Monday, September 7, 2009

Indian Stocks End At New 52-Week Highs

. Monday, September 7, 2009

By stockOzone team

The Indian stock market indices touched new 2009 highs on Monday, taking cues from the positive global markets. Much to dealers delight, the market has doubled up from March lows in just six months.

“There is upside in the market based on funds flow and earnings in the first quarter. Based on tax holdings and other seasonal factors, earnings per share on the Sensex could be quite a bit higher than the consensus and probably highest on the street right now. So our thought is that market could potentially break out.

One concern that has developed last week is on the interest rate side. The consumer price index readings are becoming quite serious and I don’t think the Reserve Bank of India can ignore it for too long. So probably by the end of this calendar year, the RBI may increase rates and that may affect interest rate sensitive sectors,” said Pankaj Vaish, MD, Nomura Financials.

After trading range bound for quite sometime, the indices finally broke out of reistance levels and charted new territory. Bombay Stock Exchange ended at 16,016.32, up 327.20 points or 2.09 per cent. The index touched an intra-day high of 16,035.50 and low of 15793.27.

National Stock Exchange’s Nifty closed at 4782.90, up 102.5 points or 2.19 per cent from Friday’s close. The broader index hit a high of 4790 and low of 4679.30.

"Market has finally managed to break out of crucial resistance levels. Benchmarks are moving in a fresh range and next target for Nifty is seen at 5050/5300. We expect large moves in midcaps segment," said a senior market analyst.

Analysts are expecting the upmove to continue provided Asian markets don’t falter (US markets are shut Monday for Labor Day), but the relatively low volumes raise doubts over strength of the upmove.

Traders continued to pick up stocks from the mid and small cap space, which are playing a catch-up game with the index stocks. BSE Midcap Index was up 2.31 per cent and BSE Smallcap Index moved 2.83 per cent higher.

Amongst the sectoral indices, BSE Realty Index gained 5.49 per cent, BSE Metal Index jumped 3.95 per cent and BSE Bankex moved higher by 3.1 per cent.

Biggest Nifty gainers comprised Tata Motors (11.35%), Unitech (7.72%), Jindal Steel (6.86%), Reliance Communications (6.83%) and BPCL (6.59%).

ITC (-1.78%), Mahindra & Mahindra (-1.45%), Tata Communications (-0.69%) and ABB (-0.18%) were the only laggards in the 50-share index.

News based movements in stocks were also seen today. Uttam Galva Steels on Friday said ArcelorMittal Netherlands, a unit of leading steelmaker ArcelorMittal, has taken a stake in the company and become a co-promoter. Uttam Galva did not disclose the financial details of the deal. ArcelorMittal will launch an open offer starting Monday for 29.4 per cent stake in Uttam Galva at Rs 120 per share, a 27 per cent premium over a two-week average and 85 per cent premium over a six-month average. The scrip closed at 10 per cent upper circuit on NSE.

The board of Rei Agro will meet on September 9 to consider and approve issue of rights shares to existing shareholders. The scrip surged 11 per cent on NSE.

Larsen and Toubro, the country’s largest engineering and construction company, is in talks to buy a thermal coal mine in Australia for about $300 million. The mine has estimated coal reserves of 250 million tonne that can generate enough electricity to meet India’s needs for about seven months. The stock ended 2 per cent higher on NSE.

Indian Oil Corporation’s board will meet on September 13 to consider issue of bonus shares. This saw the scrip surge 9 per cent on NSE.

Market breadth on BSE showed 2,244 advances against 587 declines.

Disclosure: Author does not own any of the stocks discussed here.





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