Key benchmark indices extended surge to strike fresh intra-day highs in mid-afternoon trade as buying demand in battered index pivotals intensified following six-days of sharp market slide. Firm Asian and European stocks and weakness in US dollar against major rivals laid a solid platform for today's rally. Moreover comments by the Finance Minister Pranab Mukherjee on Tuesday, 3 November 2009, that there are no immediate plans to place curbs on capital inflows, also boosted sentiment. The BSE 30-share Sensex was up 463.42 points or 3.01%, up 380.39 points from the day's low and off just 6.67 points from the day's high
Montek Singh Ahluwalia, the deputy chairman of Planning Commission, said today that high food price inflation is a concern but it should moderate by the end of this year. Inflation as measured by wholesale price index rose 1.51% in the year through 17 October 2009 but food price index was up 12.85%, government data showed on 29 October 2009.
Montek Singh added that revival of foreign investment flows into India is a welcome move and the country can absorb them. The deputy chairman of Planning Commission said he was not concerned about the surge in foreign portfolio investments.
With short-term interest rates very low, global traders have turned to borrowing funds cheaply in the US and then reinvesting the proceeds in equities and commodities, looking to lock in higher returns and benefiting from further erosion in the dollar. The dollar edged down on Tuesday after hitting a one-month against a basket of major currencies. The Dollar Index, which measures the currency's value against six major units including the euro, edged down to 76.253 from 76.320.
Today's spurt was broad based with all sectoral indices on BSE logging gains. Heavyweight stocks Reliance Industries, ICICI Bank, ONGC and Bharti Airtel, all participated in the rally. Realty, metal and banking shares were in the forefront of the rally. Auto stocks gained riding on the back of robust monthly sales for October 2009. Telecom pivotals pared early gains. The market breadth was strong.
A bout of early volatility was witnessed in early trade. After an initial surge triggered by higher Asian stocks, the market soon pared gains. The market soared in mid-morning trade after a report showed that business activity among services companies in India climbed to its highest level in more than year in October 2009 as new work orders, activity and employment expanded at faster rates. The market soared in afternoon trade. Sustained buying in index pivotals kept indices firm in mid-afternoon trade.
India's economy is expected to expand by 6.3% in the year to March 2010, the Planning Commission said in a report on Wednesday. The plan panel expects wholesale price inflation to go beyond 4-5% by end of March 2010.
The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to a 13-month peak of 56.78 in October 2009 after having dropped to a three-month low of 54.37 in September 2009. The index has been above 50, which separates expansion from contraction, for six months. Before that, it shrank for six months, hitting a trough of 40.3 in February 2009.
The business expectations sub-index recorded its fastest expansion since March 2008, at 79.47 in October 2009, compared with 74.82 in September 2009. Better market conditions, promotional strategies and good reputations were the main reasons for the increased confidence, the survey said
Meanwhile, power generation in October 2009 rose 4.5% from a year ago, slowing from a 6% rise in the previous month as coal supply dwindled
Coming back to stocks, Finance Minister's comments have put to rest speculation of government clamping capital controls after a deluge of foreign portfolio inflows this year. Brazil, another emerging economy, had last month slapped a 2% tax on foreign investments into equities and fixed income instruments.
European markets saw a firm start today, 4 November 2009 as investors braced for the Federal Reserve's statement on interest rates and the economy. Key benchmark indices in Germany, France and UK were up by between 0.53% and 1.10%.
Asian markets were trading higher today, 4 November 2009 led by banks and mining companies, as Korea Exchange Bank reported better-than-estimated profit and gold prices climbed to a record. Key benchmark indices in Japan, China, Hong Kong, Singapore, South Korea, and Taiwan were up by between 0.42% and 1.76%.
The World Bank on Wednesday raised its forecasts for Chinese growth this year and projected a slightly faster pace of expansion in 2010, but it said Beijing did not need to embark on major policy tightening at this stage. Gross domestic product will increase 8.4% this year and 8.7% in 2010 on the back of massive fiscal and monetary stimulus, the bank said in a regular update on China's economy.
Worries about a looming bubble in China's real-estate market are misplaced, as gains in home prices have not dramatically outpaced rising incomes on a nationwide level, the World Bank said in a report. The view stands in contrast to recent talk that China could be repeating the policy errors that led to property bubbles in Japan in the 1980s and more recently in the US and UK. Still, the World Bank cautioned that there was a lack of clarity on home affordability and that better data were needed.
US markets ended on a mixed note on Tuesday, 3 November 2009 as technology stocks struggled after a downgrade on Intel and caution prevailed before a Federal Reserve statement on interest rates and the economy. The Dow Jones industrial average was down 17.53 points, or 0.18%, to 9,771.91. However the S&P 500 index added 2.53 points, or 0.24%, to 1,045.41 and the Nasdaq Composite index rose 8.12 points, or 0.4%, to 2,057.32.
In economic data, factory orders rose 0.9% in September 2009, after a 0.8% drop in August 2009. Economists were expecting a gain of 1%.
Billionaire investor Warren Buffett's Berkshire Hathaway on Tuesday agreed to buy Burlington Northern Santa Fe Corp in a deal that values the railroad company at $34 billion, Berkshire's biggest deal ever.
It is widely expected that the US Federal Reserve at a regular two-day policy meeting on 3-4 November 2009 will hold interest rates at their lowest-ever range of 0% to 0.25%, where they stood since December 2008. However, there's plenty of unease about the contents of the Fed's accompanying policy statement. A section of the market sees the Fed altering its statement to a less dovish tone. There is speculation that the Fed might drop or alter its pledge to keep rates low for an extended period.
Financial markets are also looking for clues from other central banks about when stimulative policy may have to come to an end. The European Central Bank (ECB) meets on Thursday, 5 November 2009. No rate change is expected and few expect it to offer clues on when it might change tack. The Bank of England (BOE) meets the same day and the market is waiting to see if it tops up its quantitative easing programme after the economy unexpectedly contracted between July-September 2009 period.
Governments and central banks around the world have injected trillions of dollars in the past year or so to pull the world out of a most severe recession since the 1930s Great Depression.
The International Monetary Fund on Tuesday, 3 November 2009, projected higher debt levels for the world's major economies, but said the global economic recovery was still too fragile to begin withdrawing fiscal support.
Australia's central bank on Tuesday raised its key policy rate for a second month in a row, hiking it by a quarter of a percentage point to 3.50%, as expected. The Reserve Bank of Australia left some analysts speculating that policy could be on hold in December 2009 after it said that interest rate rises in October 2009 and November 2009 would work to temper inflation and ensure a sustainable upswing in the economy.
Trading in US index futures indicated Dow could rise 48 points at the opening bell today, 4 November 2009.
Closer home, Finance Minister Pranab Mukherjee said on Tuesday that the government has to continue with its fiscal stimulus and is confident of attaining it medium-term fiscal targets. He said non-farm credit growth remained an area of concern and said banks have been told to enhance credit growth.
The summer-sown crop output is set to shrink by more than initial forecasts after a worst monsoon rains in 37 years, raising the spectre of higher food prices and its further dependence on imports of rice and sugar. Output of rice planted in the monsoon months from June could record a bigger-than-expected fall of 18% on year, while cane output was likely to drop by 9%, the government's first estimates of the summer-sown crop showed on Tuesday. The government issues four estimates of harvests as it gathers more data.
Mukherjee said returning the economy to growth of 9% would take more than a year, adding that the poor monsoon and then floods in some parts of the country had obvious implications for agriculture and food prices. Mukherjee said he was confident of meeting medium-term fiscal targets, and expected higher tax receipts in the second half of the fiscal year ending March 2010.
Mukherjee said it was imperative for the government to pursue reforms, including in the financial sector, to make the economy more competitive and the regulatory system more efficient and more sensitive to new developments. The finance minister said the government had identified a few more state-run companies that it could sell stakes in, with the timing of any sale dependent on market conditions.
A report prepared by ministry of finance indicated that the economy is showing a distinct sign of pickup, although uncertainty related to the poor summer monsoon and the global economic outlook remain. The economic growth slowed to 6.7% in the fiscal year through March 2009 after three straight years of at least 9%, and government officials have said growth in the current year is on track for roughly 6.5%.
A news agency on 3 November 2009, quoted G. Bhujabal, economic advisor in the Ministry of Commerce and Industry as saying that he expects declining trend of exports reversing by December 2009 or January 2010. Exports declined 13.8% in September 2009 to $13.6 billion. Exports fell 28.5% in the April-September 2009 period to $77.9 billion.
Automobile sales rose 29.89% to 154,476 units in October 2009 over October 2008 as softened lending rates and attractive benefits offered by companies pushed the aggregate sales of the industry.
The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian companies, fell to 54.5 in October 2009 from 55 in September 2009. A reading above 50 means activity expanded during the month. Growth in domestic new orders may be beginning to suffer from the impact of a drought, but stronger foreign demand was helping to cushion the blow, HSBC senior Asian economist Robert Prior-Wandesforde said.
The Reserve Bank of India at its monetary policy review, on 27 October 2009, left its key rates unchanged, but raised the wholesale price-based inflation projection for end-March 2010 sharply to 6.5% with an upward bias, from 5 % earlier.
The IMF said on 29 October 2009 the economies of India, China and Australia were recovering especially rapidly, suggesting it notices growing pressures for authorities there to tighten monetary policy ahead of others in the region. It called the three economies special cases, while adding a tightening of monetary policy seemed unnecessary elsewhere in the region in the near future.
It also advised Asian central banks not to raise interest rates only to calm asset price growth, saying lifting rates ahead of advanced economies could attract carry trade-type capital inflows and aggravate asset price pressures.
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.
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 recently 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.
The government has approved a follow-on public offering of 20% of state run Steel Authority of India, the steel minister said on 21 October 2009. The Government of India owns nearly 86% of Sail. Also the government gave its approval for 15% follow on public offer for Rural Electrification Corporation on 29 October 2009.
As per provisional data, foreign funds sold stocks worth a net Rs 874.26 crore on 3 November 2009 whereas domestic funds bought equities worth a net Rs 751.95 crore.
At 14:25 IST, the BSE 30-share Sensex was up 463.42 points or 3.01% to 15,868.36. The Sensex opened 83.03 points higher at 15,487.97, also its day's low so far. It rose 470.09 points at the day's high of 15,875.03 in mid-afternoon trade.
The S&P CNX Nifty was up 137.50 points or 3.01% to 4701.40
The market breadth, indicating the overall health of the market was strong. On BSE, 1564 shares advanced as compared with 1089 that declined. A total of 76 shares remained unchanged.
The total turnover on BSE amounted to Rs 3885 crore by 14:25 IST as compared with Rs 2917 crore by 13:25 IST
Among the 30-member Sensex pack, 26 gained while the rest of them slipped. Grasim (down 0.35%), Sun Pharmaceuticals (down 0.53%), edged lower from the Sensex pack.
India's largest private sector aluminium maker by sales Hindalco Industries jumped 7.51% to Rs 117.35. It was the top gainer from the BSE Sensex pack. The stock had tumbled more than 10% on 3 November 2009 after net profit declined 52.2% to Rs 344.05 crore on a 13.2% decline in sales to Rs 4892.56 crore in Q2 September 2009 over Q2 September 2008. The result was announced on Saturday, 31 October 2009.
India's largest private sector steel maker by sales Tata Steel spurted 4.96%. The company's Vice Chairman was quoted as saying that its European unit Corus is expected to be operating at full capacity by the end of the fiscal year in March. Corus, Europe's second-largest steelmaker, operated at 80% capacity in October 2009, he added.
India's largest firm by market capitalisation and oil refiner Reliance Industries (RIL) jumped 4.96% to Rs 1910.10. The stock gyrated in a band of Rs 1840- 1910 so far in the day. The hearing on a gas dispute case between the Mukesh Ambani led Reliance Industries (RIL) and Anil Ambani led Reliance Natural Resources (RNRL) resumes today, 4 November 2009, after a break since last week. RNRL rose 1.88%
In the previous hearing on 27 October 2009, the Supreme Court had observed that gas is a national resource owned by the Government and, therefore, subject to Government policy. The Court also asked why the brothers cannot settle the matter through arbitration or mutual consensus. The two brothers are fighting a legal battle in the apex court over division of natural gas produced by RIL from KG-D6.
Reports that the Comptroller and Auditor General of India (CAG) has set up a team to examine the expenses Reliance Industries (RIL) incurred on its D6 natural gas field in the Krishna-Godavari (KG) basin in the Bay of Bengal had triggered a near 6% slump in the stock on Tuesday, 3 November 2009. The director general of hydrocarbons has been accused by Reliance Natural Resources (RNRL), controlled by Mukesh Ambani's estranged brother Anil Ambani, of approving an increase in RIL's capital expenditure on the D6 exploration block from $2.4 billion (Rs11,280 crore) to $8.8 billion. This block is where RIL made one of the biggest discoveries of natural gas in India.
The government on 27 October 2009 allocated additional 50 million cubic metres a day (mmscmd) of gas from Reliance Industries-operated east coast block D6. Power plants and refineries will get the bulk of Reliance Industries' gas from the Krishna-Godavari basin beyond the previously allotted 40 million metric standard cubic metres per day (mmscmd).
The empowered group of ministers (eGoM) also made some allotments for Reliance's petrochemical plants and refineries.
India's largest oil exploration firm by market capitalisation Oil & Natural Gas Corporation (ONGC) rose 1.50%. As per recent reports, the company is planning to enter the nuclear power space. ONGC, which last year announced plans to enter uranium mining, is now seriously exploring the possibility of setting up nuclear power plants in the country, reports added.
India's largest private sector bank by net profit ICICI Bank gained 4.52%. The bank's net profit rose 2.6% to Rs 1040.13 crore on a 12.7% decline in total income to Rs 8480.73 crore in Q2 September 2009 over Q2 September 2008. The result was announced during trading hours on 30 October 2009.
India's largest bank by net profit State Bank of India (SBI) gained 1.30% to Rs 2130, recovering sharply from day's low of Rs 2059.10. The bank's consolidated net profit rose 28.29% to Rs 3,133.16 crore on 22% rise in consolidated income to Rs 33,101.65 crore in Q2 September 2009 over Q2 September 2008. The results were announced on 31 October 2009.
India's largest dam builder by sales Jaiprakash Associates (JAL) surged 7.33% on recent reports its subsidiary Jaypee Infratech (JIL) is preparing to raise Rs 2,500-3,000 crore through an initial share sale. JAL is eyeing a valuation of Rs 20,000-25,000 crore and expects to divest 10-15% in JIL through the public offer.
Meanwhile, Jaiprakash Associates' cement shipments rose 41.3% to 0.816 million tonnes in October 2009 over October 2008. The announcement was made before market hours today, 4 November 2009.
Construction stocks saw across the board rally on the back of fresh buying. Hindustan Construction Company (up 6.31%), Nagarjuna Construction (up 6.19%), Gammon India Construction Company (up 0.96%), and IVRCL Infrastructure (up 3.72%), gained.
India's second largest power generation company by sales Tata Power Company lost 1.35% to Rs 1292.25 and was the top loser from the Sensex pack. The company's net profit declined 30.1% to Rs 183.19 crore on 16.33% drop in total income to Rs 1796.60 crore in Q2 September 2009 over Q2 September 2008. The company announced the results after market hours on 29 October 2009.
Telecom pivotals pared early gains as fears that the ongoing price war will suppress profitability resurfaced. India's second largest telecom company by sales Reliance Communications (RCom) fell 0.24% to Rs 165.40, off day's high of Rs 169.90. The company launched a per-second billing plan on Tuesday, 3 November 2009 under which it will charge 1 paise per second for all local and national calls.
RCom reported 51.66% decline in its consolidated profit at Rs 740 crore in Q2 September 2009 over Q2 September 2008. Consolidated revenue increased to Rs 5,703 crore in the quarter under review from Rs 5,645 crore in the year-ago period. The result was declared on 31 October 2009.
India's largest cellular services provider by sales Bharti Airtel rose 1.57% to Rs 304.65. Though the stock rose, it is still off its day's high of Rs 309.50. Bharti Airtel on Friday introduced a 'pay per second' plan across the country. In this plan, called Freedom Plan, Airtel customers will be charged one paise per second for all local and STD calls to Airtel numbers and 1.20 paise per second for local and STD calls to other networks.
Meanwhile, Singapore Telecommunications has bought additional 1.52% stake in Bharti Airtel and will pay up to Rs 3008.4 crore in three installments ranging over 18 months. In a notice to Singapore Stock Exchange, SingTel said it has entered into a conditional share purchase agreement with Bharti Group entity to buy an additional 7,30,000 issued shares in Bharti Telecom, a promoter company of Bharti Airtel.
Chambal Fertilizers & Chemicals gained 2.48% after one of the promoter group companies hiked stake in the firm. The company made this announcement during trading hours today, 4 November 2009.
Mahindra Satyam jumped 4.14% after the company won an IT outsourcing contract from Swedish defence and aerospace firm, Saab, to develop solutions in India for the global defence and homeland security market. The announcement was made after market hours on Tuesday, 3 November 2009.
Aurobindo Pharma rose 5.18%, extending gains for the second consecutive day, after the company posted net profit of Rs 128.29 crore in Q2 September 2009 as against a net loss of Rs 38.50 crore in Q2 September 2008. The company declared its results after market hours on Friday, 30 October 2009.
Advanta India surged 4.73% on bargain hunting after the stock plunged more than 27% in the preceding ten trading sessions.
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