Sensex up 32.39% from recent low

Key benchmark indices registered small gains in a highly volatile trade today. Volatility in banking stocks and the index heavyweight Reliance Industries (RIL) caused volatility in the key benchmark indices. The BSE 30-share Sensex rose 61.52 points or 0.57%, up close to 145 points from the day's low and off close to 130 points from the day's high. The Sensex registered its highest closing in nearly six months.

Fall in headline inflation and weak industrial production data for February 2009 raised expectations of a further easing of the monetary policy by the Reserve Bank of India (RBI). Resumption of buying by foreign funds also bolstered sentiment.

Volatility was high. The market surged in early trade with the Sensex hitting its highest level in more than five months on firm Asian stocks. The market soon cut gains and slipped in the red for a brief period. The market regained strength later and extended gains in early afternoon trade on data showing fall in headline inflation.

After a sharp surge, the Sensex slipped into the red again in afternoon trade before bouncing back. High volatility was witnessed in the last one hour of trade.

Signs of an improvement in the Indian economy triggered a solid rally on the domestic bourses in the past few days. The rally was also a part of a sharp surge in global equities triggered by hopes the worst of the global economic recession may be over. From a 3-year closing low of 8,160.40 on 9 March 2009, the Sensex jumped 2,643.46 points or 32.39%.

Inflation based on the wholesale price index (WPI) rose 0.26% in the year through 28 March 2009, lower than previous week's 0.31% rise, data released by the government today, 9 April 2009, showed. It was the lowest growth in WPI inflation in at least two decades.

Another data showed India's industrial production declined 1.2% in February 2009 compared to a 0.4% rise in January 2009. The government revised upwards the January 2009 industrial production to 0.4% from a provisional fall of 0.5%.

Near zero WPI inflation and weak industrial production data raised expectations of a further easing of the monetary policy by the RBI to revive slowing economic growth. RBI governor D Subbarao said this week policy will be tailored to arrest a steeper-than-estimated moderation in growth.

Meanwhile, the Indian government today launched its biggest-ever auction of oil and gas assets, offering 70 exploration blocks at a time when global oil demand is waning due to economic slowdown. The government has offered 24 deepwater blocks, 28 shallow water blocks and 18 onland blocks in the auction, which will close on 10 August 2009. The government has also offered 10 coal-bed methane blocks for exploration in the fourth round of offering such blocks. The government has so far awarded 212 oil and gas blocks, under its licencing policy introduced in 1999.

European shares were higher on Thursday, 9 April 2009, up for the second consecutive session, with banks and commodity stocks leading the rally. Key benchmark indices in France, UK and Germany were up by between 0.25% to 1.15%.

The Bank of England today left interest rates unchanged at a record low of 0.5% and said it would take another two months to complete its 75 billion pound quantitative easing program.

British inflation continued to ease at the wholesale level in March 2009, with producer prices up 2% compared to the same month last year, the Office for National Statistics reported Thursday. That's the smallest rise since July 2007.

Asian stocks rose on Thursday, 9 April 2009, led by automakers and electronics companies, as Japan's ruling party proposed $154 billion of additional spending and reported an unexpected increase in machinery orders. The Nikkei 225 average jumped 3.74% as Japanese machinery orders rose for the first time in five months in February 2009, adding to signs that the recession may be easing.

As per reports Japan's ruling Liberal Democratic Party will propose the government implement a 15.4 trillion ($154 billion) stimulus package to help revive the economy. Japanese Prime Minister Taro Aso indicated this week he wanted to spend at least 10 trillion yen.

Japanese machinery orders unexpectedly rose for the first time in five months in February 2009. Bookings, an indicator of capital investment in the next three to six months, climbed 1.4% from January 2009, the Cabinet Office said today in Tokyo. The report added to signs the global recession might be easing. Even so, Australia's jobless rate rose to a five-year high of 5.7%, the statistics bureau said today. The Organization for Economic Cooperation and Development said on 27 March 2009 its 30 members are likely to see their economies contract by 4.2% this year.

Key benchmark indices in China, Hong Kong, Singapore and Taiwan rose by between 1.38% to 4.12%.

South Korea's Kospi index jumped 4.3% after the Bank of Korea's monetary policy committee left interest rates unchanged at a record low of 2%, signaling that there may be some hint of improvement in the economy. In a statement, the committee said that while domestic economic activity has continued to decline because of drops in both domestic demand and exports, the pace of the slowdown has moderated somewhat. There are signs that production activity in the manufacturing and services sectors is improving slightly, it said.

US stocks rose on Wednesday, 8 April 2009, after the Treasury said it may give funds to life insurers. Trading in US index futures showed the Dow could rise 60 points at the opening bell on Thursday, 9 April 2009.

Closer home, the Q4 March 2009 results of India Inc would start trickling in soon and investors will closely watch the future outlook provided by the management. IT bellwether Infosys Technologies kickstarts the earnings reporting season on 15 April 2009.

One domestic brokerage expects core earnings of 30-Sensex firms to decline 12% in Q4 March 2009 over Q4 March 2008. The decline in earnings may be more widespread than in the previous quarter. The decline in earnings was led primarily by commodities in Q3 December 2008. The above mentioned brokerage expect earnings to decline in real estate, automobiles, banking, financial services & insurance (BFSI), media, and construction, in addition to commodities (metals & mining, cement), sectors. FMCG and capital goods are expected to report only a marginal earnings growth. Oil marketing companies are, however, expected to post strong earnings growth.

The suspension of AS-11 till 2011 will result in significant increase in profits in Q4 March 2009, as companies may write back marked-to-market losses on foreign currency liabilities booked in the past three quarters.

The above-mentioned brokerage expects Sensex earnings to decline 5% in the year ending March 2010 (FY 2010). Capital goods, FMCG, oil & gas, and BFSI are expected to register earnings growth in FY 2010, whereas metals, cement and real estate are expected to see sharp earnings decline, it says in a recent report. Slowing economic growth, weak demand, and lower realisations will keep earnings growth and profitability of Indian corporates under pressure in the near term. With sales declining, operating leverage will result in margin contraction. However, this will be partially compensated by lower input costs.

Consensus earnings expectations have been consistently revised downwards. There could be further earnings downgrades if the macroeconomic situation does not improve materially.

Indian manufacturing activity contracted for a fifth straight month in March 2009 as demand remained depressed by the global economic downturn, although there were some signs of improvement, a survey showed on 1 April 2009. The new orders index rose to 49.5 in March 2009 from 45.9 in February 2009.

Prime Minister Manmohan Singh on 24 March 2009 said India's economy will revive in a big way in six to seven months as stimulus packages start to take effect. On the same day, Planning Commission Deputy Chairman Montek Singh Ahluwalia scaled down the GDP (gross domestic product) growth projection for the current fiscal to 6.5% from the 7.1% increase estimated by the government earlier during the year, owing to the ongoing global crisis.

Indian corporate bonds sales posted their best quarter on record as government-backed infrastructure and finance companies raised funds to bolster their capital. Indian companies raised Rs 37800 crore from bonds in Q1 March 2009, 44% more than in the same period a year earlier. State-owned lender India Infrastructure Finance Co. raised Rs 7370 crore in the biggest bond sale of the quarter, followed by a Rs 3950-crore issue by the National Bank for Agriculture & Rural Development, known as Nabard.

Earlier the global financial crisis ends and sooner the risk appetite of global investors and global companies improves, better it will be for India Inc. An increase in risk appetite of global investors/global companies will help Indian firms raise overseas funds required for business expansion. The global financial crisis has chocked the overseas funding route for Indian firms.

Raising funds may become difficult for small and medium enterprises (SMEs) with new lending regulations for banks, popularly known as Basel II norms coming into force from 1 April 2009. All business units, irrespective of their size, will need to take ratings for their enterprises to secure working capital, loans, and other funds from banks.

Lack of funding has hit a slew of long-gestation infrastructure projects in India. World Bank Chief Economist & Senior Vice-President, Dr Justin Yifu Lin, on 13 March 2009, said if India can improve its infrastructure such as electricity, power, transportation and port facilities, it will be well on its path to achieve a 9-10% growth.

India's fiscal deficit for the April-February 2009 period was Rs 3,07,000 crore ($61 billion), or 94.1% of an upwardly revised budget target, a government statement said on Tuesday, 31 March 2009. In February 2009, the government revised upwards its fiscal deficit estimate for the year ending 31 March 2009 to Rs 3, 27, 000 crore, equivalent to 6% of gross domestic product from 2.5% estimated earlier. The deficit has widened after the government announced extra spending of close to Rs 1, 50,000 to cover a farm debt scheme, subsidies and steps to stimulate a slowing economy.

Meanwhile, investors moved more cash out of safe-haven money market funds and moved it into higher-risk investments in the week ended 1 April 2009, data from Boston-based fund tracker EPFR Global showed on 3 April 2009. During the week ended 1 April 2009, long-only dedicated emerging market equity funds witnessed net inflows of $1.2 billion, according to the US-based EPFR Global, which provides fund flows and asset allocation data to financial institutions.

The broader category of Global Emerging Market (GEM) equity funds had net inflows of $867.5 million. However, India had net outflows of $4.1 million in the week ended 1 April 2009. It seems that emerging markets have once again become attractive investment destinations, promising better growth prospects, says EPFR Global managing director Brad Durham.

In the latest period, investors pulled $9.68 billion out of money market funds while developed equity markets such as the United States and Japan had outflows of $1.095 billion and $487.1 million, respectively.

Closer home, foreign funds have resumed buying of Indian stocks. As the provisional data released by the stock exchange, foreign funds bought shares worth a net Rs 573.33 crore on Wednesday, 8 April 2009. Foreign funds bought shares worth Rs 1103.40 crore in three trading sessions from 1 April 2009 and 6 April 2009. The inflow followed heavy sales in the preceding three trading sessions. Foreign funds dumped stocks worth a net Rs 1266.70 crore in three trading sessions from 27 March 2009 to 31 March 2009. Before the selling, foreign institutional investors had mopped up stocks worth Rs 3635 crore in a short span from 17 March 2009 to 26 March 2009.

Domestic institutional investors had absorbed heavy selling by foreign funds witnessed in first two months of calendar year 2009.

The Indian rupee has bounced back after hit a record low beyond 52 per dollar early last month. The Indian rupee rose in early on Thursday as stocks extended gains for a sixth day while higher Asian units also boosted sentiment. The partially convertible rupee was at 50.01 per dollar, stronger than its previous close of 50.19/20.

The upside on the domestic bourses will be capped in the next two months due to political uncertainty ahead of parliamentary election to be held between mid-April 2009 to mid-May 2009. More so at a time when early estimates point a fractured mandate. A group of smaller political parties, including the communists, have formally launched a Third Front in a bid to provide an alternative to the two main parties viz. the Congress and the BJP.

The BSE 30-share Sensex rose 61.52 points or 0.57% to 10,803.86, its highest closing since 15 October 2008. At the day's high of 10,932.12, the Sensex rose 189.78 points in early trade. At the day's low of 10,655.96, the Sensex fell 86.38 points in early trade.

The S&P CNX Nifty was almost unchanged at 3,342.05 compared to Wednesday (8 April 2009)'s close of 3342.95

The BSE clocked a turnover of Rs 5,915 crore, higher than Rs 5,437.91 crore on Wednesday, 8 April 2009.

Nifty April 2009 futures were at 3,353, at a premium of 10.95 points as compared to the spot closing of 3,342.05. Turnover in NSE's futures & options (F&O) segment was Rs 62,970.10 crore lower than Rs 63,465.15 crore on Wednesday, 8 April 2009.

The BSE Mid-Cap index rose 1.69% and the BSE Small-Cap index rose 1.66%. Both the indices outperformed the Sensex.

The BSE Realty index (up 5.42%), the BSE Metal index (up 1.65%), the BSE Bankex (up 2.64%), the BSE Consumer Durables index (up 2.59%), the BSE Capital Goods index (up 1.31%), the BSE Power index (up 0.59%) outperformed the Sensex.

The BSE FMCG index (down 1.36%), the BSE Auto index (down 0.87%), the BSE PSU index (down 0.69%), the BSE Healthcare index (down 0.49%), the BSE Oil & Gas index (down 0.26%), the BSE IT index (up 0.04%), the BSE TECk index (up 0.35%), underperfomed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1,790 stocks advanced as compared to 807 that declined. A total of 52 shares remained unchanged. The breadth was weak earlier in the day.

From the 30 share Sensex pack 18 stocks gained while rest fell.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 0.52% to Rs 1,733.05. The stock was off the day's high of Rs 1,759. The company started pumping gas from the Krishna Godavari (KG) recently which is estimated to add close to $2 billion to the company's profit at peak production levels.

Meanwhile, as per recent reports, RIL and ONGC Videsh (OVL) may pick up 20% stake each in at least one of the three large oil fields in Venezuela's Carabobo region. Each one of the Carabobo oil fields has 40-50 billion barrels of proven oil reserves enough to meet the total global oil demand for 6-8 weeks. The RIL-OVL consortium will pick up 40% stake while the balance 60% will be held by Venezuela's national oil company PdVSA.

Essar Oil jumped 2.28% extending gains for the sixth day in a row on reports the firm is buying 50% stake in a Kenyan refinery.

Metal stocks rose as a measure of six metals rose 0.7% in London yesterday, 8 April 2009, its second day of gains. Tata Steel, Steel Authority of India, Sterlite Industries, National Aluminum Company and Hindalco Industries rose by between 0.09% to 7.71%.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. DLF, Indiabulls Real Estate, Unitech rose by between 4.83% to 7.62%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Banking stocks rose on hopes falling interest rates will boost lending growth. However, bank stocks were volatile. India's largest private sector bank by net profit ICICI Bank was up 5.62% to Rs 397.70. The stock hit the high of Rs 401.70 and a low of Rs 371.55. Its American depository receipts (ADR) rose 4.54% on Wednesday, 7 April 2009. ICICI Bank's advance tax payment remained unchanged at Rs 250 crore in Q4 March 2009 when compared to Q4 March 2008.

India's second largest private sector bank by operating income HDFC Bank was up 0.02% to Rs 1,046.05. The stock hit the high of Rs 1,079 and a low of Rs 1,033. Its ADR rose 2.18% on Wednesday. Its advance tax payment rose 10% to Rs 275 crore in Q4 March 2009 over Q4 March 2008.

India's largest bank in terms of assets and branch network State Bank of India was up 1.47% to Rs 1,140.40. The stock hit the high of Rs 1,162.90 and a low of Rs 1,116.30. Its 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 fell 0.35%. It announced a 50 basis points reduction in its retail prime lending rate (RPLR) to 14% effective 25 March 2009.

As per the latest RBI data, credit growth from the banking sector slowed down to 17.27% in the financial year ended March 2009, from 21.60% in the financial year ended March 2008. It was the slowest pace of credit growth in five years.

Shares of FMCG companies fell as recovering equity market forced investors to dump these so called defensive stocks. Godrej Marico, Britannia Indisustries, Nestle India, ITC, Hindustan Unilever, fell by between 0.47% to 3.26%.

Some healthcare stocks rose triggered by expectations of better Q4 March 2009 results following reports of higher advance tax payment by these firms. Lupin, Dr Reddy's Laboratories, Ranbaxy Laboratories, Biocon, Sun Pharmaceutical Industries, Piramal Healthcare rose by between 0.74% to 3.12%.

Some cement stocks fell on reports cement prices will fall post general elections as demand from state projects tapers off and credit crunch thwarts new projects. ACC, Ultratech Cement and Bila Corporation India fell by between 0.68% to 2.65%.

India's largest engineering and construction firm by sales Larsen & Toubro rose 2.76% after firm secured orders worth Rs 605 crore from the water and steel sectors.

Other capital goods stocks, Crompton Greaves, ABB, AIA Engineering rose by between 1.48% to 11.09%.

Outsourcing focussed IT stocks fell on a stronger rupee. India's third largest software services exporter, Wipro fell 2.8%. Its ADR rose 10.71% on Wednesday. Recently its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC).

India's largest software services exporter by sales TCS fell 0.26%. As per recent reports company bagged a $80 million outsourcing contract from UK's Child Maintenance and Enforcement Commission, the first in a series of $2-3 billion worth of contracts to be awarded by the UK's state-owned departments. The company's advance tax payment fell 54.3% to Rs 53 crore in Q4 March 2009 over Q4 March 2008.

India's fifth largest IT firm by sales HCL Technologies fell 1.65% on recent reports the firm has bagged a five-year IT services contract worth close to $170 million or Rs 848 crore from US-based Microsoft Corporation.

But, India's second largest software services exporter Infosys Technologies rose 0.33%. Its ADR rose 2.55% on Wednesday.

Recent reports said Infosys may win a large IT project from the government, which will run on a transaction-based pricing model, similar to the passport processing contract its larger rival Tata Consultancy Services (TCS) won last year. The contract is among the many large IT contracts that are up for bidding from government departments or public sector undertakings, reports suggest.

A firm rupee affects operating profit of IT firms negatively as they earn most of their revenues from exports.

Unitech clocked the highest volume of 3.39 crore shares on BSE. Satyam Computer Services (2.39 crore shares), Reliance Natural Resources (2.2 crore shares), Cals Refineries (2.19 crore shares) and Suzlon Energy (1.58 crore shares) were the other volume toppers in that order.

Reliance Industrial Infrastructure clocked the highest turnover of Rs 404.33 crore on BSE. Reliance Industries (Rs 288.56 crore), Reliance Infrastructure (Rs 247.22 crore), ICICI Bank (Rs 237.47 crore) and Reliance Capital (Rs 227.18 crore) were the other turnover toppers in that order.

The stock market remains closed tomorrow, 10 April 2009, on account of Good Friday.