Sensex Rallies 2.8%, Rupee Drops

Ivaylo
22 Mar, 2007
New York City

The Sensex rallied over 300 points supported by sustained buying across the board. Robust markets in Asia and strong close on US market helped the Indian benchmark index. The decision of the Fed to keep rates intact also boosted sentiment, as rate cuts are believed to shift investment to emerging markets. Today, BHEL led the advancers in a broad-based rally, while the only decliner in the Sensex stocks was Grasim. The rupee retreated from 19-month highs on Thursday.

[R]9:00AM NY-7:00PM Mumbai Sensex zooms over 300 points in a broad rally.[/R]
The Sensex on BSE finished 362.15 points, or 2.80%, higher at 13,308.03. The market-breadth was strong as there were almost two advancers for every decliner. For 1,658 stocks that advanced, 933 stocks declined and 84 remained unchanged. Of the 30 stocks in the Sensex, only Grasim declined, while the rest advanced. The turnover on BSE was Rs 3,571.80 crore, higher than Rs 2,730 crore, while on NSE, the turnover was Rs 7,865.08 crore, also higher than Rs 5,839.09 crore on Wednesday.

Economic news

The rupee retreated from 19-month highs on Thursday as a cash squeeze in the money market was relieved, and traders settled short positions in the dollar on concerns of provoking Reserve Bank of India intervention. In morning trade, the rupee stood at 43.685/695 per dollar, dropping from Wednesday close of 44.4450/4550.

India has threatened to withdraw from the seven billion dollar Iran-Pakistan-India gas pipeline project if Islamabad did not reduce the fee it wants to charge for allowing flow of natural gas from Iran to India.

Crude oil imports plunged 3.5% to 8.7 million tons in February despite a 4% growth in consumption of petrochemical products.

Trading highlights

MindTree was the most-active stocks with a turnover of Rs 162.25 crore followed by SBI and Reliance Communications.

Advancers

BHEL led the Sensex advancers, up 6% to Rs 2,230. Bank shares extended their gains from Wednesday. HDFC Bank gained 5.9% to Rs 1,023 and ICICI Bank rose 3% to Rs 987. State banks also surged. State Bank of India rose 4.7% to Rs 1,029, Bank of India gained 11% to Rs 174, Canara Bank surged 7.5% to Rs 207 and Punjab National Bank added 7%, to Rs 485. Banks had rallied on Wednesday on value-buying, as well as on short-covering in the derivatives.

IT large-caps advanced on the rupeedip against the US dollar. Wipro gained 2.8% to Rs 598, Satyam Computer advanced nearly 3.4% to Rs 467, TCS added 3% to Rs 1,307 and Infosys rose 1.1% to Rs 2,117.

Oil large-cap ONGC surged nearly 4.9% to Rs 852. Auto shares also surged. Maruti Udyog gained almost 5% to Rs 831, Hero Honda advanced 4.7% to Rs 681, Tata Motors gained 3.8% to Rs 806, and Bajaj Auto rose 3% to Rs 2576. Mahindra & Mahindra rose 3.4% to Rs 781. Engineering & construction company L&T surged 4.7% to Rs 1,573. The company is sitting on a strong order-book.

Reliance Industries rallied nearly 3% to Rs 1,378. Reliance Industries announced on Thursday that Rohm and Haas Co, US, and itself were exploring joint construction of an acrylic-monomer plant in India. The plant in question will be in Jamnagar and will be able to produce 2 lakh tons of acrylic acid and its esters annually.

Decliners

Grasim was the only decliner in the Sensex stocks. Its shares dipped 1.2% to Rs 2,081. Reportedly, cement makers have declined a request by the government to cut prices. A meeting was held today between the finance minister and cement makers,

[R]8:00AM European markets were higher on Thursday on bid talk.[/R]
European markets were higher on Thursday. By midday, Frankfurt Xetra Dax rose 1.7% to 6,826.46, the CAC 40 added 1.4% to 5,576.27 and London FTSE 100 climbed 0.8% to 6,303.9.

Advancers

ING gained 2.4%, as the news that a cross-border deal in the financial services sector was in progress helped underpin broader gains for European equities. The news came as Barclays of the UK continued merger talks with Dutch peer ABN Amro. Although there were still no financial details, Barclays moved 2% higher and ABN gained 0.7%.

Eiffage added a further 13% to the previous session 7% gain. Sacyr Vallehermoso of Spain may sell its stake in oil company Repsol to help fund a purchase of Eiffage, in which it already owns 32.6%. In the other scenario, French rival Vinci might fend off approaches. Shares in Sacyr gained 1.7 %, while Vinci edged 0.2% higher.

In the banking sector, shares in Unicredit, the Italian bank, gained 1.9% after it reported a forecast-beating 61% rise in full-year net profit. Broker comment supported Dutch group Aegon, up 2.7%, France Axa, 3.5% stronger, Allianz of Germany, 3% higher and Zurich Financial, up 1.5%.

Decliners

Health-care companies were underperforming. Shares in AstraZeneca slipped 0.7%, while GlaxoSmithKline was almost flat, up 0.1%. Alcatel-Lucent shares lost 0.3%. The company was downgraded to neutral from buy at Goldman Sachs

Oil and gold

Oil advanced for a third day in New York on signs of increasing demand from U.S. refineries. Crude oil for May delivery rose as much as $1.20, or 2%, to $60.81 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for May settlement rose as much as $1.28, or 2.1 %, to $62.05 a barrel in electronic trading on the ICE Futures exchange.

Gold for immediate delivery was little changed at $664.25 an ounce in early trade in London. Silver gained 5 cents to $13.375 an ounce. Platinum rose $3 to $1,236.50 and palladium was unchanged at $353.50.

Currencies

The dollar rebounded from a two- year low versus the euro before speeches by Federal Reserve officials today. The dollar traded $1.3359 against the euro in early trade in London, rebounding from $1.3385 late yesterday in New York. The U.S. currency was at 117.60 yen, from 117.54. Against the dollar, the British pound was at $1.9710 in early trade in London, from $1.9678 late yesterday.

[R]6:00AM Cocoa surges on Wednesday, while precious metals decline. Gold gained.[/R]
On the New York Board of Trade, the most-active May cocoa rose $30 to end at $1,894 a metric ton. In other trading, May Arabica coffee futures finished up 3.2 cents at $1.1250 a pound, reaching a 1.50 week high. Futures on raw sugar in foreign ports for May settled down 0.04 cent at 10.19 cents a pound

April gold gained $1 to $660 a troy ounce on the New York Mercantile Exchange. May silver shed 5 cents to $13.32. April platinum dipped $5.30 to $1,230 an ounce, while June palladium dropped $3.30 to $352 an ounce. The most-active May copper contract declined 1.50 cents to settle at $3.0190 per pound.

The front-month May crude oil contract ended up 36 cents at $59.61 a barrel. April gasoline lost 0.72 cent to close at $1.9349 a gallon. April heating oil fell 0.41 cent at $1.6646 a gallon, while April natural gas settled up 25.0 cents at $7.160 per million British thermal units.

On the Chicago Board of Trade, corn futures ended higher in choppy trading with speculative fund buying and technical buying boosting prices. May corn settled 4.50 cents higher to $4.0975 per bushel. May soybeans ended 1.75 cents higher at $7.6650 and May wheat advanced 2.75 cents to end at $4.6550 per bushel.