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Sensex spurts 879 points as Sebi gives partial relief to FIIs on p-notes

Tuesday, October 23, 2007

The market spurted today after the market regulator Securities Exchange Board of India, after trading hours on Monday, 22 October 2007, provided partial breather to FIIs with respect to proposed restrictions on use of participatory notes and said it would speed up regulatory clearance for foreigners keen to invest transparently.

Television media reports in mid-afternoon trade that the market regulator Securities & Exchange Board of India (Sebi) has cleared proposals allowing foreign individual investors to invest on Indian bourses aided the surge in the second half of the trading session. The minimum networth criteria for a foreign individual investor, who intends to invest directly is set at $50 million, television reports suggest.

Index pivotals led by Reliance Industries were in strong demand on value buying after the recent fall. Short covering may also have propelled blue chips. Asian and European markets were trading firm today, 23 October 2007.

The BSE 30-share Sensex posted its biggest ever single day point gain of 878.85 points or 4.99% at 18,492.84. It opened 296.31 points higher at 17,910.30 and kept on cruising ahead during the course of the day as buying intensified. It struck an intra-day high of 18,542.41 in late trade. The Sensex’s previous biggest single day point gain was on 9 October 2007, when it had risen 788.85 points or 4.51% at 18,280.24.

From a recent intra-day low of 17,171.45, touched yesterday, 22 October 2007, the Sensex has surged 1321.39 points at current 18,492.84. It is now 705.82 points away from all-time high of 19,198.66 struck on 18 October 2007.

The broader based S&P CNX Nifty jumped 289.70 points, or 5.59%, to 5,473.70. The Nifty October 2007 futures settled at 5473.20, a slight discount of 0.50 points as compared to spot closing.

Volatility is expected to remain high in the coming few days ahead of expiry of October 2007 derivatives contracts on Thursday, 25 October 2007. Also RBI’s mid-term review of annual policy due on 30 October 2007, and US federal reserve’s meeting on 31 October 2007, on interest rates will be key events that will drive the market.

After market hours on Monday, 22 October 2007, Securities & Exchange board of India (Sebi) Chairman, M Damodaran said that proprietary sub-accounts (through which FIIs handle participatory notes) wishing to apply for FII status must send Sebi their letter of intent within 24 hours indicating their intent. The application itself must be submitted within a week’s time. Although Sebi will go ahead with its proposed restrictions on FII investments through participatory notes, p-notes as instrument are here to stay, provided the anonymity behind them is lifted.

Damodaran further added that currently there is no limit to the number of sub-accounts that may register for FII status. As of now, Sebi is comfortable with the numbers, at present 3000-plus. The Sebi board meets on 25 October 2007 to finalise the proposals. The Sebi chief said an expert panel is working on PNs based on derivatives and that its recommendations along with FII registration norms, would be announced after Sebi's 25 October 2007 board meeting.

After trading hours on Tuesday, 16 October 2007, Sebi issued draft proposals wherein the market regulator proposed restriction on use of the popular participatory notes (PNs) route of FII inflow and it also recommended unwinding of some PNs within 18 months. PNs are financial instruments used by foreign investors that are not registered with Sebi, to invest in Indian shares. FIIs and their sub-accounts buy Indian securities and then issue PNs to foreign investors with these securities as the underlying.

The Sebi chairman was slated to meet domestic brokerage houses at 16:00 IST today, 23 October 2007 to clarify the regulator's position on participatory notes and discuss developments in the equity markets.

The BSE Mid-Cap index was up 4.03% to 7,556.24 and the BSE Small-Cap index gained 3.21% to 9,135.72. Both these indices underperformed the Sensex.

Sectoral indices on BSE posted strong gains. Bankex (up 5.91% to 9,563.11), BSE Capital Goods Index (up 7.76% at 16,777.18), BSE Oil and Gas Index (up 6.55% at 10,740.52), BSE Metal Index (up 6.65% at 15,392.29), BSE PSU index (up 7.01% to 8,751.49), and BSE BSE Realty (up 6.38% to 9,568.03), outperformed the Sensex.

BSE Health Care Index (up 3.28% at 3,852.38), BSE Consumer Durables index (up 3.64% to 4,976.47), BSE FMCG Index (up 4.08% at 2,128.44), BSE Auto Index (up 2.86% at 5,452.59), BSE IT Index (up 0.34% at 4,634.88), BSE TecK index (up 3.04% to 3,974.25), were underperformers.

Among the 30-member Sensex pack, 26 advanced while only 4 of them slipped. The market breadth was strong on BSE: 2057 scrips advanced as compared to 657 that declined while 54 remained unchanged.

The total turnover on BSE amounted to Rs 7390 crore as against Rs 7,545.65 crore on Monday, 22 October 2007. The NSE F&O turnover rose to Rs 97393.15 crore, as compared to Rs 71454.2 crore on Monday, 22 October 2007.

India's largest private sector entity by market capitalisation and oil refiner Reliance Industries (RIL) galloped 7.52% to Rs 2595 on 11.59 lakh shares. As a part of a restructuring exercise, RIL has reportedly decided to hive off Reliance Fresh into a separate company, Ranger Farm, for single point accountability. Reliance Fresh sells food, fruits and vegetables and consumer products.

Battered Reliance Energy and Bharti Airtel made a strong comeback. Reliance Energy, the country’s second largest power utility company in terms of sales surged 12.28% to Rs 1538.25 on 26.78 lakh shares. The stock gained on value buying after it had plunged 28.06% to Rs 1370 in past one week to 22 October 2007. It was the top gainer from Sensex pack.

India’s largest listed cellular services provider by sales, Bharti Airtel gained 7.08% to Rs 993. The stock had slipped 16.41% to Rs 927.65 in the past one week to 22 October 2007, hit by on concerns that the launch of nationwide GSM services by rival Reliance Communications would eat into its market share.

Meanwhile Reliance Communications rose 4.80% to Rs 755. On Friday, 19 October 2007, it got nod to launch nationwide GSM-based cellular services from Department of Telecom (DoT).

Capital Goods shares dominated gainers on fresh buying, in anticipation of strong set of Q2 September 2007 results from them. India’s largest engineering company by sales, Bharat Heavy Electricals (Bhel) jumped 11.82% to Rs 2300. Bhel said on Monday, 22 October 2007, that due to some unavoidable circumstances, the meeting of its board of directors to consider Q2 September 2007 results, scheduled to be held on 25 October 2007 has been postponed to 29 October 2007.

Larsen & Toubro (L&T), the nation's largest engineering and construction company by sales, surged 7.69% to Rs 3336. On 18 October 2007, L&T said it won four orders worth Rs 452 crore for projects in Andhra Pradesh

Other capital goods stocks, Astra Microwave (up 17.60% to Rs 135), Punj Lloyd (up 13.37% to Rs 387.55), and Bharat Bijlee (up 10.08% to Rs 3055), also surged

India’s largest oil exploration company in terms of market capitalisation Oil and Natural Gas Corporation rose 4.28% to Rs 1144.80. As per reports, its joint venture firm ONGC-Mittal Energy had acquired a 30% participating interest in an exploration block in the Caspian Sea, Turkmenistan.

NTPC (up 9.36% to Rs 218.40), Hindustan unilever (up 4.15% to Rs 215), Cipla (up 7.30% to Rs 193.40), and Tata Steel (up 6.97% to Rs 895.70), were the other gainers from Sensex pack.

Banking heavyweights ICICI Bank (up 3.36% to Rs 1098), HDFC Bank (up 6.75% to Rs 1465), and State Bank of India (up 5.27% to Rs 1803), also rallied

India’s largest pharma company by sales, Ranbaxy Laboratories (RLL) gained 2.26% to Rs 425. Ranbaxy announced during trading hours on Monday, 22 October 2007, that it has received approval in Canada to manufacture and market Ran-Lisinopril 5, 10 and 20 mili gram oral tablets from Health Canada, Therapeutic Products Directorate (TPD). Lisinopril is indicated for the treatment of hypertension.

IT pivotals underperformed the market. India’s top software services exporter TCS lost 0.98% to Rs 1063.90 on 4.49 lakh shares. It was the top loser from Sensex pack.

Infosys (down 0.38% to Rs 1879.55), and Wipro (down 0.56% to Rs 492) underperformed the market. The Indian rupee firmed against the dollar. It was hovering at 39.64, as compared to yesterday’s (22 October 2007) close of 39.88.

India’s fourth largest software services exporter Satyam Computer Services gained 3.49% to Rs 464.10 after hitting day’s high of Rs 469. Its net profit rose 7.19% to Rs 417.15 crore on 10.75% rise in sales to Rs 1948.24 crore in Q2 September 2007 over Q1 June 2006. The company declared the results before market hours today, 23 October 2007. The company revised upwards earnings as well revenue guidance for FY 2008 (year ending 31 March 2008), both in rupee terms and dollar terms.

Satyam Computer Services signed an agreement with Fujitsu Services to provide IT services to Reuters as part of a 10-year, $1 billion internal information systems transformation programme. It also announced that entering into a definitive agreement to acquire 100% stake in Nitor Global Solutions ("NITOR") of the UK, a niche consulting firm providing Infrastructure Management Services (IMS), for up to British pound (GBP) 2.76 million ($ 5.5 million) in cash.

Among side counters, IVRCL Infrastructures (up 14.86% to Rs 506), Bank of India (up 23.79% to Rs 318.70), Hercules Hoists (up 20% to Rs 4318.85), Reliance Capital (up 15.84% to Rs 1768.15), and Mercator Lines (up 15.83% to Rs 98.40), surged

Unitech was the top traded counter on BSE with turnover of Rs 446.85 crore. The stock soared 10.71% to Rs 339 after a block deal of 12.40 lakh shares was executed on the counter at 10:07 IST on BSE at Rs 321 per share.

United Breweries was the third most traded counter on BSE with turnover of Rs 371.06 crore. It jumped 13.29% to Rs 394.80 after a three block deals of 34.74 lakh shares each were struck on the counter in opening trade on BSE at an average price of Rs 354 per share.

Reliance Energy (Rs 396.23 crore), Reliance Industries (Rs 295.69 crore) and Reliance Capital (Rs 235.49 crore) were the other turnover toppers on BSE in that order.

Reliance Natural Resources topped volumes chart with total volume of 1.81 crore shares on BSE followed by Power Grid Corporation of India (1.63 crore shares), Unitech (1.39 crore shares), and Tata Teleservices (Maharashtra) (1.26 crore shares) in that order.

Suzlon Energy soared 10.41% to Rs 1750 after it reported 40.27% rise in net profit to Rs 355.58 crore on 32.39% rise in total income to Rs 1,718.73 crore in Q2 September 2007 over Q2 September 2006. The company made this announcement during the market hours today, 23 October 2007. The company also said that board of directors has proposed stock split of face value of Rs 10 to face value of Rs 2. The company’s order book position stands at Rs 16,328.04 crore comprising of Rs 1988.88 crore of domestic orders and Rs 14,339.16 crore of export orders.

MMTC jumped 5% to Rs 28,754.55 on reports that the company has received nod to set up a commodity exchange.

Triveni Engineering rose 3.13% to Rs 116.80 on reports it has struck a strategic alliance with General Electric (GE) to enter the domestic market for high-speed compressors which are used in the oil & gas sector.

Kotak Mahindra Bank moved up 13.21% to Rs 949.80. It will declare Q2 September 2007 result on 26 October 2007.

Micro Inks surged 15.27% to Rs 408 after it posted net profit of Rs 18.66 crore in Q3 September 2007 compared to a net loss of Rs 7.41 crore in Q3 September 2006. Total income rose 25.63% to Rs 298.09 crore in Q3 September 2007 over Q3 September 2006.

MTNL flared up 2.16% to Rs 180, after its ADR jumped 10.21% to $8.85. VSNL rose 3.80% to Rs 528.50 after its ADR gained 5.73% to $25.30

Rajesh Exports rose 2.56% to Rs 913 after its board of directors at its meeting held on 22 October 2007, decided to issue 2 bonus shares for every 1 share held by the shareholders. The board has also considered stock split of Rs 2 each to Re 1 each.

National Aluminium Company rose 2.18% to Rs 286 on reports it plans to build a Rs 15000 crore smelter in South Africa to benefit from low-cost electricity.

Reliance Industrial Infrastructure was locked at lower limit of 5% at Rs 2753.85 after hitting upper circuits for continuous 28 trading sessions in a row. The scrip had touched a high of Rs 3043.65 today, its all time high.

Cambridge Solutions jumped 7.12% to Rs 91 after the company said its board would meet on 30 October 2007 to consider the merger of MatrixOne India and demerger of Cambridge Integrated Services. MatrixOne India, a wholly owned subsidiary of Cambridge Solutions is presently engaged in computer software development and related services.

LIC Housing Finance vaulted 20.50% to Rs 272.50. It reported 53.25% rise in net profit to Rs 116.37 crore on 36.84% rise in total income to Rs 526.58 crore in Q2 September 2007 over Q2 September 2006. The results hit the market during trading hours yesterday, 22 October 2007

GTL gained 3.39% to Rs 249.50. It reported 494.63% spurt in net profit to Rs 45.43 crore on 145.89% rise in sales to Rs 357.92 crore in Q2 September 2007 over Q2 September 2006. The company announced the results during the market hours today, 22 October 2007.

India Infoline jumped 7.32% to Rs 943. Its board yesterday, 22 October 2007 approved raising foreign fund investment limit to 100% of the company’s paid-up capital.

BASF India rose 6.17% to Rs 248.70 on reporting 18.26% rise in net profit to Rs 24.09 crore on 16.71% rise in total income to Rs 256.49 crore in Q2 September 2007 over Q2 September 2006. The company announced the results during the market hours today, 23 October 2007.

Meanwhile, under pressure from the Left parties to make clear whether the Indo-US nuclear deal is on or off, government on Monday, 22 October 2007, after market hours said the operationalisation of the deal will take place in accordance with the UPA-Left committee's findings. External Affairs Minister Pranab Mukherjee made this clear after a meeting between leaders of the Left parties and the UPA coalition formed to go into the concerns of the allies on the nuclear deal. The committee would meet again on 16 November 2007.

European markets were trading higher today, 22 October 2007. Key benchmark indices in United Kingdom (up 1.05% to 6,527), France (up 0.64% to 5,697.75) and Germany (up 0.43% to 7,828.74) moved up.

Asian markets were higher today, 23 October 2007. Hang Seng (up 3.54% at 29,376.86), Taiwan's Taiwan Weighted (up 1.51% at 9,501.89), Nikkei (up 0.07% at 16,450.58), South Korea's Seoul Composite (up 2.32% at 1,947.98) and Singapore's Straits Times (up 1.45% at 3,695.98) edged higher.

US markets ended higher yesterday, 22 October 2007, as investors overcame some of their nervousness about the credit markets and uneven earnings and found solace in the technology sector. The Dow Jones Industrial Average gained 44.95 points, or 0.33%, to 13,566.97. The S&P 500 index rose 5.70 points, or 0.38%, to 1,506.33, while the technology-dominated Nasdaq Composite Index rose 28.77 points, or 1.06%, to 2,753.93.

Crude oil prices fell on Tuesday, 23 October 2007, extending a sell-off from record highs on concerns about the state of the US economy. US light crude for December 2007 delivery fell 26 cents to $85.76 a barrel. Oil has retraced over $4 since hitting a record-high of $90.07 on Friday, 19 October 2007. London Brent crude fell 36 cents to $82.91 a barrel.

Posted by FR at 10:43 PM  

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Investment in equity shares has its own risks. Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that we consider reliable. I, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and I am not responsible for any loss incurred based upon it.& take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations given in this blog.