Sensex surges to six-month high as global stocks rally

Positive global cues and short covering in April 2009 derivatives contracts which expired today, 29 April 2009, boosted the bourses in a volatile trading session. A sharp surge was witnessed in late trade. The BSE 30-share Sensex attained its highest closing in more than six months.

Banking, realty, auto and IT stocks were in the limelight. The Sensex jumped 401.50 points or 3.65%. A recovery in the economy also boosted the bourses. Index heavyweight Reliance Industries jumped past the Rs 1,800 mark.

The market was volatile as traders roll over positions from April 2009 contracts to May 2009 contracts ahead of the expiry of the near month April 2009 derivatives contracts. After a firm opening the market surged in early trade as strong Q4 results from mobile services giant Bharti Airtel and gains in Asian stocks bolstered sentiment. Profit taking after a recent solid surge in share prices pulled the market off the higher level in morning trade. The market bounced back again in early afternoon trade before paring gains. Volatility continued in afternoon trade. The market firmed up again in mid-afternoon trade. It surged in late trade.

The expiry of April 2009 derivatives contracts was advanced by a day from 30 April 2009 as the stock market remains closed on 30 April 2009 on account of voting for the parliamentary elections in Mumbai on 30 April 2009. As per reports, rollover of Nifty positions from April 2009 series to May 2009 series stood at 61% while those of stock futures were 54%, as on Tuesday, 28 April 2009.

Political uncertainty may lead to volatile swings on the bourses in the next few weeks with polling underway for India's 15th Lok Sabha. The month-long parliamentary elections that began on 16 April 2009 will conclude on 13 May 2009 with results due on 16 May 2009. Poll estimates point to a fractured mandate.

A recovery in the economy supported stocks today, 29 April 2009. India's industrial production may have risen 10% on a monthly basis in March 2009 as the effects of a recent spate of fiscal and monetary measures started showing up, Macquarie Research said in a recent note.

UBS's lead economic indicator in India has climbed for three consecutive months pointing to a strong recovery in industrial activity by June 2009, it said in a note late on Friday, 24 April 2009. UBS said the key variables which have boosted its lead indicator index was the government bond yield spread, real (M1) money supply and a revival in foreign capital inflows. "Our base-case scenario is for the Indian economy and corporate earnings to bottom out by the second half of 2009/10 and for full recovery in 2010/11," it said. UBS said it is positive on the Indian stock market on a 12 month view with overweight recommendation for autos, metals, banks, real estate and conglomerates.

The Reserve Bank of India (RBI) said on Tuesday it had extended up to 31 October 2009, the ceiling on the rates of interest on pre-shipment rupee export credit of up to 270 days and post-shipment rupee export credit up to 180 days at benchmark prime lending rate minus 2.5%. The earlier validity was up to 30 April 2009.

The Reserve Bank of India (RBI) governor D. Subbarao on Saturday, 25 April 2009, said unwinding of fiscal stimulus in an orderly manner is one of the major challenges going forward. The central bank governor also highlighted other challenges ahead. These include implementing the fiscal stimulus packages, particularly stepping up public investment, revival of private investment demand, maintaining flow of credit while ensuring credit quality.

For the central bank, which is also the regulator of the financial markets, preserving financial stability along with provision of adequate liquidity is another task that will have to be addressed, according to the RBI governor. Besides, it will have to ensure an interest rate environment that supports the return of the economy to a high growth path.

The Reserve Bank of India (RBI) on Tuesday, 21 April 2009 cut its key short-term rates by 25 basis points each to shore up faltering growth in the face of the global economic slowdown. The Reserve Bank also repeated a call for banks to pass on its rate cuts to customers and said deposit rates should also fall. "There is scope for the overall interest rate structure to move down within the policy rate easing already effected by the Reserve bank," it said adding its latest rate cut reinforced the case.

Reacting to the RBI rate cut, ICICI Bank, India's largest private sector bank by net profit, announced a reduction in both deposit and lending rates after trading hours on Tuesday, 21 April 2009. While moderation in internal accruals has an adverse effect on corporate investment, decline in input prices and reduction in borrowing costs may have a favourable impact on profitability of the corporate sector going forward, the RBI said at the time of announcing the monetary policy.

The central bank said that managing large government borrowing in FY 2010 in a non-disruptive manner would be a major challenge, and said it would use a mix of monetary and debt management tools to ensure this was done smoothly. Large borrowings also militate against the low interest rate environment that the RBI is trying to maintain to spur investment demand in keeping with the stance of monetary policy, the central bank said in its policy statement.

A good news for the economy is forecast of a near normal monsoon by the India Meteorological Department (IMD) on 17 April 2009. The IMD said rainfall in the June-September 2009 monsoon season was expected to be 96% of the long-term average. The outlook is among the nation's most widely watched indicator as monsoon rains are a major influence on output of key crops, economic activity and also affects sentiment in the country's financial markets.

European stocks gained ground on Wednesday, reversing some of the previous session's losses, as investors eyed forecast-beating earnings from some of Europe's top companies, including Siemens, Sanofi-Aventis, Santander and Royal Dutch Shell. Key benchmark indices in France, Germany and UK were up by between 0.8% to 1.3%.

The European Commission's economic sentiment indicator for the 16-nation euro zone rebounded to 67.2 in April 2009 from a record low of 64.7 in March 2009, marking the first rise since May 2007, the EC said Wednesday. Economists had expected a more modest rise to 65.3. The rebound was led by improvements in consumer and industrial confidence.

Asian stocks rose today, 29 April 2009 after reports showed US consumer confidence jumped this month by the most since 2005 and the pace of a slide in US home prices slowed. Key benchmark indices in China, Hong Kong, Singapore, Taiwan, South Korea, rose by between 0.31% and 2.94%. The Japanese markets were shut for a local holiday.

Trading in US index futures showed the Dow could rise 71 points at the opening bell on Wednesday 29 April 2009.

Better-than-expected US consumer data helped support Wall Street late Tuesday, with indexes ending only mildly lower. The Dow Jones Industrial Average shed 8.05 points, or 0.10%, to 8,016.95, the Standard & Poor's 500 Index dropped 2.35 points, or 0.27%, to 855.16. The Nasdaq Composite index fell 5.60 points, or 0.33%, to 1,673.81.

Closer home, foreign funds turned sellers after aggressive buying recently. Foreign institutional investors (FIIs) sold shares worth a net Rs 173.90 crore on Tuesday, 28 April 2009. FII inflow in April 2009 totaled Rs 7,039.90 crore (till 28 April 2009). With heavy buying in the last two months, foreign funds have turned net buyers in calendar 2009. FII inflow in calendar year 2009 totaled Rs 368.10 crore (till 28 April 2009).

FIIs had resorted to heavy selling of Indian stocks in the first two months of calendar 2009. Domestic institutional investors had absorbed the selling by FIIs.

The BSE 30-share Sensex rose 401.50 points or 3.65% to 11,403.25, its highest closing since 14 October 2009. At the day's high of 11,430.25, Sensex rose 428.50 points in late trade. At the day's low of 11,091.56, Sensex rose 89.81 points in early trade.

The S&P CNX Nifty jumped 111.60 points or 3.32% to 3,473.95

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,437 stocks advanced as compared to 1,046 that declined. A total of 62 shares remained unchanged.

BSE clocked a turnover of Rs 4141 crore, lower than Rs 4,255.07 crore on Tuesday, 28 April 2009.

Nifty May 2009 futures were at 3,481, at a premium of 7.05 points as compared to the spot closing of 3,473.95. Turnover in NSE's futures & options (F&O) segment was Rs 80,063.40 crore, lower than Rs 81,137.88 crore on Tuesday, 28 April 2009.

The BSE Sensex is up 1,755.94 points or 18.2% in calendar 2009 from its close of 9,647.31 on 31 December 2008.

Coming back to today's trade, the BSE Mid-Cap index was up 1.83%, and the BSE Small-Cap index rose 1.35%. Both the indices underperformed the Sensex.

The BSE IT index (up 4.95%), The BSE Bankex (up 4.47%), the BSE TECk (up 3.99%) outperformed the Sensex.

The BSE Healthcare index (up 0.99%), the BSE FMCG index (up 1.53%), the BSE Consumer Durables index (up 1.94%), the BSE PSU index (up 1.96%), the BSE Capital Goods index (up 2.24%), the BSE Realty index (up 2.6%), the BSE Metal index (up 2.84%), the BSE Auto index (up 2.92%), the BSE Power index (up 3.17%), the BSE Oil & Gas index (up 3.48%), outperfomed the Sensex.

From the 30 pack Sensex pack, 29 stocks rose and only one stock fell.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 3.8% to Rs 1,802.70 after the company signed gas sales and purchase agreement (GSPA) with customers in the power sector for supply of natural gas from the prolific KG-D6 block. The GSPAs were signed with nine customers in the power sector for supply of about 11 million standard cubic metres (mmscmd) of natural gas at 11 different power generation facilities.

Meanwhile, as per other reports, Reliance Industries has resumed crude oil production from one well in its east coast deepwater block. Reliance had stopped crude oil production form the Krishna Godavari block, popularly known as D-6, from 22 March 2009 to add more wells to raise the crude oil output.

India's largest oil exploration firm by sales Oil and Natural Gas Corporation gained 3.93% as crude oil reversed earlier losses and moved past $50 a barrel mark. The rise in crude oil prices would result in higher realizations from crude sales for oil exploration firms.

India's largest telecom services provider by sales Bharti Airtel rose 3.25% as consolidated net profit as per US accounting standards rose 21% to Rs 2239.30 crore on 26% growth in sales to Rs 9824.50 crore in Q4 March 2009 over Q4 March 2008. The company also announced a 2-for-1 stock split.

Capital goods stocks rose after India's biggest engineering & construction firm by revenue L&T recently said it expect a strong order flow in the year ending March 2010 (FY 2010). L&T, Bharat Heavy Electricals, Punj Lloyd, Praj Industries, Siemens rose by between 0.79% to 4.54%.

L&T on 16 April 2009 said the company expects its order inflow to grow by 25-35% in FY 2010

Some realty stocks rose on recent reports of revival in demand for new homes in Q4 March 2009. DLF, Indiabulls Real Estate, Housing Development & Infrastructure, Akruti City rose by between 2.68% to 5.5%.

Auto shares rose on hopes lower interest rates will boost demand for vehicles which is mainly driven by finance. Mahindra & Mahindra, Bajaj Auto, Tata Motors, Maruti Suzuki India and Hero Honda Motors rose by between 1.44% to 5.49%.

Banking stocks rose on hopes falling interest rates will boost lending growth. India's second largest private sector bank by operating income HDFC Bank rose 2.8%. Its American depository receipts (ADRs) fell 1.22% on Tuesday, 28 April 2009. The banks' net profit rose 33.9% to Rs 630.88 crore on 53.1% rise in operating income to Rs 5,365,52 crore in Q4 March 2009 over Q4 March 2008. The results were more or less in line with market expectations. The bank announced the results on Thursday 23 April 2009.

HDFC Bank's gross non performing assets (NPA) stood at 1.98% of advances as of 31 March 2009 compared to 1.91% as of 31 December 2008. Net NPA as of 31 March 2009 was at 0.63% of net advances.

India's largest private sector bank by net profit ICICI Bank rose 8.74%. Goldman Sachs raised its rating on the stock on improving core earnings. Its American depository receipts (ADRs) fell 1.9% on Tuesday.

ICICI Bank cut its lending rates by 50 basis points after the central bank cut official interest rates on Tuesday 21 April 2009. The benchmark advance rate, or the rate that it charges its top customers, now stands at 16.25% from 16.75%, effective from Wednesday, 22 April 2009.

ICICI Bank also cut rates for retail customers by 50 basis points. The rates on deposits have been cut between 25 to 50 basis points, with effect from Friday 24 April 2009.

India's largest bank in terms of assets and branch network State Bank of India (SBI) was up 3.04%. SBI chairman O.P. Bhatt on Tuesday 21 April 2009 said interest rate cuts by the Reserve Bank of India were a signal for commercial banks to lower their rates. He said a decision on whether SBI would lower rates would be taken after a meeting of the bank's asset-liability. SBI's advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

India's biggest dedicated housing finance firm by operating income HDFC rose 3.62%.

Outsourcing focussed IT stocks rose on speculation US government efforts to fix the banking system and revive the economy will pull the nation out of a recession. US is the biggest market for Indian IT firms. India's third largest software services exporter, Wipro rose 4.79% even as its ADR rose fell 0.76% on Tuesday.

India's largest software services exporter by sales TCS rose 4.11%. India's second largest software services exporter Infosys Technologies rose 5.29%. Its ADR was flat on Tuesday.

IT stocks shrugged off a firm rupee. The rupee rose on Wednesday, snapping a two-day fall, boosted by gains in Asian stock markets and the dollar's weakness against some currencies. The partially convertible rupee was at 50.09 per dollar, above Tuesday's close of 50.52/53. A stronger rupee affects operating profit of IT firms negatively as they earn most of their revenues from exports.

India's largest copper maker by sales Sterlite Industries India rose 6.75% on better-than-expected Q4 numbers. Sterlite Industries India reported a 54.62% fall in consolidated net profit to Rs 598.25 crore in Q4 March 2009 over Q4 March 2008. Total income declined 34.76% to Rs 4800 crore in Q4 March 2009 over Q4 March 2008.

Some FMCG stocks rose triggered by expectations of a surge in sales due to forecast of a good monsoon this year. ITC, Hindustan Unilever, Dabur India, United Spirits rose by between 0.32% to 4.2%. FMCG firms derive a substantial revenue from rural markets.

Sugar stocks rose on reports India is likely to produce less sugar in the current season compared to last year. Shree Renuka Sugars, Balrampur Chini and Bajaj Hindusthan rose by between 6.53% to 7.38%

Unitech clocked the highest volume of 7.41 crore shares on BSE. Cals Refineries (5.88 crore shares), Jaiprakash Associates (1.1 crore shares), Suzlon Energy (1.1 crore shares) and Reliance Natural Resources (98.22 lakh shares) were the other volume toppers in that order.

Unitech clocked the highest turnover of Rs 321.38 crore on BSE. Reliance Industries (Rs 185.70 crore), ICICI Bank (Rs 184.75 crore), Reliance Industrial Infrastructure (Rs 165.27 crore) and Reliance Capital (Rs 154.45 crore) were the other turnover toppers in that order.