BSE / NSE Share Market Report 15 July 2009

BSE / NSE Share Market Report 15 July 2009

The key benchmark indices rose for the second straight day as firm global markets boosted sentiment. The BSE 30-share Sensex jumped 399.54 points or 2.88%. The barometer index today, 15 July 2009, crossed the psychological 14,000 mark. Metal, power, capital goods and power stocks rose. Index heavyweight Reliance Industries (RIL) surged. The market breadth, indicating the overall health of the market, was strong.

Equities recovered in last two days after a recent steep slide. The Sensex has risen 852.92 points or 6.36% in last two trading sessions. The barometer index had 13.36% to 13,400.32 on Monday, 13 July 2009 from a high of 15,466.81 on 10 July 2009.

The Sensex is up 4,605.93 points or 47.74% in calendar year 2009, as on 15 July 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 6,092.84 points or 74.66% as on 15 July 2009.

Finance Minister Pranab Mukherjee's statement on Tuesday that country aims to return to a path of fiscal prudence to ensure moderate interest rates helped soothe investor nerves. Higher fiscal deficit has been a major cause of concern for investors.

The market rose in early trade, extending Tuesday's (14 July 2009) 3.4% rally, on firm global stocks. It pared gains in mid-morning trade before recovering later. The market extended gains later. It soared in the last one hour of trade.

Finance Minister Pranab Mukherjee said on Tuesday that the government aims to return to a path of fiscal prudence at the earliest. He said the government intends to cut the deficit to 5.5% of GDP by the end of 2010/11, and further to 4 % in 2011/12, he said. About the stake sales in government firms he said Finance Ministry has initiated discussion with other ministries for identifying the public sector undertakings where a portion of government shareholding can be sold. This will be along with issue of fresh equity by the public sector undertakings to meet their fund requirements. The details are being worked out and would be announced in due course he added.

The Finance Minister also sought cooperation from political parties ruling different states for the introduction of Goods and Services Tax from 1 April 2010, saying it will lead to a sustained rise in tax revenue.

Finance Secretary Ashok Chawla today said the government is likely to continue front-loading its borrowing for the April-September 2009 period. He also said other ministries have been asked to send their stake sale plans in state-run firms to the finance ministry by the end of July 2009. The government will announce plans for stake sales in state firms in 3-4 weeks. There will be small stake sale in state firms and it will not be a strategic sale, he said. The Reserve Bank of India will support government's borrowing through bond buyback in open market operations.

Officials from India's central bank and the finance ministry will meet on Thursday to finalise the government's revised borrowing schedule for the April-September period, the Finance Secretary said.

Meanwhile, stock market investors will closely watch the progress of the monsoon. On Tuesday, 14 July 2009, the Jharkhand state government declared four of its 22 districts drought-hit. On the same day, the Assam government declared 14 out of its 27 districts drought-hit. Manipur has already declared all of its nine districts drought-hit. However, the meteorological department expects rains to pick up in the near-term, and is sticking to its forecast of a cumulative shortfall of only 7% from the long-period average for this year's South-West monsoon.

The government continues to be cautiously optimistic, its mood buttressed by accumulated food stocks of nearly 48 million tonne. Industry, too, reflects the mood, and believes that there is cause to worry only if the cumulative rainfall drops more than a fifth below normal. India depends heavily on monsoon rains as only 40% of its farmland has access to irrigation facilities.

The stock 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%.

Indian investors continue to be the most optimistic lot in Asia and as much as 84% of those surveyed expect the stock market to rise in the third quarter of 2009, according to global financial services group ING.

Firm global stocks boosted the domestic bourses today. European stocks rose to a two-week high on Wednesday, as forecast-beating earnings from Intel, and Goldman Sachs reassured investors on the outlook for corporate profits. Key benchmark indices in France, Germany and UK were up by between 1.62% to 1.76%.

Asian stocks gained for a second day today, led by technology and mining companies, after US chip maker Intel Corporation's sales forecast exceeded analyst estimates and metal prices rose. Key benchmark indices in China, Hong Kong, Japan, South Korea, Singapore and Taiwan were up by between 0.08% to 3.41%.

The Bank of Japan left its overnight call rate unchanged at 0.1% at the conclusion of its two-day policy meeting Wednesday, as widely expected. The central bank said Japan's economy has stopped worsening and that business sentiment has stopped deteriorating, but to support the recovery, it said it would maintain its outright purchases of corporate bonds and commercial paper through the end of the year. The special liquidity-boosting measures had been scheduled to expire in September 2009.

Trading in US index futures indicated the Dow could rise 82 points at the opening bell today, 15 July 2009.

US markets closed slightly higher on Tuesday, 14 July 2009 as a positive start to earnings season was offset by a decline in banking stocks. The Dow gained 27.81 points, or 0.3%, to 8,359.49. The S&P 500 index added 4.79 points, or 0.5%, to 905.84. The Nasdaq Composite Index rose 6.52 points, or 0.4%, to 1,799.73.

In economic data, US retail sales rose in June 2009 for the second consecutive month, increasing 0.6%, the Commerce Department said. Separate figures from the Labor Department showed that US wholesale prices increased in June 2009.

Goldman Sachs also bettered analyst forecasts by reporting a 33% rise in quarterly earnings. Wall Street's largest surviving investment bank reported revenue of 13.6 billion against an estimate of 10.6 billion. Meanwhile in earnings, Intel reported a profit, excluding one-time items, of 18 cents a share in the second quarter, way ahead of analyst estimates.

The BSE 30-share Sensex was up 399.54 points or 2.88% at 14,253.24. At the day's high of 14,299.54, the Sensex rose 445.84 points in late trade. At the day's low of 13,891.04, the Sensex rose 37.34 points in mid-morning trade.

The S&P CNX Nifty was up 122.10 points or 2.97% to 4,233.50. Nifty July 2009 futures were at 4240.10, at a premium of 6.60 points as compared to the spot closing of 4233.50. Turnover in NSE's futures & options (F&O) segment surged to Rs 57,969 crore from Rs 54,305.52 crore on Tuesday, 14 July 2009.

BSE clocked a turnover of Rs 5431 crore, much higher than Rs 4323.61 crore on Tuesday, 14 July 2009.

The market breadth, indicating the overall health of the market, was strong. On BSE, 2,029 shares rose as compared with 559 that fell. A total of 88 shares remained unchanged.

From the 30 shares Sensex pack, 29 rose and 1 fell.

The BSE Mid-Cap index was up 4.15% and the BSE Small-Cap index was up 4.56%. Both the indices outperformed the Sensex.

The BSE Realty index (up 7.98%), the BSE Metal index (up 5.67%), the BSE Power index (up 4.77%), the BSE Capital Goods index (up 4.72%), the BSE PSU index (up 4.66%), the BSE Auto index (up 3.47%), the BSE Oil & Gas index (up 3.47%), the BSE Consumer Durables index (up 2.92%), outperformed the Sensex.

The BSE IT index (up 0.62%), the BSE FMCG index (up 1.38%), BSE TECk index (up 1.41%), the BSE Healthcare index (up 2.33%), the BSE Bankex (up 2.56%), underperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) rose 3.52% to Rs 1,875 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. From a recent high of 2,084.95 on 29 June 2009 the stock had lost 13.12% to Rs 1,811.20 on 14 July 2009.

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 crude oil rose snapping three days of declines, as stocks advanced and an industry report showed a decline in gasoline inventories in the US, the world's largest energy consumer. Cairn India rose 5.12%.

India's largest state-run oil exploration firm by revenue ONGC rose 3.33%. Crude oil for August delivery gained as much as 60 cents, or 1% to $60.12 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.

PSU OMCs rose after a recent steep slide in crude oil prices. HPCL, BPCL and Indian Oil Corporation rose by between 0.94% to 2.24%. The recent steep fall in crude oil prices will reduce under-recoveries for PSU OMCs on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

But oil minister Murli Deora on Thursday, 9 July 2009 said that the government will roll back the Rs 4 a litre hike in petrol prices and the Rs 2 a litre increase in diesel rates if international crude oil prices stabilize between $50 and $60 a barrel. At the beginning of this month, the Government had raised petrol and diesel prices citing spike in international crude oil prices to $70 a barrel.

Contrary to market expectations, the Union Budget 2009-2010 did not include a roadmap for decontrol of fuel prices in the country even as the finance minister said an expert panel will be set up to look into the matter of fuel pricing.

Metal stocks rose after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 3.44% on Tuesday, 14 July 2009. Steel Authority of India, Hindalco Industries, Tata Steel, National Aluminum Company, Hindustan Zinc rose by between 5.03% to 8.22%.

India's largest copper maker by sales Sterlite Industries rose 4.1% on reports company is planning to raise up to $1 billion through a fresh issue of shares.

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. Unitech, Housing Development & Infrastructure, Indiabulls Real Estate, Omaxe, Ackruti City rose by between 4.96% to 13.14%.

India's largest realty player by market capitalization DLF jumped 7.18% on reports the company plans to raise Rs 1,900 crore by the end of this fiscal year for reducing debt through the sale hotel plots and its wind power business.

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 3.95% to 6.63%.

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.

India's largest electric equipment maker by sales Bharat Heavy Electricals rose 6.31% after Power Minister Sushil Kumar Shinde in a television interview said the 11th Plan target of adding 78,750 megawatt (MW) of power capacity was on track and that he was confident of achieving it by March 2012, when the 11th Plan ends. About 80,000 MW capacity is under construction currently, he said, adding that at the least, the government would be able to deliver 65,000 MW capacity addition. The stock had risen 4.34% on Tuesday.

Cement stocks rose as a thrust on infrastructure development in the Union Budget 2009-2010 may boost cement demand. ACC, Birla Corporation of India, Grasim Industries, Ultratech Cements, rose by between 1.79% to 5%.

Construction stocks extended Tuesday's gains after the road transport minister Kamal Nath on Tuesday said the government is looking to set up an organization to develop and manage expressways in the country. Era Infra Engineering, Hindustan Construction Company, IVRCL Infrstructure &Projects and Nagarjuna Construction Company rose by between 2.95% to 5.5%.

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, Power Grid Corporation of India rose by between 1.68% to 6.63%.

Reliance Power rose 8.51% after company on Tuesday announced that it had achieved financial closure for its prestigious 1,200 MW Rosa power project in Uttar Pradesh.

India's largest energy distributor by sales and construction firm Reliance Infrastructure rose 4.79% extending yesterday's more than 9% gains on reports the company may win the order for Hyderabad metro rail project.

Auto stocks rose on hopes of good Q1 June 2009 results. Mahindra & Mahindra, Hero Honda Motors, Bajaj Auto, Ashok Leyland, TVS Motor Company, Maruti Suzuki India and Tata Motors rose by between 1.86% to 6.44%.

Auto stocks rose on hopes the rising auto sales is likely to be reflected in the results of these companies. Analysts expect good Q1 June 2009 results from auto firms on softening commodity prices and buoyant demand from rural India. Auto sales have been rising in the first six months of 2009 after seeing a steep decline in the second half of last year. New models, discounts and easing retail finance aided 14% rise in automobile sales to 9.17 lakh units in June 2009 over June 2008, the Society of Indian Automobile Manufacturers (SIAM) data showed earlier during the month.

IT stocks rose for the fourth straight day on positive sentiment for tech stocks globally after the world's biggest chipmaker, Intel reported better-than-expected Q2 earnings and gave an outlook that blew past forecasts. India's largest IT exporter by sales TCS rose 3.43%. India's third largest IT exporter by sales Wipro rose 3.15%.

But, Infosys fell 0.85% on profit taking after the recent strong gains triggered by the company raising the lower end of its annual forecast in dollar terms at the time of announcing Q1 June 2009 results before trading hours on Friday, 10 July 2009.

Shares of drug makers rose after the Finance Minister Pranab Mukherjee reduced customs duty on life saving drugs in the Budget. Ranbaxy Laboratories, Pfizer, Cipla, Lupin, Piramal Healthcare, Biocon, Sun Pharmaceutical Industries rose by between 0.02% to 5.62%.

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.

Bank stocks rose after the Finance Minster on Tuesday said 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 2.45% after its American depository receipt (ADR) rose 3.52% on Tuesday, 14 July 2009.

India's biggest bank in terms of branch network State Bank of India (SBI) rose 3.24% after Chairman O P Bhatt said on Monday the bank's net interest margin may be over 2.5% in the year ending March 2010.

Axis Bank rose 3.41% extending gains for the third 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 on Monday 13 July 2009.

India's second largest private sector bank bank in terms of operating income HDFC Bank rose 1.54%. 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 on Tuesday, 14 July 2009.

Shipping stocks rose after the Baltic Dry Index which measures changes in the cost of shipping commodities, jumped 4.1% on Tuesday, its first winning session this month, as concerns over a slow global economic recovery eased. Essar Shipping, Mercator Lines and Shipping Corporation of India rose by between 5.83% to 15.7%.

Some state-run firms gained on hopes the government may divest some of its holding. Hindustan Copper, MMTC, NMDC and Central Bank rose by between 2.16% to 9.99%.

Cals Refineries clocked highest volume of 3.11 crore shares on BSE. Reliance Natural Resources (1.92 crore shares), Suzlon Energy (1.83 crore shares), Unitech (1.46 crore shares) and Mahindra Satyam (1.41 crore shares) were the other volume toppers in that order.

Aban Offshore clocked the highest turnover of Rs 226.79 crore on BSE. Educomp Solutions (Rs 182.38 crore), ICICI Bank (Rs 172.65 crore), Suzlon Energy (Rs 172.11 crore) and Reliance Industries (Rs 166.75 crore) were the other turnover toppers in that order