Bulls Riding ahead…
Bulls were in command as the key benchmark indices continued their
uptrend in mid-afternoon trade on firm global stocks and higher US
index futures. The BSE 30-share Sensex was up 226.94 points or
1.32%. The BSE Sensex today, 16 November 2009, crossed the
psychological 17,000 mark and S&P CNX Nifty breached the key 5,000
mark. Both the indices hit their highest level since late October
2009. Banking, realty, metal and auto stocks rose. Index
heavyweight Reliance Industries gained. The market breadth was
strong.
Cabinet Secretary KM Chandrasekhar today said food prices will
moderate as supply constraints ease. He said the government is
monitoring sugar prices and it will take more action to contain
prices if needed.
There are no fears of government borrowing crowding out private
borrowing in India, finance minister Pranab Mukherjee said at an
industry conference on Monday.
The economy could expand between 6 and 7% in the year to March 2010
despite a bad monsoon, Mukherjee said on Saturday as data showed
accelerating inflation in October. Speaking in the Sri Lankan
capital Colombo, Mukherjee said there were risks to an early global
economic recovery and signs asset price bubbles were re-emerging.
Inflation based on the wholesale price index accelerated in October
2009 from a month earlier on costlier minerals and fuels. On
Saturday, the government switched to using monthly inflation data
for all commodities with 1993/94 as the base year, from the earlier
practice of announcing weekly price movement. The wholesale price
index was up 1.34 % in October 2009 from a year earlier, compared
with 0.5 % rise in September 2009 and 11.06 % jump a year ago. Food
prices, however, declined by 1 % from the previous month’s level,
while minerals and industrial fuels were each costlier by 3%.
At its policy review last month, the Reserve Bank of India (RBI)
lifted its inflation forecast to 6.5% for the end of 2009/10 fiscal
year in March, but left policy rates unchanged. The RBI also laid
the groundwork for a rise in interest rates by tightening credit to
the commercial property sector and removed some of the emergency
liquidity support steps that were extended to protect the economy
from the global downturn.
Industrial output grew 9.1% in September 2009 from a year earlier,
helped by stimulus and festival demand, and adding to the debate on
the timing of exit policy. The RBI forecast the economy would
expand 6% in 2009/10, below 6.5 % predicted by the prime minister’s
economic panel. It grew 6.7% last year, slowing sharply from 9% or
more between 2005/06 and 2007/08.
Meanwhile, the government aims to sell shares of about 60 state-run
firms in the coming years, with offers for NTPC and Rural
Electrification Corp expected by end-March 2010, disinvestment
Secretary Sunil Mitra said on Friday 1 November 2009. He also said
the finance ministry was in talks with other ministries to launch
public offers of Steel Authority of India, miner NMDC, Coal India
and telecoms firm BSNL.
The cabinet will soon consider selling part of government’s stake
in Steel Authority of India and NMDC, Steel Minister Virbhadra
Singh told reporters on Monday.
The cabinet recently approved a long-pending divestment policy that
mandates at least 10% public holding in state-run firms and use the
proceeds for social schemes until March 2012, to cut its fiscal
deficit.
European shares advanced for the fourth straight session on Monday,
with commodity stocks leading the gainers as raw material prices
benefited from a weaker US dollar, but retailer H&M fell after weak
October sales. The key benchmark indices in France, Germany and UK
were up by between 0.78% to 1.15%.
New passenger car registrations in Europe rose 11.2% to 1.26
million in October 2009 year-on-year, driven by growth in the
Western European markets, the European Automobile Manufacturers’
Association said Monday.
Asian stocks gained on Monday after upbeat reports from US
retailers underpinned confidence the global economy is recovering.
The key benchmark indices in China, Hong Kong, South Korea,
Singapore and Taiwan rose by between 1.3% to 2.74%.
Japan’s Nikkei rose 0.21%. Japan’s economy expanded at the fastest
pace in more than two years in the third quarter, led by a rebound
in domestic demand that may ease concern of a return to recession
next year. Gross domestic product rose at an annual 4.8% pace,
after a 2.7% gain in the second quarter, Cabinet Office figures
showed today in Tokyo.
Meanwhile, Japanese Trade Minister Masayuki Naoshima apologized for
speaking about price sensitive third-quarter GDP data to oil
industry executives on Monday ahead of its official release in an
embarrassment for a government that took power two months ago.
China’s economy is expected to grow by about 8.5 % next year while
inflation will remain modest at about 2.5 %, indicating that
monetary policy should remain appropriately loose to solidify the
basis of the recovery, a key government think-tank said on Monday.
The State Information Centre added that the risks of rapid credit
growth could be contained and that a tightening of monetary policy
would have only limited effectiveness in curbing asset price
bubbles, in a report carried by the official China Securities
Journal.
US President Barack Obama said on Monday that Washington was not
trying to contain China’s rise but said trade between the two
giants needed to be more balanced. Addressing students at a town
hall-style meeting in Shanghai on the first full day of his first
trip to China, Obama said the notion that Washington and Beijing
must be adversaries was not pre-destined.
Trading in US index futures indicated Dow could gain 53 points at
the opening bell on Monday, 16 November 2009.
US stocks rose on Friday, setting up a second straight week of
gains, as upbeat retail news reinforced hopes for strong sales in
the key holiday season. The Dow Jones Industrial Average roseor 73
points or 0.71%, to close at 10,270. The Nasdaq gained about 18
points or 0.87% at 2176, and the S&P 500 was up 6.24 points or
0.57% at 1093.
Obama said on Sunday the world economy was on a path to recovery
but warned that failure to re-balance the global economic system
would lead to further crises. Obama was addressing Asia Pacific
leaders in Singapore.
Leaders of the 21-member Asia Pacific Economic Cooperation forum
pledged on Sunday to conclude Doha global trade talks in 2010 and
to reject protectionism, but dropped earlier draft references to
“market-oriented exchange rates” and to emissions cuts.
Kansas City Fed President Thomas Hoenig said on Monday that the US
economy still faced significant weaknesses and he urged
policymakers to allow large financial institutions to fail if
needed. Hoenig was speaking at a central bank event in Abu Dhabi,
the capital of the United Arab Emirates.
At 14:20 IST, the BSE 30-share Sensex was up 226.94 points or 1.32%
to 17075.77. At the day’s high of 17083.20, the Sensex rose 234.37
points in mid-afternoon trade, its highest level since 21 October
2009. The Sensex rose 44.28 points at the day’s low of 16893.11 in
early trade.
The S&P CNX Nifty was up 69.60 points or 1.39% to 5068.55. It hit a
high of 5073.20, its highest since 21 October 2009.
The market breadth, indicating the overall health of the market was
strong. On BSE, 1789 shares advanced as compared with 871 that
declined. A total of 94 shares remained unchanged.
From the 30 share Sensex pack; 27 rose and rest fell.
The BSE Mid-Cap index rose 1.45% and the BSE Small-cap index rose
1.38%.
Energy major Reliance Industries (RIL) rose 1.2%. RIL may
reportedly join global oil majors in search of shale gas. RIL has
been studying the breakthroughs and the new technologies that are
being used in producing shale gas that is now a huge rage in the
US, reports suggest.
Reliance Industries (RIL) on Friday offered to withdraw affidavits
filed by seven of its directors, claiming they were unaware of the
contents of the memorandum of understanding (MoU) signed between
members of the Ambani family in 2005 for supply of gas from the
Krishna-Godavari basin, only if Reliance Natural Resources (RNRL)
agreed to withdraw an assertion in its affidavit that the RIL board
had seen and approved the MoU. RIL and RNRL are currently fighting
the gas price dispute in the supreme court.
RIL on 10 November 2009 said reports of a meeting between the
billionaire Ambani brothers to settle a gas-pricing dispute were
baseless. RIL said in a statement the matter would be decided by
the Supreme Court, which is currently hearing the case.
RIL on Tuesday 10 November 2009 announced its first oil discovery
in its exploration block in the Cambay Basin off Gujarat. Reliance
holds 100% participating interest in the block. This block was
awarded to Reliance under the fifth round of the New Exploration
Licensing Policy.
Metal stocks rose as a gauge of six metals traded on the London
Metal Exchange, rose 0.27% on Friday, 13 November 2009. Sterlite
Industries rose 2.97% even on reports a Texas judge has issued
final approval of Grupo Mexico’s plan to regain control of copper
miner Asarco, ending a lengthy takeover battle with rival suitor
Sterlite Industries. The ruling will return control of Asarco to
Americas Mining Corporation, a Grupo Mexico subsidiary. The deal is
expected to close by mid-December
National Aluminium Company rose 1.52%. The company recently hiked
the prices of aluminium products by Rs 1000 a tonne reflecting the
recent uptrend in prices on the London Metal Exchange.
Hindustan Zinc and Hindalco Industries rose by between 2.75% to
3.17%.
NMDC rose 0.73% after the steel minister said disinvestment process
in the state-run firm will begin in the current financial year.
Steel Authority of India (Sail) rose 2.75% after the steel minister
said the cabinet will soon consider selling part of government’s
stake in Steel Authority of Steel. Meanwhile, Sail chairman today
said the company has cut flat product prices by Rs 500 per tonne
Tata Steel, the world’s eighth largest steelmaker by output, rose
3.76%. The company said on Thursday 12 November 2009 it approved a
new convertible bonds offer in exchange for an existing $875
million securities to reduce costs and ease repayment obligations.
The company said on 6 November 2009 steel sales at its Indian
operations rose 38% to 462,000 tonnes in October 2009 over October
2008.
Demand for steel remains strong from auto, rural construction and
infrastructure sectors. Also demand for construction grade steel
has improved post monsoon season, and has resulted into higher
sales.
Rate sensitive auto stocks rose as low interest rates and
attractive benefits offered by companies pushed up sales in October
2009.
India’s largest small car marker by sales Maruti Suzuki India rose
4.8%. The company’s total sales grew 32.4% to 85415 units in
October 2009, compared with 64490 units posted in the same month a
year ago.
India’s largest truck marker by sales Tata Motors rose 2.26%. Its
UK unit Jaguar Land Rover is reportedly expected to announce on
Monday that it has secured a 170-million-pound ($282.5 million)
working capital facility from GE Capital.
India’s second largest bike marker by sales Bajaj Auto rose 3.29%.
Carlos Ghosn, chief executive of French car maker Renault and
Japan’s Nissan Motor Co, said on Tuesday an agreement had been
signed with Bajaj Auto for a low-cost car which would come to India
in 2012.
India’s largest bike marker by sales Hero Honda Motors rose 2.79%.
The company reported a marginal increase in October sales at
354,156 units as against 352,449 units in the same month last year
India’s largest tractor maker by sales Mahindra & Mahindra 1.59%.
The company’s overall sales climbed 32% in October this year to
18,410 units against 13,935 units in the same month last year.
Car sales in India rose an annual 34% to 132,615 units in October
2009, boosted by festival demand and easier availability of loans,
an industry body said on Wednesday 11 November 2009. Sales of
trucks and buses, a gauge of economic activity, rose 52% to 42,562
units in October 2009, the data showed.
Rate sensitive realty shares rose on bargain hunting after a recent
steep fall. Omaxe, Unitech, Indiabulls real Estate, DLF, Parsvnath
Developers rose by between 1.49% to 3.74%.
Realty stocks corrected recently after the RBI, late last month,
raised the provisioning requirements for loans to commercial real
estate from 0.4% to 1% at a regular monetary policy review. The
latest RBI move will result in increase in borrowing costs for
realty firms which depend heavily on borrowing. In view of large
increase in credit to the commercial real estate sector over the
last one year and the extent of restructured advances in this
sector, it would be prudent to build cushion against likely
non-performing assets (NPAs), the central bank said in its
quarterly policy review.
Banking shares rose on hopes of financial sector reforms. India’s
largest private sector bank by net profit ICICI Bank rose 1.67%.
Its ADR rose 0.86% on Friday 13 November 2009. The bank’s net
profit rose 2.6% to Rs 1040.13 crore on a 12.7% decline in total
income to Rs 8480.73 crore in Q2 September 2009 over Q2 September
2008. The result was announced during trading hours on 30 October
2009.
India’s second largest private sector bank by net profit HDFC Bank
rose 0.29% as its ADR rose 2.82% on Friday.
India’s largest bank by net profit State Bank of India (SBI) rose
2.13%. State Bank of India said on 9 November 2009 said it had
entered into an agreement with T. Rowe Price to sell a 6.5% holding
each in UTI Asset Management Company and UTI Trustee Company. State
Bank currently holds 25% in each of the companies and after the
sale its holding would be reduced to 18.5%, it said in a statement.
SBI announced after market hours on Friday 6 November 2009 it has
revised downwards interest rates on deposits by 25-50 basis points
for a few maturities effective from 9 November 2009. The bank’s
consolidated net profit rose 28.29% to Rs 3,133.16 crore on 22%
rise in consolidated income to Rs 33,101.65 crore in Q2 September
2009 over Q2 September 2008. The results were announced on 31
October 2009.
Among other PSU stocks, Punjab National Bank, Bank of India and
Bank of Baroda rose by between 0.64% to 3.11%.
India’s largest dedicated home loan lender Housing Development
Finance Corporation (HDFC) rose 0.6%. The lender announced after
market hours on Friday 13 November 2009 it has agreed to acquire
approximately 41% in the fully diluted equity share capital of
Credila Financial Services from DSP Merrill Lynch Capital.
Prime Minister Manmohan Singh said on Sunday, 8 November 2009,
financial reforms, such as building up a domestic bond market and
expanding foreign investment in sectors like insurance, would be
pushed forward.
As per reports, the government plans to introduce two key bills in
parliament by December 2009. It plans to introduce bills proposing
the raising of foreign stake limits in insurers to 49% from the
present 26% and opening up the pension sector to private and
foreign firms.
UltraTech Cement, a unit of conglomerate Aditya Birla Group, rose
1.38% paring gains after more than 8% jump in early trade after it
absorbed sister unit Samruddhi Cement, to form the country’s
biggest cement firm. The move, flagged in October 2009, was
approved by the boards of both companies on Sunday. In October, the
group said it will hive off the cement business of flagship firm
Grasim Industries into unit Samruddhi in a cashless transaction and
later merge it with group firm UltraTech. Samruddhi shareholders
will receive four shares of UltraTech for every seven held in
Samruddhi. UltraTech will also issue 14.95 crore new shares,
boosting its capital to Rs 274 crore. Shares of Grasim Industries
rose 2.52%.
Aban Offshore shot up 3.18%, on reports the company has raised $150
million by selling shares to institutional investors.
Themis Medicare declined 2.06%, after a fire and explosion took
place in one of the sections of the company’s Vapi factory on
Friday, 13 November 2009.
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