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Sensex, Nifty settle near 1-1/2-week highs on Europe optimism

1. Trading for the week started on a firm note, with key benchmark indices reaching their highest closing level in nearly 1-1/2 week as global stocks surged driven by renewed optimism that European officials were poised to take action to alleviate debt crisis wreaking havoc in the euro zone. The barometer index, BSE Sensex, regained the psychological 16,000 mark. The Sensex jumped 471.70 points or 3.01%, off close to 20 points from the day's high and up about 280 points from the day's low. All the 13 sectoral indices on BSE were in green. The market breadth was strong.
2. The Sensex has lost 1,537.88 points or 8.68% this month so far. The Sensex has slumped 4,341.96 points or 21.17% in calendar 2011. From a 52-week high of 20,664.80 on 3 January 2011, the Sensex has lost 4,497.67 points or 21.76%. From a 52-week low of 15,478.69 on 23 November 2011, the Sensex has risen 688.44 points or 4.44%.
3. Coming back to today's trade, strength in many global commodities amid hope for progress in Europe helped boost metal shares. Interest rate sensitive banking, auto and realty shares rose after the latest data showed easing of food inflation. Bike makers dropped. Shares of organized retailers fell after leaders of many states said they were opposed to foreign giants setting mega stores. Index heavyweight Reliance Industries (RIL) jumped almost 4%.
4. The market opened on a firm note as Asian stocks surged. The Sensex and the 50-unit S&P CNX Nifty hit their highest level in nearly one week. The market pared gains after hitting fresh intraday high in morning trade. Key benchmark indices were off highs in early afternoon trade as index heavyweight L&T reversed initial gains. Key benchmark indices hit fresh intraday highs in afternoon trade as index heavyweight Reliance Industries (RIL) extended initial gains. The market surged to fresh intraday high in mid-afternoon trade. The Nifty hit a one-week high in late trade.
5. The BSE Sensex jumped 471.70 points or 3.01% to settle at 16,167.13, its highest closing level since 18 November 2011. The index surged 491.25 points at the day's high of 16,186.68 in late trade. The index rose 192.85 points at the day's low of 15,888.28 in early trade.
6. The S&P CNX Nifty jumped 141.25 points or 3% to settle at 4,851.30, its highest closing level since 18 November 2011. The Nifty hit a high of 4,859.10 in intraday trade. The index hit a low of 4,766.40 in intraday trade.
7. The BSE Mid-Cap index rose 1.5% and the BSE Small-Cap index gained 1.72%. Both these indices underperformed the Sensex.
8. BSE clocked turnover of Rs 1902 crore, lower than Rs 2161.33 crore on Friday, 25 November 2011.
9. The market breadth, indicating the overall health of the market, was strong. On BSE, 1,922 shares gained and 879 shares fell. A total of 76 shares were unchanged.
10. From the 30-member Sensex pack, 28 stocks gained and only two fell.
11. GAIL (India) rose 1.28% after the Bombay Stock Exchange (BSE) said it has decided to include GAIL (India) in the barometer index, BSE Sensex, with effective from 9 January 2012. GAIL India will replace Jaiprakash Associates in the Sensex. Shares of Jaiprakash Associates jumped 5.27%.
12. Index heavyweight Reliance Industries (RIL) gained 3.85%. RIL and its associate Reliance Industrial Infrastructure (RIIL) said on Friday, 25 November 2011, that negotiations on contemplated acquisitions by RIL and RIIL of Bharti's 74% shareholding in Bharti AXA Life Insurance Company and Bharti AXA General Insurance Company were jointly terminated as parties were unable to reach agreement on the long-term vision and joint governance of the ventures with AXA. Reliance had said in June that it would buy out Bharti's stakes in joint ventures with France's AXA as it sought to build on moves beyond its core energy business. Shares of RIIL rose 2.45%.
13. Bharti Enterprises, which controls leading Indian telecoms firm Bharti Airtel, had set up the ventures -- Bharti AXA Life Insurance and Bharti AXA General Insurance -- with AXA, Europe's second biggest insurer, in 2006. Shares of Bharti Airtel gained 3.55%.
14. Shares of organized retailers fell after leaders of many states said they were opposed to foreign giants setting mega stores. Pantaloon Retail India, Trent, Koutons Retail, V2 Retail, Provogue (India), Store One Retail and Shoppers Stop shed by between 3.19% to 9.96%. Shares of retailers had surged on Friday, 25 November 2011, after the Union Cabinet on Thursday, 24 November 2011, cleared a proposal to allow 51% foreign direct investment (FDI) in multi-brand retail and increase in FDI in single brand retail to 100% from current 51%.
15. To set up shop, foreign retailers must get a green light from the government of the state where they want to do business. The leaders of the states of Tamil Nadu, Uttar Pradesh, Kerala, Orissa and West Bengal have all publicly opposed the government's move to let foreign retailers own up to 51% of supermarkets and 100% of single-brand stores. A newspaper report suggested that 28 of the 53 cities where retailers could set up under the new rules are in states controlled by political parties opposed to the regulations.
16. Nevertheless, the move to liberalize FDI norm in retails signals that the Indian government, after years of prevaricating over allowing greater foreign investment in several sectors, is now serious about attracting overseas funds. Foreign direct investment in India dropped 28% to $29.4 billion in the year ended 31 March 2011 as the country's economic forecast clouded. Further opening the retail market--and the message that sends about the government's willingness to introduce reforms--might help kick-start the economy and shore up faltering investor sentiment.
17. Foreign supermarkets wanting to set up shop in India will have to source 30% of their produce from local, small industries, a government statement said on Monday, 28 November 2011. Last Friday, a government statement had said supermarkets could not be forced to source their wares from Indian industries as such a policy would not be compliant with guidelines from the World Trade Organisation (WTO).
18. Capital goods stocks gained for the second straight day on bargain hunting after recent steep slide. India's largest power equipment maker by sales Bhel rose 4.04% to Rs 280.75, after jumping 3.45% on Friday, 25 November 2011. The stock had hit a 52-week low of Rs 246.20 in intraday trade on Thursday, 24 November 2011.
19. India's largest engineering and construction firm by order book L&T gained 1.07% to Rs 1279.30, after jumping 3.4% on Friday, 25 November 2011. The stock had hit 52-week low of Rs 1175 in intraday trade on Thursday, 24 November 2011.
20. Interest rate sensitive auto shares rose after the latest data showed easing of food inflation. Purchases of automobiles, including that of cars, utility vehicles and commercial vehicles are substantially driven by financing. Reports that petrol prices are likely to fall by up to Re 1 per litre this week, on account of the declining trend in international prices, also aided gains in auto stocks.
21. India's largest truck maker by sales Tata Motors jumped 5.36%. India's largest small car maker by sales Maruti Suzuki India rose 2.05%. India's largest tractor maker by sales Mahindra & Mahindra (M&M) gained 1.04%.
22. But, bike makers declined. India's largest motorcycle maker by sales Bajaj Auto declined 1.69%. India's largest motorcycle maker by sales Hero MotoCorp fell 0.69%.
23. Interest rate sensitive realty shares rose for the third day in a row after the latest data showed easing of food inflation. Another trigger for the recent rally in realty shares was the government's decision to liberalize foreign investment rules in retail sector. A likely debut of foreign retail giants like Carrefour, Walmart and Tesco, among others, in India's organised retail space, could throw open a big opportunity for domestic real estate developers. DLF, HDIL, Indiabulls Real Estate, and Unitech rose by between 2.67% to 5.47%.
24. FMCG stocks gained in a firm market. Dabur India, Nestle India, Hindustan Unilever, Marico, ITC and United Spirits rose by between 0.03% to 2.29%.
25. Strength in many global commodities amid hope for progress in Europe helped boost metal and mining shares. Jindal Saw, Hindustan Zinc, JSW Steel, Nalco, Jindal Steel & Power, Hindalco Industries, Sterlite Industries, and Tata Steel rose by between 2.9% to 9.72%.
26. Steel Authority of India (Sail) rose 4.08% on report the firm is in talks with two or three possible targets in Australia and New Zealand to secure overseas sources of coking coal necessary to fire its furnaces.
27. Interest rate sensitive banking shares gained after the latest data showed that inflation eased in the year through 12 November 2011. India's largest private sector bank by net profit ICICI Bank rose 4.28% to Rs 750.20. The stock had slipped to a 52-week low of Rs 710.50 in intraday trade on Wednesday, 23 November 2011. India's second largest private sector bank by net profit HDFC Bank rose 2.16%.
28. India's largest bank by net profit and branch network State Bank of India (SBI) rose 5.1% to Rs 1776.90. The stock had hit a 52-week low of Rs 1629.10 in intraday trade on Thursday, 24 November 2011.
29. Among other banking stocks, IDBI Bank, Kotak Mahindra Bank, IndusInd Bank, Yes Bank, Federal Bank, Canara Bank, Bank of India, Bank of Baroda, Union Bank of India, Axis Bank and Punjab National Bank rose by 1.64% to 4.54%.
30. Cement shares surged ahead of announcement of monthly sales data for November 2011 starting later this week. Ambuja Cements, India Cements, UltraTech Cement, and ACC rose by between 2.01% to 6.53%.
31. Construction shares surged on renewed buying. Unity Infraprojects, Patel Engineering, Nagarjuna Construction Company, and Hindustan Construction Company, rose by between 5.85% to 10%.
32. Pharma stocks extended recent gains triggered by good Q2 results. Pfizer, Lupin, Dr Reddy's Laboratories, Cipla and Sun Pharmaceutical Industries rose by between 0.18% and 4.49%.
33. IT stocks rose after reports suggested that Thanksgiving weekend retail sales in the US were strong. Reports of European and international measures to get a grip on euro-zone debt crisis also aided gains in IT stocks. Europe is the second biggest outsourcing market for Indian software exporters after the US. India's second largest software services exporter by revenue Infosys gained 1.64%. India's third largest software services exporter Wipro rose 0.92%.
34. India's largest software services exporter TCS gained 2.46%. Tata group holding firm, Tata Sons, on Wednesday, 23 November 2011, named Cyrus Pallonji Mistry as the successor to Tata Group Chairman Ratan Tata.
35. Oil exploration shares rose as crude oil prices gained. India's biggest state-run oil exploration firm by revenue Oil & Natural Gas Corporation (ONGC) rose 3.89%. Cairn India rose 2.57%. India's second biggest oil and gas exploration firm by revenue, Oil India, rose 0.26%. Higher crude oil prices would result in higher realizations from crude sales for oil exploration firms.
36. Shares of offshore oil services providers gained as oil prices rose. Aban Offshore, Dolphin Offshore, Jindal Drilling, SEAMEC, Great Offshore and Deep Industries gained by between 0.37% to 6.75%.
37. Oil climbed for a second day today, 28 November 2011, on speculation that Europe's steps to tame its debt crisis may sustain demand and sanctions against Syria will threaten Middle East stability. Crude oil for January 2012 delivery advanced as much as $3.79 to $100.56 a barrel in Asian electronic trading today, 28 November 2011. Oil had risen 60 cents to $96.77 on Friday, 25 November 2011.
38. Suzlon Energy clocked highest volume of 57.15 lakh shares on BSE. Sujana Towers (47.07 lakh shares), Educomp Solutions (35.71 lakh shares), Cals Refineries (34.31 lakh shares) and Tata Motors (30.26 lakh shares) were the other volume toppers in that order.
39. SBI clocked highest turnover of Rs 110.11 crore on BSE. Educomp Solutions (Rs 77.65 crore), Infosys (Rs 63.80 crore), Tata Motors (Rs 54.78 crore) and RIL (Rs 52.63 crore) were the other turnover toppers in that order.
40. A latest government statement in parliament dashed hopes of a relief in securities transaction tax (STT). Junior finance minister S.S. Palanimanickam on Wednesday, 23 November 2011, said the government has no proposal to lower the securities transaction tax (STT). There has been a speculation that the government will reduce STT in Union Budget 2012-2013 in a bid to revive sagging volumes on the bourses. Palanimanickam said in a written reply to Rajya Sabha that the securities transaction tax receipts had declined by around 18% to Rs 2960 crore during the first six months in the current fiscal year from a year ago period.
41. Corporate earnings have been weak. The combined net profit of a total of 3,897 companies declined 36.3% to Rs 67112 crore on 20.5% growth in sales to Rs 1143432 crore in Q2 September 2011 over Q2 September 2010.
42. On the macro front, the government unveils Q2 September 2011 gross domestic product (GDP) data on Wednesday, 30 November 2011. The GDP is seen rising 6.9% in Q2 September 2011 as per median estimate of a total of 14 economists polled by Capital Market. The economy expanded 7.7% in Q1 June 2011 from a year earlier, helped by strong growth in the services sector. The GDP is seen rising 7.3% in the fiscal year through March 2012 (FY 2012) as per median estimate of the poll.
43. Both the houses of parliament were adjourned till tomorrow, 29 November 2011, as a consequence of the stand-off between the opposition and the government over the latter's decision to increase Foreign Direct Investment or FDI in the retail sector. The opposition wants to discuss the government's decision under an adjournment motion -- which would end with a vote. The government has rejected this -- it wants a debate, but no vote.
44. Uproar in parliament on Friday, 25 November 2011, over the cabinet's decision to open up the retail market to global supermarket chains forced Trade Minister Anand Sharma to announce the details of the new FDI policy at a press conference instead of the government's plan of announcing the same in parliament on that day. Sharma said the "India-specific" scheme would create tens of millions of jobs. The proposal sets a minimum investment limit of $100 million per chain -- 50% to go on developing rural infrastructure and establishing a cold-chain system -- and 50% on front-end retailing, or stores. The multi-brand retailers will be permitted only in cities with a population of one million or more.
45. Trinamool Congress cabinet member and Railway Minister Dinesh Trivedi had said he had registered his dissent at the cabinet meeting on Thursday but was overruled.
46. The first week of the winter session was washed out last week without any business being transacted. Besides FDI in retail, the opposition was also out with their blazing guns to attack the government on the issue of price rise and corruption. Parliament did not run on the first three days of the session due to protests over rising prices and the demand of separate statehood for Telangana region in Andhra Pradesh. The winter session concludes on 21 December 2011.
47. The Union Cabinet on Thursday, 24 November 2011, approved the long-awaited Companies Bill that will completely recast the key provisions of the decades-old Companies Act 1956. Following Cabinet clearance, it is now likely to be taken up for consideration and passage in the ongoing winter session of Parliament. The Bill suggests that profit-making companies above a certain threshold will have to spend at least 2% of the average profits in the preceding three years on corporate social responsibility (CSR) activities and make a disclosure to shareholders about the policy adopted in the process.
48. The government diluted the provision after stiff opposition from the industry and decided not to make 2% CSR spend mandatory. The Bill also seeks to provide for class action suits and a fixed term for independent directors. Among other things, it proposes to tighten laws for raising money from the public. The Bill also seeks to prohibit any insider trading by company directors or key managerial personnel by treating such activities as a criminal offence. The Bill will give more powers to the Serious Frauds Investigation Office.
49. Food price index rose 9.01% and the fuel price index climbed 15.49% in the year to 12 November 2011, government data on Thursday, 24 November 2011, showed. In the previous week, annual food and fuel inflation stood at 10.63% and 15.49%, respectively. The primary articles price index was up 9.08%, compared with an annual rise of 10.39% a week earlier.
50. Monetary policy has a limited role in curbing food price pressures in India but such action may still be warranted if high food inflation persists, the central bank governor said Tuesday, 22 November 2011. "A lasting solution to food price pressures lies in a supply response that raises agricultural production and productivity, improves supply chain management and sets the right incentive framework for both producers and consumers," D Subbarao said, according to a copy of his speech at a conference released by the Reserve Bank of India.
51. Subbarao said that the supply measures taken to meet the growing demand for protein-rich foods have been inadequate. Food prices have been hovering at their highest levels in several months due to sustained demand from the growing middle class that is increasingly consuming more of high-protein diets like milk, fish and meats, offsetting price decline in other commodities.
52. 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.
53. European stocks surged on Monday, 28 November 2011, with banks in the lead after a series of media reports pointed to European leaders making progress in addressing the euro-zone debt crisis, though Moody's Investors Service came out with a fresh warning on the crisis. Key benchmark indices in France, Germany and UK rose by between 2.06% to 3.69%.
54. Euro-zone finance ministers are expected to agree on draft operational rules for the so-called bailout fund for the region, the European Financial Stability Facility, reports said. The coming week is an important one for European bond issuance, with Belgium, Italy, Spain and France all on course to issue up to a combined total of 19.5 billion euros ($26 billion) in bonds this week, as well as another 9 billion to 9.5 billion euros in bills.
55. Moody's Investors Service said on Monday the rapid escalation of the euro zone sovereign and banking crisis is threatening the credit standing of all European sovereigns. "While Moody's central scenario remains that the euro area will be preserved without further widespread defaults, even this 'positive' scenario carries very negative rating implications in the interim period," the agency said in a report. Moody's also noted the political impetus to implement an effective resolution plan may only emerge after a series of shocks, which may lead to more countries losing access to market funding and requiring a support programme.
56. Asian shares jumped on Monday, 28 November 2011, with investors eyeing media reports that Germany and France have discussed plans to leverage the European Financial Stability Facility and are also seeking ways to deepen fiscal union. Markets were also gaining on media reports that the International Monetary Fund was considering bailout plans for Italy, which was reportedly denied by an IMF spokesperson. Key benchmark indices in China, Hong Kong, Japan, Indonesia, Singapore, South Korea and Taiwan were up by between 0.12% to 2.19%.
57. Trading in US index futures indicated that the Dow could gain 245 points at the opening bell on Monday, 28 November 2011. US stocks posted seven straight sessions of losses on Friday, 25 November 2011, ending the worst week in two months, as the lack of a credible solution to Europe's debt crisis kept investors away from risky assets. US markets were open only for half-day on Friday, 25 November 2011.