Market ends higher on rate cut hopes

In a dramatic turn around, key benchmark indices wiped off intraday losses to hit the day's high in late trade as hopes for further rate cuts triggered bargain hunting in stocks. Subir Gokarn, Reserve Bank of India (RBI) deputy governor, has hinted at a rate cut in the upcoming policy review of the central bank, saying below trend growth and falling crude oil prices offer RBI a window to ease policy stance. The barometer index, BSE Sensex, settled a tad below the psychological 16,000 mark. The Sensex rose 23.24 points or 0.15%, up close to 239 points from the day's low and off about 24 points from the day's high. From a recent high of 16,438.58 on 29 May 2012, the Sensex declined 473.42 points or 2.87% in three trading sessions to 15,965.16 on Friday, 1 June 2012. The barometer index has gained 533.48 points or 3.45% in calendar 2012 so far (till 4 June 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 852.54 points or 5.63%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 3143.30 points or 16.43%. The market breadth was negative. Index heavyweight Reliance Industries (RIL) extended intraday gains. PSU OMCs rose as crude futures fell for the fifth straight day today, 4 June 2012, its lowest level in almost eight months. Shares of aviation companies gained on reports the aviation ministry has called for abolition of service tax on air tickets and reduction in sales tax on aviation fuel from an average 25% to a uniform 4%. Capital goods stocks reversed intraday losses. Interest rate sensitive banking stocks recovered on hopes RBI may cut interest rates in the monetary policy later in this month to prop up slowing economy. The market opened lower to hit their lowest level in nearly five months as Asian stocks declined. It trimmed losses to hit fresh intraday high in morning trade. It weakened once again after extending intraday recovery to hit fresh intraday high in mid-morning trade. It moved in a narrow range in a negative terrain in early afternoon trade. Key benchmark indices pared losses to hit their intraday highs in afternoon trade. It extended recovery to hit fresh intraday high in mid-afternoon trade. It reversed intraday losses to hit fresh intraday high in late trade The BSE Sensex rose 23.24 points or 0.15% to 15,988.40. The index declined 216.18 points at the day's low of 15,748.98 in early trade, its lowest level since 9 January 2012. The index rose 47.68 points at the day's high of 16,012.84 in late trade. The S&P CNX Nifty rose 6.55 points or 0.14% to 4,848.15. The index hit a low of 4770.35, its lowest level since 10 January 2012. The index hit a high of 4,858.30 in intraday trade. The BSE Mid-Cap index fell 0.21% and the BSE Small-Cap index fell 0.23%. Both these indices underperformed the Sensex. The market breadth, indicating the overall health of the market, was negative. On BSE, 1449 shares declined and 1204 shares rose. A total of 121 shares were unchanged. BSE clocked turnover of Rs 1753 crore lower than Rs 1873.85 crore on Friday, 1 June 2012. From the 30-share Sensex pack, 17 stocks declined and the rest of them rose. GAIL (India) (down 3.47%), Jindal Steel & Power (down 2.72%) and Bharti Airtel (down 2.31%), edged lower from the Sensex pack. Index heavyweight Reliance Industries (RIL) rose 1.31% to Rs 692.65, off the day's low of Rs 673.50. RIL bought back 8.2 lakh shares at average price of Rs 700.226 per share on 28 May 2012. The company cumulatively bought back a total of 2.09 crore till 28 May 2012 under the share buyback programme. RIL recently said it has selected Phillips 66's E-Gas technology for its planned gasification plants at Jamnagar in Gujarat. The planned gasification plants at Jamnagar will be among the largest in the world and will process petroleum coke and coal into synthesis gas utilizing the E-Gas technology, RIL said in a statement. The synthesis gas will be used as a feedstock for a new chemical complex and will fuel the Jamnagar refinery's existing gas turbine power generation units, RIL said in a statement. India's largest state run oil exploration firm by sales ONGC gained 3.19%. India's largest motorcycle maker by sales Hero MotoCorp rose 1.16% to Rs 1843 on good sales in May 2012. The world's largest two-wheeler manufacturer reported its best-ever monthly sales in May 2012, thus underlining the robust momentum the company has sustained since embarking on its solo journey. Marking its 10th consecutive month of over five lakh sales, Hero MotoCorp total sales rose 11.3% to 5,56,644 two-wheelers in May 2012 over May 2011. The company's sales in May this year surpassed its previous highest of 5,51,557, recorded only last month (April'12). Mr. Anil Dua, Senior Vice-President (Marketing and Sales), Hero MotoCorp said, "We have been setting new industry benchmarks month after month which is an indication not only of our progress in our journey but also the trust of our valued customers. The first two consecutive months of the new fiscal recording highest-ever sales for the company has clearly been a great start for us. Notwithstanding the slowdown in the overall economy and the prevailing sentiment in the country, we are cautiously optimistic that the expected normal monsoon and the consequent good harvest should perk up the mood in the coming months. "We remain committed to our multi-focal strategy of new launches, network expansion, rural drive, compelling communication and on-ground customer activation. We currently have about 5000 customer touch points, and we plan to add another 400 touch points to our network this year," he added. Capital goods stocks reversed intraday losses. Larsen & Toubro (up 3.43%), Siemens (up 3.14%), Praj Industries (up 2.03%), ABB (up 1.43%), Bharat Electronics (up 1.16%), Havells India (up 1.04%), Alstom T&D India (up 0.84%), Crompton Greaves (up 0.83%), BGR Energy Systems (up 0.58%) and Bhel (up 0.17%), edged lower. Shares of aviation companies rose on reports the aviation ministry has called for abolition of service tax on air tickets and reduction in sales tax on aviation fuel from an average 25% to a uniform 4%. SpiceJet (up 7.04%), Jet Airways (India) (up 4.53%) and Kingfisher Airlines (up 0.27%) edged higher. The abolition of service tax on air tickets and reduction in sales tax on aviation fuel turbine fuel (ATF), if materializes, may not only nurse bleeding carriers back to profits, but also rein in soaring fares. Interest rate sensitive banking stocks recovered on hopes RBI may cut interest rates in the monetary policy later this month to prop up slowing economy. The central bank is scheduled to announce its first mid-quarter review of monetary policy for 2012-13 on June 18. India's second largest private sector bank by net profit HDFC Bank rose 1.09% to Rs 496.80, off the day's low of Rs 485.10. India's largest commercial bank in terms of branch network State Bank of India (SBI) gained 0.99% to Rs 2046.20, off the day's low of Rs 1975. India's largest private sector bank by net profit ICICI Bank gained 1.10% to Rs 790.30, off the day's low of Rs 767.95. Among other banking stocks, Bank of Baroda (up 2.69%), Axis Bank (up 2.43%), IDBI Bank (up 2.33%), Punjab National Bank (up 1.86%), Kotak Mahindra Bank (up 0.87%), Federal Bank (up 0.56%), Bank of India (up 0.50%) and Canara Bank (up 0.39%), edged higher. RBI Deputy Governor Subir Gokarn said today liquidity in the Indian banking system was adequate after a recent drop in banks' borrowing from the central bank, which gives it the option of buying bonds if tightness re-emerges, a remark which dampens market expectations for a reduction in the cash reserve ratio. PSU OMCs rose as crude futures fell for the fifth straight day today, 4 June 2012, its lowest level in almost eight months on signs of an economic slowdown in the US and China. HPCL (up 4.83%), BPCL (up 3.19%) and Indian Oil Corporation (up 3.13%), edged higher. Lower crude oil prices will decrease 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. State fuel retailers Saturday, 2 June 2012 decided to cut retail gasoline prices following heated protests from the ruling Congress party's key allies, opposition parties and consumers. The cut of Rs 2.02 in the price of a liter of gasoline announced by Indian Oil Corporation follows an 11.5% increase in gasoline prices in late May. The three retailers have freedom to revise gasoline rates every two weeks, in line with the benchmark global prices. Pantaloon Retail (India) jumped 6.91% to Rs 148.45 after company said during market hours today that Pantaloon Retail (India) and its wholly owned subsidiary, Future Value Retail, have entered into Share Purchase Agreement (SPA) with Cloverdell Investment (one of the affiliated entity of Warburg Pincus) to sale its holding in Future Capital Holdings (FCH) in two tranches representing a maximum of 53.67% but subject to a minimum of 40% of the equity share capital of the company. The sale is proposed at a price of Rs 162. Future Capital Holdings is Systematically Important Non Deposit Accepting Registered Non Banking Financial Company and is listed on BSE and NSE. This SPA and further resolution passed today by FCH board to make preferential allotment of equity shares and / or convertible securities of around Rs. 100 crore to Warburg subject to the approval of members and will require Warburg to make an open offer. Shares of Future Capital Holdings surged 4.78%. State Bank of India clocked a highest turnover of Rs 142.88 crore on BSE. Indraprastha Gas (Rs 127.53 crore), Tata Motors (Rs 73.62 crore), L&T (Rs 45.22 crore) and Jubilant FoodWorks (Rs 32.69 crore), were the other turnover toppers on BSE in that order. Cals Refineries reported a highest volume of 1.16 crore shares on BSE. Suzlon Energy (57.63 lakh shares), Indraprastha Gas (51.45 lakh shares), Spicejet (39.17 lakh shares) and Lanco Infratech (34.55 lakh shares), were the other volume toppers on BSE in that order. Weather conditions are "becoming favourable" for the arrival of India's 2012 monsoon rains over southern Kerala coast in 48 hours, state-run India Meteorological Department (IMD) said in a statement on Monday. On May 15, the IMD said annual June-September monsoon rains would hit the southern coast on time on June 1, give or take 4 days. Officials on Thursday said a cyclonic pressure over the Arabian Sea has delayed the onset, but still expected rains to arrive nearly on time. Foreign institutional investors (FIIs) sold shares worth a net Rs 220.37 crore on Friday, 1 June 2012, as per provisional figures from the stock exchange. European stocks were mixed on Monday following the dismal US nonfarm payrolls report on Friday, which has sparked fears of a global slowdown in economic growth. France's CAC 40 rose 0.66%. Germany's DAX fell 0.69%. London stock market is closed for a two-day public holiday. Rating agency Moody's Investors Service said it had lowered its ratings ceiling on Greek domestic debt issuers due to the rising risk of the country exiting the euro zone, but added it did not consider that the most likely scenario for the country. Moody's said it lowered its assessment of the highest rating that can be assigned to a domestic debt issuer in Greece to Caa2, below the highest existing rating by the firm on any Greek security, which is B1 for certain covered bonds. Greek voters return to the polls on 17 June 2012 after the splintered results of a May 6 parliamentary election left no party able to put together a government. Unemployment fell 0.6% in May versus the prior month in Spain, according to official data released Monday. The number of jobless dropped 30,113 against the prior month to a total of 4,714,122. Asian markets skidded Monday as investors took their first chance to react to much weaker-than-expected US jobs data, adding to ongoing worries about global growth, including the drag from Europe's debt crisis. Key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Taiwan and Singapore shed by between 1.7% to 3.82%. China's non-manufacturing industries expanded at the slowest pace in more than a year, as export orders declined and weakness in real estate countered strength in retailing and leasing, an official survey indicated. The purchasing managers' index fell to 55.2 in May from 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing. Trading in US index futures indicated that the Dow could fall 5 points at the opening bell on Monday, 4 June 2012. U.S. stocks fell more than 2% on Friday, dragging the Dow Jones Industrial Average into negative territory for the year after a dismal U.S. jobs report added to fears that Europe's spiraling debt crisis was dragging down the world economy. The U.S. economy added just 69,000 jobs in May, less than half what expected and well below what is seen as needed to keep the jobless rate moving lower. Readings for the prior two months were also revised down, while the unemployment rate rose for the first time in almost a year, to 8.2%.