Nifty hits over 6-month high

A bout of volatility was witnessed in early trade as key benchmark indices trimmed gains after a firm opening. The 50 unit S&P CNX Nifty trimmed gains after hitting its highest level in more than six months at the onset of the trading session. The barometer index, BSE Sensex, was up 24.33 points or 0.14%, off about 100 points from the day’s high. The market breadth was strong. IT stocks rose on a recent slew of positive economic data in the US. Index heavyweight Reliance Industries (RIL) edged higher in early trade.

Data showing continued purchases of Indian stocks by foreign funds boosted sentiment. FIIs bought shares worth Rs 997 crore on Monday, 6 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth Rs 5688.93 crore in first four trading sessions this month, as per provisional data from the stock exchanges. FIIs made substantial purchases of Indian stocks last month. FIIs bought shares worth a net Rs 10357.70 crore in January 2012, as per data from Securities & Exchange Board of India (Sebi).

At 09:29 IST, the BSE Sensex was up 24.33 points or 0.14% to 17,731.64. The index surged 121.40 points at the day’s high of 17,828.71 in early trade. The index gained 13.38 points at the day’s low of 17,720.69 in early trade.

The S&P CNX Nifty was up 3.95 points or 0.07% to 5,365.60. The index hit a high of 5,413.35, its highest level since 4 August 2011. The index hit a low of 5,362.15 in intraday trade.

The market breadth, indicating the overall health of the market, was strong. On BSE, 820 shares rose and 397 fell. A total of 51 shares were unchanged

Among the 30-member Sensex pack, 17 rose while the rest fell. ONGC, Hindustan Unilever and DLF fell by between 0.62% to 0.94%. Tata Power Company, Sun Pharmaceutical Industries and Coal India rose by between 0.66% to 0.92%.

Index heavyweight Reliance Industries (RIL) rose 0.61% to Rs 837.80. RIL said on 30 January 2012, that it proposes to buy-back its shares from the existing shareholders/beneficial owners other than the promoters/persons who are in control of the company from the open market. The company proposes to buy-back up to a maximum of twelve crore shares and a minimum of three crore shares. The buyback programme started on 1 February 2012 and will end on 19 January 2013.

The maximum price for buyback has been set at Rs 870 per share. The company has set aside Rs 10440 crore for share buyback, which represents approximately 7.22% of the company’s total paid-up equity capital and free reserves as on 31 March 2011.

India’s largest utility vehicles and tractors maker Mahindra & Mahindra (M&M) fell 0.83% ahead of its Q3 results today, 7 February 2012. GMR Infrastructure rose 0.83% ahead of its Q3 results today, 7 February 2012.

IT stocks rose on a recent slew of positive economic data in the US, the biggest outsourcing market for the Indian IT firms. India’s largest software services exporter by revenue TCS rose 0.85%, with the stock extending Monday’s 2.04% gain triggered by the company announcing a new order win at the fag end of the trading session on Monday, 6 February 2012. TCS has won a multi-year, multi-million euro contract from Europcar, the car rental leader in Europe. Europcar Information Services, Europcar’s IT subsidiary, has selected TCS to manage strategic IT services development for its French operations.

TCS reported 21.8% growth consolidated net profit to Rs 2803 crore on 13.5% growth in revenue to Rs 13204 crore in Q3 December 2011 over Q2 September 2011. The result was announced on 17 January 2012. The company’s management at a post-result conference call said that out of a total of 130 discretionary projects that the company is pursuing, 50% are facing delays in decision making even as there are no project cancellations so far. The management also said that out of a total of 120 top clients surveyed, two-thirds have flat or marginally increased budgets and remaining one-thirds has reduced budgets. The company said the pipeline is intact but discretionary spend may lag ramp up in volumes in Q4 March 2012.

India’s second largest software services exporter by revenue Infosys rose 0.28%. The company has given a muted guidance for Q4 March 2012. The company has projected a marginal 1.25% growth in non-annualised earnings per American Depositary Share at $0.81 in Q4 March 2012 over Q3 December 2011. The company has projected a flat to 0.22% growth in consolidated revenue in dollar terms at $1.806 billion to $1.81 billion in Q4 March 2012 over Q3 December 2011.

India’s third largest software services exporter by revenues Wipro gained 0.58%. Wipro reported 12% growth in consolidated net profit to Rs 1456.40 crore on 10% growth in sales to Rs 9997.20 crore in Q3 December 2011 over Q2 September 2011. Wipro expects revenues from IT services business to grow 1% to 3% at $1.52 billion to $1.55 billion in Q4 March 2012 over Q3 December 2011. The company announced the 3rd quarter results on 20 January 2012.

The 3rd quarter earnings season is at its peak. Bharti Airtel, ONGC, Power Grid Corporation of India and Tech Mahindra unveil Q3 results tomorrow, 8 February 2012. Tata Steel, Hindalco, ACC, Ambuja Cements and HPCL unveil quarterly results on Thursday, 9 February 2012. DFL, Tata Power, BPCL, Reliance Communications (RCom), Britannia Industries, Sun TV Network, Essar Oil and Neyveli Lignite Corporation unveil Q3 results on Friday, 10 February 2012. JSW Steel announces consolidated Q3 results on Friday, 10 February 2012. The company has already announced its stand-alone results.

Aditya Birla Nuvo, Oil India and Ashok Leyland announce Q3 results on Saturday, 11 February 2012. State Bank of India, Cipla, Reliance Power, Indian Oil Corporation, Coal India, Sun Pharmaceuticals Industries and Steel Authority of India (Sail) unveil Q3 results on 13 February 2012. Tata Motors, Reliance Infrastructure, Jaiprakash Associates and Shipping Corporation of India unveil Q3 results on 14 February 2012. Ranbaxy Laboratories announces Q4 December 2011 results on 23 February 2012.

India is facing some challenges on its stable rating outlook and the balance of risk factors for its rating may be shifting slightly toward the negative, said Standard & Poor’s Ratings Services on Monday, 6 February 2012, in a report titled Several Factors Could Weigh On India’s Current Stable Sovereign Rating In 2012. High inflation, a weak government fiscal position, and slower economic growth have hurt investor confidence in the rupee, triggered a capital outflow, and weighed on the stable sovereign outlook on India in 2012, the report said. S&P has an investment grade BBB- rating with a stable outlook on India.

The government is likely aim to shrink its budget deficit by at least 0.4 percentage point of gross domestic product next fiscal year, as it attempts to boost government revenue and cut subsidies, a news agency quoted an unnamed senior finance ministry official as saying on Monday, 6 February 2012. Under a medium-term fiscal consolidation plan, the government is tasked with shrinking the fiscal deficit to 3.5% by March 2014. Getting back to a tight fiscal road is critical, and the government may have to take some tough steps such as cutbacks in social spending and streamline subsidies to help keep a lid on government expenditure, the official said.

The official said the government is likely to add more services to boost indirect taxes as a slowing economy limits chances of a sharp rise in personal income tax and corporate tax revenue. However, raising service tax rates seems unlikely ahead of the roll out an ambitious Goods and Services Tax, the official added.

The Union Budget 2012-13 is likely to be presented in parliament in mid-March 2012. The annual budget is usually presented on the last working day of February. However, the budget is likely to delayed this time due to the ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012.

A trial court Saturday, 4 February 2012, dismissed a petition to investigate Home Minister P Chidambaram’s alleged role in a 2008 telecom scandal, handing a much-needed victory to the Congress party-led national government. The scandal, which revolves around alleged fraud in the distribution of second-generation cellphone licenses, has destabilized the Congress government over the past 18 months. The Supreme Court citing the manner of the allocation recently ordered the scrapping of more than 100 licenses, putting at risk millions of dollars of investment by foreign telecom companies. Former Telecommunications Minister A Raja was arrested last year for his alleged role in the scandal. Mr. Raja, although a former minister in the Congress-led coalition, is a member of a smaller regional party.

The court ruled on Saturday that there was insufficient evidence to make Mr. Chidambaram a co-defendant alongside Mr. Raja and other politicians and corporate executives who are being investigated. Mr. Chidambaram has denied any wrongdoing.

India’s services sector grew at its fastest pace in six months during January 2012 as new business swelled, extending the previous couple of months’ positive trend into the new calendar year, a survey showed on Friday, 3 February 2012. The HSBC Business Activity Index, compiled by Markit and based on a survey of around 400 firms, bounced to 58 in January from 54.2 in December. That was the third month the index has been above the 50-mark separating growth from contraction.

India’s manufacturing sector grew at its fastest pace in eight months in January 2012 as factory output surged the most on record on increased domestic and foreign demand, a survey showed last week. The HSBC manufacturing purchasing managers’ index (PMI), compiled by Markit, jumped to 57.5 from 54.2 in December. The factory output sub-index jumped to 62.9 in January from 55.8 in December, the biggest rise from one month to the next on record. Both the output and the new orders indexes rose to their highest level since May last year.

India’s trade deficit widened to $12.7 billion in December from $8.0 billion a year earlier as export growth slowed due to falling global demand. But imports, specially in the non-oil segments, continued to grow. For the April-December period, the trade gap was $133.2 billion, compared with $96.2 billion a year earlier. India’s merchandise exports in December grew 6.7% from a year earlier to $25.0 billion while imports rose 19.8% to $37.7 billion.

The government last week lowered slightly its estimate of the country’s growth in gross domestic product for the last fiscal year ended 31 March 2011, to 8.4% from 8.5%.

Asian shares were mixed on Tuesday, as renewed fears of a messy debt default by Greece gave pause to mounting hopes the global economy is improving. Key benchmark indices in China, Japan, Taiwan, and Indonesia fell by between 0.16% to 1.93%. Key benchmark indices in South Korea, Hong Kong and Singapore rose by between 0.04% to 0.12%.

Greece’s political leaders pushed back their decision for another day on Monday, resisting terms of a proposed new bailout deal which demands strict labour reforms and other austerity steps. The full package must be approved by the euro zone, the European Central Bank and the International Monetary Fund before February 15 in order to complete legal procedures for a bond swap deal for a March 20 bond redemption.

Trading in US index futures indicated that the Dow could gain 7 points at the opening bell on Tuesday, 7 February 2012. US stocks fell on Monday after a five-week rally on concerns Greece may be unable to avoid a chaotic default as it struggles to reach terms on a new bailout package.


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