Sensex jumps 4.4% in 4 days on strong January services, manufacturing data

Key benchmark indices advanced for the fourth consecutive trading session to attain their highest closing level in 13-1/2 weeks as data showing stepping up of buying of Indian stocks by foreign institutional investors (FIIs) recently boosted sentiment. A private survey showing that the services sector grew at its fastest pace in six months in January 2012, aided the rally as the market extended this year's strong gains. The services sector data comes after a survey recently showed strong growth in manufacturing sector in January 2012. The barometer index, BSE Sensex, jumped 173.11 points or 0.99%, up close to 225 points from the day's low and off about 25 points from the day's high.

The Sensex has jumped 741.66 points or 4.39% in four trading sessions from a recent low of 16,863.30 on 30 January 2012. The Sensex has surged 2,150.04 points or 13.91% in calendar 2012 so far. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,469.10 points or 16.31%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,206.18 points or 11.13%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) extended gains in late trade. Cement stocks extended Thursday's gains after monthly dispatches data. Realty stocks extended recent gains. Auto stocks rose on good vehicle sales in the month just gone by. Dr Reddy's Laboratories rose on strong Q3 results. Sun Pharmaceutical Industries hit record high. Banking stocks reversed initial losses. The market breadth was positive. The BSE Small-Cap and Mid-Cap indices rose more than 1% each, outperforming the Sensex.

The market regained positive terrain after slipping into the red for a brief period after a flat opening. Key benchmark indices weakened to hit fresh intraday lows after alternately swinging between positive and negative terrain in morning trade. The Sensex recovered from intraday low and moved into the positive terrain in mid-morning trade after a private survey showed that the services sector grew at its fastest pace in six months in January 2012.

A bout of volatility was witnessed as key benchmark indices swung between positive and negative terrain in early afternoon trade. The market was range bound in afternoon trade. The market surged to hit its highest level in more than 12 weeks in mid-afternoon trade. The market trimmed gains after hitting fresh intraday high in late trade.

Foreign funds stepped up buying of Indian stocks, with a net inflow of a massive Rs 1941.23 crore on Thursday, 2 February 2012, as per provisional data from the stock exchanges. FIIs had mopped up shares worth a net Rs 1676.49 crore on Wednesday, 1 February 2012, as per provisional data from the stock exchanges. FIIs made substantial purchases of Indian stocks 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 BSE Sensex jumped 173.11 points or 0.99% to settle at 17,604.96, its highest closing level since 31 October 2011. The index surged 198.68 points at the day's high of 17,630.53 in late trade. The index fell 49.15 points at the day's low of 17,382.70 in morning trade.

The S&P CNX Nifty surged 55.95 points or 1.06% to settle at 5,325.85, its highest closing level since 31 October 2011. The index hit a high of 5,334.85 and a low of 5,255.55 in intraday trade.

The BSE Mid-Cap index rose 1.28% and the BSE Small-Cap index gained 1.17%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2916 crore, lower than Rs 3679.07 crore on Thursday, 2 February 2012.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,717 shares rose and 1,166 fell. A total of 112 shares were unchanged.

Among the 30-member Sensex pack, 24 rose while the rest fell.

Index heavyweight Reliance Industries (RIL) rose 1.1% to Rs 837.75, with the stock extending recent strong gains. The stock was volatile. The stock hit a high of Rs 839.40 and a low of Rs 815.55. RIL said after market hours on Monday, 30 January 2012, that it proposes to buy-back its shares from the existing shareholders/beneficial owners other than the promoters/persons who are in control of the company from the open market. The company proposes to buy-back up to a maximum of twelve crore shares and a minimum of three crore shares. The buyback programme started on 1 February 2012 and will end on 19 January 2013.

The maximum price for buyback has been set at Rs 870 per share. The company has set aside Rs 10440 crore for share buyback, which represents approximately 7.22% of the company's total paid-up equity capital and free reserves as on 31 March 2011.

Dr Reddy's Laboratories rose 2.16%. The company announced during market hours today that consolidated net profit surged 87.8% to Rs 512.96 crore on 45.85% growth in net income from sales and services to Rs 2769.19 crore in Q3 December 2011 over Q3 December 2010.

Sun Pharmaceutical Industries rose 2.38% to Rs 556.25. The stock hit a record high of Rs 558.40 today.

ONGC rose 1.89% and Bhel gained 1.93%. The Empowered Group of Ministers (EGoM) will reportedly meet again in the next 10 days to discuss the mode and timing of stake sale in ONGC. However, disinvestment in Bhel was dropped from the agenda at the last minute for Thursday's meeting. The government plans to shed 5% equity or 42.77 crore shares in ONGC. After the dilution, its stake in ONGC will come down to 69.14% from 74.14%.

Banking stocks reversed initial losses. India's largest private sector bank by branch network ICICI Bank rose 1.41%. The bank's net profit rose 20.26% to Rs 1728.10 crore on 24.14% increase in total income to Rs 10483.73 crore in Q3 December 2011 over Q3 December 2010. The result was announced during trading hours on Tuesday, 31 January 2012.

ICICI Bank said advances increased by 19% year-on-year to Rs 246157 crore as on 31 December 2011 from Rs 206692 crore as on 31 December 2010. The bank said its Current and savings account (CASA) ratio increased to 43.6% at 31 December 2011, from 42.1% as on 30 September 2011. Net non-performing asset ratio decreased to 0.7% at 31 December 2011 from 0.8% at 30 September 2011 and 1.16% as at 31 December 2010. The bank had strong capital adequacy ratio of 18.88% and Tier-1 capital adequacy of 13.13% as on 31 December 2011.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) gained 1.47%. SBI recently said that the Government of India has agreed to inject approximately Rs 7900 crore into bank by way of preferential allotment of equity shares to help SBI achieve minimum 8% Tier I CAR by 31 March 2012. The country's biggest lender by assets didn't say when the government would infuse the capital. The government currently owns 59.40% of SBI.

India's second largest bank by net profit HDFC Bank rose 1.72%. HDFC Bank reported 31.4% growth in net profit to Rs 1429.70 crore on 35.6% increase in total income to Rs 8622.64 crore in Q3 December 2011 over Q3 December 2010. The result was announced on 19 January 2012.

HDFC Bank said its core CASA deposit ratio, adjusted for one-off current account balance of about Rs 4000 crore, was at 47.7% of total deposits as on 31 December 2011. The private sector bank said its asset quality remains healthy. The bank's capital adequacy ratio (CAR) remained strong at 16.3% as on 31 December 2011, against the regulatory minimum of 9%. The bank's Tier-I CAR was 11.2% as on 31 December 2011.

The Reserve Bank of India (RBI) has decided to allow all private sector banks to undertake Central and state government business, which is still a forte of public sector banks and three large private players, ICICI Bank, HDFC Bank and Axis Bank. Banks earn a fee while working as an agent of the central bank for collecting revenues as well as disbursing the payments under various schemes. At present, the three private banks are allowed to undertake government business in a limited way but RBI now said all the private lenders will be treated at par with their public sector counterparts.

According to the regulator, the move is aimed to enhance the quality of customer service in Government business through more competition, improving customer convenience by increasing the number of customer service outlets and broad basing the revenue collection and payments mechanism of governments.

Cement stocks extended Thursday's gains after monthly dispatches data. Jaiprakash Associates rose 2.98%, with the stock extending Thursday's 1.37% gain. The company's cement dispatches rose 27% to 1.96 million tonnes in January 2012 over January 2011.

ACC rose 1.7% to Rs 1,268.10, after surging 4.94% on Thursday. The stock hit a 52-week high of Rs 1,274.75 today. The company said during market hours on Thursday that its cement dispatches rose 8.78% to 2.23 million tonnes in January 2012 over January 2011. ACC's cement production rose 9.22% to 2.25 million tonnes in January 2012 over January 2011.

Ambuja Cements rose 1.68% to Rs 172.85, with the stock extending Thursday's 3.32% gains. The stock hit a record high of Rs 173.15 today. The company's cement dispatches rose 3.8% to 1.91 million tonnes in January 2012 over January 2011.

Realty stocks extended recent gains. HDIL, DLF and Indiabulls Real Estate rose by between 1.62% to 1.98%. From a recent low of 1,388.61 on 6 January 2012, BSE Realty index had surged 25.78% to 1,746.69 on 2 February 2012.

Unitech rose 3.59% on bargain hunting after slumping 7.04% on Thursday. Uninor, a joint venture between Unitech and Norway's Telenor, said on Thursday that it was shocked to hear that the Supreme Court has cancelled all its telecom licences. "We will study the order in detail and exercise all options available to ensure that Uninor continues to operate in India," Uninor said in a statement. Supreme Court in its verdict in 2G telecom scam on Thursday, 2 February 2012, quashed 122 telecom licenses issued after January 2008.

Unitech said that the Supreme Court verdict pertains to the telecom venture Uninor, which was issued 2G licenses in accordance with the government policy. Unitech is separate entity from Uninor and it will continue to focus on its real estate business, the company said. Unitech said that the company believes that Uninor will apply for the appropriate relief available under the laws to protect the interest of its subscribers, employees, vendors, distributors, investors and all other stakeholders.

Auto stocks rose on good vehicle sales in the month just gone by. India's largest car maker by sales Maruti Suzuki India rose 1.55%. The car major announced during market hours on Wednesday that its total sales rose 5.2% to 1.15 lakh units in January 2012 over January 2011. Domestic sales rose 0.6% to 1.01 and exports jumped 54.3% to 14,386 units in January 2012 over January 2011.

Maruti on Wednesday, 1 February 2012, introduced a shorter, cheaper version of its Swift Dzire sedan as part of efforts to retain its position as the country's largest car maker by sales. The new Dzire is 3.95 meters in length, qualifying it for a lower federal excise tax, compared with the current 4.1 meter-long model. The government imposes a 10% tax on cars measuring up to 4 meters in length. These cars can have a diesel engine of only up to 1.5 liters or a gasoline engine of up to 1.2-liters. An excise tax of 22% is imposed on cars beyond 4 meters in length.

India's largest utility vehicles and tractors maker Mahindra & Mahindra (M&M) rose 1.54%. The company's total automotive sales rose 22% at 44,717 in January 2012 over January 2011. The company's domestic sales stood at 41,369 units during January 2012, as against 34601 units during January 2011, an increase of 20%. Exports jumped 95% at 3,348 units while the 4-wheeler commercial segment which includes the passenger and load categories registered a growth of 35% at 13,725 units in January 2012 over January 2011

The company's tractors sales, however, registered a decline. Domestic tractor sales in January 2012 stood at 17,950 units, as against 19430 units during January 2011. Total tractor sales (domestic plus exports) in January 2012 stood at 19,354 units, as against 20,499 units for the same period last year. Exports for the month stood at 1404 units, having registered a growth of 31%, M&M said in a statement.

India's largest commercial vehicle maker by sales Tata Motors gained 0.75%. The company's total sales rose 16% to 87,465 units in January 2012 over January 2011.

India's largest motorcycle maker by sales Hero MotoCorp fell 0.69%. The company reported 11.5% growth in sales to 5.20 lakh units in January 2012 over January 2011.

Bajaj Auto rose 0.4%. The company said during market hours on Thursday, 2 February 2012, that its total vehicle sales rose 8% to 3.37 lakh units in January 2012 over January 2011.

IT stocks rose on positive economic data in the US and ahead of the influential US non-farm payroll data later in the global day. US is the biggest outsourcing market for the Indian IT firms. India's largest software services exporter by revenue TCS rose 1.91%. The company announced during market hours on Tuesday that it has inaugurated its Silicon Valley Customer Collaboration Center in Santa Clara, California. TCS had announced during trading hours on Monday that Diligenta, its UK based subsidiary, has successfully completed a multi-year, multi-million dollar transformation project at Phoenix Group, the UK's largest specialist consolidator of closed life funds.

TCS reported 21.8% growth consolidated net profit to Rs 2803 crore on 13.5% growth in revenue to Rs 13204 crore in Q3 December 2011 over Q2 September 2011. The result was announced on 17 January 2012. The company's management at a post-result conference call said that out of a total of 130 discretionary projects that the company is pursuing, 50% are facing delays in decision making even as there are no project cancellations so far. The management also said that out of a total of 120 top clients surveyed, two-thirds have flat or marginally increased budgets and remaining one-thirds has reduced budgets. The company said the pipeline is intact but discretionary spend may lag ramp up in volumes in Q4 March 2012.

India's second largest software services exporter by revenue Infosys gained 0.96%. The company has given a muted guidance for Q4 March 2012. The company has projected a marginal 1.25% growth in non-annualised earnings per American Depositary Share at $0.81 in Q4 March 2012 over Q3 December 2011. The company has projected a flat to 0.22% growth in consolidated revenue in dollar terms at $1.806 billion to $1.81 billion in Q4 March 2012 over Q3 December 2011.

India's third largest software services exporter by revenues Wipro rose 0.05%. Wipro reported 12% growth in consolidated net profit to Rs 1456.40 crore on 10% growth in sales to Rs 9997.20 crore in Q3 December 2011 over Q2 September 2011. Wipro expects revenues from IT services business to grow 1% to 3% at $1.52 billion to $1.55 billion in Q4 March 2012 over Q3 December 2011. The company announced the 3rd quarter results on 20 January 2012.

Mahindra Satyam fell 0.54% in volatile trade. The company said during trading hours today, 3 February 2012, that it had received a provisional attachment order dated 30 2012 from the Additional Commissioner of Income Tax, Central Range - 3, Hyderabad attaching land and buildings of the company under section 281B of the Income Tax Act, 1961.

The company also received the interim order High Court Order dated 31 January 2012 in the writ petitions filed by the company inter alia questioning the orders of CBDT and the Draft Assessment Orders, wherein the High Court listed the matter on 28 February 2012 and ordered the parties to maintain status-quo as on date. The said order also directed that the bank guarantee furnished by the company will not be encashed by the revenue department until further orders. Mahindra Satyam said it is examining various legal options to challenge the order of ACIT.

Meanwhile, the rupee climbed to a three-month high on Friday, propelled by dollar inflows and gains in equities. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Airline stocks gained for the third day in a row after state-run oil marketing companies, with effect from midnight, 31 January 2012, slashed jet fuel prices by over 3% as an appreciating rupee made imports cheaper. Jet Airways, and SpiceJet rose by between 2.93% to 2.31%. Kingfisher Airlines fell 0.2%. Jet fuel or aviation turbine fuel (ATF) typically makes up almost half of an airline's operating cost. Prices of jet fuel are directly linked to crude oil prices.

State-run oil marketing companies--Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation revise jet fuel prices on the 1st and 16th of every month based on the average international crude price in the preceding fortnight. Meanwhile, US crude oil tumbled to a fresh six-week low on Thursday, falling below $97 a barrel, on weak demand and rising supplies.

Some capital goods stocks fell on profit taking after recent strong gains. From a recent low of 9,784.77 on 30 January 2012, BSE Capital Goods index had gained 4.56% in three trading sessions to 10,231.88 on 2 February 2012. Gammon India, Crompton Greaves, L&T, and Praj Industries shed by between 0.17% to 1.68%.

Metal stocks fell as LMEX, a gauge of six metals traded on the London Metal Exchange declined 1.56% on Thursday, 2 February 2012. Sterlite Industries, Hindalco Industries, NMDC, Sesa Goa, Tata Steel and Jindal Steel & Power fell by between 0.73% to 3.08%.

Telecom stocks were mixed after the Supreme Court in its verdict in 2G telecom scam on Thursday, 2 February 2012, quashed 122 telecom licenses issued after January 2008. Bharti Airtel rose 0.69%, with the stock extending Thursday's 6.88% rally. MTNL fell 1.16%. Tata Teleservices (Maharashtra) rose 0.32%.

Idea Cellular fell 2.14%, reversing initial gains. Idea Cellular said after market hours on Thursday, 2 February 2012, that the government's latest decision to quash all the 122 telecom licenses granted in 2008 also includes Idea's 9 licences and 4 licences of erstwhile Spice Communications which was merged with Idea Cellular.

Idea clarified that it has unnecessarily been caught in this situation of cancelled licenses, just because the licences were granted in January 2008, which was as late as 18 months from the date of application. Idea said it had applied for 9 new telecom licences in 2006, long before the government took a decision to award licences in 2008.

Idea said it will study in detail the Supreme Court judgement and explore all possibilities to protect its investment. Idea said out of the total of 13 licences of the firm which have been cancelled, six licences are non-operational. With respect to the remaining 7 licences, Idea currently has over 6 million subscribers. These account for about 5% of the company's cumulative capex, 4% of revenue and are EBITDA loss making circles.

Reliance Communications (RCom) lost 3.3%, with the stock extending Thursday's 3.54% losses. The company said during market hours on Thursday that the cancellation of 122 telecom licenses has no impact on the company. The company said licenses to the company were issued in 2001 or prior and hence its licenses are not affected by the Supreme Court's judgement pronounced on Thursday, 2 February 2012.

Supreme Court said that status quo will remain for four months for operators that hold 122 telecoms licences issued after January 2008 which have been cancelled. The court said the telecom regulator has to frame new recommendations for license and bandwidth allocation, and that the government needs to decide on the proposals in a month, after which new licenses need to be auctioned.

Meanwhile, the telecom tribunal on Thursday postponed to 16 February 2012 its hearing of a case against banning mobile-phone companies from sharing their networks to offer roaming facility to users of third-generation services. Consequently, the stay on the telecommunications department's ban order will be extended until 16 February 2012 when the Telecom Disputes Settlement & Appellate Tribunal next hears the case. The tribunal is a quasi-judicial body which decides on disputes in the telecom and media sectors.

Bharti Airtel, Idea Cellular and the local unlisted unit of UK's Vodafone Group PLC had in July signed agreements that enabled their customers to avail 3G services in the service areas of any three of the companies. Bharti has 3G bandwidth in 13 of India's 22 telecom service areas, while Idea has access in 11 and Vodafone India in nine.

Avance Tech clocked highest volume of 1.42 crore shares on BSE. Cals Refineries (85.20 lakh shares), Dazzel Confindiv (68.01 lakh shares), Resurgence Mines (64.39 lakh shares) and Unitech (56.71 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 157.21 crore on BSE. ICICI Bank (Rs 83.61 crore), RIL (Rs 55.35 crore), Tata Steel (Rs 52.07 lakh shares) and Aban Offshore (Rs 50.28 crore) were the other turnover toppers in that order.

India's services sector grew at its fastest pace in six months during January 2012 as new business swelled, extending the previous couple of months' positive trend into the new calendar year, a survey showed on Friday, 3 February 2012. The HSBC Business Activity Index, compiled by Markit and based on a survey of around 400 firms, bounced to 58 in January from 54.2 in December. That was the third month the index has been above the 50-mark separating growth from contraction.

The 3rd quarter earnings season is at its peak. Hindustan Unilever, National Aluminium Company and India Cements announce Q3 results on Monday, 6 February 2012. Mahindra & Mahindra and GMR Infrastructure unveil Q3 results on 7 February 2012. Bharti Airtel, ONGC, Power Grid Corporation of India and Tech Mahindra unveil Q3 results on 8 February 2012. Tata Steel, Hindalco, ACC, Ambuja Cements and HPCL unveil quarterly results on 9 February 2012.

DFL, Tata Power, BPCL, Reliance Communications (RCom), Britannia Industries, Sun TV Network, Essar Oil and Neyveli Lignite Corporation unveil Q3 results on 10 February 2012. JSW Steel announces consolidated Q3 results on 10 February 2012. The company has already announced its stand-alone results.

Aditya Birla Nuvo, Oil India and Ashok Leyland announce Q3 results on 11 February 2012. State Bank of India, Cipla Indian Oil Corporation, Coal India, Sun Pharmaceuticals Industries and Steel Authority of India (Sail) unveil Q3 results on 13 February 2012. Tata Motors and Shipping Corporation of India unveil Q3 results on 14 February 2012. Ranbaxy Laboratories announces Q4 December 2011 results on 23 February 2012.

India's manufacturing sector grew at its fastest pace in eight months in January 2012 as factory output surged the most on record on increased domestic and foreign demand, a survey showed on Wednesday. The HSBC manufacturing purchasing managers' index (PMI), compiled by Markit, jumped to 57.5 from 54.2 in December. The factory output sub-index jumped to 62.9 in January from 55.8 in December, the biggest rise from one month to the next on record. Both the output and the new orders indexes rose to their highest level since May last year.

India's trade deficit widened to $12.7 billion in December from $8.0 billion a year earlier as export growth slowed due to falling global demand. But imports, specially in the non-oil segments, continued to grow. For the April-December period, the trade gap was $133.2 billion, compared with $96.2 billion a year earlier. India's merchandise exports in December grew 6.7% from a year earlier to $25.0 billion while imports rose 19.8% to $37.7 billion.

The government on Tuesday, 31 January 2012, lowered slightly its estimate of the country's growth in gross domestic product for the last fiscal year ended 31 March 2011, to 8.4% from 8.5%.

The Reserve Bank of India (RBI), last week, took liquidity easing measures by cutting the cash reserve ratio (CRR) requirement for banks by 50 basis points to 5.5% from 6% at Third Quarter Review of Monetary Policy 2011-12. The central bank said that as a result of the reduction in the CRR by 50 basis points, around Rs 32000 crore of primary liquidity will be injected into the banking system. The central bank said the large structural deficit in the system presents a strong case for injecting permanent primary liquidity into the system.

The RBI kept its key lending rate viz. the repo rate unchanged at 8.5%. RBI has cut the baseline projection of GDP growth for 2011-12 to 7% from 7.6%. The growth-inflation balance of the monetary policy stance has now shifted to support growth, while at the same time ensuring that inflationary pressures remain contained, the central bank said.

The reduction in CRR can be viewed as a reinforcement of the guidance that future rate actions will be towards lowering interest rates, RBI said. However, the timing and magnitude of future rate actions is contingent on a number of factors, RBI said. In the absence of credible fiscal consolidation, the Reserve Bank of India will be constrained from lowering the policy rate in response to decelerating private consumption and investment spending, it said. The forthcoming Union Budget must exploit the opportunity to begin this process in a credible and sustainable way, the RBI said.

The budget for 2012/13 ending March will be presented after elections scheduled in five states, Finance Minister Pranab Mukherjee said on 2 January 2012. Polling for assembly elections in five states concludes in early March 2012. The annual budget is usually presented on the last working day of February.

Seven-phase polling for assembly elections in Uttar Pradesh begins tomorrow, 4 February 2012.

European stocks reversed initial losses on Friday, 3 February 2012, ahead of the key US employment data that is seen as a barometer of health of the world's largest economy. Key benchmark indices in France, Germany and UK rose by between 0.39% to 0.48%.

The Markit/CIPS purchasing managers index for Britain's dominant services sector rose to a 10-month high at 56.0 in January from 54.0 in December. Economists had forecast a January reading of 53.3. A reading of more than 50 signals growth in activity, while a figure of less than 50 indicates a contraction.

Asian markets were mostly higher on Friday ahead of the key US jobs report due out later in the global day. Key benchmark indices in China, Hong Kong, Taiwan and Singapore rose by between 0.08% to 0.77%. Key benchmark indices in Indonesia, Japan and South Korea fell by between 0.02% to 0.60%.

China is considering increasing its participation in the rescue funds aimed at resolving the European debt crisis, Chinese Premier Wen Jiabao told media reporters on Thursday.

Trading in US index futures indicated that the Dow could gain 24 points at the opening bell on Friday, 3 February 2012. US stocks tallied limited gains for two of three benchmark indices on Thursday, 2 February 2012, as Wall Street looked to Friday's (3 February 2012) influential employment report for January 2012 as the next indicator of the economic recovery. The US jobs report is expected to show the US economy generated 150,000 jobs in January 2012, keeping the unemployment rate steady at 8.5%. In December 2011, the country added 200,000 jobs.