Sensex Rallies 0.9%, GDP at 9.4%

Ivaylo
31 May, 2007
New York City

The market exhibited a volatile session Thursday with a number of large-cap stocks, mainly in the technology and banking sector, soaring and aiding the rally. Strong GDP figures for the January-March period and buying in May 2007 derivatives, which expired today also supported the rally. In the fiscal year ended March 2007, the Indian economy grew at 9.4% rate.

[R]8:00AM NY -7:00PM Mumbai Sensex advances Thursday on a rally in tech and banking stocks.[/R]

The Sensex on BSE rallied today, finishing 133.08 points, or 0.92%, higher at 14,544.46, which is its highest close since February 9 2007.

The market-breadth was strong as 1,333 stocks advanced, while 1,154 declined and 78 stocks remained unchanged. Of the 30 stocks in the Sensex, 22 advanced, while the rest declined. The turnover on BSE was Rs 4,430 crore, lower than Rs 5,303 crore on Wednesday. On NSE, the turnover was Rs 11,963 crore, higher than Rs 11,123 crore on Wednesday.

Economic news

Indian GDP growth is the fastest in 18 years and stood at 9.4% in the fiscal 2007, ended March, topping government estimates of 9.2%. In the January-March period the GDP growth was 9.1% with services, exports and manufacturing developing most rapidly.

India refused to buy 1 million tons of wheat from the world market and will wait for a better price to come from future harvests in U.S., EU and Australia. India is expected to buy around 5 million tons of wheat, which will amount to a huge difference even considering a small change of price of a few dollars.

The government today put off issuing an approval for Mukesh Ambany’s Special Economic Zone. The decision was postponed over a controversial issue connected with the enclosure of five villages.

Trading highlights

MIC Electronics was the most-active stock with a turnover of Rs 252.30 crore followed by India Infoline and Unitech.

Advancers

Hero Honda rallied 5% to Rs 733. Hero Honda promoted eight new models last fiscal year and will continue with this policy this fiscal year. HDFC Bank soared 3.2% to Rs 1,140. Other banks also joined the rally. ICICI Bank was up 0.99% to Rs 920 and the State Bank of India advanced 2.1% to Rs 1,352.

Maruti surged 2.6% to Rs 824. Tata Motors and Bharti Airtel surged around 2% each to Rs 758 and Rs 848, respectively. IT stocks advanced today on a new buying interest after they declined in the previous sessions. Wipro moved up 1.6% to Rs 545. Cipla added 1.4% to Rs 218.

Decliners

Engineering large-cap BHEL went ex-bonus today, opening at Rs 1,400, but then declining to a low of Rs 1,351. The stock surged to a high of Rs 1,435, before ending at Rs 1,380. the bonus ratio stood at 1:1. BHEL was the worst performing stock on BSE today.

Other decliners included Gujarat Ambuja shed 1.7% to Rs 113, and NTPC slipped 1.2% to Rs 158. Dr Reddy’s declined 0.8% to Rs 649 and ACC lost 0.7% to Rs 856.

[R]6:30AM European markets advance in early trade Thursday on E.On, Iberdrola.[/R]

European markets advanced on Thursday. In early trading, the German DAX Xetra 30 index added 1% to 7,844.36, the U.K. FTSE 100 index gained 0.7% at 6,645.10, while the French CAC-40 index advanced 0.7% at 6,084.08. National benchmarks advanced in all 17 western European markets open except for Ireland.

Advancers

German utility giant E.On traded 5.5% higher the highest in ten years time after announcing late Wednesday that it intends to buy back at least 10% of its own shares by the end of 2008. It also intends to raise dividends by 10%-20% a year on average by 2010.

Iberdrola advanced 3.2% after Albert Frere announced he had purchased 5 % sake of second- largest power company in Spain. Frere investment companies stated late yesterday they paid 2.2 billion euros for the stake.

Scottish & Southern also advanced 1.7% as the supplier of electricity and natural gas announced full-year profit increased 29%, topping estimates. Credit Suisse Group also upped its rating on the stock to outperform from neutral.

ASML gained 5.2% after the maker of semiconductor equipment stated it intends to pay 960 million euros in cash to its shareholders.

Decliners

There were no major decliners in early trade on Thursday.

Oil and gold

A report which the market awaits to show that U.S. gasoline supplies have advanced for a fourth week makes investors shun buying crude oil futures. Crude oil for July delivery was at $63.22 a barrel, down 27 cents on the New York Mercantile Exchange. Brent crude, the benchmark for Europe, was trading at $67.69 a barrel, down 15 cents, on the London-based ICE Futures exchange.

Gold gained in London on talks that inflation will lure investors into buying the precious metal in search of a hedge against increasing raw material prices. Gold gained $4.02, or 0.6%, to $657.47 an ounce, while silver rose 9 cents, or 0.7%, to $13.27 an ounce.

Currencies

The U.S. dollar was virtually unchanged against the euro on Thursday. The euro fetched $1.3437 in early European trading, up from the $1.3436 it bought in New York late Wednesday. The British pound dipped to $1.9744 from $1.9761. The dollar advanced to 121.62 Japanese yen from 121.58 yen on Wednesday.

[R]5:30AM Gold and silver decline on dollar strength, grain rallies.[/R]

Gold futures for June delivery on the New York Mercantile Exchange lost $4.10 to end at $653.10 an ounce, while July silver shed less than a penny to finish at $13.22 an ounce. Copper for July delivery declined 1.65 cents to end at $3.3035 a pound.

Crude oil for July advanced 34 cents to end at $63.49 a barrel on the New York Mercantile Exchange, a slight recovery from the more than $2 decline a day earlier. Gasoline for June lost 2.54 cents to finish at $2.2725 a gallon.

July corn advanced 17.4 cents to finish at $3.822 a bushel on the CBOT, as the dry spell in the eastern Corn Belt also propelled prices higher. Wheat rallied 19.6 cents a bushel to end at $5.106, while a bushel of soybeans rose 10.6 cents to close at $8.082.