Sensex Rallies 2.5%, Idea Cellular IPO

Ivaylo
15 Feb, 2007
New York City

The market opened with a positive bias and rallied following upbeat Asian markets and strong performance of Indian ADRs overnight. The rally was broad-based covering small and mid-caps. Auto, IT, banking and metal sectors advanced. L&T, Satyam, Cipla and Hero Honda jumped. Ranbaxy and NTPC led the decliners. Wholesale inflation hit a two-year high. Citigroup plans setting up a $5 billion infrastructure fund in India.

[R]7:30AM NY-6:30PM Mumbai Sensex advances Thursday in a broad rally.[/R]
The Sensex on BSE finished 345.65 points, or 2.47%, higher at 14,355.55. The market-breadth was strong, for every stock that fell four stocks rose. On BSE 2,121 shares advanced, 525 declined and only 33 shares were unchanged. Of the 30 stocks in the Sensex, 24 advanced, while the rest declined. The turnover on BSE was Rs 4,266.54 crore, higher than Rs 3,998 crore on Wednesday. On NSE, the turnover was Rs 10,025.11 crore, much higher than Rs 8,878.7 crore on Wednesday.

Economic news
Wholesale inflation hit a two-year high of 6.73 % in the week ended 3 February, from 6.58 % in the previous week, topping the forecast of the Reserve Bank of India for the sixth week in a row, as prices of edible oils, dairy products and vegetables rose. The rupee also advanced, following the stronger yen and gains in Indian ADRs. One dollar traded at Rs 44.08/09.

Commerce and Industry Minister Kamal Nath on Thursday announced that the government may liberalize imports to control the inflation. The government believes that higher inflation is due to the constraints on the supply side. Also, the government reduced the retail prices of gasoline and diesel by 4.5% and 3.2% respectively on Thursday to combat inflation.

Deutsche Börse has bought a 5% stake in Bombay Stock Exchange, and paid Rs 1.89 billion or $43 million, for the stake in the exchange, the chief executive, Rajnikant Patel, announced Wednesday in Mumbai.

Corporate news
Citigroup Inc., Blackstone Group Holdings LP and two Indian finance companies have signed an agreement to set up a $5 billion infrastructure fund. The aim of the fund will be to improve the country’s roads, ports and other facilities, the Indian finance ministry announced.

Trading highlights
Newly-listed Redington was the most-active stock with a turnover of Rs 407.30 crore followed by another new listing Pearl Fashion and Global Broadcast.

Advancers
L&T surged 4.8% to Rs 1,692.10, on bargain-hunting after a recent sell-off. The company has seen rising backlog of orders.

Telecoms were given a lift from the strong performance of IPO, Idea Cellular, which was subscribed almost 27 times. Reliance Communications and Bharti Airtel surged. Reliance Comm gained 3% to Rs 466 and Bharti Airtel was up 4.1% to Rs 791.75.

Auto stocks advanced after the government cut gasoline and diesel prices. Ashok Leyland surged 5.4% to Rs 46.20, M&M surged 5% to Rs 900, Maruti Udyog gained 4% to Rs 892 and Hero Honda gained 4.4% to Rs 744. Tata Motors gained 1.8% to Rs 866. Tata Motors and Fiat on Wednesday signed an $80 million agreement to build Tata pick-up trucks under the Fiat brand in Cordoba, Argentina at the Italian carmaker plant.

IT shares advanced on overnight gains in their ADRs listed in New York. Infosys gained 4% to Rs 2,374 after its ADR surged 3% on Wednesday. Satyam Computer advanced nearly 5% to Rs 485, its ADR rose nearly 4% and Wipro gained 3.9% to Rs 676 as its ADR advanced 1.2%. Index heavy Reliance Industries gained 2.3% to Rs 1,410.

Banks also rallied despite the increase in inflation. ICICI Bank gained nearly 4% to Rs 951 and HDFC Bank added 3% to Rs 1,048.

Decliners
Ranbaxy declined 5.1% to Rs 393.50 on reports that investigators for the U.S. Food & Drug Administration yesterday locked the headquarters of Ranbaxy USA.

NTPC slipped 1.3% to Rs 142 and Reliance Energy declined 0.8% to Rs 542.15. ACC lost 0.4% to Rs 1,018 and Gracim was nearly flat, shedding 0.1 to Rs 2,654.


[R]6:30AM European markets dipped on Thursday on weakness in the banking stocks.[/R]
European markets were lower on Thursday. By mid morning, Frankfurt Xetra Dax added 0.1% to 6,964.2, the CAC 40 in Paris fell 0.1% to 5,722.8 and London FTSE 100 shed 0.2% to 6,409.1.

Advancers

DaimlerChrysler, German carmaker, advanced 5.3% after the board of the company on Wednesday proposed a restructuring of the ailing US Chrysler unit. The company also stated that all options were on the table, raising the possibility of a full or partial sale of the division, or a spin off.

Michelin, French tire maker, added 6% as it targeted between 1.5 billion euros and 1.7 billion euros in cost reductions in the period to 2010 as it struggled with the violent impact of raw materials prices.

Reed Elsevier, Anglo-Dutch publishing group, said it about to sell its underperforming education arm after posting full-year pre-tax profit that missed expectations. The company announced that the sale would result in a more cohesive and predictable business that would generate earnings per share growth of around 10% a year. The shares gained 6%.

Luxury goods group LVMH gained 4.2 % after releasing record full year profits, despite the negative impact of a strong euro, and said it expected further growth in 2007 so long as foreign exchange conditions did not deteriorate. Christian Dior, which owns around 42% of LVMH, also reported strong 2006 results. Its shares gained 4.4%.

Swiss bank Credit Suisse gained 3.6% after posting record Q4 profits that easily topped market forecasts, thanks to a 130 % rise in trading revenues.

Decliners

Banks retreated on concerns over the French retail banking division of BNP Paribas. The bank topped forecasts with its Q4 net profit, although operating profit was a little weaker than expected due to unforseen costs related to its takeover of Italy’s BNL last year. BNP Paribas fell 3.4%.

Societe Generale, which declined in the previous session as similar concerns were raised after it posted full-year results, was down 1.8 %. Credit Agricole shed 2.6%.

Oil and gold

Oil inched above $58 a barrel on Thursday in volatile trade that has trapped prices in a narrow range. U.S. crude for March delivery was 29 cents higher at $58.29 a barrel in early trade in London. Brent crude for April was up 34 cents at $57.77. Gold for immediate delivery was little changed, up 52 cents, or 0.1% at $669.55 an ounce in early trading in London.

Currencies

The euro bought $1.3137 in morning European trading, up slightly from $1.3128 in New York late Wednesday. The British pound rose to $1.9663 from $1.9625. The dollar fell to 120.17 yen from 120.78 yen.