Market extends gains

 Continued strong buying by foreign institutional investors, firm global markets and expectations of good Q2 September 2007 results from corporate India, took the market up further last week.

 

The 30-share BSE Sensex gained 645. 68 points or 3.63% to 18,419.04, while the S&P CNX Nifty gained 242.40 points or 4.6% to 5428.25 in the week ended Friday, 12 October 2007.

 

On Monday (8 October 2007), the market drifted lower on speculation of mid-term polls after Congress President Sonia Gandhi on Sunday, 7 October 2007, indicated her party's readiness to face elections by saying those opposing the nuclear deal were enemies of development and peace. The 30-share BSE Sensex, on that day, lost 281.97 points, or 1.59%, to 17,491.39 points. The S&P CNX Nifty ended down 100.75 points, or 1.94%, to 5,085.10.

 

On Tuesday (9 October 2007), the Sensex touched a milestone of 18,000 after worries of an early election eased. The Congress-led United Progressive Alliance (UPA) government at the centre and its communist allies agreed to meet again on 22 October 2007 to resolve a row over a nuclear deal with the United States. On that day, the 30-share BSE Sensex ended up 788.85 points, or 4.51%, to 18,280.24 and the broader based S&P CNX Nifty ended up 242.15 points, or 4.76%, to 5,327.25.

 

On Wednesday (10 October 2007), the record-breaking trend continued on the bourses, with easing of political worries and firm Asian markets. The 30-share BSE Sensex, on that day, rose 378.01 points, or 2.07%, to 18,658.25. The broader based S&P CNX Nifty was up 114.2 points, or 2.14%, to 5,441.45.

 

On Thursday (11 October 2007), the market recouped its lost ground in afternoon trade and rallied sharply to at all-time high. The market was quiet in early trade as the second quarter performance of Infosys Technologies disappointed investors. On that day, the 30-share BSE Sensex ended up 155.82 points, or 0.84%, to 18,814.07. The broader based S&P CNX Nifty ended up 83.4 points, or 1.53%, to 5,524.85.

 

On Friday (12 October 2007), the three-day bull-run came to a halt as mixture of profit booking and global negativity acted against the market uptrend. The 30-share BSE Sensex, on that day, fell 395.03 points, or 2.10%, to 18,419.04. The broader based S&P CNX Nifty was down 96.6 points, or 1.75%, to 5,428.25. Finance Minister P Chidambaram's statement that the steep rise in stock price was worrisome also pulled down bourses on that day.

 

Chidambaram on Friday, 12 October 2007 expressed surprise over the steep rise in stock market and said it was being driven by ample fund flows from abroad. When Chidambaram spoke, the market was down more than 1.5% and it quickly extended its losses to more than 2% on worries the government may act to counter foreign inflows.

 

The BSE IT index fell 1.10% to 4,687.79 in a week, following a slump in software stocks after Infosys Technologies reported its Q2 results on 11 October 2007, which lagged behind the estimates of investors.

 

Tata Consultancy Service, India's largest software services firm by sales, slid 0.66% to Rs 1063.10 in the week. Infosys, the second-largest computer services provider, fell 2.98% to Rs 1930.45. Wipro, the third biggest software firm, gained 5.49% to Rs 486.45. Satyam Computer Services, the fourth biggest software firm, declined 1.32% to Rs 438.60 in the week.

 

Infosys Technologies' net profit rose 19.87% to Rs 1074.00 crore on 18% rise in sales to Rs 3862.00 crore in Q2 September 2007 over Q2 September 2006.

 

The BSE Capital Good index was the major gainer in the week. This index gained 5.53% to 16,614.69 in a week, led by major gains in Larsen & Toubro (L&T) and Bharat Heavy Electrical (Bhel).

 

Larsen & Toubro (L&T) gained 8.79% to Rs 3360.75 in the week. It secured a Rs 693 crore contract to set up sulphur plants for Indian Oil Corporation. The company also won $60 million order for setting up a methyl amines & dimethyl formamide plants for Methanol Chemical Company in Saudi Arabia.

 

The company has agreed to buy out the switchgear business of Tamco in Malaysia for $108 million. The acquisition will be completed by March 2008.

 

Bharat Heavy Electrical (Bhel) moved up 8.72% to Rs 2341.35 in the week. The company bagged a Rs 394 crore contract from Rashtriya Ispat Nigam for setting up a captive power plant at Vizag Steel Pant in Andhra Pradesh.

 

Other stock which was in action the week was Reliance Industries, which rose 3.34% to Rs 2566.85 in a week. The stock declined on Friday, 12 October 2007 on disappointment that an expected stock split or bonus issue was not announced at company's shareholders' meeting.

 

Reliance Energy grew 13.07% to Rs 1636.30 in a week. Some reports suggested that its subsidiary, Reliance Energy Transmission has bagged a transmission project worth Rs 2,000 crore.

 

ICICI Bank rose 1.56% to Rs 1053 and State Bank of India was virtually steady to end at Rs 1862.30 in a week. Both the banks have reduced interest rates on almost all types of loans to boost demand in festive season.

 

India's wholesale price index rose 3.26% in the 12 months to 29 September 2007, lower than the previous week's 3.42% rise, government data showed on Friday.

 

India's industrial output in August rose 10.7% from a year earlier, higher than upwardly revised annual growth of 7.5% in July due to mining, manufacturing and electricity production, data showed on Friday.