The key benchmark remained regained strength after slipping into the red for a brief period in mid-afternoon trade. Firm global stocks supported market. The BSE 30-share Sensex was up 52.57 points or 0.35% up close to 75 points from the day's low and off close to 170 points from the day's high. Capital goods stocks fell. Reliance Industries (RIL) extended Thursday's losses after its exploratory partner Hardy Oil & Gas said it has plugged and abandoned an exploratory well on the D9 block on the East Coast of India. IT stocks rose.
The S&P CNX Nifty regained the psychological 5,000 mark after falling below that mark in mid-afternoon trade. Nifty rose above 5000 mark in early trade today after settling below that level on Thursday.
The BSE Sensex was trading below the psychological 17000 mark after breaching that mark at the onset of the trading day. The Sensex had fallen below that mark on Thursday. The market breadth was positive.
Intraday volatility was high. The market surged at the onset of the trading session, recovering from a 3% slide in the past three days, on firm global stocks. It pared gains in mid-morning trade. The market regained strength in early afternoon trade before paring gains. A high volatility was witnessed later Market regained strength after slipping into the red for a brief period in mid-afternoon trade.
The government's borrowing programme has been going on smoothly in a non-disruptive manner and the finance ministry was not pushing to raise the hold-to-maturity cap for banks, an official said on Friday. A hike in the hold-to-maturity limit for banks' debt holdings could protect them from mark-to-market risks and stimulate demand for bonds.
On the political front, the ruling Congress party-led alliance won two state polls on Thursday and was set to form the government in a third, a result that gives more room for the alliance to push economic reforms. Elections were held last week in Maharashtra, northern Haryana and Arunachal Pradesh in polls seen as a major test for the Congress coalition after a strong victory in Lok Sabha polls in May this year. The party retained power in Maharashtra and Arunachal Pradesh, and was expected to hold on to power in Haryana.
On the macro front, the RBI in its report on trend and progress of banking in India for 2008/09 released on Thursday, 22 October 2009, said managing the heavy government borrowing in a non-disruptive way is a major challenge for the central bank, as hardening bond yields run counter to its low rate policy needed for lifting growth
Inflation based on the wholesale price index (WPI) rose 1.21% in the year through 10 October 2009, higher than previous week's annual rise of 0.92%, date released by the government on Thursday showed. Within the WPI, the food articles index rose 13.34%. The government revised upwards inflation for the year through 27 August 2009 to a much smaller fall of 0.21% from an estimated 0.95% decline.
The Prime Minister's economic advisory council said on Wednesday that it sees inflation at around 6% by the end of the current fiscal year to March 2010. 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 2009 at 10.4%.
The RBI pumped in massive liquidity in the banking system in the past one year or so to help revive the domestic economy in the aftermath of the global financial crisis. While as exit from the loose monetary policy is imminent, speculation on the bourses is the timing of the exit policy. The RBI is expected to keep its benchmark lending and borrowing rates on hold at a quarterly monetary policy review on 27 October 2009.
RBI on Thursday said financial reforms need to be carried out in a re-calibrated manner after the global financial crisis following Lehman Brothers' collapse last year. The central bank also sounded a note of caution on securitisation and asset derivative deals.
Stock and sector-specific activity may dominate trade on the bourses 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 amid sluggish credit offtake. 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 stocks rose on Friday, reversing most of their previous session's drop, with French food group Danone rising after results pleased investors. The key benchmark indices in France, Germany and UK were up by between 0.91% to 1.02%.
The euro zone flash composite output index rose to 53.0 in October, according to Markit, up from 51.1 in September and a 22-month high for the index. Economists had been expecting a reading of 51.6, according to FactSet. The services business activity index rose to 52.3, up from 50.9 in September. Manufacturing PMI rose to 50.7, from 49.3 a month ago. The flash PMI's indicate that the Euro zone economy has entered Q4 on a strong note, with growth accelerating in both manufacturing and services, said Chris Williamson, chief economist at Markit.
A closely-watched gauge of German business sentiment posted a slightly smaller-than-expected rise in October. The Munich-based Ifo Institute's October climate index rose to 91.9 from 91.3 in September, news reports said. The median forecast was for a rise to 92.3, according to Action Economics
British gross domestic product unexpectedly shrank by 0.4% in the third quarter, according to data from the Office for National Statistics. It was the sixth straight contraction for the U.K. economy. Economists had been expecting a modest 0.1% rise. Compared to the third quarter of 2008, GDP declined 5.2%
Asian shares nudged higher on Friday on the back of upbeat earnings reports from the United States while the dollar resumed a broad slide after a Fed official indicated US interest rates would remain low. The key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.15% to 1.71%.
Auto makers and banks led rally in Chinese stocks on a view the economic recovery would continue. The Shanghai Composite rose 1.85%.
China's exports are likely to resume year-on-year growth this quarter as global trade slowly recovers, a Ministry of Commerce researcher said in remarks published on Friday. Exports have been falling from year-earlier levels since last November. In September 2009, the decline narrowed to 15.2% from 23.3% in August 2009.
That improvement was likely to continue because of the low base of comparison in the October-December quarter of 2008, researcher Liu Xueqin was quoted as saying by the International Business Daily, a Ministry of Commerce newspaper
Meanwhile, China's banking watchdog has reportedly instructed lenders to carry out quarterly stress tests as part of a drive to strengthen credit controls and liquidity management. A recent circular from the China Banking Regulatory Commission orders banks to measure their capacity to withstand liquidity risks and work out a corresponding strategy to handle those risks
US index futures pared gains. Trading in US index futures indicated the Dow could see a flat opening on Friday, 23 October 2009.
US markets rallied on Thursday as investors cheered some better than expected earnings and shrugged off a disappointing jobless report. Financials led the rally. The Dow jumped 131.95 points, or 1.3%, to 10,081.31. The S&P 500 index rose 11.51 points, or 1.1%, to 1,092.91. The Nasdaq rose 14.56 points, or 0.7%, to 2,165.29.
In the day's economic news, jobless claims rose 11,000 to a seasonally adjusted 531,000 last week, more than expected. An index of leading economic indicators rose 1% in September 2009, touching a two-year high and more than the 0.8% expected.
Nobuo Tanaka, executive director of the IEA, said in a interview to a news agency on Thursday that a rapid rise in oil prices could hamper the global economic recovery. He, however, added that it was too early to say if that scenario was unfolding now. The IEA has previously expressed concerns of a possible price spike if insufficient investment is made to add new sources of oil to keep up with demand. Crude is hovering close to a one-year high.
Closer home, the supply of paper by Indian firms appear limitless, raising concerns that additional share sales will suck liquidity from the secondary equity market. As per reports, Indian firms have garnered about $9 billion (Rs 32,400 crore at the current exchange rates) through sale of shares and convertible bonds to institutional buyers since April 2009. Indian companies are taking advantage of a surge in liquidity to recapitalize and fund capital expenditure after being starved of cash last year.
Most of these companies - from industries ranging from liquor and spirits to infotech - issued equity shares to a select group of investors by way of qualified institutional placement or QIP. If the enabling resolutions passed by the companies are any indication, Indian firms are gearing up to raise $15 billion (Rs 69,427 crore) in the next six months. The list includes Hindalco (Rs 2,900 crore), JSW Steel ($1 billion), India Cements ($100 million), Essar Oil ($2 billion), Tata Steel (Rs 5,000 crore), Jet Airways ($ 400 million) and Bharat Forge ($150 million).
Unlisted Reliance Infratel announced on 22 September 2009 its intention to raise Rs 5,000 crore from the primary market. Divestment of state-run firms by the government may also increase the supply of paper in the market.
The government on Monday approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country's resolve to speed up reforms and raise more resources for social schemes. On Monday, Trade Minister Anand Sharma said the Union Cabinet had approved a 5% stake sale in NTPC, and 10% in, an unlisted power producer. On Friday, 16 October 2009, Prime Minister Manmohan Singh said many state-run firms are eager to list their shares in the stock market as it would help unlock their value.
The government has approved a follow-on public offering of 20% of state run Steel Authority of India, the steel minister said on Wednesday, 21 October 2009. The Government of India owns nearly 86% of Sail.
At 14:20 IST, the BSE 30-share Sensex was up 52.57 points or 0.35% to 16849.28. The Sensex rose 217.03 points at the day's high of 17,006.77 in early trade. The barometer index fell 24.54 points at the day's low of 16,765.20 in mid-afternoon trade.
The S&P CNX Nifty was up 17.65 points or 0.35% to 5006.25.
The market breadth, indicating the overall health of the market was positive. Breadth weakened from strong breadth in early trade. On BSE, 1455 shares advanced as compared with 821 that declined. A total of 92 shares remained unchanged.
Among the 30-member Sensex pack, 17 rose while rest fell.
The BSE Mid-Cap index rose 1.19% and the BSE Small-Cap index rose 0.78%.
Energy major Reliance Industries fell 3.73% to Rs 2054 after Hardy Oil & Gas shares plunge 35.3 % in London after the firm says it has plugged and abandoned an exploratory well on the D9 block on the East Coast of India, with the well having encountered poor reservoir sands. Hardy holds a 10% participating interest in the D9 block, which is located in the Krishna Godavari basin on the east coast of India. Reliance Industries is the operator and holds a 90% stake.
The company told the Supreme Court on Thursday it had no knowledge of the pact between its chairman Mukesh Ambani and his younger brother Anil. The stock came off the day's high of Rs 2154. On the third day of hearing on the gas supply dispute between the group firms of the Ambani brothers, Justice R.V. Raveendran asked RIL to satisfy the bench that the MoU, signed in 2005, was not between two companies, but two individuals. The bench also enquired if the pact, which has not been made public till date, could be produced before the court.
Mukesh Ambani-controlled Reliance Industries, India's top conglomerate, is fighting with Reliance Natural Resources, led by younger brother Anil Ambani, over the terms of a deal to sell gas to Reliance Natural at below the price set by the government. Reliance Industries has been presenting initial arguments in the case before the Supreme Court since Tuesday, saying the private deal between the Ambani brothers is not binding on the company, and it can sell the gas only at the government-approved price.
The government, which has the power to decide who can buy gas and at what price, had filed an application asserting it is the rightful owner of the disputed gas.
Anil Ambani's Reliance Natural Resources claims the contract is valid and wants the court to direct Reliance Industries to supply it with 28 mmscmd of gas for 17 years at almost half the government-set price of $4.2 per mmBtu.
The Supreme Court will resume hearing the case next Tuesday, with Reliance Industries expected to conclude its initial arguments by Thursday, 29 October 2009. The court will then hear arguments by Reliance Natural, following which it will consider a petition by the government to become a party to the dispute.
India's largest power maker by sales Bharat Heavy Electricals fell 1.74% despite strong Q2 resutls. Net profit rose 39.31% to Rs 857.88 crore in Q2 September 2009 over Q2 September 2008, surpassing market expectations. The company announced result during market hours today.
India's largest engineering and construction firm by sales Larsen & Toubro fell 2.47%, extending Thursday's 3.86% fall, on muted sales growth in Q2 September 2009. L&T's net profit rose 26.1% to Rs 580.4o crore on 3.54% rise in total income to Rs 8136.39 crore in Q2 September 2009 over Q2 September 2008. The result hit the market during trading hours on Thursday.
L&T attributed the muted sales growth to delay in clearances of infrastructure projects from some clients and lower offtake of industrial and machinery products. The company said order backlog is at Rs 81623 crore, which is 2.4 times its revenue of Rs 33926.37 crore in the year ended March 2009, giving strong revenue visibility.
The company is likely to see order inflows rise over 30% in 2009/10 and sales rise of 15%, Chief Financial Officer Y.M. Deosthalee said on Thursday at the time of announcing Q2 results.
L&T said the recent surge in crude oil prices may boost orders from the hydrocarbon sector. The company said revival of infrastructure development in the Gulf augurs well as the company has a significant presence in the region.
India's largest thermal power producer by sales NTPC rose 0.2% after its net profit rose 1.96% to Rs 2151.95 crore in Q2 September 2009 over Q2 September 2008 . The government on Monday approved a 5% stake sale in NTPC.
IT stocks rose on increased optimism over the growth outlook for the sector. India's largest software services exporter TCS rose 1.43%. The company after market hours on 16 October 2009, reported stronger-than-expected Q2 September 2009 results. Consolidated net profit as per US accounting standards rose 6.81% to Rs 1623.90 crore on 3.16% growth in revenue to Rs 7435.10 crore in Q2 September 2009 over Q1 June 2009.
TCS has a good business pipeline and is pursuing 20 to 25 large outsourcing deals, chief executive N. Chandrasekaran said at the time of announcing Q2 results. The management is seeing signs of recovery but it believes it will be slow. The discretionary spent is still tight but there is spent seen in banking, finance services and insurance (BFSI), retail, utility and pharma verticals, TCS said at a conference call after the results. However, a continuous improvement in volumes cannot be expected, it said. The company is seeing stability in demand environment. The management expects to maintain margins at current levels provided there is no adverse rupee movement.
India's third largest software services exporter Wipro rose 1.41% even as its ADR fell 1.26% on Thursday. Wipro has bagged a 10-year total outsourcing contract from Delhi International Airport (DIAL) to provide information technology infrastructure and services for the Indira Gandhi International Airport (IGIA).
IT bellwether Infosys Technologies rose 1.9% as its ADR rose 0.75% on Thursday. 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 9 October 2009. Infosys, however, said strengthening rupee is a big concern for its earnings.
A foreign brokerage said in a recent note that it expects 2010 IT budgets to be strong given a significant pent-up demand.
India's largest cigarette maker by sales ITC rose 3.92% after net profit rose 25.81% to Rs 1009.91 crore in Q2 September 2009 over Q2 September 2008. The result which hit market during market hours, surpassed market expectations.
A surge in profit margins and a decent growth in revenue boosted the bottom line. ITC's operating profit margin surged to 36.59% in Q2 September 2009 from 31.4% in Q2 September 2008
Dr Reddy's Laboratories rose 4.84% after company said on Friday its consolidated quarterly profit rose 176.8 % in Q2 September 2009 over Q2 September 2008, helped by the launch of new generics in the overseas market.
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