The key benchmark indices strengthened in rangebound mid-afternoon trade. Index heavyweight Reliance Industries (RIL) edged higher in volatile trade. The BSE 30-share Sensex was up 197.17 points or 1.16% off close to 30 points from the day's high but up close to 110 points from the day's low. A rally in global stocks, a strong response to the initial public offer of Indiabulls Power and stronger-than expected Q2 results from housing finance major HDFC, boosted market sentiment. A rally in US index futures triggered by a strong guidance from chip major Intel, aided the rally on the domestic bourses.
The barometer index BSE Sensex and the 50-unit S&P CNX Nifty hit highest level in nearly 17 months. The market breadth was strong.
Oil exploration stocks gained whereas PSU OMCs fell as crude hit its highest level in 2009 on weak dollar. Metal and auto stocks gained. India's largest engineering and construction firm by sales Larsen & Toubro rose on winning a large order. Other capital goods stocks also rose.
After a firm opening, the market surged in early trade on firm Asian stocks. The market was ranged bound in mid-morning trade. The market extended gains in early afternoon trade with the Sensex hitting a fresh intraday high. It came off the higher level later before regaining strength. Market strengthened in range-bound mid-afternoon trade.
Minister of State for Agriculture KV Thomas on Wednesday said there is no need to import foodgrains as the country has adequate stocks.
Industrial production (IIP) rose a robust 10.4% in August 2009, government data showed on Monday. It is the fastest pace of growth in 22 months. Manufacturing output rose 10.2%. The government revised upwards industrial production growth for July 2009 to 7.2% from an earlier estimated 6.8%.
Arvind Virmani, chief economic adviser at the Finance Ministry, on Tuesday said the economy can expand 7% in 2009/10, and the Reserve Bank of India (RBI) must weigh the trade-off between growth and inflation when it reviews policy settings later this month. The forecast for the fiscal year ending March is higher than 6% estimated by the RBI and private analysts, and the 6.3% predicted by government's Planning Commission.
Planning Commission deputy chairman Montek Singh Ahluwalia said on Monday industrial growth is set to improve in the second half of the 2009/10 fiscal year. Finance Secretary Ashok Chawla said he expects trend in industrial production to continue and expects better numbers in September 2009. Abhijit Sen, a member of the government's Planning Commission said industrial output will not slow down in coming months. He, however, said farm output is expected to be lower by 2.5% in 2009/10 from the previous year.
Prime Minister Manmohan Singh said on Sunday that the worst is over for the Indian economy, and measures to control the sharp rise in food prices are taking effect. Singh, also said he was confident the harvest will be normal, despite the weakest monsoon since 1972 that has ravaged rice and sugarcane fields. Singh had said earlier the Indian economy is likely to grow at 6.3 to 6.5 % in the fiscal year to March 2010, or a seven-year low. He said economic stimulus measures will continue since the economy is not operating at full capacity.
Commerce and Industry Minister Anand Sharma said on Tuesday Indian exporters still face weak demand from Europe and the United States, so they are setting their sights on new markets. Many domestic sectors are experiencing double-digit growth despite the drop-off in exports, he said.
C. Rangarajan, chairman of the prime minister's Economic Advisory Council, today, 14 October 2009, said the Reserve Bank of India is unlikely to revise benchmark interest rates when it reviews monetary policy later this month. RBI holds its quarterly policy review on 27 October 2009. He said the economy would grow 6-6.5% with an upward bias in the year to March 31, 2010. Rangarajan forecast inflation to touch 5-6% by then.
He later said that the Reserve Bank of India can continue with its present easy monetary stance as long as inflationary pressures are moderate. He also said the central bank would first have to stop injecting liquidity, and then consider draining off excess cash.
Meanwhile, the IPO of Indiabulls Power was subscribed 8.49 times at 14:00 IST on second day of the issue on Tuesday. Indiabulls Power, a unit of Mumbai-based developer Indiabulls Real Estate, is developing five thermal power plants in western and central India, with total capacity of 6,600 megawatts, and will use the issue proceeds to fund two projects. The issue closes on Thursday, 15 October 2009.
The company has allotted 6.11 crore shares to anchor investors at Rs 45 per shares, at the top end of the Rs 40 to Rs 45 price band for the IPO.
Stock and sector-specific activity may dominate trade in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Lower interest rates and pay hike for government employees has boosted auto sales this year after last year's slowdown in demand. Government employees have started receiving the balance 60% of their wage arrears as per the recommendations of the VIth Pay Commission.
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.
Banks are seen reporting a sedate growth in core lending. On the flip side, PSU banks will benefit from treasury gains amid volatility in prices of government securities during the quarter.
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 bounced back on Wednesday from the previous session's decline, with soothing earnings results from Intel and ASML prompting investors to pick up riskier assets such as equities. The key benchmark indices in France, Germany and UK were up by between 1.21% to 1.27%.
Asian stocks rose on Wednesday after a better- than-estimated sales forecast from Intel Corp. boosted technology shares, offsetting a decline among financial companies. Key benchmark indices in China, Hong Kong, South Korea, Singapore and Taiwan rose by between 1.07% to 1.95%.
China's exports declined at the slowest pace in nine months, helping government efforts to sustain the recovery in the world's third-biggest economy. Shipments dropped 15.2% in September 2009 from a year earlier, the customs bureau said compared with a 23.4% slide in August 2009.
But, Japan's Nikkei average lost 0.16% on Wednesday, dented by a slide in bank shares such as Mizuho Financial Group after their US peers fell ahead of earnings reports from several major banks this week.
The Bank of Japan kept markets guessing on Wednesday on the future of its support for corporate finance, avoiding any reference to the measures in a statement after its latest policy review. The central bank had been tipped to decide whether it would start withdrawing support for corporate finance, despite government criticism that the economy was still unstable.
Although it made no reference to funding measures in its statement, the central bank repeated its assessment that financial conditions were increasingly showing signs of improvement. It left its policy rate unchanged at 0.10%, as a widely expected, and upgraded its view on the economy, saying it was recovering.
Trading in US index futures indicated Dow could gain 77 points at the opening bell today, 14 October 2009.
US stocks slipped on Tuesday as disappointing sales from Johnson & Johnson stirred jitters about the strength of earnings, snapping the S&P 500's six-day winning streak. The Dow Jones industrial average declined 14.74 points, or 0.15 % to end at 9,871.06. The Standard & Poor's 500 Index slipped 3 points, or 0.28% to 1,073.19. But the Nasdaq Composite Index inched up just 0.75 of a point, or 0.04 % to 2,139.89.
Johnson & Johnson beat Wall Street's earnings expectations, but reported revenue that was below forecasts, sending its shares down 2.4%.
Intel, which supplies chips to around 80% of the world's personal computers, provided a strong outlook for the rest of the year, even as third-quarter profits slid 7.8%. The results which hit the market after trading hours on Tuesday surpassed Wall Street's expectations, helped by a return of consumers to the PC market. Its shares gained 4.3% after-hours in the US, with other major tech stocks also higher.
A key data due later in the day today, 14 October 2009, is US retail sales for September 2009. A broad-based increase in sales would indicate consumers are becoming more confident that the economy is rebounding. A decline would show households are relying on stimulus measures to justify spending.
Closer home, a section of the market is 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.
At 14:20 IST, the BSE 30-share Sensex was up 197.17 points or 1.16% to 17,223.84. The Sensex rose 231.72 points at the day's high of 17,258.39 in early afternoon trade, its highest since 21 May 2008. The barometer index rose 91.23 points at the day's low of 17,117.90 in early trade.
The S&P CNX Nifty was up 49.50 points or 0.98% to 5,103.75. It hit a high of 5,125.85 its highest since 21 May 2008.
The market breadth, indicating the overall health of the market was strong. On BSE, 1612 shares advanced as compared with 1053 that declined. A total of 92 shares remained unchanged.
Among the 30-member Sensex pack, 23 rose while the rest fell.
The BSE Mid-Cap index rose 1.62% and the BSE Small-Cap index rose 1.43%.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 0.22% to Rs 2171.80 after Monday's 3.19% gain. The stock came off the day's high of Rs 2,195. Anil Dhirubali Ambaini group (ADAG) Chairman Anil Ambani called on Sunday, 11 October 2009, for a renewed effort to end a bitter feud with his brother Mukesh Ambani triggered by the carve-up of up a vast family business stretching from energy to telecommunications and financial services. The stock was volatile. It hit a high of Rs 2195 and a low of Rs 2153.10.
Anil Ambani said in a statement he believed all disagreements can be sorted out in a constructive, cordial and conciliatory manner, and called for a generous heart, a willing mind and accommodating spirit to resolve issues.
Their latest dispute is over a deal for Mukesh Ambani's Reliance Industries to sell gas to Anil Ambani's Reliance Natural Resources (RNRL) at below-market rates as agreed in a 2005 family settlement to divide the business following their father's death in 2002. The dispute has landed in the Supreme Court (SC). Anil Ambani said on Sunday the contentious gas dispute is a large national issue and can only be resolved through the SC.
Reliance Industries (RIL) said it welcomes Anil Ambani's call to make a renewed effort to resolve, reconcile and reciprocate and said it hopes that it is a positive change in the negative, calumnious and malafide campaign launched by ADAG against RIL.
RIL, last week, announced liberal 1:1 bonus issue. Both the bonus and the dividend are applicable to shareholders of the erstwhile Reliance Petroleum, which has been merged with RIL. Meanwhile, a sharp year on year fall in refining margins will weight on Q2 September 2009 results of RIL.
Oil exploration stocks rose as the crude surged on Wednesday to a 2009 high of $75.12 a barrel after Oil Producing and Exporting Countries (OPEC) increased its world energy demand forecast and the weaker dollar boosted the the appeal of commodities. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.
India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 1.35%. ONGC has bagged over a third of the 70 blocks offered under India's eighth New Exploration Licensing Policy (NELP 8), amid luke-warm response towards the bidding round. ONGC bid for 25 blocks and was awarded 11 offshore and two onshore concessions.
Cairn India rose 6.32%. Cairn India, a unit of Cairn Energy, won 2 offshore blocks in the auction. India's second biggest state-run oil exploration firm by revenue Oil India rose 0.39%. Oil India won 5 offshore blocks in the auction.
Nearly half of 70 blocks offered found no bidder, with 76 bids submitted for 36 exploration blocks, D.N. Narasimha Raju, joint secretary in the oil ministry said on Monday.
PSU OMCs fell as higher crude oil prices will increase under-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. HPCL, BPCL and Indian Oil Corporation (IOC) fell by between 2% to 3.73%.
Metal stocks rose on strong domestic demand. India's largest private sector steel maker by sales Tata Steel rose 4.04%. 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.
Among other metal stocks, National Aluminum Company, Hindalco Industries, Sterlite Industries rose by between 2.28% to 5.74%.
Steel Authority of India rose 2.2% on reports the company is considering buying coking coal mines in Australia, Indonesia and Mozambique with an Indian government joint venture.
India's largest engineering and construction firm by sales Larsen & Toubro rose 1.72% after it got orders worth Rs 966 crore.
India's largest power equipment maker by sales Bharat Heavy Electricals rose 3.21% on expectations of good Q2 September 2009 result.
Auto stocks rose on expectations of strong Q2 results. Higher volumes and increase in profit margins due to lower input costs are seen boosting the bottom line of auto firms in Q2 September 2009. India's largest tractor maker by sales Mahindra & Mahindra rose 5.87%. Total sales 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 top small car maker by sales Maruti Suzuki India rose 0.65% on bargain hunting after a recent sharp fall in the counter. 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.
India's largest truck maker by sales Tata Motors rose 4.72%. The company said during market hours on Friday it has raised $750 million through an issue of global depositary receipts (GDRs) and convertible bonds. The company said it will use the funds to repay debt taken for acquisition of Jaguar Land Rover (JLR).
Tata Motors said the GDRs were issued at $12.54 each -- a 1.5% discount to Thursday's closing price of Rs 589.25 on NSE. The convertible notes were issued at a 7.5% conversion premium over the GDR price with a yield to maturity of 5.5%.
Total domestic automobile sales in the country in the first half of the financial year 2009-10 rose by 14.51% year-on-year to 57,82,920 units, according to automobile sales figures released by the Society of Indian Automobile Manufacturers (Siam). The jump in sales for the April-September period came from the double-digit growth posted by the passenger vehicle segment (comprising cars and sports utility vehicles) which grew by 13.46%, by the 15.68% spurt in two-wheeler sales and by an increase of 12.37% in sales of three-wheelers
Subhash Projects & Marketing jumped 3.45% after the company won an order worth Rs 212 crore for setting up a sewerage network in Kanpur, Uttar Pradesh.
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