Wednesday, November 18, 2009

Indian Share / Stock Markets Report 18 Nov 2009

Volatility ruled the roost as the key benchmark indices edged lower with investors cashing in on gains after a sharp rally in the past few days. The BSE 30-share Sensex fell 51.87 points or 0.3% off close to 100 points from the day's high. The Sensex settled below 17,000 mark after alternatively moving above and below that level during the day.

Metal stocks rose. But capital goods and banking stocks fell. Index heavyweight Reliance Industries dropped after setting record date for a liberal 1:1 bonus issue. Another index heavyweight L&T also fell.

Intraday volatility was high. The market recovered soon after an initial slide. The Sensex and the 50-unit S&P CNX Nifty pared gains after hitting one-month highs in mid-morning trade. The market once again slipped into the red later. The market cut losses in early afternoon trade after Finance Minster Pranab Mukherjee said the current higher capital inflows are not a matter of concern. The market moved between positive and negative zone later. The market hit a fresh intraday low in late trade. Volatility was high at the fag end of the trading session

Profit taking weighed on the domestic bourses today. From a recent low of 15,404.94 on 3 November 2009, the Sensex had jumped 1,645.71 points or 10.68% in a short period of time to 17,050.65 on 17 November 2009.

Mukherjee said on Wednesday the country is monitoring foreign capital inflows and the current higher inflows are not a matter of concern. Indian stocks have risen sharply this year on robust inflow from foreign funds. Indian officials had said on recent occasions that they welcomed fund inflows, but Mukherjee on Wednesday also noted that India is ready to deal with the flows if they become a problem. We have a system of monitoring inflows, he said.

The industry body Assocham on Tuesday, 17 November 2009, suggested that foreign institutional investors (FIIs) should be charged a tax of 2% of their money pumped into the stock market to prevent further rise of the rupee and also an asset-bubble. At a quarterly policy review late last month, the RBI said there were signs excess liquidity is seeping into asset prices.

Imposing the tax would help the RBI to manage rupee at reasonable levels to safeguard and support Indian exporters, hit hard by rising input cost and appreciating rupee, Assocham said. The rupee has appreciated over 5% against the US dollar in the last six months.

The parliament will debate closely watched reform bills in the banking and insurance sectors in the winter session which starts on Thursday, 19 November 2009, the minister of state for Parliamentary Affairs Prithviraj Chavan said on Wednesday. The insurance bill, which is pending before the parliamentary standing committee, proposes to raise foreign investment limit in insurance companies from 26% to 49%, Chavan said

Meanwhile, Federal Reserve Chairman Ben Bernanke surprised investors on Monday 16 November 2009 when he said the central bank was attentive to implications of changes in the value of the dollar, although he reiterated that interest rates would remain exceptionally low for an extended period.

On Tuesday, 17 November 2009, other top Federal Reserve officials struck differing notes on the likely pace of the US economic recovery. Jeffrey Lacker, the president of the Richmond Federal Reserve Bank said economic recovery in the US is solidly under way. He expects the economy to grow at a reasonable pace in 2010 as the housing sector recovers and consumers and businesses resume spending. Lacker, an outspoken anti-inflation hawk, said that if officials want to keep inflation in check, they cannot be "paralyzed by patches of lingering weakness, which could persist well into the recovery."

Two other senior Fed officials, Cleveland Fed President Sandra Pianalto and San Francisco Fed chief Janet Yellen, stressed that the economic recovery will be sluggish. Yellen, however, told a panel in Hong Kong that the Fed knows it cannot maintain its easy money policy for too long once the economy has healed.

Lacker warned that the risk consumers and businesses lose confidence in inflation stability is greatest in the early years of an economic recovery. The Fed's actions to pump money into the system to spur recovery heightens this danger, he said.

The Fed took another small step on Tuesday to wind down its emergency support as financial markets improve. It shortened the maturity of the emergency loans it makes to banks at its discount window, which it had lengthened during the crisis.

Closer home, inflation based on the wholesale price index accelerated in October 2009 from a month earlier on costlier minerals and fuels. On Saturday 14 November 2009, the government switched to using monthly inflation data for all commodities with 1993/94 as the base year, from the earlier practice of announcing weekly price movement. The wholesale price index was up 1.34% in October 2009 from a year earlier, compared with 0.5% rise in September 2009 and 11.06% jump a year ago. Food prices, however, declined by 1% from the previous month's level, while minerals and industrial fuels were each costlier by 3%.

Mukherjee today said the government may import rice if there is a shortfall in the summer-sown crop output.

Industrial output grew 9.1% in September 2009 from a year earlier, helped by stimulus and festival demand, and adding to the debate on the timing of exit policy. However, Finance minister Pranab Mukherjee said on Monday stimulus packages to perk up the economy during the slowdown are unlikely to be withdrawn in the current financial year and the exit when it happens will be a gradual one.

Economists and analysts surveyed by the Reserve Bank of India (RBI) revised downwards India's gross domestic product projection to 6% for 2009/10 from 6.5% in the previous round of survey, the RBI released the results of the ninth round of survey on Monday 16 November 2009.

The RBI in its mid-term monetary policy review last month kept its GDP projection for the current fiscal unchanged at 6% but had increased inflation target to 6.5% by end-March 2010 from 5%. The government is scheduled to announce the July-September GDP growth number on 30 November 2009.

Meanwhile, the initial public offer of Cox and Kings, a global tour operator, was subscribed 60% at 16:00 IST on the first day of bidding today. The price band has fixed at Rs 316-330 per share and the issue will close for subscription on 20 November 2009. Face value per share is Rs 10.

European shares bounced back on Wednesday to trade near their highest level in more than 13 months, with investors waiting for macro-economic numbers from the United States and minutes from the Bank of England. The key benchmark indices in France, Germany and UK were up by between 0.44% to 0.67%.

Asian stocks were trading mixed on Wednesday. The key benchmark indices in China, South Korea and Taiwan rose by between 0.43% to 1.13%. The key benchmark indices in Hong Kong, Japan and Singapore fell by between 0.32% to 0.72%.

China needs to be alert to the danger of asset bubbles, but headline inflation is unlikely to be a risk for some time, Fan Gang, a member of the People's Bank of China's monetary policy committee, said. Speaking at a forum in Hong Kong on Wednesday, Fan said Chinese gross domestic product could expand between 8% and 9% in 2010. Growth this year would be above the government's target of 8%, he added.

Chinese Premier Wen Jiabao told US President Barack Obama in a meeting on Wednesday that China wants to balance its trade relationship with the United States and does not seek a surplus. The comments published on China's foreign ministry website made no reference to Wen mentioning China's yuan policy to Obama, but did indicate that Obama had brought up currency reform as one step that China should take to mitigate trade imbalances.

Trading in US index futures indicated a steady opening of US stocks on Wednesday, 18 November 2009.

US stocks rose to fresh 13-month highs on Tuesday as upbeat broker views on improving prospects for two Dow components offset disappointing holiday spending outlooks from Target and Home Depot. The Dow Jones industrial average was up 30.46 points, or 0.29%, to end at 10,437.42. The Standard & Poor's 500 Index gained 1.02 points, or 0.09% to finish at 1,110.32. The Nasdaq Composite Index rose 5.93 points, or 0.27% to close at 2,203.78.

In economic data from the US, producer prices rose 0.3% in October, with the core rate dropping 0.6%. And industrial production climbed 0.1% in October 2009. This was less than the 0.4% gain expected.

The BSE 30-share Sensex fell 51.87 points or 0.3% to 16998.78. At the day's high of 17,098.79, the Sensex rose 48.14 points in mid-morning trade, its highest since 21 October 2009. The Sensex fell 92.24 points at the day's low of 16,958.41 in late trade.

The S&P CNX Nifty fell 7.55 points or 0.15% to 5054.70. It hit a high of 5079.30 in intraday trade, its highest since 21 October 2009. Nifty November 2009 futures were at 5,057, at a premium of 2.30 points as compared to spot closing of 5,054.70. Turnover in NSE's futures & options (F&O) segment was Rs 67,322.64 crore, lower than Rs 71,301.23 crore on Tuesday, 17 November 2009.

The market breadth, indicating the overall health of the market was strong. On BSE, 1591 shares advanced as compared with 1163 that declined. A total of 81 shares remained unchanged.

From the 30 share Sensex pack, 18 fell and rest rose.

BSE clocked a turnover of Rs 5234 crore, higher than Rs 4835.65 crore on Tuesday,17 November 2009.

The Sensex is up 7351.47 points or 76.2% in calendar year 2009, as on 18 November 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8838.38 points or 108.3% as on 18 November 2009.

Coming back to today's trade, the BSE Mid-Cap index rose 0.29% and the BSE Small-cap index rose 0.8%. Both these indices outperformed the Sensex.

The BSE Metal index (up 1.2%), the BSE FMCG index (up 0.73%), the BSE IT index (up 0.7%), the BSE Realty index (up 0.67%), the BSE Consumer Durables index (up 0.61%), the BSE Healthcare index (up 0.47%), the BSE Teck index (up 0.47%), the BSE Auto index (up 0.03%), the BSE Power index (down 0.1%), the BSE PSU index (down 0.2%), outperformed the Sensex.

The BSE Oil & Gas index (down 0.84%), the BSE Bankex (down 0.78%), the BSE Capital Goods index (down 0.66%), underperformed the Sensex.

Energy major Reliance Industries (RIL) fell 1.47%. The company plans an aggressive exploration campaign, investments in petrochemicals and overseas acquisitions as India's top company by market capitalisation prepares itself for the next phase of growth. The company will work towards attaining global scale for its conventional energy platform petrochemicals, refining and oil and gas exploration and invest in its new businesses such as retailing and alternative energy, chairman Mukesh Ambani said at the company's annual meeting of shareholders on Tuesday.

Meanwhile, RIL has set 27 November 2009 as the record date for a liberal 1:1 bonus share issue.

The government on Monday 16 November 2009 announced additional allocation of 51.6 million metric standard cubic metres per day (mmscmd) of natural gas from RIL's Krishna Godavari D6 field. Nearly 70% of this has been to the power sector. The move, finalised at the meeting of the ministry of petroleum and natural gas on 27 October 2009, takes the total allocation to 91.6 mmscmd from the current 40 mmscmd.

RIL on Tuesday 10 November 2009 announced its first oil discovery in its exploration block in the Cambay Basin off Gujarat. Reliance holds 100% participating interest in the block. This block was awarded to Reliance under the fifth round of the New Exploration Licensing Policy.

Oil exploration stocks rose as crude oil gained for a third day on Wednesday after an industry report showed US stockpiles declined after a hurricane in the Gulf of Mexico. Oil rose as much as 0.9% to $79.85 a barrel on Asian electronic trading. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

Cairn India rose 1.58%. The company on 5 November 2009 signed a pact with Reliance Industries for supply of crude oil.

India's second biggest state-run oil exploration firm by revenue Oil India rose 0.43%. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 0.37%. Steel magnate Lakshmi Mittal has reportedly pulled out of a project to develop an oil block in Kazakhstan with Indian joint venture partner Oil and Natural Gas Corp. ONGC Mittal Energy was to have acquired a 25% stake in Satpaev block from state-owned KazMunaiGaz and invested a total of $400 million in the project.

Meanwhile, the petroleum ministry has reportedly proposed a 33% hike in the price of natural gas produced by ONGC and Oil India and gradually increase it to $4.20 per mmBtu set for gas from Reliance Industries' KG-D6 fields.

PSU OMCs fell as higher crude oil prices will increase under-recoveries on domestic sale of petrol, diesel, kerosene and LPG at controlled prices. HPCL, Indian Oil Corporation (IOC) and BPCL fell by between 0.45% to 2.35%.

Metal stocks rose on strong domestic demand. National Aluminium Company rose 0.3%. The company recently hiked the prices of aluminium products by Rs 1000 a tonne reflecting the recent uptrend in prices on the London Metal Exchange. Sterlite Industries rose 0.49%.

Steel Authority of India (Sail) rose 0.51% on reports the company has won a battle with ArcelorMittal for Chiria mines in Jharkhand. The steel minister on 16 November 2009 said the cabinet will soon consider selling part of government's stake in Steel Authority of Steel. Meanwhile, Sail chairman on Monday said the company has cut flat product prices by Rs 500 per tonne

JSW Steel rose 4.03%. Japan's Nippon Steel Corp on Wednesday denied a report that it was in talks for a stake in JSW Steel. Earlier, a television report said JSW Steel aims to raise $300 million to $500 million via the stake sale of about 7 to 11% to Nippon.

Tata Steel, the world's eighth largest steelmaker by output, rose 1.68%. Tata conglomerate is looking around the world for a successor to Ratan Tata, the 71-year old chairman of the sprawling salt-to-steel group said on Wednesday. Local and foreign candidates were being looked at to head the group, which includes Tata Motors, Tata Steel, Tata Consultancy Services and Tata Power among its 27 listed companies Tata Steel is reportedly raising its annual iron ore production by 55% to 17 million tonnes in India over the next two years. The expansion is expected to cost about Rs 1100 crore.

Tata Steel, recently approved a new convertible bonds offer in exchange for an existing $875 million securities to reduce costs and ease repayment obligations. The company said on 6 November 2009 steel sales at its Indian operations rose 38% to 462,000 tonnes in October 2009 over October 2008.

Demand for steel remains strong from auto, rural construction and infrastructure sectors. Also demand for construction grade steel has improved post monsoon season, and has resulted into higher sales.

India's largest engineering and construction firm by sales Larsen & Toubro fell 1.72%. The company after market hours on Tuesday said Gilbarco Inc. has bought its petroleum dispensing pump business.

India's largest power equipment maker by sales Bharat Heavy Electricals fell 0.19%. The company said on Wednesday it has signed a joint-venture to build a 1,600 megawatt (MW) thermal power plant in the central state of Madhya Pradesh. The power plant at Khandwa will be equipped with supercritical technology, which helps lower coal consumption and leads to lower emissions.

Banking shares fell on profit taking. India's largest bank by net profit State Bank of India (SBI) fell 0.88%. State Bank of India said on 9 November 2009 said it had entered into an agreement with T. Rowe Price to sell a 6.5% holding each in UTI Asset Management Company and UTI Trustee Company. State Bank currently holds 25% in each of the companies and after the sale its holding would be reduced to 18.5%, it said in a statement.

SBI announced after market hours on Friday 6 November 2009 it has revised downwards interest rates on deposits by 25-50 basis points for a few maturities effective from 9 November 2009. The bank's consolidated net profit rose 28.29% to Rs 3,133.16 crore on 22% rise in consolidated income to Rs 33,101.65 crore in Q2 September 2009 over Q2 September 2008. The results were announced on 31 October 2009.

India's largest private sector bank by net profit ICICI Bank fell 1.47% as its ADR fell 0.23% on Tuesday. The bank's net profit rose 2.6% to Rs 1040.13 crore on a 12.7% decline in total income to Rs 8480.73 crore in Q2 September 2009 over Q2 September 2008. The result was announced during trading hours on 30 October 2009.

India's second largest private sector bank by net profit HDFC Bank fell 0.22%.

India's largest dedicated home loan lender Housing Development Finance Corporation (HDFC) fell 0.66%. The lender announced after market hours on Friday 13 November 2009 it has agreed to acquire approximately 41% in the fully diluted equity share capital of Credila Financial Services from DSP Merrill Lynch Capital.

Prime Minister Manmohan Singh said on 8 November 2009, financial reforms, such as building up a domestic bond market and expanding foreign investment in sectors like insurance, would be pushed forward.

Meanwhile, the Reserve Bank of India Deputy Governor Usha Thorat said on Monday 16 November 2009 the central bank will soon issue guidelines on provisioning for bad loans by banks

IT stocks rose on gains in American depositor receipt overnight in US. India's third largest software company by sales Wipro rose 0.4% as its ADR rose 0.99% on Tuesday. Wipro, sees robust deal pipeline on the back of improving IT demand worldwide, Suresh Vaswani, joint chief executive said on Tuesday 10 November 2009. The company said on 5 November 2009 it had agreed to buy some personal care businesses of Yardley for about $45.5 million, adding to its consumer goods business. Wipro said it had signed an agreement with UK-based Lornamead group, which owns the Yardley brand, for the businesses in Asia, the Middle East, Australasia and some African markets.

India's second largest software company by sales Infosys rose 1.54% as its ADR rose 1.27% on Tuesday. Infosys BPO, the business processing outsourcing subsidiary of Infosys Technologies, last week, announced the signing of a definitive agreement to acquire all of the outstanding interests of McCamish Systems LLC, a premier business process solutions provider, based in Atlanta, Georgia in the United States.

The acquisition is expected to be completed later this year subject to the satisfaction of certain closing conditions. The upfront consideration for the deal is $38 million with up to an additional $20 million payable to the sellers if McCamish Systems achieves certain financial targets in the future. The announcement was made before market hours on Thursday 12 November 2009.

But, India's largest software company by sales Tata Consultancy Services (TCS) fell 0.54%. The company recently secured a 150 million pounds software implementation contract for 15 years from Cardiff city council, UK.

UltraTech Cement, a unit of conglomerate Aditya Birla Group rose 1.08% extending gains for the third day. The company absorbed sister unit Samruddhi Cement, to form the country's biggest cement firm. The move, flagged in October 2009, was approved by the boards of both companies on Sunday. In October, the group said it will hive off the cement business of flagship firm Grasim Industries into unit Samruddhi in a cashless transaction and later merge it with group firm UltraTech. Samruddhi shareholders will receive four shares of UltraTech for every seven held in Samruddhi. UltraTech will also issue 14.95 crore new shares, boosting its capital to Rs 274 crore.

India's largest mobile telecom services provider by sales Bharti Airtel fell 0.25%. The company's chief Executive Manoj Kohli recently said that the company is confident that the country will proceed on schedule with 3G spectrum auctions in January 2010 with high hopes for the technology in the competitive market. The government held a pre-bidding conference on Monday in the run-up to third-generation (3G) spectrum auctions that have been twice delayed but are now scheduled to take place on 14 January 2009.

Bharti expects the current state of stiff competition to continue into 2010, as the government worked on new rules that may allow faster consolidation, Kohli said.

Among other telecom stocks, Reliance Communications and Idea Cellular rose by between 0.4% to 0.69%.

Shares of state-run firms rose after Prime Minister Manmohan Singh on 5 November 2009, approved divestment in public sector companies to raise funds for social welfare. Hindustan Copper, Central Bank of India, State Trading Corporation, MTNL rose by between 0.07% to 2.54%.

Shares of shipping firms rose after the Baltic dry index, which tracks rates to ship dry commodities, surged to its highest since September 2008. On Tuesday, 17 November 2009 the Baltic Dry Index (BDI) jumped 3.8% to 4,381 in London, extending its rally for the fourteenth straight session, as bids rose for the Capesize vessels that transport iron ore and coal to China. Mercator Lines, Shipping Corporation of India , Essar Shipping Ports & Logistics , Shreyas Shipping & Logistics , Varun Shipping Company and Great Eastern Shipping Company rose by between 2.56% to 11.56%.

FMCG stocks rose on bargain hunting. ITC, Tata Tea, United Spirits, Nestle India, rose by between 0.28% to 1.61%.

India's largest thermal power producer by sales NTPC fell 0.26%. A 5% stake sale in state-run power producer could fetch the government Rs 8100 crore ($1.7 billion), Sunil Mitra, a senior finance ministry official, said on Friday 13 November 2009.

Last month, the cabinet approved share sales for NTPC, Satluj Jal Vidyut Nigam and Rural Electrification Corp.

Among other power stocks, Torrent Power, Reliance Infrastructure, CESC fell by between 0.02% to 3.2%.

Rate sensitive auto stocks fell on profit taking. Low interest rates and attractive benefits offered by companies pushes up sales

India's largest tractor maker by sales Mahindra & Mahindra fell 0.52%. The company's overall sales climbed 32% in October this year to 18,410 units against 13,935 units in the same month last year.

India's second largest bike marker by sales Bajaj Auto fell 1.11%. Carlos Ghosn, chief executive of French car maker Renault and Japan's Nissan Motor Co, said, last week, that an agreement had been signed with Bajaj Auto for a low-cost car which would come to India in 2012.

India's largest bike marker by sales Hero Honda Motors fell 0.75%. The company reported a marginal increase in October sales at 354,156 units as against 352,449 units in the same month last year

But, India's largest small car marker by sales Maruti Suzuki India rose 0.52%. The company's total sales grew 32.4% to 85415 units in October 2009, compared with 64490 units posted in the same month a year ago.

India's largest commercial vehicle maker by sales Tata Motors rose 3.14%. Tata Motors has reportedly raised Rs 264 crore so far through the revised fixed deposit scheme which it launched in August this year. The company is authorised to raise Rs 1,300 crore from the revised scheme. Meanwhile, Jaguar Land Rover received as much as 170 million pounds ($286 million) as a five-year working capital facility from General Electric Co.'s GE Capital division, the lender said on 16 November 2009. Tata Motors the owner of Jaguar Land Rover, is hopeful of turning around the unprofitable luxury unit as it cuts costs to battle a slump in sales during the global recession.

Car sales in India rose an annual 34% to 132,615 units in October 2009, boosted by festival demand and easier availability of loans, an industry body said on Wednesday 11 November 2009. Sales of trucks and buses, a gauge of economic activity, rose 52% to 42,562 units in October 2009, the data showed.

Rate sensitive realty shares rose on bargain hunting. Omaxe, Unitech, DLF, Lok Housing, rose by between 0.2% to 5.66%.

The RBI, late last month, raised the provisioning requirements for loans to commercial real estate from 0.4% to 1% at a regular monetary policy review. The latest RBI move will result in increase in borrowing costs for realty firms which depend heavily on borrowing. In view of large increase in credit to the commercial real estate sector over the last one year and the extent of restructured advances in this sector, it would be prudent to build cushion against likely non-performing assets (NPAs), the central bank said in its quarterly policy review.

Cals Refineries clocked the highest volume of 3.33 crore shares on BSE. Suzlon Energy (1.21 crore shares), Ispat Industries (1.15 crore shares), Karuturi Global (0.98 crore shares) and Mahindra Satyam (0.87 crore shares) were the other volume toppers in that order.

Reliance Capital clocked the highest turnover of Rs 275.67 crore on BSE. JSW Steel (Rs 194.89 crore), Reliance Industries (Rs 178.04 crore), Tata Steel (Rs 141.86 crore) and DLF (Rs 109.29 crore) were the other turnover toppers in that order.

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