BSE / NSE Market Report 21 July 2009

Market Report 21 July 2009

Key benchmark indices fell in volatile trade as profit booking emerged after a recent solid surge. However firm European stocks capped the fall. The BSE 30-share Sensex was down 128.52 points or 0.85%, up close to 105 points from the day's low and off close to 175 points from the day's high. IT, realty and power stocks fell. Some metal stocks rose after Tata Steel raised $500 million from an issue of global depository receipts (GDR).

The market breadth, indicating the overall health of the market was negative. Concerns of impact of below average rains on the economy weighed on the sentiment.

The market was volatile. Profit taking pulled the key benchmark indices lower after a higher start triggered by firm global markets. The market cut losses in mid-morning trade. However, the intraday recovery proved short lived and the market lost ground again in early afternoon trade. The barometer index BSE Sensex regained 15,000 level soon after sliding below that level in early afternoon trade. Volatility was high in mid-afternoon trade.

Equities had witnessed a solid run up in the past few days with good initial batch of Q1 June 2009 lifting sentiment. From a recent low of 13,400.32 on 13 July 2009, the Sensex had risen 1,790.69 points or 13.36% in just five trading sessions to 15,191.01 on Monday, 20 July 2009.

Union Agriculture Minister Sharad Pawar on Monday said the overall agriculture situation due to an inadequate South-West monsoon so far was quite serious, and that the government was taking all steps to face the situation. Monsoon was 27% below normal during the period from 1 June 2009 to 15 July 2009. Spatial distribution and actual rain during July and August are vital to determine its consequences on overall economy. More than two-thirds of the people in India live in villages and 60% of the farm land depends on the annual rains.

Finance Secretary Ashok Chawla on Monday said the Centre and state governments are trying to ensure adequate supply of power and diesel for farmers to help them exploit ground water resources to the maximum.

The deputy chairman of the Planning Commission Montek Singh Ahluwalia said on Tuesday that India's economy does not need any more stimulus packages from the government. He said the Union Budget 2009-2010 includes a very significant boost in plan expenditure and investment.

Indian policymakers may reportedly raise foreign investment limit on government debt securities. Foreign investment in government debt is capped at $5 billion and at $15 billion in corporate debt, and the move if done is seen as ensuring demand for the government's record borrowing plan of Rs 4,51,000 crore ($94 billion) in 2009/10. The borrowing target, unveiled in the 6 July budget, is three times more than last year's and is aimed to bridge a fiscal deficit of 6.8 %, the biggest in 16 years.

The Q1 June 2009 results announced so far have encouraging, with lower costs helping bottomline growth. The combined net profit of 246 companies rose 42.8% Rs 12,717 crore on 10.9% growth in sales to Rs 96,767 crore in Q1 June 2009 over Q1 June 2008.

European shares rose on Tuesday, rising for a seventh straight day, following overnight gains US stocks and amid another batch of second-quarter earnings. Key benchmark indices in France, Germany and UK were up by between 0.9% to 1.33%.

Asian stocks were mixed. Key benchmark indices in Singapore, China and Hong Kong were down by between 0.07% to 1.64%. Key benchmark indices in Taiwan, Japan and South Korea were up by between 0.21% to 2.73%.

Trading in the US index futures indicated the Dow could rise 36 points at the opening bell today, 21 July 2009.

US stocks rallied on Monday, pushing the S&P 500 to an eight-month closing high, after CIT Group Inc was thrown a lifeline to avoid bankruptcy, and investors bet corporate America would log another strong set of earnings this week. CIT lends to nearly one million small and mid-sized US businesses.

The S&P 500 index closed at its best levels of the year and at 8-month highs above the psychologically important level of 950. Goldman Sachs has raised its year-end target for the index to 1,060 from 940.

The Dow gained 104.21 points, or 1.2%, to 8,848.15. The S&P 500 index rose 10.75 points, or 1.1%, to 951.13 and the Nasdaq Composite Index added 22.68 points, or 1.2%, to 1,909.29.

On the economic data front, an index which gauges US economic prospects for the next six to nine months, increased in June for the third straight month, suggesting the recession was drawing to a close.

The BSE 30-share Sensex was down 128.52 points or 0.85% at 15,062.49. At the day's high of 15,234.21, the Sensex rose 43.20 points in early trade. At the day's low of 14,955.88, the Sensex fell 235.13 points in early afternoon trade.

The S&P CNX Nifty was down 33.15 points or 0.74% to 4,469.10. Nifty July 2009 futures were at 4471.15, at a premium of 2.05 points as compared to the spot closing of 4469.10. Turnover in NSE's futures & options (F&O) segment was Rs 65,459.06 crore, lower than Rs 70,008.60 crore on Monday, 20 July 2009.

BSE clocked a turnover of Rs 6,190 crore which was almost equal to Monday's Rs 6,193.18 crore.

The barometer index BSE Sensex is up 5,415.18 points or 56.13% in calendar year 2009 as on 21 July 2009. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex has risen 6,902.09 points or 84.5% as on 21 July 2009.

Coming back to today's trade, the market breadth, indicating the overall health of the market was negative. On BSE, 1,283 shares rose as compared with 1,343 that fell. A total of 86 shares remained unchanged.

From the 30 shares Sensex pack, 21 fell and rest rose.

The BSE Mid-Cap index was down 0.19%. The BSE Small-Cap index was up 0.24%. Both the indices outperformed the Sensex.

The BSE Metal index (up 1.25%), the BSE Auto index (up 0.11%), the BSE Healthcare index (up 0.02%), the BSE Capital Goods index (down 0.18%), the BSE Consumer Durables index (down 0.21%), the BSE FMCG index (down 0.85%), outperformed the Sensex.

The BSE IT index (down 1.74%), the BSE Power index (down 1.7%), the BSE PSU index (down 1.4%), the BSE TECk index (down 1.4%), the BSE Bankex (down 1.39%), the BSE Realty index (don 1.23%), the BSE Oil & Gas index (down 0.99%), underperformed the Sensex.

India's largest private sector firm by market capitalisation Reliance Industries (RIL) fell 0.65% to Rs 2,017.55. The stock hit a high of Rs 2,044.90 and a low of Rs 2,007.15. The stock had risen 5.03% on Monday, 20 July 2009, after the Supreme Court asked the energy giant and former group firm Reliance Natural Resources (RNRL) why a gas pact between the two should not be cancelled. The news hit the market during trading hours that day. The court has scheduled next hearing on the dispute over the gas supply to Reliance Natural Resources (RNRL) on 1 September 2009.

RNRL has asked the Supreme Court to dismiss the government's affidavit on the dispute, even as the petroleum ministry has suggested that the court treats the pact between the two brothers null and void. The dispute concerns supply of natural gas from RIL's field, off the Andhra Pradesh coast, as also the price at which Reliance Natural Gas will get the fuel for power projects within the group.

In reply to the lawsuit filed by Reliance Industries challenging the Bombay High Court order, RNRL has said the government has no role to play in the private gas sharing dispute, and certainly not as a party to the row. The government, however, has said that the country's interest must be taken into consideration first and that cannot be held to ransom by a dispute between two industrialists or a previous, private pact between them.

Shares of oil exploration firms fell even after crude oil rose for a fifth day today on speculation that fuel demand will increase as gains in equity markets spurred optimism the global recession is ending. India's largest state-run oil exploration firm by revenue ONGC fell 1.49%. Cairn India fell 0.18%. Crude oil for August delivery rose 0.45% to $64.27 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 as LMEX, a gauge of six metals traded on the London Metal Exchange rose 1% on Monday, 20 July 2009. JSW Steel, Jindal Steel, Hindalco Industries, Steel Authority of India, rose by between 0.11% to 5.09%.

India's largest steel maker by sales Tata Steel jumped 5.28% reversing losses in early trade after the company said on Tuesday it has launched an issue of issue global depository receipts (GDR). The stock came off the day's low of Rs 377. The company today, 21 July 2009, said it will raise $500 million and priced each GDR at $7.644. Each GDR issue represents one underlying equity share. The issue will result in equity dilution of nearly 9%. The company will use the funds for expansion projects.

IT stocks fell on profit taking after Monday's sharp rally triggered by better-than-expected Q1 June 2009 result by India's largest IT exporter by sales TCS after trading hours on Friday, 17 July 2009. TCS fell 4.52% after surging 15.34% on Monday. The company's net profit rose 15.27% to Rs 1276.44 crore on 0.12% fall in sales to Rs 5609.60 crore in Q1 June 2009 over Q4 March 2009.

India's largest IT firm by sales Infosys fell 1.5%. The stock had risen 5.66% on Monday. The company had raised the lower end of its annual forecast in dollar terms at the time of announcing Q1 June 2009 results on 10 July 2009. Its ADR rose 5.01% overnight.

India's third largest IT exporter by sales Wipro fell 0.46% ahead of its Q1 June 2009 result on Wednesday, 22 July 2009. Its American depository receipt (ADR) rose 4.44% on Monday, 20 July 2009.

Power stocks fell on disappointment from the Budget early this month. There was lack of any major sops in the Budget for the power sector. Reliance Power, Reliance Infrastructure, Tata Power Company, NTPC, Power Grid Corporation of India, fell by between 0.27% to 2.67%.

India's largest car maker by sales Maruti Suzuki India rose 2.62% ahead of its Q1 June 2009 result on Thursday, 23 July 2009.

Realty stocks fell on profit taking after a recent surge triggered by government's thrust on the housing sector in the Budget. Unitech, Housing Development & Infrastructure, Omaxe, Indiabulls Real Estate, DLF, Ackruti City fell by between 0.91% to 2.48%.

Some cement stocks rose after a robust Q1 result by Ultratech Cement. Ultratech Cement rose 0.67% after net profit rose 61.41% to Rs 427.77 crore on 30.5% rise in total income to Rs 1,987 crore in Q1 June 2009 over Q1 June 2008.

Birla Corporation of India and Grasim Industries rose by between 0.95% to 4.04%.

Construction stocks, rose after thrust on infrastructure sector in the Union budget 2009-2010. Era Infra Engineering, Hindustan Construction Company, Gayatri Projects, JP Associates rose by between 0.35% to 3.5%.

Finance Minister Pranab Mukherjee on 6 July 2009, provided a thrust on various infrastructure projects in the Budget which may result in increase in orders for construction firms and help boost cement demand. 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 engineering and construction firm by sales Larsen & Toubro (L&T) rose 0.91%. The company, last week, stood by its stated outlook of 25% growth in order inflows for the current year even as the first quarter ended with a negative note. At the time of announcing Q1 June 2009 results, L&T had during trading hours on Thursday, 16 July 2009 said its order inflow was down 22 % in Q1 June 2009 over Q1 June 2008. The company's order backlog at the end of the June quarter was Rs 71, 650 crore ($14.7 billion).

Other capital goods stocks, Punj Lloyd, Praj Industries, BEML, ABB, Crompton Greaves, rose by between 0.77% to 3.84%.

Some drug makers rose after the Finance Minister Pranab Mukherjee reduced customs duty on life saving drugs in the Budget. Biocon, Ranbaxy Laboratories, Sun Pharmaceutical Industries , Cipla rose by between 0.16% to 1.01%.

Dr Reddy's Laboratories fell 0.18%. The company after market hours today said net profit rose 8.27% to Rs 227.44 crore on 9.13% rise in total income to Rs 1,220.71 crore in Q1 June 2009 over Q1 June 2008.

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 fell on profit taking after recent gains triggered by the government's commitment to financial sector reforms. Finance Secretary Ashok Chawla on 17 July 2009, said the government will introduce seven bills in parliament, including proposals for pension and banking reforms and efforts to raise the foreign investment limit in insurance companies.

India's largest private sector bank by net profit ICICI Bank fell 1.92% even as its American depository receipt (ADR) rose 9.19% overnight.

India's biggest bank in terms of branch network State Bank of India (SBI) fell 0.74% on recent reports the Reserve Bank of India has asked it to set aside more money for bad loans, noting that provisions made by the bank are far short of the industry average.

India's second largest private sector bank in terms of operating income HDFC Bank fell 0.56%. Its ADR rose 6.61% overnight. The bank on Monday, 20 July 2009, slashed its benchmark lending rate by 25 basis points to 15.75%. The cut in lending rate follows the reduction in the fixed deposits rate effective from 18 May 2009, the private sector bank said.

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 on 14 July 2009.

Yes Bank was flat at Rs 153.45 even as net profit surged 84.19% to Rs 100.07 crore in Q1 June 2009 over Q1 June 2008. The private sector bank announced the results during trading hours today

Axis Bank fell 0.39% on profit taking after recent sharp gains triggered by robust Q1 June 2009 results announced during market hours on 13 July 2009. 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

Unitech clocked the highest volume of 2.58 crore shares on BSE. Mahindra Satyam (2.45 crore shares), Ispat Industries (2.44 crore shares), IFCI (1.82 crore shares) and Cals Refineries (1.72 crore shares) were the other volume toppers in that order.

Tata Steel clocked the highest turnover of Rs 390.14 crore on BSE. Mahindra Satyam (Rs 231.55 crore), Unitech (Rs 210.31 crore), Reliance Capital (Rs 207.49 crore) and ICICI Bank (Rs 151.89 crore) were the other turnover toppers in that order.