Sensex Up 1.3%, Rupee Surges

Ivaylo
04 Apr, 2007
New York City

The benchmark index opened with a positive bias and rallied especially in afternoon trade. Banking, metals, pharma, sugar and offshore oil stocks advanced, while after a lackluster start cement shares managed to recover in late session. The surge of the rupee against the dollar accounted for the mixed trend in IT stocks. HDFC, NTPC and BHEL led the advancers today, while Hero Honda and Grasim led the decliners. The rupee breached 43 level.

[R]8:00AM NY-7:00PM Mumbai Sensex against 162 points in a broad rally.[/R]
The Sensex on BSE finished 162.19 points higher, or 1.28%, higher to 12,786.77. The market-breadth was very strong as there were three advancers for every two decliners. As 1,581 stocks advanced, 899 declined and 79 were unchanged. Of the 30 stocks in the Sensex, 21 advanced, while the rest declined. The turnover on BSE was Rs 3,218 crore, higher than Rs 2,890.28 crore on Tuesday. On NSE, the turnover was Rs 6,971.64 crore, compared with Rs 6,745.48 crore on Tuesday.

Economic news

The Rupee surged to its highest level in nearly eight years today, breaching 43 to a dollar as banks sold the US unit to raise funds to meet statutory reserve requirements. In morning trade, the rupee was at 42.925/42.935 per dollar, off an early high of 42.84, its strongest since June 1, 1999.

The government has eliminate the 16% countervailing duty and 4% special additional duty on Portland cement imports, which may put margin pressure on domestic cement companies waiting for a respite on dual excise duty structure. The government is also likely to restrict the maximum area for a Special Economic Zone at 5,000 hectares and to announce more rules for SEZs after the Empowered Group of Ministers on SEZs meet on Thursday.

Trading highlights

HDFC Bank was the most-active stock with a turnover of Rs 112.70 crore followed by Renuka Sugar and Indiabulls Real Estate.

Advancers

HDFC soared over 5% to Rs 1,497. The stock had lost 6.3% over the past two days, after lifting the lending rate by 75 basis points after a hike in a short-term rate by the Reserve Bank of India. NTPC surged 4.5% to Rs 161 and BHEL rallied 4.4% to Rs 2,353. BHEL continued the trend from Tuesday when it reported 42% growth in provisional net profit for the fiscal 2007.

Banking stocks gained ahead of the weekly inflation data, due on Thursday. ICICI Bank gained 2% to Rs 821 and State Bank of India rose 0.5% to Rs 931.80. The wholesale price inflation rate is expected at 6.29% for the 12 months to March 24 2007, dropping from an annual rise of 6.46% a week earlier. The data will be released on Thursday, as Friday will be a public holiday.

Dr.Reddy rallied 3.7% to Rs 746 on the rally in its ADR on Tuesday. Wipro gained 2.8% at Rs 549 and Cipla advanced 2.3% to Rs 229. IT large-cap Infosys added 1.4% to Rs 1,993. The stock had retreated in morning trade from the early gains, as the rupee today struck its highest level in nearly eight months. Index heavyweight Reliance Industries advanced 1.6% to Rs 1,364, after it became clear that it was planning to set up two gas-based projects.

Decliners

Hero Honda dropped 2.3% to Rs 644 and Grasim was off 1.9% to Rs 2,064. Maruti shed 1.5% to Rs 745. Ashok Leyland’s dropped 1.6% to Rs 35.50, after its vehicle sales in March 2007, fell 1.6% to 8,444 units from 8,577 units a year earlier. Satyam and Reliance Communications slid around 1% each to Rs 453 and Rs 398, respectively.

[R]6:30AM European stocks advanced Wednesday on autos and travel stocks.[/R]
European markets were slightly higher on Wednesday. By mid morning, Frankfurt Xetra Dax added 0.2% to 7,061.71, the CAC 40 in Paris was flat at 5,710.52, while London FTSE 100 fell 0.1% to 6,358.4. National benchmarks rose in 14 of 18 markets in western Europe

Advancers

DaimlerChrysler gained 0.5% after the company chief executive, Dieter Zetsche, for the first time revealed that there are talks with interested parties regarding future options for Chrysler. Sodexho, the French contract catering group, advanced 0.3% after reporting revenue growth matching forecasts, and raising its fiscal 2007 sales forecasts thanks to new business contracts.

Utilities continued their upward trend. Italian Enel, which along with Spanish construction group Acciona will bid for Endesa, was up 0.6%. Acciona added 0.1%. Other perceived takeover targets in the sector added to their recent gains. Union Fenosa climbed 0.4 %, Iberdrola rose 1% and Gas Natural gained 1.1%. The prospect of a takeover battle for Telecom Italia drove its shares up 3.7%. Miner Xstrata increased 1.4%.

Decliners

Oil stocks declined as crude prices dropped on expectations of a diplomatic solution to the Iran hostage affair. Total shed 0.6% after US authorities stated they intended to interview Christophe de Margerie, chief executive, as part of an inquiry into the activities in Iran and Iraq of the company. BP, the second-largest energy company in Europe, dropped 0.7%.

Shares in U.K. pharmacy chain Alliance Boots lost 0.1% after the U.K. competition watchdog, the Office of Fair Trading, announced Wednesday that it has initiated a market study into the distribution of medicines in the U.K.

Banking hogged the limelight after Bear Stearns reassessed their ratings in the U.K. banking sector. Bear Stearns downgraded Barclays to peer perform from outperfom, on the company proposed combination with ABN Amro and also downgraded mortgage bank Northern Rock to peer perform from outperform.

Oil and gold

Crude oil dipped because some traders expected Iran and the U.K. to reach a compromise over 15 captive British sailors and marines. Crude oil for May delivery shed 76 cents, or 1.2%, to $63.88 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Brent crude for May settlement fell 69 cents, or 1%, to $67.12 a barrel in electronic trading on the ICE Futures exchange.

Gold rose as declines in the dollar may increase investor demand for the precious metal. Gold for immediate delivery advanced $1.95, or 0.3%, to $665.90 an ounce in early trade in London. Silver climbed 6 cents to $13.46 an ounce, platinum gained $2.50 to $1,243.50 and palladium advanced 50 cents to $352.50.

Currencies

The dollar was lower against most other major currencies in European trading Wednesday. The euro traded at $1.3351, up from $1.3331 late Tuesday. The British pound traded at $1.9748, up from $1.9746. The dollar fetched 118.83 Japanese yen, down from 118.88.

[R]5:00AM Copper hit highest level since November Tuesday, silver climbs.[/R]
The most-active May copper contract gained 13.55 cents to end at $3.3145 per pound on the New York Mercantile Exchange. It reached $3.3240 a pound in after-hours electronic trading, its highest level since Nov. 8. May silver advanced 8 cents to settle at $13.43 a troy ounce. July platinum added $3.30 to finish at $1,252.30 an ounce, while June palladium was up $2.05 to finish at $355.75 an ounce. June gold fell $1.80, however, to settle at $669.70 an ounce.

In Nymex energy trading, crude oil futures dipped on moderate optimism that the stand-off between Iran and Britain will be resolved diplomatically. May crude closed $1.30 lower at $64.64 a barrel. Meanwhile, May gasoline futures shed 2.51 cents to end at $2.0177 a gallon, and May heating oil was off 2.38 cents to close at $1.8387 a gallon. May natural gas futures settled 24.5 cents lower at $7.426 a million British thermal units

Arabica coffee futures rebounded from five-month lows, as funds and small speculators covered shorts and bought. May coffee closed 2.15 cents stronger at $1.1075 a pound.