Sensex adds 2.5% on Asian rally, oil price fall
The market staged a solid rebound today as Tuesday’s huge 268 point fall gave way to a 292 points surge today. Strong Q4 results by car major Maruti, a recovery in Asian markets and fall in oil price after a recent record high, boosted the market. It was the biggest rise in the Sensex since 17 April 2006. On that day, Sensex had risen 302 points following strong guidance for FY 2007 by IT bellwether Infosys Technologies, heartwarming Q3 March 2006 results by Gujarat Ambuja Cements (GACL) and strong Q4 numbers of HDFC Bank. That was also the day when the market had staged a rebound after a sharp fall.
Auto, cement, metal, IT and FMCG stocks led the rally. Shares of firms sitting on large real estate and real estate developers extended their recent surge. Select side-counters surged with some stock boosted by strong news flow which in some cases included strong Q4 results.
Side-counters Bombay Rayon, Investment & Precision Castings, Thomas Cook, Tricom India, Amruntajan, RCF, Vibra Auto, Finolex Industries, Bata India, DCW, Subros, Pratibha Industries, Shyam Telecom, Indiabulls, Mahindra Gesco Developers, Spanco Telesystems, TRF, Elder Pharma, Opto Circuit, Kirloskar Oil Engines, Madras Aluminium, Orient Paper, Ashapura, and Gangotri Textiles rose between 10-20% for the day.
The 30-share BSE Sensex jumped 292.75 points (2.5%) to settle at 11,938.53. The S&P CNX Nifty gained 93.10 points (2.69%) to 3,555.75.
Key indices in Asian markets like Hong Kong, Japan, South Korea, Australia, Singapore and Taiwan were up between 0.5-1.5%.
BSE clocked a turnover of Rs 4,519 crore compared to Tuesday’s Rs 4,588 crore.
Heavy FII sales, increase in margins by stock exchanges, and high oil prices had caused a huge 383.52 points fall in the Sensex, in the past two trading sessions between 24-25 April. Stock exchanges have raised margins in both cash and the futures segment and the higher margins come into force from 28 April. `Strong domestic liquidity has triggered a solid rebound even as concerns about high oil prices, rising interest rates, uncertainty about the monsoon, and slowing FII inflows persist,' says Ajit Sanghvi, director, MSS Securities. The latest data showed that mutual funds bought shares worth a net Rs 217.43 crore on Tuesday 25 April – the day when the Sensex had tumbled 268 points. The cumulative inflow of mutual funds in equities in April 2006 has reached Rs 1,996 crore.
Over the past 4 years or so, the market has been on a bull run on the back of strong corporate earnings, a boom in India’s economy and an increase in the risk appetite of global investors.
The Q4 earnings season so far has been good with companies like ACC, Gujarat Ambuja Cement, Satyam Computer, TCS, Wipro, Infosys, HDFC Bank, Cipla and now Maruti Udyog reporting strong performance. What was also inspiring was a strong guidance of between 26-28% earnings growth for FY 2007 by Infosys.
Car major Maruti Udyog jumped 6.6% today to Rs 924.90 on stronger than expected Q4 results. A huge 12.5 lakh shares changed hands in the counter on BSE. Maruti Udyog has reported 39.1% growth in Q4 March 2006 net profit to Rs 360.92 crore (Rs 259.45 crore). If one takes into consideration a one-time expenditure, the net profit growth has exceeded market expectations. Net sales has risen 7.6% to Rs 3,277.01 crore (Rs 3,045.18 crore). Net sales growth has been in line with market expectations.
Maruti’s results boosted rival car maker Tata Motors (up 3.6% to Rs 950.75). Two-wheeler major Bajaj Auto rose 4% to Rs 2,950 and Hero Honda gained nearly 3% to Rs 850. Frontmonth US crude for June delivery was trading 14 cents (0.19 percent) lower, at $72.74 a barrel in Access electronic trading. On Tuesday in New York, it fell 45 cents. Crude oil prices fell after US president George Bush suspended deliveries to the US emergency reserve, to boost supply and counter near-record prices.
MTNL gained nearly 7% to Rs 216.40 after the company said it has decided to form a new entity to manage its real estate assets in a bid to give a fillip to its sagging bottomline. The stock rose on heavy volume of 45.3 lakh shares on BSE. MTNL reported a 56.6% fall in Q4 March 2006 net profit to Rs 140.27 crore (Rs 323.26 crore). Total income fell 3.8% to Rs 1,594.51 crore (Rs 1657.61 crore). MTNL expects 1,300 employees to retire as part of a third round of voluntary staff cuts.
Cipla jumped nearly 6% to Rs 262.20. As many as 14.2 lakh shares changed hands in the counter on BSE. IT reported 80.6% jump in Q4 March 2006 net profit from Rs 105.58 crore to Rs 190.77 crore. Net sales rose 62.7% to Rs 870.59 crore (Rs 534.98 crore). The company also received insurance claim of Rs 19.70 crore relating to losses on account of floods which is included in other income.
Cement shares staged a comeback after Tuesday’s correction. UltraTech Cement jumped 10% to Rs 863.15, ACC rose 4.8% to Rs 967, Grasim gained 3.4% to Rs 2,379 and Gujarat Ambuja Cements advanced 1.6% to Rs 119.
Steel shares surged on firm global prices. Tata Steel jumped 4.7% to Rs 6,520.50 and Sail rose 3% to Rs 84.45. Steel firms had raised prices in April on the back of firm global prices.
Basic metal makers rose tracking firm global copper and zinc prices which hovered at all-time highs. Sterlite Industries jumped 7% to Rs 2,445, Hindustan Zinc (HZL) rose 5.6% to Rs 948 and Hindalco advanced 3.5% to Rs 213. HZL got boost from reports that the company had raised zinc prices by a steep Rs 10,200 per tonne.
Oil exploration major ONGC (up 4.5% to Rs 1,383) firmed up. Index heavyweight Reliance Industries rose 2.5% to Rs 977 even as the company denied rumours that it may consider a bonus and stock split.
IT stocks rose on bargain hunting after a recent fall. Wipro jumped 4.5% to Rs 550, Infosys rose 2.4% to Rs 3,222 and Satyam Computer advanced 1.6% to Rs 775.
R Systems International settled at Rs 249.75, below the IPO price of Rs 250. A massive 60.1 lakh shares changed hands in the counter on BSE.
Companies sitting on large real estate like RCF (up 20% to Rs 48.10), Bata India (up 16% to Rs 279), Bombay Dyeing (up 8% to Rs 761), surged. Companies involved in real estate development Mahindra Gesco Developers (up 12% to Rs 774) and Morarjee Realities (up 5% to Rs 920), too, surged.
Siemens gained 3.8% to Rs 5,782 on the back of surge in Q2 March 2006 net profit. Siemens’ Q2 March 2006 net profit has risen 48.4% to Rs 117.82 crore (Rs 79.37 crore). Net sales/operating income has jumped 57.6% to Rs 1,133.43 crore (Rs 719.05 crore). Investment & Precision Castings jumped 20% to Rs 1,014.40 after the company’s board declared a liberal 3:1 bonus.