Sensex Rallies 2%, Inflation Rises

Ivaylo
20 Apr, 2007
New York City

The benchmark index opened with a positive bias Friday and continued its rally throughout the day on intense buying in Reliance Industries, Bharti Airtel, ONGC and SBI. Satyam led the advancers on strong fourth-quarter results and higher guidance. The market sentiment was upbeat even as inflation figures showed an increase. The market-breadth was strong and there were only three declining stocks in the Sensex. Inflation was up to 6.09% in the first current fiscal week.

[R]8:00AM NY-7:00PM Mumbai Sensex surges Friday on strong results from Satyam.[/R]

The Sensex on BSE finished 277.71 points, or 2.04%, higher at 13,897.41.

The market-breadth was strong as there were three advancers for every two decliners. For 1,508 stocks which advanced, 1,072 declined and only 85 stocks which remained unchanged. Of the 30 stocks in the Sensex, there were only three decliners, while the all the other stocks advanced. The tutnover on BSE was Rs 4,301 crore, higher than Rs 4,170.51 crore on Thursday. On NSE, the turnover was Rs 8,857.73 crore, also higher than Rs 8,194.26 crore on Thursday.

Economic news

Wholesale inflation rose to 6.09% for the week ended April 7 from 5.74% for the week ended March 31. The rise is mainly on a sudden 23% surge in vegetable prices, increasing pressure on RBI to strenghten money supply next week. Finance Minister P Chidambaram said he expected inflation to decline to around 5.7% next week.

The government asked state-owned banks to slow down credit growth, which is advancing at a rate of 30%, as well as rebalance their portfolios. Finance minister P Chidambaram asked banks to check credit growth to high risk sectors and warned against mobilising bulk deposits at high costs. Banks have to keep interest rates low for home loans up to Rs 10 lakh, which make more than 80% of the home loan portfolio of these banks.

Trading highlights

Tata Steel was the most-active stock with a turnover of Rs 241.35 crore followed by Advanta and Reliance Industries.

Advancers

Satyam rallied 6.3% to Rs 476.2, supported by better-than-expected fourth-quarter results. Satyam Computer fourth-quarter net profit rose 38% to Rs 394 crore, compared with the same quarter a year earlier. Satyam forecast 27% to 29% growth in earning per ADS for fiscal 2008, between $1.16 and $1.18. The US GAAP revenue is expected to rise 28% to 30%, between $1.87 billion and $1.9 billion for fiscal 2008.

Tata Steel soared 5.8% to Rs 534, and HDFC surged 5.5% to Rs 1,651. Tata Steel had rebounded from the last two days of decline caused by equity dilution worries after unveiling funding plans for its $12 billion takeover of Corus Group. Other gainers included Reliance Communications which rallied 5% to Rs 456. Reliance Communications had made strong growth in new subscriptions for the month just gone by.

Bharti Airtel advanced 3.4% to Rs 846. The company has launched a new set of prepaid cards, waiving processing fees. Named Airtel Happy Recharge, the cards will come in three denominations of Rs 299, Rs 399 and Rs 499 having a validity of 30 days. Index heavy Reliance Industries gained 3.4% to Rs 1,543.75.

ONGC gained nearly 3% at Rs 921. Oil prices rose as OPEC member, Nigeria, is holding elections this weekend, ahead of the US May futures contract expiry later on Friday. Larsen & Toubro an SBI moved up 2% each to Rs 1,695 and Rs 1,075, respectively. SBI advanced after the it said it planned to borrow up to Rs 10000 crore during 2007/08. Gujarat Ambuja was up 1.8% at Rs 115.

Decliners

Wipro lost 1.4% to Rs 571. Wipro today posted 44% growth in net profit in the March 2007 quarter to Rs 861 crore as per US GAAP, compared with the same time a year ago. It also forecast strong growth on more outsourcing and higher billing rates.

Hindustan Lever and Hero Honda were the other two declining stocks in the Sensex. Hindustan Lever lost 0.8% to Rs 206 and Hero Honda dipped 0.7% to Rs 649.6.

[R]6:30AM European markets are higher Friday on M&A and bid speculation.[/R]
European markets were higher Friday. By mid-day, the U.K. FTSE 100 index rose 0.5% at 6,473.10, the German DAX Xetra 30 index advanced 0.6% at 7,286.73 and the French CAC-40 index increased 0.5% at 5,859.37. National benchmarks gained in all 16 western European markets that were open.

Advancers

Pharmacy chain Alliance Boots gained 5.4% after Kohlberg Kravis Roberts and Alliance Boots deputy chairman, Stefano Pessina, announced that they had agreed to pay 10.6 billion pounds, or $21.3 billion, to buy the company. In a statement accompanying the offer, Alliance Boots also said that Terra Firma and the Wellcome Trust also indicated that they were interested in the company.

Software consulting company SAP shares rose 1.9% after it said that its first-quarter net income rose 10% to 310 million euros from 282 million euros. Revenue for the quarter rose 6%, or 11% at constant currencies, to 2.2 billion euros.

BHP, the world largest mining company, added 1.2%. Anglo American, the world second-biggest mining company, climbed 1.2%.

Nokia, the world largest maker of mobile phones, advanced 2.1%. ABN Amro Holding NV raised its recommendation for the shares to buy from hold while WestLB lifted the stock to buy from reduce.

Decliners

Swedish telecommunications equipment maker Ericsson lost 0.6% after Sony Ericsson, its mobile phone joint venture with Sony, stated that its first quarter net income rose to 254 million euros, from 109 million euros a year ago, after sales grew to 2.93 billion euros, from 1.99 billion euros last year.

Volkswagen fell 1.2% as the shares trade without the right to their latest dividend.

Oil and precious metals

Crude oil for May delivery fell $1.80, or 2.8%, to $61.83 a barrel in the first four days of trading this week on the New York Mercantile Exchange.

Gold and silver climbed as the dollar plunged to its fourth consecutive weekly decline against the euro, making investors buy the precious metals as an alternative investment to U.S. stocks and bonds. Gold for immediate delivery in London rose $3.10, or 0.5%, to $686.05 an ounce. Silver for immediate delivery gained 12.5 cents, or 0.9%, to $13.805 an ounce. Platinum climbed $18.50, or 1.4%, to $1,315.50 an ounce, while palladium rose $4, or 1.1%, to $381 an ounce.

Currencies

The dollar was lower against most other major currencies in European trading Thursday morning. The euro traded at $1.3598, up from $1.3580 late Wednesday in New York. The British pound remained above the $2 mark, trading at $2.0021, down from $2.0057. The dollar fetched 117.84 Japanese yen, down from 118.61.

[R]5:00AM Copper declines Thursday, while gold dips on profit-booking.[/R]
The May copper contract shed 3.25 cents to settle at $3.5865 per pound on the New York Mercantile Exchange. June gold dipped $5 to finish at $688.30 an ounce, and May silver lost 24 cents to settle at $13.735 an ounce. June palladium ended $2.80 weaker at $380 an ounce, but July platinum rose $2.90 to settle at $1,309.80 an ounce.

Front-month May crude oil contract slipped $1.30 to $61.83 a barrel, the lowest settlement since April 9. Front-month May gasoline futures added 0.55 cent to $2.0888 a gallon. May heating oil slid 0.08 cent to $1.8058 a gallon. Natural gas for May delivery finished 0.5 cent lower at $7.492 a million British thermal units.

Arabica coffee futures also ended lower. May coffee lost 0.85 cent at $1.0850 a pound, while July coffee slipped 0.60 cent to $1.1150 a pound. Futures on raw sugar in foreign ports advanced. May sugar closed 0.13 cent higher at 9.55 cents a pound, while July sugar closed 0.11 cent stronger at 9.53 cents a pound.