The key benchmark indices recovered from the day's low and were trading flat in early afternoon trade. Positive Asian stocks aided recovery. The BSE 30-share Sensex was up 1.99 points or 0.01%, off close to 115 points from the day's high and up close to 60 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 today, 15 October 2009.
IT stocks faltered on a firm rupee. Index heavyweight Reliance Industries held firm. Rate sensitive realty and banking stocks gained despite slight rise is weekly inflation data. Capital goods, power, cement stocks rose. The market breadth was strong. Hindalco Industries gained after raising foreign investment limit and on fund raising plans.
The market pared gains soon after an initial surged 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. The market slipped into the red shortly. The Sensex moved between positive and negative zone in mid-morning trade. Market recovered from the day's low in early afternoon trade.
The wholesale price index rose 0.92 % in the 12 months to 3 October 2009 above previous week's annual rise of 0.7 % the government announced at 12:00 IST today. Food articles index rose 13.34% as on 3 October. The government revised inflation to wek ended 8 August to -0.37% from a fall of 1.53%.
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 13.50 times at 12:00 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 0.19% to 1.77%.
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 Dow could rise 9 points at the opening bell 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 12:20 IST, the BSE 30-share Sensex was up 1.99 points or 0.01% to 17,233.10. 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 61.57 points at the day's low of 17,169.54 in mid-morning trade.
The S&P CNX Nifty was down 3.85 points or 0.08% to 5,113.85. 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, 1370 shares advanced as compared with 1093 that declined. A total of 88 shares remained unchanged.
Among the 30-member Sensex pack, 14 rose while the rest fell.
The BSE Mid-Cap index rose 0.9% and the BSE Small-Cap index rose 0.94%.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 1.05% to Rs 2,201. 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 Ambani 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.
IT stocks fell on a stronger rupee. IT bellwether Infosys Technologies fell 2.25% 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 45.91 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 1.72%. 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 1.39% even as its ADR rose 3.64% on Wednesday.
Polaris Software Lab rose 0.61% after the company acquired Chennai-based Laser Soft Infosystems for a consideration of Rs 52 crore.
India's largest power equipment maker by sales Bharat Heavy Electricals rose 1.3% on expectations of good Q2 September 2009 result. The company's Q2 result is due on 23 October 2009. Meanwhile, as per reports the company may set up a factory with Indian Railways to manufacture electrically powered trains.
But, India's largest engineering and construction firm by sales Larsen & Toubro fell 0.33%. The company on Wednesday announced it got orders worth Rs 966 crore.
Among other capital goods stocks, BEML, ABB, Praj Industries and Siemens rose by between 0.34% to 2.16%.
India's largest aluminum maker by sales Hindalco Industries rose 1.11% after company's board approved raising foreign Institutional Investors (FIIs) investment limit to 40%.
The board has also approved raising of long term finance by way of qualified institutional placement (QIP) / global depository receipts and / or other securities with or without green shoe option upto Rs. 2,900 crore instead of earlier approval of Rs. 2,400 crore.
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 2.1%.
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 3.12%.
India's largest private sector bank by net profit ICICI Bank rose 0.13% as its ADR rose 2.96% on Wednesday. The bank last week reduced auto loan rates by 50 basis points.
India's second largest private sector bank by net profit HDFC Bank was flat. The 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.
But, India's largest dedicated housing finance firm HDFC fell 0.1%. 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.
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.
Shares of diversified firm Grasim fell 1.04%. The company said on 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 rose 1.24%. 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 0.05% to 1.05%.
Power stocks rose on strong response to Indiabulls Power's IPO. Reliance Power, Torrent Power and CESC rose by between 0.74% to 3.9%.
India's largest thermal power generator by sale NTPC rose 1.84%. The company said on Wednesday it has signed a joint venture agreement with state-run Coal India to develop the Brahmini and Chichro Patsimal coal mining blocks in eastern India. The mines will supply coal to NTPC's projects at Farakka and Kahalgaon.
After meeting the coal requirements of NTPC's projects, the JV may also consider setting up an integrated thermal power plant, NTPC said in a statement
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, Omaxe, rose by between 0.16% to 1.29%.
Euro Multivision was trading at Rs 61.90, a discount of 17.47% over the initial public offer price of Rs 75 per share. The stock debuted at at Rs 70, a 6.66% discount over the issue price.
Gruh Finance gained 3.29% after net profit rose 29% to Rs 10.59 crore in Q2 September 2009 over Q2 September 2008.
GVK Power & Infrastructure jumped 3.60% after its board of directors approved a proposal to raise up to Rs 1800 crore in one or more tranches.
Nilkamal gained 2.23% after net profit soared 181.8% to Rs 13.13 crore in Q2 September 2009 over Q2 September 2008.
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