The key benchmark indices pared gains in early afternoon trade as index heavyweights Larsen & Toubro and ICICI Bank came off the day's high. The BSE 30-share Sensex was up 137.15 points or 0.83% off close to 85 points from the day's high. Strong Asian stocks supported market. Construction, IT, cement and realty stocks gained. But FMCG stocks fell. Oil exploration firms rose on rise in crude oil prices. The market breadth was strong.
Market opened on a strong note on firm Asian markets and overnight surge in US stocks triggered by positive economic data in the US. It pared gains in early afternoon trade.
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 0.11% to 1.54%.
Trading in US index futures indicated Dow could fall 13 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 12:20 IST, the BSE 30-share Sensex was up 137.15 points or 0.83% to 16201.05. The Sensex rose 219.96 points at the day's high of 16283.86 in mid-morning 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 38.20 points or 0.8% to 4803.75..
The market breadth, indicating the overall health of the market was strong. On BSE, 1927 shares advanced as compared with 528 that declined. A total of 60 shares remained unchanged.
From the 30 share Sensex pack, 24 stocks rose and rest fell.
The BSE Mid-Cap index rose 1.96% and the BSE Small-cap index gained 2.1%.
Energy giant Reliance Industries rose 0.84%. 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 0.52%. The company on Thursday 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%. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 0.42%.
India's largest private sector bank by net profit ICICI Bank rose 0.39% to Rs 848 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. The stock came off the day's high of Rs 863.
Rate sensitive realty shares rose on bargain hunting. Unitech, Omaxe, Akruti City DLF and Indiabulls Real Estate rose by between 0.57% to 3.46%.
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.
IT stocks rose on better than expected Q2 results. India's largest software company by sales Tata Consultancy Services (TCS) rose 0.63%. The company recently secured a 150 million pounds software implementation contract for 15 years from Cardiff city council, UK.
India's second largest software company by sales Infosys rose 0.18% as its ADR rose 1.05% on Thursday. Infosys said on Thursday its chairman's wife sold company shares worth $92 million for setting up a venture capital fund.
Sudha Murthy, wife of Infosys co-founder and chief mentor N.R. Narayana Murthy, sold 20 lakh shares, or about 22 % of her total holding, on the Bombay Stock Exchange on Thursday, the company said in a filing. Last month, Narayana Murthy, who co-founded Infosys with six other software engineers in 1981 with $250, had sold a total of 800,000 shares worth $37 million to set up a venture capital fund which he plans to set up in India. The company said the Murthys have confirmed they did not plan to raise further capital for the fund.
India's third largest software company by sales Wipro rose 1.12% as its ADR rose 1.36% on Thursday. The company said on Thursday it had agreed to buy some personal care businesses of Yardley for about $45.5 million, adding to its consumer goods business. Wipro said it had signed an agreement with UK-based Lornamead group, which owns the Yardley brand, for the businesses in Asia, the Middle East, Australasia and some African markets.
The rupee strengthened to its highest in more than a week on Friday boosted by gains in regional shares, which could prompt foreign fund inflows into the local sharemarket. The partially convertible rupee was at 46.83/84 per dollar stronger than its previous close of 47.0150/0250. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.
FMCG stocks fell on profit taking. United Spirits, ITC, Hindustan Unilever, fell by between 0.04% to 1.38%.
Construction and cement shares rose on government's thrust on infrastructure. Among cement stocks, ACC, Ambuja Cements, Ultratech Cements and Grasim Industries rose by between 0.17% to 1.49%.
Among construction socks, Hindustan Construction Company, Era Infra Engineering, Gammon India, Punj Lloyd, Jaiprakash Associates rose by between 1.06% to 5.15%.
India's largest engineering firm by sales Larsen & Toubro (L&T) rose 1.38% to Rs 1563.50 off the day's high of Rs 1580 after a large block deal was hit of 42.10 lakh shares at Rs 1566.30 on BSE.
Higher government spending on infrastructure sector in the Union Budget 2009-2010 to provide a stimulus to the economy, may result in increase order flow for construction. The government has set a target of spending $20 billion a year on road construction.
Aurobindo Pharma rose 2.44%, after the company received approval from US Food & Drug Administration for Lamotrigine tablets in 5 miligram and 25 miligram strengths.
IFCI rose 3.20% on reports the government has shortlisted three consultants for advising it on stake sale in the project financier.
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