BHP's bid for Potash lifts fertiliser scrips

The key benchmark indices surged, with data showing sustained buying by foreign funds boosting sentiment. IT and metal stocks were in demand. Auto, FMCG and metal stocks also gained. Fertiliser stocks rose across the board after Australian mining giant BHP Billiton said it will take its nearly $39 billion takeover bid for Canada's Potash Corp of Saskatchewan Inc, the world's largest fertilizer maker by capacity, straight to Potash Corp shareholders after the fertilizer firm's board spurned the offer as grossly inadequate.



Index heavyweight Reliance Industries (RIL) edged lower. The BSE 30-share Sensex was up 208.27 points or 1.15%, up about 190 points from the day's low and off close to 30 points from the day's high. Except the BSE Consumer Durables index, all the other sectoral indices on BSE were in green. Asian stocks were mixed.

The market edged higher in early trade on data showing sustained buying by foreign funds. The Sensex extended gains in morning trade. The market continued the upward trend to hit fresh intraday high in mid-morning trade. The market extended gains to hit fresh intraday high in early afternoon trade. Stocks pared gains in afternoon trade as European equities opened lower. The market regained strength in mid-afternoon trade. The market surged in late trade as European stocks cut initial losses and as US index futures regained positive zone.

Hair oil producer Bajaj Corp made a modest debut today. The stock settled at Rs 758.25 on BSE, a 14.8% premium over the initial public offer price of Rs 660. The stock debuted at Rs 730, a 10.61% premium over the initial public offer (IPO) price.

NSE's volatility index, India VIX, a gauge of traders' perception of near-term risks in the market based on options prices, was down 6.98% at 16.40. The index had lost 2.65% at 17.63 on Tuesday, 17 August 2010. The index had jumped 8.18% to 18.11 on Monday, 16 August 2010, a day after it had lost 7% on Friday, 13 August 2010. India VIX is calculated based on the S&P CNX Nifty options prices. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days.

India needs to channelise more pension and insurance funds into the infrastructure sector, Finance Minister Pranab Mukherjee said in a government statement released on Wednesday, 18 August 2010. India plans to spend $1.5 trillion between 2007 and 2017 to upgrade its infrastructure to support double-digit economic growth rates.

Foreign funds have made heavy purchases of Indian stocks over the past 2-1/2 months. Foreign funds today, 18 August 2010, bought shares worth a net Rs 674.52 crore, as per the provisional data from the stock exchanges. Domestic funds sold shares worth a net Rs 113.51 crore.

Foreign funds have bought equities worth a net Rs 5544.79 crore so far this month, till 18 August 2010, absorbing selling of Rs 3262.51 crore from domestic funds, as per data from the stock exchanges.

Foreign funds had bought shares worth a net Rs 8320.50 crore in July 2010, absorbing selling by domestic institutional investors. Domestic funds sold shares worth a net Rs 6323.13 crore in July 2010.

Foreign funds had pumped in Rs 7713.97 crore in equities in June 2010, absorbing selling by domestic funds in that month. Domestic funds had dumped shares worth a net Rs 4777.05 crore in June 2010.

European stock fell on Wednesday, 18 August 2010, with investors looking to consolidate the previous session's bumper gains. The key benchmark indices in France, Germany and UK were down by between 0.18% to 0.72%.

Expectations for Germany's economy worsened in August 2010, according to a survey published by the ZEW economic research institute, raising concerns that the driver of Europe's growth could falter ahead.

The Bank of England's rate-setting Monetary Policy Committee earlier this month weighed the case for further easing of monetary policy as well as tightening before voting 8-1 to make no changes, according to minutes of the meeting released on Wednesday.

The Central Bank of Iceland on Wednesday said its Monetary Policy Committee decided to lower its official interest rates by one percentage point, the latest in a string of cuts. The move brings the bank's seven-day collateralized lending rate to 7%. The rate stood at 11.5% at the beginning of the year.

Asian stocks were mixed on Wednesday, 18 August 2010, with overnight rally in US market supporting some stocks. The key benchmark indices in Japan, South Korea and Indonesia rose by between 0.4% to 0.86%. But, the key benchmark indices in Taiwan, Singapore, China and Hong Kong were down by between 0.09% to 0.54%.

Trading in US index futures indicated that the Dow could fall 5 points at the opening bell on Wednesday, 18 August 2010. US index futures swung between gains and losses.

US stocks rose on Tuesday, 17 August 2010, after earnings from Wal-Mart and Home Depot and a $39 billion takeover bid in the agriculture sector bolstered confidence in the corporate outlook. Economic data was mixed. Industrial production rose and wholesale prices rose, allaying some fears of deflation, but housing starts suggested that the sector remains weak.

Most US economic data in recent weeks has portrayed a slowdown in the recovery, driving investors away from equities. The Dow Jones Industrial Average jumped 103.84 points, or 1.01% at 10,405.85. The Standard & Poor's 500 Index was up 13.16 points, or 1.22% at 1,092.54. The Nasdaq Composite Index was up 27.57 points, or 1.26% at 2,209.44.

Back home, the Centre will reportedly meet states on Wednesday, 18 August 2010, to resolve all outstanding issues, including rates, on the draft Constitution Amendment Bill for the proposed GST where it has already dropped the contentious veto power sought for it on fixing levies. The Centre is trying to resolve all differences with states so that it can introduce the enabling Constitution Amendment Bill, for rolling out the Goods and Services Tax (GST), in the current monsoon session of Parliament that is just 10 days from being over.

If the draft is accepted by the states, it is likely to be sent to Cabinet approval soon for tabling it in the monsoon session. The revised draft has dropped the contentious issue of giving veto powers to the Union Finance Minister in order to bring states on board. With states rejecting the earlier draft on the ground that giving veto powers to the Union Finance Minister would interfere with their fiscal autonomy on indirect taxes, the new draft of the Bill proposes that all states, along with the Centre, would have to agree on a decision in the GST council to make it effective. This way, the council would become a recommendatory body, rather than mandatory, as proposed in the original draft.

India's exports in July grew an annual 13.2% to $16.24 billion, Trade Secretary Rahul Khullar said on Tuesday, 17 August 2010, the ninth straight month of expansion. Imports for the month rose 34.3% to $29.17 billion, he said.

Meanwhile, the easing of inflation in July 2010 has raised expectations that the central bank may lessen the scale and pace of increase in interest rates. The latest data showed the wholesale price index (WPI) rose an annual 9.97% in July 2010, slower than expectations. The annual food inflation rate fell to 10.29% in July 2010 from 14.6% rise in June 2010, with prices of vegetables and sugar falling on the month. Manufacturing inflation, which the RBI uses as a proxy for assessing demand, cooled to 6.15% from 6.66% in June 2010. On the flip side, the headline inflation for May 2010 was revised upwards to 11.14% from 10.16%.

The Reserve Bank of India will undertake a mid-quarter monetary policy review on 16 September 2010, as per the schedule.

Bond yields rose for the second day in a row today, 18 August 2010. The yield on benchmark 10-year 2020 bond was hovering at 7.94%, higher than Tuesday's (17 August 2010) close of 7.88%. The yield on the second most traded, 8.13% 2022 bond was hovering at 8.01%, higher than Tuesday's close of 7.97%

The Reserve Bank of India (RBI) at its Q1 monetary policy on 27 July 2010 raised a key lending rate by 25 basis points to curb surging inflation. With growth taking firm hold, the balance of policy stance has to shift decisively to containing inflation and anchoring inflationary expectations, the RBI said at that time. The RBI also signaled its strong preference for tight liquidity, saying it would ensure that excess liquidity in the system doesn't dilute the effectiveness of policy-rate actions.

The industrial output rose 7.1% in June 2010 compared with revised 11.3% rise in May 2010, the latest data showed. Manufacturing grew 7.3%, mining sector grew 9.5%, consumer goods sector rose 8.3%, capital goods sector expanded 9.7% and electricity generation rose 3.5%.

The industrial production growth rate for May 2010 was revised marginally down to 11.3% from 11.5% reported earlier. The growth rate for March 2010 was revised upward to 14.5% from 13.9% reported earlier.

The vital monsoon rains were 26% below normal in the week to 12 August 2010 the first weekly fall in three weeks, the weather office said on 12 August 2010. The rains were 16% above normal in the week to 4 August 2010 and 38% above average in the week to 28 July 2010.

Meanwhile, the improvement in rainfall early this month in the country as a whole, has resulted in a spectacular improvement in the water stock in reservoirs, reports suggest. The total water storage in the 81 major reservoirs stood at 52.09 billion cubic metres (BCM) as on 5 August 2010, against 28.65 BCM a fortnight ago. The present storage is a mere 6% short of normal, against 35% a fortnight ago, reports suggest.

The cumulative rainfall during the period from 1 June 2010 to 17 August 2010 was 4% below normal. The southwest monsoon was active over Sub-Himalayan West Bengal & Sikkim, East Rajasthan, Marathwada, Rayalaseema and Kerala during past 24 hours, the India Meteorological Department (IMD) said in its daily update on Tuesday, 17 August 2010. The weather office expects widespread rainfall activity over Punjab, Haryana, Uttar Pradesh, Bihar, Sub-Himalayan West Bengal & Sikkim and northeastern states, over the next few days.

Rainfall over the country as a whole for the second half (August to September) of the 2010 southwest monsoon season is likely to be normal, according to the India Meteorological Department (IMD). Quantitatively, rainfall for the country as a whole during the period August-September 2010 is likely to be 107% of long period average (LPA) with a model error of plus/minus 7%, according to the weather office.

The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The weather office expects this year's monsoon rains to be at 102% of the long-period average. If the southwest monsoon for the June-September monsoon season turns out good and if it is well distributed, it will help raise farm output, boost rural incomes and lower food inflation.

The BSE 30-share Sensex was up 208.27 points or 1.15% to 18,257.12. The index rose 237.15 points at the day's high of 18,286 at the fag end of the trading session. The index rose 18.82 points at the day's low of 18067.67 in early trade.

The S&P CNX Nifty was up 65 points or 1.2% to 5,479.15.

The BSE Mid-Cap index was up 0.85%. The Small-Cap index up 0.7%. Both these indices underperformed the Sensex.

Barring the BSE Consumer Durables index, all the other sectoral indices on BSE rose. The BSE IT index (up 1.96%), FMCG index (up 1.45%), Metal index (up 1.43%), Auto index (up 1.27%), and banking sector index Bankex (up 1.16%), outperformed the Sensex. The BSE Healthcare index (up 0.98%), PSU index (up 0.46%), Capital Goods index (up 0.32%), Realty index (up 0.28%), Oil & Gas index (up 0.27%), and Consumer Durables index (down 0.2%), underperformed the Sensex. The BSE Power index was unchanged for the day, underperforming the Sensex which rose 1.15%.

The market breadth, indicating the health of the market was positive. On BSE, 1684 shares advanced while 1292 shares declined. A total of 108 shares remained unchanged. The breadth was much stronger earlier in the day.

From 30 share Sensex pack, 22 rose and the rest fell.

BSE clocked turnover of Rs 5215 crore, higher than Rs 5000.97 crore on Tuesday, 17 August 2010.

Index heavyweight Reliance Industries (RIL) fell 0.65%. Reliance Industries recently denied a media report that the company may sell treasury stocks worth more than $1 billion. The company has no such plans, Reliance spokesman Manoj Warrier clarified to the media on Wednesday, 11 August 2010.

A unit of RIL recently signed definitive agreements to enter into a Marcellus Shale gas joint venture with United States-based Carrizo Oil & Gas Inc. RIL will pay a total $392 million, comprising $340 million of cash and $52 million of drilling carry obligations. Under the deal, Reliance will acquire a 60% interest in Marcellus Shale acreage in Central and Northeast Pennsylvania that is currently held in an equal joint venture between Carrizo and an affiliate of Avista Capital Partners. Reliance will acquire all of Avista's stake and 20% of Carrizo's stake in the existing joint venture.

Auto stocks rose robust sales in July 2010. India's biggest truck maker by sales Tata Motors rose 4.19%, with the stock gaining for the second straight day. The stock hit a record high of Rs 1,055 today and was the top gainer from the Sensex pack. The company said on Monday, 16 August 2010, its global vehicle sales in July rose 36% from a year earlier to 90,646 units. Jaguar and Land Rover sales in the month rose 30% to 19,386 units.

India's largest motorbike maker by sales Hero Honda Motors rose 0.15%, with the stock gaining for the fifth straight day. The company reported a jump of 16.60% in sales at 4,27,686 units in July 2010 over July 2009. The company has recorded dispatches of more than four lakh units in a single month for the third consecutive time.

India's second largest bike maker by sales Bajaj Auto rose 0.96%. The stock had hit a record high of Rs 2767.35 on Thursday, 5 August 2010. Bajaj Auto's total vehicle sales jumped 65% at 3.18 lakh units in July 2010 over July 2009.

Maruti Suzuki, India's top car maker was flat. Managing Director Shinzo Nakanishi said recently that the company is looking to advance its capacity expansion plans. Its second unit in Haryana is scheduled to come up by April 2012. Nakanishi said the company is working on ways to advance that to an earlier date.

Maruti, launched a new version of its best selling car Alto. The new version, Alto-K10 is powered by 998cc K10B engine and is priced between Rs 3.03 - Rs 3.16 lakh (ex-showroom Delhi).

Maruti's total vehicle sales rose 29.2% to 1,00,857 units in July 2010 over July 2009. The company announced the sales figures during market hours on 2 August 2010. Maruti Suzuki India recently raised prices across models by 1% to 1.5% due to a sharp increase in input costs. The price rise was between Rs 2,000 to Rs 7,500. The company decided to keep prices of its best selling model Alto unchanged.

India's largest tractor maker by sales Mahindra & Mahindra fell 0.6%. The company has been picked as the preferred bidder to buy South Korea's Ssangyong Motor in a deal estimated at $500 million.

Metal stocks rose as LMEX a gauge of six metals traded on the London Metal Exchange rose 1.66% on Tuesday, 17 August 2010. JSW Steel, Jindal Steel & Power, Steel Authority of India, Tata Steel, Hindalco Industries, Sterlite Industries, JSW Steel, Hindustan Zinc rose by between 0.03% to 4.56%.

Telecom stocks fell. Reliance Communications, Bharti Airtel and Idea Cellular fell by between 0.14% to 1.55%.

IT stocks rose on encouraging economic data in the US, the biggest market for Indian IT firms. India's largest software services exporter TCS rose 2.13%. The stock had on 5 August 2010 hit a record high of Rs 882. India's second largest software services exporter Infosys Technologies rose 1.92%. India's third largest software services exporter Wipro rose 1.83%.

FMCG stocks rose on good monsoon rains. Rural markets contribute substantial amount to sales of FMCG firms. Nestle India, Dabur India, Marico, United Spirits, Hindustan Unilever, United Breweries rose by between 0.15% to 4.29%.

Cigarette maker ITC rose 2.01%. The stock hit record high of Rs 163.25 today.

Realty stocks rose in volatile trade. Omaxe, Sobha Developers, Omaxe, DLF, Orbit Corporation, Ansal Properties, HDIL rose by between 0.31% to 2.16%.

Bank stocks extended recent solid gains on prospects of strong lending growth in a fast expanding Indian economy. India's second-biggest lender ICICI Bank rose 1.04%, with the stock gaining for the second straight day. The bank will raise its prime lending rate (PLR) by 50 basis points from 18 August 2010. The The bank will increase its prime lending rate to 16.25%.

India's second largest private sector bank by market capitalisation HDFC Bank rose 3.1%, with the stock gaining for the second straight day. The stock scaled a record high of Rs 2,200 today, 18 August 2010. HDFC Bank raised deposit rates for various maturities by 0.25% to 0.75%, with effect from 30 July 2010.

For deposits with maturity between 91 days and 6 months, the rate would be raised by 75 basis points to 5.25% from the existing 4.5%. For fixed deposit between 9 months and one year, the new rates would be higher by 50 basis points at 6.25% while for 1 year 16 days category it will be 7%, 25 basis points more than the existing rate of 6.75%.

But, India's largest commercial bank State Bank of India (SBI) fell 0.12%, in volatile trade. SBI on Monday said it has raised the benchmark prime lending rate by 50 basis points to 12.25% per annum effective from 17 August 2010. SBI on Monday also announced introduction of floating rate term deposit products linked to base rate with effective from 6 September 2010.

The parliament approved a bill on Thursday, 12 August 2010, enabling the government to reduce its holding in State Bank of India (SBI) to 51% and help it raise capital. The SBI stock hit record high of Rs 2879.95 on Friday, 13 August 2010.

On a consolidated basis, SBI's net profit rose 22% to Rs 3365.26 crore on 0.98% decline in total income to Rs 32808.06 crore in Q1 June 2010 over Q1 June 2009. The results were announced late last week.

Fertiliser stocks rose across the board after Australian mining giant BHP Billiton said it will take its nearly $39 billion takeover bid for Canada's Potash Corp of Saskatchewan Inc, the world's largest fertilizer maker by capacity, straight to Potash Corp shareholders after the fertilizer firm's board spurned the offer as grossly inadequate. GSFC, Deepak Fertilisers, GNFC and National Fertilizers rose by between 2.92% to 9.52%.

FCS Software clocked the highest volume of 4.96 crore shares on BSE. Cals Refineries (2.58 crore shares), Shree Ashtavinayak Cine Vision (92.93 lakh shares), Thomas Cook India (86.22 lakh shares) and Birla Power Solutions (83.82 lakh shares) were the other volume toppers in that order.

Bajaj Corporation clocked the highest turnover of Rs 281.12 crore on BSE. Tata Motors (Rs 149.56 crore), Midfield Industries (Rs 131.02 crore), Reliance Industries (Rs 124.53 crore) and State Bank of India (Rs 123.70 crore) were the other turnover toppers in that order.