Post Session Commentary - Oct 23 2009

The Indian market closed with marginal gains after a sharp rally at the initial stage on the back of heavy profit booking at the higher level. The volatility was high during the session. The BSE Sensex closed just above the 16,800 mark while Nifty just below 5,000 mark. Though the mark opened with strong gains and traded firmly for most part of the day but the profit booking at the final hours did the spoil sport. The FMCG stocks remained in the lime light on the back of reports by Assocham that this sector is expected to witness growth of 20% in July-September period this fiscal up from 14% in the previous quarter. From the sectoral front, FMCG (3.03%), Health Care (2.05%), IT (2.04%) and Bankex (1.31%) indices closed with decent gains.
The market during the trading session witnessed high volatility. The market shot up since the initial bell breaking the past three days of losing trend tracking the firm cues from the global markets. On the global front, the US markets closed on a firm note on Thursday as investors were carried away by some better than expected earnings and shrugged off a disappointing jobless report. The participants welcomed fresh set of better-than-expected earnings reports mainly from Travelers and 3M that surprises the market. Fellow companies AT&T, McDonald''''s and Merck also reported better-than-expected earnings for the current quarter. In economic front, the latest weekly jobless claims came in at 531,000, which is worse than the 515,000 that had been widely expected. Continuing claims came in at 5.92 million, which is a bit worse than the 5.97 million that was expected. This is the lowest level since the week ended March 28. Moreover, the leading indicators for September shot up 1.0%, as against 0.8% that was widely expected.
On the domestic front, the wholesale price index surged to 1.2% for the week ended October 10, 2009 from 0.92% in the previous week. The wholesale price index for all commodities stood at 242.2, up 0.1 per cent from a week earlier. Moreover, the Prime Minister’s Economic Advisory Council (PMEAC) projected that India’s economy might grow by 6.5 per cent in 2009-10 and even touch 6.75 per cent, despite poor monsoon. However, the panel said the growth was not likely to be lower than 6.25 per cent. PMEAC has projected the agriculture sector to fell by 2 per cent as against 1.6 per cent growth in the previous year while the services sector would enhance by 8.2 per cent as against 9.7 per cent growth last year. The government today will unveil the inflation data.
Among the Sensex pack 18 stocks ended in positive territory and 12 in negative territory. The market breadth indicating the overall health of the market remained firm as 1,414 stocks closed in green while 1,327 stocks closed in red and 110 stocks remained unchanged in BSE.
The BSE Sensex closed higher by 21.07 points or (0.13%) at 16,810.81 and NSE Nifty closed up by 8.45 points or (0.17%) at 4,997.05. BSE Mid Caps and BSE Small Caps closed with gains of 66.62 points and 25.73 points at 6,510.89 and 7,673.50 respectively. The BSE Sensex touched intraday high of 17,006.77 and intraday low of 16,765.20.
Losers from the BSE Sensex pack are Reliance Inds (4.04%), Grasim Inds (3.12%), Tata Motors (2.31%), L&T (2.31%), Tata Steel (2.20%), Bharti Airtel (1.63%), Reliance Infra (1.56%), Bhel (1.56%) and Hero Honda (1.20%).
Gainers from the BSE Sensex pack are ITC (4.97%), M&M (2.80%), Tata Power (2.59%), Hindalco Inds (2.28%), Infosys (2.20%) and TCS (2.18%).
On the global markets front, the Asian markets that opened before the Indian market, closed in green. Shanghai Composite, Hang Seng, Jakarta Composite, Strait Times and Seoul Composite ended up by 1.85%, 1.71%, 1.43%, 1.24% and 0.60% at 3,107.84, 22,589.73, 2,467.95, 2,715.34 and 1,640.17 respectively.
European markets, which opened after the Indian market, are trading higher. In Paris the CAC 40 is up by 0.91% at 3,855.54, in Frankfurt DAX index is trading up by 0.89% at 5,814.21 and in London FTSE 100 is higher by 1.12% at 5,265.70.
BSE REALTY index was at 4,522.81 down by 1.47 points or by (0.03%) The main losers were Penland Ltd down by (3.39%) at Rs.88.25, Unitech Ltd down by (1.65%) at Rs.98.65, Ansal Infras down by (1.34%) at Rs.77.55, Phoenix Mill down by (1%) at Rs.167.85, Housing Dev down by (0.71%) at Rs.376.4.
BSE METAL index was at 15,420.96 up by 67.07 points or by (0.44%) The main gainers were Hind.Zinc up by (7.6%) at Rs.934.05, Welsp Guj Sr up by (3.7%) at Rs.280.05, Hindalco In up by (2.28%) at Rs.141.35, Jindal Saw up by (2.09%) at Rs.801.9, Sterlite In up by (1.69%) at Rs.829.35.
BSE BANKEX index was at 10,231.41 up by 132.76 points or by (1.31%) The main gainers were Indian Overs up by (4.75%) at Rs.133.45, Indus Ind Bk up by (4.55%) at Rs.139.05, Yes Bank up by (3.4%) at Rs.255.65, Allahabad Bk up by (3.17%) at Rs.130.15, Axis Bank up by (2.93%) at Rs.994.8.
BSE FMCG index was at 2,824.71 up by 82.98 points or by (3.03%) The main gainers were Dabur India Ltd. up by (5.85%) at Rs.151.05, I T C Ltd up by (4.97%) at Rs.259.85, Godrej Cons up by (2.44%) at Rs.269.2, Colgate Palm up by (2.19%) at Rs.708.4, Britania In up by (1.25%) at Rs.1721.65.
BSE HC index was at 4,401.80 up by 88.32 points or by (2.05%) The main gainers were Dishman Phar up by (7.38%) at Rs.259.75, Pirama Healt up by (6.71%) at Rs.390.6, Dr.Reddys Laboratories Ltd. up by (6.21%) at Rs.960.2, Lupin Ltd up by (4.45%) at Rs.1252.6, Ipca Lab Ltd.* up by (3.03%) at Rs.835.
BSE OIL&GAS index was at 10,006.69 down by 278.73 points or by (2.71%) The main losers were Gail India down by (4.32%) at Rs.362.85, Reliance down by (4.04%) at Rs.2047.3, Aban Offsho down by (1.67%) at Rs.1540.6, Hindustan Petroleum Corp. Ltd. down by (1.17%) at Rs.353.7, Bharat Petroleum Corporation L down by (0.68%) at Rs.518.7.
BSE IT index was at 4,528.43 up by 90.62 points or by (2.04%) The main gainers were Mphasis Ltd up by (3.89%) at Rs.673.7, Rolta Ind up by (3.82%) at Rs.194.3, Aptech Ltd up by (2.55%) at Rs.263.15, Patni Comput up by (2.52%) at Rs.453.9, Infosys Technologies Ltd.-Ordi up by (2.2%) at Rs.2260.2, The main losers were Oracle Fin
Jubilant Organosys surged 12.52% to close at Rs 237.30 strong quarterly results. The company has posted a net profit of Rs 554.90 million for the quarter ended September 30, 2009 as against net loss of Rs (243.90) million for the quarter ended September 30, 2008. Moreover, the company’s board has approved raising capital through issue of equity or equity related instruments upto Rs 500 Crores.
Piramal Health Care shot up 6.71% to close Rs 390.60 on good quarterly numbers. The company has posted a net profit for the period of Rs 1142.20 million for the quarter ended September 30, 2009 as against Rs 694.40 million for the quarter ended September 30, 2008.

Sensex see-saws, closes marginally higher

When all the global indices staged a strong performance, the Sensex remained volatile and shed the heavy gains of the morning trades. The day started with the overnight gains of the US markets that jumped by over1%. The trend was continued by the Asian indices that registered gains in the range of 0.13-1.85% each, with India's Sensex losing the most whereas China's Shanghai Composite rising the most. Even FTSE 100 that opened strongly is trading at 5265 with 58 points or about 1% gains at the time of writing the report. The Singapore Nifty rose marginally by 10 points in today's trade. Amid selling pressure in the heavyweights like Reliance Industries Ltd (RIL), the Sensex lost the morning gains and closed marginally higher by 0.13% over its yesterday’s closing.
On the back of heavy sell-off in the major index components, the Sensex that once touched 17000 level and traded with strong gains, lost steam in the closing hours and ended the day slightly higher with marginal gains despite global indices remaining strongly upbeat. The Sensex that opened
at 16796 with gains of mere 6 points later went to hit the high of 17007. However it couldn't hold on to such gains, remained volatile and ended the day with marginal gain of 21 points amid the heavy selling in the Sensex heavyweights. The Indian markets ignored the strong indicators from the European and Asian markets. While the Sensex during the day saw the low of 16765, it closed at 16811. While Nifty gained mere 8 points to end the day at 4997, 3 points below the significant psychological level of 5000. The market breadth was fairly positive, as out of the 2851 stocks traded on the BSE, 1,414 stocks advanced, whereas 1,327 stocks declined. One hundred and ten stocks closed unchanged.
Among the sectoral indices, BSE FMGC surged the most with the gains of 3.03% followed by BSE HC and BSE IT that rose by over 2% each. Among the losers, BSE Oil & Gas declined by 2.71% and BSE CG slid by 1.44%. On the stocks’ front, Jubilant Organosys jumped the most and surged by 12.52% to Rs257.30 followed by Asian Paints that rose by 9.54% to Rs1,676.15 and Hindustan Zinc that advanced 7.60% to Rs934.05. While stocks like Piramal Healthcare, Dr Reddy’s Laboratories, Dabur India and IRB Infrastructure ended the day with gains of over 5% each. Among the losers, Zee Entertainment fell the most by 5.04% to Rs227.00 followed by Gail India that fell by 4.32% to Rs362.85, RIL slid by 4.04% to Rs2,047.30. Nagarjuna Construction, Punj Llyod, Sintex Industries, Grasim Industries and Hindustan Copper declined by over 3% each.
On the turnover front, Over 1.06 crore shares of Unitech changed hands on the BSE followed by Ispat Industries (0.91 crore shares), Jaiprakash Associates (0.55 crore shares), Sesa Goa (0.46 crore shares) and GVK Power & Infrastructure (0.33 crore shares).
Events outcome
Bharat Forge's top line slid by 36%
Century Textiles Q2 profit rose to Rs82.63 crore
NTPC's net profit was up marginally
BHEL’s Q2 net profit surged by 39% to Rs857.9 crore
Alphageo India recorded net profit of Rs9.50 crore
ITC’ net profit was up by 25.8% to Rs1,009.90 crore
IDFC’ net profit rose by 26% to Rs291.84 crore

Derivatives: Fresh shorts seen building-up in the Nifty and Stock futures November series

Fresh shorts are seen built-up in the November series although the next week will see a clearer picture; we expect huge volatility as we enter the October expiry week.
Besides the extremely weak global indices throughout the previous week, the pending court hearing in the Reliance Industries and Reliance Natural Resources gas disputes dented the domestic market sentiment heavily thus reversing the unabated bullish run. Besides Reliance Industries, the bank stocks fell after Moody's Investors Services on Wednesday downgraded the supported ratings of 13 Indian commercial banks after its global review of systemic support indicators for individual banking systems. Although the market notched up some gain on Friday 23rd October 2009, overall for the week most of the benchmark indices fell. On Friday Reliance further corrected as partner in KG Basin- Hardy Oil said a D9 well will be plugged and abandoned.
The S&P CNX Nifty closed 8.45 points higher on Friday 23rd September 2009 compared to the previous trading day. It closed below the psychological 5,000 mark after moving above and below that level during the day. The Nifty future however closed above the 5000 mark at a premium of 10.85 points to the underlying. Although the Nifty October series shed OI by 18.91 lakh shares, the November series added 20.55 lakh shares in OI on Friday. The total OI in the October series stood at 2.01 crore shares, while that in November series was 61.53 lakh shares.
The average volume in the F&O segment during the current series was Rs 67,525.72 crore as the volumes remained at higher levels during the week gone-by. The average volume during the previous week was Rs 77,043.71 crore. On Monday it self there was aggressive put buying of 4900 to 5300 strikes with lower open interest (OI) thus indicating covering of the put wrote at these strikes earlier. The trend continued through-out the week. Simultaneously there was call writing at 5100 and 5200 strikes indicating bearish undertone.
The stock future segment also witnessed unwinding of OI in the current series while fresh positions were seen building up in the next series. For e.g. During the week under review the major stock underlying like Reliance, Tata Steel, Tata Motors and Unitech shed 3.98 lakh shares, 21.24 lakh shares, 36.38 lakh shares and 50.94 lakh shares in OI respectively. Other major underlying like ICICI Bank, SBI, Sail, Bharti and Maruti also shed OI in the current series. However fresh short position seems to be building-up in the November months Nifty as well as stock futures.
The market-wide open interest (OI) on Friday stood at 203.68 crore shares, thus gaining by 2.25 crore shares as compared to the previous trading day. The stock future contributed the major addition
On Friday there was fresh OI build-up in the Nifty 5000 and 5100 strike calls indicating calls being wrote at these levels. Besides fresh puts wrote earlier at strikes ranging from 4900 to 5300 were being covered. More importantly fresh aggressive call writing is witnessed in the above strikes of November series as well. The October Nifty 5000 and 5100 strike call options added 2.64 lakh shares and 2.18 lakh shares in OI taking the total OI of these strikes to 40.16 lakh shares and 56.26 lakh shares respectively. The most active October puts viz- 4900, 5000 and 5100 strikes shed 8.09 lakh shares, 3.43 lakh shares and 3.71 lakh shares in OI.
The ongoing Reliance and Reliance Natural Resources gas dispute will continue to exert downward pressure on the market as the market enters the October expiry week. It would be very important to monitor the F&O segment as it would indicate a trend from the fresh positions being taken in the November series. So far fresh shorts are seen built-up in the November series although the next week will see a clearer picture. Expect huge volatility as we enter the October expiry week.

Final batch of Q2 results, RBI policy review to dictate trend results

Liquidity holds key for stocks after most Q2 results announced so far exceeded market expectations. A number of companies are yet to announce Q2 results. Most of the remaining Q2 results will be out next week, the deadline for the results being 31 October 2009, as per the listing norms.
The major event next week is the quarterly review of the monetary policy by the Reserve Bank of India (RBI) on Tuesday, 27 October 2009. The RBI is expected to keep its benchmark lending and borrowing rates unchanged on Tuesday. The RBI pumped in massive liquidity in the banking system in the past one year or so to help revive the domestic economy in the aftermath of the global financial crisis. While as exit from the loose monetary policy is imminent, speculation on the bourses is centred around the timing of the exit policy.
The whole price index (WPI) is expected to gallop in coming months as the statistical base effect becomes unfavorable and an economic recovery spurs demand for manufactured products. The Consumer Price Index is already in double digits.
Bank stocks will be action after comments from a finance ministry official on Friday, 23 October 2009, dashed hopes for the central bank relaxing mark-to-market rules for bank's debt holdings. The market has 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) category, possibly at the quarterly monetary policy review on 27 October 2009.
Among the major results, car major Maruti Suzuki will announce Q2 results on Saturday, 24 October 2009. Ranabxy, Tata Motors, Idea Cellular and Tata Communications, are set to announce results on Monday, 26 October 2009. Tata Steel, Hindustan Unilever, Wipro, HCL Technologies and Reliance Power, unveil results on Tuesday, 27 October 2009. ACC, Cipla, Sun Pharma, GAIL India, Power Grid Corporation and Ambuja Cements, will declare results on Wednesday, 28 October 2009.
M&M, ONGC, Tata Power, BPCL, Cairn India, Grasim, Reliance Industries (RIL), DLF and Punjab National Bank, will come out with Q2 results on Thursday, 29 October 2009, to be followed by ABB, Sterlite Industries, ICICI Bank, National Aluminium Company, Bharti Airtel, Reliance Communications, Reliance Capital and Steel Authority of India on Friday, 30 October 2009. Hindalco, Jindal Steel & Power, State Bank of India, Reliance Infrastructure, Suzlon Energy and Unitech, will unveil Q2 results on Saturday, 31 October 2009.
The results announced so far have been mostly stronger than expected. The management guidance has been mixed. L&T said the company is likely to see order inflows rise over 30% in the financial year ending March 2010 and sales rise of 15%. The recent surge in crude oil prices may boost orders from the hydrocarbon sector, it said. The company said revival of infrastructure development in the Gulf augurs well as the company has a significant presence in the region.
IT major TCS said it has a good business pipeline and is pursuing 20 to 25 large outsourcing deals. Earlier, Infosys raised its earnings and revenue guidance in both dollar and rupee terms for the year ending March 2010 (FY 2010) at the time of announcing Q2 September 2009 results. Infosys, however, said strengthening rupee is a big concern for its earnings. The rupee has pared gains after hitting its highest level in more than a year recently.
Cement major UltraTech Cement said new capacities which are at various stages of implementation will result in pressure on margins for the cement industry. The company said its focus on higher volume growth, captive power generation and capital productivity, will help offset the impact of lower prices on margins.
Two-wheeler maker Bajaj Auto said raw material costs are likely to witness an upward trend in the coming quarters. The company said higher sales volumes from new launches will help leverage fixed costs and thus help partially offset a likely pressure on margins from higher input costs.

Sensex scores small gains amid high volatility scores

Volatility ruled the roost as the key benchmark notched up small gains on firm global stocks. The BSE 30-share Sensex rose 21.07 points or 0.13%, up close to 55 points from the day's low and off close to 200 points from the day's high. Capital goods stocks fell. Reliance Industries (RIL) slumped as partner Hardy Oil said a D9 well will be plugged and abandoned. But, IT and FMCG stocks rose.
As per provisional data, foreign funds today, 23 October 2009, offloaded stocks worth a net Rs 478.80 crore. Domestic funds bought equities worth a net Rs 172.99 crore
The S&P CNX Nifty closed marginally below the psychological 5,000 mark after moving above and below that level during the day. The Nifty had fallen below the 5,000 mark on Thursday on weak global stocks.
The BSE Sensex fell below the psychological 17,000 mark after breaching that mark at the onset of the trading day. The market breadth was marginally positive.
Intraday volatility was high. The market surged at the onset of the trading session, recovering from a 3% slide in the past three days, on firm global stocks. It pared gains in mid-morning trade. The market regained strength in early afternoon trade before paring gains. Immense volatility was witnessed later. The market regained positive zone after slipping into the red for a brief period in mid-afternoon trade. The market moved between positive and negative terrain in late trade.
The Securities and Exchange Board of India has allowed stock exchanges to set their trading hours between 9:00 IST and 17:00 IST, it said in a statement on Friday. The stock markets currently trade between 9:55 IST and 15:30 IST.
On the political front, the ruling Congress party-led alliance won two state polls on Thursday and was set to form the government in a third, a result that gives more room for the alliance to push economic reforms. Elections were held last week in Maharashtra, northern Haryana and Arunachal Pradesh in polls seen as a major test for the Congress coalition after a strong victory in Lok Sabha polls in May this year. The party retained power in Maharashtra and Arunachal Pradesh, and was expected to hold on to power in Haryana.
On the macro front, the RBI in its report on trend and progress of banking in India for 2008/09 released on Thursday, 22 October 2009, said managing the heavy government borrowing in a non-disruptive way is a major challenge for the central bank, as hardening bond yields run counter to its low rate policy needed for lifting growth
Inflation based on the wholesale price index (WPI) rose 1.21% in the year through 10 October 2009, higher than previous week's annual rise of 0.92%, date released by the government on Thursday showed. Within the WPI, the food articles index rose 13.34%. The government revised upwards inflation for the year through 27 August 2009 to a much smaller fall of 0.21% from an estimated 0.95% decline.
The Prime Minister's economic advisory council said on Wednesday that it sees inflation at around 6% by the end of the current fiscal year to March 2010. Faster industrial output growth and rising inflationary pressures have strengthened case for an end to the RBI's accommodative monetary stance next year. Industrial output grew at its fastest pace in 22 months in August 2009 at 10.4%.
The RBI pumped in massive liquidity in the banking system in the past one year or so to help revive the domestic economy in the aftermath of the global financial crisis. While as exit from the loose monetary policy is imminent, speculation on the bourses is the timing of the exit policy. The RBI is expected to keep its benchmark lending and borrowing rates on hold at a quarterly monetary policy review on 27 October 2009.
RBI on Thursday said financial reforms need to be carried out in a re-calibrated manner after the global financial crisis following Lehman Brothers' collapse last year. The central bank also sounded a note of caution on securitisation and asset derivative deals.
Stock and sector-specific activity may dominate trade on the bourses in the coming days based on expectations on Q2 September 2009 results. Auto firms are seen reporting strong Q2 results on strong volume growth and on lower input costs. Lower interest rates and pay hike for government employees has boosted auto sales this year after last year's slowdown in demand. Government employees have started receiving the balance 60% of their wage arrears as per the recommendations of the VIth Pay Commission.
Cement firms, too, are seen reporting good Q2 numbers on the back of volume growth, higher realisation and decline in costs like imported coal. Metal firms are seen reporting fall in net profit due to a sharp fall in metal prices on year-on-year basis.
Fall in volumes in the commercial property segment and lower realisations in both commercial and residential property segments, will pull earnings of realty firms lower.
Banks are seen reporting a sedate growth in core lending amid sluggish credit offtake. On the flip side, PSU banks will benefit from treasury gains amid volatility in prices of government securities during the quarter.
Strong growth in new subscriber additions will aid topline growth of telecom firms. But falling average revenue per user (ARPU) and revenue per minute due to intense competition will cap bottom line growth.
European stocks rose on Friday, reversing most of their previous session's drop, with French food group Danone rising after results pleased investors. The key benchmark indices in France, Germany and UK were up by between 0.97% to 1.28%.
The euro zone flash composite output index rose to 53 in October 2009, according to Markit, up from 51.1 in September 2009 and a 22-month high for the index. The services business activity index rose to 52.3, up from 50.9 in September 2009. Manufacturing PMI rose to 50.7, from 49.3 a month ago. "The flash PMI's indicate that the Euro zone economy has entered Q4 on a strong note, with growth accelerating in both manufacturing and services," said Chris Williamson, chief economist at Markit.
A closely-watched gauge of German business sentiment posted a slightly smaller-than-expected rise in October 2009. The Munich-based Ifo Institute's October climate index rose to 91.9 from 91.3 in September 2009, news reports said.
British gross domestic product unexpectedly shrank by 0.4% in the third quarter on a month-on-month basis, according to data from the Office for National Statistics. It was the sixth straight contraction for the UK economy. Economists had been expecting a modest 0.1% rise. Compared to the third quarter of 2008, GDP declined 5.2%.
Asian shares nudged higher on Friday on the back of upbeat earnings reports from the United States while the dollar resumed a broad slide after a Fed official indicated US interest rates would remain low. The key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.15% to 1.71%.
Auto makers and banks led rally in Chinese stocks on a view the economic recovery would continue. The Shanghai Composite rose 1.85%.
China's exports are likely to resume year-on-year growth this quarter as global trade slowly recovers, a Ministry of Commerce researcher said in remarks published on Friday. Exports have been falling from year-earlier levels since last November. In September 2009, the decline narrowed to 15.2% from 23.3% in August 2009.
That improvement was likely to continue because of the low base of comparison in the October-December quarter of 2008, researcher Liu Xueqin was quoted as saying by the International Business Daily, a Ministry of Commerce newspaper.
Meanwhile, China's banking watchdog has reportedly instructed lenders to carry out quarterly stress tests as part of a drive to strengthen credit controls and liquidity management. A recent circular from the China Banking Regulatory Commission orders banks to measure their capacity to withstand liquidity risks and work out a corresponding strategy to handle those risks
Trading in US index futures indicated a slightly firmed start of US stocks on Friday, 23 October 2009.
US markets rallied on Thursday as investors cheered some better than expected earnings and shrugged off a disappointing jobless report. Financials led the rally. The Dow jumped 131.95 points, or 1.3%, to 10,081.31. The S&P 500 index rose 11.51 points, or 1.1%, to 1,092.91. The Nasdaq rose 14.56 points, or 0.7%, to 2,165.29.
In the day's economic news, jobless claims rose 11,000 to a seasonally adjusted 531,000 last week, more than expected. An index of leading economic indicators rose 1% in September 2009, touching a two-year high and more than the 0.8% expected.
Nobuo Tanaka, executive director of the IEA, said in a interview to a news agency on Thursday that a rapid rise in oil prices could hamper the global economic recovery. He, however, added that it was too early to say if that scenario was unfolding now. The IEA has previously expressed concerns of a possible price spike if insufficient investment is made to add new sources of oil to keep up with demand. Crude is hovering close to a one-year high.
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.
Most of these companies - from industries ranging from liquor and spirits to infotech - issued equity shares to a select group of investors by way of qualified institutional placement or QIP. If the enabling resolutions passed by the companies are any indication, Indian firms are gearing up to raise $15 billion (Rs 69,427 crore) in the next six months. The list includes Hindalco (Rs 2,900 crore), JSW Steel ($1 billion), India Cements ($100 million), Essar Oil ($2 billion), Tata Steel (Rs 5,000 crore), Jet Airways ($ 400 million) and Bharat Forge ($150 million).
Unlisted Reliance Infratel announced on 22 September 2009 its intention to raise Rs 5,000 crore from the primary market. Divestment of state-run firms by the government may also increase the supply of paper in the market.
The government on Monday approved stake sales in state-run power producer NTPC and another unlisted power firm Satluj Jal Vidyut Nigam which reflects the country's resolve to speed up reforms and raise more resources for social schemes. On Monday, Trade Minister Anand Sharma said the Union Cabinet had approved a 5% stake sale in NTPC, and 10% in, an unlisted power producer. On Friday, 16 October 2009, Prime Minister Manmohan Singh said many state-run firms are eager to list their shares in the stock market as it would help unlock their value.
The government has approved a follow-on public offering of 20% of state run Steel Authority of India, the steel minister said on Wednesday, 21 October 2009. The Government of India owns nearly 86% of Sail.
The BSE 30-share Sensex rose 21.07 points or 0.13% to 16810.81. The Sensex rose 217.03 points at the day's high of 17,006.77 in early trade. The barometer index fell 24.54 points at the day's low of 16,765.20 in afternoon trade.
The S&P CNX Nifty rose 8.45 points or 0.17% to 4,997.05. Nifty October 2009 futures were at 5007, at a premium of 9.95 points as compared to the spot closing of 4,997.05. Turnover in NSE's futures & options (F&O) segment was Rs 79,719.69 crore, lower than Rs 86,383.23 crore on Thursday, 22 October 2009.
BSE clocked a turnover of Rs 5102 crore, lower than Rs 5806.58 crore on Thursday, 22 October 2009.
The market breadth, indicating the overall health of the market was marginally positive. The breadth weakened when compared to a strong breadth in early trade. On BSE, 1408 shares advanced as compared with 1324 that declined. A total of 100 shares remained unchanged.
Among the 30-member Sensex pack, 18 rose while rest fell.
From a 17 month high of 17,326.01 on 17 October 2009, the Sensex had lost 536.27 points or 3.09% in three trading sessions to 16,789.74 on Thursday, 22 October 2009. With foreign funds making heavy purchases, the Sensex is up 7,163.50 points or 74.25% in calendar year 2009, as on 23 October 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8650.41 points or 106%, as on 23 October 2009 FII inflow in the calendar year 2009 totaled Rs 67,788.90 crore (till 22 October 2009).
Coming back to today's trade, the BSE Mid-Cap index rose 1.03% and the BSE Small-Cap index rose 0.34%. Both the indices outperformed the Sensex.
Sectoral indices on BSE displayed mixed trend. The BSE FMCG index (up 3.03%), the BSE Healthcare index (up 2.05%), the BSE IT index (up 2.04%), the BSE Bankex (up 1.31%), the BSE Teck index (up 0.92%), the BSE Auto index (up 0.58%), the BSE Consumer Durables index (up 0.51%), the BSE Metal index (up 0.44%), outperformed the Sensex.
The BSE Oil & Gas index (down 2.71%), the BSE Capital Goods index (down 1.44%), the BSE PSU index (down 0.05%), the BSE Realty index (down 0.03%), the BSE Power index (up 0.05%), underperformed the Sensex.
Energy major Reliance Industries fell 4.04% to Rs 2047.30 as partner Hardy Oil said a D9 well will be plugged and abandoned. Shares of Hardy Oil plunged 35.3% in London. Hardy holds a 10% participating interest in the D9 block, which is located in the Krishna Godavari basin on the east coast of India. Reliance Industries is the operator and holds a 90% stake.
Meanwhile, RIL told the Supreme Court on Thursday it had no knowledge of the pact between its chairman Mukesh Ambani and his younger brother Anil. The stock came off the day's high of Rs 2154. On the third day of hearing on the gas supply dispute between the group firms of the Ambani brothers, Justice R.V. Raveendran asked RIL to satisfy the bench that the MoU, signed in 2005, was not between two companies, but two individuals. The bench also enquired if the pact, which has not been made public till date, could be produced before the court.
Mukesh Ambani-controlled Reliance Industries, India's top conglomerate, is fighting with Reliance Natural Resources, led by younger brother Anil Ambani, over the terms of a deal to sell gas to Reliance Natural at below the price set by the government. Reliance Industries has been presenting initial arguments in the case before the Supreme Court since Tuesday, saying the private deal between the Ambani brothers is not binding on the company, and it can sell the gas only at the government-approved price.
The government, which has the power to decide who can buy gas and at what price, had filed an application asserting it is the rightful owner of the disputed gas.
Anil Ambani's Reliance Natural Resources claims the contract is valid and wants the court to direct Reliance Industries to supply it with 28 mmscmd of gas for 17 years at almost half the government-set price of $4.2 per mmBtu.
The Supreme Court will resume hearing the case next Tuesday, with Reliance Industries expected to conclude its initial arguments by Thursday, 29 October 2009. The court will then hear arguments by Reliance Natural Resources, following which it will consider a petition by the government to become a party to the dispute.
India's largest power maker by sales Bharat Heavy Electricals fell 1.56% on profit taking after strong Q2 results. Net profit rose 39.31% to Rs 857.88 crore in Q2 September 2009 over Q2 September 2008, surpassing market expectations. The company announced result during market hours today.
India's largest engineering and construction firm by sales Larsen & Toubro fell 2.31%, extending Thursday's 3.86% fall, on muted sales growth in Q2 September 2009. L&T's net profit rose 26.1% to Rs 580.4o crore on 3.54% rise in total income to Rs 8136.39 crore in Q2 September 2009 over Q2 September 2008. The result hit the market during trading hours on Thursday.
L&T attributed the muted sales growth to delay in clearances of infrastructure projects from some clients and lower offtake of industrial and machinery products. The company said order backlog is at Rs 81623 crore, which is 2.4 times its revenue of Rs 33926.37 crore in the year ended March 2009, giving strong revenue visibility.
The company is likely to see order inflows rise over 30% in 2009/10 and sales rise of 15%, Chief Financial Officer Y.M. Deosthalee said on Thursday at the time of announcing Q2 results.
L&T said the recent surge in crude oil prices may boost orders from the hydrocarbon sector. The company said revival of infrastructure development in the Gulf augurs well as the company has a significant presence in the region.
IT stocks rose on increased optimism over the growth outlook for the sector. India's largest software services exporter TCS rose 2.18%. The company after market hours on 16 October 2009, reported stronger-than-expected Q2 September 2009 results. Consolidated net profit as per US accounting standards rose 6.81% to Rs 1623.90 crore on 3.16% growth in revenue to Rs 7435.10 crore in Q2 September 2009 over Q1 June 2009.
TCS has a good business pipeline and is pursuing 20 to 25 large outsourcing deals, chief executive N. Chandrasekaran said at the time of announcing Q2 results. The management is seeing signs of recovery but it believes it will be slow. The discretionary spent is still tight but there is spent seen in banking, finance services and insurance (BFSI), retail, utility and pharma verticals, TCS said at a conference call after the results. However, a continuous improvement in volumes cannot be expected, it said. The company is seeing stability in demand environment. The management expects to maintain margins at current levels provided there is no adverse rupee movement.
India's third largest software services exporter Wipro rose 2.11% even as its ADR fell 1.26% on Thursday. Wipro has bagged a 10-year total outsourcing contract from Delhi International Airport (DIAL) to provide information technology infrastructure and services for the Indira Gandhi International Airport (IGIA).
IT bellwether Infosys Technologies rose 2.2% as its ADR rose 0.75% on Thursday. Infosys raised its earnings and revenue guidance in both dollar and rupee terms for the year ending March 2010 (FY 2010) at the time of announcing Q2 September 2009 results before trading hour on 9 October 2009. Infosys, however, said strengthening rupee is a big concern for its earnings.
A foreign brokerage said in a recent note that it expects 2010 IT budgets to be strong given a significant pent-up demand.
India's largest cigarette maker by sales ITC rose 4.97% after net profit rose 25.81% to Rs 1009.91 crore in Q2 September 2009 over Q2 September 2008. The result which hit market during market hours, surpassed market expectations.
A surge in profit margins and a decent growth in revenue boosted the bottom line. ITC's operating profit margin surged to 36.59% in Q2 September 2009 from 31.4% in Q2 September 2008
Among other FMCG stocks, Hindustan Unilever, Dabur India, REI Agro, Tata Tea rose by between 0.88% to 5.85%.
India's largest thermal power producer by sales NTPC rose 0.8% after net profit rose 1.96% to Rs 2151.95 crore in Q2 September 2009 over Q2 September 2008. The results hit the market during trading. The government on Monday approved a 5% stake sale in NTPC.
Among other power stocks, Tata Power Company, CESC , Power Grid Corporation of India, rose by between 0.92% to 2.59%.
Bank stocks rose on bargain hunting after a recent slide triggered by concerns a proposed new interest rate system will intensify competition among lenders. A Reserve Bank of India (RBI) panel on Tuesday proposed a transparent pricing structure for floating rate loans wherein benchmark rates get automatically revised on shrinking cost of funds. India's largest private sector bank by net profit ICICI Bank rose 1.4% as its ADR rose 0.64% on Thursday. The bank recently reduced auto loan rates by 50 basis points.
India's largest bank by branch network State Bank of India rose 1.21%. SBI has reportedly raised $750 million (around Rs 3500 crore) in the overseas market through five-year bonds as part of its medium-term note programme (MTN). SBI's $5 billion MTN programme was launched in 2004. It targets investors, including banks, insurance companies, hedge funds and private equities in the global market.
India's second largest private sector bank by net profit HDFC Bank rose 1.4% as its ADR rose 1.76% on Thursday. The bank's net profit rose 30.2% to Rs 687.46 crore in Q2 September 2009 over Q2 September 2008. The results, which hit the market last week, were more or less in line with market expectations.
The committee headed by RBI executive director Deepak Mohanty has suggested discontinuing the usage of a bank's prime lending rate (PLR) as the benchmark for variable rate loans. Instead, it wants banks to arrive at a base rate that reflects the cost of one-year deposits and price loans over this base rate.
The panel has also proposed a ceiling on the extent of loans that can be granted below the benchmark rate. Most banks typically pass on the benefit of falling rates only to fresh customers. RBI governor D Subbarao has repeatedly said though the central bank has slashed its repo rate (at which it lends to banks) by 425 basis points in the last one year, prime lending rates of banks have fallen by only around 200 basis points.
Lenders currently offer loans at less than the benchmark prime lending rate to about 10 categories of borrowers, according to the central bank. Some of these loans are at rates that don't "make much commercial sense" for the banks, according to the report.
Meanwhile, comments from a finance ministry official on Friday, 23 October 2009, dashed hopes for the central bank relaxing mark-to-market rules for bank's debt holdings. The market has 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) category, possibly at a quarterly monetary policy review on 27 October 2009.
Banks do not have to make any mark-to-market provisions on securities held this basket if prices of securities fall. Provisions have to be made out of profit and therefore, impact a bank's bottom line. Yields on ten-year government bonds have risen sharply this year. Bond prices and bond yields are inversely related.
A news agency quoted an unnamed finance ministry official as saying that there was no compulsion over the Reserve Bank of India right now to raise the HTM cap and the finance ministry was not pushing for it. Indian banks can put bonds equal to 25% of the value of deposits in their HTM accounts. The market expectations is for an increase in the ceiling by up to 2 percentage points.
Global rating agency Moody's on Wednesday assigned moderate credit risk rating to 13 Indian commercial banks, including the country's largest public sector lender State Bank of India and private entity ICICI Bank. The agency has given the supported ratings an assessment of the government's ability to support the banks to the 13 entities, following the review of systemic support for individual banking systems. Moody's Investor Service in a statement said it has changed the systemic support input for Indian banks' ratings to Baa2 from the A1 local currency deposit ceiling. Baa2 generally refers to moderate credit risk.
The RBI in its report on trend and progress of banking in India for 2008/09 released on Thursday, 22 October 2009, said it needs to assess and initiate measures to raise the capital base of state-run banks. The central bank said off-balance sheet exposures of local banks declined by 26% in 2008/09, but it was necessary to monitor and evaluate risks from such exposure
India's largest dedicated housing finance firm HDFC rose 1.61%. HDFC, last week, announced its net profit rose 24.27% to Rs 663.94 crore in Q2 September 2009 over Q2 September 2008. The results beat market expectations.
Ultratech Cement fell 0.5%, extending losses this week, after the company issued a cautious outlook at the time of announcing Q2 results late last week. Net profit jumped 53% to Rs 251 crore in Q2 September 2009 over Q2 September 2008.
UltraTech said the performance was affected on a sequential basis due to lower demand in Southern India. The net profit dropped 39.94% to Rs 250.90 crore in Q2 September 2009 over Q1 June 2009.
The company said the cement demand may grow 9% in the year ending March 2010 on the back of government's initiative to boost rural development, infrastructure and housing. It, however, said new capacities which at various stages of implementation will result in pressure on margins.
The company said its focus on higher volume growth, captive power generation and capital productivity will help offset the impact of lower prices on margins.
Among other cement stocks, Grasim Industries and ACC fell by between 0.45% to 3.12%.
Jaiprakash Associates fell 0.34%, extending Thursday's 6.84% slide. Net profit rose 327.9% to Rs 870.19 crore on 53% rise in sales to Rs 1824.26 crore in Q2 September 2009 over Q2 September 2008. The company announced result after market hours on Wednesday, 21 October 2009. The company also announced 1:2 bonus issue at the time of announcing Q2 results
Telecom stocks fell. Finance secretary Ashok Chawla said on Tuesday the auctions for the 3G spectrum would take place by December this year. India's largest mobile services provider by market share Bharti Airtel rose 1.63%.
The Department of Telecommunications had earlier said that the auction would start from 7 December 2009, though there are apprehensions about the date since the defence forces are yet to vacate spectrum. The auction has already been postponed several times. With the availability of 3G spectrum, telecom companies are expected to offer a combined mobile and internet platforms.
India's second largest mobile services provider by sales Reliance Communications (RCom) fell 1.14%. Chairman Anil Ambani, last week, alleged that there is a 'vicious and malafide' campaign against his telecom company Reliance Communications by a 'known rival group' and dubbed the special audit report, which claimed that RCom was mis-stating its revenues as 'biased and prejudiced'. But the auditor, Parekh & Co defended its work and also denied a claim by Mr Ambani that it had not sought feedback from RCom.
Meanwhile, the Central Bureau of Investigation (CBI) on Thursday raided the offices of the Department of Telecom (DoT), alleging criminal conspiracy between DoT officials and private firms in the allotment of 2G spectrum. According to the agency, all records pertaining to the allocation of spectrum to new entrants in January 2008 are being examined to ascertain whether or not there was any irregularity in the process.
Realty stocks rose on recent reports that demand for residential projects in major cities is picking up on lower home loan rates, property price cuts by developers and a recovery in the job market. The housing market had slumped last year amid a global credit crunch and buyers fearing job losses. Indiabulls Real Estate, Omaxe, Anant Raj Industries, DLF rose by between 0.05% to 2.51%.
Auto stocks rose on expectation of strong Q2 September 2009 result. Bajaj Auto rose 0.91%. Bajaj Auto's net profit jumped 117.85% to Rs 402.83 crore in Q2 September 2009 over Q2 September 2008. The company announced the Q2 results during trading hours on 15 October 2009.
India's top small car maker by sales Maruti Suzuki India rose 2.01%. The company's total sales rose 17.3% to 83,306 vehicles in September 2009 over September 2008. The figures were released during trading hours on 1 October 2009.
India's largest tractor maker by sales Mahindra & Mahindra rose 2.8%. Total sales rose 10.94% to 28434 vehicles in September 2009 over September 2008. The company unveiled the sales figures during trading hours on 1 October 2009.
But, India's largest truck maker by sales Tata Motors fell 2.31%.
Hero Honda Motors fell 1.21% even as net profit jumped 95% to Rs 597.14 crore on 26.8% rise in revenue to Rs 4059.44 crore in Q2 September 2009 over Q2 September 2008. The company announced result after market hours on 21 October 2009
Total domestic automobile sales in the country in the first half of the financial year 2009-10 rose by 14.51% year-on-year to 57,82,920 units, according to automobile sales figures released by the Society of Indian Automobile Manufacturers (Siam). The jump in sales for the April-September period came from the double-digit growth posted by the passenger vehicle segment (comprising cars and sports utility vehicles) which grew by 13.46%, by the 15.68% spurt in two-wheeler sales and by an increase of 12.37% in sales of three-wheelers.
Sugar stocks rose on bargain hunting after recent losses triggered by the government's decision to extend tax free white sugar imports till December 2010 to improve supplies to tide over a shortage. Dhampur Sugars, Bajaj Hindustan, Shree Renuka Sugars rose by between 2.38% to 5.68%.
Cals Refineries clocked highest volume of 2.63 crore shares on BSE. Unitech (1.06 crore shares), Radhe Developers (0.92 crore shares), Ispat Industries (0.91 crore shares) and FCS Software (0.66 crore shares) were the other volume toppers in that order.
Reliance Industries clocked highest turnover of Rs 332.28 crore on BSE. Sesa Goa (Rs 151.12 crore), Larsen & Toubro (Rs 131.88 crore), Jaiprakash Associates (Rs 130.95 crore) and State Bank of India (Rs 130.27 crore) were the other turnover toppers in that order.