INDIAN STOCK MARKET / QUICK REVIEW :

Sensex breaches 17,200 in late buying frenzy

A late buying frenzy in index pivotals propelled key benchmark indices to fresh intraday highs. Markets across Europe and Asia rallied and US index futures jumped as worries about Dubai's finance woes receded. The BSE 30-share Sensex was provisionally up 273.53 points or 1.62%, up 252.30 points from the day's low and off 18.70 points from the day's high. Robust November 2009 auto sales numbers added to the positive sentiment triggered by better-than-expected GDP data, helping the barometer index BSE Sensex regain the psychological 17,000 mark

The market cut gains after an initial surge triggered by higher Asian stocks. It cut gains later before bouncing back. The Sensex struck a fresh intraday high in mid-morning trade. The market came off the higher level later. The market hit a fresh intraday high in afternoon trade led by rally in index heavyweight Reliance Industries. The market extended gains to hit fresh intraday high in mid-afternoon trade as European markets rose. Intense buying frenzy in late trade propelled market to the day's high in late trade

Exports fell 6.6% to $13.19 billion in October 2009 over October 2008, their 13th straight monthly fall, the government said on Tuesday. Imports dropped 15% from a year earlier to $22 billion. The trade deficit shrunk to $8.8 billion in October 2009 from $11.74 billion a year earlier.

Exports for April-October, the first seven months of the 2009-10 fiscal year, were down 26% at $91.05 billion from the same period in the previous year.

C. Rangarajan, chairman of the prime minister's Economic Advisory Council today said the robust growth of the economy in July-September indicated it could expand at around 7% in 2009-10. The latest numbers do indicate that industry and services are growing very strongly, Rangarajan said adding that this could help offset to a very large extent the impact of the decline in agricultural production.

Finance Minister Pranab Mukherjee told parliament today that the current trend in inflation in India is a result of a shortage of food items and not due to a demand-push factor. The food articles index rose an annual 15.6% as at 14 November 2009, up from the previous week's 14.6% rise. Weak monsoon and floods in parts of the country have hurt farm output and pushed up food prices. The government is keeping a close watch on futures trading in commodities, Mukherjee said

The finance minister said buoyancy in government's revenue seen earlier may not be there till 2011/12. He said the government will time stake sale in state-run firms so as to get maximum value. He added that there is no plan for a strategic stake sale in state-run firms. The government, last month, decided to cap its holdings in state-run firms at 90% and said it would sell off shares in the firms where this limit was exceeded.

India's manufacturing activity expanded for the eighth straight month in November 2009 but at its weakest pace since March 2009 due to a slowdown in growth of output, new business and employment, a survey showed. The HSBC Markit Purchasing Managers' Index (PMI), based on a survey of 500 companies, fell to 53 in November 2009 from 54.5 in October 2009. A reading above 50 means activity expanded during the month.

The market breadth was strong on BSE with small and mid-cap shares also participating in today's rally. Among the 30-member Sensex pack, 27 advanced while only 3 of them declined. Index heavyweight Reliance Industries surged nearly 3.5%. Metal shares rose on rally in metal prices on the London Metal Exchange on Monday.

Auto shares were also upbeat after auto major Maruti Suzuki India and Mahindra & Mahindra reported robust monthly sales figures for November 2009. Tata Motors struck a 52-week high of Rs 708 in intra-day trade today. FMCG shares underperformed the Sensex as investors shifted to high growth stocks from defensive stocks. IT pivotals, too, underperformed the Sensex on firm rupee.

European shares rose on the first day of December, as worries about the potential fallout to the global economy from Dubai's debt woes abated and deal speculation also lent a hand. Key benchmark indices in UK, Germany and France were up by between 1.71% to 2.07%

Japanese stocks led rally in Asian stocks today, 1 December 2009 as fears about the ripple effects of Dubai's debt woes eased. Key benchmark indices in Hong Kong, Singapore, South Korea and Taiwan were up by between 0.88% to 1.42%.

China's Shanghai Composite index rose 1.25%. China's manufacturing grew last month at the fastest pace since April 2004, a survey showed, helping Asia to lead the recovery from the global economic slump. The purchasing managers' index released today by HSBC Holdings Plc rose to a seasonally adjusted 55.7 in November 2009 from 55.4 in October 2009. The government's PMI, also released today, held at an 18-month high. The government's Purchasing Managers' Index was unchanged at a seasonally adjusted 55.2, the Federation of Logistics and Purchasing said in a statement. A reading over 50 indicates an expansion of activity in the manufacturing sector, while one below 50 suggests contraction.

Japan's Nikkei 225 index gained 2.43%. The Bank of Japan decided to take additional easing steps at a special policy meeting called Tuesday, in order to keep the country's fragile economic recovery in light of deflationary pressures and a soaring currency.

The Japanese central bank unanimously voted to keep its overnight call rate target unchanged at 0.1%, but also set up a new 10 trillion yen ($120 billion) lending facility, which will accept as collateral Japanese government bonds, coprorate bonds commercial paper, and deeds on loans. The bank pledged to cooperate with the government to do all it can to pull Japan out of deflation, which the bank has said it expects to last for three fiscal years.

Bank of Japan (BoJ) Governor Masaaki Shirakawa said that the BoJ's decision to pump more liquidity into the financial system to stave off deflation and recession was in part a response to the yen's recent strength, which culminated in a 14-year high against the dollar. He also said the commitment to keeping interest rates low will have an effect on the currency market in the longer run

Meanwhile, the Reserve Bank of Australia today raised its cash rate target by one quarter of a percentage point to 3.75%, further unwinding emergency policy settings no longer appropriate for the country's recovering economy.

Trading in US index futures showed the Dow could rise 90 points at the opening bell on Tuesday, 1 December 2009

US markets pulled off a modest gain in late trade on Monday, 30 November 2009, led by banks as investors took the view that Dubai debt woes will likely be contained. The Dow Jones industrial average gained 34.92 points, or 0.3%, to 10,344.84. The S&P 500 index rose 4.14 points, or 0.4%, to 1,095.63, and the Nasdaq Composite Index rose 6.16 points, or 0.3%, to 2,144.60.

In economic data, the institute for supply management-Chicago reported its gauge of regional business activity rose to 56.1 in November from 54.2 in October. This was the strongest reading since August.

Meanwhile, Dubai World, the holding company at the heart of the Dubai crisis, on Monday announced a restructuring plan involving $26 billion in debt. However, the Dubai government said it was not responsible for Dubai World's debts, dealing a blow to creditors' assumptions that the Arab emirate would guarantee the government-controlled conglomerate's liabilities.

Dubai World, one of the emirate's main state holding companies, last week, asked for a delay on maturities until at least 30 May 2010. The company has total debts of $59 billion, including $3.52 billion of Islamic bonds due 14 December 2009 from its property unit Nakheel.

Close home, data released on Monday showed the gross domestic product (GDP) grew by 7.9% in Q2 September 2009, from 7.1% in the previous year, shattering forecasts as stimulus measures boosted demand and manufacturing activity surged. The economy had registered a 6.1% growth in the first quarter.

The bulk of the recovery was led by a 9.2% growth in manufacturing, while mining and construction activities also expanded by 9.5% and 6.5%, respectively. But agriculture continued to me a major drag with a mere 0.9% growth.

Reacting to the GDP figures Montek Singh Ahluwalia, Deputy Chairman, Planning Commission said economic growth forecast for the year to March 2010 may have to be revised upwards as data released on Monday showed a faster expansion in September quarter. He added that there was no serious concern on inflation as of now and conventional monetary policy was unlikely to be effective in curbing food price rise.

Finance minister Pranab Mukherjee on Monday said he expects the economy to grow around 7% in the fiscal year ending March 2010. During the weekend, the finance minister said that Dubai's debt crisis would not affect India much, but the government is keeping a close watch and will act to prevent any fallout.

India's fiscal deficit during the April to October 2009 period was Rs 2.45 lakh crore ($52.7 billion), or 61% of the full-year target, the government said in a statement on Monday. Tax receipts were Rs 2.14 lakh crore and total expenditure was Rs 5.37 lakh crore for the first seven months of 2009/10 fiscal year

There are concerns that a glut in share sales may suck liquidity from the secondary market. A foreign brokerage firm expects Indian firms to raise roughly $70 billion through share sales over the next three years. The brokerage expects stake sales in state-run firms will account for $10-$15 billion of the total funds to be raised. The upcoming auction of third-generation mobile spectrum will also spur potentially billions of dollars in equity raising, although not necessarily from the public markets.

Indian companies have raised about $18 billion in equity thus far this year to repay high cost debt or to fund expansion plans. Last year, Indian firms raised $7.2 billion in equity.

The BSE 30-share Sensex was up 273.54 points or 1.62% to 17,199.76 as per provisional closing. The Sensex opened 21.24 points higher at 16,947.46, also its day's low. It gained 292.24 points at the day's high of 17,218.46 in late trade.

The S&P CNX Nifty was up 89.20 points or 1.77% to 5121.90 as per provisional closing

The market breadth, indicating the overall health of the market was strong. On BSE, 2091 shares advanced as compared with 746 that declined. A total of 82 shares remained unchanged.

The total turnover on BSE amounted to Rs 5026 crore as compared with Rs 3659 crore by 14:25 IST

Among the 30-member Sensex pack, 27 advanced while only 3 of them declined.

Auto stocks rallied following robust monthly sales in November 2009. India's top truck maker by sales Tata Motors rose 7.11% to Rs 707.90 and was the top gainer from the Sensex pack. The stock struck a 52-week high of Rs 708 in intra-day trade today. The company is reportedly planning to produce hybrid versions of its low cost car Nano to join in the environment-friendly trend.

On consolidated basis, Tata Motors reported a net profit of Rs 21.78 crore in Q2 September 2009, compared to a loss of Rs 941.8 crore a year earlier. Consolidated total income declined 8.20% to Rs 21506.94 crore in Q2 September 2009 over Q2 September 2008. The results were announced at the fag end of the trading session on Friday, 27 November 2009.

India's largest small car maker by sales Maruti Suzuki India rose 1.49% after total vehicle sales spurted 66.60% to 87,807 units in November 2009 over November 2008. The announcement was made during trading hours today, 1 December 2009. Domestic sales spurted 60.10% to 76,359 units, while exports surged 128.60% to 11,448 untis in November 2009 over November 2008.

India's top tractor marker by sales Mahindra & Mahindra (M&M) gained 4.69% after total vehicle sales soared 96% to 22,587 units in November 2009 over November 2008.

The company signed an agreement with BAE Systems, the global defence systems manufacturer, to create a land systems focused joint venture defence company that will be based in India. The announcement was made at fag end of day's trading session on Monday.

M&M will hold 74% in the venture and BAE Systems will hold the remaining 26%, the maximum foreign direct investment allowed under the existing defence sector norms. The two companies will invest a total of $21.25 million over a three-year period.

India's largest bike maker by sales Hero Honda Motors rose 1.17% after total vehicle sales jumped 32% to 3.81 lakh units in November 2009 over November 2008. The announcement was made during trading hours today, 1 December 2009. India's second largest bike maker by sales Bajaj Auto shot up 4.05%.

India's largest private sector firm by market capitialisation Reliance Industries (RIL) advanced 3.47% to Rs 1099.70. RIL has reportedly become the largest natural gas producer in the country with its over 50 million standard cubic meter per day (mmscmd) output surpassing state-run Oil and Natural Gas Corporation's (ONGC) output.

RIL's gas production from its D6 fields in the Krishna Godavari basin yesterday touched 50.15 mmscmd, according to the regular output report RIL sent to the oil ministry. This for the first time surpasses ONGC's 49.6 mmscmd output.

However India's largest oil exploration firm by sales Oil & Natural Gas Corporation (ONGC) fell 0.66% on profit booking. The stock jumped 2.97% on Monday on reports it has found traces of a new oil reserve in Gujarat in western India that could raise its onshore oil production by 20%. The new hydrocarbon structure is likely to produce at least 1 million tonnes per annum (mmtpa) of oil. This could be the largest onshore oil find for ONGC in the last one decade.

India's largest pharma firm by market capitaliasation Sun Pharmaceuticals jumped 5.36%. On 26 November 2009, the company received tentative United States Food and Drug Administration's approval for its generic Strattera capsules, which is used for treatment of attention deficit hyperactivity disorder. The drug is a therapeutic equivalent of Strattera capsules from Eli Lily.

Metal stocks extended Monday's gains on fresh buying. India largest non ferrous metal producer Sterlite Industries jumped 2.96% tracking a 2% gain in its American depository receipt (ADR) on Monday.

India's largest private sector aluminium maker by sales Hindalco Industries surged 2.86%. On Friday, the Reserve Bank of India allowed the company to enhance foreign institutional investors (FII) limit to 40%.

A gauge of six metals traded on the London Metal Exchange, rose 1.71% on Monday, 30 November 2009.

India's largest bank by net profit and branch network State Bank of India gained 2.41% on reports the bank has invited bids for sale of 1% stake in National Stock Exchange of India (NSE) as well as 5.91% stake in Multi Commodity Exchange (MCX).

Private sector banking pivotals gained tracking firm ADRs. India's largest private sector bank by net profit ICICI Bank gained 2.61% following a 2.17% rise in its ADR on Monday. India's second largest private sector bank by net profit HDFC Bank rose 0.92% echoing a 0.29% rise in its ADR on Monday.

India's largest power generation firm by capacity NTPC rose 0.41% on reports the company plans to acquire two coal mines in Indonesia to secure fuel supplies for its plants.

IT stocks rose following reports of TCS, Wipro and Infosys are in the fray for Goldman Sachs' $700 million IT outsourcing deal. However they underperformed the Sensex on profit booking and firm rupee.

India's largest software services exporter Tata Consultancy Services (TCS) rose 0.35%. India's second largest software services exporter Infosys Technologies rose 0.50%. India's third largest software services exporter Wipro rose 1.29%. The partially convertible rupee was trading at 46.26/27 per dollar, higher than 46.50/52 on Monday. A firm rupee negatively impacts operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

As per reports, the contract, to create research & development functions and software database, will span across 5-6 years. HCL Technologies, Cognizant, and IBM are the others bidders reported to be in the fray for the IT contract. Bids are expected to begin by April 2010.

FMCG shares underperformed the Sensex as investors shifted from the so-called defensive sector to high growth sectors. India's largest FMCG company by sales Hindustan Unilever lost 2.09% to Rs 279.30 and was the top loser from the Sensex pack.

ITC (up 0.25%), United Spirits (up 0.32%), Colgate Palmolive India (up 0.15%), though up underperformed the Sensex. Godrej Consumer Products (down 0.05%), Marico (down 1.11%), also slipped