The two key benchmark indices - the 30-share BSE Sensex and the 50-unit S&P CNX Nifty, both, struck their highest level in more than 29 months at the onset of the trading session on firm Asian stocks. The Sensex was up 62.46 points or 0.34%, off 61.95 points from the day's high and up 43.32 points from the day's low.
The market breadth was strong. IT stocks were in demand after strong results from Wipro. Auto stocks extended recent gains in anticipation of strong Q1 June 2010 results.
The market surged at the onset of the trading session on firm Asian stocks. The market pared gains in early trade. Volatility may rise over the next few days as traders rollover positions in the derivatives segment from July 2010 series to August 2010 series ahead of the expiry of the near-month July 2010 contracts next Thursday, 29 July 2010.
The Reserve Bank of India (RBI) said on Thursday, 22 July 2010, it will allow take-out financing through external commercial borrowing for refinancing of rupee loans availed from domestic banks. Refinancing of domestic rupee loans with external commercial borrowings is not permitted, Reserve Bank of India said.
Investors poured money into equity funds focused on India and China in the week ended 21 July 2010 as concern about economic growth spurred withdrawals from developed-market stocks, global fund tracker EPFR Global said. India funds received a net $187 million, the most in 51 weeks, while China money managers took in $138 million, EPFR said.
The key near term event is the Reserve Bank of India's quarterly policy review on Tuesday, 27 July 2010. Analysts expect another 25 basis points rate hike aimed at anchoring inflation expectations. The Reserve Bank of India (RBI) on 2 July 2010, hiked the repo rate by 25 basis points to 5.5% from 5.25%, with immediate effect. It also hiked the reverse repo rate, at which it absorbs excess cash from the banking system, by an equal 25 basis points to 4% from 3.75%. The central bank said the latest rate hike was a part of the calibrated exit from the expansionary monetary policy.
Globally, investors are keenly awaiting the results of the stress tests on 91 European banks due after the close of business Friday, 23 July 2010. The European stress test exercise comes in the wake of an earlier US effort to instill new confidence in its own battered banking sector. European regulators had asked the region's biggest banks to publish a list of each lender's gross and net exposure to central and local governments in 30 countries in the region, including Greece, Spain, Ireland, Italy and Portugal to determine if they can survive potential losses from both a recession and a decline in the value of their government- bond holdings.
Asian markets rose on Friday, 23 July 2010, as commodity prices climbed and on upbeat guidance from select US bluechip companies. The key benchmark indices in Hong Kong, Indonesia, China, South Korea, Japan, Taiwan, and Singapore were up by between 0.38% and 1.23%.
US stocks rebounded Thursday, 22 July 2010, amid better-than-expected corporate earnings, shrugging off a series of mixed economic data. The Dow Jones Industrial Average jumped 201.77 points or 1.99% to 10,322.30. The tech-rich Nasdaq composite index gained 58.56 points or 2.68% at 2,245.89 and the broader S&P 500 index climbed 24.08 points or 2.25% to 1,093.67.
In economic news, the Labor Department reported that new claims for US unemployment benefits rose more than expected last week, after two weeks of sharp declines linked largely to seasonal layoffs. Initial jobless claims surged more than eight percent to a seasonally adjusted 464,000 in the week ending 17 July 2010.
Existing US home sales fell for the second straight month in June, the National Association of Realtors (NAR) said, reflecting weakness in the housing industry which was at the epicenter of the financial crisis. Sales of single-family, town homes and condominiums dropped 5.1% to 5.37 million units from 5.66 million in May 2010.
Trading in US index futures indicated that the Dow could rise 8 points at the opening bell on Friday, 23 July 2010.
Back home, government data released on 22 July 2010 showed the fuel price index rose 14.27% in the year to 10 July 2010, unchanged when compared to previous week's rise of 14.27%. The food price index climbed 12.47%, lower than previous week's annual rise of 12.81%. The primary articles index was up 16.48%, compared with the previous week's reading of 16.25%.
The headline inflation rose lower-than-expected 10.55% in June 2010. The rate of increase was higher than May's rise of 10.16%. Inflation for April 2010 was revised upwards to 11.23% from 9.59%.
Meanwhile, C. Rangarajan, the Chairman of the Prime Minister's Economic Advisory Council is scheduled to meet Prime Minister Manmohan Singh on Friday, 23 July 2010 to brief him about the GDP projections and the challenges before the economy. Rangarajan would also submit the economic outlook for 2010-11 to the Prime Minister. On the corporate front, the combined net profit of a total of 303 companies rose 25.50% to Rs 20510 crore on 17.70% rise in sales to Rs 133828 crore in Q1 June 2010 over Q1 June 2009.
The goods and services tax (GST), which is to replace the existing value added tax (VAT), service tax, excise duties and central sales tax among others, will be in place from 1 April 2011. Reports indicated that the Centre and states on Wednesday, 21 July 2010 arrived at a broad consensus on rolling out independent India's biggest tax reforms that will simplify the manner in which corporates, small enterprises and traders will be levied taxes on goods and services. The new indirect tax reform is to streamline the movement of goods and services across India with a single tax structure.
A committee set up by the stock market regulator Securities & Exchange Board of India (Sebi) has recommended major changes in the existing law governing substantial acquisition of shares and takeovers. The committee headed by C. Achuthan has recommended an increase in the acquisition threshold for the initial trigger of an open offer from the current level of 15% to 25% of the voting capital of a listed company. While no change has been recommended in the annual creeping acquisition limit of 5%, the committee has recommended that creeping acquisition be permitted only to acquirers who already hold more than 25% of the voting capital, subject to the aggregate post-acquisition shareholding not exceeding the maximum permissible non-public shareholding.
The committee has recommended that an open offer should be made for all the shares of the target company to ensure equality of opportunity and fair treatment of all shareholders, big and small. The exception to this rule is the size of an open offer where the same is voluntary in nature. The current regulations mandate a minimum offer size of only 20%.
Investors are closely monitoring the progress of the monsoon rains. The annual monsoon rains were 17% below normal in the week to 21 July 2010, improving after a 24% deficit in the previous week, the India Meteorological Department said on Thursday, 22 July 2010. The seasonal monsoon rains during 1 June to 22 July 2010 were 12% below normal, the weather office added.
Southwest monsoon was vigorous over Sub-Himalayan West Bengal & Sikkim and active over Bihar, West Uttar Pradesh, Uttarakhand, Himachal Pradesh, Punjab, Konkan & Goa, Vidarbha, Telangana, Coastal & South Interior Karnataka and Kerala during past 24 hours, the weather office said in its daily report on Thursday 22 July 2010.
The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The weather office expects this year's monsoon rains to be at 102% of the long-period average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.
At 9:20 IST, the BSE 30-share Sensex was up 62.46 points or 0.34% to 18,175.61. The Sensex rose 124.41 points at the day's high of 18,237.56 at the onset of the trading session, its highest level since 19 February 2008. The index rose 19.14 points at the day's low of 18,132.29 in early trade.
The S&P CNX Nifty was up 16.25 points or 0.30% to 5,458.20. Nifty struck an intra-day high of 5,477.50, its highest level since 5 February 2008.
The market breadth, indicating the overall health of the market, was strong. On BSE, 1361 shares advanced while 541 shares declined. A total of 72 shares remained unchanged.
The total turnover on BSE amounted to Rs 536 crore by 09:25 IST
From the 30-share Sensex pack, 25 stocks advanced while only 5 of them declined. HDFC Bank (down 0.38%), ONGC (down 0.61%), and Reliance Communications (down 0.47%), edged lower from the Sensex pack.
Software stocks gained after India's third largest software services exporter Wipro reported strong results before trading hours. Wipro jumped 2.65% to Rs 426.60 after consolidated net profit rose 30.50% to Rs 1318.60 crore on 16.17% increase in total income to Rs 7371.50 crore in Q1 June 2010 over Q1 June 2009. It was the top gainer from the Sensex pack.
Wipro's chairman, Azim Premji said the company is seeing strong demand environment across industry verticals despite macro challenges. Wipro added the highest number of billable employees ever in Q1 June 2010. For Q2 September 2010, the company expect revenues from its IT services business to be in the range of $1,253 million to $1,277 million, a sequential increase of 4.1% to 6.1%
India's largest software services exporter TCS rose 0.13% and India's second largest software services exporter Infosys Technologies gained 0.56%.
Index heavyweight Reliance Industries (RIL) rose 0.26% to Rs 1061.30. As per recent reports, RIL has rejected the oil ministry's directive to sell gas from its Krishna Godavari basin field to new customers by reducing supply to existing ones. As many as 16 companies are waiting to sign gas sale and purchase agreements with RIL.
Auto stocks extended recent gains in anticipation of strong quarterly results. India's largest tractor maker by sales Mahindra & Mahindra (M&M) advanced 0.82% The company, last week, said its board of directors at its meeting held on 15 July 2010, was briefed about the company's potential bid for Ssangyong Motors Company, South Korea. A decision on the bid would be taken at the company's next board meeting to be held on 28 July 2010. The company would also unveil its Q1 June 2010 earnings on 28 July 2010.
Bajaj Auto rose 0.84%, extending Thursday's rally triggered by strong Q1 results and a liberal bonus issue. The company's board during market hours on 22 July 2010 announced a liberal 1:1 bonus issue. The company's net profit jumped 101.08% to Rs 590.15 crore on 68.18% increase in total income to Rs 3971.73 crore in Q1 June 2010 over Q1 June 2009.
India's top small car maker by sales Maruti Suzuki India gained 1.05% ahead of its Q1 June 2010 earnings on 24 July 2010. India's largest truck maker by sales Tata Motors rose 0.76%.
Infrastructure pivotals Bharat Heavy Electricals (up 0.77%), and Jaiprakash Associates (up 0.19%), advanced ahead of their April-June quarter results today, 23 July 2010.
Idea Cellular jumped 1.99%. Consolidated net profit fell 32.2% to Rs 201.40 crore in Q1 June 2010 over Q1 June 2009. The result was announced after trading hours on Thursday, 22 July 2010.
