II:IT stocks advance as rupee hits record low against dollar
Key benchmark indices extended intraday gains to hit fresh intraday highs in mid-morning trade as bargain hunting emerged after recent steep slide in share prices. The barometer index, BSE Sensex, was above the psychological 16,000 mark, having alternately moved above and below that level at the onset of the trading session. The Sensex was up 174.90 points or 1.10%, up 150.89 points from the day's low and off 31.06 points from the day's high. The market breadth once again turned positive from negative.
Index heavyweight Reliance Industries (RIL) gained 2%. ITC was trading flat after multiple block deals on BSE. Metal stocks were in demand on bargain hunting after steep recent slide triggered by poor Q2 results from leading metal firms. Bargain hunting also helped bank stocks recover from recent decline triggered by fears of rising defaults in a slowing economy. IT stocks edged higher after the rupee hit a record low against the US dollar. Auto stocks were mixed.
The market trimmed gains after a firm start. The market regained strength in morning trade. The Sensex hit a fresh intraday high in mid-morning trade.
The market may remain volatile this week as traders roll over positions in futures & options (F&O) segment from the near-month November 2011 series to December 2011 series. The near-month November 2011 F&O contracts expire on Thursday, 24 November 2011.
At 11:25 IST, the BSE Sensex was up 174.90 points or 1.10% to 16,121. The index rose 205.96 points at the day's high of 16,152.06 in mid-morning trade. The index rose 24.01 points at the day's low of 15,970.11 in morning trade.
The S&P CNX Nifty was up 48.10 points or 1.01% to 4,826.45. The Nifty hit a high of 4,835.30 and low of 4,782.55 in intraday trade.
The market breadth, indicating the overall health of the market, once again turned positive from negative. On BSE, 1,235 shares advanced and 1,051 shares declined. A total of 115 shares were unchanged. Earlier, the breadth had turned negative from positive in morning trade.
The total turnover on BSE amounted to Rs. 713 crore by 11:25 IST compared with Rs. 415 crore by 10:25 IST
From the 30-share Sensex pack, 24 gained while the rest of them declined.
Index heavyweight Reliance Industries (RIL) advanced 2% to Rs. 802.85 on bargain hunting after the stock tumbled 10.97% in prior six trading sessions. RIL said after market hours on Friday, 18 November 2011, that it has formed an equal joint venture with BP by the name India Gas Solutions, which will focus on global sourcing and marketing of natural gas in India. The joint venture will also develop infrastructure to accelerate transportation and marketing of natural gas within the country. India Gas Solutions will be funded with equal equity from BP and RIL.
Oil Secretary G.C. Chaturvedi today, 22 November 2011, said that the oil ministry may decide within a month on taking action against Reliance Industries for falling natural gas production at the D6 block in the Krishna-Godavari basin, off the country's east coast.
India's largest listed cellular services provider by market capitalization Bharti Airtel lost 2.41% to Rs. 379.15 and was the top loser from the Sensex pack. The stock extended Monday's (21 November 2011) 2.3% fall triggered by the Central Bureau of Investigation (CBI) conducting searches at Bharti Airtel's office in Gurgaon, seeking details on spectrum allocation by the government to operators between 2001-02. The CBI carried out the searches on on Saturday, 19 November 2011.
We would like to categorically state that all the spectrum allotted to us from time to time has been strictly as per the stated government policy, Bharti Airtel's spokesman said in a statement. We are providing all details and correspondence to the authorities and shall provide complete support as needed in the matter, Bharti Airtel's spokesperson said.
Meanwhile, Bharti Airtel on Friday, 18 November 2011, said it will start selling Apple Inc.'s latest iPhone 4S on 25 November 2011. The smartphone from the Cupertino, California-based company is priced at $867 for the 16GB version. India, with 865.71 million wireless users at the end of August, is the world's second-largest telecoms market after China.
India's largest cigarette maker by sales ITC was down 0.10% to Rs. 199.10 after 15 lakh shares, or 0.01% equity, changed hands in four different block deals in early trade on BSE. A block deal of 10 lakh shares was struck at Rs. 199.50 per share at 10:53 IST. Another block deal of 2 lakh shares was struck at Rs. 198.60 per share at 11:06 IST. A block deal of 2 lakh shares was struck at Rs. 198.85 per share at 11:10 IST. Another block deal of 1 lakh shares was struck at Rs. 198.85 per share at 11:11 IST.
Metal stocks rose bargain hunting after steep recent slide triggered by poor Q2 results from leading metal firms. Hindalco Industries (up 2.64%), Steel Authority of India (Sail) (up 2.43%), Sesa Goa (up 1.14%), Jindal Steel & Power (up 1.16%), Tata Steel (up 0.71%), and Sterlite Industries India (up 0.73%), gained.
Bargain hunting also helped bank stocks recover from recent decline triggered by fears of rising defaults in a slowing economy. India's largest bank by net profit and branch network State Bank of India (SBI) rose 1.27%. India's largest private sector bank by net profit ICICI Bank gained 2.16% and India's second largest private sector bank by net profit HDFC Bank rose 0.36%.
Punjab National Bank (up 1.81%), Bank of Baroda (up 0.52%), Bank of India (up 0.98%), Kotak Mahindra Bank (up 1.26%), and Axis Bank (up 0.61%), gained.
Auto stocks were mixed. India's largest truck maker by sales Tata Motors jumped 3.87% to Rs. 167.70 and was the top gainer from the Sensex pack. The stock had lost 11.36% in prior three trading sessions.
Tata Motors on Monday, 21 November 2011, introduced a new version of the Nano minicar, which it said is more powerful and fuel efficient than the previous model. India's largest commercial vehicle maker by sales said it will continue to sell the Nano at the same price. The Nano, sold in three variants, is priced between Rs. 1.4 lakh and Rs. 1.96 lakh at showrooms in New Delhi. Tata Motors said the new version of the Nano will have a fuel efficiency of 25.4 kilometers per liter, compared with 23.6 kilometers per liter of the previous variant. The new Nano is powered by a 624 cubic centimeter gasoline engine that will deliver 38 horsepower, compared with 35 horsepower in the previous variant.
India's largest small car maker by sales Maruti Suzuki India rose 1.95%. India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 0.47%. India's largest motorcycle maker by sales Hero MotoCorp declined 0.42% while India's second largest motorcycle maker by sales Bajaj Auto slipped 0.97%.
IT stocks edged higher after the rupee hit a record low against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. The partially-convertible rupee was trading at 52.60/61, as against Monday's close of of 52.155/165.
India's second largest software services exporter by revenue Infosys gained 2.06%, reversing five-day 5.24% decline. The company's chief financial officer V. Balakrishnan said in an interview to a news agency on Monday, 21 November 2011, that the company may miss the upper end of its sales targets for Q3 December 2011 and also for the year ending March 2012 (FY 2012) as the worsening global economic situation has made large contracts hard to come by. Balakrishnan said though the upper end of the forecast is at risk, the sales growth will still be in that range.
At the time of announcing Q2 September 2011 results early last month, Infosys had forecast 3.2% to 5.3% growth in revenue at $1.802 to $1.84 billion in Q3 December 2011 over Q2 September 2011. The company had projected 17.1% to 19.1% growth in revenue at $7.08 billion to $7.20 billion for the year ending March 2012 (FY 2012) over the year ending March 2011 (FY 2011).
In rupee terms, Infosys had forecast 8.97% to 11.2% growth in revenue at Rs. 8826 crore to Rs. 9012 crore in Q3 December 2011 over Q2 September 2011. The company had projected 21.8% to 24% growth in revenue at Rs. 33501 crore to Rs. 34088 crore in FY 2012 over FY 2011.
India's third largest software services exporter Wipro rose 1.24% while India's largest software services exporter TCS advanced 1.41%.
Indian stocks had tumbled recently on weak September 2011 corporate earnings and as European and US debt problems pulled world markets lower. The BSE Sensex tanked 1,623.43 points or 9.24% in the eight trading sessions to settle at 15,946.10 on Monday, 21 November 2011, its lowest closing level since 5 October 2011, from a recent high of 17,569.53 on 8 November 2011.
Sustained selling by foreign funds pulled the market lower. Foreign institutional investors (FIIs) sold shares worth Rs. 743.02 crore on Monday, 21 November 2011, as per the provisional data from the stock exchanges. Their outflow totaled Rs. 2708.49 crore in five trading session from 15 to 21 November 2011.
Corporate earnings have been weak. The combined net profit of a total of 3,783 companies declined 36% to Rs. 67352 crore on 20.6% growth in sales to Rs. 1136746 crore in Q2 September 2011 over Q2 September 2010.
Over the past few weeks, the government has taken some steps to encourage foreign investment. It raised the amount of government bonds that foreigners can hold and the amount of corporate debt they can hold by $5 billion each, to $15 billion and $20 billion respectively. The Union Cabinet also recently approved a pension overhaul that is expected to have a provision added allowing foreign pension-management companies to hold up to 26% of Indian joint ventures, from zero today.
The crucial winter session of the parliament starts today, 22 November 2011. Among key financial Bills pending before Parliament is the Pension Fund Regulatory and Development Authority (PFRDA) Bill 2011, which will provide the regulatory authority statutory powers, including that to take punitive action on violations. The interim PFRDA authority, at present, is not backed by a statutory mandate.
The Judicial Standards and Accountability Bill is the cornerstone of the judicial reforms much touted by the government. Its intent is to bring about disclosure of assets for all high court and Supreme Court judges and lay down a 'code of conduct'. Thereby, judges can be probed over corruption allegations as that would be a violation of their code of conduct.
Among other important Bills lined up is the National Advisory Council-backed National Food Security Bill. Issues such as the extent of coverage of such food security, the amount of subsidy and the role of the PDS in such a system will be the aspects likely to be debated. The sports ministry-led National Sports Development Bill and the Nuclear Regulatory Authority Bill are among the 23 new Bills listed for introduction.
The Reserve Bank of India (RBI) recently announced its first government bond buyback under its open-market-operations program this year, in a move aimed at easing liquidity in the cash-strapped banking system. The plan to buy up to Rs. 10000 crore of government bonds on Thursday, 24 November 2011 comes as banks have been borrowing between Rs. 80000 crore and Rs. 1.3 lakh crore daily for the past week, underscoring the cash crunch in the local banking system. The RBI said it will buy the bonds through a multi-security auction using the multiple price method. It will announce the details of the bonds that it will buy back at the auction shortly, it added.
RBI announced a 25 basis points hike in its key policy rate viz. the repo rate to 8.5% after half-yearly review of the monetary policy on 25 October 2011. The central bank cut its GDP growth forecast for the current fiscal year through March 2012 to 7.6% from 8% earlier. But it retained its March-end inflation projection of 7%. RBI said the projected inflation trajectory indicates that the inflation rate will begin falling in December 2011 (January 2012 release) and then continue down a steady path to 7% by March 2012. It is expected to moderate further in the first half of 2012-13. This reflects a combination of commodity price movements and the cumulative impact of monetary tightening. Further, moderating inflation rates are likely to impact expectations favourably.
Emerging markets such as India must take measures to boost long-term foreign direct investment to blunt volatility in exchange rates, and any capital control measures must be selective and temporary, a senior executive of the Asian Development Bank said on 14 November 2011. While capital flows and exchange rates are likely to be volatile in the short-term amid ongoing euro-zone debt concerns, India must focus on improving its investment climate by providing better infrastructure, putting in place a coherent manufacturing policy and developing financial markets, Managing Director General Rajat M. Nag said on the sidelines of the India Economic Summit.
Asian stocks weakened on Tuesday, 22 November 2011, with sentiment under pressure from ongoing concerns about European government finances and gridlock on the US debt pile. Key benchmark indices in China, Taiwan, Hong Kong, Japan, Indonesia and Singapore were down by between 0.02% to 0.98%. South Korea's Seoul Composite rose 0.17%.
Trading in US index futures indicated that the Dow could gain 16 points at the opening bell on Tuesday, 22 November 2011.
Fitch Ratings said late on Monday, 21 November 2011, that it would conclude a review of US sovereign credit ratings by the end of November, in light of the congressional supercommittee's failure to reach a bipartisan deal to cut the federal debt. Fitch cited its previous statement in August that failure by the supercommittee to reach agreement would likely result in a negative rating action -- most likely a revision of the rating outlook to negative, which would indicate a greater than 50% chance of a downgrade over a two-year horizon. It said a one-notch downgrade was possible but less likely.
US stocks tumbled on Monday, 21 November 2011, as members of a special US debt-cutting committee confirmed on that day that they had failed to reach a bipartisan deal to reduce the budget deficit. The committee couldn't agree on how to cut the US debt pile by $1.2 trillion over 10 years, with the result that automatic spending cuts are now slated to take effect in 2013. The Dow Jones Industrial Average lost 248.85 points, or 2.11%, at 11,547.31. The Standard & Poor's 500 Index was down 22.66 points, or 1.86%, at 1,192.99 and the Nasdaq Composite Index was down 49.36 points, or 1.92%, at 2,523.14.
Moody's Investor Services warned on Monday that rising French borrowing costs and an uncertain outlook posed an ongoing threat for the country's AAA credit rating. French government bond yields ticked higher on Monday.
