Tuesday, November 17, 2009

Indian Shares / Stock Markets BSE NSE Review 16 Nov 2009

The key benchmark indices surged as the US dollar weakened against its major rivals. Stocks rose across the globe. The BSE 30-share Sensex jumped 83.68 points or 1.09%. The BSE Sensex today, 16 November 2009, crossed the psychological 17,000 mark and S&P CNX Nifty breached the key 5,000 mark. Both these two key indices scaled their highest closing level in nearly one month

Banking, realty, metal and auto stocks rose. But IT stocks fell. The market breadth was strong.

The dollar slipped against major rivals on Monday, 16 November 2009, pressured by stepped-up rhetoric from China, better-than-expected Japanese growth data and rising gold futures. The dollar index, which measures the greenback against six major currencies, was recently down 0.5% at 74.93.

The dollar was also under pressure after China's chief banking regulator on Sunday, 15 November 2009, criticized loose US monetary policy as leading to increased speculation. The yen, meanwhile, got a lift from better-than-expected Japanese gross domestic product data.

The dollar index has tumbled from a three-year high reached in March 2009, on speculation the US Federal Reserve will be slow in raising borrowing costs. With short-term interest rates very low, global traders have turned to borrowing funds cheaply in the US and then reinvesting the proceeds in equities and commodities, looking to lock in higher returns and benefiting from further erosion in the dollar. These so called US dollar carry trades have kept putting pressure on the dollar as investors short the currency to invest elsewhere.

There has been a solid surge in inflows in emerging markets equity funds this year. But a strong rebound in dollar, if any, may result in unwinding of the so called US dollar carry trade positions by traders/institutions. This may hit emerging markets equities hard.

Cabinet Secretary KM Chandrasekhar today said food prices will moderate as supply constraints ease. He said the government is monitoring sugar prices and it will take more action to contain prices if needed.

There are no fears of government borrowing crowding out private borrowing in India, finance minister Pranab Mukherjee said at an industry conference on Monday.

The economy could expand between 6 and 7% in the year to March 2010 despite a bad monsoon, Mukherjee said on Saturday as data showed accelerating inflation in October. Speaking in the Sri Lankan capital Colombo, Mukherjee said there were risks to an early global economic recovery and signs asset price bubbles were re-emerging.

Inflation based on the wholesale price index accelerated in October 2009 from a month earlier on costlier minerals and fuels. On Saturday, 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%.

At its policy review last month, the Reserve Bank of India (RBI) lifted its inflation forecast to 6.5% for the end of 2009/10 fiscal year in March, but left policy rates unchanged. The RBI also laid the groundwork for a rise in interest rates by tightening credit to the commercial property sector and removed some of the emergency liquidity support steps that were extended to protect the economy from the global downturn.

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. The RBI forecast the economy would expand 6% in 2009/10, below 6.5 % predicted by the prime minister's economic panel. It grew 6.7% last year, slowing sharply from 9% or more between 2005/06 and 2007/08.

Meanwhile, the government aims to sell shares of about 60 state-run firms in the coming years, with offers for NTPC and Rural Electrification Corp expected by end-March 2010, disinvestment Secretary Sunil Mitra said on Friday 1 November 2009. He also said the finance ministry was in talks with other ministries to launch public offers of Steel Authority of India, miner NMDC, Coal India and telecoms firm BSNL.

The cabinet will soon consider selling part of government's stake in Steel Authority of India and NMDC, Steel Minister Virbhadra Singh told reporters on Monday.

The cabinet recently approved a long-pending divestment policy that mandates at least 10% public holding in state-run firms and use the proceeds for social schemes until March 2012, to cut its fiscal deficit.

European shares advanced for the fourth straight session on Monday, with commodity stocks leading the gainers as raw material prices benefited from a weaker US dollar, but retailer H&M fell after weak October sales. The key benchmark indices in France, Germany and UK were up by between 0.81% to 1.44%.

New passenger car registrations in Europe rose 11.2% to 1.26 million in October 2009 year-on-year, driven by growth in the Western European markets, the European Automobile Manufacturers' Association said Monday.

Asian stocks gained on Monday after upbeat reports from US retailers underpinned confidence the global economy is recovering. The key benchmark indices in Hong Kong, South Korea, Singapore and Taiwan rose by between 1.3% to 2.08%.

China's Shanghai Composite Index jumped 2.74%, aided by economic data showing foreign direct investment (FDI) into China climbed for a third straight month. FDI rose 5.7% to $7.1 billion in October 2009, after rising 18.9% on year in September 2009, the state-run Xinhua news agency reported, citing data from the Ministry of Commerce. In the first ten months of the year foreign domestic investment totaled $70.87 billion, down 12.6% from a year earlier.

Data released last week showed China's industrial production and retail sales accelerated at faster than expected pace, although consumer and producer prices were generally softer than expected

China's economy is expected to grow by about 8.5 % next year while inflation will remain modest at about 2.5 %, indicating that monetary policy should remain appropriately loose to solidify the basis of the recovery, a key government think-tank said on Monday. The State Information Centre added that the risks of rapid credit growth could be contained and that a tightening of monetary policy would have only limited effectiveness in curbing asset price bubbles, in a report carried by the official China Securities Journal.

US President Barack Obama said on Monday that Washington was not trying to contain China's rise but said trade between the two giants needed to be more balanced. Addressing students at a town hall-style meeting in Shanghai on the first full day of his first trip to China, Obama said the notion that Washington and Beijing must be adversaries was not pre-destined.

Japan's Nikkei rose 0.21%. Japan's economy expanded at the fastest pace in more than two years in the third quarter, led by a rebound in domestic demand that may ease concern of a return to recession next year. Gross domestic product rose at an annual 4.8% pace, after a 2.7% gain in the second quarter, Cabinet Office figures showed today in Tokyo.

Meanwhile, Japanese Trade Minister Masayuki Naoshima apologized for speaking about price sensitive third-quarter GDP data to oil industry executives on Monday ahead of its official release in an embarrassment for a government that took power two months ago.

Trading in US index futures indicated Dow could gain 62 points at the opening bell on Monday, 16 November 2009.

US stocks rose on Friday, setting up a second straight week of gains, as upbeat retail news reinforced hopes for strong sales in the key holiday season. The Dow Jones Industrial Average roseor 73 points or 0.71%, to close at 10,270. The Nasdaq gained about 18 points or 0.87% at 2176, and the S&P 500 was up 6.24 points or 0.57% at 1093.

Obama said on Sunday the world economy was on a path to recovery but warned that failure to re-balance the global economic system would lead to further crises. Obama was addressing Asia Pacific leaders in Singapore.

Leaders of the 21-member Asia Pacific Economic Cooperation forum pledged on Sunday to conclude Doha global trade talks in 2010 and to reject protectionism, but dropped earlier draft references to "market-oriented exchange rates" and to emissions cuts.

Kansas City Fed President Thomas Hoenig said on Monday that the US economy still faced significant weaknesses and he urged policymakers to allow large financial institutions to fail if needed. Hoenig was speaking at a central bank event in Abu Dhabi, the capital of the United Arab Emirates.

The BSE 30-share Sensex rose 183.68 points or 1.09% to 17,032.51, its highest closing since 20 October 2009. At the day's high of 17083.20, the Sensex rose 234.37 points in mid-afternoon trade. The Sensex rose 44.28 points at the day's low of 16893.11 in early trade.

The S&P CNX Nifty rose 59.10 points or 1.18% to 5058.05, its highest closing since 21 October 2009. Nifty hit a high of 5073.20. Nifty November 2009 futures were at 5,055.20, at a discount of 2.85 points as compared to spot closing of 5,058.05. Turnover in NSE's futures & options (F&O) segment was Rs 58,411.07 crore, sharply lower than Rs 72,277.97 crore on Friday, 13 November 2009.

The market breadth, indicating the overall health of the market was strong. On BSE, 1752 shares advanced as compared with 1013 that declined. A total of 90 shares remained unchanged.

From the 30 share Sensex pack; 26 rose and rest fell.

BSE clocked a turnover of Rs 4377 crore, lower than Rs 5312.04 crore on Friday, 13 November 2009.

As per provisional data, foreign funds today, 16 November 2009, bought equities worth a net Rs 544.64 crore. Domestic funds offloaded shares worth a net Rs 294.64 crore

The market has risen sharply in the past few days. From a recent low of 15,404.94 on 3 November 2009, the Sensex has jumped 1,627.57 points or 10.56% in a short period of time, at current 17,032.51 on 16 November 2009. The Sensex is up 7385.20 points or 76.55% in calendar year 2009, as on 16 November 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8872.11 points or 108.72% as on 16 November 2009.

Coming back to today's trade, the BSE Mid-Cap index rose 1.14% and the BSE Small-cap index rose 1.22%. Both the indices outperformed the Sensex.

The BSE Realty index (up 3.15%), the BSE Auto index (up 2.9%), the BSE Metal index (up 2.41%), the BSE Oil & Gas index (up 1.37%), the BSE Consumer Durables index (up 1.16%), outperformed the Sensex.

The BSE IT index (down 0.28%), the BSE Teck index (up 0.21%), the BSE Capital Goods index (up 0.69%), the BSE PSU index (up 0.7%), the BSE FMCG index (up 0.76%), the BSE Healthcare index (up 0.83%),the BSE Power index (up 0.92%), the BSE Bankex (up 0.98%), underperformed the Sensex.

Energy major Reliance Industries (RIL) rose 1.47% to Rs 2147.75. But the stock came off the day's high of Rs 2158.80. RIL may reportedly join global oil majors in search of shale gas. RIL has been studying the breakthroughs and the new technologies that are being used in producing shale gas that is now a huge rage in the US, reports suggest.

Reliance Industries (RIL) on Friday offered to withdraw affidavits filed by seven of its directors, claiming they were unaware of the contents of the memorandum of understanding (MoU) signed between members of the Ambani family in 2005 for supply of gas from the Krishna-Godavari basin, only if Reliance Natural Resources (RNRL) agreed to withdraw an assertion in its affidavit that the RIL board had seen and approved the MoU. RIL and RNRL are currently fighting the gas price dispute in the supreme court.

RIL on 10 November 2009 said reports of a meeting between the billionaire Ambani brothers to settle a gas-pricing dispute were baseless. RIL said in a statement the matter would be decided by the Supreme Court, which is currently hearing the case.

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.

India's largest engineering and construction firm by sales Larsen & Toubro rose 0.43% to Rs 1650.65. But the stock came off the day's high of Rs 1669. The company made a profit of Rs 86.14 crore by paring a third of its stake in software firm Mahindra Satyam. Larsen and Toubro (L&T) on Friday, 13 November 2009 sold 2.72 crore shares in Mahindra Satyam in two bulk deals at an average price of Rs 113.65 on BSE in opening trade.

Among other capital goods stocks, Bharat Heavy Electicals, ABB, BEML, Thermax rose by between 0.12% to 1.5%.

Metal stocks rose as a gauge of six metals traded on the London Metal Exchange, rose 0.27% on Friday, 13 November 2009. Sterlite Industries rose 3.55% even on reports a Texas judge has issued final approval of Grupo Mexico's plan to regain control of copper miner Asarco, ending a lengthy takeover battle with rival suitor Sterlite Industries. The ruling will return control of Asarco to Americas Mining Corporation, a Grupo Mexico subsidiary. The deal is expected to close by mid-December

National Aluminium Company rose 1.11%. 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.

Hindustan Zinc and Hindalco Industries rose by between 2.6% to 2.99%.

Bur NMDC fell 0.22% after the steel minister said disinvestment process in the state-run firm will begin in the current financial year.

Steel Authority of India (Sail) rose 0.91% after the steel minister said the cabinet will soon consider selling part of government's stake in Steel Authority of Steel. Meanwhile, Sail chairman today said the company has cut flat product prices by Rs 500 per tonne

Tata Steel, the world's eighth largest steelmaker by output, rose 2.65%. The company said on Thursday 12 November 2009 it 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.

Rate sensitive auto stocks rose as low interest rates and attractive benefits offered by companies pushed up sales in October 2009.

India's largest small car marker by sales Maruti Suzuki India rose 5.45%. 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 truck marker by sales Tata Motors rose 2.32%. Its UK unit Jaguar Land Rover is reportedly expected to announce on Monday that it has secured a 170-million-pound ($282.5 million) working capital facility from GE Capital.

India's second largest bike marker by sales Bajaj Auto rose 3.57%. Carlos Ghosn, chief executive of French car maker Renault and Japan's Nissan Motor Co, said on Tuesday 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 rose 3.82%. The company reported a marginal increase in October sales at 354,156 units as against 352,449 units in the same month last year

India's largest tractor maker by sales Mahindra & Mahindra 1.79%. 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.

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 after a recent steep fall. Omaxe, Unitech, Indiabulls real Estate, DLF, Parsvnath Developers rose by between 1.19% to 4.54%.

Ansal Properties & Infrastructure surged 9.01% after the company's board approved allotment of 96.27 lakh equity shares to Mauritius-based IPRO Funds, a foreign fund, under preferential allotment.

Realty stocks corrected recently after 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.

Banking shares rose on hopes of financial sector reforms. India's largest private sector bank by net profit ICICI Bank rose 1.04%. Its ADR rose 0.86% on Friday 13 November 2009. 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 largest bank by net profit State Bank of India (SBI) rose 2%. 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.

But, India's second largest private sector bank by net profit HDFC Bank was flat even as its ADR rose 2.82% on Friday.

India's largest dedicated home loan lender Housing Development Finance Corporation (HDFC) was flat at Rs 2760. 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 Sunday, 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.

As per reports, the government plans to introduce two key bills in parliament by December 2009. It plans to introduce bills proposing the raising of foreign stake limits in insurers to 49% from the present 26% and opening up the pension sector to private and foreign firms.

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

IT stocks fell on reports a new tax rule in the European Union (EU) will put a renewed squeeze on profit margins of companies such as Tata Consultancy Services, Infosys and Wipro. Starting 1 January 2010 the 27-nation bloc plans to impose value-added tax (VAT) on services delivered from non-EU nations such as India. A strong rupee also weighed on IT stocks.

India's second largest software company by sales Infosys fell 0.34% even as its ADR rose 2.85% on Friday. Infosys BPO, the business processing outsourcing subsidiary of Infosys Technologies, on Thursday 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.

India's largest software company by sales Tata Consultancy Services (TCS) fell 0.63%. The company recently secured a 150 million pounds software implementation contract for 15 years from Cardiff city council, UK.

Bur, India's third largest software company by sales Wipro rose 0.55% as its ADR rose 2.11% on Friday. 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.

Indian rupee rose on Monday, boosted by gains in regional stock markets and tracking broad weakness in the dollar. The partially convertible rupee was at 46.21/23, stronger than Friday's close of 46.31/32. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

UltraTech Cement, a unit of conglomerate Aditya Birla Group, rose 1.49%, paring gains after more than 8% jump in early trade after it 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. Shares of Grasim Industries rose 2.07%.

Among other cement stocks, ACC, Ambuja Cements and Birla Corporation rose by between 0.24% to 1.4%.

Some PSU stocks rose as Prime Minister Manmohan Singh on 5 November 2009, approved divestment in public sector companies to raise funds for social welfare. Chennai Petroleum, MTNL, Central Bank of India, Power Finance Corporation rose by between 0.3% to 2.46%.

Some construction shares rose as higher government spending on infrastructure sector in the Union Budget 2009-2010 to provide a stimulus to the economy, may result in increase order flow for construction. A government panel has approved eight road projects worth Rs 10880 crore ($2.34 billion), the finance ministry said in a statement late last week. Era Infra Engineering, Valech Engineering, Jaiprakash Associates, Gayatri Projects rose by between 0.71% to 13.77%.

FMCG stocks rose on bargain hunting. ITC, Hindustan Unilever, Dabur India, Marico rose by between 0.45% to 2.19%.

Telecom stocks rose as the process for auctioning third generation (3G) radio frequencies or spectrum that is vital for telecom companies to offer high-end services such as ultra fast internet and data services on the mobile, kicks off in New Delhi today with the pre-bid conference. India's second largest mobile services provider by sales Reliance Communication rose 3.05%. As per recent reports the company is in talks with Canadian firm Iseemedia Inc to introduce low-cost e-mail services on phones.

Bharti Airtel India's top mobile operator by sales rose 0.53% The company added 27 lakh users in October 2009, taking its total subscriber base to 11.32 crore. Idea Cellular rose 2.18%.

The Cellular Operators' Association of India (COAI) said last week its members added 1.02 crore users to their GSM networks in October, taking their total subscribers to 35.52 crore.

During the meet, officials from the communication ministry will seek to clarify as well as address all queries regarding the 3G and WiMAX auctions which are scheduled to begin in mid-January 2010, reports suggest

India's largest thermal power producer by sales NTPC fell 0.16%. 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. Mitra said. Rural Electrification Corporation rose 5.54%.

But among other power stocks, Torrent Power, Reliance Infrastructure Reliance Power and GVK Power & Infrastructure rose by between 0.34% to 5.33%.

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