Sensex boosted by Metal, Realty, Oil & Gas Industries
The key benchmark indices were trading higher in afternoon deals led by gains in metal, realty, oil & gas and IT stocks. Volatility ruled the roost on the bourses with the Sensex recovering soon after hitting intraday low in early afternoon trade. The Sensex was up 0.5 per cent to 8,472. The Nifty gained 1 per cent to trade at 2,648. The aglobal economic crisis, a slowdown in the domestic economy, a weak rupee and sustained selling by foreign funds, however, weighed on the investor sentiment. Key benchmark indices opened firm tracking recovery in Asian stocks but soon slipped into the red for a brief period before regaining positive zone. The market weakened again in morning trade before cutting losses. It later moved between positive and negative zone. The market weakened again with Sensex hitting intraday low in early afternoon trade. The market soon cut loss. It later moved between positive and negative zone. There has been heavy selling by foreign funds this year. FII outflow in February 2009 totaled Rs 2707 crore. FII outflow in calendar year 2009 totaled Rs 7418.80 crore (till 2 March 2009). Asian stocks staged an intraday rebound today, 4 March 2009. China’s Shanghai Composite index was up 6.21% after the latest data showed the pace of contraction in the manufacturing sector eased in February 2009. Most other Asian stocks also recovered as optimism governments around the world will widen efforts to bolster growth offset weak US data overnight and also a latest data showing a contraction in Australia’s economy. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan rose by between 0.84% to 3.29%. Trading in US index futures indicated the Dow could rise 67 points at the opening bell on Wednesday, 4 March 2009. Overnight, US stocks closed lower for the fifth straight session amid ongoing worries about the financial markets and the recession. The Dow Jones industrial average and S&P 500 ended at fresh 12-year lows, while the S&P 500 closed below the 700 level for the first time since 1996. US economic data continued to surprise to the downside. US auto sales plunged in February 2009 and January pending home sales fell 7.7% verses an expected 3% fall. Federal Reserve chief Ben Bernanke painted a bleak picture of the US banking industry. The market breadth, indicating the overall health of the market, turned weak form positive breadth in early trade. On BSE, 903 shares advanced as compared with 1,243 that declined. A total of 93 shares remained unchanged. From the 30 share Sensex pack, 23 stocks gained while rest fell. Tata Power Company, Bharat Heavy Electricals, NTPC, HDFC and Bharti Airtel fell by between 0.22% to 3.54%. India’s largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) extended decline for the third straight day, falling 0.6% to Rs 1,192. The stock had lost 5.21% in last two trading sessions after the company set the swap ratio for merger of Reliance Petroluem slightly in favour of Reliance Petroleum before trading hours on Monday, 2 March 2009. The board of Reliance Industries on Monday approved the absorption of its unit Reliance Petroleum (RPL) and set a share swap ratio giving it direct control of the world’s largest refinery complex. Reliance Industries said it would issue one share for every 16 held in RPL, which runs a refinery. Reliance Petroleum fell 0.55%. Oil exploration firm Cairn India gained 1.8% as crude oil prices rose nearly 4% on the New York Mercantile Exchange on Tuesday, 3 March 2009. While India’s largest oil exploration firm by sales ONGC rose 2.11%. Crude oil eased to $41.33 per barrel in Asian trade, down $0.32 or 0.77% from Tuesday’s close. Crude oil rebounded on Tuesday as bargain-hunters capitalized on a sharp sell-off in the previous session. Light sweet crude finished at $41.65 a barrel on the New York Mercantile Exchange, up $1.50 for the session. Metal stocks gained on hopes of a recovery in battered metal prices after the latest data showed the pace of contraction in China’s manufacturing sector eased in February 2009. Sterlite Industries, Hindalco Industries, Tata Steel, Steel Authority of India and National Aluminum Company rose by between 0.61% to 3.33%. China is the world’s largest importer of metals. Orissa Sponge Iron & Steel was locked at upper limit of 5% at Rs 359.95 after Bhushan Steel entered the race to bid for the company at Rs 330 per share, a price higher than offered by two exiting bidders. Cement stocks extended gain on jump in February 2009 cement dispatches and on higher cement prices. Grasim Industries rose 2.27% while Ultratech Cement gained 2.21%. Aditya Birla Group said cement shipments rose 10.1% to 2.92 million tonnes in February 2009 over February 2008. Production for the month rose 9.5% to 2.92 million tonnes, the company said in a statement. The group’s cement business includes flagship Grasim Industries and unit UltraTech Cement, with combined production capacity of 35 million tonnes a year. India’s largest cement maker by sales ACC rose 2.38% as cement dispatches were up 4% at 1.75 million tones (mt) in February 2009 over February 2008. Ambuja Cement rose 2.57% as it reported 11.3 % increase in dispatches at 1.65 mt in February 2009 over February 2008. As per reports, buoyed by an improved demand, cement makers have raised prices by Rs 5-8 per 50-kilogram bag in Mumbai and Gujarat from Sunday 1 March 2099. This has defeated the government move to pull down cement prices by cutting down excise duty. Auto Stocks rose on improved sales in February 2009. India’s largest motorcycle maker by sales Hero Honda Motors rose 1.58%. Hero Honda’s sales rose 24% to 3,29,055 units in February 2009 over February 2008. India’s largest car maker by sales Maruti Suzuki India rose 0.14%. Maruti during trading hours on Monday 2 February 2009 reported 24.1% rise in sales to 79190 units in February 2009 over February 2008. TVS Motor Company rose 4.71% after its two wheeler sales rose 13% to 1,07,301 units in February 2009 over February 2008. India’s largest tractor maker by sales Mahindra & Mahindra rose 0.86% on reports the company is looking to grow business from the defence sector through global partnerships. Recently, M&M recorded 10.8% growth in total volumes to 29,017 units in February 2009 over February 2008. India’s largest commercial vehicle maker by sales Tata Motors rose 0.6% on reports the company plans to bring the Nano, the world’s cheapest car, to Europe by 2011. Tata Motors will begin selling the Rs 1-lakh car Nano in India in April 2009. Rate sensitive real estate shares extended gain on hopes lower rates will spur housing demand. DLF, Indiabulls Real Estate and Unitech rose by between 0.44% to 3.43%. Most of the realty deals including sale of commercial property and housing sales is driven by finance. Banking stocks fell after firm start as fears of rising defaults in a weakening economy offset hopes a further fall in interest rates may boost lending growth and gains in American Depository Receipts (ADRs) overnight. India’s largest private sector bank by net profit ICICI Bank fell 2.13% to Rs 290.10, off the day’s high of Rs 305.85. Its American Depository Receipts (ADR) rose 1.18% on Tuesday, 3 February 2009. Recently, Life Insurance Corporation of India hiked its stake in ICICI Bank by 2.04% to 9.38%. India’s second largest private sector bank by operating income HDFC Bank gained 0.49% to Rs 835.05, off the day’s high of Rs 848. Its ADR rose 2.85% overnight. India’s largest bank in terms of assets and branch network State Bank of India fell 0.85% to Rs 967.55, off the day’s high of Rs 989. The bank has reduced deposit rates by 40 to 50 basis points across maturities. The new rates would be effective from 9 March 2009. Despite a steep cut in policy rates by Reserve Bank of India (RBI) since October 2008, there has not been a commensurate reduction in lending rates by banks as fears of rising bad loans have made them cautious in increasing advances/lending. One reason why banks have not fully passed on the central bank rate cuts to customers is because higher bond yields are pushing up their funding costs. Bond yields and bond prices are inversely related.
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