The key benchmark indices regained strength in mid-afternoon trade supported by firm global stocks. Volatility was high. The BSE 30-share Sensex was up 110.56 points or 0.69% off close to 110 points from the day's high and up close to 100 points from the day's low. Metal and realty stocks edged higher. But FMCG and IT stocks fell. Index heavyweight Reliance Industries edged higher in volatile trade. The market breadth was strong.
The market surged in early trade on firm Asian markets and overnight surge in US stocks triggered by positive economic data in the US. The market remained range bound in mid-morning trade. It pared gains in early afternoon trade. The market soon came off the lower level. Volatility ruled the roost as the Sensex tumbled to a fresh intraday low in afternoon trade. Market regained strength in mid-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.
The Group of 20 finance ministers and central bankers start a meeting in Scotland on Friday seeking to firm up a plan to rebalance the world economy. Ahead of the meeting, British finance minister Alistair Darling said in an interview to a news agency that the G20 policymakers are agreed that it is too early to pull the plug on economic life-support packages as the global recovery is still fragile.
The top central banks have shown little inclination yet to choke off the extraordinary support given to economies shaken by global financial crisis but some have offered the first signs of changing tack. The Federal Reserve, European Central Bank (ECB) and Bank of England all left interest rates at record lows this week and the British central bank opted to pump yet more money into its economy.
ECB President Jean-Claude Trichet said on Thursday he expected the euro zone economy to recover at a gradual pace in 2010, after the central bank left rates at 1%, and signalled some of the bank's liquidity measures could soon be halted. The Bank of England (BoE) decided to pump another 25 billion pounds ($41 billion) into its economy on Thursday, taking its quantitative easing (QE) to 200 billion pounds in total, but slowed the pace of the programme. The BoE also left interest rates at a record low of 0.5% and said the prospect was for a slow recovery in the level of economic activity.
The Fed on Wednesday, 4 November 2009, expressed growing confidence that an economic recovery was building but stuck to its commitment to keep borrowing costs near zero for an extended period.
European shares rose on Friday, ahead of a key U.S. employment report, with banks and miners gaining. The key benchmark indices in France, Germany and UK were up by between 0.19% to 0.26%.
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 0.28% to 1.63%.
China's Ministry of Commerce on Friday said it would protect its industry's interests and accused Washington of double-standards in denouncing new US anti-dumping duties imposed shortly before a visit by President Barack Obama. It also called for Washington's swift recognition of China as a market economy.
The United States on Thursday slapped preliminary anti-dumping duties ranging up to 99% on $2.63 billion in Chinese-made pipes used in the oil and gas industry, in the biggest US trade action against China. That comes on top of counter-vailing duties on the same product, announced in September 2009. The preliminary Commerce Department decision came a week before US President Barack Obama heads to Asia on a trip that includes stops in Shanghai and Beijing.
Meanwhile, Japanese Prime Minister Yukio Hatoyama said on Friday he could not be optimistic about Japan's economic outlook. There is a chance the economy may worsen further, Hatoyama told an upper house budget committee meeting.
Japan's deputy prime minister Naoto Kan said on Friday the government will likely keep the budget for next fiscal year stimulative for Japan's economy. He said there is strong risk of Japan's economy experiencing a double-dip recession. His comments were in stark contrast to comments by Bank of Japan (BoJ) Deputy Governor Hirohide Yamaguchi that the chances of the economy experiencing a double dip are small. Yamaguchi said the economy continues to recover modestly.
Trading in US index futures indicated Dow could fall 8 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.
The US non-farm payrolls report due later today, 6 November 2009, may show 175,000 jobs cut in October 2009. While that would be an improvement on the 263,000 jobs lost in September 2009, the unemployment rate is tipped to rise from 9.8% to 9.9%, menacingly close to the psychologically key 10% level.
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 13:20 IST, the BSE 30-share Sensex was up 110.56 points or 0.69% to 16174.97. The Sensex rose 219.96 points at the day's high of 16283.86 in mid-morning trade. The Sensex rose 11.29 points at the day's low of 16075.19 in afternoon trade.
The S&P CNX Nifty was up 35.95 points or 0.75% to 4801.50.
The market breadth, indicating the overall health of the market was strong. On BSE, 1858 shares advanced as compared with 773 that declined. A total of 66 shares remained unchanged.
From the 30 share Sensex pack, 17 stocks rose and rest fell.
The BSE Mid-Cap index rose 2.13% and the BSE Small-cap index gained 2.01%.
Energy giant Reliance Industries rose 0.6% to Rs 1951.50. The stock hit a high of Rs 1973.95 and a low of Rs 1940. 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.
Rate sensitive realty shares rose on bargain hunting. Unitech, Omaxe, DLF and Indiabulls Real Estate rose by between 0.33% to 2.78%.
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 fell reversing early gains on a stronger rupee. India's largest software company by sales Tata Consultancy Services (TCS) fell 0.91%. 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 fell 0.36% even 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.
But, India's third largest software company by sales Wipro rose 0.45% 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 share market. 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 1.15% to 1.76%.
Metal stocks rose on strong domestic demand. Hindalco Industries, Hindustan Zinc and Sterlite Industries rose by between 0.52% to 2.33%.
National Aluminium Company surged 2.78%, after the company hiked the prices of aluminium products by Rs 1000 a tonne reflecting the recent uptrend in prices on the London Metal Exchange.
Steel stocks rose for the second straight day on reports major steel producers have posted strong sales volumes for the month of October 2009. Steel Authority of India (Sail) rose 1.8%. Sail has posted 28% growth in saleable steel volumes to 0.85 million tonnes in October 2009 over October 2008.
Tata Steel, the world's eighth largest steelmaker by output rose 3.56% after company said on Friday steel sales at its Indian operations rose 38% to 462,000 tonnes in October 2009 over October 2008.
But JSW Steel was flat after jumping 7.34% on Thursday. JSW steel's sales doubled to 0.4 million tonnes in October 2009 over October 2009.
Demand for steel remains strong auto, rural construction and infrastructure sectors. Also demand for construction grade steel has improved post monsoon season, and has resulted into higher sales. Another reason for the surge in sales in October 2009 was lower base effect, as last year demand dropped significantly owing to economic downturn. Most steel companies had cut production in October last year due to the global economic crisis and steep fall in demand.
Garware Offshore Services rose 1.68% after the company's platform vessel, M V Mana, won a two-year contract approximately worth Rs 22.5 crore a year in the north sea, from an exploration and production company.
Mangalam Timber Products advanced 2.76% after one of the promoter group companies hiked its stake in the firm.
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