Market Report 20 July 2009
The key benchmark indices clocked strong gains, extending last week's sharp climb, as encouraging Q1 June 2009 results from India Inc and firm global stocks boosted sentiment. The BSE 30-share Sensex rose 446.09 points or 3.03%. The barometer indices struck its highest closing in more than a month. The Sensex crossed the psychological 15,000 mark for the first time in two weeks. World stocks rose on news CIT Group Inc had clinched a last-minute $3 billion rescue by a group of bondholders and probably escaped bankruptcy. CIT lends to nearly one million small and mid-sized US businesses.
Index heavyweight Reliance Industries rallied after the Supreme Court asked the energy giant and former group firm Reliance Natural Resources (RNRL) why a gas pact between the two should not be cancelled.
Banking, realty, and capital goods stocks jumped. TCS vaulted more than 15% and was the major gainer from the Sensex pack on stronger-than-expected Q1 June 2009 results. Other IT majors surged. The market breadth, indicating the overall health of the market, was strong. Except, BSE FMCG index, all the other sectoral indices on BSE, rose.
A bout of intraday volatility was witnessed. The market pared gains after an early surge triggered by firm global stocks. The Sensex hit the psychological 15,000 mark in early trade but fell below the mark shortly. The last time the Sensex had hit 15,000 was on the day of announcement of the Union Budget 2009-2010 on 6 July 2009. The market surged in early afternoon trade with the Sensex regaining the 15,000 mark. The market extended gains in afternoon trade. After hitting a fresh intraday high, the market pared gains in mid-afternoon trade. It spurted in late trade.
Lower costs have helped India Inc report Q1 June 2009 results. The combined net profit of 191 companies rose 41.6% Rs 10,730 crore on 14.9% growth in sales to Rs 72,710 crore in Q1 June 2009 over Q1 June 2008.
But possibility of deficient rains this year raises a risk of low agricultural output and hence high food inflation. The cumulative seasonal rainfall from 1 June 2009 to 15 July was 27% below normal levels. It has adversely affected the kharif sowing. The worst hit crops are rice, oilseeds especially groundnut and soyabean and sugarcane. Spatial distribution and actual rain during July and August are vital to determine its consequences on overall economy.
European shares were higher on Monday, rising for the sixth straight day, with banks the major gainers. The key benchmark indices in France, Germany and UK were up by between 1.3% to 1.53%.
Asian stocks advanced, led by commodity and technology shares, after oil and metal prices gained and US housing starts unexpectedly rose. Key benchmark indices in China, Hong Kong, South Korea, Singapore and Taiwan were up by between 1.02% to 3.7%.
Trading in the US index futures indicated Dow could rise 66 points at the opening bell today, 20 July 2009.
After a strong week, US markets ended Friday's (17 July 2009) trade flat. The Dow added 32.12 points, or 0.4%, to 8,743.94. The S&P 500 index slipped 0.36 points, or less than 0.1%, to 940.38, while the Nasdaq composite index rose 1.58 points, or 0.1%, to 1,886.61. For the week the Dow and S&P were up over 7%. Nasdaq gained almost 8%.
On the earnings front, Bank of America, the largest US bank, said second-quarter net income fell 25% to $2.42 billion and warned results would continue to be hurt by troubled loans from credit card, mortgage and business customers due to the weak economy. Citigroup reported a $4.3 billion quarterly profit, thanks to the merger of its brokerage arm into a new venture after struggling to survive the financial crisis.
General Electric reported a second-quarter profit of 26 cents a share, topping consensus estimates of 23 cents a share. Revenues came in lower by 17%, at 39 billion dollars was slightly below the 42 billion dollars that analysts had predicted.
The BSE 30-share Sensex rose 446.09 points or 3.03% at 15,191.01, its highest closing since 12 June 2009. At the day's high of 15,209.36, the Sensex rose 464.44 points in late trade. At the day's low of 14,854.17, the Sensex rose 109.25 points in early trade.
The S&P CNX Nifty was up 127.30 points or 2.91% to 4,502.25, its highest closing since 16 June 2009. Nifty July 2009 futures were at 4505.60, at a premium of 3.35 points as compared to the spot closing of 4502.25. Turnover in NSE's futures & options (F&O) segment was Rs 70,008.60 crore, much lower than Rs 74,254.90 crore on Friday, 17 July 2009.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1,832 shares rose as compared with 829 that fell. A total of 72 shares remained unchanged. From the 30 shares Sensex pack, 23 rose and rest fell.
From a recent low of 13,400.32 on 13 July 2009, the Sensex has risen 1,790.69 points or 13.36% in five trading sessions. The Sensex is up 6,253.70 points or 64.82% in calendar year 2009, as on 20 July 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 7,030.61 points or 86.15% as on 20 July 2009.
Coming back to today's trade, the BSE Mid-Cap index was up 2.54% and the BSE Small-Cap index was up 2.52%. But both these indices underperformed the Sensex.
The BSE IT index (up 7.26%), the BSE Realty index (up 4.91%), the BSE TECk index (up 4.78%), the BSE Bankex (up 4.37%), the BSE Oil & Gas index (up 3.66%), outperformed the Sensex.
The BSE FMCG index (down 0.49%), the BSE Power index (up 0.89%), the BSE PSU index (up 0.95%), the BSE Consumer Durables index (up 1.64%), the BSE Auto index (up 1.68%), the BSE Healthcare index (up 1.82%), the BSE Capital Goods index (up 2.11%), the BSE Metal index (up 2.12%), underperformed the Sensex.
India's largest private sector firm by market capitalisation Reliance Industries (RIL) rose 5.03% to Rs 2,030.65 after Supreme Court (SC) scheduled next hearing on the dispute over the gas supply to Reliance Natural Resources (RNRL) to 1 September 2009. Media reports quoted Reliance Industries (RIL) lawyer as saying that the Supreme Court has asked parties to explain why gas pact should not be cancelled. The SC has cleared the way for the government to be a party in the court battle, the RIL lawyer was quoted as saying .
Reports also quoted RNRL lawyer as saying that the Supreme court will club all petitions and applications in gas case together. RNRL has asked the Supreme Court to dismiss the government's affidavit on the dispute, even as the petroleum ministry has suggested that the court treats the pact between the two brothers null and void. The dispute concerns supply of natural gas from RIL's field, off the Andhra Pradesh coast, as also the price at which Reliance Natural Gas will get the fuel for power projects within the group.
In reply to the lawsuit filed by Reliance Industries challenging the Bombay High Court order, RNRL has said the government has no role to play in the private gas sharing dispute, and certainly not as a party to the row. The government, however, has said that the country's interest must be taken into consideration first and that cannot be held to ransom by a dispute between two industrialists or a previous, private pact between them.
Shares of oil exploration firms rose as oil rose surged past $64 a barrel mark on Monday, extending last session's 2.5% gains, bolstered by a rally in Asian stocks and fall in the dollar on hopes of a global economic recovery. India's largest state-run oil exploration firm by revenue ONGC rose 1.83%. Cairn India rose 6.05%. US crude oil for August delivery rose 1.59% to $64.57 a barrel after settling up $1.54 at $63.56 on Friday. The rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.
But PSU OMCs fell on rise in crude oil prices. BPCL and Indian Oil Corporation, fell by between 0.08% to 1.51%. HPCL was flat. Higher oil prices will results in increase underrecoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.
Realty stocks rose on the government's thrust on the housing sector in the Budget. Unitech, Housing Development & Infrastructure, Indiabulls Real Estate, DLF, Omaxe, Ackruti City rose by between 1.06% to 7.8%.
IT stocks jumped on better-than-expected Q1 June 2009 result by India's largest IT exporter by sales TCS after trading hours on Friday. TCS jumped 15.34%. The company's net profit rose 15.27% to Rs 1276.44 crore on 0.12% fall in sales to Rs 5609.60 crore in Q1 June 2009 over Q4 March 2009.
India's third largest IT exporter by sales Wipro rose 7.14%. Its American depository receipt (ADR) rose 3.08% on Friday, 17 July 2009.
India's largest IT firm by sales Infosys rose 5.66%. The company had raised the lower end of its annual forecast in dollar terms at the time of announcing Q1 June 2009 results on 10 July 2009. Its ADR rose 2.95% on Friday, 17 July 2009.
Bank stocks rose after the Finance Minster said last week that the government is committed to financial sector reforms. The minister's articulation of commitment to financial sector reforms suggests that greater foreign direct investment in insurance and pension reforms, issue that had been put in cold storage because of Left opposition during the UPA's last term, would now be expedited.
India's largest private sector bank by net profit ICICI Bank rose 6.01% after its American depository receipt (ADR) rose 3.78% on Friday, 17 July 2009.
India's biggest bank in terms of branch network State Bank of India (SBI) rose 2.78% despite reports the Reserve Bank of India has asked it to set aside more money for bad loans, noting that provisions made by the bank are far short of the industry average.
India's second largest private sector bank in terms of operating income HDFC Bank rose 2.44%. HDFC Bank's net profit rose 30.52% to Rs 606.11 crore on 21.86% rise in total income to Rs 5136.75 crore in Q1 June 2009 over Q1 June 2008. Other income jumped 75.9% to Rs 1043.70 crore in Q1 June 2009 over Q1 June 2008, due to spurt in fees and commissions. The bank announced the result on Tuesday, 14 July 2009. Its ADR rose 1.12% on Friday.
PSU banks, Union Bank of India, Bank of Baroda, Indian Overseas Bank, Bank of India, Punjab National Bank, rose by between 4.64% to 6.48%.
Axis Bank rose 4.06% extending recent sharp gains after net profit rose 70.24% to Rs 562.04 crore on 33.64% rise in total income to Rs 3864.13 crore in Q1 June 2009 over Q1 June 2008. The bank announced the result during market hours on Monday 13 July 2009.
India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 2.69% extending Friday's (17 July 2009) 3.03% jump after the company stood by its stated outlook of 25% growth in order inflows for the current year even as the first quarter ended with a negative note. At the time of announcing Q1 June 2009 results, L&T had during trading hours on Thursday, 16 July 2009 said its order inflow was down 22 % in Q1 June 2009 over Q1 June 2008. The company's order backlog at the end of the June quarter was Rs 71, 650 crore ($14.7 billion). The stock fell 3.65% on Thursday after result.
Other capital goods stocks, Punj Lloyd, Praj Industries, BEML, ABB, Siemens, Bharat Heavy Electricals, Thermax, rose by between 0.13% to 4.53%.
FMCG majors fell on slow progress of India's annual monsoon. FMCG firms derive substantial revenue from the rural sector. ITC and Hindustan Unilever fell by between 0.19% to 1.98%.
Some drug makers rose after the Finance Minister Pranab Mukherjee reduced customs duty on life saving drugs in the Budget. Ranbaxy Laboratories, Pfizer, Cipla, Dr Reddy's Laboratories, Wockhardt Lupin, rose by between 0.84% to 2.76%.
Finance minister on 6 July 2009, reduced basic customs duty on influenza vaccine and nine other specified life-saving drugs used for treating breast cancer, hepatitis-B, rheumatic arthritis, etc. The government has also reduced basic customs duty for two bulk drugs used in manufacturing these medicines from 10% to 5%. Bulk drugs are processed raw materials used in manufacturing the final doses of medicines.
Some power stocks rose on bargain hunting after a recent fall triggered by disappointment from the Budget. There was lack of any major sops in the Budget for the power sector. Tata Power Company, NTPC, Power Grid Corporation of India, fell by between 0.22% to 1.29%.
Some cement stocks rose after a thrust on infrastructure development in the Union Budget 2009-2010. Grasim Industries, ACC, Ultratech Cements, rose by between 1.01% to 3.41%.
Construction stocks, too, were in demand. Era Infra Engineering, Hindustan Construction Company, IVRCL Infrstructure &Projects and Nagarjuna Construction Company rose by between 3.03% to 4.65%.
Finance Minister Pranab Mukherjee on 6 July 2009, provided a thrust on various infrastructure projects in the Budget which may result in increase in orders for construction firms and help boost cement demand. The government announced more spending for urban, water and road projects. The allocation to National Highway development program allocation was increased 23% to Rs 15948 crore.
Two-wheeler makers rose, extending last week's gains, boosted by good Q1 June 2009 results from Bajaj Auto during market hours on Thursday, 16 July 2009. Bajaj Auto gained 2.42% extending a recent sharp surge. Bajaj Auto's net profit jumped 67.60% to Rs 293.49 crore in Q1 June 2009 over Q1 June 2008.
India's largest motor bike maker by sales Hero Honda Motors rose 0.85%.
India's largest small car maker by sales Maruti Suzuki India rose 1.97% and India's largest tractor maker by sales Mahindra & Mahindra rose 2.34%. India's largest commercial vehicle maker by sales Tata Motor rose 3.78%.
Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange rose 1.22% on Friday, 17 July 2009. JSW Steel, Jindal Steel, Hindalco Industries, Steel Authority of India, National Aluminum Company, Hindustan Zinc rose by between 0.45% to 8.13%.
India's largest copper maker by sales Sterlite Industries rose 3.8% on bargain hunting after a recent sharp fall triggered by equity dilution concerns after the company raised $1.5 billion from an issue of American Depositary Receipts in which parent Vedanta has subscribed $500 million.
Some shipping firms rose as Baltic Dry Index, which measures the cost of shipping commodities, rose 1.2% in London on Friday, 17 July 2009. Shipping Corporation of India, Mercator Lines and Essar Shipping rose by between 0.75% to 2.64%.
Sugar stocks rose on firm global sugar prices. Dhampur Sugar, Bajaj Hindustan, Balrampur Chini and Shree Renuka Sugars rose by between 0.51% to 3.35%.
Mahindra Satyam clocked the highest volume of 3.39 crore shares on BSE. Reliance Natural Resources (2.39 crore shares), Cals Refineries (2.23 crore shares), IFCI (1.84 crore shares) and Unitech (1.77 crore shares) were the other volume toppers in that order.
Mahindra Satyam clocked the highest turnover of Rs 329.97 crore on BSE. Reliance Industries (Rs 270.03 crore), Tata Consultancy Services (Rs 196.78 crore), ICICI Bank (Rs 196.33 crore) and Reliance Natural Resources (Rs 193.27 crore) were the other turnover toppers in that order.