Sensex, Nifty attain 22-month closing highs

The key benchmark ended slightly higher to hit 22-month closing highs as firm Asian stocks and expectations of strong Q3 December 2009 results, underpinned sentiment. The BSE 30-share Sensex rose 14.89 points or 0.08%, up close to 65 points from the day's low and off close to 90 points from the day's high. European stocks were weak. IT and metal stocks fell. But FMCG, healthcare and realty stocks rose. The market breadth was marginally positive.
The market came off higher level soon after an initial surge that pushed the key benchmark indices to their highest level in 22 month. The market soon came off the lows. However, the intraday recovery proved short lived. The Sensex slipped into the red morning trade. The barometer index regained positive zone only to slip into the red again. The market once again regained positive zone in early afternoon trade after moving between the positive and negative terrain. The market once again slipped into the red in mid-afternoon trade. The market regained positive zone in late trade.
Business activity among Indian services companies expanded at its fastest pace in 15 months in December 2009 and helped create more jobs, but the outlook for 2010 is wary, a survey released on Wednesday showed. The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 57.41 in December, its highest since September 2008, after slowing to 55.20 in November. The index has been above 50, separates expansion from contraction
However, the business expectations sub-index slowed for a second straight month to 65.56 in December, to its lowest level in 10 months. It stood at 71.58 in November. The degree of positive sentiment fell sharply since November, as a greater proportion of companies reported that they expect activity in 12 months' time to be broadly similar to current levels, HSBC Markit said in the report.
Meanwhile, the Indian industry on Tuesday urged the government to continue with the fiscal stimulus at least for six months, as withdrawing them could choke faster recovery of the economy. In the customary pre-budget meeting with Finance Minister Pranab Mukherjee, industry representatives also demanded tax reforms through introduction of a Goods and Services Tax and reduction of the fiscal deficit. Leading industry bodies also wanted the easy monetary stance to continue. The Reserve Bank has already turned hawkish after food inflation neared 20% by end of December 2009
An adjustment in policy interest rates is not warranted for now but liquidity tightening may be needed, the prime minister's economic adviser C. Rangarajan said recently. Kaushik Basu, chief economic adviser to the finance ministry, also said on Monday that no monetary policy tightening measures are expected now. Rangarajan said the inflation rate could rise above 6% by the end of the fiscal year in March. The central bank's inflation projection stands at 6.5% with an upward bias for end-March, while some private economists expect it to reach about 8%. Some policymakers have said recently that food prices may drop in coming months and ease the pressure on the central bank to hike rates.
The latest data showed that the rate of growth in manufacturing rose for the first time in three months in December 2009, with activity reaching its highest since May 2009 on sharp rises in new work and output. The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian companies, rose to 55.6 in December from 53.0 in November. The reading was the strongest since May's 55.7, which was the strongest in 2009.
Data last month showed that corporate advance tax payments for the October-December 2009 quarter shot up sharply, suggesting a higher profit growth in corporate sector in the third quarter (October-December) of the current fiscal. Corporate advance tax payments for the quarter were up 44% to Rs 48,300 crore against a 3.7% decline in April-June quarter and a 14.7% increase in July-September quarter. The company-wise break-up of advance tax collection suggests a broad-based recovery with automobiles, cement, metals and consumer goods, doing well.
Corporate tax collections increased 44% in December 2009, suggesting a smart recovery in corporate performance and increasing the possibility of the government exceeding the overall direct tax collections target for the entire year and making up for the shortfall in indirect tax collections. Higher corporate tax collections have boosted overall direct tax collections that rose by 8.5% during April-December 2009 to Rs 2.5 lakh crore.
European shares turned negative after hitting a new 15-month peak earlier in the day, with investors waiting for more macro-economic data later in the session for clearer market direction. The key benchmark indices in France and UK were down by between 0.03% to 0.23%. Germany's DAX rose 0.09%.
Private-sector activity in the 16-nation euro zone accelerated in December 2009, pushing the euro-zone composite purchasing managers index to a 26-month high of 54.2, Markit Economics reported Tuesday. The reading confirmed an earlier estimate and marked a rise from 53.7 in November. A reading of more than 50 means a majority of managers reported a rise in activity, while a reading of less than 50 signals contraction.
Most Asian stocks rose on Wednesday as Toyota Motor Corp.'s and Nintendo Co.'s US sales reports boosted expectations demand in the world's biggest economy is recovering. The key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.35% to 1.42%. But, key benchmark indices in China and Indonesia fell by between 0.08% to 0.85%.
A monthly survey released Wednesday indicated improvement in China's services sector, with December business activity rising at the fastest pace in three months. HSBC said its China Services Purchasing Manager's Index rose to 57.2 for the month, up from 57.1 in November 2009.
Trading in US index futures indicated Dow could fall 13 points at the opening bell on Wednesday, 6 January 2010.
In US markets action on Tuesday, the S&P 500 and the Nasdaq rose on as better-than-expected factory orders and a surge in vehicle sales at Ford Motor Co provided more evidence of an economic recovery. But a big decline in pending home sales, which fell in November for the first time in nine months, increased concerns about the housing market, capping the broad market's gains and pushing the Dow industrials into the red, a day after all three major US stock indexes finished the first trading day of 2010 at the highest levels in over a year. The Dow Industrials slipped 11.94 points, or 0.1%, to 10,572.02. The Standard & Poor's 500 index rose 3.53 points, or 0.3%, to 1,136.52. The Nasdaq Composite Index was up 0.29 points, or less than 0.1%, to 2,308.71.
In economic data, pending-home sales tumbled 16% in November 2009, much steeper than the 5% drop expected and the 3.7% gain logged in October 2009. But factory orders rose 1.1% in November, more than double of what was expected.
Short-term US interest rate futures prices climbed for a second straight day on Tuesday as traders' sentiment for yields to stay low runs contrary to views evident just before the turn of the year. Federal-funds futures after Tuesday's action see less than even odds for the Federal Open Market Committee (FOMC) to raise the funds rate by mid-year. The July 2010 contract priced in only a 46% chance for the FOMC to lift the Fed funds rate to 0.5% at the late June 2010 policy meeting, down from a 58% chance at Monday's settlement, and a 78% chance as factored in at last Thursday's settlement.
Closer home, the BSE 30-share Sensex rose 14.89 points or 0.08% at 17,701.13, its highest closing since 28 February 2008. The Sensex gained 104.09 points at the day's high of 17,790.33 at the onset of the trading session. The Sensex fell 49.53 points at the day's low of 17636.71 in morning trade.
The S&P CNX Nifty rose 3.90 points or 0.07% at 5281.80, its highest closing since 28 February 2008. It hit a high of 5310.85 in early trade, its highest since 27 February 2008.
BSE clocked a turnover of Rs 6198 crore, lower than Rs 7135.39 crore on Tuesday, 5 January 2010.
The market breadth, indicating the overall health of the market was positive. But the breadth weakened when compared to a strong breadth witnessed in early trade. On BSE, 1488 shares advanced as compared with 1,408 that declined. A total of 73 shares remained unchanged.
The BSE Mid-Cap index rose 0.6% and the BSE Small-Cap index rose 0.44%. Both these indices outperformed the Sensex
Among the sectoral indices on BSE, the BSE HealthCare index (up 2.04%), the BSE Realty index (up 1.43%), the BSE Oil & Gas index (up 1.1%), the BSE Consumer Durables index (up 0.68%), the BSE FMCG index (up 0.53%), banking sector index the Bankex (up 0.43%) and the BSE Power index (up 0.21%), outperformed the Sensex.
The BSE IT index (down 1.41%), the BSE Metal index (down 0.98%), the BSE Auto index (down 0.34%) and the BSE Capital Goods index (down 0.34%), underperformed the Sensex.
Among the 30-member Sensex pack, 15 rose while rest fell.
Index heavyweight Reliance Industries (RIL) rose 1.8% on bargain hunting after the stock declined for two days in a row. RIL, early this week, raised Rs 2,675 crore selling shares held by its treasury to build a war chest probably to buy the bankrupt petrochemical major LyondellBasell.
RIL sold 2.58 crore treasury shares, created eight years ago following the merger of Reliance Petroleum with RIL, to state-owned Life Insurance Corporation, which is the largest institutional shareholder in the company with a 6% stake.
FMCG stocks rose on bargain hunting. ITC, Hindustan Unilever, Dabur India, Tata Tea rose by between 0.14% to 1.78%.
Software pivotals fell on a firm rupee. India's second largest software services exporter Infosys fell 1.35% even as its ADR rose 0.39% on Tuesday. India's third largest software services exporter Wipro fell 1.65% even as its ADR rose 2.92% on Tuesday. India's largest software services exporter TCS fell 2.28%.
The rupee surged to its highest level in 11 weeks against the US dollar boosted by a report calling for a yuan revaluation and following the domestic stock market's rise to a 22-month peak early. At 15:00 IST, the partially convertible rupee was at 45.97/98 per dollar, its strongest since 20 October 2009, and above Tuesday's close of 46.24/25. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.
Rate sensitive realty stocks rose on positive outlook for 2010 after a lackluster 2009. India's largest realty player by market capitalization DLF rose 2.38%. On 16 December 2009, the company's board approved merger of its commercial realty arm DLF Assets (DAL) with itself, a move aimed at repaying some of DAL's debt.
Among other realty stocks, Indiabulls Real Estate, Unitech, Phoenix Mills rose by between 0.72% to 5.02%.
Drug maker Dr. Reddy's Laboratories rose 2.32% extending Tuesday's 2.91% gains after the company said its Balaglitazone diabetes drug has met its primary target in the first of its phase 3 clinical trials. Balaglitazone reduced blood glucose levels over a period of time in the study conducted on 409 patients.
Among other health care stocks. Sun Pharmaceuticals, Ranbaxy Labs, Cipla, Pfizer rose by between 0.96% to 4%.
Metal stocks fell on profit taking. Steel Authority of India (SAIL) fell 1.5%. The company reported a 32% growth in sales at 1.3 million tonne in December 2009 from a year ago
Tata Steel, the world's eighth-largest steelmaker fell 1.09%. The company said on Tuesday sales from its Indian operations rose 73% in December 2009 to 636,000 tonnes from a year earlier. India sales for the December 2009 quarter rose 49% to 16 lakh tonnes, the company said in a statement. The Indian operations account for about a quarter of the group's total annual global capacity of 30 million tonnes, which includes unit Corus, Europe's second-largest steelmaker.
Sales of flat products, used in automobiles and consumer durables, surged 90% in December, while sales of long products, primarily used in construction, rose 56%, Tata Steel said. The company's crude steel production in India rose 21%.
Steel companies are reportedly eyeing higher prices in 2010 as stronger economic growth worldwide drives up demand for the critical building material.
Recently, Tata Steel raised prices by Rs 2,000 a tonne, while state-owned Steel Authority of India (SAIL) withdrew the Rs 750-1,500 per tonne rebate it had started offering in November 2009, following the increase in raw material cost. Other secondary steel makers such as Bhushan Steel and Uttam Galva also raised the prices of their products on 5 January 2010.
Among non ferrous stocks, Sterlite Industries, Hindalco Industries, Hindustan Zinc, fell by between 0.13% to 2.45%.
National Aluminium Company fell 5.91% on profit taking after gaining 14.84% on Tuesday. As per recent reports, the state-run aluminium producer has hiked prices of rolled products by Rs 3,000 a tonne and other product prices by Rs 1,000 a tonne.
India's largest mobile services provider by sales Bharti Airtel fell 0.92% after gaining 1.57% on Tuesday on reports the firm has got approval from Bangladesh's telecoms authority for its proposed $300 million investment in Abu Dhabi Group's Warid Telecom.
India's second largest mobile services provider by sales Reliance Communications rose 0.22% after gaining 3.51% on Tuesday.
India's largest thermal power generator by sales NTPC fell 0.41%. The government plans to divest stake in the firm.
Among other power sector stocks, Reliance Power, Reliance Infrastructure and Torrent Power fell by between 0.81% to 2.36%.
Shipping companies rose, after the Baltic dry index, which tracks rates to ship dry commodities, surged 4.14% in London on Tuesday, 5 January 2010. Shreyas Shipping & Logistics, Shipping Corporation of India, Varun Shipping Company, Mercator Lines and Great Eastern Shipping Company rose by between 0.28% to 2.91%.
Auto stocks fell on profit taking. India's largest motorcycle maker by sales Hero Honda Motors fell 1.15%. Sales jumped 74% to 375,838 units in December 2009 over December 2008.
Bajaj Auto fell 1.35%. Bajaj Auto sold 2,20,429 two-wheelers in December 2009, registering an 85% growth in sales over the same month last year, when it sold 1,19,215 units.
TVS Motors fell 3.68% declining for the second straight day. Sales rose 34% to 119,701 units in December 2009 over December 2008.
India's largest car maker by sales Maruti Suzuki India fell 3.5%, extending previous session's losses as removal of incentives in Europe on car purchases may hit exports next year. Maruti Suzuki's managing director and chief executive officer, Shinzo Nakanishi was quoted by the media as saying on Tuesday that the company will see flat to lower exports next year because of the scrappage of incentives by Europe. He also said there would be lower offtake from Nissan for exports as a result of the removal of incentives.
Nakanishi said the company aims to keep operating margins at 10% in fiscal year 2009/10 but profitability will be impacted by a rise in raw material prices and a rise in the yen.
Maruti Suzuki India reported 50.6% increase in total vehicle sales to 84,804 units in December 2009 over December 2008. Domestic sales rose 36.5% to 71,000 units, while exports surged 223.7% to 13,804 units.
But, India's top truck maker by sales Tata Motors rose 0.14%. Tata Motors has raised prices of some truck and bus models in January 2010 by about 1%. The company expects commercial vehicle sales to remain strong in the next 12 months. The company's chairman Ratan Tata said on Tuesday that the company may consider launching its ultra-cheap Nano car in the United States in three years, following possible sales in Europe by the end of 2011.
Tata Motors registered 105% growth in sales to 51,627 units in December 2009 over December 2008.
India's largest tractor marker by sales Mahindra & Mahindra (M&M) advanced 2.39%. M&M marked its entry on Monday into the heavy commercial vehicle (HCV) segment with its unveiling of 25 and 31 tonne trucks with its US-based joint venture partner Navistar Inc.
Mahindra & Mahindra, reported 122% rise in its domestic sales to 22,754 units in December 2009 over December 2008. The company sold a total of 24,001 vehicles (domestic plus exports) in December 2009 as against 11,172 vehicles sold in December 2008.
India's largest engineering & construction firm by sales Larsen & Toubro fell 1.04% on profit taking after the stock rose for three consecutive days. The company said on Monday it won orders worth Rs 987 crore. The company said on Thursday 31 December 2009 it won two orders totaling Rs 580 crore.
Among other capital goods stocks, ABB, Bharat Heavy Electricals, AIA Engineering and Praj Industries fell by between 0.07% to 2.41%.
Banking stocks extended recent gains on reports credit offtake has picked up. According to the latest Reserve Bank of India (RBI) figures, total loans, including food credit loans to Food Corporation of India for foodgrain procurement and non-food credit (all other loans) amounted to Rs 29,41,293.07 crore as on 19 December 2009. This represents a sequential growth of Rs 34,028 crore since 27 November 2009 compared to a growth of Rs 7,698 crore in the whole of November 2009.
India's largest private sector bank by net profit ICICI Bank rose 0.86% as its ADR rose 1.43% on Tuesday. ICICI Bank has tied up with UK Trade and Investment to help Indian firms explore business opportunities in the British market. Through this tie-up, the bank will be able to provide value-added services such as training events and investment assistance to Indian firms looking at business opportunities in the UK. UK Trade and Investment is a government organisation that helps UK-based companies succeed in international markets.
India's largest bank by net profit and branch network State Bank of India rose 0.57%. The state-run bank paid advance tax of Rs 1795 crore versus Rs 1700 crore.
India's second largest private sector bank by net profit HDFC Bank was flat. Its ADR rose 0.43% on Tuesday.
Shares of DB Corp settled at Rs 265.90, at a premium of 25.42% over the initial public offer price of Rs 212. The stock debuted at Rs 250, a 17.90% premium over the initial public offer (IPO) price.
Cals Refineries clocked highest volume of 3.09 crore shares on BSE. D B Corp (1.99 crore shares), Kaashyap Technologies (1.63 crore shares), Mahindra Satyam (1.29 crore shares) and Ispat Industries (1.25 crore shares) were the other volume toppers in that order.
D B Corp clocked highest turnover of Rs 529.61 crore on BSE. Mahindra Satyam ((Rs 141 crore), Tata Steel (Rs 135.87 crore), JSW Energy (Rs 118.75 crore) and Reliance Industries (Rs 17.23 crore) were the other turnover toppers in that order.