Banks, Cement Stocks Boost Sensex

Elena
15 Nov, 2006
New York City

With high volatility Sensex advanced for another session led by a rally in banking stocks. Subsiding interest rates worries lifted the sector as well as 10-year bond prices rising to a six-month high. Stable cement prices bolstered cement stocks as well. Bharti Airtel surged to an all-time high, buoying market sentiment still further. Software stocks led the decline, pharma stocks ended mixed. ICICI Bank led the gainers while on the opposite end was Hindustan Lever, leading the decliners.

[R]10:30AM Banks, cement shares helped the Sensex gain 44 points on Wednesday.[/R]
The Sensex on BSE advanced 43.87 points, or 0.33 %, to close at 13,469.37. The market was highly volatile. The BSE Sensex traded withing a range of 115.29 points for the day. The market-breadth was weak. As 1,509 shares declined on BSE, 1,035 advanced and 69 stocks were unchanged. For every 2 advancers, there were 3 decliners. From the Sensex stocks 17 advanced, while the rest declined. The turnover on BSE was Rs 5,088 crore, lower than Rs 5,151 crore on Tuesday. The turnover on NSE was Rs 8,768.6 crore, higher than Rs 8,071.78 crore on Tuesday.

Economic news

The bonds rose to their highest in six weeks on Tuesday as central bank dollar buying in the foreign exchange market in the last three sessions eased concerns about liquidity in the banking system.

The central bank of India announced that the recent decline in global crude oil prices should help ease inflation pressures in the economy and that the macroeconomic environment remained favourable.

Advancers

Banks led the advancers today. ICICI Bank gained nearly 3% to Rs 880. The stock hit Rs 888, an all-time high. ICICI Bank was also boosted by reports that RBI has permitted the largest private sector bank to open new branches and off-site ATMs. State Bank of India jumped 4.6% to Rs 1,179. The stock also struck a record high of Rs 1,184.40. The Reserve Bank of India on Tuesday said the recent fall in global crude oil prices should help ease inflation pressures.

Cement shares rose on firm cement prices. Gujarat Ambuja Cements gained 2% to Rs 138.05, UltraTech Cement added 1.4% to Rs 914.85, ACC rose 1.3% to Rs 1,021 and Grasim added 1.3% to Rs 2,708. Airlines advanced on reports of airlines gearing to raise airfares between 3 - 5%. Jet Airways rose 3.6% to Rs 656. Among low cost airlines, Deccan Aviation jumped 10% to Rs 119 and SpiceJet added nearly 5% to Rs 47.30. Ranbaxy Labs advanced 1.0% to Rs 405.25, after a favorable ruling by a US court for marketing Simvastatin tablets.

Bharti Airtel gained nearly 2% to Rs 580.95. The stock struck Rs 582.50, an all-time high. It has replaced TCS as the fifth largest company in terms of market-cap today. Software major Infosys Technologies also gained in volatile trade. The stock rose 0.7% to Rs 2,227. On Tuesday, its ADR rose 2.4% to $56.50. Glenmark Pharma jumped nearly 15% to Rs 584.35, extending its recent solid surge in spite of the mixed trend in pharma stocks.

Decliners

Hindustan Lever led the decliners, shedding 1.8% to Rs 243.30. A large block deal of 10 lakh shares was executed in the stock at Rs 243.80 per share, on BSE.

Reliance Industries lost 1.3% to Rs 1,260. Motital Oswal Securities has downgraded the stock. It is the second brokerage after Kotak Securities to downgrade it, on stretched valuation.

Arvind Mills declined 1.2% to Rs 54.30. The National Stock Exchange has barred fresh foreign funds positions in the derivatives segment in Arvind Mills as such positions in the stock have crossed 95% of the market wide position limit.

Another decliner was i-flex solutions down 0.4%, at Rs 1,520. Financial Services stated on Tuesday, it will now offer Flexcube, the core banking solution from i-flex, as a hosted offering to community banks in the United States. Despite Glenmark Pharma advance of 11%, other pharma stocks declined as Dr Reddy''s and Dabur Pharma sank 1% each.


[R]9:45AM Stocks opened higher, led by solid gains for airlines.[/R]
Stocks opened modestly higher, with investors eyeing an $8 billion acquisition bid in the airline sector and awaiting minutes from the Federal Reserve''s meeting last month. A survey that showed manufacturing in the New York region at a five-month high and gains for tobacco company Altria Group and Web search company Google also generated positive sentiment.

Google ((GOOG)) rose 1.4%, getting close to $500 after Credit Suisse said it reinstated coverage of the company with an ‘outperform’ rating following the completion of the YouTube acquisition. Also, it raised its price target on Google to $600 from $500. Altra Group ((MO)) added 1.3% after Goldman Sachs raised its rating on the stock.

In early trading, significant strength emerged in the airline sector after US Airways ((LCC)) offered to acquire Delta Air Lines for approximately $8 billion in cash and stock. Shares of U.S. Airways climbed 8%. Following the news, AirTran ((AAI)) and JetBlue ((JBLU)) surged 19% and 9% respectively, turning in two of the sector''s best performances. The market also benefited from strength in the semiconductor, defense, and internet sectors. At the same time, gold stocks showed weakness due to a decrease by the price of gold.

In the first hour of trading Wednesday, the Dow was up 13.61, or 0.11%, at 12,231.62, moving further into record territory. The S&P was up 1.81, or 0.13%, at 1,395.03, and the Nasdaq composite index was up 6.78, or 0.28%, at 2,437.44. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.61% from 4.57% late Tuesday.


[R]9:30AM Upgrades in Vodafone helped the FTSE 100 to a modest advance.[/R]
The FTSE 100 in London was 21 points, or 0.4%, higher at 6,207.6 by mid-day.

Advancers

The mobile phone company Vodafone gained 2.7% as analysts upped their numbers following better than expected results on Tuesday. Deutsche Bank stated that although fundamentals remained difficult, there were further potential upside to consensus estimates from industry consolidation and further cost saving.

Another gainer was Old Mutual adding 2.5% as Bear Stearns forecast strong figures from the South Africa-based life assurer later this month. Among mid-caps, recruitment group Hays gained 4.6% on news of strong like for like fee growth of 15% in the first four months of the financial year. Luminar jumped 8.1% after the nightclub operator said it was in the advanced stages on a plan to divest its entertainment division.

Decliners

Of the decliners, Kingfisher shed 3.5% as UBS and Merrill Lynch both cut the owner of retailer B&Q from buy to neutral after a strong run on the shares. The stock has risen 17% in three months. Lonmin fell 2.5% as investors took profits following a 140% jump in earnings at the platinum miner.

Cadbury Schweppes lost 1.7% as Goldman Sachs cut its stance from neutral to sell, arguing the confectioner was vulnerable to further weakness as the sector experiences a tough trading environment. J Sainsbury, the supermarket chain, shed 0.7% after it reported a 60% rise in first-half underlying profit before tax. The stock had performed strongly in the run up to the figures today.

Other news

Cheaper fuel meant the pace of inflation in the UK last month was slower than forecast, an outcome that caused the City of London to trim expectations for further interest rate rises. CPI was at 2.4%, below the 2.6% forecast.


[R]9:00AM Stock futures pointed to a flat opening ahead of FOMC minutes.[/R]
U.S. stock futures indicated a flat start of Wednesday session, awaiting the release of minutes of the last FOMC meeting as well as crude inventories data. S&P 500 futures eased 0.50 of a point at 1,397.20 and Nasdaq 100 futures were 0.75 of a point lower at 1,795.50. Dow industrial futures slipped 7 points to 12,247.

In earnings news, Tyco International Ltd ((TYC0)), high-tech manufacturing and services conglomerate, reported Q4 profit increase on higher sales and a gain from special items. Net income jumped to $1.27 billion, or 62 cents per share, up from $917 million or 44 cents per share last year. Quarterly revenue rose 8% to $10.76 billion from $9.94 billion, exceeding estimate of $10.5 billion. Full-year earnings grew 22% to $3.71 billion, or $1.80 per share, compared with $3.03 billion, or $1.43 per share a year ago.

Airline stocks are seen in the spotlight after U.S. Airways ((LCC)) made an $8 billion offer for Delta Air Lines in cash and stock for Delta Air Lines. The airlines would operate under Delta''s name. Shares of delta gained 3.5% before market opening, while US Airways rose 5%. Among other airlines rising in electronic trading were American Airlines operator AMR Corp. ((AMR)), Southwest Airlines ((LUV)), United Airlines parent UAL Corp. ((UAUA)), Continental Airlines Inc. ((GAL)) ant others.

Elsewhere, Dow component Altria Group ((MO)) rose 1.7% in pre-open trading after Goldman Sachs upgraded the tobacco company to buy from neutral.


[R]8:00AM U.S. Airways Group offered $8 billion for Delta Air Lines.[/R]
US Airways Group Inc. announced Wednesday that it had offered $8 billion to buy Delta Air Lines in a cash-and-stock deal. The bid was made despite Delta’s repeated statements that it is not interested in the merger deal. The offer to buy Delta emerges from bankruptcy protection by the middle of 2007 that would give Delta''s unsecured creditors $4 billion in cash and 78.5 million shares of US Airways stock. US Airways said the offer is a 25% premium over the current trading price of Delta''s pre-petition unsecured claims as of Tuesday, and a 40% premium over the average trading price for Delta unsecured claims over the last 30 days. US Airways said it would be financially supported by Citigroup Inc. which will provide $7.2 billion in new financing for the deal.

The transaction, if completed, would create one of the world''s largest carriers with about 85,000 employees. The combined company would operate under the Delta name and serve more than 350 destinations across five continents. US Airways said the deal is expected to generate $1.65 billion in annual savings from optimization of the airlines'' complementary networks and combining facilities in overlap airports. It also said the deal would reduce unprofitable flying and improve the mix of traffic.


[R]7:30AM Asian markets close mostly higher Wednesday, Japan edges lower.[/R]
Asian markets ended mostly higher on Wednesday. In Japan, the Nikkei 225 Average Index ended 0.3% lower to 16243.47. Shares of camera maker Canon gained 0.5%, while electronics and entertainment company Sony shed 0.6%. In construction and steel stocks, Obayashi declined 1.7% and JFE Holdings lost 0.6%.

The Hang Seng Index ended at a record high, gaining 1.1% to finish at 19093.00. China Construction Bank led the advance, surging 6.4% after BOCI raised its rating on the bank to outperform, announcing it believes that strong earnings growth and high profitability will support higher valuation of CCB. Peers Industrial & Commercial Bank of China gained 3.1% and Bank of China advanced 2.5%. Shares of wireless provider China Mobile rose 1.6%.

The Straits Times Index in Singapore advanced 0.6% to 2777.62. Strength in the property and technology sectors also helped lift shares to a record closing high. An upbeat technology sector helped lift Taiwan''s Weighted Price Index, which gained 0.5% to 7236.85. The Korea Composite Stock Price Index, or Kospi, also rose 0.4% to 1412.54. Shares of Samsung Electronics advanced 2% and LG.Philips LCD added 4.2%. Bank shares were hit hard by the announcement of the government of further moves to control property prices. Kookmin Bank shed 1.8% and Woori Finance closed down 1.4%.

In China, the market finished at a five-year closing high, led by advances from air carriers. The Shanghai Composite Index rose 1.8% to 1922.94, its highest closing level since Aug. 21, 2001, when it closed at 1938.87. The Shenzhen Composite Index added 2.7% to 448.70. Bucking the uptrend were Australia S&P/ASX 200 shedding 0.1% and New Zealand NZX-50 Index ending 0.2% lower. Malaysia KLSE Composite traded flat fell 0.4%, while stock indexes in Thailand traded flat.


[R]6:30AM European markets advanced Wednesday on tech and telecom stocks.[/R]
European markets were higher on Wednesday. By mid morning, the FTSE 100 in London climbed 0.5% to 6,214.9, Frankfurt Xetra Dax was up 0.5% to 6,419.88, and the CAC 40 in Paris added 0.4% to 5,499.94.

Advancers

Infineon of Germany, the semiconductor maker, gained 3.4% after Qimonda, its US-listed memory chip unit, reported better than expected fourth-quarter results.

STMicroelectronics, Franco-Italian chipmaker, gained 1.7%, while ASML, the Dutch maker of chip-manufacturing equipment, climbed 1.4%.

Ericsson, the Swedish mobile phone equipment group, gained 1.5% after it announced a trio of contract wins, including a $110 million deal to expand the mobile network of AIS of Thailand.

Alstom, the French heavy engineer, gained 3.2% after Morgan Stanley raised its price target on the company following its stronger than expected results on Monday.

Decliners

Euronext, the pan-European stock exchange operator, fell 4% after Deutsche Borse said it was withdrawing its bid, a rival offer to that of NYSE. The German operator said it could have only pursued a deal that was supported by both sides and felt this was no longer possible.

Shares in Deutsche Borse and the London Stock Exchange were hit after a group of international banks unveiled plans for a European trading platform. The shares of the German company fell 2%, while LSE shed 4.7%.

Oil and gold

Crude oil for December delivery gained 21 cents to $58.49 a barrel in electronic trading on the NYME. On London ICE Futures exchange, December Brent crude gained 31 cents to $59.15 a barrel ahead of its expiration later Wednesday.

Gold for immediate delivery rose $1.42, or 0.2%, to $622.30 an ounce in early trading in London. The metal dropped 2% the previous three sessions.

The euro bought $1.2825 in morning European trading, compared with $1.2823 in New York late Tuesday. The British pound slipped to $1.8956 from $1.8971. The dollar rose to 117.84 Japanese yen from 117.54 yen.