Volatile Sensex Rebounds

Elena
12 Sep, 2006
New York City

Banks and technology stocks were the backbone of the reversal from weak market to rally by the benchmark index in the second half of trading session today. What gave momentum was the strong data on July industrial production released by the government. Reliance Industries, TCS, Infosys and SBI led the advancers. Finance Minister Chidambaram stated that high industrial growth will not necessarily affect interest rates and he expects foreign investments from Japan and the U.S. to rise.

[R]10:30AM The Sensex recovered early losses on strong industrial data.[/R]
The Sensex on BSE finished 110.10 points higher, or 0.95%, at 11,660.79. The BSE benchmark index traded in a range of 226.45 points under extremely volatile conditions. The total turnover on BSE was Rs 3,343 crore, slightly higher than Monday’s turnover of Rs 3,390 crore. The turover on NSE was Rs 7,260.49.

The market-breadth was negative for the greater part of the day and turned positive as buying intensified for small-caps and mid-caps. On the market, 1,243 shares advanced, while 1,217 declined and 79 shares remained unchanged. From the 30-Sensex stocks, 23 advanced and 7 declined.

India’s industrial production advanced 12.4% in July from the previous year, beating expectations, due to strong manufacturing and electricity output, data showed on Tuesday.

Advancers
Reliance Communication led the advancers, rising 3.82% to Rs 326.35 on 23.64 lakh shares. Hero Honda also gained 2.92% to Rs 767, NTPC rose 2.73% to Rs 124.20, ACC advanced 2.63% to Rs 929.05, TCS jumped up 2.51% to Rs 979 and Cipla climbed 2.24% to Rs 250.50. Index heavy, Reliance Industries spurted to Rs 1,109.80, as buying intensified. It closed 1.71% higher, at Rs 1,106.25, on a volume of 21.47 lakh shares. Reliance Industries was the most-active stock on BSE with a turnover of Rs 235.80 crore.

IT stocks were also in focus with buying spread over frontline as well as second line stocks. Mphasis gained 5.73% to Rs 184.40, HCL Technologies moving up 2.96% to Rs 569, Hexaware was up 2.92% to Rs 154.90, Infosys Technologies gained 1.77% to Rs 1767, Patni Computer advanced 1.92% to Rs 391.10 and Wipro edging up 1.21% to Rs 505.80.

Bank stocks rise on strong volume.
State-run SBI gained 1.41%, to Rs 930.80, as 5.55 lakh shares were traded on BSE. Other banks also advannced. Corporation Bank edged up 0.98% to Rs 313, Bank of Baroda gained 7.21% to Rs 257.90, Punjab National Bank jumped 3.15% to Rs 477, Oriental Bank of Commerce moved up 3.05% to Rs 206.20 and Union Bank of India surged 6.33% to Rs 118.50.

Private banks were also in demand. ICICI Bank advanced 1.62%, to Rs 606, Karnataka Bank was up 5.57% to Rs 113.80, IndusInd Bank climbed 1.77% to Rs 43.15 and HDFC Bank notched up 2.01% to Rs 839.15.

Decliners
ONGC led the decliners on BSE. It sank 2.21% to Rs 1,150.90, Hindalco shed 1.15% to Rs 172.40, BHEL was off 1% to Rs 2,232, Hindustan Lever fell 0.33% to Rs 229.30 and L&T dropped 0.17% to Rs 2,458.


[R]9:45AM Stocks opened on a positive note on Goldman Sachs earnings.[/R]
U.S. stocks opened on a positive note Tuesday as better-than-anticipated quarterly earnings from Goldman Sachs helped offset news of a record trade deficit in July. The Commerce Department said the U.S. trade deficit widened to a record $68 billion in July, raising worries about the U.S. economy and corporate profits from overseas sales. Investment bank Goldman Sachs ((GS)) said its fiscal Q3 profit fell 1% from a year ago, but came in above expectations. The stock rose 3%. Rival Lehman Brothers ((LEH)) rose 1.9%, while Morgan Stanley ((MS)) shares were up 1.6%.

Analyst upgrades in the semiconductor sector offset negative news from Texas Instruments ((TXN). The chip maker fell 1.5% after forecasting lower Q3 financial earnings and revenue targets. Semiconductor shares rose with Applied Materials ((AMAT)) up 3.4% after Credit Suisse raised its rating on the company and the whole semiconductor sector. Among other stocks in focus, Dow component McDonald’s ((MCD)) said its U.S. sales at restaurants open at least one year rose 3.5% in August. Systemwide sales for McDonald''s restaurants worldwide increased 8.6% in August, or 7.1% in constant currencies. The stock was up 0.8% at $37.43. Drugmaker Bristol-Myers Squibb ((BMY)) rose 2% after its CEO was replaced. In the first hour of trading, the Dow Jones industrial average rose 21.37, or 0.19%. The Standard & Poor''s 500 index was up 2.87, or 0.22%, and the Nasdaq composite index rose 7.65, or 0.35%.


[R]09:00AM Stock futures pointed to a flat opening.[/R]
U.S. stock market futures were sitting near the flat mark Tuesday morning after news of a failed attack on the U.S. embassy in Syria and data showing wider-than-expected trade deficit. Commerce Department said the U.S. trade deficit widened much more than expected in July to a record $68 billion. Yet, upgrades in the technology sector and a rise by the shares of Goldman Sachs helped offset worries about Texas Instruments Inc.''s Q3 forecast.

Investment bank Goldman Sachs ((GS)) said its fiscal Q3 profit fell 1% from a year ago, to $1.59 billion, or $3.26 a share on revenue $7.46 billion. Analysts had expected earnings of $2.97 a share on revenue of $7.17 billion. After the bell on Monday, shares of Texas Instruments ((TXN)) slipped 1.6% as the world''s biggest maker of chips for mobile phones lowered its Q3 forecast of earnings and revenue targets. But shares of Applied Materials Inc. ((AMAT)) rose 1.3% before the opening bell after Credit Suisse raised its rating on the company and the entire semiconductor sector. Standard & Poor''s 500 futures were down 1.8 points, but above fair value. Dow Jones industrial average futures were down 10 points, and Nasdaq 100 futures were down 3 points.

[R]The U.S. trade deficit widened to a record level in July.[/R]
Tuesday morning, the Department of Commerce released its report on U.S. international trade in goods and services in the month of July, showing that the U.S. trade deficit widened more than economists had expected and reached a record level. The report showed that the trade deficit widened to $68.0 billion in July from an unrevised deficit of $64.8 billion in June. Economists had been expecting the trade deficit to widen to about $65.5 billion. The July deficit surpassed the previous record of $66.6 billion set last October. The wider trade deficit in July came as the value of imports increased compared to the previous month while the value of exports fell. The Commerce Department said the value of imports rose 1 percent to $188.0 billion in July from $186.1 billion in June, while the value of exports fell 1 percent to $120.0 billion from $121.2 billion in the previous month. The increase in the value of imports was due in large part to a significant increase in imports of industrial supplies and materials. At the same time, a notable decline in exports of capital goods contributed to the drop in the value of exports. The report also showed that the politically-sensitive trade deficit with China narrowed to $19.6 billion in July from $19.7 billion in June.


[R]8:00AM Texas Instruments cut its Q3 earnings target.[/R]
Texas Instruments Inc. ((TXN)) lowered its Q3 financial targets late Monday. The world''s largest provider of mobile phone chips forecasted total sales in the range of $3.71 billion to $3.87 billion, compared with its previous estimate of $3.63 billion to $3.95 billion. It projected earnings per share between 44 cents and 46 cents compared to its previous outlook of 42 cents to 48 cents. By segment, TI said its semiconductor revenues would be between $3.53 billion and $3.67 billion, compared with the prior range of $3.45 billion to $3.75 billion. It confirmed its sales target of $180 million to $200 million for its educational and productivity unit. Shares of TI closed at $31.78, up 2.5%.


[R]7:30AM Asian stocks closed lower due to plummeting commdity stocks.[/R]
Asian markets ended mostly lower. The Nikkei 225 Average ended the day 0.48% lower at 15719.34. Commodity and materials-linked companies, from steel makers and non-nonferrous metal producers to trading houses, helped to pull down the Nikkei for a second straight session. Nippon Steel shed 1.6%, JFE Holdings skidded 3.8% and Sumitomo Metal Industries declined 2.9%.

The Kospi Index in South Korea sank 0.45% to close at 1328.04. Stocks were also led lower by metal and brokerage shares. Korea Zinc dipped 9.9% after zinc prices hit a three and a half week low on the London Metal Exchange. Posco shed 1.7% on falling steel prices in China, Europe and the U.S. Samsung Securities lost 1.3% and Daishin Securities fell 3.2%.

Taipei fell 1.02% to 6625.73. Stocks in Taiwan ended lower on worries protests against President Chen Shui-bian may develop into an islandwide strike. Local news media reported Monday and Tuesday the organizers of the protests may try to organize a strike to force the president to resign. Memory-chip makers fell, partly on profit-taking. Nanya Technology fell 1.9%, and Powerchip dropped 1.6%.

Australia''s S&P/ASX 200 fell 1.03% to finish at 4974.40. Dropping commodity prices drove the stock market sharply lower, marking the fifth straight day of weakness. BHP Billiton ended 5.7% lower and Rio Tinto fell 5.2% after metal prices declined Monday.

Hong Kong shares ended higher, supported by an upbeat land sale. The Hang Seng Index gained 0.75% to 17075.40. Property developers continued to gain in afternoon trading. Cheung Kong rose 1.3% and Sun Hung Kai Properties advanced 0.5%. Department store operator Parkson Group climbed 4.9% to a record close after China said retail sales moved up 13.8% in August.

China shares also ended higher, supported by draft rules that simplify the procedure for pricing initial public offerings, and by gains in most refiners and airlines following a decline in the price of crude oil. The benchmark Shanghai Composite Index closed 1.3% higher at 1695.86.


[R]6:30AM European shares rebound led by tech and auto stocks.[/R]
European stocks were higher by mid-morning on Tuesday. The FTSE 100 in London was flat at 5,851.3, the Xetra Dax in Frankfurt rose 0.2% to 5,807.27 and the Paris CAC-40 gained 0.2% to 5,070.66. Telecom Italia announced it would be splitting out two businesses, its network and mobile arms, and hinted that it could move on to sell them both. Telecom Italia was flat. Gaz de France beat expectations with first-half net profit adding 1.6%.

Chipmakers were strong with Infineon up 3.1% and STMicroelectronics advancing 2.45, following a rise by peers in the US on optimism demand growth will be sustained. Electrolux, lead the gainers, climbing 5.7%. Lufthansa, German airline, agreed to pay $85m to settle US class-action lawsuits relating to alleged cargo price-fixing. The company received conditional immunity from antitrust investigators. The stock was down 0.6%.

Oil prices advanced above $66 a barrel in Tuesday on a technical rebound after dropping in the previous session on news that OPEC that it would maintain its 28 million barrel-a-day production target. Light, sweet crude for October delivery gained 59 cents to $66.20 a barrel in electronic trading on the NYME. October Brent on London ICE exchanged hands at $64.92 a barrel, up 37 cents.

The euro rose against the U.S.dollar. In morning trading the euro bought $1.2713, up from $1.2701 late Monday in New York. The British pound climbed to $1.8681 from $1.8645 the day before, while the dollar rose to purchase 117.63 Japanese yen from 117.51. Gold advanced for the first day in five as the U.S. dollar weakened, boosting the appeal of the precious metal, and after an earlier decline attracted buyers. Gold for immediate delivery in London advanced $6.90, or 1.2%, to $596.65 an ounce at 10:05 a.m.