Sensex Rises on Rate Stability

123jump.com Staff
24 Aug, 2006
Mumbai

The Sensex on BSE staged a solid intra-day rebound after spending most of the day in negative territory on weak Asian markets. Supported by a rise in the bond prices to a two-month high, as well as buoyed by hopes that domestic fuel prices may not increase in the near term. Reliance Industries led the advancers in afternoon trading. Metal, cement, auto, banking, IT and construction shares advanced.

[R]10:30AM Sensex jumps on bonds and likely fuel price stability.[/R]
The Sensex on BSE soared 125.30 points, or 1.1%, to close at 11,531.95. This is the highest closing since 17 May 2006. The turnover on BSE amounted to Rs 3,146 crore, higher than Wednesday’s Rs 2,998 crore. The market-breadth was initially negative but turned positive in late trading, as 1,349 shares advanced on BSE, 1,113 declined and 81 shares were unchanged.

Reliance Industries led the advancers. The stock surged in late trading and triggered the turnaround in the market from negative to positive. Most blue-chips advanced towards the second half of trading, in contrast to an early fall. Reliance Industries surged 5.3%, to Rs 1,118.

Metal shares bounced back in the latter part of trading. Sterlite Industries gained 4% to Rs 424.95, Hindalco advanced 4% to Rs 168.50, Hindustan Zinc rose 3% to Rs 594, and Tata Steel jumped 2.4% to Rs 518.55. Metal shares had retreated in early trade in the wake of commodity price drop in European trading.

Select cement stocks gained on hopes of a rise in demand as the monsoon season is about to end. Gujarat Ambuja Cements gained 3.4% to Rs 113.80, ACC rose 2% to Rs 912, Grasim was up 1.2% to Rs 2,220, India Cements advanced 3% to Rs 191.40, JK Lakshmi Cement jumped 3% to Rs 142.75, and Madras Cement added 3% to Rs 2,870.

State Bank of India also gained 1.5% to Rs 876. Its board meets later in the day to consider a hike in prime lending rates. Cellular services operator Bharti Airtel advanced 2.3% to Rs 415 on reports that it has offered a contract worth $ 1 billion to expand and upgrade its telecom network to telecom equipment maker Ericsson. Gas transmission company, GAIL India, also jumped 4.4% to Rs 267.25.

Select auto stocks gained on hopes that the government will not raise domestic fuel prices in the near term due to the recent retreat of global crude oil price. Hero Honda gained 2.5% to Rs 718, Mahindra & Mahindra rose 1.6% to Rs 642.50, car major Maruti Udyog advanced 0.7% to Rs 831.50 and Tata Motors added ((TTM)) 1.5% to Rs 860. Hindustan Motors soared 9.91%, to Rs 40.50 on high volumes of 4.2 million shares on BSE as compared to a two-week average volume of 0.13 million shares.

[R]9:45AM Early trading indicate a positive bias.[/R]
Market maintained the upward bias in the first twenty minutes of trading. Nasdaq traded 6 points up, Dow traded 18 points up and S&P 500 gained 3 points after twenty minutes of trading. Durable goods orders and jobless claims report led traders to conclude that interest rates may not need to be revised.

Creative Techonologies is up $1.39 to $7.40 on the news of the patent settlement worth $100 million with Apple Computer. Williams Sonoma ((WSM)) is down $2.60 to $30.00 on the earnings news. The company reported second quarter earnings of 30 cents compared to 26 cents a year ago.

In the large cap stocks dominating various indexes IBM, Johnson & Johnson an Merck are up 40 cents, United Technologies is up 46 cents and Honeywell is up 22 cents. However, Caterpillar is down 63 cents and Home Depot is down 19 cents.

Chico’s ((CHS)) dropped to $5.06 or 21% to $19 on the earnings news. The company reported second quarter earnings of 30 cents vs. 27 cents a year ago on revenue growth of 19%. Same store sales grew 3%, below the projected rise of 4.5% by the management. The company lowered its full year fiscal 2006 year earnings per share guidance between $1.10 and $1.14 and for the year 2007 to $1.28 to $1.36.

[R]9:25AM Futures indicate higher opening.[/R]
Economic reports on durable goods orders and jobless claims led a brief decline in the bond market. The 10-year note is trading at 4.81%. Jobless claims fell 1,000 to 313,000 and July durable goods orders fell 2.4% vs. the expected 0.8% decline. Volatile transportation oders for the aircraft orders declined. However, excluding transportation orders, core order for durable goods, gained 0.5%.

Market in the futures trading indicate an opening with a slight positive bias. Financials, semiconductors and consumer and retail stocks are likely to lead the advancers.

Rite Aid has agreed to buy Eckerd and Brooks stores from JeaCoutu for $2.55 billion in stocks and cash. The company after the acquision will have 5,000 stores and icrease its foot print from 14 states to 31 states. The company will pay $1.45 billion in cash and issue 250 million shares. The combined operation will have $26.8 billion in revenue.

Williams-Sonoma reported second quarter porofit of 30 cents vs. 26 cents a year ago on revenue grwoth of 6.4%. The second quarter earnings included 5 cents charges.

[R]7:30AM Asian markets fall Thursday on large-caps in auto and tech sector.[/R]
Asian markets ended lower on Thursday. The Nikkei 225 Average finished 1.25% lower at 15960.62, Hong Kong''s Hang Seng Index sank1.20% to 16883.04, South Korea''s Kospi Index shed 0.7% to finish at 1315.73, Taipei shed 0.09% to 6550.64, and Australia''s S&P/ASX 200 closed 1.86% lower at 4987.80. Shanghai Composite Index was the only index to buck the trend, finishing 0.66% higher at 1623.02.

Toyota Motor fell 2.2% and Canon lost 2.3%. Sony shed 2.9% after Mitsubishi UFJ Securities lowered its rating on the stock, citing possible difficulties in component procurement for the PlayStation 3 game console. Nippon Steel, bucked the downtrend, ending 0.2% higher. The increase was based on a Nikkei report that it was in talks with Mittal Steel.

Hong Kong fell led by Hutchison and Cheung Kong. Hutchison fell 2.4% and Cheung Kong dropped 2.5%. Cheung Kong''s first-half profit advanced 33% from the year-earlier period, but at the low end of analysts'' expectations because of sluggish property sales. Hutchison''s earnings doubled.

South Korean Samsung Securities lost 2% and Daewoo Securities dropped 2.8%. Samsung Electronics shed 1.4% on foreigners'' profit-taking after last week''s more than 8% gain. Shares in Taiwan closed slightly lower on falls in some large technology companies and on weakness in transportation and construction companies. In Australia, the stock market saw its biggest intraday fall in six weeks as BHP Billiton closed 3.1% lower, and Rio Tinto shed 2.6%.

[R]6:30AM European markets got a boost from German economic data.[/R]
European markets were broadly higher by mid-morning on Thursday. Frankfurt Xetra Dax was up 0.5% to 5,802.46, while in Paris, the CAC 40 added 0.3% to 5,099.66 and only in London the FTSE 100 was flat at 5,856.2. Swiss watchmaker Swatch beat market expectations, with first-half net profit rising 23.6 per cent on 13 per cent growth in gross sales.

Banks advanced after reports of consolidation among the Italian lenders. Banca Intesa and Sanpaolo IMI were being advised on a merger of equals helped both stocks higher. The oil sector declined following Wednesday’s oil-price fall that came in the wake of an unexpected increase in US crude stockpiles. Austria’s OMV was down 2%, while Norway’s Statoil fell 1.1%.

Oil prices gained slightly Thursday, a day after a fall brought on by an unexpected increase in U.S. gasoline and crude oil stockpiles. Light, sweet crude for October delivery gained 13 cents to $71.89 a barrel on the NYME. October Brent crude on London''s ICE futures exchange rose 26 cents to $72.28 a barrel.

Gold opened Thursday at a bid price of $623.25 a troy ounce, up from $622.20 late Wednesday. The euro slipped against the U.S. dollar Thursday. The euro bought $1.2774 in early European trading, down from $1.2795 in New York late Wednesday. The British pound fell to $1.8903 from $1.8933. The dollar edged up to 116.41 Japanese yen from 116.30 yen.

[R]5:00AM Gold futures hit Wendesday three-session low.[/R]
December gold futures finished $1 lower at $633 a troy ounce. Silver futures held onto gains as the benchmark September contract ended 25 cents higher at $12.515 an ounce. October platinum settled $1.30 lower at $1,236.50 an ounce, while September palladium finished up $3.90 at $346.85 an ounce. The September copper futures shed 2.80 cents to settle at $3.4650 per pound on the NYME.

October light, sweet crude oil ended down $1.34 at $71.76 a barrel. September gasoline fell 7.99 cents to $1.8594 a gallon, its lowest close since March 27. September natural gas closed down 13.3 cents at $6.875 a million British thermal units. On the New York Board of Trade, September Arabica coffee ended down 0.85 cent at $1.0735 a pound while December lost 1.25 cents to $1.1135. Futures on raw sugar in foreign ports for October moved up 0.35 cent to settle at 12.41 cents a pound.