Monday, May 12, 2008

Market surges in late trade shrugging off weak industrial production data

Frenzied buying in late trade helped market snap its five-day slide. Firm European and Asian markets boosted the sentiment. The S&P CNX Nifty galloped past the 5,000 mark. The market was highly choppy today.

The market, which had opened lower tracking weak US markets on Friday, 9 May 2008, accentuated fall in afternoon trade triggered by dismal industrial production data.

In Europe, the key benchmark indices in UK, France and Germany were up by 0.6% 1%. Asian markets reversed early losses to post gains today, 12 May 2008. Nikkei 225 Average (up 0.64% at 13,743.36), Straits Times index (up 0.70% at 3,184.19), Taiwan Weighted index (up 0.43% at 8,830) and Sanghai Composite index (up 0.37% at 3,626.98) advanced.

The 30-share BSE Sensex was up 139.85 points or 0.84% to 16,876.92, as per provisional closing. Sensex gained 160.29 points at the day`s high of 16,897.36 hit in late trade. Sensex hit a low of 16,546.55 in early-afternoon trade. At the day`s low, Sensex lost 190.52 points.

The broader based S&P CNX Nifty was up 38.70 points or 0.78% at 5,021.30, as per provisional closing.

India`s industrial production growth dropped sharply to 3% in March 2008. Industrial production rose 3% in March 2008 from a year earlier, slowing from the previous month`s unrevised 8.6%, government data showed on Monday, 12 May 2008. It was the slowest annual growth since a 2.4% rise in February 2002.

Manufacturing production rose 2.9% in March 2008 from a year earlier, compared with 8.6% growth in February 2008. Industrial output rose 8.1% in 2007/08 compared with 11.6% in 2006/07.

Despite the rally, the market breadth remained weak. On BSE, 1746 shares declined as compared to 951 that advanced. 51 remained unchanged.

The BSE Mid-Cap index was down 0.67% to 6,945.91 while the BSE Small-Cap index shed 1.20% to 8,403.56, as per provisional closing. Both these indices underperformed the Sensex

The total turnover on BSE amounted to Rs 5971 crore as compared to Rs 4414 crore by 14:30 IST,

Among the 30-member Sensex pack, 22 gained while the rest slipped.

India`s largest pharma company in terms of sales, Ranbaxy Laboratories surged 5.44% to Rs 495 on 6.10 lakh shares. It was the top gainer from Sensex pack. Ranbaxy Laboratories signed a deal to develop new anti-infective drugs for US-based Merck & Co Inc. As per the deal, Ranbaxy will carry out drug discovery and clinical development through Phase IIa clinical trials, while Merck will be responsible for the development and commercialisation.

IT stocks advanced on fresh buying as the rupee fell below 42 level against the dollar, at its lowest in almost 13 months. Satyam Computer Services (up 3.72% to Rs 491), TCS (up 1.08% to Rs 927.40), Wipro (up 1.60% to Rs 509.20), and Infosys Technologies (up 1% to Rs 1768), advanced.

A depreciating rupee augurs well for IT companies as they derive over 50% of their revenues from exports to US.

India`s largest private sector company in terms of market capitalisation and oil refiner Reliance Industries (RIL) recovered from day`s low of Rs 2480 and settled 1.08% higher to Rs 2555 on 8.44 lakh shares.

Banking stocks staged smart recovery from lower levels. India`s biggest commercial bank, State bank of India settled 1% lower at Rs 1659, off day`s low of Rs 1620. India`s biggest private sector bank in terms of net profit, ICICI Bank rose 0.22% to Rs 876, off day`s low of Rs 861.15. India`s second largest private sector bank in terms of net profit HDFC Bank rose 1.72% to Rs 1476.90 recovering from session`s low of Rs 1430.

India`s largest power generation company in terms of sales, NTPC gained 0.34% to Rs 192.50 after its board decided setting up a research and development fund for undertaking activities leading to development of sustainable energy. The company will allocate 0.5% of distributable profit annually for sustainable energy initiative.

Diversified company Grasim lost 3.76% to Rs 2252 on 44,431 shares. It was the top loser from Sensex pack.

Jaiprakash Associates (down 1.77% to Rs 246.85, off day`s low of Rs 235), ACC (down 1.26% to Rs 703, off day`s low of Rs 690), and Hindustan Unilever (down 1.40% to Rs 246.95, off day`s low of Rs 242.25), though in the red were off their day`s low.

Shares of state-run oil marketing companies declined as US light crude for June delivery was hovering near $126.14 a barrel today, 12 May 2008 after soaring to a record high of $126.27 in late trade on Friday, 9 May 2008. Bharat Petroleum Corporation (down 4.51% to Rs 358), Hindustan Petroleum Corporation (down 2.08% to Rs 237.25), and Indian Oil Corporation (down 4.71% to Rs 421.80), declined.

The sharp spurt in crude prices is putting further pressure on fuel retailers as they continue to sell products below the cost price.

However oil exploration company Cairn India galloped 11.63% to Rs 305.80, an all-time high buoyed by anticipation that higher crude oil prices will boost realisations.

Recently listed Aishwarya Telecom spurted 13.79% to Rs 98.20 on huge volumes of 6.07 crore shares on momentum buying.

The spiraling inflation has been a major cause of concern for Indian equities market. The wholesale price index rose 7.61% in the 12 months to 26 April 2008, marginally higher than previous week`s annual rise of 7.57%, government data showed on Friday, 9 May 2008. The rate was the highest since an annual reading of 7.68% on 13 November 2004. The WPI remained above the 7%-mark (significantly above RBI`s revised target of 5.5% for the year) for the past four weeks.

Meanwhile, the Left parties may reportedly issue another warning soon to the ruling United Progressive Alliance (UPA) government following the failure of the government to stem burgeoning prices and its efforts to operationalise the Indo-US nuclear deal. The Left parties are slated to meet on 23 May 2008, six days ahead of their ninth round of deliberations with the UPA on the nuclear issue.

US light crude for June delivery rose 18 cents to $126.14 a barrel today, 12 May 2008, as violence in the Middle East heightened worries of supply disruptions in the world`s largest crude producing region. It had struck a record high of $126.27 in late trade on Friday, 9 May 2008.

US markets slumped on Friday, 9 May 2008, as American International Group Inc (AIG)the world`s largest insurer, reported huge losses while crude oil surged to a new high. The Dow Jones industrial average slipped 120.90 points at 12745.88 and the Nasdaq Composite declined 5.72 points at 2445.52. The S&P 500 index shed 9.40 points to 1,388.28.

As per provisional data, foreign funds sold shares worth a net Rs 619.34 crore on Friday 9 May 2008. Domestic funds bought shares worth a net Rs 180.16 crore on that day.

Foreign institutional investors (FIIs) were net buyers of Rs 122.49 crore in the futures & options segment on Friday, 9 May 2008. They were net sellers of index futures to the tune of Rs 484.85 crore and bought index options worth Rs 725.67 crore. They were net sellers of stock futures to the tune of Rs 85.18 crore and sold stock options worth Rs 33.15 crore.

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