The key benchmark indices jumped in early trade on higher Asian stocks. Hopes of a pick-up in the pace of economic reforms also supported the market. The BSE 30-share Sensex was up 92.44 points or 0.57%. Metal and banking stocks led the gains. Energy major Reliance Industries (RIL) jumped on reports the firm is close to announcing a major overseas acquisition. The market breadth was strong.
Prime Minister Manmohan Singh said on Sunday, 8 November 2009, that the government would push through legislative changes, including in the insurance sector which foreign players are eyeing. Singh also said his government would take steps in the 2010/2011 fiscal year to wind down economic stimulus measures for Asia's third largest economy. He said there is a need to develop long-term debt markets, deepen corporate bond markets, strengthen the insurance and pensions sectors, improve futures markets for better price discovery and regulation. He also said the government would accelerate the sale of stakes in state-run companies.
The government plans to introduce in parliament by December 2009 bills proposing the raising of foreign stake limits in insurers to 49% from the present 26% and opening up the pension sector to private and foreign firms. It will also propose a law to cut its holding in top lender State Bank of India to 51%
The prime minister said growth in the next fiscal year, assuming a normal monsoon season, was expected to be more than 7% compared with a 6.5% forecast for the 2009/2010 fiscal year. The government has a medium-term target of 9% growth per annum, needed to help reduce widespread poverty. Singh said the Indian economy grew 6.7% in 2008/2009 with the help of an economic stimulus package.
The timing of the withdrawal of stimulus steps for India's economy will be decided when it becomes clear the economy is recovering, but there will be no fresh stimulus, Finance Minister Pranab Mukherjee said on Sunday.
Last month, while announcing the monetary policy the Reserve Bank of India signalled an interest rate hike was imminent, citing inflationary pressures. It also started tightening some bank credit.
Asian stocks climbed on Monday after modest gains on Wall Street Friday, 7 November 2009. The key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.23% to 1.07%. But China's Shanghai Composite fell 0.2%.
Trading in US index futures indicated Dow could gain 34 points at the opening bell on Monday, 9 November 2009.
US stocks rose in a choppy trading session on Friday, lifted by several broker upgrades that offset disappointing data showing the unemployment rate rose to its highest in more than 26 years. The Dow Jones industrial average gained 17.46 points, or 0.17%, to end at 10,023.42. The Standard & Poor's 500 Index rose 2.67 points, or 0.25 %, to 1,069.30. The Nasdaq Composite Index added 7.12 points, or 0.34 % to close at 2,112.44.
The economic data came in worse than expected. The labour department said employers cut 1,90,000 jobs in October 2009 and the unemployment rate jumped to 10.2%, its highest level in more than 26 years. In other data, wholesale inventories fell 0.9% in September 2009 and consumer borrowing fell by $14.8 billion in September.
Meanwhile, the Group of 20 finance ministers and central bankers pledged on Saturday, 7 November 2009, to prepare strategies to end emergency support for their economies, but to keep the aid flowing until recovery was assured. The world's biggest economies - the European Union, the United States and Japan - are either expected to or already have emerged from recession in the third quarter.
This has prompted a discussion on when to start cutting back on the trillions in public support pledged to cushion the worst economic downturn since World War Two to maintain credibility of fiscal policies with markets and consumers. Officials from the world's 20 biggest developed and emerging economies said at the end of talks in the small Scottish town of St. Andrews that while the economy has improved, recovery was still uneven and depended on policy support.
At 10:20 IST, the BSE 30-share Sensex was up 92.44 points or 0.57% to 16250.72. The Sensex rose 116.85 points at the day's high of 16275.13 in early trade. The Sensex rose 32.51 points at the day's low of 16190.79 in early trade.
The S&P CNX Nifty was up 20.15 points or 0.42% to 4816.30.
The market breadth, indicating the overall health of the market was strong. On BSE, 966 shares advanced as compared with 235 that declined. A total of 29 shares remained unchanged.
From the 30 share Sensex pack, 23 stocks rose and rest fell.
The BSE Mid-Cap index rose 0.83% and the BSE Small-cap index gained 1.09%.
Energy major Reliance Industries (RIL) rose 1.44% to Rs 1984.90 on reports the firm is close to announcing a major overseas acquisition. The likely target is a part of the assets owned by troubled petrochemical major LyondellBasell, which is undergoing reorganisation under the protection of a US court, reports suggest.
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.
Banking shares rose on hopes of financial sector reforms. India's largest private sector bank by net profit ICICI Bank rose 0.72% even as its ADR fell 0.19% on Friday 6 November 2009. 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 0.25% as its ADR rose 1.21% on Friday.
India's largest bank by net profit State Bank of India (SBI) rose 1.35%. State Bank of India said on Monday it had entered into an agreement with T. Rowe Price to sell a 6.5% holding each in UTI Asset Management Company and UTI Trustee Company. State Bank currently holds 25% in each of the companies and after the sale its holding would be reduced to 18.5%, it said in a statement.
SBI announced after market hours on Friday 6 November 2009 it has revised downwards interest rates on deposits by 25-50 basis points for a few maturities effective from 9 November 2009. 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.
Punjab National Bank rose 2.16% after bank said on Monday it will sell 6.5% stake in each in UTI Asset Management and UTI Trustee Co to T. Rowe Price. The stake sale in the asset management company will fetch the state-run lender Rs 163 crore.
Bank of Baroda rose 1.19% after bank said on Monday it signed a definitive agreement to sell 6.5% stake each in UTI Asset Management Co and UTI Trustee Co to T. Rowe Price. The bank's shareholding in both these companies will fall to 18.5% after the divestment, Bank of Baroda said in a statement to the stock exchange.
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 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.
Metal stocks rose on a strong domestic demand . Hindalco Industries, Hindustan Zinc and Sterlite Industries rose by between 1.23% to 1.57%.
National Aluminium Company rose 0.73%, The company recently 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 third straight day on reports major steel producers have posted strong sales volumes for the month of October 2009. Steel Authority of India (Sail) rose 1.57%. 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 1.06% after jumping 3.08% on Friday, 6 November 2009 after company said on Friday steel sales at its Indian operations rose 38% to 462,000 tonnes in October 2009 over October 2008.
JSW Steel rose 1.99%. 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.
Plethico Pharmaceuticals gained 1.86% after the company's US unit Natrol Inc got current good manufacturing practices certification from Natural Products Association.
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