The key benchmark indices pare gains as select pivotals retracted from early highs on profit booking. The BSE 30-share Sensex was up 123.86 points or 0.74% to 16,790.26, off 80.84 points from the day's high and up 97.60 points from the day's low. The market breadth was strong.
Metal shares gained following rise in metal prices in London on Thursday. Realty stocks extended gains for the third running day on signs of recovery in the sector after a record real estate deal was struck in Mumbai earlier this week. However, IT pivotals declined on a firm rupee.
The market opened on a firm note tracking gains in Asian stocks. The market soon pared gains on profit taking. The market regained strength in morning trade. Stocks once again pared gains later.
The government will unveil data on some wholesale price indices for the year through 15 May 2010 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST today.
Asian stocks extended gains for the third straight session on Friday after China reassured its commitment to investing in Europe. Key benchmark indices in China, Hong Kong, South Korea, Japan and Taiwan were up by between 0.50% to 1.77%.
US markets rallied on Thursday, 27 May 2010 after China said it remains a long-term investor in Europe. China's State Administration of Foreign Exchange put aside rumors that it has lost faith in euro-zone bonds and reiterated that it remains a long term investor in Europe. The Dow Jones Industrial Average rallied 284.54 points or 2.85% to 10,258.99. The Nasdaq index rose 81.80 points or 3.73% to 2,277.68 and the S&P 500 advanced 35.11 points or 3.29% to 1,103.06.
In economic data, the commerce department on Thursday reported that US gross domestic product rose at an annualised rate of 3% in the first quarter, a downward revision from last month's initial estimate of 3.2% growth. The US economy had expanded at a 5.6% pace in Q4 2009.
Separately, new applications for state jobless benefits dropped to 460,000 in the week ending 22 May 2010 from 474,000 in the prior week, the Labor Department said.
Trading in US index futures indicated that the Dow could fall 21 points at the opening bell on Friday, 28 May 2010. US markets are closed on Monday, 31 May 2010, for the Memorial Day holiday.
Back home, the Reserve Bank of India (RBI) on Wednesday eased rules to boost liquidity at banks to avoid a cash crunch because of payments for corporate advance tax and license fees for third-generation mobile-phone spectrum. As per RBI's circular released on 26 May 2010, banks can borrow as much as 0.5% of their deposits from the central bank under the repurchase agreement till 2 July 2010. In addition, RBI said that as an ad hoc measure, banks can seek a waiver for any shortfall in maintenance of the prescribed 25% statutory liquidity ratio (SLR) while availing the temporary facility.
Besides, the central bank has decided to conduct two rounds of liquidity adjustment facility (LAF) operations till 2 July 2010. Through LAFs, that are conducted at least once a day, banks can avail of funds through the repo window or park surplus cash through the reverse repo route.
China, India, Brazil and Russia are powering ahead, the Organisation for Economic Cooperation and Development (OECD) said on Wednesday, 26 May 2010, revising upwards its growth outlook for all four largest emerging economies. The OECD revised India's GDP growth forecast for 2010 to 8.2% from its earlier estimate of 7.3%. It also raised the growth forecast for 2011 to 8.5% from its earlier estimate of 7.6%. The OECD also said that underlying inflationary pressures are likely to persist given the strong outlook for demand.
In its World Economic Outlook in April 2010, the International Monetary Fund (IMF) pegged India's GDP growth forecast at 8.75% in calendar 2010 and 8.5% in calendar 2011. IMF's optimism was based on expectations of strengthening of domestic demand as the labour market improves. Expectations of increase in investment on the back of strong corporate profitability, rising business confidence and favourable financing conditions, were other factors cited by IMF for its prediction of strong growth in India's economy.
Prime Minister Manmohan Singh early this week said inflation is showing signs of moderating and the government expects to achieve a medium term target of 10% GDP growth annually. The Prime Minister said he expects inflation to moderate to 5-6% by December 2010. Singh expects 8.5% GDP growth in the year ending March 2011 (FY 2011).
The RBI expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.
The monsoon rains are likely to hit the country's southern coast in three to four days, the India Meteorological Department said in its latest forecast on Thursday. Conditions are becoming favourable for onset of southwest monsoon over Kerala during next 3-4 days, the weather office said.
The weather office had said late last week that rains were on track to hit the country's southern coast on 30 May 2010, and the Laila cyclone in the Bay of Bengal would not derail the vital June-September rainfall. The India Meteorological Department (IMD) in late April 2010 said rainfall is likely to be 98% of the long-term average. Good monsoon rains would help raise farm output, boost rural incomes and lower food inflation.
The south west monsoon is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector. The quantum of rainfall in the crucial sowing month of July and distribution of rainfall during the monsoon season also holds key.
The fourth quarter corporate results have been decent. The combined net profit of a total of 2,635 companies rose 13.60% to Rs 71372 crore on 25.40% rise in sales to Rs 733414 crore in the quarter ended March 2010 over the quarter ended March 2009.
The BSE 30-share Sensex was up 123.86 points or 0.74% to 16,790.26 at 10:24 IST. The index rose 204.70 points at the day's high of 16,871.10 in early trade. The Sensex rose 26.26 points at the day's low of 16,692.66 in early trade.
The S&P CNX Nifty was up 33 points or 0.70% to 5038.20
The market breadth, indicating the overall health of the market, was strong. On BSE, 1844 shares advanced as compared with 455 that declined. A total of 76 shares remained unchanged.
The total turnover on BSE amounted to Rs 1279 crore by 10:25 IST as compared with Rs 623 crore by 09:25 IST.
Among the 30-share Sensex pack, 25 advanced while only 5 of them declined. Maruti Suzuki India (down 0.62%), Larsen & Toubro (down 0.30%), and HDFC Bank (down 0.08%), edged lower from the Sensex pack.
Realty stocks extended gains for the third running day. DLF (up 2.64%), Sobha Developers (up 2.42%), Unitech (up 3.30%), HDIL (up 6.68%), Orbit Corporation (up 3.71%), rose.
Early this week, Lodha Developers paid more than twice the asking price to win a 25,000-square meter plot of land in the central Mumbai suburb of Wadala for Rs 4050 crore.
Omaxe jumped 4.84% after the company reported a net profit of Rs 41.30 crore in Q4 March 2010 compared with net loss of Rs 31.83 crore in Q4 March 2009. The result was announced after market hours on Thursday, 27 May 2010.
IT pivotals pared gains on a firm rupee. IT stocks had risen earlier in the day , on the back of firm American depository receipt (ADRs) on Thursday, 27 May 2010. India's second largest software services exporter by sales Infosys gained 0.10% to Rs 2646, off day's high of Rs 2674. Its ADR rose 4.19% on Thursday.
India's third largest software services exporter by sales Wipro rose 0.04% to Rs 657.30, off the day's high of Rs 665. Its ADR rose 6.9% on Thursday. India's largest software services exporter by sales TCS rose 0.09% to Rs 741.65, off the day's high of Rs 749.
The partially convertible rupee was trading at 46.64/65 a dollar, stronger than its close of 47.29/30 on Wednesday, 26 May 2010. The currency market remained closed on Thursday, 27 May 2010, on account of Buddha Purnima. A firm rupee negatively impacts operating margin of IT firms negatively as the sector derives a lion's share of revenue from exports.
Metal shares surged after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 2.96% to 3,204.10 on Thursday, 27 May 2010.
India's largest non-ferrous metal producer by sales Sterlite Industries jumped 4.07% to Rs 671.05 and was the top gainer from the Sensex pack.
India's largest private sector aluminium maker by sales Hindalco Industries jumped 2.76% after its US subsidiary Novelis clawed back into profits. The world's largest producer of aluminium rolled products reported a net income of $405 million for the fiscal year 2010 as against a net loss of $1.9 billion it suffered last year.
India's largest steel maker by sales Tata Steel surged 2.23%, extending Thursday's gain. Tata Sons, the main investment firm of the Tata Group, is likely to inject around Rs 1,350 crore in Tata Steel through a preferential share-cum-warrant issue to part-finance the steel maker's future growth plans. The Tata Steel board on Thursday, 27 May 2010, decided to make the preferential allotment of 1.5 crore equity shares along with a 1.2 crore warrant issue to Tata Sons. The warrants can be converted into equity shares at a later stage at a pre-determined price.
National Aluminium Company (up 1.33%), Hindustan Zinc (up 3.12%), Sesa Goa (up 8.02%), Steel Authority of India (up 2.47%), and Jindal Steel & Power (up 3.47%), edged higher.
Index heavyweight Reliance Industries (RIL) rose 0.75% to Rs 1029.55. The company is reportedly evaluating acquiring or forming joint ventures for two shale gas assets in the US.
India's top truck maker by sales Tata Motors gained 0.67% to Rs 747.50. The stock came off the day's high of Rs 774. The company reported a consolidated net profit of Rs 2571.06 crore in the year ended March 2010 as against a net loss of Rs 2505.25 crore in the year ended March 2009. Net sales rose 30.7% to Rs 91893.45 crore in the year ended March 2010 over in the year ended March 2009. Surge in consolidated net profit was helped by rising sales and profitability at its Jaguar Land Rover (JLR) unit. The result was announced after market hours on 27 May 2010.
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