IND: Market extends gains in late trade as European shares surge
The key benchmark indices surged, extending gains for the second straight day, buoyed by firm global stocks and also boosted by India Meteorological Department's (IMD) prediction of normal monsoon season this year. Data showing substantial buying by foreign funds on Tuesday, 19 April 2011, underpinned sentiment. The BSE 30-share Sensex was provisionally up 355.75 points or 1.86%. Index heavyweight Reliance Industries edged higher.
IT stocks rose after Intel and Yahoo Inc both beat earnings expectations. Auto stocks advanced on expectations of pick up in rural demand following forecast of normal rains this year. Bank stocks rose on expectations of good Q4 earnings. Metal stocks rose as metal prices gained on the London Metal Exchange.
The market breadth was strong. All the sectoral indices on BSE were in the green. Shares in DB Realty, Unitech and Reliance Communications fell after a CBI court rejected bail applications of executives of these firms involved in the telecoms graft trial.
The market surged in early trade, tracking firm Asian stocks. The market trimmed gains in morning trade. The market came off lows later. Volatility continued as the key benchmark indices trimmed gains after hitting fresh intraday highs in mid-morning trade. The market regained strength in early afternoon trade. Volatility ruled the roost as the key benchmark indices recovered from lower level soon after paring gains. The market surged to hit fresh intraday high in mid-afternoon trade as European shares jumped. The market extended gains in late trade.
Foreign institutional investors (FIIs) bought shares worth Rs. 1693.19 crore and domestic institutional investors (DIIs) bought shares worth Rs. 208.33 crore on Tuesday, 19 April 2011, provisional data released by the stock exchanges showed.
As per provisional figures, the BSE 30-share Sensex was up 355.75 points or 1.86% to 19,477.58. The index gained 362.94 points at the day's high of 19,484.77 in late trade. The Sensex rose 49.20 points at the day's low of 19,171.03 in afternoon trade.
The S&P CNX Nifty was up 113.75 points or 1.98% to 5854.50 as per provisional figures.
The BSE Mid-Cap index rose 1.14% and the BSE Small-Cap index gained 1.26%. Both these indices underperformed the Sensex.
The market breadth, indicating the health of the market, was strong. On BSE, 1914 shares advanced while 995 shares declined. A total of 89 shares remained unchanged.
Among the 30-member Sensex pack, 27 advanced while 3 shares declined.
BSE clocked turnover of Rs. 3729 crore, lower than Rs. 12832 crore on Tuesday, 19 April 2011. The turnover on BSE had surged on Tuesday as Vedanta Resources bought 10.4% in Cairn India in large block deals on that day.
Index heavyweight Reliance Industries (RIL) rose 1.58% to Rs. 1027.30, amid a bout of volatility in the stock in afternoon trade. The stock came off the day's low of Rs. 1007.10. The company will announce its Q4 result tomorrow 21 April 2011. The market has been abuzz with talks that the company's plans for the financial sector will be high on the agenda and final details of the deal with DE Shaw would be discussed at RIL's board meet on Thursday, 21 April 2011, when RIL announces Q4 result. RIL, last month formed a joint venture with DE Shaw group, to offer an array of financial services. But, it did not share the investment plans or equity structure or even the leadership of the new venture.
RIL, last week, said it has started work on large polyester projects in India to consolidate its position as the world's largest integrated polyester producer. RIL said it has planned its capacity expansion in phases over the next few years including a 2.30 million metric tonne at Dahej, Gujarat, with an ability to increase the capacity by another 1.15 million tonne at a later stage. The expansion also includes a 3.95 lakh tonne of polyester filament yarn and 1.4 lakh tonne polyester texturized yarn at Silvassa.
Bank stocks rose on expectations of good Q4 earnings. Strong lending growth is seen boosting bottom line of banks in Q4 March 2011. India's second largest private sector bank by net profit HDFC Bank rose 1.14%, extending Tuesday's 1.4% gains triggered by strong Q4 results and on announcement of 5-for-1 stock split. Net profit rose 33.23% to Rs. 1114.71 crore on 34.38% rise in total income to Rs. 6724.31 crore in Q4 March 2010 over Q4 March 2010. The board of directors of the bank also approved a 5-for-1 stock-split while approving the results. The result and stock-split announcements were made after trading hours on Monday, 18 April 2011.
India's largest private sector bank by net profit ICICI Bank rose 1.95% extending Tuesday's 0.74% gain. The bank will announce Q4 result on 28 April 2011. Yes Bank jumped 2.35% ahead of Q4 result today, 20 April 2011.
India's largest state run bank by net profit and branch network State Bank of India (SBI) gained 1.96%, after the bank said after market hours on Tuesday 19 April 2011, that it is raising benchmark prime lending rate and base rate by 25 basis points (bps) each to 13.25% per annum and 8.5% per annum respectively, effective from 25 April 2011.
Metal stocks rose across the board as LMEX, a gauge of six metals traded on the London Metal Exchange gained 0.97% on Tuesday, 19 April 2011. Nalco, Hindustan Zinc, JSW Steel, Hindalco Industries, Sterlite Industries, Jindal Saw, Sail and Tata steel gained by between 1% to 4.4%.
Jindal Steel & Power (JSPL) rose 2.74% after the company said it has initiated a cash offer for the entire equity of Australian coal-mining firm Rocklands Richfields (Rocklands). The offer will be made through Jindal Steel's step down wholly owned subsidiary, Jindal Steel and Power (Australia). Jindal is offering AUD $0.25 cash for every Rocklands share held. The offer values Rocklands' total equity at approximately AUD $88 million. Jindal Steel and Power (Australia) currently holds a 14.46% interest in Rocklands and has received approval of foreign investment review board, Australia to increase its stake above the 15% threshold. The open offer has commenced today, 20 April 2011.
Auto stocks rose on expectations of pick up in rural demand following forecast of normal rains this year. India's largest truck maker by sales Tata Motors rose 3.96%, with the sock snapping last three days' losses. The company late last week said its global vehicle sales rose 9% to 1.10 lakh units in March 2011 over March 2010. Global sales of commercial vehicles grew 19% to 56,814 in March, while sales of passenger vehicles were at 53,971 units, the company said in a statement. Jaguar and Land Rover (JLR) sales rose 2% to 24,101 units, driven by an 8% rise in Land Rover sales. Tata Motors bought the British luxury brand unit JLR from Ford Motor Co for $2.3 billion in 2008.
India's top small car maker by sales Maruti Suzuki India gained 1.36%. The company will announce its Q4 result on 25 April 2011. The company had recently announced that it will recall 13,157 diesel engine cars. The company said it would inspect the 'connecting rod bolt' for units of its Swift and Ritz model diesel cars with engines manufactured between 13 November 2010 and 4 December 2010.
Maruti Suzuki increased the prices of its products by 0.2% to 2.4% from 4 April 2011, depending on the models to offset rising costs of key inputs viz. steel, aluminum, copper and natural rubber.
India's second largest bike maker by sales Bajaj Auto rose 1.5%, extending gains of 5.12% in last four days. The company's total vehicle sales increased 12% to 3.07 lakh units in March 2011 over March 2010. The company announced its March 2011 sales figures on 4 April 2011.
India's leading farm equipment maker by sales Mahindra & Mahindra (M&M) rose 4.98%, with the stock gaining for the second straight day on reports company is in talks with Japanese major Mitsubishi for a global strategic alliance to source farm equipment products including tractors as it looks to expand presence in major markets across the globe.
Meanwhile, the company launched its 15 horsepower tractor, Yuvraj 215 in Pune, on Tuesday, 19 April 2011.
India's largest bike maker by sales Hero Honda Motors fell 2.26% and was the top loser from the Sensex pack as the stock turned ex-dividend today for an interim dividend of Rs. 70 per share.
IT stocks rose after Intel and Yahoo Inc both beat earnings expectations. HCL Technologies jumped 9.93% after company reported 17.1% rise consolidated net profit as per US accounting standards to Rs. 468 crore on 6.4% rise in revenue to Rs. 4138 crore in Q3 March 2011 over Q2 December 2010. The result hit the market before trading hours today, 20 April 2011.
Commenting on the results, Vineet Nayar, Vice Chairman and CEO, HCL Technologies said, We continue to expand market share backed by a second sequential quarter of revenue growth of 30% plus year-on-year along with expansion in margins. HCL's focus on forward investment in key markets and transformation services is paying rich dividends. CFO Anil Chanana said, Impressive sequential revenue growth at 5.8%, 130 basis points improvement in operating margin and net income to operating cash conversion at 114% are the key highlights of HCL's performance this quarter. Moreover, the EPS growth of 34% over the last one year in line with the revenue growth firmly demonstrates strength of HCL's business model.
HCL Tech said it signed 11 transformational deals Q3 March 2011 across service lines, verticals and geographies -- 8 of these deals have been won from existing customers.
India's largest software services exporter TCS rose 4.63%, with the stock gaining for the second straight day. The company will announce Q4 result tomorrow, 21 April 2011. India's third largest software services exporter Wipro rose 3%, with the stock gaining for the second straight day.
India's second largest software services exporter and index heavyweight Infosys rose 0.65%, with the stock snapping last three days' slide triggered by the company's disappointing earnings growth forecast for the year ending March 2012 (FY 2012).
Infosys has projected 8% to 10% growth in earnings per American Depositary Share (ADS) as per International Financial Reporting Standards at $2.83 to $2.88 for the year ending March 2012 (FY 2012) over the year ended March 2011 (FY 2011). The projected growth in earnings is much lower than the projected revenue growth for the current year -- Infosys has projected 18% to 20% growth in revenue at $7.13 billion to $7.25 billion for the year ending March 2012 (FY 2012) over the year ended March 2011 (FY 2011).
Shares in DB Realty, Unitech and Reliance Communications fell by between 1.99% to 5.13% after a CBI court rejected bail applications of executives of these firms involved in the telecoms graft trial.
The CBI has already arrested six people, including former Telecom Minister Andimuthu Raja, as part of its probe into allegations that telecom licenses in 2008 were sold at below-market prices. Other allegations included bringing forward the cut-off date for filing applications, designed to benefit some companies.
Real estate developer DB Realty said a move by a CBI court to reject the bail plea of its managing director Vinod Goenka in the telecoms graft trial was unfortunate, but added that it did not affect the company's operations. There is no direct or indirect shareholding of DB Realty in the telecom business and the company will continue its business in the normal course, the company said. DB Realty, whose parent firm has a telecom joint venture with UAE's Etisalat, also said it was in the process of inviting new directors to its board.
Sadbhav Engineering jumped 12.91% after consolidated net profit jumped 157.21% to Rs. 93.31 crore on 75.07% rise in total income to Rs. 2336.19 crore in the financial year ended March 2011 over the financial year ended March 2010.
The near term major trigger for the market is Q4 March 2011 results of India Inc. Investors will scrutinize post-result management commentary to gauge outlook on earnings at a time when rising salaries, raw materials prices and interest rates are pressurizing profit margins of India Inc. High global commodity prices will add to pressure on profit margins of Indian firms.
The combined net profit of a total of 76 companies rose 24.1% to Rs. 6214 crore on 26.8% rise in sales to Rs. 49280 crore in Q4 March 2011 over Q4 March 2010.
India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA). The IMD released its initial forecast for the June to September monsoon after market hours on Tuesday 19 April 2011. The forecast is made in two stages in April and in June. The forecast for the season as a whole (June-September) is issued in the first stage.
Normal monsoon this year could help ease food inflation and boost rural income. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector as the country lacks irrigation facilities on more than half of its farm land. The South Asia Climate Outlook Forum last week predicted that South Asia is likely to receive normal monsoon rains in 2011. It said the La Nina weather phenomenon, which aids monsoon in the region, would continue until June.
With inflation remaining above its comfort level, the Reserve Bank of India (RBI) is seen raising key short term policy rates by 25 basis points at its annual 2011-2012 monetary policy review on 3 May 2011.
A sharp surge in global crude oil prices over the past few months has raised macroeconomic worries. India imports majority of its crude oil requirements and high oil prices had raised concerns about widening current account deficit. High oil prices had also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were up $1.34 or 1.24% at 109.62 a barrel.
India's exports surged 37.5% to $246 billion in the year ended March 2011 (FY 2011) their fastest annual growth since independence-despite a strong rupee and weak demand in developed markets, data released on Tuesday showed. The government is reportedly targeting a 25% rise in exports in the current fiscal. Imports rose 21.5% to $350.5 billion in FY 2011. Exports in March added to $29.1 billion, highest for a single month so far.
European shares surged on Wednesday, tracking gains on Wall Street and in Asia, after strong sales at tech bellwether Intel and other US firms boosted optimism for European companies' results. The key benchmark indices in UK, France and Germany were up 2.07% to 2.39%.
Asian stocks rose on Wednesday, 20 April 2011, following a rebound overnight on Wall Street. The key benchmark indices in Hong Kong, Indonesia, China, Japan, Singapore, South Korea and Taiwan rose by between 0.29% to 2.23%.
Japan's exports in March fell for the first time in 16 months, hit by the fallout from last month's massive earthquake and tsunami, which destroyed factories and crippled supply chains, the government said Wednesday.
Trading in US index futures indicated that the Dow could gain 61 points at the opening bell on Wednesday, 20 April 2011.
Encouraging results from health care and materials companies lifted US stocks on Tuesday, but weak earnings from Goldman Sachs limited gains in a market skeptical of the growth outlook. The latest government data showed US housing starts and permits for future home construction rose more than expected in March.
