Indices hit 15-month high

An improvement in business confidence of India Inc and revival of monsoon rains helped the key benchmark indices hit a 15-month high last week. Firm global stocks and foreign fund buying aided the rally.

A survey to gauge business confidence sentiment, carried out by Federation of Indian Chambers of Commerce and Industry (Ficci), for the month of September 2009, suggested that the confidence level of India Inc is on the rise thanks to government's fiscal stimulus measures. Eighty per cent of the companies believe that the Indian economy is on the road to recovery and expect improvement in corporate performance in the months to come.

Although, the future outlook for the Indian industry as a whole is fairly positive, 86% of the companies expressed concern over delayed monsoons. The respondents feel this can have an adverse impact on demand for industrial goods in the coming months.

Incidentally, there has been a revival in monsoon rains in the past few days. After playing truant for most of the season, the monsoon has picked up pace in the past few days thereby reducing the deficiency in cumulative rainfall in this season. The cumulative rainfall was 23% below normal in the week ended 2 September 2009, an improvement from 25% in the week ended 26 August 2009 and 29% in the week ended 12 August 2009, the India Meteorological Department said on 4 September 2009.

However, a cause of concern is that reservoir levels in key reservoirs are at two-thirds of the 10-year average, and 60% of last year's levels. Because of the deficient rainfall between June and September, good water storage level in these key reservoirs, which makes up one-third of the country's total water storage, are crucial to a good winter crop. Two-third of India's population lives in villages and 60% of the farm land depends on the annual rains.

A Japanese brokerage firm in a research note said India's economic growth could slow to 6% in 2009-10 from its earlier estimate of 6.3%, dragged by contraction in agricultural growth. The brokerage cut its 2009-10 agriculture gross domestic product (GDP) growth forecast to 2.2% from 3.5% due to deficient monsoon rains.

An Australian based brokerage has lowered India's economic growth target to 6.5% in the year ending March 2010 from the 7% forecast earlier, as weak monsoon rainfall affects the agriculture sector. However the brokerage firm raised its estimate for gross domestic product expansion for the following year to 8% from 7.5%.

FII inflow in September 2009 totaled Rs 2,172.10 crore (till 10 September 2009). Foreign funds had bought equities worth Rs 4028.80 crore in August 2009. FII inflow in calendar year 2009 totaled Rs 42,370.60 crore (till 10 September 2009).

The wholesale price index (WPI) fell for the 13th successive week though the drop was lower at 0.12% for the week ended August 29 against 0.21% decline in the week before, data on Thursday, 10 September 2009, showed.

The Index of Industrial Production (IIP) number for July 2009 was at 6.8% versus 8.2% in June 2009 and 6.4% in July 2008. The June IIP figure, which was first reported at 7.8%, has been revised to 8.2%.

The BSE 30-share Sensex rose 575.18 points or 3.67% to 16,264.30 in the week ended Friday, 11 September 2009. The S&P CNX Nifty rose 149.15 points or 3.18% to 4829.55 in the week.

The BSE Mid-Cap index rose 88.39 points or 1.52% to 5,921.61. The BSE Small-Cap index 109.76 points or 1.57% to 7,101.27. Both the indices underperformed Sensex.

Strong response to the initial public offer of Oil India, an improvement in business confidence of India Inc and revival of monsoon rains helped key benchmark indices end on a positive note on Monday, 7 September 2009. The BSE 30-share Sensex jumped 327.20 points or 2.09% to 16,016.32. The S&P CNX Nifty rose 102.50 points or 2.19% to 4,782.90.

The initial public offer (IPO) of state-run Oil India ended with oversubscription of 30.82 times. The IPO received bids for 81.52 crore shares compared to the issue size of 2.64 crore shares. The IPO opened for bidding on 7 September 2009 and closed on 10 September 2009.

Key benchmark indices extended gains for the third straight session on Tuesday, 8 September 2009, led by rally in index heavyweights Reliance Industries and State Bank of India. The BSE 30-share Sensex rose 107.35 points or 0.67% to 16,123.67. The S&P CNX Nifty rose 22.35 points or 0.47% to 4805.25.

Key benchmark indices extended gains for the fourth straight session on Wednesday, 9 September 2009, on a revival in monsoon and after a recent survey showed an improvement in business confidence of India Inc. The BSE 30-share Sensex was up 59.88 points or 0.37% to 16,183.55. The S&P CNX Nifty was up 9 points or 0.19% to 4814.25.

The key benchmark indices registered small gains in choppy trade on Thursday, 10 September 2009, extending a rally for the fifth day. The market retraced afterweak European markets and lower US index futures triggered profit taking. The BSE 30-share Sensex rose 33.31 points or 0.21% to 16,216.86. The S&P CNX Nifty rose 5.15 points or 0.11% to 4819.40.

The key benchmark indices extended gains for the sixth straight day on Friday, 11 September 2009, on positive global stocks and industrial output data which came in as expected. The BSE 30-share Sensex rose 47.44 points or 0.29% to 16,264.30. The S&P CNX Nifty rose 10.15 points or 0.21% to 4829.55.

India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 8.08% to Rs 2140.95 in the week. Anil Ambani group firm Reliance Natural Resources (RNRL) on Wednesday told the Supreme Court that the government has no role to play either in the utilisation or the fixation of gas price as per its contract with Mukesh-led RIL.

The two sides RIL and RNRL had approached Supreme Court challenging a decision by the Bombay High Court on 15 June 2009, which said RIL should provide 28 million cubic metres of gas per day to RNRL at $ 2.34 per mmBtu and both the parties should sign a necessary agreement for the same within a month. RIL, however, is pleading that it was only a contractor for the gas from the Krishna-Godavari basin's D6 block and did not have the power to fix the price, while the government has also moved a special leave petition in the case asserting its right on pricing and distribution of natural gas. The apex court has decided to commence hearing on this matter on 20 October.

Shares of software outsourcers rose after a Japanese brokerage raised its rating on the sector to ‘neutral' from ‘bearish' given positive growth prospects in the US and Europe, an improvement in IT spending and expanding operating margins.

India's fourth largest software services exporter by sales HCL Technologies rose 2.60%. India's second largest software services exporter by sales Infosys rose 2.98%. India's largest software services exporter by sales Tata Consultancy Services (TCS) rose 5.25%. However, India's third largest software services exporter by sales Wipro was unchanged.

India's largest copper maker by sales Sterlite Industries rose 11.25%. The company on Friday, 11 September 2009, said it had raised its open offer price for bankrupt US copper miner Asarco by a fifth to $2.565 billion. Sterlite, a unit of India-focused mining company Vedanta Resources, has been facing off with Mexican miner Grupo Mexico for the assets of Asarco, which has been under bankruptcy protection since 2005.

Steel stocks were in demand last week after Steel Minister Virbhadra Singh said on Thursday, 10 September 2009, domestic consumption of steel could rise 6% this quarter.

World's largest steel maker by capacity Tata Steel rose 9.07%. Steel Authority of India (up 2.74%), JSW Steel (up 6%), Jindal Steel & Power (up 2.81%), and Bhushan Steel (up 8.62%), rose.

Domestic steel makers recently raised prices of flat steel products such as plates and sheets, mainly used in manufacturing automobiles, refrigerators and washing machines, by about 3-5% from Tuesday, 1 September 2009, in line with international prices.

Tata Steel and Steel Authority of India have raised prices of flat products by Rs 1,500 a tonne.

Prices of long steel products used in construction and infrastructure sector, however, were left unchanged.

Bank stocks advanced after shares of ICICI Bank, HDFC Bank were upgraded by a foreign brokerage.

India's largest private sector bank by market capitalisation ICICI Bank rose 12.32% after it was raised to 'overweight' from 'underweight'.

India's second largest private sector bank by market capitalisation HDFC Bank 2.51% after it was lifted to 'overweight' from 'neutral.'

The brokerage said HDFC Bank and ICICI Bank, offered potential total returns of 25% over the next three years.

India's largest commercial bank by branch network State Bank of India (SBI) rose 8.78%. SBI chairman O P Bhatt, on 8 September 2009, said the bank's earnings are likely to grow 30-35% in Q2 September 2009 over Q2 September 2008. SBI's retail loan growth in Q2 September 2009 is likely to be twice of what it was in Q2 September 2008, he added.