ONGC gains ahead of auction of 5% Govt stake

Key benchmark indices eked out small gains on firm global stocks, with strong intraday gains erased by data showing slowdown in GDP growth in Q3 December 2011. The barometer index, BSE Sensex, advanced 21.56 points or 0.12%, off close to 250 points from the day's high and up about 75 points from the day's low. The market edged higher for the second day in a row. The market breadth was positive. BSE Small-Cap and Mid-Cap indices outperformed the Sensex.

The Sensex jumped 559.13 points or 3.25% in February 2012. The barometer index has surged 2297.76 points or 14.86% in calendar 2012 so far. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,616.82 points or 17.28%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,058.46 points or 10.39%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) edged higher for the second day in a row. State-run ONGC surged more than 3% after the government said it will sell 5% stake in ONGC through an auction tomorrow, 1 March 2012. Shares of many other state-run companies gained amid expectations of good response from investors for ONGC auction tomorrow. FMCG stocks declined. Metal stocks rose as global metal prices edged higher.

Interest rate sensitive banking stocks fell on fears banks' bad loans could increase in a slowing economy. HDFC Bank retreated after scaling a record high in intraday trade today, 29 February 2012. Capital goods stocks fell on worries a slowing economy will crimp new orders.

The market opened on a firm note on higher Asian stocks. The barometer index, BSE Sensex, briefly hit the psychological 18,000 mark. The market regained strength in morning trade after paring gains after an initial surge. Volatility ruled the roost as key benchmark indices trimmed gains to hit fresh intraday lows in mid-morning trade soon after the latest data showed that the Indian economy expanded at the weakest pace in more than two years in Q3 December 2011. Volatility continued in early afternoon trade as key benchmark indices trimmed gains once again after recovering from lower level after hitting intraday lows.

The market further pared gains to hit fresh intraday low in afternoon trade. Volatility continued as key benchmark indices recovered after reversing intraday gains to slip into the red to hit fresh intraday lows in mid-afternoon trade. The Sensex alternately swung between gains and losses in late trade.

The Indian economy expanded 6.1% in the October-December quarter from a year earlier, the weakest pace in more than two years, hurt by slower growth in manufacturing output and a contraction in mining production, according to data released by the government today, 29 February 2012. Growth in gross domestic product was slower than the 6.9% expansion posted in the July-September quarter. It was also below expectations for a 6.4% expansion, according to the median estimate of a poll of economists carried out by Capital Market. The government expects the economy to grow 6.9% in the current fiscal year that ends March 31, the weakest pace in three years.

The BSE Sensex rose 21.56 points or 0.12% to settle at 17,752.68, its highest closing level since 24 February 2012. The index surged 270.23 points at the day's high of 18,001.35 in early trade. The index fell 53.15 points at the day's low of 17,677.97 in mid-afternoon trade.

The S&P CNX Nifty rose 9.70 points or 0.18% to settle at 5,385.20, its highest closing level since 24 February 2012. The index hit a high of 5,458.80 and a low of 5,352.25 in intraday trade.

The BSE Mid-Cap index rose 1.1% and the BSE Small-Cap index gained 0.62%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 3501 crore, higher than Rs 2816.50 crore on Tuesday, 28 February 2012.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,593 shares rose and 1,295 shares fell. A total of 137 shares were unchanged. The breadth had turned negative from positive for a brief period in mid-afternoon trade. The breadth was strong in early trade.

From the 30-share Sensex pack, 17 stocks gained and rest of them fell.

Index heavyweight Reliance Industries (RIL) advanced 2.84% to Rs 818.65. The stock extended Tuesday's 1.9% advance triggered by reports RIL along with BP PLC will submit a joint plan to the government to develop the D6 natural gas block and its satellite fields as an integrated unit. The proposal, which will be submitted in the next few weeks, will seek to maximise the use of existing infrastructure to develop all the fields which haven't been worked on yet, BP India chief Sashi Mukundan told reporters on Monday, 27 February 2012. The proposal is significant in that it will seek approval to develop an entire block as one unit, rather than follow the current practise of getting clearance for one oil or natural gas field at a time.

In 2011, BP purchased a 30% stake in 21 RIL's oil and gas blocks across India, including D6, which is India's biggest gas discovery so far. RIL is facing declining output at D6 due to reservoir complexity, a natural decline in reserves and delays in developing satellite fields. Output at the D1, D3 and MA fields in the D6 block has plunged to about 38 million metric standard cubic meters a day (MMSCMD) from 60 MMSCMD in June 2010. It is estimated that output will fall further to 27.60 MMSCMD in the next financial year starting April, and to 22.60 MMSCMD in the year after that.

RIL last week said its wholly-owned subsidiary Reliance Holding USA, Inc. priced a $500 million reopening of its existing 5.4% Guaranteed Senior Notes due 2022. The additional notes will be consolidated and will form a single series with the $1,000 million 5.4% Guaranteed Senior Notes due 2022 and will be fully and unconditionally guaranteed by RIL. Reliance Holding USA, Inc. will apply the net proceeds to fund its ongoing capital expenditure, to make business investments, to refinance its existing debt and for general corporate purposes.

State-run ONGC gained 3.46% to Rs 293.35 and was the top gainer from the Sensex pack. The Government of India (GoI) will sell 5% stake in ONGC through an auction tomorrow, 1 March 2012. The offering will close on the same day. The government will sell 42.77 crore shares or 5% of its holding in the offering and the floor price for the issue has been set at Rs 290 a share. The government will raise at least Rs 12400 crore from the stake sale at floor price of Rs 290. GoI currently owns 74.14% stake in ONGC. After the stake-sale, its holing will fall to 69.14%.

The auction of government stake-sale in ONGC will take place through a separate window provided by the stock exchanges. The stock exchanges will collect 100% of the order value in cash for each bid.

Shares of many other state-run companies gained amid expectations of good response from investors for ONGC auction tomorrow, 1 March 2012. Sail, NTPC, HMT, Shipping Corporation of India, STC, and Hindustan Copper rose 0.44% to 8.56%.

Shares state-run oil-marketing companies (PSU OMCs) rose as crude oil prices fell. Indian Oil Corporation (IOC), BPCL and HPCL rose by between 1.35% to 4.23%. Lower crude oil prices will reduce under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.

Oil prices fell for the second day on Tuesday as worries that recent price increases may hurt demand prompted investors to sell and take profits on recent gains, moves that more than offset support from possible Middle East supply disruptions.

Meanwhile, government is reportedly planning to hike fuel prices in early March 2012 after the assembly election results are out in five states.

GAIL (India) rose 0.03%. The company said during market hours today said that the company in association with its partner (consortium) is contemplating joint participation in the formal sale process being run by Cove Energy Plc. The company said there can be no certainty that the company along with its partner will make an offer. However, if an offer is made by the consortium, it will be an all cash offer, GAIL (India) said.

Shares of gas distribution firms rallied. Gujarat Gas Company, Indraprastha Gas, and Gujarat State Petronet rose by between 1.18% to 7.47%.

Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange, gained 0.33% on Tuesday, 28 February 2012. Hindalco Industries, JSW Steel, Hindustan Zinc, Tata Steel, Nalco, and Bhushan Steel rose by between 0.83% to 2.9%.

Sterlite Industries rose 2.98% and Sesa Goa also gained 2.98%. Cairn India rose 0.53%, with the stock reversing initial losses. Vedanta Resources Plc group on Saturday, 25 February 2012, announced the merger of its Indian subsidiaries, Sesa Goa and Sterlite Industries and the proposed consolidation and simplification of the group structure. Sterlite will be merged with Sesa Goa and new entity will be named Sesa Sterlite. Three Sesa Goa shares will be issued for every 5 existing Sterlite Industries shares.

The Vedanta group also announced the consolidation of Vedanta Aluminium (VAL), via the merger of Ekaterina Limited (a Mauritius holding company for Vedanta's 70.5% shareholding in VAL) into Sesa Sterlite. Further, The Madras Aluminium Company (Malco) will be merged into Sesa Sterlite.

Post the merger of Sesa Goa and Sterlite Industries, Sterlite Energy and VAL's aluminium business will be merged into the consolidated Sesa Sterlite. As wholly-owned subsidiaries no shares will be issued in consideration of the mergers. Vedanta's direct holding of 38.8% in Cairn India will be transferred to Sesa Goa, together with the associated debt of $5.9 billion, at cost. Post the transfer, Sesa Sterlite will have a 58.9% shareholding in Cairn India. Post consolidation, the Vedanta group will own a 58.3% shareholding in Sesa Sterlite.

Vedanta said that the consolidation exercise is expected to lead to significant operational, capital and corporate synergies, including economies of scale, leveraging technical expertise, more efficient movement of group cash, improved allocation of capital and corporate cost savings including tax efficiencies. These synergies are expected to generate cost savings of Rs 1000 crore per annum, Vedanta said. The consolidation is expected to be earnings accretive to Sesa Goa, Sterlite Industries and Vedanta shareholders immediately post completion, it said.

FMCG stocks edged lower. Marico, ITC and Hindustan Unilever dropped by between 0.08% to 1.35%.

Tata Global Beverages jumped 4.41% to Rs 125.55. The stock hit a 52-week high of Rs 128.70 today.

Interest rate sensitive banking stocks fell on fears banks' bad loans could increase in a slowing economy. India's biggest private sector bank in terms of branch network, ICICI Bank fell 0.47%, with the stock reversing initial gains.

India's second largest bank by net profit HDFC Bank fell 2.34% to Rs 517.80. The stock reversed direction after hitting a record high of Rs 540 in intraday trade today, 29 February 2012.

IDBI Bank, Kotak Mahindra Bank, Bank of India and Federal Bank shed by between 0.48% to 2.88%.

State Bank of India rose 0.62% to Rs 2243.40. The stock was volatile. The scrip hit a high of Rs 2286.20 and low of Rs 2222.40. The bank on Monday, 27 February 2012, cut interest rates on education loans. Loans of up to Rs 4 lakh will now be charged an interest rate of 13.50%, down from 13.75% earlier, while those between Rs 4 lakh and Rs 7.5 lakh will be charged 13.25%, instead of 14.25% earlier. Loans above Rs 7.5 lakh will be given at an interest rate of 12.00%, a quarter percentage point less than earlier.

SBI's Managing Director Krishna Kumar told the media on Monday, 27 February 2012, that the bank is not considering giving any fresh loans to loss-making Kingfisher Airlines. He said any decision to give fresh loans to Kingfisher depends on discussions within a consortium of banks.

Bank of Baroda (BoB) declined 0.7%. The state-run bank said Banco Bilbao Vizcaya Argentaria (BBVA) has indicated to the bank that it may not be able to form a joint venture for credit card business with BoB due to a change in its strategy. The two had earlier entered into a Memorandum of Understanding (MOU) for setting up a joint venture for credit card business.

Capital goods stocks fell on worries a slowing economy will crimp new orders. SKF India, Praj Industries, BEML and Siemens shed by between 0.37% to 1.87%.

India's largest engineering and construction frim by sales L&T fell 2.91% on reports that the company has lost in a bidding race for a large NTPC contract for super-critical boilers. L&T was reportedly the third lower bidder for the NTPC contract.

BGR Energy Systems said after market hours today, 29 February 2011, that it has emerged as the lowest bidder in all five projects for NTPC's 11 x 660 megawatts (MW) super-critical boiler tender. As per tender conditions of NTPC, BGR Energy would be awarded contracts worth Rs 6500 crore for 7 boilers. Shares of BGR Energy jumped 9.47% ahead of the announcement.

State-run power equipment major, Bhel, was the second lowest bidder for the contract and it will get orders for the remaining 4 boilers, reports suggest. Shares of Bhel declined 0.15%, with the stock reversing initial gains.

Reliance Communications rose 0.16%. The company said during market hours today that it has made payment of $1.182 billion (Rs 5825 crore at the US dollar exchange rate of Rs 49.30) to make the largest ever redemption of all the outstanding Foreign Currency Convertible Bonds (FCCBs) from the $1 billion issued in February 2007 and due on 1 March 2012. The redemption amount is inclusive of the premium of 27.69%.

Sun Pharmaceutical Industries rose 0.78% The company said after market hours today that USFDA has granted an approval for its Abbreviated New Drug Application (ANDA) for generic version of Zyprexa Zydis®, Olanzapine ODT, 5 milligrams (mg), 10 mg, 15 mg and 20 mg.

Shares of organised retailers jumped. Pantaloon Retail, Shoppers Stop, Store One Retail, Trent, Provogue India, Brandhouse Retail and Koutons Retail rose 1.68% to 8.7%.

Auto stocks were mixed. India's largest commercial vehicles maker by sales Tata Motors declined 0.68%.

India's largest motorcycle maker by sales Hero MotoCorp fell 1.07%. Hero MotoCorp recently entered into a partnership with US-based motorcycle company -- Erik Buell Racing (EBR). As part of the partnership, Hero MotoCorp will receive support in terms of technology and design to develop future models from EBR -- the East Troy, Wisconsin-based firm, which specializes in designing and manufacturing powerful and high-speed motorcycles. Hero MotoCorp exited a 26-year-long joint venture with Japan's Honda Motor Company in March 2011.

India's second largest motorcycle maker by sales Bajaj Auto gained 1.6% to Rs 1798.95. The stock hit a record high of Rs 1,839 in intraday trade today, 29 February 2012.

India's largest car maker by sales Maruti Suzuki India fell 0.71%, with the stock reversing initial gains.

India's largest utility vehicles maker Mahindra & Mahindra (M&M) gained 0.49%. M&M's consolidated net profit, adjusted for extra-ordinary items, rose 13.2% to Rs 831.80 crore on 27.6% growth in gross revenue and other income to Rs 16488.40 crore in Q3 December 2011 over Q3 December 2010. Mahindra Satyam, Mahindra Finance and Mahindra Forgings led the improved performance of the Mahindra Group in Q3 December 2011. M&M announced the consolidated results during trading hours on 21 February 2012.

IT stocks were mixed. India's third largest software services exporter by revenues Wipro rose 2.72%.

India's largest software services exporter by revenue, TCS shed 0.54%, with the stock reversing initial gains. The company announced after market hours on Tuesday that its universal financial services platform, TCS BaNCS, has been selected by South Africa's Nedgroup Insurance Company, (NedIC) -- a short-term insurer specializing in homeowner's cover, personal accident and vehicle-related, value-added insurance products. TCS BaNCS Insurance, a part of the TCS BaNCS universal financial services platform, will serve as the new policy administration system for NedIC's short-term insurance services. TCS BaNCS serves the top banks in Africa through its banking and capital markets suite of solutions; this will be TCS BaNCS' first insurance customer in Africa.

India's second largest software services exporter by revenue Infosys gained 0.14%. Infosys expects its outsourcing business to face as tough a time in the next fiscal year starting 1 April as it did this year, with the global economic uncertainty making customers go slow on spending. Clients are likely to continue committing smaller portions of their technology budgets for shorter periods in the next fiscal year, a news agency on Tuesday quoted Infosys Chief Financial Officer V. Balakrishnan as saying. The European economy is in a "mess" and it will take a long time to fix it, Mr. Balakrishnan said. Also, businesses fear that the signs of a recovery in the US may not indicate a sustainable economic rebound, he added.

Infosys announced during market hours on Monday, 27 February 2012, that Bharti Airtel has chosen the company as its partner for 'airtel money' -- the country's first of its kind mobile wallet service by a mobile operator. Under this partnership, Infosys WalletEdge -- the mobile commerce platform will enable the ubiquitous mobile wallet service to support cashless payments and settlements needs of diverse customer segments.

Cement stocks were mixed ahead of the announcement of February 2012 cement dispatches figures by cement companies starting from tomorrow, 1 March 2012. India Cements and Jaiprakash Associates gained by between 1.47% to 4.7%. Ambuja Cements and UltraTech Cements fell by between 0.75% to 1.72%.

ACC rose 1.37% after the company said it will set up a new clinker production facility of 2.79 million tonnes per annum and allied grinding facility at Jamul to meet the demand for cement in the Eastern Region. ACC said it will phase out its existing clinkering and grinding lines at Jamul and set up a new unit. The company is also planning decentralized grinding stations which will use clinker produced at Jamul, ACC said. The project will be implemented in a phased manner and scheduled for completion by the first quarter of 2015, ACC said.

Lanco Infratech clocked highest volume of 1.53 crore shares on BSE. GVK Power & Infrastructure (96.52 lakh shares), IFCI (90.58 lakh shares), HDIL (75.65 lakh shares) and Suzlon Energy (71.58 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 194.05 crore on BSE. L&T (Rs 107.92 crore), HDIL (Rs 86.51 crore), BGR Energy Systems (Rs 85.20 crore) and RIL (Rs 80.70 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) bought shares worth a net Rs 727.59 crore on Tuesday, 28 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 24495.58 crore in this month so far (28 February 2012), as per provisional data from the stock exchanges. The inflow this month comes on the top of heavy purchases last month. FIIs bought shares worth a net Rs 10357.70 crore in January 2012, as per data from Securities & Exchange Board of India (Sebi).

The government is working with state governments for early implementation of a goods and services tax (GST), Finance Minister Pranab Mukherjee said on 22 February 2012.

Finance Minister Pranab Mukherjee will present the annual budget for 2012/13 on 16 March 2012, while the railways budget will be presented on 14 March 2012. The budget session of parliament will start on 12 March 2012. The government will present on March 15 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012. The counting of the votes takes place on 6 March 2012, with the results due on the same day.

Reports indicate that the finance ministry is considering a proposal to increase excise duty from 10% to 12%, although still lower than the level before the 2008 financial crisis. The move is aimed at helping the government improve its fiscal situation but it is expected to push up the cost of almost all manufactured goods from food products to consumer durables and automobiles.

European stock markets edged higher on Wednesday after the European Central Bank allotted 529.5 billion euros ($713.4 billion) in cheap loans to euro-zone banks in its second and potentially last three-year long-term refinancing operation, or LTRO. Key benchmark indices in UK, France & Germany rose by between 0.05% to 0.55%.

Banks took 530 billion euros at the European Central Bank's second offering of three-year funds on Wednesday, slightly above forecasts, fuelling hopes that more credit will flow to businesses and government borrowing costs will ease further.

The number of unemployed German workers remained unchanged in February on a seasonally-adjusted basis, while the jobless rate held steady at a record low 6.8%, the Federal Labor Office said Monday.

Asian stocks rose on Wednesday, with technology stocks leading gains as an upbeat finish for US shares overnight and easing oil prices underpinned investor optimism. Key benchmark indices in Hong Kong, Indonesia, Japan, Taiwan, Singapore, and South Korea rose by between 0.01% to 2.04%. China's Shanghai Composite fell 0.95%.

Japan's industrial production rose a seasonally adjusted 2% during January the government reported Wednesday. The result beat market expectations.

Trading in US index futures indicated a flat opening of US stocks on Wednesday, 29 February 2012. US stocks rose Tuesday, sending the Dow Jones Industrial Average to its first close above 13,000 since May 2008, as consumer confidence hit a 12-month high and oil prices fell.