Sensex at Three-Month High

Elena
01 Sep, 2006
Mumbai

The market witnessed a sustained rise today, as investors showed renewed interest in blue-chips. Reports that the government has decided against an increase in domestic fuel prices supported the Sensex. Auto stocks led the gainers, while select software and telecom stocks sank. ICICI added 2% and Reliance Industries also edged up. The wholesale index in the last twelve months jumped to 4.91% from 3.71% a year ago.

[R]10:30AM The Snesex gains led by auto and pharma stocks.[/R]
The Sensex on BSE gained 78.97 points, or 0.68%, to finish at 11,778.02 hitting its highest closing level in three straight months since May 17th of this year. The market-breadth was positive with 1,345 stocks advancing, 1,179 declining and 62 were unchanged. The turnover on BSE was Rs 2,812 crore, compared to Thursday’s Rs 2,774 crore. The turnover on NSE was Rs 5,900 crore.

India''s wholesale price index gained 4.91% in the 12 months to Aug. 19, barely lower than 4.92% a week earlier on a slight decline in energy prices. The figure was higher than a analysts’ forecast for 4.85%. The wholesale inflation rate was 3.71% during the corresponding week of the previous year.

For the week, the Sensex gained 1.7%, State Bank of India and ICICI bank gained the most. In today’s session, auto stocks led the advancers on hefty sales for August and following reports that the government will not raise fuel prices. Bajaj Auto gained 3% to Rs 2,786, Maruti Udyog advanced 1.6% to Rs 875, TVS Motor surged 4% to Rs 96.85 and Mahindra & Mahindra added 1.8% to Rs 661.

Auto large-cap Tata Motors ((TTM)) advanced 2.8% to Rs 869 and Ashok Leyland gained 5% to Rs 41.70. Hero Honda rebounded from a lower level despite its report of a 13% decline in sales for August 2006. The stock gained 1.3% to Rs 730, off an early low of Rs 706. ICICI Bank advanced 2% to Rs 609.55 on strong foreign investment flows. HDFC Bank climbed 2.3% to Rs 873.

Renewed interest in pharma stocks boosted the sector. Cipla advanced 3% to Rs 258, Dr Reddy’s Lab gained 3% to Rs 743 and Ranbaxy Labs added 2.2% to Rs 416. Cipla gained on a strong volume of 11 lakh shares on BSE. Zee Telefilms advanced 3.3% to Rs 284, making an intra-day rebound. It had fallen 5.6%, to a low of Rs 259.40 earlier in the day.

Steel shares advanced despite producers announcing a reduction in the metal price. SAIL gained 1.5% to Rs 73.35 and Tata Steel added 1.2% to Rs 502.25. Select stocks not part of the Snesex group soared. Shares of Mazda, DCW, SKS Ship, Lakshmi Machine Works, Paramount Communications, Orient Paper, IL&FS Investment Mangers, Jaiprakash-Hydro Power, Essar Oil, and Harita Seating gained between 7.6% and 20%.


[R]09:45AM Stocks opened higher on tame wage inflation.[/R]
Stocks opened higher Friday on news that wage inflation was tamer-than-expected last month. The tech-heavy Nasdaq was dragged by a notable weakness in the semiconductor sector. Shares of Monster Worldwide ((MNST)) came under pressure, with the provider of online recruitment services down 5.3% on brokerage downgrade to Market Perform from Outperform. On the other hand, Shares of Devon Energy ((DVN)) advanced 2.4% after Morgan Stanley upgraded its rating on the oil and gas company to Overweight from Equal Weight.

In corporate news Friday, Bristol-Myers Squibb ((BMY)) rose 4.8% after a judge blocked sales of a generic form of the drug maker''s blood-thinning drug, Plavix, citing possible patent infringement. Aerospace giant Lockheed Martin Corp. ((LM)) rose $1 to $83.60 after confirming it received a multibillion NASA contract for construction of a spacecraft capable of sending astronauts to the moon and perhaps to Mars. Dow component Intel Corp. ((INTC)) moved higher 1.2% amid reports that it would slash up to 20,000 jobs next week. In the first hour of trading, the Dow Jones industrial average rose 33.78, or 0.30%.The Standard & Poor''s 500 index gained 4.22, or 0.32%, and the Nasdaq composite index rose 8.81, or 0.40%.

[R]Construction spending notably declined.[/R]
The Commerce Department released its report on construction spending in the month of July on Friday, showing that spending showed a notable decline after edging higher in the previous month. The report showed that construction spending fell 1.2 percent in July following an upwardly revised 0.4 percent increase in June. Economists had expected spending to come in unchanged compared to the 0.3 percent increase originally reported for the previous month. The decrease was partly due to a 1.3 percent decline in spending on private construction, which reflected a 2.0 percent decrease in spending on residential construction. The report also showed that spending on public construction fell 0.7 percent in July, as a 0.6 percent decrease in spending on highway construction more than offset a 1.0 percent increase in spending on education construction.


[R]9:00AM Positive employment data boosted futures.[/R]
U.S. stock futures moved higher Friday following in-line-with-expectations August employment data after missing forecasts in the previous four months. A less-than-expected rise in wage increases also soothed inflation fears. The Labor Department said that U.S. nonfarm payrolls grew by 128,000 jobs, while the unemployment rate inched lower to 4.7% in August from 4.8% in July. Average hourly earnings rose by 2 cents, or 0.1%, to $16.79.

In corporate news, shares of drug maker Bristol-Myers Squibb Co ((BMY)) rose 7% in German trading, and Sanofi-Aventis ((SNY)) rose in local trading after the drugmakers secured a federal court victory against Apotex late Thursday that will prohibit copycat sales of blood-thinning drug Plavix. S&P 500 futures rose 3.30 points at 1,308.90 and Nasdaq 100 futures were up 8.00 points at 1,591.00. Dow industrial futures advanced 31 points to 11,422.

[R]Non-farm payroll employment rose by128,000.[/R]
Employment rose roughly in line with economist estimates in the month of August, according to a closely watched report released by the Department of Labor on Friday. The report also showed a modest decrease by the unemployment rate. The report said that non-farm payroll employment increased by 128,000 in August following an upwardly revised increase of 121,000 in July. Economists had expected employment to increase by 130,000 compared to the increase of 113,000 originally reported for July. The Labor Department said that the increase in employment was partly due to notable employment growth in education and health services. Several other industries showed more modest increases. As mentioned above, the report also showed that the unemployment rate edged down to 4.7 percent in August from 4.8 percent in July. The modest decrease by the unemployment rate was in line with economist estimates. The Labor Department also said that average hourly earnings rose by $0.02 or 0.1 percent in August to $16.79. Average hourly earnings rose 0.5 percent in July and 0.4 percent in June.

Sanofi-Aventis, ((SNY)), pharmaceutical company, reported that late Thursday won a ruling from a federal judge blocking sales of a generic version of Plavix. The company lowered its earnings guidance for the year, now seeing adjusted earnings per share growth of 2%. Based on information circulating on the market, it is possible that prior to the imposition of the injunction Apotex had already sold sufficient quantities in the U.S. to satisfy substantially all market demand through the end of 2006, Sanofi said. Only a month ago Sanofi-Aventis had predicted adjusted earnings growth of around 12% for the year.

VimpleCom, ((VIP)), Russian mobile operator, reported Q2 net income advanced 23% to 96 cents a U.S-listed share on 46% revenue growth. The company topped analyst views for earnings of 93 cents a share. The company exceeded quarterly revenue of $1 billion for the first time on 45% growth in subscribers, which offset a 4% decline in average revenue per user and rising subscriber acquisition costs.

Northwest Airlines Corp, ((NWACQ)), carrier, currently in Chapter 11 reorganization, reported net income for July amounted to $101 million, according to a regulatory filing. The company reported $1.2 billion in revenue in July and $1.7 billion in cash and unrestricted short-term investments. A federal judge has blocked Northwest''s flight attendants from striking and urged the airline and the union to reach an agreement.


[R]8:00AM Integraph Corp. agreed to be bought for $1.3 billion.[/R]
Intergraph Corp. ((INGR)), a provider of specialty software, agreed to be bought by a group of private-equity investors in a deal worth around $1.3 billion. Under terms of agreement the investor group led by Hellman & Friedmand and Texas Pacific Group will pay $44 for each share. The deal represents an 18% premium over Thursday''s closing price and a 22% premium over the stock''s average closing price for the last 20 trading days. The deal is expected to close in the fourth quarter. The transaction will be financed through a combination of debt and equity financing and Intergraph''s cash. Goldman Sachs & Co. is acting as financial adviser to Intergraph''s board, and Morgan Stanley is acting as sole adviser to the investor group.

Following the news Intergraph''s stock jumped 15% in evening trading Thursday. After a trading halt, shares changed hands at $42.80 in extended trading. The stock had lost just more than a quarter of its value for the year so far, and has ranged in price from $30.04 to $51.77 over the last 52 weeks.

Intergraph, which went public in 1981, posted a profit of $114.4 million on net revenue of $576.8 million for 2005. The company employs around 3,400 workers in over 30 countries. Just over half of the company''s workers are employed outside of the United States.


[R]7:30AM Asian markets finished mixed, Japan slips on tech stocks.[/R]
Asian markets ended mixed on Friday. The Nikkei 225 Average closed 0.6 lower at 16134.25. Shares of office equipment maker Canon slid 1.2%, while Konica Minolta shed 1.9%. Shares of chip equipment Kyocera Corp declined 1.4%, swinging from sharp gains a day earlier. Advantest Corp inched up 0.8%, adding to sharp gains Thursday.

Hong Kong’s Heng Seng finished 0.18% up at 17423.72. The China Enterprises Index, which tracks stocks of leading mainland-incorporated companies listed in Hong Kong, dropped 0.4% to 6,853. Taiwan''s Weighted Index advanced 27.63 to 6639.40 and Malaysia''s KLSE Composite gained 3.61 to 961.73. Elsewhere in the region, stocks in Australia, Singapore and South Korea finished flat.


[R]6:30AM Europe moves higher ahead of U.S. payroll data.[/R]
European markets were slightly higher by mid-morning on Friday. The U.K. FTSE 100 index edged up 0.2% at 5,917, the German DAX Xetra 30 index rose less than one percentage point to 5,861, and the French CAC-40 index gained 0.2% at 5,176. Sanofi-Aventis, the French drug group, gained 1.4 as the market saw the positive side of a US generic drug judgement. The company won a ruling from a federal judge blocking sales of a generic version of Plavix late Thursday.

German sugar company Suedzucker advanced 2% following its statement that it is planning for an initial public offering of its CropEnergies bioethanol division this year if the stock exchange mood remains in good shape. French electricity group EDF edged up 0.6% after it posted a 41% increase in adjusted first-half net income. Swedish healthcare group Capio AB surged 32% after securing a 15.6 billion Swedish crowns ($2.17 billion) takeover bid from private equity firms Apax Partners and Nordic Capital.

Oil prices advanced slightly Friday on hopes that a current standoff between the West and Iran over the country nuclear program would unlikely result in major sanctions against Iran. Light, sweet crude for October delivery gained 5 cents to $70.34 a barrel on the NYME. Brent crude for October delivery on London''s ICE Futures exchange rose 27 cents to $70.52 a barrel.

The U.S. dollar was mixed against other major currencies in European trading Friday morning. The euro bought $1.2818, up from $1.2806 late Thursday in New York. The British pound bought $1.9036, down from $1.9041. 117.29. The greenback purchased 117.29 Japanese yen, down from 117.33. Gold dealers in London fixed a recommended price of $624.00 at midmorning, up from $619.40 late Thursday.