178 crore across various business segments in November 2012. Index heavyweight and cigarette maker ITC rose 4.14% to Rs 298.25. The Ministry of Health and Family Welfare last month 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 on 19 October 2012. ITC's 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. Index heavyweight Reliance Industries (RIL) rose 2.69% to Rs 793.90. RIL said after market hours on Thursday, 29 November 2012, that it has bought back 4.62 crore shares for about of Rs 3357.27 crore till 27 November 2012 under its ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. 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. Minister of Petroleum & Natural Gas Dr. M. Veerappa Moily informed Rajya Sabha in a written reply on Tuesday, 27 November 2012, that the average gas production from RIL's KG-DWN-98/3 (KG-D6) block during the current year (2012-13 up to October, 2012) was about 29.81 Million Standard Cubic Meter Per Day (MMSCMD) as against 86.73 MMSCMD approved in the Field Development Plans (FDPs) of D1, D3 & MA fields in this block, which are currently on production. He also emphasized that the government has not accepted the contention of the contractor and it has ordered proportionate disallowance of cost of production facilities amounting to $1.005 billon for not fully implementing approved AIDP. RIL has initiated arbitration proceedings on the disallowance and government of India has also appointed an arbitrator in this regard. Motorcycle major Bajaj Auto rose 6.27% to Rs 1,930.55. The stock had hit a record high of Rs 1,977 in intraday trade on Thursday, 29 November 2012. The company on 2 November 2012 said its total sales rose 4% to 4.11 units in October 2012 over October 2011. Three-wheeler sales jumped 14% to a record 50,316 units in October 2012 over October 2011. Exports declined 4% to 1.26 lakh units in October 2012 over October 2011. Bajaj Auto's motorcycle sales rose 3% to 3.61 lakh units in October 2012 over October 2011. Bajaj Auto said its domestic motorcycle clocked record monthly sales of 2.62 lakh units in October 2012. The company also said that sales of its Discover brand of motorcycles clocked record sales of 1.55 lakh units in October 2012. India's largest commercial vehicle maker by sales Tata Motors rose 5.20% to Rs 274.25. The company early this week announced its entry in the Bangladesh new car market, introducing two sedans and a hatchback viz. Tata Indigo eCS, India's most fuel-efficient compact sedan, the Tata Indigo Manza, a luxury sedan, and the Tata Indica Vista hatchback, with class defining space. The Manza and the Vista are born out of Tata Motors' new car platform. Car major Maruti Suzuki India was the biggest Sensex loser last week. It fell 1.38% to Rs 1,473.55. The stock had hit 52-week high of Rs 1,514.95 in intraday trade on 22 November 2012. The company early this month said its total sales jumped 85.5% to 1.03 lakh units in October 2012 over October 2011. Maruti Suzuki India said total passenger car sales surged 93.8% to 79,811 units in October 2012 over October 2011. Total domestic sales jumped 86.6% to 96,002 units and total exports rose 71.8% to 7,106 units in October 2012 over October 2011. The sharp surge in sales in October 2012 was due to base effect. Maruti's sales in October of 2011 were hit adversely due to labour unrest at the company's Manesar and Gurgaon factories in Haryana. India's largest utility vehicle maker by sales Mahindra and Mahindra (M&M) declined 0.97% to Rs 944.85. The stock had hit record high of Rs 960.95 in intraday trade on 26 November 2012. Data released by the government on Friday, 30 November 2012, showed that India's GDP grew 5.3% in Q2 September 2012, which was lower than 5.5% growth in Q1 June 2012. The economic activities which registered significant growth in Q2 September 2012 are construction at 6.7%, 'trade, hotels, transport and communication' at 5.5%, 'financing, insurance, real estate and business services' at 9.4%, and 'community, social and personal services' at 7.5%. The growth rates in 'agriculture, forestry & fishing' is estimated at 1.2%, 'mining and quarrying' at 1.9%, manufacturing at 0.8%, and 'electricity, gas and water supply' at 3.4%. The credit rating agency, Moody's said on Tuesday, 27 November 2012, that the outlook on its Baa3 rating for India is stable, in part due to the country's high savings and investment rates. In its annual credit analysis on India, which Moody's said does not constitute a rating action, the agency also cited the country's large, diverse economy and strong gross domestic product growth as supportive of the rating. However, Moody's said, "The rating is constrained by the credit challenges posed by India's poor social and physical infrastructure, high government deficit and debt ratios, recurrent inflationary pressures and an uncertain operating environment." Last month, Standard & Poor's warned India still faced a one-in-three chance of a credit rating downgrade over the next 24 months, although it said a series of reform steps launched in September had slightly improved the country's prospects. The deadlock in Lok Sabha ended on Thursday, 29 November 2012, as Speaker Meira Kumar allowed a debate in the Lower House on FDI in multi-brand retail under Rule 184 that entails voting. The FDI decision will be debated in Lok Sabha on 4 and 5 December 2012. The vote will be non-binding on the government, meaning the UPA faces no threat even if it loses the vote. However, it would be a political embarrassment if the government fails to prove numbers on the floor of the House during the voting. The debate on FDI in multi-brand retail under rule 168 that entails voting will take place in the Rajya Sabha on 6 and 7 December. The government was forced to relent after the Opposition stalled proceedings of both Lok Sabha and Rajya Sabha and demanded that the government face a trial of strength on its nod for 51% FDI in multi-brand retail. Earlier, the Lok Sabha remained paralyzed for four days in a row and Rajya Sabha for five days amid opposition's demand for discussion and voting on the issue of FDI in retail after the Winter Session of Parliament that began on 22 November 2012. The government braved intense political opposition by allowing 51% foreign direct investment (FDI) in multi-brand retail in September 2012. The winter session of the parliament which began on 22 November 2012, has heavy legislative agenda. The key financial sector reforms bills that the government intends to pass this session include insurance and pension bills and the Banking Laws (Amendment) Bill, 2011. The insurance bill will aim to raise the limit for foreign direct investment in the sector to 49% from 26%, while the pension bill will seek to allow foreign investments of up to 49% in local pension-fund managers. The Banking Laws (Amendment) Bill, 2011 includes increasing the voting rights of large shareholders in private banks to 26% from 10%, and giving the central bank more powers. The Reserve Bank of India has held back approvals of new bank licenses, urging the government to first get the bill passed in parliament. In Europe, euro-zone finance ministers, the European Central Bank and the IMF agreed early Tuesday, 27 November 2012, on a plan to cut Greece's government debt to 124% of gross domestic product by 2020 and to less than 110% of GDP by 2022, paving the way for the country to receive its next tranche of financial aid. At a news conference in Brussels, European Commissioner for Monetary Affairs Olli Rehn said that "Greece has shown that it is serious about reform," and has kept to its commitments. The IMF said that the initiatives include Greek debt buybacks and a lowering of some of the interest Greece pays on its aid. In the fourth Greek crisis meeting in two weeks, euro region finance ministers persuaded a skeptical International Monetary Fund that Europe has a formula for putting the country that triggered the debt crisis on to a path out of it. Greece also was cleared to receive a 34.4 billion euro ($44.7 billion) loan installment in December.