Thursday, November 19, 2009

Indian Stock Markets - BSE, NSE Review 19 Nov 2009

Volatility ruled the roost as stocks lost ground with the sentiment hit by Brazil's latest move to curb capital inflows. Decline in European shares and lower US index futures also weighed on sentiment. The BSE 30-share Sensex fell 213.13 points or 1.25%, off close to 220 points from the day's high and up close to 70 points from the day's low. Index heavyweight Reliance Industries edged lower.

As per provisional data, foreign funds today, 19 November 2009, sold equities worth a net Rs 459.18 crore. Domestic funds bought stocks worth a net Rs 116.79 crore.

The Sensex fell below 17,000 mark after regaining that level in opening trade. The Sensex had settled below that psychological level on Wednesday, 18 November 2009. The S&P CNX Nifty fell below the key 5,000 mark. Metal, auto, banking, realty and IT stocks declined. The market breadth was weak in contrast to a strong breadth in early trade.

Intraday volatility on the bourses was high. The market recovered from lower level in morning trade after Finance Secretary Ashok Chawla said high capital inflows is not a cause for concern as of now. However, the intraday rebound proved short-lived. The market cut losses after hitting a fresh intraday low in late trade.

Equities may remain volatile over the next few days as traders rollover positions in the derivative segment from November 2009 series to December 2009 series ahead of the expiry of the near month November 2009 contracts on 26 November 2009.

The market sentiment was hurt by Brazil's latest move to curb capital inflows. Brazil took another step on Wednesday to try to contain the appreciation of its currency, unveiling a 1.5% tax on certain trades involving American Depositary Receipts issued by Brazilian companies. The Brazilian government, last month, implemented a 2% financial tax on foreign inflows into stocks and fixed income investments.

Among other overseas markets, South Korea announced measures on Thursday aimed to tightening controls over currency liquidity to make the banking system less vulnerable to the capital flight. The Financial Services Commission said it will limit the size of forward foreign exchange transactions that South Korean companies can enter into, to a total value of not more than 125% of the underlying transactions they are hedging against, which could mean less-than-expected selling of dollar-forwards by exporters in the future. Taiwan has already banned foreigners from investing in time deposits

Closer home, Chawla said today there is no proposal to put quota on external commercial borrowings even as he said that the government is closely monitoring capital inflows. Earlier, a newspaper report suggested that the government is taking its first significant step to ward off a surge in foreign capital inflows that may threaten the stability of the financial system by drawing up new rules that will make overseas loans costlier for companies. Indian stocks have risen sharply this year on robust inflow from foreign funds. Reports had suggested that the government was considering auctioning of corporate entitlements to borrow abroad, a move that could make such borrowing costlier.

A global glut of liquidity has pushed stock markets across the globe sharply higher since March this year. Governments and central banks around the world have injected trillions of dollars in the past one year or so to pull the world out of a most severe recession since the 1930s Great Depression.

On Wednesday, Finance Minister Pranab Mukherjee said India would have the tools to deal with an influx of foreign capital inflows if they become disruptive, but they are not a concern yet.

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 Reserve Bank of India (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. Foreign funds have bought stocks worth Rs 73786.80 crore so far in calender 2009.

Meanwhile, the latest data showed that the food price index jumped 14.55% in the 12 months to 7 November 2009. The primary article index was up 9.94% whereas the fuel index was down 1.51%. The finance minister on Wednesday said the government might import rice, if the summer-sown crop output was inadequate. The annual wholesale inflation rose 1.34 % in October 2009 from a year earlier, compared with 0.5 % in September 2009 and 11.06 % a year ago.

The Organisation of Economic Co-operation and Development (OECD) today, 19 November 2009, raised India's 2010 GDP growth forecast to 7.3% from 7.2% earlier. OECD sees 7.6% growth in India's GDP in 2011.

The government has set reform of the insurance sector as a priority for the winter parliament session that begins today, 19 November 2009. The bill, which was stalled in the last parliament, proposes raising the foreign investment limit in insurance companies from 26 % to 49%. The government also wants to open up the pension sector to private and foreign firms and give equal voting rights to foreigners in private-sector banks, which are currently limited to 10% irrespective of their actual holding.

Prime Minister Manmohan Singh said recently India is ready to increase the pace of reform, and the government has flagged stake sales in state run firms and tax changes to help to plug a large budget deficit.

The government kicked off the discussion process towards consolidation in the banking sector at a meeting with senior bankers on Wednesday. The finance ministry has been urging banks since the last few years to start the process of mergers and acquisition on a voluntary basis, but none of the state-run banks have shown any initiative on this.

Meanwhile, the initial public offer of Cox and Kings, a global tour operator, was fully subscribed on the second day of the bidding for the issue today, 19 November 2009.

In a bid to speed up the process of fund mobilisation and listing, the Securities and Exchange Board of India (Sebi) is reportedly working towards bringing down the time frame for listing of an IPO on the stock exchange to seven days from the current 20 days.

In overseas news, the Paris-based Organization for Economic Cooperation and Development on Thursday said a recovery across its 30-member area is picking up steam thanks to stimulus measures and other interventions. In its semi-annual Economic Outlook, the OECD said it now expects US gross domestic product to shrink 2.5% in 2009, followed by growth of 2.5% in 2010. In June, the OECD forecast a 2.8% fall this year and growth of 0.9% in 2010.

Japan is forecast to contract 5.3% this year, compared to an earlier forecast for a 6.8% decline. Next year, Japan is expected to grow by 1.8%, compared to an earlier forecast of 0.7%. The euro zone is now forecast to shrink 4% this year, compared to a previous forecast for a 4.8% fall. In 2010, the euro zone is seen expanding by 0.9%, compared to the OECD's previous call for flat economic growth

European shares were lower on Thursday for the third consecutive session, with food producers leading the losers after Danone cut its sales growth target. The key benchmark indices in France, Germany and UK fell by between 0.62% to 0.98%.

British retail sales rose slightly less than expected in October 2009, while the public finances deteriorated more sharply than thought over the month, the Office for National Statistics said on Thursday. The ONS said sales rose 0.4 % last month, slightly below forecasts for a rise of 0.5%. The ONS said public sector net debt as a percentage of GDP came in at 59.2% in October 2009, the highest since records began in 1974/75.

Asian stocks were trading mixed on Thursday with equities witnessing a consolidation phase after strong gains this year . The key benchmark indices on Taiwan, Hong Kong and Japan fell by between 0.09% to 0.86%. The key benchmark indices in South Korea, Singapore and China rose by between 0.5% to 1.03%.

Trading in US index futures indicated Dow could fall 70 points at the opening bell on Thursday, 19 November 2009.

US stocks fell on Wednesday on worrisome outlooks from major software makers and as a surprise drop in new home construction last month prompted concern about the strength of an economic recovery. The Dow was down 11.11 points, or 0.1%, to 10,426.31. The S&P 500 index slipped 0.52 points, or 0.1%, to 1,109.80, while the Nasdaq fell 10.64 points, or 0.5%, to 2,193.14.

Housing starts unexpectedly fell 10.6% in October 2009 to the lowest level in six months, weighed down by a sharp decline in construction activity for both single-family and multi-family dwellings. The consumer price index rose 0.3%, indicating that inflation may not be quite as benign as some economists have indicated.

The BSE 30-share Sensex fell 213.13 points or 1.25% to 16785.65. The Sensex opened with an upward gap of 6.20 points at 17,004.98, which was also the day's high. The Sensex fell 286.45 points at the day's low of 16,712.33 in late trade.

The S&P CNX Nifty fell 65.70 points or 1.3% to 4,989. Nifty November 2009 futures were at 4,984, at a discount of 5 points as compared to spot closing of 4,989. Turnover in NSE's futures & options (F&O) segment jumped to Rs 79,048.32 crore from Rs 67,322.64 crore on Wednesday, 18 November 2009.

The market breadth, indicating the overall health of the market was negative compared to a strong breadth in early trade. On BSE, 1049 shares advanced as compared with 1685 that declined. A total of 86 shares remained unchanged.

From the 30 share Sensex pack, 27 fell and rest rose.

BSE clocked a turnover of Rs 5057 crore, lower than 5264.49 crore on Wednesday, 18 November 2009.

From a recent low of 15,404.94 on 3 November 2009, the Sensex jumped 1,645.71 points or 10.68% in a short period of time, to 17,050.65 on 17 November 2009. From that high, the Sensex has lost 265 points or 1.55% in two trading sessions to the current 16785.65. The Sensex is up 7138.34 points or 73.99% in calendar year 2009, as on 19 November 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex is up 8625.25 points or 105.69% as on 19 November 2009.

Coming back to today's trade, the BSE Mid-Cap index fell 1.67% and underperformed the Sensex. The BSE Small-cap index fell 1.08%. It outperformed the Sensex.

The BSE Realty index (down 4.36%), the BSE Bankex (down 1.95%), the BSE Metal index (down 1.77%), the BSE Teck index (down 1.35%), the BSE Auto index (down 1.35%), underperformed the Sensex. The BSE PSU index fell 1.25%, matching the fall in the Sensex.

The BSE FMCG index (down 0.47%), the BSE Consumer Durables index (down 0.66%), the BSE Healthcare index (down 0.88%), the BSE Capital Goods index (down 1%), the BSE Oil & Gas index (down 1.01%), the BSE Power index (down 1.05%),the BSE IT index (down 1.21%) outperformed the Sensex.

Energy major Reliance Industries (RIL) fell 0.98% to Rs 2077.20. The stock came off the day's high of Rs 2081.95. 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 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.

Shares of public sector oil marketing companies fell after Oil Secretary R.S. Pandey said the government has no immediate plan to raise fuel prices. BPCL, HPCL and Indian Oil Corporation fell by between 0.87% to 1.27%.

Pandey said there is no proposal yet on raising fuel prices, adding that state-run oil marketing companies were likely to suffer a revenue loss of Rs 44,000 crore in the current financial year by selling fuel at government-set rates. Pandey said inter-ministerial consultations about raising the prices of gas sold under the administrative price mechanism were underway

Rate sensitive realty shares fell 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. Indiabulls Real Estate, Unitech, DLF fell by between 3.68% to 5.48%.

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.

IT stocks fell on profit taking. India's second largest software company by sales Infosys fell 0.99% as its ADR fell 0.99% on Wednesday. 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 on 12 November 2009.

India's largest software company by sales Tata Consultancy Services (TCS) fell 1.08%. The company recently secured a 150 million pounds software implementation contract for 15 years from Cardiff city council, UK.

But India's third largest software company by sales Wipro rose 0.1% as its ADR rose 0.49% on Wednesday. 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.

Banking shares fell on profit taking. India's largest bank by net profit State Bank of India (SBI) fell 2.15%. 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 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 2.18% as its ADR fell 2.22% on Wednesday. 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 1.37% as its ADR fell 1.92% on Wednesday.

But, India's largest dedicated home loan lender Housing Development Finance Corporation (HDFC) rose 0.44%. The lender announced on 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

Rate sensitive auto stocks fell on profit taking. Low interest rates and attractive benefits offered by companies pushed up auto sales in October 2009

India's largest tractor maker by sales Mahindra & Mahindra fell 1.27%. 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 largest small car marker by sales Maruti Suzuki India fell 0.91%. 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 bike marker by sales Hero Honda Motors fell 1.53%. 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 commercial vehicle maker by sales Tata Motors fell 1.56%. 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.

But, India's second largest bike marker by sales Bajaj Auto rose 0.18%. 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.

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.

Metal stocks reversed early gains on profit taking. Sterlite Industries, and Hindalco Industries fell by between 2.22% to 3.46%.

Steel Authority of India (Sail) fell 1.38%. As per recent 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.

Tata Steel, the world's eighth largest steelmaker by output, fell 1.76%. 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.

JSW Steel fell 0.65% after Japan's JFE Steel, the world's sixth-largest steelmaker, said on Thursday it will team up with JSW Steel on automotive steel production in India.

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

FMCG stocks fell on profit taking. ITC, Hindustan Unilever, Tata Tea, Marico fell by between 0.29% to 2.41%.

India's largest thermal power producer by sales NTPC fell 0.35%. 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, Reliance Power, Tata Power Company, Reliance Infrastructure, CESC fell by between 0.76% to 3.9%.

India's largest drug maker by sales Ranbaxy Laboratories fell 1.18% even after the company got final approval from US Food & Drug Administration for its abbreviated new drug application for Famotidine tablets in multiple strengths.

UltraTech Cement, a unit of conglomerate Aditya Birla Group rose 0.56% extending gains for the fourth 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.

Among the other cement stocks, Ambuja Cements and Birla Corporation fell by between 0.02% to 1.32%.

India's largest mobile telecom services provider by sales Bharti Airtel fell 1.96%. 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 fell by between 1.66% to 2.41%.

India's largest engineering and construction firm by sales Larsen & Toubro fell 0.82%. The company after market hours on Tuesday 17 November 2009 said Gilbarco Inc. has bought its petroleum dispensing pump business.

India's largest power equipment maker by sales Bharat Heavy Electricals fell 0.55%. 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.

Among other capital goods stocks, BEML, ABB, Siemens, Punj Lloyd fell by between 0.55% to 2.92%.

Sugar stocks fell as thousands of farmers protested low state-controlled sugarcane prices forcing the postponement of the first day of the parliamentary winter session on Thursday, highlighting rural discontent over government policy. Bajaj Hindustan, Shree Renuka Sugars and Balrampur Chini fell by between 3.69% to 7.28%.

Suzlon Energy clocked the highest volume of 3.99 crore shares on BSE. Cals Refineries (2.49 crore shares), Ispat Industries (0.88 crore shares), Unitech (0.85 crore shares), Mahindra Satyam (0.61 crore shares) were the other volume toppers in that order.

JSW Steel clocked the highest turnover of Rs 362.45 crore on BSE. Suzlon Energy (Rs 300.28 crore), Housing Development & Infrastructure (Rs 145.83 crore), Tata Steel (Rs 134.02 crroe) and Reliance Industries (Rs 129.61 crore) were the other turnover toppers in that order.

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