Key benchmark indices retreated from day's high on profit booking after positive global cues triggered a firm start. Volatility was high in early trade. The BSE 30-share Sensex was up 27.98 points or 0.19% to 14,814.12, off 93.36 points from the day's high, but up 20.64 points from the day's low. Market breadth was strong. Poor results took their toll on Tata Motors for second day, while Sun Pharma reversed two-day losses on bargain hunting.
The key event to watch out for will be the Union Budget 2009-10 about to be presented on 6 July 2009. The Annual economic survey is scheduled to be presented on 2 July 2009 followed by the Rail Budget on 3 July 2009.
The corporate sector is expecting a removal of the fringe benefit tax (FBT) in the budget. Under the current dispensation, an employer has to pay FBT at 30% on the fringe benefit, the taxable value of which is determined in accordance with a formula. FBT is a tax levied on perquisites-or fringe benefits -provided by an employer to his employees.
Meanwhile, domestic brokerages and fund houses want the government to remove securities transaction tax (STT) on trading in securities in the Budget. The Securities & Exchange Board of India (Sebi) members have already forwarded the demand of premier stock exchanges, BSE and NSE, to Finance Minister Pranab Mukherjee for scrapping STT in the Budget.
STT, which was introduced in the Union Budget 2004-05 by the then Finance Minister P Chidambaram, taxes every purchase and sale of securities entered into in a recognised stock exchange in India in securities like shares, debentures, bonds, and units of mutual funds. Equity investors pay an STT of 0.125% for every transaction in cash for the delivery of shares.
Meanwhile, before the budget, investors will also be keenly watching the outcome of the Employees' Provident Fund Organisation (EPFO's) apex advisory body meet on 4 July 2009. The Central Board of Trustees (CBT) will take a view on the Finance Ministry's proposal to invest 15% of its corpus in equity. The EPFO has a corpus of about Rs 1,82,000 crore and the permission to invest 15% funds in equity could have positive implications for the capital market. A proposal to park funds in the stock market was earlier rejected by the EPFO's Finance and Investment Committee (FIC) at its meeting on 26 March 2009.
Many equity analysts have been raising earnings forecasts of India Inc on hopes that the new government will provide thrust on the infrastructure sector and push economic reforms to boost growth. Citigroup expects the economy to grow by 6.8% in the year ending March 2010 (FY 2010) and 7.8% in the year ending March 2011 (FY 2011).
Finance Minister Pranab Mukherjee would present the budget on 6 July 2009. The Railway Budget will be presented on 3 July 2009 and the Economic Survey would be presented on 2 July 2009.
A comfortable victory last month for the Congress-led United Progressive Alliance (UPA) government in elections for the 15th Lok Sabha has raised hopes for economic reforms. Reforms virtually came to a halt in the past five years of the Congress-led alliance government at the centre, when the Communists provided support to the government from outside for a large part of the five-year term. Left parties are opposed to economic reforms.
Investor expectations from the new government are high. Investors expect financial sector reforms such as increase in the cap on foreign direct investment in insurance sector to 49%, from 26% at present.
Asian markets were trading firm today, 30 June 2009 on the back of a surge in commodity prices. Key benchmark indices in Hong Kong, Singapore China, South Korea, Taiwan and Japan were up by between 0.05% and 1.97%.
Trading in the US index futures indicated the Dow could see a flat opening today, 30 June 2009.
US stocks rose on Monday, 29 June 2009 as higher oil prices lifted shares of energy companies and fund managers snapped up recent winners to embellish their portfolios a day before the close of the second quarter.
The Dow Jones Industrial Average rose 90.99 points, or 1.08%, to 8,529.38. The Standard & Poor's 500 Index added 8.33 points, or 0.91% to 927.23 and the Nasdaq Composite index gained 5.84 points, or 0.32%, to 1,844.06
At 10:25 IST, the BSE 30-share Sensex was up 27.98 points or 0.19% to 14,814.12. The Sensex opened points 45.23 higher at 14,830.97. At the day's high of 14,907.48, the Sensex rose 121.74 points in early trade. The Sensex rose 7.74 points at the day's high low of 14,793.48 in early trade
The S&P CNX Nifty was up 2.40 points or 0.05% to 4,393.35
The BSE clocked a turnover of Rs 1515 crore at 10:25 IST
The market breadth, indicating the overall health of the market, was strong. On BSE, 882 shares advanced as compared with 222 that declined. 21 shares remained unchanged.
Among the 30-member Sensex pack, 26 gained while only 4 of them slipped
Metal shares rose on strong domestic demand. Also a 0.35% rise in LMEX, a gauge of six metals traded on the London Metal Exchange, on Monday, 29 June 2009 lifted sentiment.
India's largest private sector steel maker by sales Tata Steel gained 2.86% to Rs 408.50 and was the top gainer from the Sensex pack
JSW Steel (up 3.17%), Hindustan Zinc (up 2.44%), and Nalco (up 2.06%), gained.
India's largest private sector copper and zinc maker by sales Sterlite Industries (India) rose 1.33% after it said its wholly-owned unit Sterlite Energy (SEL), on Monday, 29 June 2009, has achieved financial closure for its 2,400 megawatts (MW) power project at Jharsuguda in Orissa. A consortium of 19 lenders led by the State Bank of India committed a term loan of Rs 6,150 crore. SBI Capital Markets, IDBI Bank and Deutsche Bank acted as joint lead arrangers for the transaction.
However India's largest private sector aluminium marker by sales Hindalco Industries fell 0.19% after its subsidiary Novelis Inc., reported net loss of $16 million in Q4 March 2009 as compared to profit of $117 million in Q4 March 2008. Pre-tax income slipped to $67 million in Q4 March 2009 compared to pre-tax income of $117 million in Q4 March 2008.
India's top pharma firm by market capitalisation Sun Pharma gained 1.97% reversing two-day losses on bargain hunting. Reports the US drug regulator has seized generic drugs made by Caraco Pharmaceutical Laboratories, a US subsidiary of Sun Pharma after the agency found manufacturing defects at company plants, including oversized tablets had triggered a sharp fall on the counter. Sun Pharma holds 70.21% stake in Caraco Pharmaceutical Laboratories.
India's largest private sector firm by market capitalisation Reliance Industries (RIL) rose 0.29% to Rs 2091.10. The Bombay High Court on Monday, 29 June 2009 approved the merger between RIL and Reliance Petroleum (RPL) but stayed its own order for four weeks to enable those objecting to the amalgamation to file appeal before division bench.
In March 2009, the boards of director of the two firms approved the merger, creating one of the world's largest petrochemical entities. The deal offered shareholders of RPL one RIL share for every 16 shares held by them.
India's biggest bank in terms of branch network State Bank of India (SBI) rose 0.11%. The bank is reportedly in talks with Indonesia's Bank Eksekutif to acquire a majority stake.
Outsourcing focussed IT stocks gained as a weak rupee offset lower American depositor receipts (ADR). India's second largest software firm by sales Infosys Technologies rose 0.19% despite a 1.12% fall in its ADR on Monday, 29 June 2009.
India's largest software services exporter by sales TCS rose 0.12%. India's third largest software services exporter by sales Wipro gained 0.46% even as its ADR slipped 0.34% on Monday, 29 June 2009
A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.
India's largest commercial vehicle maker by sales Tata Motors lost 2.20% to Rs 306.80, extending yesterday's over 5% slump after the company reported a net loss of Rs 2505.25 crore in the year ended March 2009 as compared with net profit of Rs 2167.70 crore in the year ended March 2008. Net sales jumped 98.73% to Rs 70370.40 crore in the year ended March 2009 over the year ended March 2008. However the figures are not comparable as the year-ago numbers did not include that of Jaguar and Land Rover, as well as some other assets the company bought and sold during the year. The results were announced after market hours on 26 June 2009. It was the top loser from the Sensex pack.
India's top cellular services provider by sales Bharti Airtel slipped 1.29%. As per reports, JP Morgan, BNP Paribas, HSBC and Barclays are in talks with Bharti Airtel to fund part of the $4 billion needed by Bharti Airtel to complete its $23-billion merger with MTN, Africa's largest mobile phone operator. The merger deal will see both Bharti and MTN offering equity stakes and cash to each other. Bharti will have to make a net cash payment of around $4 billion to complete the deal, which will see it acquiring a 49% stake in MTN, which, in turn, will get a 36% economic interest in the Indian firm. Both companies are in exclusive talks till 31 July 2009.
Back home, as per the provisional figures on the NSE, foreign institutional investors (FIIs) bought shares worth Rs 292.44 crore on Monday, 29 June 2009 while domestic institutional investors purchased shares worth Rs 143.84 crore.
Monsoon rains, which runs from June to September, have weakened and are expected to be below normal, Prithviraj Chavan, minister of science and technology, said on Wednesday, 24 June 2009 in a briefing in New Delhi. The India Meteorological Department on 17 April 2009 predicted rains in the June- September period to be near normal. The minister said the 2009 monsoon rainfall would be 93% of the long-term average, lower than an earlier forecast of 96%.
The outlook is among the nation's most widely watched indicator as monsoon rains are a major influence on output of key crops, economic activity and also affects sentiment in the country's financial markets.
The World Bank on 22 June 2009 predicted that the global economy will shrink 2.9% this year, a deeper fall than the 1.7% contraction it predicted in March 2009.
The good news for India is that the World Bank has raised India's growth forecast for 2009 to 5.1% from earlier projection of 4%. It has projected an 8% growth for India in 2010 which will make it the fastest growing economy in the world in 2010, overtaking China's expected 7.7% growth relative to the robust performance prior to the current crisis.
In its semi-annual Economic Outlook released on 24 June 2009, the Organisation for Economic Co-operation and Development (OECD) called on the Indian government to restore fiscal discipline, speed up structural reform and increase sales of public-sector assets.
Brazil, India, China and Russia - collectively, the BRICs - held their first summit in Paris this month, underlining the quartet's growing political as well as economic clout.
The OECD had been forecasting GDP growth for India of 4.3% in 2009 and 5.8% in 2010. OECD said that with the gradual recovery of the global economy and easier financial conditions, growth is projected to gradually regain momentum.
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