The key benchmark indices remained firm in mid-morning trade on firm Asian markets and overnight surge in US stocks triggered by positive economic data in the US. The BSE 30-share Sensex was up 211.13 points or 1.31%. Telecom, auto, banking and realty stocks gained. Oil exploration firms rose on rise in crude oil prices. The market breadth was strong.
The government on Thursday mandated more sales of shares by state-run firms and changed the rules on how it can use the proceeds, as it seeks to boost revenues and rein in a widening budget deficit.
The government said all profitable, listed state-run firms must have at least 10% of their shares in public hands, and unlisted firms that had a positive net worth, no accumulated losses and a net profit over the past three years should list.
The government said the funds from the listings would be spent on social schemes for three years. Currently, proceeds are put in a National Investment Fund and only its dividends are used for funding social security schemes. The government also said it was debating the need for changes in tax laws including on saving schemes, capital gains for non-residents and tax pacts with other nations, as part of reforms to boost revenues. The government has said it will maintain fiscal stimulus until the recovery is secure.
On Thursday, data showed food inflation remained firm at 13.39% for the 12 months to 24 October 2009. The government said it will release monthly wholesale price index (WPI) for October 2009 on 12 November 2009 and there will be no more weekly headline inflation data.
Asian stocks rose on Friday after Australia's central bank more than tripled its economic-growth forecast and reports showed US unemployment claims and worker productivity beat estimates. The key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.65% to 1.68%.
Trading in US index futures indicated Dow could fall 16 points at the opening bell on Friday, 6 November 2009.
US stocks rose sharply on Thursday, with the S&P 500 up four straight days and the Dow closing above 10,000, after a rise in business productivity and a drop in jobless claims boosted confidence in the economy, while strong results from Cisco bolstered tech stocks. The Dow Jones industrial average was up 203.82 points, or 2.08 % to end at 10,005.96. The Standard & Poor's 500 Index was up 20.13 points, or 1.92 %, at 1,066.63. The Nasdaq Composite Index was up 49.80 points, or 2.42 % at 2,105.32.
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.
At 11:20 IST, the BSE 30-share Sensex was up 211.13 points or 1.31% to 16275.03. The Sensex rose 216.34 points at the day's high of 16280.24 in early trade. The Sensex rose 73.52 points at the day's low of 16137.42 in early trade.
The S&P CNX Nifty was up 67 points or 1.41% to 4832.55.
The market breadth, indicating the overall health of the market was strong. On BSE, 1775 shares advanced as compared with 451 that declined. A total of 53 shares remained unchanged.
From the 30 share Sensex pack, 26 stocks rose and rest fell.
The BSE Mid-Cap index rose 2.4% and the BSE Small-cap index gained 2.49%.
Energy giant Reliance Industries rose 0.9%. The Supreme Court on Thursday resumed its hearing on a gas dispute between the Ambani brothers after one of the judges on Wednesday withdrew from the Supreme Court hearing on gas dispute, citing potential conflict of interest. Reliance Industries' counsel Harish Salve recapitulated the arguments made by him in the past six days and asserted that the company had no choice but to follow the government's gas utilisation policy.
RIL's price for the gas from the K-G basin discovered and operated by it was subject to government approval and it cannot be a private arrangement between the two brothers, the counsel told the bench now consisting of Chief Justice K G Balakrishnan and Justices B Sudershan Reddy and P Sathasivam.
The High Court ordered RIL to supply gas to Reliance Natural Resources (RNRL) at a price lower than that fixed by the government. Both Ambani brothers approached the Supreme Court, aggrieved by diverse parts of the judgment. The government also entered the fray, adding to the complexity.
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.
Oil exploration stocks rose as crude oil traded above $80 a barrel today and, poised for a weekly gain, on optimism fuel demand will increase amid improved prospects for an economic recovery in the US, the world's biggest energy consumer. Crude oil for December 2009 delivery rose as much as 47 cents, or 0.6%, to $80.09 a barrel on Asian electronic trading. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.
Cairn India rose 1.02% after the company signed a pact with Reliance Industries for supply of crude oil. India's second biggest state-run oil exploration firm by revenue Oil India rose 1.13%. But, India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) fell 0.62%.
Telecom stocks rose for the second straight day on reports the Department of Telecom (DoT) will seek a fast-track approval from the finance ministry to slash the annual licence fee by up to a third for telecom operators with large network presence. It will also propose to the finance ministry that all licence fee be exempted for landline services, reports suggest. Bharti Airtel and Reliance Communications rose by between 1.12% to 1.41%.
Rate sensitive realty shares rose on bargain hunting. Unitech, Omaxe, Akruti City DLF and Indiabulls Real Estate rose by between 1.03% to 4.77%.
Realty stocks had declined sharply recently after the RBI raised the provisioning requirements for loans to commercial real estate from 0.4% to 1% in its monetary policy review meet on 27 October 2009.
Auto stocks rose on jump in sales in October 2009. Low interest rates and attractive benefits offered by companies pushed the aggregate sales of the industry in October 2009. The auto sales figures were announced on 2 November 2009.
India's largest small car marker by sales Maruti Suzuki India rose 0.75% The company's total sales grew 32.4% to 85415 units in October 2009, compared with 64490 units posted in the same month a year ago.
India's largest tractor maker by sales Mahindra & Mahindra rose 0.33%. The company's overall sales climbed 32% in October this year to 18,410 units against 13,935 units in the same month last year. Mahindra and Mahindra (M&M) reportedly plans to launch a motorcycle next year. The company is also looking at acquisitions in the electronic scooter space. The auto major had entered the two-wheeler market market by acquiring the assets of Pune-based scooter manufacturer Kinetic Motor in 2008.
India's largest truck marker by sales Tata Motors rose 0.39%. Its total sales grew 18% to 20,011 units last month against 17,014 units in the same period last year.
India's second largest bike marker by sales Bajaj Auto rose 1.97% The company reported 51.06% rise in total two-wheeler sales to 2,49,974 units in October 2009 as compared with 1,65,477 units in the same period a year ago.
India's largest bike marker by sales Hero Honda Motors rose 0.72%. The company reported a marginal increase in October sales at 354,156 units as against 352,449 units in the same month last year
Banking shares rose on gains in American depository receipts (ADRs) overnight in US. India's largest private sector bank by net profit ICICI Bank rose 0.27% as its ADR rose 1.66% on Thursday. 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 second largest private sector bank by net profit HDFC Bank rose 1.03% as its ADR rose 2.04% on Thursday.
India's largest bank by net profit State Bank of India (SBI) rose 1.41%. 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.
Last week, the RBI did not relax mark-to-market rules for bank's debt holdings at a quarterly policy review on 27 October 2009. The market was been agog with talks over the past few days of the central bank hiking the ceiling on the portion of government securities that banks can park in held-to-maturity (HTM).
The central bank also decided to streamline provisioning requirement on non-performing assets. The RBI, asked banks to ensure by September 2010 that the total provisioning coverage against non-performing or bad loans aren't less than 70% of the outstanding amount.
Tata Steel, the world's eighth largest steelmaker by output rose 3% after company said on Friday steel sales at its Indian operations rose 38 % to 462,000 tonnes in October 2009 over October 2008.
Asian Paints rose 0.85%, after the company said one of the promoter group companies revoked a small portion of shares it had pledged earlier.
ITI rose 8.27% on reports Intel is planning to participate in bids invited by the firm to set up joint ventures.
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