The key benchmark indices were trading marginally lower after hovering between the positive and negative terrain in mid-morning trade. The BSE 30-share Sensex was down 12.84 points or 0.07% off close to 130 points from the day's high and up cose to 20 points from the day's low. The BSE Sensex and S&P CNX Nifty hit their highest level in nearly 17 months at the onset of the trading session. IT stocks extended early fall on a strong rupee. Oil exploration stocks gained whereas PSU OMCs fell on rally in crude oil prices. Telecom stocks were mixed. Rate sensitive auto and banking stocks gained ahead of inflation data. The market breadth was strong.
The market was volatile. It pared gains after a firm start triggered by a strong rally in US stocks on Wednesday. The Dow Jones Industrial Average pushed above 10,000 for the first time in a year on better-than-expected reports from Intel and JPMorgan Chase. Market was trading marginally lower after hovering between the positive and negative terrain in mid-morning trade.
The government will today unveil headline inflation data for the year through 3 October 2009. Annual inflation rate slowed to 0.70% in the year through 26 September 2009 from 0.83% in the previous week.
C. Rangarajan, chairman of the prime minister's Economic Advisory Council said on Wednesday the Reserve Bank of India is likely to hold interest rates at a near decade-low in its policy review this month and the monetary stance can continue until inflationary pressures rise. Robust industrial growth could offset the impact of a 2 to 2.5% contraction in farm output due to weak monsoon, and help the economy grow between 6 and 6.5% in 2009/10, Rangarajan said.
Faster industrial output growth and rising inflationary pressures have strengthened case for an end to the RBI's accommodative monetary stance next year. Industrial output grew at its fastest pace in 22 months in August at 10.4 %.
Meanwhile, the IPO of Indiabulls Power was subscribed 10.67 times at 11:00 IST on last day of the issue today. 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.
Asian stocks advanced for a third day on Thursday after JPMorgan Chase & Co.'s earnings topped estimates and South Korean steel giant Posco raised its profit forecast. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.04% to 1.5%.
The Bank of Japan said Thursday that Japan's economy has started to pick up, and economic conditions in the nation are likely to improve gradually, according to the central bank's October report of Recent Economic and Financial Developments. The BOJ also said that while the overnight call rate has remained at an extremely low level and funding costs for firms have been more or less unchanged at low levels, the stimulative effects from low interest rates have been limited given the low level of economic activity and corporate profits. The BOJ voted Wednesday to leave its rates steady at 0.1%.
Lending by Chinese banks totaled 516.7 billion yuan ($75.68 billion) in September 2009, accelerating from 410.5 billion yuan in new loans issued in August 2009, according to data released Wednesday by the People's Bank of China. The new lending brings total loans issued in the first nine months of the year to 8.65 trillion yuan ($1.27 trillion), a rise of 149.1% on year.
Trading in US index futures indicated a flat opening of US stocks on Thursday, 15 October 2009.
US markets rallied and the Dow broke through the 10,000 mark for the first time since last October on Wednesday bolstered by strong earnings from JP Morgan. The S&P 500 & Nasdaq were also at new 2009 highs. Banks surged on the back of JP Morgan's earnings. The Dow gained 144.80 points, or 1.5%, to 10,015.86. The S&P 500 index added 18.83 points, or 1.8%, to 1,092.02. The Nasdaq Composite Index rose 32.34 points, or 1.5%, to 2,172.23.
JP Morgan's third quarter profit beat expectations. The bank's earning per share stood at 82 cents a share, up from 9 cents a share in the same quarter a year ago. The bank's net revenue was 7.5 billion dollar, an increase of 85% from last year.
A government report showed US retail sales, excluding auto purchases, rose for a second month. The data offered cautious optimism that spending could help support the economy as it struggles out of recession.
Back 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 11:20 IST, the BSE 30-share Sensex was down 12.84 points or 0.07% to 17,218.27. The Sensex rose 119.28 points at the day's high of 17,350.39 in early trade, its highest level since 20 May 2008. The barometer index fell 36.95 points at the day's low of 17,194.16 in mid-morning trade.
The S&P CNX Nifty was down 3.85 points or 0.08% to 5,113.30. It hit a high of 5152.25 in early trade, its highest level since 20 May 2008.
The market breadth, indicating the overall health of the market was strong. On BSE, 1316 shares advanced as compared with 920 that declined. A total of 73 shares remained unchanged.
Among the 30-member Sensex pack, 17 rose while the rest fell.
The BSE Mid-Cap index rose 0.86% and the BSE Small-Cap index rose 0.96%.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 1.09% to Rs 2,202. RIL is in advanced talks to acquire refinery and petrochemical units in the US and Europe and could finalise a deal by end-2009, Maurice Bannayan, senior vice president at Reliance Industries said on Wednesday.
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.
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 oil rose for the sixth straight session to near $76 a barrel on Thursday, touching its highest in a year after US industry data showed a surprise fall in crude stockpiles, suggesting that demand in the world's top oil consumer is recovering. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.
Cairn India rose 1.65%. Cairn India, a unit of Cairn Energy, won 2 offshore blocks in the auction. Cairn India, has secured loans worth $1.6 billion to fund its project in the western state of Rajasthan, potentially helping it accelerate development of its oilfields in the region. India's second biggest state-run oil exploration firm by revenue Oil India rose 0.16%. Oil India won 5 offshore blocks in the auction.
But, India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) fell 0.5%. ONGC has bagged over a third of the 70 blocks offered under the government'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.
Nearly half of 70 blocks offered under NELP 8 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 0.65% to 2.16%.
Crude oil for November delivery climbed as much as 78 cents, or 1% to $75.96 a barrel on the New York Mercantile Exchange.
IT stocks fell on a stronger rupee. IT bellwether Infosys Technologies fell 2.69% even as its ADR rose 2.77% on Wednesday. Infosys raised its earnings and revenue guidance in both dollar and rupee terms for the year ending March 2010 (FY 2010) at the time of announcing Q2 September 2009 results before trading hour on Friday, 9 October 2009.
Infosys, however, said strengthening rupee is a big concern for its earnings. The Indian rupee rose to its highest in more than a year as the dollar weakened in global markets. The partially convertible rupee was at 45.86 per dollar stronger than 46.13/14 per dollar on Wednesday. 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 fell 2.56%. A total of ten brokerages expect a between 6.8% fall to a 4.9% growth in TCS' consolidated net profit as per US accounting standards at between Rs 1416.30 crore to Rs 1595.40 crore in Q2 September 2009 over Q1 June 2009. Their expectations peg a between 0.4% to 3.8% growth in revenue at between Rs 7237.70 crore to Rs 7478.40 crore in Q2 September 2009 over Q1 June 2009. TCS unveils Q2 results on Friday, 16 October 2009.
India's third largest software services exporter Wipro fell 1.85% even as its ADR rose 3.64% on Wednesday.
. India's second largest mobile telecom services provider by sales Reliance Communications (RCom) rose 1.32% on bargain hunting reversing early slide .The stock fell close to 7% on Wednesday. As per reports, the Securities and Exchange Board of India (Sebi) has asked for details of the special audit ordered by the Department of Telecommunications ahead of launching an independent investigation on the issue. The audit report by special auditors Parakh & Company had found that RCom, which offers CDMA mobile services and recently launched GSM services, had under-reported revenues for the financial years 2006-07 and 2007-08 that, in turn, impacted licence and spectrum fees it pays the government.
But, India's largest cellular services provider by sales Bharti Airtel fell 0.5%. Bharti Airtel reported 10.32% decline in mobile user addition to 2.52 million mobile users in September 2009 over August 2009. For Bharti, this is the biggest month on month decline since the 22% drop the company saw in March 2005.
Chief Executive Manoj Kohli last week 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.
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 top small car maker by sales Maruti Suzuki India rose 0.39%. 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 1.25%. Tata Motors is planning to ramp up production of its Nano, billed as the world's cheapest car, by a fifth this month, Rajiv Dube, head of the company's passenger car business said on Wednesday. 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%.
Bajaj Auto rose 1.69% ahead of its Q2 September 2009 result today. Bajaj Auto is seen reporting a surge in net profit in Q2 September 2009 on higher vehicle sales and on a sharp surge in operating profit margins due to lower input costs
But, India's largest tractor maker by sales Mahindra & Mahindra fell 1.08% on profit taking after recent strong surge. 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.
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
Bank stocks rose on better than expected result by JP Morgan Chase & Co. India's largest bank by net profit and branch network State Bank of India rose 0.99%. As per reports, State Bank of India plans a series of investor presentations this week on the expected issue of a five-year dollar benchmark bond, an official at one of the banks managing the roadshow said on Monday. The bank's plans for a bond were first unveiled at the start of the month and would be the first from an Indian bank in the offshore G3 market since August 2007.
Among other PSU banks, Bank of India, Punjab National Bank, Union Bank of India, Bank of India and Bank of Baroda, rose by between 0.43% to 1.3%.
India's second largest private sector bank by net profit HDFC Bank rose 0.84% extending Wednesday's gains after bank said during market hours on Wednesday its net profit rose 30.2% to Rs 687.46 crore in Q2 September 2009 over Q2 September 2008. The results were more or less in line with market expectations.
India's largest private sector bank by net profit ICICI Bank was flat at Rs 920.60 even as its ADR rose 2.96% on Wednesday. The bank last week reduced auto loan rates by 50 basis points.
India's largest dedicated housing finance firm HDFC rose 1.59%. HDFC, after market hours on Monday said net profit rose 24.27% to Rs 663.94 crore in Q2 September 2009 over Q2 September 2008. The results beat market expectations. Its ADR rose 2.9% on Wednesday.
The central bank will reportedly hike the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM) category. Banks do not have to make any mark-to-market provisions on securities held this basket if prices of securities fall. Provisions have to be made out of profit and therefore, impact a bank's bottom line. Yields on ten-year government bonds have risen sharply this year. Bond prices and bond yields are inversely related.
Indian banks can put bonds equal to 25% of the value of deposits in their HTM accounts. The market expectations is for an increase in the ceiling by up to 2 percentage points, possibly at a quarterly monetary policy review on 27 October 2009.
Tata power company rose 0.36% on reports company is exploring options to raise about $200-250 million to part finance its expansion plans.
Container Corporation of India slipped 0.70% after net profit declined 8.6% to Rs 204.35 crore in Q2 September 2009 over Q2 September 2008.
Parsvnath Developers rose 2.75% after consolidated net profit jumped 183.7% to Rs 62.42 crore Q2 September 2009 over Q2 September 2008.
KCP Sugar & Industries Corporation rose 3.43% after net profit surged 210.6% to Rs 17.02 crore in Q2 September 2009 over Q2 September 2008.
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