Sensex, Nifty attain highest closing level in over 12 weeks

Key benchmark indices edged higher for the third consecutive trading session today, 2 February 2012. Data showing substantial purchases of Indian stocks by foreign institutional investors underpinned sentiment. Also supporting sentiment for the second day in a row was data released during trading hours on Wednesday, 1 February 2012, showing strong manufacturing sector growth in the month just gone. The barometer index, BSE Sensex, jumped 131.27 points or 0.76%, up about 124 points from the day's low and off 72 points from the day's high. The market breadth was positive. The Sensex and the 50-unit S&P CNX Nifty attained their highest closing level in more than 12 weeks.

The Sensex has surged 1,976.93 points or 12.79% in calendar 2012 so far. The barometer index jumped 1,738.63 points or 11.25% in January 2012 on the back of heavy buying by foreign institutional investors (FIIs). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,295.99 points or 15.17%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,379.29 points or 12%.



Coming back to today's trade, index heavyweight Reliance Industries (RIL) edged lower in volatile trade. Telecom stocks were mixed after the Supreme Court in its verdict in 2G telecom scam quashed 122 telecom licenses issued after January 2008, with Bharti Airtel gaining nearly 7%. Airline stocks surged for the second day in a row after state-run oil marketing companies slashed jet fuel prices with effect from midnight of 31 January 2012.

Cement stocks rose after monthly cement dispatches data, with ACC hitting a 52-week high and Ambuja Cements hitting a record high. FMCG stocks were mixed. IT stocks rose on positive economic data in the US. Metal stocks gained as manufacturing data around the globe worked to soothe worries about the trajectory of global growth and subsequent commodity demand.

The market surged in early trade to hit its highest level in more than 12 weeks. The market extended initial gains to hit fresh intraday high in morning trade. Volatility ruled the roost as the market recovered soon after cutting almost all the intraday gains after hitting fresh intraday high in mid-morning trade. The high volatility mid-morning trade was after the Supreme Court in its verdict in 2G telecom scam ordered the Department of Telecommunications (DoT) to cancel all the 122 mobile telecom services licenses it allotted after January 2008.

The market regained strength in early afternoon trade. The market held firm in afternoon trade. Volatility was witnessed on the bourses again as key benchmark indices regained strength after trimming gains in mid-afternoon trade.

The BSE Sensex rose 131.27 points or 0.76% to settle at 17,431.85, its highest closing level since 8 November 2011. The index jumped 203.67 points at the day's high of 17,504.25 in mid-morning trade, its highest level since 9 November 2011. The index rose 7.70 points at the day's low of 17,308.28 in mid-morning trade.

The S&P CNX Nifty rose 34.20 points or 0.65% to settle at 5,269.90, its highest closing level since 8 November 2011. The index hit a high of 5,289.95, its highest level since 9 November 2011. The index hit a low of 5,225.75 in intraday trade.

The BSE Mid-Cap index rose 0.55% and the BSE Small-Cap index rose 0.54%. Both these indices underperformed the Sensex.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,573 shares rose and 1,295 fell. A total of 126 shares were unchanged. The breadth was much stronger earlier in the day.

BSE clocked turnover of Rs 3666 crore, lower than Rs 4845.51 crore on Wednesday, 1 February 2012.

Among the 30-member Sensex pack, 21 fell while the rest rose.

Index heavyweight Reliance Industries (RIL) fell 0.2% to Rs 828.60, off the day's high of Rs 842.35. 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.

ONGC rose 1.19% and Bhel rose 1.53%. The Empowered Group of Ministers (EGoM) has reportedly postponed a decision on divestment of government stake in ONGC and Bhel.

Telecom stocks were mixed after the Supreme Court in its verdict in 2G telecom scam quashed 122 telecom licenses issued after January 2008. Bharti Airtel jumped 6.88% and was the top gainer from the Sensex pack.

MTNL was flat at Rs 30.10 while Tata Teleservices (Maharashtra) fell 2.77%.

Idea Cellular rose 2.68%. Idea Cellular said after market hours today, 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 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 3.54%. The company said during market hours today 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 today, 2 February 2012.

Unitech plunged 7.04%. 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 said that status quo will remain for four months for operators that hold 122 telecoms licences issued after January 2008. The Supreme Court has asked the government to decide on issuing fresh telecoms licence norms within four months, a news agency quoted an unnamed lawyer on the case as saying. Allegations of irregularities during the 2008 allotment of the licenses and bandwidth have led to the arrest of politicians, former government officials and several industry executives. A government auditor had in late 2010 pulled up the telecom department for giving 85 licenses--bundled with bandwidth to offer mobile services--to companies which didn't have the required capital. Some other license holders have also been issued notices for not meeting service launch rules.

The Supreme Court on Thursday refused to direct the CBI to probe the alleged role of Union Home Minister P. Chidambaram in the 2G scam. The apex court left it to the discretion of the trial court to decide on probe against Chidambaram in the 2G case. The Supreme Court also said that there was no need to set up a Special Investigation Team to monitor CBI's inquiry into the 2G scam. The CVC would monitor CBI's status report into the 2G scam investigation, the apex court said today.

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.

Airline stocks surged for the second 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, SpiceJet, and Kingfisher Airlines rose by between 0.20% to 3.56%. 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.

IT stocks rose on positive economic data in the US, the biggest outsourcing market for the Indian IT firms. India's largest software services exporter by revenue TCS rose 1.62%. 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 0.68%. 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 3.46%. 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 2.49%, reversing initial gains. The company announced after market hours on Wednesday that consolidated net profit rose 29% to Rs 308 crore on 9% growth in revenue to Rs 1718 crore in Q3 December 2011 over Q2 September 2011.

Meanwhile, the rupee strengthened on Thursday to its highest level in three months as risk appetite improved after strong manufacturing data from China and India to Germany helped ease worries about the global economy. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports.

Metal stocks gained as manufacturing data around the globe worked to soothe worries about the trajectory of global growth and subsequent commodity demand. Sesa Goa (up 4.41%), Sterlite Industries (up 3.9%), Nalco (up 3.69%), Hindalco Industries (up 3.04%), Hindustries Zinc (up 2.99%), Coal India (up 1.47%), Tata Steel (up 1.09%) and Sail (up 0.57%), edged higher. LMEX, a gauge of six metals traded on the London Metal Exchange gained 1.15% on Wednesday, 1 February 2012.

NMDC fell 0.32% on profit booking, reversing Wednesday's 3.52% gains triggered by good Q3 results. The company announced after market hours on Tuesday that net profit rose 22.44% to Rs 1858.81 crore on 14.79% rise in total income to Rs 3347.34 crore in Q3 December 2011 over Q3 December 2010.

Cement stocks rose after monthly dispatches data. Jaiprakash Associates rose 1.37%. The company's cement dispatches rose 27% to 1.96 million tonnes in January 2012 over January 2011.

ACC rose 4.94% to end at the day's high of Rs 1259.95, which is also a 52-week high for the counter, after the company said during market hours today 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 3.32% after cement dispatches rose 3.8% to 1.91 million tonnes in January 2012 over January 2011. The stock hit a record high of Rs 170.80 today.

Among other cement stocks, J K Cements (up 6.34%), Heidelberg Cement (up 5.01%), Saurashtra Cement (up 4.94%), Madras Cement (up 4.6%), India Cements (up 4.46%), UltraTech Cement (up 2.1%), Shree Cement (up 2%), Prism Cement (up 1.16%) and Dalmia Bharat (up 0.4%), edged higher.

FMCG stocks were mixed. United Spirits (up 4.03%), United Breweries (up 1.69%), Hindustan Unilever (up 1.32%), Tata Global Beverages (up 0.82%), Dabur India (up 0.57%) and Britannia Industries (up 0.33%), edged higher.

Marico rose 2.47% after the company announced during market hours today that consolidated net profit rose 20.98% to Rs 84.11 crore on 29.35% rise in net sales to Rs 1057.81 crore in Q3 December 2011 over Q3 December 2010.

ITC (down 1.36%), Godrej Consumer Products (down 1.28%), Colgate Palmolive (India) (down 0.4%), Nestle India (down 0.13%) and Ruchi Soya Industries (down 0.11%), edged lower.

RCF fell 0.74% after the company announced during market hours today that net profit fell 21.07% to Rs 53.95 crore on 5.64% rise in total income to Rs 1634.34 crore in Q3 December 2011 over Q3 December 2010.

Corporation Bank rose 0.05%. The state-run bank announced during market hours today that net profit rose 5.17% to Rs 402.21 crore on 39.06% rise in total income to Rs 3804.49 crore in Q3 December 2011 over Q3 December 2010.

Dena Bank rose 3.93% after the state-run bank said its board will consider a proposal for preferential issue of equity shares to insurance companies and government sponsored mutual funds.

OCL India surged 7.58% after net profit jumped 78.06% to Rs 37.82 crore on 25.02% growth in net sales to Rs 426.27 crore in Q3 December 2011 over Q3 December 2010.

Ashok Leyland slumped 5.95%. Net profit jumped 54.3% to Rs 66.90 crore on 29.3% growth in net sales to Rs 2879.80 crore in Q3 December 2011 over Q3 December 2010. The result was announced after trading hours on Wednesday, 1 February 2012.

State Bank of India clocked a highest turnover of Rs 241.74 crore on BSE. Bharti Airtel (Rs 120.09 crore), ICICI Bank (Rs 115.88 crore), Reliance Communications (Rs 100.61 crore) and Reliance Industrial Infrastructure (Rs 86.90 lakh), were the other turnover toppers on BSE in that order.

Unitech reported a highest volume of 1.42 crore shares on BSE. Reliance Communications (1.04 crore shares), Suzlon Energy (85.95 lakh shares), Lanco Infratech (68.62 lakh shares) and Cals Refineries (60.54 lakh shares), were the other volume toppers on BSE in that order.

The 3rd quarter earnings season is at its peak. Dr. Reddy's Laboratories, Power Finance Corporation and Hindustan Copper report Q3 results tomorrow, 3 February 2012. Hindustan Unilever, National Aluminium Company and India Cements announce Q3 results on 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. Tata Power, BPCL, Britannia Industries, Sun TV Network 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 and Ashok Leyland announce Q3 results on 11 February 2012. 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 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 on Saturday, 4 February 2012.

European stocks reversed initial gains on Thursday, pausing for breath after Wednesday's strong gains which saw equities push to highs not seen since October 2011. Key benchmark index in UK fell by 0.18%. Germany's DAX rose 0.12% while France's CAC 40 was flat.

Asian shares gained on Thursday as global manufacturing data soothed fears about global economies deteriorating on the back of the ongoing euro zone debt crisis, while falling European debt yields also improved sentiment. Key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, and Taiwan rose by between 0.76% to 2%. Singapore's Straits Times fell 0.13%.

Defaults by Asian companies are likely to rise this year as the economic environment deteriorates and credit becomes tighter with European lenders reducing their exposure to the region, ratings agency Moody's Investors Service said on Thursday. "Asian sectors most vulnerable to adverse policy tightening, cyclicality, and excess capacity include Chinese property developers, as well as the refining and marketing, technology and semiconductor sectors," Moody's said in a report. "Weakening or volatile domestic currencies will likewise increase cost pressures for importers in countries such as India and Korea," the US ratings agency added. Moody's said it expects a negative ratings trend for Asian corporates, indicating there will likely be more ratings downgrades than upgrades this year.

Trading in US index futures indicated a flat opening of US stocks on Thursday, 2 February 2012. US stocks scored gains on Wednesday after manufacturing data showed growth and the market buzzed with speculation that Facebook would soon announce its market debut. After the closing bell, Facebook filed for an initial public offering potentially worth $5 billion.

The Institute for Supply Management said its index of US national factory activity rose to 54.1 in January, the strongest pace in seven months, while the ADP National Employment Report showed the private sector added 170,000 jobs last month, the smallest gain in three months but in line with forecasts. The US government labour market report is due on Friday.