BSE / NSE Market Analysis 14 July 2009

Market Analysis 14 July 2009

Firm global markets and forecast of increase in rains in the coming days boosted the domestic bourses as the BSE 30-share Sensex jumped 453.38 points or 3.38%. Power, metal, capital goods and realty stocks led the gains. The S&P CNX Nifty today, 14 July 2009, regained the psychological 4,000 mark within a day of falling below that level on Monday, 13 July 2009. All the sectoral indices on BSE were trading in green.

Index heavyweight Reliance Industries surged after a recent sharp fall. The market breadth, indicating the overall health of the market, was strong.

The market was volatile. After an early surged triggered by firm global stocks, the market came off the higher level. The

market surged in morning trade with the Sensex hitting a fresh intraday high. The market extended gains in early afternoon

trade. The market pared gains later before bouncing back. The market extended gains later.

Equities recovered today after a recent steep slide. The BSE Sensex had lost 13.36% to 13,400.32 on Monday, 13 July 2009 from a high of 15,466.81 on 10 July 2009.

Finance Minister Pranab Mukherjee today, 14 July 2009, said the economy is showing signs of recovery. In reply to the debate on the Union Budget 2009-2010 in parliament, the Finance Minster said higher investment is needed to return to higher growth path, adding that the government has resorted to huge borrowing because of higher spending plan. He said higher growth will be difficult without infrastructure development. Mukherjee said the Government will initiate institutional reforms this year.

Indian Meteorological Department's forecast that rains will intensify in the coming days boosted sentiment among stock market investors. The monsoon rains, the main source of irrigation for the nation's 235 million farmers, will intensify across the country, the weather bureau said. The northwest region, the nation's biggest producer of rice, wheat, sugar cane, will receive rain and thundershowers at many places, the India Meteorological Department said today. Rains along the west coast will strengthen over the next two-to-three days, with Mumbai, the nation's financial hub, set to receive very heavy showers in the next 24 hours, the weather office said.

Planning Commission deputy chairman Montek Singh Ahluwalia said deficient rainfall continues to be a matter of concern for the economy but the monsoon is expected to recover in July 2009. The Ministry of Agriculture is looking at a contingency plan arising out of shorfall in monsoon rains, he added.

The market has entered a crucial period of earnings. The market expectations are that in Q1 June 2009, the 30 stocks that

comprise Mumbai's benchmark Sensex index could see an annual fall in sales of 4-8% and fall in profit at between 9-13%. European equities extended previous session's sharp gains on Tuesday, lead by banks and miners, with investors keenly awaiting quarterly results from companies such as Goldman Sachs and Intel. The key benchmark indices in France, Germany and UK were up by between 0.53% to 0.9%.

Asian stocks advanced after South Korean steel giant Posco raised its production target and Singapore upgraded its forecast

for economic growth. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between

0.54% to 3.66%. Posco, South Korea's largest steelmaker, said 2009 output may be 6.4% higher than forecast.

Meanwhile, Singapore's government raised its economic forecast for 2009 as gains in construction and pharmaceutical output

lifted the nation from its deepest recession since independence in 1965. Gross domestic product will shrink 4% to 6% this

year, less than an earlier forecast for a contraction of as much as 9%, the trade ministry said in a statement today.

Trading in US index futures indicated Dow could rise 36 points at the opening bell today, 14 July 2009.

Wall Street rebounded yesterday, 13 July 2009 led by financials after an upgrade for Goldman Sachs by prominent US analyst

Meredith Whitney. Meredith also indicated solid short-term potential for banks. The Dow jumped 185.16 points, or 2.3%, to

8,331.68. The S&P 500 index added 21.92 points, or 2.5%, to 901.05. The Nasdaq Composite Index rose 37.18 points, or 2.1%, to

1,793.21.

The BSE 30-share Sensex jumped 453.38 points or 3.38% to settle at 13,853.70. At the day's high of 13,903.48, the Sensex rose 503.16 points at the fag end of the trading session . At the day's low of 13,549.42, Sensex rose 149.10 points in early trade.

The S&P CNX Nifty was up 137.35 points or 3.46% to 4,111.40. The BSE Realty index (up 9.38%), the BSE Metal index (up 5.53%), the BSE Consumer Durables index (up 5.12%), the BSE Power index (up 4.6%), the BSE Capital Goods index (up 4.11%), the BSE Bankex (up 3.69%), outperformed the Sensex.

The BSE FMCG index (up 1.09%), the BSE Healthcare index (up 1.95%), the BSE TECk index (up 2.46%), the BSE IT index (up 2.63%), the BSE Auto index (up 2.7%), the BSE Oil & Gas index (up 2.85%), the BSE PSU index (up 3.11%) underperformed the Sensex.

BSE clocked a turnover of Rs 4,305 crore higher than Rs 4,095.61 crore on Monday, 13 July 2009. The market breadth, indicating the overall health of the market, was strong. On BSE, 1,917 shares rose as compared with 623 that fell. A total of 78 shares remained unchanged. From the 30 shares Sensex pack, 29 rose and 1 fell.

The BSE Mid-Cap index was up 4.63% and the BSE Small-Cap index was up 4.79%. Both these indices outperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) jumped 4.3% to Rs 1,823 on bargain hunting after a recent sharp fall. Recent reports suggest that the government is open to allowing private-sector refiners such as RIL and Essar Oil to access subsidy on domestic fuel sales. The Supreme Court, last week, declined to stay the Bombay High Court's verdict in a dispute over the sale of natural gas by Reliance Industries (RIL) to Reliance Natural Resources (RNRL). The Supreme Court didn't grant RIL' plea to stay the order of

the Bombay High Court until the resolution of the case and issued notices to the companies and the Centre. Both companies have to reply to appeals filed by each other by 20 July 2009, when the matter is scheduled to be heard. The government must also respond by then, the court said.

RIL had moved the Supreme court, challenging the Bombay High Court judgment asking it to supply gas to the former at a price that is 44% lower than fixed by the government. In its appeal filed in the Supreme Court on Saturday 4 July 2009, Reliance Industries contended that the high court had erred in deciding the three terms - quantity, tenure and price of gas supply to power plants of Reliance Natural Resources (RNRL) affiliates.

Shares of oil exploration firms rose as oil reversed the previous session's losses and rose above $60 a barrel thanks to improved sentiment amid a stock market rally, but lingering fears of the deep and long recession capped oil's gains. Cairn India rose 1.89%.

India's largest state-run oil exploration firm by revenue ONGC rose 0.8%. Oil and Natural Gas Corporation will invest $730 million in a Cairn India block in Rajasthan, despite expecting negative returns, Petroleum Minister Murli Deora said Monday. While the total capital expenditure is $2.4 billion, ONGC's share will be $729.4 million.

Crude oil for August delivery rose 38 cents to $60.07 a barrel, on the New York Mercantile Exchange. Rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

Metal stocks rose after Shanghai copper rose 1.4% on Tuesday and as investors brushed aside demand worries following a rally in Asian equities. Steel Authority of India, Hindalco Industries, Tata Steel, National Aluminum Company, Hindustan Zinc rose by between 4.75% to 9.49%.

India's largest copper maker by sales Sterlite Industries rose 3.22% on recent reports its wholly-owned subsidiary Sterlite Energy may come out with a public offering in next 3-4 months to raise up to Rs 3,000 crore to part finance its expansion plans.

Realty stocks rose on bargain hunting after a recent steep slide. The government has provided a strong thrust to housing sector in the Union Budget 2009-2010. DLF, Unitech, Housing Development & Infrastructure, Indiabulls Real Estate, Omaxe, Ackruti City rose by between 7.22% to 12.35%.

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. NTPC, Tata Power Company, PowerGrid Corporation of India, Reliance Power rose by between 1.38% to 7.06%. India's largest energy distributor by sales and construction firm Reliance Infrastructure soared 9.02% on reports the company may win the order for Hyderabad metro rail project.

Capital goods stocks rose on a thrust on infrastructure development in last week's Union Budget 2009-2010. BEML, Crompton

Greaves, Punj Lloyd, Siemens, Larsen & Toubro, Praj Industries rose by between 1.9% to 11.01%. India's largest electric equipment maker by sales Bharat Heavy Electricals gained 4.34% after the company bagged an order worth Rs 640 crore order from Adhunik Power and Natural Resources for a 270 mega watt thermal power plant in Jharkhand.

Finance Minister Pranab Mukherjee on 6 July 2009, provided a thrust on various infrastructure projects in the Budget which may benefit capital goods and construction firms in the form of increased orders. 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.Bank stocks rose on bargain hunting after a recent steep slide triggered by disappointment in the Budget. Contrary to market expectations, the government did not announce financial sector reforms in the Budget. Market expectations on financial sector reforms were high. The government's annual economic survey released ahead of the Budget had called for a phased increase in the foreign direct investment limit in banks. Voting rights in banks should be aligned with equity holdings, the Survey had said.

India's largest private sector bank by net profit ICICI Bank rose 7.6% as its American depository receipt (ADR) rose 4.76% on Monday. India's biggest bank in terms of branch network State Bank of India (SBI) rose 2.36% after Chairman O P Bhatt said yesterday the bank's net interest margin may be over 2.5% in the year ending March 2010. State Bank of Bikaner & Jaipur was locked at 5% upper limit at Rs 354.25 after net profit jumped 125.54% to Rs 147.30 crore in Q1 June 2009 over Q1 June 2008.

Axis Bank rose 0.93% extending gains for the second straight day 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 yesterday.

Among PSU banks, Bank of India, Union Bank of India, Bank of Baroda, and Indian Overseas Bank rose by between 2.02% to 5.4%.But India's second largest private sector bank bank in terms of operating income HDFC Bank fell 1.03% after the ratio of gross non performing assets rose to 2.05% on 30 June 2009 from 1.54% on 30 June 2008. HDFC Bank's gross non performing assets (NPA) jumped 43.96% to Rs 2163.45 crore on 30 June 2009 from Rs 1502.74 on 30 June 2008. The ratio of net NPAs to net advances edged up to 0.6% on 30 June 2009 from 0.5% on 30 June 2008. 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 during the market hours today.

Sintex Industries rose 3.9% after net profit rose 10.29% to Rs 48.22 crore in Q1 June 2009 over Q1 June 2008.