Market warms up to govt package

Sensex crosses 10,000-mark, led by metal, oil & gas, banking stocks .

The Bombay Stock Exchange (BSE) benchmark index, Sensex, on Monday crossed the 10,000-mark on the back of coordinated financial and monetary measures by the government and firm global markets. The rally was led by oil & gas, banking and metal stocks.

While the Sensex was up 3.19 per cent, or 317 points, to close at 10,275 points, the broader index, S&P CNX Nifty of the National Stock Exchange (NSE), gained 2.45 per cent, or 74 points, to end the day at 3,121.

Key benchmark indices in Hong Kong, Japan, South Korea, Singapore, China and Taiwan gained between 1.4 and 5.2 per cent. In the US, Dow Jones industrial average had closed with gains of 2.94 per cent last week. 

HOW THEY FARED
TOP GAINERS
	05 Jan ’09	%chg*
Sterlite Ind	301.95	9.82
Tata Power	830.15	7.76
Jaiprakash Asso	93.95	7.49
Tata Steel	245.10	6.73
ONGC	723.75	6.43
TOP LOSERS
	05 Jan ’09	%chg*
Satyam Com	166.90	-6.00
Bharti Airtel	685.35	-2.76
DLF	295.80	-1.60
NTPC	181.05	-1.60
HUL	243.55	-1.58

Back home, foreign institutional investors (FIIs) made net purchases of Rs 469 crore as per the provisional figures provided by the BSE. Domestic institutional investors too purchased stocks worth Rs 220 crore on Monday.

The BSE Metal index was the top gainer, up 5.54 per cent. BSE Oil & Gas index was up 5.10 per cent and BSE Bankex was up 3.53 per cent.
 

BSE sectoral indices
	05 Jan ’09	%chg*
Metal	5,869.08	5.54
Oil & Gas	6,559.66	5.10
Bankex	5,874.87	3.53
Cap goods	7,493.25	2.83
IT	2,339.10	2.40
Power	1,941.52	1.75
Auto	2,553.82	1.30
Cons durables	2,028.30	1.21
Healthcare	2,995.33	0.05
Realty	2,464.28	-0.33
FMCG	1,996.03	-0.53
*Change over previous close

Bank stocks rose on speculation that falling bond yields and lower rates would accelerate loan growth and profitability. Metal stocks rose after the government withdrew exemptions from countervailing duty on TMT bars, used in construction activity, and customs duty on zinc and ferro alloys. This customs duty was levied earlier to contain inflation.

However, market players are of the view that the current rally is not sustainable. “Majority of the institutional investors are cautious of the current rally and wary of the crucial data that would come out from the US in the next 10 days,” said Deepak Sawhney, Research Head at the Mumbai-based Networth Stock Broking.

Institutions are awaiting US construction spending numbers, total vehicle sales, home sales, consumer confidence, employment numbers, jobless claims and payroll numbers that would be out in the next 10 days.

Last week, the Indian government raised overseas investment limit in local corporate bonds to $15 billion from $6 billion and lifted restrictions on foreign borrowings and recapitalisation of state-run banks. Markets also got a boost as the former Chairman of ICICI Bank Chairman, K V Kamat, told the media that domestic interest rates would dip by 4-5 per cent in the next six months.

Moreover, according to a research note by Goldman Sachs’ Mumbai-based economist Tushar Poddar, the Reserve Bank of India (RBI) may cut its overnight lending and borrowing rates by another 0.5 percentage point each this month as growth slows to as little as 6.7 per cent in the year ending March 31 and 5.8 per cent in February. Goldman predicts the cash reserve ratio (CRR) will be lowered by another 1.5 per cent.

Sterlite Industries led the gainers among the Sensex pack rally on Monday. The stock was up 9.82 per cent at Rs 301. Among other gainers, Tata Power was up 7.76 per cent at Rs 830, Jaiprakash 7.49 per cent at Rs 93, Tata Steel 6.75 per cent at Rs 245, ICICI Bank 6.04 per cent at Rs 499 and the country’s largest private sector company, Reliance Industries, was up 6.38 per cent at Rs 1,365.

The market breadth on BSE looked strong as 64.29 per cent, or 1,680, stocks advanced against the declines of 32.87 per cent, or 859, stocks.