The key benchmark indices garnered small gains in a choppy trade as global stocks surged. The BSE 30-share Sensex rose 36.88 points or 0.22%, off close to 160 points from the day's high and up close to 65 points from the day's low. Higher US index futures also aided gains. The S&P CNX Nifty closed above the psychological 5,000 mark after slipping below that level in late trade. Nifty had fallen below that level on Wednesday, 7 October 2009.
India's biggest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) gave up most of the strong early gains triggered by a surprise bonus issue announced by the firm after trading hours on Wednesday, 7 October 2009. Another index heavyweight Larsen & Toubro fell on equity dilution worries. Telecom stocks tumbled, extending their recent steep losses. IT stocks fell on a firm rupee and ahead of Infosys's Q2 results on Friday, 9 October 2009. But there were many gainers. Oil exploration stocks rose on firm crude oil prices. Realty, FMCG and auto stocks also rose
Intraday volatility on the bourses was high. The Sensex pared gains soon after an early surge triggered by higher Asian stocks. The Sensex slipped into the red for a brief period in morning trade. The market later regained positive zone. The market surged in early afternoon trade after the inflation data. It pared gains in later before regaining strength in mid-afternoon trade. The market gave up all its gains and slipped into red in late trade.
Inflation based on the wholesale price index (WPI) rose 0.7% in the year through 26 September 2009, lower than a rise of 0.83% in the year through 19 September 2009, data released by the government today showed. Food article index in the WPI was up sharply at 15.45%. Meanwhile, the government revised upwards inflation for the year through 1 August 2009 to a decline of 0.83% from an estimated fall of 1.74%.
Finance Minister Pranab Mukherjeee said on Wednesday, the government needs more time before deciding on an exit from accommodative policy. Mukherjee also said in a television interview that economic growth may accelerate to 7% in the fiscal year starting April 2010, from an expected growth rate of 6.3% in 2009/10. Monetary policy and fiscal policy should move in tandem. It should not be contradictory, Mukherjee said.
Early this week, the Reserve Bank of India (RBI) Governer, D Subbarao said while there was broad agreement that the central bank needs to wind back some of its easy policy stance, there were risks if the move was mistimed. An early exit from the accommodative monetary stance on inflation concerns runs the risk of derailing the fragile growth, while a delayed exit may engender inflation expectations, he said. The central bank has pumped huge liquidity in the system and drastically cut policy rates in the aftermath of the global financial crisis last year.
Stock and sector-specific activity may dominate trade in the coming days based on expectations on Q2 September 2009 results. IT bellwether Infosys kickstarts the reporting season on Friday, 9 October 2009. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Cement firms too are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.
Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower. A sharp surge in equity markets may help treasury gains for some banks. As far as IT stocks is concerned the focus in mainly on the guidance from Infosys.
Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.
European shares were higher on Thursday after the Bank of England and European Central Bank kept rates unchanged after a regular policy review. Key benchmark indices in France, Germany and UK were up by between 0.58% to 1.24%.
The European Central Bank (ECB) kept its main refinancing rate unchanged at a record low of 1% on Thursday, as expected by economists. Markets are now turning their attention to President Jean-Claude Trichet's news conference where he will explain the decision and give the ECB's latest assessment of the economy. This month ECB members are meeting in Venice.
The Bank of England left interest rates at a record low of 0.5% for the seventh month running on Thursday and said it would keep its 175 billion pound asset buying programme in place, as expected.
Most Asian stocks were higher on a surprisingly strong Australian jobs data. The key benchmark indices in Hong Kong, South Korea, Singapore and Japan were up by between 0.62% to 1.18%. But Taiwan's Taiwan Weighted fell 1.38%.
Australia added 40,600 jobs in September 2009, official data showed, with the unemployment rate falling to 5.7%. Economists had expected the number of jobs to fall by 10,000 and the jobless rate to rise to 5.9%.
Chinese markets have been shut since 1 October 2009 for National day and Autumn festival celebrations. Trading will resume on 9 October 2009.
Trading in US index futures indicated the Dow could gain 76 points at the opening bell on Thursday, 8 October 2009.
US markets ended mixed on Wednesday, 7 October 2009 as investors took a wait-and-see approach ahead of the start of earnings season. The Dow was down 5.67 points, or 0.1%, to 9,725.58. The S&P 500 index added 2.86 points, or 0.3%, to 1,057.58, and the Nasdaq Composite index rose 6.76 points, or 0.3%, to 2,110.33.
Earnings season officially kicked off after the bell in US, with aluminum giant, Alcoa posting a surprise profit on Wednesday through cost cutting and higher aluminum prices after three consecutive quarterly losses. Wall Street had expected another loss for the aluminum producer but Alcoa said its third-quarter net earnings were $77 million, or 8 cents per share, compared with earnings of $268 million, or 33 cents per share in the same quarter of 2008.
The company also said it saw signs that key markets were stabilizing and predicted global aluminum consumption would increase 11% in the second half of 2009. Its shares gained 5.7% in after-hours trade.
Meanwhile, after a huge redemption last year, a number of hedge funds have begun to see net inflows again, reports suggest.
Closer home, a section of the market is, however, concerned that a glut in share sales may suck liquidity from the secondary market. As per reports, 30 companies have filed their draft red herring prospectuses in September 2009 with market regulator Securities & Exchange Board of India (Sebi) for raising funds through initial public offering.
The corporate sector has raised large sums of money through equity and equity related instruments in the past six months or so to either to retire high cost debt or to fund expansion. The supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary market.
As per one report, companies plan to raise over Rs 50,000 crore through initial public offers (IPOs), follow-up public offers, divestment of stake sale in the second half of the current financial year. Reliance Infratel also announced on 22 September 2009, its intention to raise Rs 5,000 crore from the primary market. A number of companies are also in the fray to raise funds by way of qualified institutional placement (QIP), reports suggest.
Divestment of state-run firms by the government may also increase the supply of paper in the market. As per recent reports, the government is planning to announce a blueprint for selling its stake in state-owned firms in the first week of October 2009. The policy is expected to suggest how the government will eventually bring down its stake in public sector companies to 75% over a period of time.
Some caution may prevail on the bourses ahead of assembly polls in three states viz. Maharashtra, Haryana and Arunachal Pradesh on 13 October 2009. The counting of votes will take place on 22 October 2009. Stock exchanges would remain shut on 13 October 2009 in view of the General Assembly Elections.
The BSE 30-share Sensex rose 36.88 points or 0.22% to 16,843.54. The Sensex rose 191.86 points at the day's high of 16,998.52 in early trade. The barometer index fell 31.30 points at the day's low of 16,775.36 in morning trade trade.
The S&P CNX Nifty rose 16.50 points or 0.33% to 5,002.25. It hit a high of 5043.05 in intraday trade. Nifty October 2009 futures were at 4986.25, at a discount of 16 points as compared to the spot closing of 5002.25. Turnover in NSE's futures & options (F&O) segment was Rs 69,732.16 crore, sharply lower than Rs 81,030.16 crore on Wednesday, 7 October 2009.
BSE clocked a turnover of Rs 6,444 crore, lower than Rs 6,634.57 crore on Wednesday, 7 October 2009.
The Sensex is up 7196.23 points or 74.59% in calendar year 2009 as on 8 October 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8683.14 points or 106.4% as on 8 October 2009. FII inflow in the calendar year 2009 totaled Rs 61302.20 crore (till 6 October 2009).
Coming back to today's trade, the BSE Mid-Cap index rose 0.79% and outperformed the Sensex. The BSE Small-Cap index rose 0.22% and matched the performance of the Sensex.
Sectoral indices on BSE displayed mixed trend. The BSE Realty index (up 2.09%), the BSE FMCG index (up 2.01%), the BSE Auto index (up 1.66%), the BSE Oil & Gas index (up 1.43%), the BSE Metal index (up 1.3%), the BSE Power index (up 1.3%), the BSE Bankex (up 1%), the BSE Consumer Durables index (up 0.92%), the BSE PSU index (up 0.89%), the BSE Healthcare index (up 0.82%) outperformed the Sensex.
The BSE Teck index (down 2.8%), the BSE IT index (down 1.86%), the BSE Capital Goods index (down 0.01%), underperformed the Sensex.
The market breadth, indicating the overall health of the market was negative after moving between positive and negative breadth earlier in the day. On BSE, 1235 shares advanced as compared with 1515 that declined. A total of 110 shares remained unchanged.
Among the 30-member Sensex pack, 22 rose while the rest declined.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) pared gains in late trade after early surge triggered by a liberal 1:1 bonus issue. The stock rose 0.96% to Rs 2119.20, off the day's high of Rs 2,209. A total of 24.83 lakh shares were traded on the counter.
Reliance, listed in 1978, has so far issued bonus shares thrice in its history - in 1980, 1983, and 1997. The company maintained its dividend for the fiscal year ended March 2009 at Rs 13 a share. Both the bonus and the dividend are applicable to shareholders of the erstwhile Reliance Petroleum, which has been merged with RIL.
Chief Financial Officer Alok Agarwal said the company was on track with the production ramp-up for its KG D6 oil and gas fields off India's east coast, and has the financial flexibility to make further investments. The company has produced 2.7 million tonnes of crude oil and 5 billion cubic metres of gas from the KG D6 field since 1 April 2009, and started 16 of 18 wells needed to achieve maximum capacity, he said.
Oil exploration stocks rose as crude regained $70 a barrel level after a slide on Wednesday. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 2.01%. Cairn India rose 2.04%. India's second biggest state-run oil exploration firm by revenue Oil India rose 2.77%.
PSU OMCs rose as lower crude oil prices will reduce under-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. HPCL, Indian Oil Corporation (IOC) and BPCL rose by between 1.14% to 2.52%.
Light, sweet crude gained 1.02% to $70.28 a barrel in Asian electronic trading, on Thursday, 8 October 2009, after a $1.31 or 1.85% fall to $69.57 a barrel on the New York Mercantile Exchange on Wednesday, 7 October 2009. Crude fell on Wednesday after US government data showed larger-than-expected increase in gasoline stockpiles.
IT stocks declined as rupee surged against the dollar. A stronger rupee negatively impacts operating margins of IT firms as the sector earns a lion's share of revenue from exports.
India's largest software services exporter TCS lost 3.36%. The company will pursue larger deals and leverage its full service offerings, its newly appointed chief executive and managing director N. Chandrasekaran said early this week. India's third largest software services exporter Wipro fell 1.4%.
India's second largest software services exporter Infosys Technologies fell 1.8%. Given the improved business conditions and stability in global financial markets, analysts expect Infosys management to revise earnings guidance for the year ending March 2010 (FY 2010) when the company announces Q2 results on Friday, 9 October 2009. At the time of announcing Q1 June 2009 results in July 2009, Infosys projected EPS of between Rs 94.59 to Rs 96 for FY 2010, a decline of between 8.2% to 9.6%.
A total of ten brokerages expect a between 8.9% fall to a 6.7% rise in Infosys' net profit at between Rs 1390.80 crore to Rs 1629.10 crore in Q2 September 2009 over Q1 June 2009. Revenue is seen rising 1.2% to 2.94% at between 5540.30 crore to Rs 5633.10 crore in Q2 September 2009 over Q1 June 2009.
Indian rupee rose to a fresh one-year peak on Thursday, helped by the dollar's weakness against other currencies. The partially convertible rupee was at 46.38 per dollar, above Wednesday's close of 46.66/67 per dollar.
Battered telecom shares fell for the fourth straight day. Telecom stocks had tumbled in the past three days on concerns over declining tariffs and rising competition.
India's largest cellular services provider by sales Bharti Airtel fell 6.61%. Chief Executive Manoj Kohli said on Wednesday that the company is considering a bid for Millicom's assets in Sri Lanka. Sweden's Millicom has put its mobile operations in Sri Lanka up for sale.
Bharti's chairman Sunil Mittal said on 5 October 2009 that the mobile services firm would continue to search emerging markets for acquisitions or alliances after its proposed talks for a $24 billion merger deal with South Africa's MTN collapsed last week. However, he declined to comment on speculation that Bharti was now eyeing a stake in Kuwait's Zain.
Kohli on Tuesday, 6 October 2009 said the company expects to reach a total of 20 crore subscribers in less than three years from the present subscriber base of about 11 crore.
India's second largest cellular services provider by sales Reliance Communications (RCom) fell 6.01%.
RCom on Monday, 5 October 2009 reduced call charges across networks to a flat 50 paise per minute, heating up the tariff war in a market that is getting increasingly competitive. Its move came after an almost similar tariff cut by Bharti Airtel last month. A reduction in tariffs by Reliance Communications (RCom) also raised concerns of a fresh tariff war.
Auto stocks rose on hopes of expectations of strong Q2 results. India's largest tractor maker by sales Mahindra & Mahindra rose 2.14%. Total sales of the company rose 10.94% to 28434 vehicles in September 2009 over September 2008. The company unveiled the sales figures during trading hours on 1 October 2009.
India's largest truck maker by sales Tata Motors rose 5.35%. The company's total sales rose 5.77% to 52,513 units in September 2009 over September 2008.
India's largest bike maker by sales Hero Honda Motors gained 1.75%. The firm's total sales rose 4.16% to 4,01,290 units in September 2009 over September 2008.
But, India's top small car maker by sales Maruti Suzuki India fell 1.69% extending losses for the second straight day. The company's total sales rose 17.3% to 83,306 vehicles in September 2009 over September 2008. The figures were released during trading hours on 1 October 2009.
Realty stocks rose on recent reports that demand for residential projects in major cities is picking up on lower home loan rates, property price cuts by developers and a recovery in the job market. Realty market had slumped last year amid a global credit crunch and buyers fearing job losses. DLF, Indiabulls Real Estate, Unitech, Ansal Properties, Akruti City rose by between 1.16% to 2.75%.
India's largest engineering & construction company by sales Larsen & Toubro fell 1.65% on equity dilution concerns after the company opened a qualified institutional placement. The company has reportedly raised $600 million through a share issue to qualified institutional buyers and convertible debentures.
Larsen & Toubro also said that the company is currently contemplating an offering of foreign currency convertible bonds and ordinary shares through depositary receipt mechanism for an aggregate amount of up to $ 200 million.
India's largest power equipment maker by sales Bharat Heavy Electricals rose 1.16% on expectations of good Q2 September results. The company unveils Q2 results on 23 October 2009. Among other capital goods stocks, ABB, Thermax, Siemens rose by between 1.29% to 5.55%.
Metal stocks advanced after Alcoa Inc posted better than expected result. LMEX, a gauge of six metals traded on the London Metal Exchange rose 0.42% on Wednesday, 7 October 2009.
India's largest private sector steel maker by sales Tata Steel gained 3.56%. The company's domestic steel sales rose 19% in July-September 2009 quarter to 1.46 million tonnes from a year earlier. Domestic operations account for about a quarter of the group's total annual global capacity of 30 million tonnes, which includes unit Corus, Europe's second-largest steelmaker.
Steel Authority of India rose 1.9% on recent reports the government has decided to split the Chiria iron ore mine in Jharkhand and give half the reserves to the company.
Among other metal stocks, Sterlite Industries, National Aluminum Company, Hindustan Zinc and Hindalco Industries rose by between 0.53% to 2.25%.
India's largest thermal power generator by sales NTPC rose 1.36% on reports the government plans to sell 5% its stake in power producer through a follow-on public offering in January 2010.
Among other power stocks, Reliance Infrastructure, Reliance Power, CESC rose by between 0.25% to 4.89%.
Banking stocks advanced as rise in headline inflation eased. India's largest private sector bank by net profit ICICI Bank rose 0.56% even as its ADR fell 2.1% on Wednesday.
India's second largest private sector bank by net profit HDFC Bank rose 0.92% even as its ADR fell 2.3% on Wednesday.
India's largest bank by net profit and branch network State Bank of India rose 0.65%. As per recent reports, the state-run bank is planning to raise $1 billion by bond issuance as a part of the bank's Medium Term Note program or MTN, a tool that allows raising funds through various products including floating rate notes or on a fixed rate, subject to necessary regulatory approvals.
Shares of diversified firm Grasim rose 0.44% on bargain hunting after recent fall. The company said on Saturday, 3 October 2009 it will transfer its cement business to its unlisted unit Samruddhi Cement. The demerger will be completed by March 2010 after which Samruddhi Cement will be listed. Samruddhi will then make an offer to UltraTech Cement for consolidation of the group's cement business. For every share, shareholders of Grasim will get one share of Samruddhi.
Meanwhile, shares of UltraTech Cement gained 1.79%. The cement maker at its board meet held on 6 October 2009 gave in principle approval to a proposal to absorb group firm Samruddhi Cement.
Aditya Birla group Grasim and UltraTech Cement currently operate a combined production capacity of 42 million tonnes a year or a fifth of India's cement capacity.
Among other cement stocks, ACC and Ambuja Cements rose by between 0.72% to 0.81%.
Construction shares rose as higher government spending on infrastructure sector in the Union Budget 2009-2010 to provide a stimulus to the economy, may result in increase order flow for construction. Nagarjuna Construction Company, Gayatri Projects, Valecha Engineering, Era Infra Engineering rose by between 1.79% to 12.1%.
The government has set a target of spending $20 billion a year on road construction.
Some FMCG stocks rose on revival of annual monsoon since mid-August. FMCG firms derive substantial revenue from the rural sector. Hindustan Unilever, ITC, United Spirits, Tata Tea, Nestle India, rose by between 0.19% to 2.72%.
Fertiliser shares rose on revival of annual monsoon since mid-August. GSFC, GNFC, Chambal Fertilisers and Chemicals, Rashtriya Chemical & Fertilisers rose by between 0.1% to 1.22%. Fertilizer sales are directly dependent on monsoon. A bountiful monsoon boosts sales whereas a drought hits sales adversely.
Revival in the monsoon in mid-August 2009 has improved prospects for an early sowing of winter crops including wheat and canola, and replenished water levels in reservoirs. Farmers use this water to grow wheat and oilseeds planted between October and December.
Shipping shares rose after the Baltic Exchange's main sea freight index, which tracks rates to ship dry commodities, rose to a seven-week high on Wednesday, 7 October 2009. Essar Shipping Ports and Logistics, Mercator Lines, Great Eastern Shipping Company, Shipping Coporation of India and Varun Shipping Company rose by between 2.32% to 9.32%.
Cals Refineries clocked highest volume of 13.42 crore shares on BSE. Unitech (1.5 crore shares), Ispat Industries (1.21 crore shares), King Fisher Airlines (0.91 crore shares) and Bharti Airtel (0.81 crore shares) were other volume toppers in that order.
Reliance Industries clocked highest turnover of Rs 526.23 crore on BSE. Bharti Airtel (Rs 271.30 crore), Housing Development & Infrastructure (Rs 225.84 crore), Reliance Communications (Rs 155.01 crore) and Unitech (Rs 151.88 crore) were other turnover toppers in that order.
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