Market Closing Session - Jan 23rd

The market surged today after a two-day rout on speculation more funds will move to emerging markets after an emergency 75 basis points cut announced by the US Federal Reserve on Tuesday, 22 January 2008. Sensex posted biggest ever single day absolute gain. Prior to todays rally, the market had consistently posted losses for seven straight days. Despite the rally the market breadth on BSE stayed negative.

Trading was choppy throughout the day. The market opened with a spurt but immediately pared gains. It started firming up again in mid-morning trade supported by firm Asian markets. European markets opened higher but most of them slipped in the red as the day progressed.

The BSE Sensex advanced 864.13 points or 5.17% to 17,594.07, its biggest percentage gain on a closing basis since 15 June, 2006. It was also Sensex's third biggest point gain on a closing basis. Sensex also registered its biggest ever intra-day gain of 1267.17 points when it hit days high of 17,997.11 in mid-afternoon trade today. Sensex hit a low of 16,951.03 in early trade. At the days low, the Sensex was up 223.02 points for the day.

The broader CNX S&P Nifty surged 304.10 points or 6.21% at 5,203.40. It struck a high of 5,328.05 in mid-afternoon trade. Nifty January 2008 futures were at 5164, a sharp discount of 39.40 points as compared to spot closing

Sanity returned to the bourses after a bloodbath witnessed on the street in the past two trading sessions when share prices had declined like nine pins. US Federal Reserve came to the rescue cutting key US interest rates by a steep 75 basis points to 3.5% late on Tuesday, 22 January 2008, after Indian markets had closed. The US central bank's move followed two days of steep losses in Asian and European equities on worries that a deteriorating US economy would drag other regions down with it. The US economy has been hit hard by rising defaults in the sub-prime mortgage sector in which Americans with bad credit records are struggling to pay back housing loans given to them during the housing boom.

Margin calls had created havoc on the Indian bourses in the last two days causing a steep decline in share prices that was initially triggered by a setback in global markets and selling by foreign institutional investors. The BSE Sensex had tumbled 2283.76 points or 12.01% to 16,729.94 on Tuesday, 22 January 2008 from its close of 19,013.70 on Friday, 18 January 2008.

Margin trading is where investors trade shares without paying the full cost of the share. Instead a margin or percentage is paid as collateral, and when the market moves against the investor, the margin needs to be topped up. If the investor does not make payment, the shares can be sold by the broker. A margin call is also triggered when shares that an investor had bought with borrowed money decrease in value. If the investor is not able to put up additional margin, the broker/financer will resort to sale of shares.

The total turnover on BSE amounted to Rs 7099 crore today, compared to Rs 6,861.32 crore yesterday, 22 January 2008. Turnover in NSE's futures & options segment declined to Rs 36073.86crore from Rs 44307.58 yesterday 22 January 2008.

Despite the rally, the market breadth was negative on BSE: 1401 shares declined as compared to 1302 that rose. 23 shares remained unchanged.

The BSE Mid-Cap index surged 8.15% to 7789.31 while the BSE Small-Cap index gained 3.96% at 10,425.34.

All the sectoral indices on BSE registered sharp gains. BSE Bankex (up 5.64% at 10731.24), BSE IT index (up 5.45% at 3631.37). BSE Metal index (up 6.85% at 15081), BSE Oil & Gas index (up 8.73% at 10845.58), BSE Power index (up 9.81% at 3943.23), BSE Realty index (up 11.44% at 10609.67), BSE PSU index (up 6.77% to 8,500.83) and BSE Consumer Durables index (up 5.23% to 5,181.51), outperformed the Sensex.

BSE Capital Goods index (up 4.67% at 17221.13), BSE FMCG index (up 5.01% at 2100.34), BSE Health Care index (up 4.35% at 3627.42), BSE Auto (4.46% at 4675.33), BSE TecK index (up 4.82% to 3,248.68), underperformed the Sensex

All the 30-members of Sensex pack advanced.

India's largest power utility company Reliance Energy surged 16.76% to Rs 2004 after the company today said it had won a railway project worth Rs 2500 crore from the Delhi Metro Rail Corporation, in consortium with Spain's CAF. It was the top gainer from Sensex pack.

Indias largest generation company in terms of net profit National Thermal Power Corporation galloped 13.25% to Rs 222.75 on high volumes of 65.99 lakh shares. As per reports the company plans to invest Rs 1,729 crore for development of the Jharkhand coal mine.

IT pivotals saw value buying. Satyam Computers (up 10.25% to Rs 391), TCS (up 7.47% to Rs 859), Infosys (up 2.86% to Rs 1417), and Wipro (up 1.43% to Rs 435) logged gains.

Banking and financial shares surged on hopes of a rate cut from the Reserve Bank of India following the Fed rate cut. Indias largest dedicated housing finance company in terms of revenue Housing Development Finance Company surged 3.21% to Rs 2560.

ICICI Bank, the countrys largest private sector bank in terms of net profit, gained 4.89% to Rs 1179.70. State Bank of India, the country's largest bank in terms of net profit vaulted 8.56% to Rs 2344

HDFC Bank jumped 6.83% to Rs 1538. On Monday, 21 January 2008, HDFC Bank reported 45.2% rise in net profit to Rs 429.36 on on 59.70% rise in total income to Rs 3405.79 crore in Q3 December 2007 over Q3 December 2006.

Grasim Industries rose 4.77% to Rs 2996. The company during trading hours on Tuesday, 22 January 2008, reported 34.55% rise in net profit to Rs 553.79 crore on 15.93% rise in total income to Rs 2694.96 crore in Q3 December 2007 over Q3 December 2006.

Indiaa largest private sector firm by market capitalization and oil refiner Reliance Industries surged 8.48% to Rs 2558. 13.10 lakh shares changed hands on the counter on BSE

India's top commercial vehicles maker by sales Tata Motors rose 1.76% to Rs 669.80 on reports that the company has signed a development contract with Chrysler LLC for developing electric vehicles.

Shares from real estate shares galloped on hopes of a cut in interest rate by the Reserve Bank of India following a surprise rate cut from the US Federal Reserve yesterday, 22 January 2008.

Omaxe (up 41.91% to Rs 318.95), Peninsula Land (up 44.23% to Rs 104.05), Anant Raj Industries (up 20% at Rs 330), Parsvnath Developers (up 15.67% at Rs 291.90), Ansal Properties and Infrastructure (up 30.80% at Rs 292), Housing Development and Infrastructure (up 18% at Rs 1000), Unitech (up 12.49% at Rs 395) and DLF (up 6.60% at Rs 925) surged. The fortunes of real estate companies are directly linked with interest rates.

Reliance Natural Resoruces was the most active counter on BSE with turnover of Rs 465.92 crore followed by Reliance Petroleum (Rs 356.47 crore), Reliance Industries (Rs 330.60 crore), ICICI Bank (Rs 256.46 crore) and Reliance Energy (Rs 231.02 crore) in that order

Ispat Industries led the volume charts clocking total volumes of 3.46 crore shares followed by Reliance Natural Resources (3.44 crore shares), Reliance Petroleum (2.13 crore shares), Tata Teleservices (Maharashtra) (1.53 crore shares) and IFCI (1.49 crore shares) in that order.

Among the side counters, Sterlite Technologies (up 43.59% to Rs 226.80), Edelwiess Capital (up 35.10% to Rs 1159), Ispat Industries (up 33.53% to Rs 45), Polaris Software (up 33.03% to Rs 89), and Dena Bank (up 32.88% to Rs 68.50), surged

Elecon Engineering Company surged 15.51% to Rs 283 after the company said it has bagged orders worth Rs 47.54 crore from various clients.

Pidilite Industries advanced 20% to Rs 175.50 on reporting 69.1% rise in net profit to Rs 40.90 crore on 37.10% rise in net sales to Rs 388.90 crore in Q3 December 2007 over Q3 December 2006.

Chennai Petroleum Corporation gained 8.03% to Rs 290 on reporting 826.57% surge in net profit to Rs 225.62 crore on 20.11% rise in total income to Rs 7102.99 crore in Q3 December 2007 over Q3 December 2006.

Canara Bank jumped 8.21% to Rs 274.20 on reporting 26.39% rise in net profit to Rs 458.83 crore on 26.23% rise in total income to Rs 4096.60 crore in Q3 December 2007 over Q3 December 2006.

Sun TV Network advanced 14.90% to Rs 342 on reporting 71.52% surge in net profit to Rs 102.30 crore on 85.56% spurt in total income to Rs 231.99 crore in Q3 December 2007 over Q3 December 2006.

Gujarat Fluorochemicals jumped 15.50% to Rs 590 after it set 8 February 2008 as record date for a 2-for-1 stock split.

Tata Power Company surged 9.71% to Rs 1190 after the company said it has acquired 73.60 lakh shares of North Delhi Power, New Delhi. North Delhi Power (NDPL) which is into power distribution, serves a populace of 50 lakh inhabiting northern and northwestern parts of Delhi.

Arvind Mills galloped 17.13% to Rs 48.90 on reports the company plans to invest Rs 400 crore in next four years to expand its retail venture by opening retail centres.

GHCL jumped 15% to Rs 115 on reports the company is demerging its businesses into three separate firms, which would all be listed entities

European markets, which began trading after Indian markets, slipped into the red. Key benchmark indices in Germany (down 1.56% to 6,664.15), France (down 1.33% to 4,778.60), and United Kingdom (down 1.04% to 5,680.40) declined.

Asian markets, which began trading before Indian markets, settled higher today 23 January 2008. Hong Kong's Hang Seng (up 10.72% at 24,090.17), Chinas Shanghai Composite (up 3.14% to 4,703.77), Japan's Nikkei (up 2.04% at 12,829.06), and South Korea's Seoul Composite (up 1.21% at 1,628.42) advanced.

However, Taiwan's Taiwan Weighted slipped 2.29% at 7,408.40

The Dow Jones industrial average which was down 465 points at one point of time staged a solid intra-day rebound to close 128.11 points lower at 11,971.19 on Tuesday after the Fed rate cut.

The Standard & Poor's 500 index, fell 14.69, or 1.11%, to 1,310.50, while the Nasdaq Composite index lost 47.75, or 2.04%, to 2,292.27.

Buying from insurance firms and mutual funds has supported the market at declines in recent months. Insurance firms have been raising lots of funds through unit-linked insurance plans with high weightage for equity. The money is being pumped in the secondary market. It now remains to be seen whether the investors in a unit-liked insurance plan (ULIP) stick to a plan with high exposure to equity if the market remains weak. Insurance companies provide ULIP investors an option to switch over to debt funds from equity funds with certain restrictions.

Fundamentals of the Indian economy remain strong. Corporate profits continue to grow at a good pace

Meanwhile, Bhartiya Janata Party (BJP) has decided to take a measured approach to the crisis with no demand for the resignation of Finance Minister P Chidambaram, reacting to second sharp day of market meltdown on 22 January 2008. Instead, party president Rajnath Singh has asked party workers to wait at least for a week and allow the panic to die down.