Auto, telecom stocks lead 1.6% Sensex surge

A rebound in European stocks aided a rally on the domestic bourses, which extended gains for the second consecutive session. All the sectoral indices on BSE rose, with auto, metals and realty indices at the forefront of the rally. Telecom stocks also rose across the board. The BSE 30-share Sensex jumped 264.19 points or 1.59%.

The Bank of England made no monetary policy changes today, leaving its key lending rate at a record low 0.5% for the fifteenth month and maintaining a pause in its money-printing, quantitative-easing program.
Back home, the market edged higher in early trade, tracking gains in Asian shares. Stocks extended gains in morning trade. The market pared gains later. Stocks regained strength in mid-morning trade. The key benchmark indices pared gains in early afternoon trade soon after hitting fresh intraday highs. A bout of volatility was witnessed once again as the market rebounded from lower level in afternoon trade. The market surged to fresh intraday high in mid-afternoon trade as European stocks recovered. The market extended gains in late trade.
Stocks have been on a roller coaster ride recently. The Sensex had lost 500.59 points or 2.9% in two trading sessions to 16,617.10 on Tuesday, 8 June 2010 from a recent high of 17,117.69 on 4 June 2010. Earlier, the market had witnessed a strong rebound from lower level. The Sensex had risen 1,095.21 points or 6.83% in eight trading sessions to 17,117.69 on 4 June 2010, from a low of 16,022.48 on 25 May 2010.
Stocks are off recent highs. The Sensex has lost 1,047.94 points or 5.83% from a recent peak of 17,970.02 on 7 April 2010. The barometer index has lost 3.1% in calendar 2010 so far after jumping 81% in 2009.
Coming back to today's trade, NSE's volatility index India VIX, which is a gauge of traders' perception of near-term risks in the market based on options prices, declined 5.89% to 26.50. The index had lost 2.12% to 28.16 on Wednesday, 9 June 2010. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.
On the macro front, the food price index rose 16.74% in the year to 29 May 2010, higher than the previous week's annual reading of 16.55% as fruits and potato prices rose, data released by the government today showed. The fuel price index climbed 14.23% compared with an annual rise of 14.14% in the previous week.
The Union Cabinet reportedly did not discuss any proposal to raise fuel prices or reform the sector at a meeting held on Thursday, 10 June 2010. On Tuesday, Finance Minister Pranab Mukherjee had said he would meet other cabinet ministers on Thursday to decide on the date for the next meeting to discuss the issue of fuel deregulation which was deferred on Monday.
The Indian government early this week deferred a decision on raising fuel prices, the second time in a year it has tripped on pushing politically-sensitive reform measures that could help trim a budget deficit. An empowered group of ministers (EGoM) was to discuss on Monday, 7 June 2010, a report by an experts' committee headed by Planing Commission member Kirit Parikh, which had recommended freeing petrol and diesel prices and a steep Rs 100 per cylinder hike in LPG rates and a Rs 6 per litre increase in kerosene prices.
Meanwhile, the Union Cabinet on Thursday deferred a decision to sell stake in state-run Coal India and miner Hindustan Copper.
European shares turned positive on Thursday morning as Novartis rose ahead of a US vote on its multiple sclerosis pill, offsetting falls in BP which slipped on concerns over costs of the oil spill. The key benchmark indices in UK, France and Germany were up by between 0.30% to 1.04%.
Interest rate decision from the European Central Bank (ECB) is awaited today, with no change expected. Investors are also watching if the ECB announces any fresh steps to help debt-stricken euro zone countries.
Asian stocks rose on Thursday on better-than-expected Chinese exports and assurances from Federal Reserve Chairman Ben Bernanke that the US economic recovery was on solid footing. The key benchmark indices in Japan, South Korea, Hong Kong, Taiwan and Singapore rose by between 0.06% to 1.56%. But, Indonesia's Jakarta Composite fell 0.63%.
China's Shanghai Composite fell 0.82% even as its exports jumped 48.5% in May 2010 from a year earlier, the biggest gain in more than six years. Stocks were weighed by concerns further tightening measures may emerge after property prices in 70 of China's large and medium-sized cities rose for a 12th consecutive month in May 2010, climbing 12.4% from a year earlier.
Meanwhile, South Korea's central bank left its key interest rate at a record low of 2% on Thursday as the country's recovery strengthens and worries persist over the health of the global economy amid Europe's debt woes.
US index futures pared gains. Trading in US index futures indicated that the Dow could gain 51 points at the opening bell on Thursday, 10 June 2010. The Dow futures had risen as much as 100 points earlier.
US stocks fell on Wednesday in another late-day roller-coaster ride, dragged lower by BP and other energy shares as the US probe of the oil spill in the Gulf of Mexico deepened. The Dow Jones industrial average dropped 40.73 points, or 0.41% to 9,899.25. The Standard & Poor's 500 Index fell 6.31 points, or 0.59% to 1,055.69. The Nasdaq Composite Index lost 11.72 points, or 0.54% to 2,158.85.
Federal Reserve Chairman Ben Bernanke said on Wednesday the US economic recovery was on a solid footing but cautioned it could be years before the jobs lost during the deep recession of 2008-2009 are restored.
The World Bank on Wednesday said a double-dip recession could not be ruled out in some countries if investors lose faith in efforts in Europe and elsewhere to tackle rising debt levels. The World Bank's Global Economic Prospects 2010 report said slower growth in developed economies would deprive developing countries of healthy markets for their goods and would cut into investment.
For the moment, worries that Greece's fiscal woes could spread to other highly-indebted countries, such as Spain and Portugal, has not affected growth in developing countries, the World Bank said. The World Bank forecast that developing economies would expand at between 5.7% and 6.2% each year from 2010 to 2012 -- more than twice the growth rate of advanced economies.
Back home, India's monsoon delivered normal rainfall in the past week, the India Meteorological Department (IMD) said today, 10 June 2010. Rainfall in the seven days to 9 June 2010 recovered to normal after an initial hiccup when cyclone Phet hindered the advance of the June-September monsoon, which irrigates 60% of farms in India.
The June-September monsoon rains hit Kerala on 31 May 2010, a day ahead of schedule. The south-west monsoon usually covers the entire country by mid-July. The weather office late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.
Last month, Australia's weather bureau said the El Nino weather pattern was over. El Nino is caused by an abnormal warming of the eastern Pacific Ocean and can play havoc with weather patterns across the Asia-Pacific region.
The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.
Data last week showed business activity remained strong for India's vast services sector in May 2010, with a key gauge growing for a 13th consecutive month even as some momentum was lost over the previous month. The HSBC-Markit Business Activity Index stood at 58.2 in May 2010 from a 21-month high of 62.1 in April 2010. A reading above 50 indicates expansion. Services make up about 55% of India's $1.2 trillion economy.
HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 Indian firms, surged to a 27-month high of 59 in May 2010 from 57.2 in April 2010, bolstered by steady growth in output, new orders and employment. The rate of growth had slowed in March 2010 and April 2010.
India's economy grew at 8.6% in the March 2010 quarter driven by robust manufacturing sector on the back of government and consumer spending, data released by the government on Monday, 31 May 2010, showed. The growth was significantly higher than the revised 6.5% expansion in Q3 December 2009 and a 5.8% growth in Q4 March 2009. The manufacturing sector grew 16.3%, farm output rose 0.7%, mining sector expanded 14% and services increased by 8.4% in January-March 2010 quarter from a year earlier. For the full year to March 2010, the economy expanded 7.4%, above a government forecast of 7.2%. Economic growth had slowed down to 6.7% in year ended March 2009.
Investors will eye the first installment of the corporate advance tax payment which will give some clue about Q1 June 2010 corporate results. The first installment of corporate advance tax falls due on 15 June.
The BSE 30-share Sensex rose 264.19 points or 1.59% to 16,922.08. The Sensex rose 284.71 points at the day's high of 16,942.60 in late trade. The Sensex rose 11.02 points at the day's low of 16,668.91 in early trade.
The S&P CNX Nifty rose 78.30 points or 1.57% to 5078.60.
The BSE Mid-Cap index rose 1.10%. The BSE Small-Cap index rose 1.26%. Both the indices underperformed the Sensex.
BSE clocked turnover of Rs 3582 crore, lower than Rs 3896.75 crore on Wednesday, 9 June 2010.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1878 shares advanced as compared with 901 that declined. A total of 135 shares were unchanged.
All sectoral indices on BSE rose. BSE Auto index (up 2.98%), Metal index (up 2.12%), Realty index (up 1.80%), Teck index (up 1.76%), Healthcare index (up 1.63%), outperformed the Sensex.
Power index (up 1.50%), Capital Goods index (up 1.43%), Consumer Durables index (up 1.11%), IT index (up 1.09%), Banking sector index Bankex (up 1.06%), FMCG index (up 0.65%), Oil & Gas index (up 0.62%) and PSU index (up 0.58%), underperformed the Sensex.
From the 30 share Sensex pack, 29 rose and just one fell.
Index heavyweight Reliance Industries (RIL) rose 0.85%, with the stock gaining for the second straight day. Reliance Industries (RIL) reportedly plans to enter the telecommunications sector when the opportunity arises. RIL is expected to go for only the lucrative corporate bandwidth market, or the business of selling telecom and internet services to companies rather than individuals. In May this year, the two Ambani brothers, Mukesh and Anil called off their non-compete agreements on all businesses other than gas-based power, enabling Mukesh Ambani to enter the telecom sphere.
Earlier reports had suggested RIL may foray into nuclear energy and may make its first big-ticket investment in coal-fired power plants after being freed from a non-compete agreement with the Anil Dhirubhai Ambani Group (ADAG) that barred it from investing in some businesses, including power.
Reliance Infrastructure rose 5% and was the top gainer from the Sensex pack. Reliance Power's wholly owned unit Reliance Coal Resources has entered into share purchase agreements to acquire the entire stake in the two coal companies in Indonesia. The two Indonesian companies own three coal-mines in Indonesia. The coal from these mines will be used in the Krishnapatnam ultra mega power project and other power projects of the group, Reliance Power said on Thursday. Reliance Infrastructure holds 44.96% stake in Reliance Power (as on 31 March 2010).
Telecom stocks rose across the board. India's largest listed mobile telecom services provider by sales Bharti Airtel rose 4.81%, extending Wednesday's 5.57% gains. The company recently announced the competition of the acquisition of Zain Group's (Zain) mobile operations in 15 countries across Africa for an enterprise valuation of $10.7 billion.
India's second largest listed mobile telecom services provider by sales Reliance Communications rose 2.47%. India's third largest listed mobile telecom services provider by sales Idea Cellular rose 3.56%
Capital goods stocks rose on expectations of continued order flows. Bharat Heavy Electricals, Usha Martin, Jyoti Structures, Crompton Greaves, Havells India, Praj Industries, SKF India and Punj Lloyd rose by 0.47% to 2.21%.
India's largest engineering and construction firm by sales Larsen & Toubro rose 1.76% after company announced during market hours today it won orders worth Rs 747 crore for metallurgical and material handling projects.
Auto stocks extended recent gains on robust vehicle sales in the month of May 2010. India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 2.55%, with the stock gaining for the second straight day. M&M's auto sales rose 69% to 28,486 units in May 2010 over May 2009.
India's largest small car maker by sales Maruti Suzuki India rose 3.33%, with the stock gaining for the second straight day. Maruti's total sales rose 27.90% to 102,175 units in May 2010 over May 2009. The company's domestic sales rose 27.2% to 90,041 units in May 2010 over May 2009. This is highest ever monthly domestic sales. Exports increased 33.5% to 12,134 units in May 2010 over May 2009. The company announced the sales figures on 1 June 2010.
India's top truck maker by sales Tata Motors rose 4.31%. The company reported 41% growth in vehicle sales in May 2010 over May 2009. The company sold 56,779 units in May 2010 as against 40,196 units sold in May 2009. The company unveiled the monthly sales data on 1 June 2010.
Car sales rose an annual 30.4% in May 2010, an industry body said on Wednesday. Domestic firms sold 1,48,481 cars in the month, compared with 1,13,810 units a year ago, data from the Society of Indian Automobile Manufacturers (Siam) showed. Sales of trucks and buses, a barometer of economic activity, rose 58% to 48,580 units in May 2010, Siam said.
India's largest bike maker by sales Hero Honda Motors rose 4.14%. The company recently raised prices of its products by up to Rs 1,000 due to rising input costs.
High beta realty stocks rose on bargain hunting. Sobha Developers, Indiabulls Real Estate, Peninsula Land, Unitech, DLF, Orbit Corporation, Housing Development & Infrastructure (HDIL), Ackruti City and D B Realty rose by 0.68% to 3.56%
Banking stocks rose on pick up in credit offtake. India's second largest private sector bank by sales HDFC Bank rose 1.71%, with the stock gaining for the second straight day. The stock today turned ex-dividend for a dividend of Rs 12 per share.
India's largest bank in terms of branch network State Bank of India rose 2.38%. SBI is likely to launch a Rs 20000-crore rights issue in the second half of 2010/11, Chairman O.P. Bhatt said on Wednesday. Among other PSU stocks, Bank of India, Bank of Baroda and Punjab National Bank rose by between 0.25% to 0.68%.
India's largest private sector bank by sales ICICI Bank rose 0.28%, reversing initial losses. The stock today turned ex-dividend for a dividend of Rs 12 per share.
Bank credit to businesses and individuals has seen a pick-up of around Rs 5,600 crore while deposits with banks have fallen by nearly Rs 5,000 crore during the fortnight ended 21 May 2010.
Metal and mining stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange rose 2.38% on Wednesday, 9 June 2010. Steel Authority of India, Hindustan Zinc, JSW Steel, Jindal Steel & Power, Jindal Saw, Sterlite Industries, Sesa Goa and NMDC rose by 0.41% to 2.89%.
India's largest steel maker by sales Tata Steel rose 1.85%, with the stock gaining for the second straight day. A subsidiary of Tata Steel recently raised stake in Canadian mining firm New Millennium Capital Corp (NML) to 27.4%.
Hindalco Industries rose 4.14%, with the stock gaining for the second straight day on reports the company plans to borrow about Rs 14000 crore in the next couple of years to build two new plants that will treble its aluminium making capacity.
Hindustan Copper declined 0.56% on reports the Union Cabinet has deferred a decision on 20% stake sale in the state-run miner.
JSW Energy gained 2.35%, after the company entered into a memorandum of understanding to acquire 70% stake in Indian Ocean Mining, South Africa.
Assam Company slumped 5.33% after 0.18% of the company's equity changed hands in a two bulk deals on BSE.
Dish TV India shot up 5.35% after the company scheduled a board meeting on 11 June 2010 to consider a proposal for internal business restructuring between the company and its wholly owned subsidiaries.
State Bank of India clocked a highest turnover of Rs 179.09 crore on BSE. Tata Steel (Rs 117.49 crore), ARSS Infrastructure Projects (Rs 114.38 crore), Tata Motors (Rs 93.55 crore) and Sesa Goa (Rs 90.54 crore), were the other turnover toppers on BSE.
Cals Refineries reported a highest volume of 1.40 crore shares. Karuturi Global (1.04 crore shares), IFCI (94.25 lakh shares), Pipavav Shipyard (76.18 lakh shares) and Unitech (67.72 lakh), were the other volume toppers on BSE.