Market Spurts On Rate Cut By Major Global Central Banks - Nov 1, 2008

Bulls tightened their grip as key benchmark indices spurted to hit new intraday high in late trade on rally in index heavyweights, Reliance Industries and ICICI Bank. The BSE Sensex was up 806.46 points or 8.92%. Earlier, weak European markets had pulled the Sensex sharply off the higher level after the barometer index had surged 814.74 points in mid-afternoon trade when it did a catch-up with a rally in global markets on Thursday, 30 October 2008, triggered by a rate cut by the US Federal Reserve. The Indian market was shut on Thursday, 30 October 2008, for a public holiday.

A steady decline in inflation for the fifth successive week and reports that the government is considering more measures to pump in liquidity in the financial system added to the positive sentiment. Bank stocks spurted on fall in inflation. IT stocks jumped on rise in American depository receipts (ADR) overnight. The market breadth was strong indicating a broad-based buying.

The wholesale price index (WPI)-based year-on-year inflation dropped to 10.68% in the week ended 18 October from 11.07% in the previous week. Following the steady decline in headline inflation, economists expect inflation to enter single digit domain by end-November 2008.

European stocks fell as on concerns about the global economy weighed on investors. Key benchmark indices in France, Germany and UK were down by between 0.34% to 2.11%.

Japan’s Nikkei average dropped 5% after a lower-than-expected 20 basis points cut in interest rate announced by Bank of Japan today, 31 October 2008. Global markets had rallied on Thursday, 30 October 2008, after the US Federal Reserve cut its main policy rate to 1% on Wednesday, 29 October 2008, to stave off the credit crunch. China cut rates on Wednesday, 29 October 2008 with Taiwan and Hong Kong following up with rate cuts on Thursday, 30 October 2008.

As per the provisional figures, the BSE 30-share Sensex was up 806.46 points or 8.92% to 9.850.97. The index jumped 825.91 points at the day's high of 9.870.42 in late trade. The Sensex rose 317.15 points at day’s low of 9,361.66 in early trade.

The S&P CNX Nifty was up 208.20 points or 7.72% to 2,905.25 as per the provisional figures.
BSE clocked a turnover of Rs 3,699 crore today, 31 October 2008 as compared to a turnover of Rs 3,104.10 on 29 October 2008.

The BSE Mid-Cap index was up 3.59% at 3,205.42 and the BSE Small-Cap index was up 2.63% at 3,771.11. Both the indices underperformed the Sensex.

The market breadth was strong. On BSE, 1538 shares advanced as compared to 952 that declined. 70 shares remained unchanged.

India’s largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) surged 14.14% to Rs 1,374.90, after the petroleum ministry said the $4.20 per metric million British thermal units (mmBtu) price fixed by an empowered group of ministers for gas from Reliance Industries’ KG-D6 was only for the purpose of valuation of government share and the selling price could be higher.

Mahindra & Mahindra (up 23.33% to Rs 373), Jaiprakash Associates (up 15.82% to Rs 71.40) and Tata Power Company (up 11.93% to Rs 690) were from the major gainers from the Sensex pack.

India’s largest drug maker by sales Ranbaxy Laboratories fell 1.39% to Rs 170.45, off day’s high of Rs 200 ahead of Q3 September2008 result today.

Telecom stocks rose after mixed Q2 results. India’s largest telecom service provider by sales Reliance Communications jumped 14.95% as net profit on consolidated basis, rose 17.33% to Rs 1530.78 crore on 23.29% rise in total income to Rs 5645 crore in Q2 September 2008 over Q2 September 2007.

India’s largest telecom service provider by market share Bharti Airtel rose 8.03% to Rs 664.70 despite a 0.9% fall in net profit to Rs 1604.78 crore on 35.6% rise in total income to Rs 8302.8 crore in Q2 September 2008 over Q2 September 2007.

India’s largest oil exploration firm by revenue ONGC rose 5.38% despite a 5.7% fall in net profit to Rs 4808 crore in Q2 September 2008 over Q2 September 2007 caused by a steep rise in the subsidy burden.

India’s largest real estate major by market capitalization DLF gained 4.16% ahead of Q2 September 2008 result today.

Metal stocks shrugged off fall in metal prices on the London Metal Exchange yesterday, 30 October 2008 triggered by fears of fall in demand as the US economy shrank at a 0.3% annual rate in the third quarter, its sharpest contraction in seven years. Tata Steel, Steel Authority of India Hindustan Zinc, Sterlite Indusries rose by between 0.11% to 17.65%.

India’s largest aluminum maker by sales Hindalco Industries jumped 13.26% as net profit rose 12.04% to Rs 719.95 crore on 15.42% rise in total income to Rs 5,859.95 crore in Q2 September 2008 over Q2 September 2007. State-run aluminium major National Aluminium Company (Nalco) jumped 5.82% after net profit rose 1.07% to Rs 444.46 crore on 12.3% growth in total income to Rs 1654.50 crore in Q2 September 2008 over Q2 September 2007.

Banking stocks jumped as the fifth successive week of decline in inflation has given more room for the central bank to cut rates. The BSE's banking sector index Bankex rose 7.51% and was the third biggest gainer form the sectoral indices on BSE. India’s largest private sector bank by net profit ICICI Bank jumped 15.5% as ADR spurted 13.64% overnight. India’s largest commercial bank State Bank of India rose 0.79%.

India’s second largest private sector bank by net profit HDFC Bank gained 8.29% to Rs 981 off day’s high of Rs 1,059, as ADR soared 11.38% overnight.

ICICI Bank, State Bank of India and HDFC Bank have a weightage of 24.21%, 22.44% and 20.55%, respectively in the BSE Bankex.

Punjab National Bank rose 3.42% on 31.3% rise in net profit to Rs 707.09 crore on 35.1% rise in total income to Rs 5313.18 crore in Q2 September 2008 over Q2 September 2007.

Kotak Mahindra Bank lost 2.10% after net profit fell 36.50% to Rs 47.86 crore in Q2 September 2008 over Q2 September 2007.

India’s largest home loan lender by sales HDFC rose 11.81%.

There is speculation and anticipation in the market that the Reserve Bank of India may cut cash reserve ratio (CRR) — the cash deposits that banks are required to keep with the central bank — by one percentage point from the existing 6.5% to 5.5%.

IT stocks gained as rally in ADRs offset a stronger rupee. India's third largest IT exporter by sales Satyam Computer Services rose 5.05%, as ADR rose 7.61%. India's fourth largest IT exporter by sales Wipro rose 6.16%, as ADR jumped 7.78%. India's second largest IT exporter by sales Infosys gained 6.06%, as ADR jumped 4.98%. India's largest IT exporter by sales Tata Consultancy Services fell 0.93%.

The Indian rupee crept higher in opening deals on Friday on expectations the local stock market will rise and help revive investor appetite. The partially convertible rupee was at 49.50 per dollar, 0.4% stronger than Wednesday's close of 49.69/70 per dollar. A stronger rupee affects IT firms negatively as they earn most of their revenues in dollar terms.

India’s largest commercial vehicle maker by sales Tata motors rose 9.11% despite a 34.1% fall in net profit to Rs 346.99 crore on 11.34% rise in total income to Rs 7508.13 crore in Q2 September 2008 over Q2 September 2007.

MMTC rose 1.12% as net profit rose 24.98% to Rs 46.78 crore on 110.92% rise in total income to Rs 12497.23 crore in Q2 September 2008 over Q2 September 2007.

Essar Oil surged 11.82% on posting a net profit of Rs 26 crore in Q2 September 2008 compared to a net loss of Rs 14 crore in Q2 September 2007.

Kirloskar Electric Company rose 3.75% after the company decided to set up a manufacturing unit for AC motors and AC generators.

IVRCL Infrastructure & Projects surged 5.86% as net profit rose 61.98% to Rs 57.10 crore in Q2 September 2008 over Q2 September 2007.

While Japanese stocks tumbled, other Asian stocks were trading mixed today, 31 October 2008. Key benchmark indices in China, Singapore and Hong Kong, fell by between 0.66% to 3.09%. However, South Korea and Taiwan rose by between 2.61% to 3.99%.

Oil prices dropped more than $1 a barrel to $64.55 on Friday, 31 October 2008, after data showed the US economy suffered its sharpest contraction in seven years in the third quarter, as consumers cut spending and businesses reduced investment.