Large Caps Drive India

Elena
17 May, 2006
Mumbai

The Sensex opened up with a strong gain and closed up 3%. Early trade on Wednesday was boosted by strong Asian markets and metal prices. The Indian benchmark struck a last-minute high as trade intensified. The market saw a great degree of volatility, fluctuating some 276 points. Advancing stocks led decliners by a margin of 4 to 1.

[R]10:30 AM Sensex jumps on the Asian bandwagon.[/R]
Sensex in India rose 344.08 points, or 2.90%, to 12,217.81. BSE turnover came to $900 million or Rs 4,089 crore. The market breadth was heavily bullish as stocks from small to large caps soared. State Bank of India led the gainers, soaring whopping 8.28% to Rs 999.95 on a high volume of 0.6 million shares. Tata Steel jumped 7.50% to Rs 616, amidst market rumors that it will declare a rights bonus issue and acquire a minority stake in oversees coal mine. Bajaj Auto soared 5.10% to Rs 3,280 on talk of stock split or bonus announcement from the company. ONGC rose 6% to Rs 1,443 while ITC advanced 6% to Rs 205.50. Automotive stocks also gained. Hero Honda surged 5.30% to Rs 894 while the pivotal Reliance Industries (RIL) gained 4.42% to Rs 1,089.40. ITC gained 5.68% to Rs 205.50.

Metal stocks soared after a sharp decline over the past few days as product price stabilized on the London Metal Exchange. Mittal Steel clearance for its takeover of Arcelor also lifted metal stocks. Real estate stocks were also showered with attention. Shares of Mahindra Gesco Developers were up 20% to Rs 1,288.25 and Bombay Dyeing gained 17% to Rs 968.55. Reliance Industries was the most-traded stock, trailed by Tata Steel and Bombay Dyeing. Cipla declined 1.46% down to Rs 259 while Grasim shed 0.80% to Rs 2,165


[R]10:00AM Stocks opened in the negative on inflation worries.[/R]
U.S. stocks came under pressure at opening as downbeat consumer prices report outweighed robust profit growth for Hewlett-Packard. The economic data raised concerns about inflation and interest-rate increases as the Labor Department posted a bigger-than expected-increase in core consumer prices, rising by 0.3% in April, above economist estimates of an increase of 0.2%. Following the report, rate-sensitive utilities and banking stocks moved to the down side, contributing to the weakness shown by the broader markets. Bank of America Corp. ((BAC)) fell 1%, while JPMorgan Chase & Co. ((JPM)) lost 1.3% on the Nymex.

In corporate news, Hewlett-Packard Co. ((HPQ)) the No. 2 computer maker, was the sole gainer in the Dow industrials. The company’s shares advanced 4% after it posted 51% jump in quarterly profit. Applied Materials ((AMAT)) fell 1.5% after reporting higher quarterly profit, but disappointing outlook. In the first hour of trading, the Dow Jones industrial average fell 67.56, or 0.59%.The Standard & Poor''s 500 index was down 6.31, or 0.49%, and the Nasdaq composite index dropped 10.80, or 0.48%. Worries about higher interest rates weighed on bonds. The 10-year Treasury note climbed to 5.16% from 5.1% late Tuesday.


[R] 9:00AM Stock futures were set to open flat on inflation data.[/R]
U.S. stock futures pointed to a flat start of Wednesday session, with investors digesting consumer prices data, giving an indication about the pace of inflation. The Labor Department reported that prices rose in line with economist estimates, with consumer price index rising 0.6% in April following a 0.4% increase in March.

Tech stocks are expected to be in focus today as Hewlett-Packard reported 51% profit growth in Q2 on sales of more profitable types of PCs and printers and from stealing market share from its biggest rival in PCs. The company posted profit of $1.46 billion, or 51 cents a share, compared with $966 million, or 33 cents per share last year. Sales rose 5% to $22.6 billion from $21.6 billion last year. Excluding one-time expenses, the company earned $1.6 billion, or 54 cents per share, compared with a profit of $1.1 billion, or 37 cents per share, in the same period last year. Applied Materials Inc. reported a higher quarterly profit, citing revenue jump on demand for consumer electronics, such as digital music players and cell phones. A disappointing outlook dragged its shares down 3.4% to $17.25 on Inet. S&P 500 futures were up 1.8 points, just above fair value. Dow Jones industrial average futures rose 20 points, and Nasdaq 100 futures rose 4.75 points.

[R]Consumer prices rose in line with expectations.[/R]
The Department of Labor released its closely watched report on consumer prices in the month of April on Wednesday, showing that prices rose in line with economist estimates. At the same time, core prices rose more than expected. The Labor Department said that its consumer price index rose 0.6 percent in April following a 0.4 percent increase in March. The increase by the index came in line with economist estimates of a 0.6 percent increase. The acceleration in the pace of price growth compared to the previous month came as energy prices surged up 3.9 percent in April after rising 1.3 percent in March. The increase in energy prices also contributed to a 2.4 percent increase in transportation prices. The report also showed that the core consumer price index, which excludes food and energy prices, rose 0.3 percent for the second consecutive month. Economists had expected a more modest increase of about 0.2 percent.

Zale Corp ((ZLC)), fine jewelry retailer, reported Q3 net income advanced to 35 cents a share, up from 28 cents a share in the year earlier period. If not for items, net income was 24 cents a share. Revenue advanced 2.2% to $526.9 million. The company beat analysts’ estimates for net income of 21 cents a share.

Charming Shoppes Inc, ((CHRS)), retailer of women''s plus-size apparel, reported Q1 net income advanced 7% to 24 cents a share, up a penny from 23 cents in the year-ago period on 22% higher sales, matching analysts’ estimate. Sales advanced to $734.9 million from $603.3 million.

Retalix, ((RTLX)), enterprise-solutions provider, posted Q1 profit decrease of 35% to 8 cents a share, from a year ago on a higher tax rate despite 50% revenue growth to $50.7 million. The company added it expects its effective tax rate to decline at least to its normal rate in the Q2.

The Talbots Inc, ((TLB)), specialty apparel retailer, reported Q1 earnings of 51 cents a share, down from a profit of 63 cents a share year-ago. Q1 includes stock option expensing of 3 cents a share. Sales rose 1% in Q1 to $453 million from $446.5 million in the same period a year ago and same-store sales advanced 0.9% in the quarter. The company matched analysts estimate.

FirstService Corp, ((FSRV)), property and business services provider, reported Q4 net income advanced to $1.18 a share, from a loss of 4 cents a share in the year-earlier period. Adjusted net income advanced to 6 cents a share from a loss of 3 cents a share. Earnings from continuing operations gained a penny a share from a loss of 11 cents a share. Revenue rose 24%. The company topped analysts’ views for earnings of 6 cents a share.

Too Inc, ((TOO)), specialty retailer, reported Q1 earnings of 35 cents a share, up from a profit of 21 cents a share a year-ago. Sales advanced 19% in Q1 to $195.1 million from $164 million in the same period a year ago with same-store sales gaining 10%. The company attributed the earnings rise to the same-store sales improvement and a reduction in general, administrative and store operating expenses stemming from elimination of the company''s Limited Too spring television advertising.


[R]8:00AM Honda Motor plans to further expand car production in North America.[/R]
Honda Motor Co. announced plans to build a new plant in the United States in order to meet growing demand for its cars. The construction of a new assembly factory in Japan and an engine plant in Canada is also part of the $1.18 billion expansion plan. The three plants are aimed at meeting 34% increase in annual sales to 4.5 million vehicles a year by 2010. In addition to the new plants, the company will double vehicle production at its plant in Brazil to 100,000 units by 2008, and double output in India to 100,000 by 2007.

Honda already has two plants in Ohio, a factory in Alabama, and a plant each in Canada and Mexico.The sixth car factory in North America, worth $400 million, would employ 1,500 workers and produce about 200,000 vehicles a year when it was completed in 2008. Honda President said that a location for the plant hadn’t been selected yet but the company was in the final stage of finding one. The new plant would boost the company''s North American production capacity from 1.4 million to 1.6 million vehicles. Information on what vehicles the new U.S. plant would produce was not officially released, but most likely the new facility will roll out models as the Civic, and the Fit, a small, five-door model that had been exported from Japan. Honda will also start designing a cleaner next-generation four-cylinder diesel engine that will produce less noise. It envisions selling the new super-clean engines within the next three years.

Last month, the company reported a record quarterly profit of 219.5 billion yen ($1.9 billion) in the first quarter, more than double its income from a year ago. Honda''s shares, which have risen about 14% in 2006, gained 0.78% in Tokyo trading.


[R]7:30 AM Asian markets rebound following U.S data and investors rally.[/R]
Asian markets closed higher. Japan''s Nikkei index advanced 0.2%, breaking six consecutive session of losses to close at 16,307.67. U.S. producer price index data showed that energy prices have not impacted inflation as it had been expected. Less inflation translates as less pressure on the dollar which is good news for exporters. Industrial and machinery stocks led the gainers in Tokyo Wednesday. Shikawajima-Harima Heavy Industries advanced 3.23%, and Mitsubishi Heavy Industries gained 4.1%. Exporters were also among the top performers. Nikon advanced 6.26%, Konica Minolta gained 1.95% and Canon was up 1.23%. Automotive stocks also advanced. Toyota Motor was traded 1.13% higher and Honda Motor rose 0.78% in the wake of its proposed plans to spend $1.2 billion on the construction of new factories in Canada. Hang Seng''s top stock, HSBC Holdings, also advanced 2.91% while chip-maker Hynix Semiconductor of South Korea was up 5.18%. Samsung Electronics advanced as much as 1.87%. Singapore''s Straits Times Index rose 1.39%, and Taiwan''s Weighted Average advanced 0.66%.


[R]6:30 AM Early European trade gains on earnings and mining stocks.[/R]
European markets traded higher Wednesday morning as equity markets gained on strong advances in Asia, the optimistic earnings reports and upbeat mining stocks. Vivendi, the French media group, continued repel moves at breaking up the company, releasing robust earnings outlook. Its shares were up 4.9%.London-listed miners also gained. Antofagasta advanced 3.2%, while BHP Billiton rose 1.9%. Tesco, the UK’s retailer, advanced 1.1%, while France’s Credit Agricole lost 0.8%.

Light crude oil gained 19 cents at $69.72 a barrel by 0713 GMT after gaining a humble 12 cents on Tuesday. London Brent for July delivery advanced 20 cents at $70.28. Gold for June delivery rose $19.80 to $712.70 an ounce, thanks to stronger-than-expected open on the Tokyo Commodity Exchange. The euro was traded at $1.2863, up from $1.2853 in New York late Tuesday, while the British pound advanced to $1.8908 from $1.8876. The dollar bought 109.17 yen.