Sensex regains 18,000 level after 9-days as crude falls

The BSE benchmark Sensex added over 313 points to regain the 18,000-level after nine-days during intra-day trade today on heavy buying in blue-chips after a steep fall in crude prices and easing concerns on fuel prices hike.

The Bombay Stock Exchange benchmark index climbed 313.14 points to 18,037.63 at 1145 hrs, with most oil company stocks rising.

The National Stock Exchange's broader Nifty index rose by 92 points to 5,414.

The trading sentiment improved after Oil Minister S Jaipal Reddy said his ministry has made no specific proposal on increasing auto and cooking fuel prices for consideration by the EGoM on fuel prices later today, easing concerns of more monetary tightening to curb inflation.

Crude oil prices dropped by 4.6 per cent to USD 91.02 a barrel in New York yesterday.

The largest state-owned oil explorer, Oil and Natural Gas Corp, surged by 3.18 per cent, the most in a month, to Rs 272.90, while Gas Authority of India gained 2.20 per cent to Rs 446.50.

Tiger Global invests US$6 million in CaratLane

Tiger Global has invested $6 million in online jewellery portal , CaratLane, in its second e-commerce investment this month. Earlier this month, the global PE major had invested $20 million in books-to electronics e-retail venture, Flipkart. CaratLane, which supplies to 50 cities, will use the funding to expand its national footprint.

"We want to strengthen our back end and invest in marketing and brand building," said the company's CEO Mithun Sacheti, who founded the venture in 2008 with Srinivasa Gopalan, founder-CEO of Lister Technologies. Tiger Global is betting big on Indian e-commerce.

The investment in CaratLane is its sixth this year. In May, the fund had led a $16 million investment round in online private sales retailer, Exclusively. in.

In April, Tiger Global, along with IDG Ventures and Indo-US Venture Partners, invested $14 million in e-retailer Myntra. They also invested in online electronics retailer Lets-Buy and in online babycare products retailer BabyOye.com .

E-commerce in India has been booming, with the market expected to rise 47% to Rs 46,000 crore this year, according to a report by the Internet and Mobile Association of India (IAMAI). However, e-retail constitutes just 8% of e-commerce, with personal items like jewellery, apparels, cosmetics, shoes and watches contributing 19% to e-retail.

While online retail has been popularly considered as driven by deals and low prices, CaratLane claims the average ticket size on their site is Rs 80,000.

But the company also claims its prices are upto 25% lower than retail store prices. Sacheti, a trained gemologist, said that in any nascent e-commerce market, low prices are the first step to attract customers. His family owns Jaipur Gems and Sacheti and he was able to leverage the connections and expertise in the area of gems and jewellery to build up CaratLane.

"We are able to keep prices low as we hold minimum stocks and are able to turn around pieces in 48 hours," said Sacheti. While the company manufactures and retails jewellery, it acts as an aggregator for solitaires. "We source solitaires from all over the world and are able to guarantee the lowest prices," he said. The company, which clocked revenue of Rs 50 crore in FY 2010-11, expects to expand to 100 cities by end of the year.

Sensex Index Swings Between Gains and Losses on Monsoon Forecast, Greece

India’s benchmark stock index was little changed after swinging between gains and losses. A forecast of a below normal monsoon outweighed optimism that Greece may avoid a default on its debt.

Hindustan Unilever Ltd. (HUVR), India’s biggest home-products maker, dropped the most in five months. Monsoon rain in India will be below normal for the second time in three years, the weather office said yesterday, potentially lowering farm output and stoking inflation which is the highest among Asia’s major economies. Infosys Ltd., a software exporter that earns 22 percent of its revenue from Europe, rose the most in two weeks. Greek Prime Minister George Papandreou secured a parliamentary confidence vote, sparking a rally in global equities.

The Bombay Stock Exchange Sensitive Index, or Sensex, was little changed at 17,550.63 at the 3:30 p.m. close in Mumbai. The S&P CNX Nifty Index on the National Stock Exchange climbed less than 0.1 percent to 5,278.30 and its June futures settled at 5,283. The BSE 200 Index fell 0.2 percent to 2,178.43.

“A weak monsoon will lead to a further spike in inflation, which is being driven by rising commodity and crude oil prices,” said Gaurang Shah, assistant vice president at Geojit BNP Paribas Financial Services Ltd. (GBNP)

Hindustan Unilever lost 3.6 percent to 310.75 rupees, its biggest slide since Jan. 27.

Rainfall will be 95 percent of the 50-year average in the June-September season, the weather office said yesterday after the markets closed. That compares with 98 percent predicted by the state-owned forecaster in April. A variation of 4 percent from the long-term average is deemed normal by the agency.

Record Harvests

Prime Minister Manmohan Singh is relying on adequate rain to harvest record quantities of food grain and oilseeds for a second year and cool inflation, which has led the central bank to raise rates 10 times since mid-March 2010. Farming makes up almost 14 percent of the economy and a reduced farm output can also lower rural incomes, hurting sales of tractors and cars.

Infosys increased 1 percent to 2,755.05 rupees and its June futures settled at 2,760 rupees.

The MSCI Asia Pacific Index rose 0.8 percent. A total of 155 lawmakers supported the motion in the 300-seat parliament in Athens, bolstering Papandreou’s chances of pushing through austerity measures to secure international financial aid for Greece. The International Monetary Fund, contributor of a third of the bailout money for the nation, has warned EU leaders that a failure to take decisive action on the debt crisis risks triggering “large global spillovers.”

“Markets may see a dead-cat bounce on good news from Greece but it will not sustain in the long term,” Geojit BNP’s Shah said.

‘Gloomy Horizon’

The Sensex has declined 14 percent in 2011, the worst performer in Asia. The stocks on the gauge are valued at 14.2 times estimated earnings, compared with 10.8 for the MSCI Emerging Markets Index.

“The horizon is still gloomy,” said Deepak Chatterjee, managing director of SBI Funds Management Pvt., which manages $9.3 billion in assets. “Inflation doesn’t seem to be tamed and we’re not at the end of the rate-increase regime. The government has to try to fix the structural problems. It is a question of sentiment rather than fundamentals.”

The central bank raised the repurchase rate to 7.5 percent from 7.25 percent on June 16, extending the longest streak of tightening in a decade, joining its peers from China to South Korea in stepping up the fight against surging living costs.

Rising borrowing costs have begun to crimp demand and hurt corporate earnings. India’s $1.4 trillion economy expanded 7.8 percent in the three months through March 31, the slowest pace in five quarters. Some 33 percent of companies in the Sensex reported profits that missed analysts’ estimates in the March quarter, compared with less than a quarter last year.

Overseas investors sold a net 5.51 billion rupees ($122.7 million) of Indian stocks on June 21, taking their total withdrawals from equities this year to 21.5 billion rupees, according to data fromthe Securities and Exchange Board of India.

To contact the reporter on this story: Santanu Chakraborty in Mumbai atschakrabor11@bloomberg.net

To contact the editors responsible for this story: Darren Boey at dboey@bloomberg.net

Nifty moves higher; oil & gas, banks, auto gain

Indian markets bounced back after a sharp fall in the last session on concerns of renewal of tax treaty between India and Mauritius. Oil&gas and rate sensitives like banks and auto stocks led the pull-back while realty, power and capital goods stocks were down on profit booking.

"After Monday's Mauritius blues, a recovery appears in sight. A review of the tax treaty with Mauritius appears to be on the cards though no timeline has been fixed for negotiations.

Even if talks were to start, their duration and outcome is uncertain. What is also heartening to note is that there was no major sell-off from FIIs (net sales Rs 5 billion). The domestic funds pumped in over Rs 8.6 billion.

So, the start will be positive and a bounce back is a given. Global cues are also supportive. Stock indices in the US and Europe closed higher amid hope of a resolution to the Greek's debt woes. Most Asian markets are up this morning.

The euro has recovered while the dollar index is down slightly. Nymex crude is hovering around $93 a barrel while the Brent is around US$112.

The Nifty could find resistance around 5300. It is likely to find support around 5200. Overall, the market could remain jittery in the short term. One must stick to a 'wait-and-see' approach and be vigilant given the high degree of volatility," said IIFL report.

At 10:20 am; National Stock Exchange's Nifty was at 5283.65, up 25.75 points or 0.49 per cent. The broader index touched a high of 5297.25 and low of 5257 in trade so far.

Bombay Stock Exchange's Sensex was at 17595.65, up 89.02 points or 0.51 per cent. The 30-share index hit a high of 17642.77 and low of 17504.27 intraday.

BSE Midcap Index was up 0.22 per cent and BSE Smallcap Index moved 0.23 per cent higher.

Amongst sectoral indices, BSE Oil&gas Index was up 0.69 per cent, BSE Bankex gained 0.56 per cent and BSE Auto Index moved 0.53 per cent higher.

BSE Realty Index was down 0.94 per cent, BSE Power Index slipped 0.22 per cent and BSE Capital Goods Index declined 0.13 per cent.

Sun Pharma (1.84%), Bharti Airtel (1.67%), Reliance Industries (1.59%), Tata Motors (1.57%) and TCS (1.52%) were the major Nifty gainers.

HCL Tech (-2.39%), Jaiprakash Associates (-1.52%), ONGC (-1.37%), BHEL (-1.32%) and DLF (-1.12%) were the major Nifty losers.

Market breadth was positive on the NSE with 1068 gainers against 976 losers.

Meanwhile, the Asian markets were moved higher. Nikkei 225 was up 0.43 per cent, Strait Times moved 0.63 per cent higher and Hang Seng edged 0.32 per cent higher.

ONGC plans to invest $7.7 bn in India gas block: Report

Indian state explorer Oil and Natural Gas Corp plans to invest USD 7.7 billion to develop a gas field in an east coast block and produce up to 30 million cubic meters a day in five years, the Economic Times reported on Tuesday.

The company plans to drill eight additional wells in the block to maximize output from the deep-sea field and has sought approval for the plan from the Directorate General of Hydrocarbons and the petroleum ministry, the newspaper said citing an emailed response from ONGC.

ONGC could not immediately be reached for comment.

Last week, the Business Standard newspaper had reported that ONGC was in talks with the Indian unit of BG Group and Italian oil major ENI to sell up to a 30% stake in an east coast block.

In February, BP agreed to buy a 30% stake in 23 oil and gas blocks owned by Reliance Industries, India's most valuable listed conglomerate, for USD 7.2 billion.

Rupee to start up on dollars broad drop, shares key

The rupee is expected to open stronger on Tuesday tracking the dollar's losses overseas, but the domestic sharemarket performance would be key for direction.

The index of the dollar against six major currencies was down 0.2% at 74.897 points at 0250 GMT, and below 75.379 when the local forex market closed on Monday.

The euro extended gains in early Asian trade after remarks by the head of the eurozone bailout fund that the facility's guarantees will be raised triggered short-covering, though its advance could stall ahead of a confidence vote on the government in the Greek parliament.

Almost all Asian currencies were stronger versus the dollar.

Traders expect the rupee to open around 44.95 to the dollar and move in a 44.90 to 45.10 band, with a possibility of slipping to 45.25 if shares remain weak through the day.

The rupee had ended at 45.00/01 on Monday, after falling to 45.06 - a level last seen on May 31, and 0.3% weaker than Friday's close of 44.86/87.

The MSCI index of Asian stocks ex-Japan was up 0.4%, while the Nifty futures traded in Singapore were down 0.1%, suggesting a flat to slightly lower start to the local market.

Pledged shares sell off: More pain in the offing?

Santosh Nair

Moneycontrol.com

What will drive the final round of bull capitulation for the stock market to bottom out? Panic selling by foreign institutional investors seems to be most logical answer. After all, they have been the biggest buyers of Indian shares in the last couple of years. Anecdotal evidence as well as shareholding data over the past many quarters point that very little domestic money—retail and institutional—has gone into equities during this period.

But some of the veteran players of the industry have a different take; they feel it could be the margin call-triggered liquidation of shares pledged by promoters that could mark the final sell-off.

Don't be fooled the numbers disclosed by companies to stock exchanges. An overwhelming majority of promoters hold shares in benami accounts, that don’t show up in disclosures of shareholding pattern to stock exchanges. Brokers and fund managers say this number could be anywhere between 3-10%.

With share prices steadily on the decline for some months now, promoters are faced with a difficult choice between either repaying a part of those loans-against-shares, or depositing additional shares as margin. If they fail to do either, the lender will dump the shares in the open market, sending the stock price into a free-fall, which in turn could trigger further margin calls. The promoter of Orchid Chemical nearly got thrown out of his own company in 2008 after the lender liquidated the pledged shares.

So, stock exchange data may show the promoters as holding a certain percentage in the company, while the actual holdings could be much higher.

It is the benami accounts through which promoters buy shares of their company whenever there is a panic selling in their stock, or when they have information about some development that could drive up the stock price. It is through these accounts that large blocks of shares are offered to fund managers for a premium, or dumped in the open market in tranches.

Many promoters pledge shares through unofficial accounts, to shield the stocks from attacks by bear traders. Bears target shares where a sizeable chunk of the promoters’ holdings is pledged. The strategy is weaken the stock price below a point that could then trigger margin calls.

In January 2009, the Securities and Exchange Board of India (SEBI) ruled that promoters should disclose details of shares pledged with lenders, to stock exchanges. The rule was prompted by sharp falls in many stocks where promoters had pledged shares with non-banking finance companies. Promoters have managed to work around the rule, by pledging their shares in the benami accounts.

This is not to say that pledging of shares is always for the promoters’ personal needs. Many promoters routinely pledge shares to fund working capital requirements, or some other requirement of the company.

But there are enough promoters who have been raising money to play the ‘market capitalization’ game. In fact, the stock market rally in many mid and small companies around Diwali last year had to do with promoters raising money by pledging a part of their holdings, and using that money to purchase shares through the open market in collusion with some market operator. That game is now up. There are far too many negatives at the macro level—both globally and locally—and the stock market is set for a downturn in the near term. Stock prices could fall even sharper than the benchmark indices, unless the companies manage to report spectacular earnings, which again looks difficult given rising interest costs, high raw material costs and falling consumer demand.

Pledging of shares is not a bad thing, but unless they were for the right reasons, some promoters will have to be ready for a dramatic fall in their stock price. Or who knows, maybe even losing control of their companies.

Subscription begins for Rushil Decor IPO

Decorative laminated sheets manufacturer Rushil Decor has opened its initial public offering of 56,43,750 equity shares of face value Rs 10 each for subscription today.

It has fixed price band at Rs 63-72 for the issue, which closes on June 23. The issue includes promoter’s contribution of 2,43,750 equity shares and issue to the public of 54 lakh equity shares.

Company manufactures decorative laminated sheets with a network of branches, distributors and dealers across India. Company offers comprehensive engineered interior products including decorative laminate sheets and plain particle boards.

Issue proceeds are proposed to be used for setting up of medium density fibre board (MDF) plant at Amble Industrial Area, Chikmagalur, Karnataka; and for working capital requirement. The issue will close on June 23.

Corporate Strategic Allianz Limited is the book running lead manager and Indbank Merchant Banking Services Ltd is the co-book running lead manager to the issue.

Sensex sheds over 300 pts; all sectoral indices in red

The benchmark Nifty was consistently trading below the 5300 level after the news that Mauritius government agreed to restart talks of revising the Double Taxation Avoidance Agreement (DTAA) treaty with India.

Finance Secretary said Mauritius gave in-principle nod to mull treaty review. He said they would discuss Mauritius tax treaty in July-August.

He also said, "We await Mauritius confirmation on tax treaty review date. We need framework before levying tax on Mauritius investment." "We can't arbitrarily tax investment routed from Mauritius," he added.

Stocks with investments from Mauritius as well as companies, which pledged shares, came in under pressure as more than 40% of India's total foreign direct investments (FDIs) come from Mauritius. GTL crashed 61% and GTL plummeted 41% despite clarification from company.

KS Oils tumbled 18%. Delta Corp, Alok Industries, HDIL, Lanco Infratech, IVRCL and Punj Lloyd fell 6-8%.

The 30-share BSE Sensex was trading at 17,523, down 348 points and the 50-share NSE Nifty slipped 107 points to 5,259. About nine shares declined for every one share advancing.

All sectoral indices were in the red. BSE Oil & Gas, Realty, IT, Power, Auto, Metal, Healthcare and TECk indices dropped 2-4%.

Heavyweights Reliance Industries, ONGC, TCS, NTPC, ITC, Infosys, HDFC Bank and Wipro were down 2-3.5%. Tata Motors and Cairn India fell 4%.

Reliance Communications was down 8% and Reliance Infrastructure down 7%. Reliance Capital and Reliance Power were down 4-4.5%.

The sell-off in global markets too added some more pressure on our markets. European markets like France's CAC, Germany's DAX and Britain's FTSE were down 1% each. US index futures namely Dow Jones and Nasdaq lost 0.5% each.

VMS Industries debuts with 10% premium

Shares of VMS Industries started the trade at Rs 43.95, up 10% as compared to issue price of Rs 40 a share despite lower subscription during the issue opened.

At 9:37 hours IST, the stock was trading at Rs 46.20, with volume of nearly 30 lakh equity shares on the Bombay Stock Exchange.

VMS Industries is engaged in ship recycling activities, off-shore support business activities. It raised Rs 25.75 crore through the issue.

Issue proceeds are proposed to be used for modernization of ship recycling plot, setting up of corporate office at Ahmedabad and for long-term working capital requirement.

Issue was opened for subscription during May 30-June 2 and was subscribed more than 1.4 times. Reserved portion of retail and non-institutional investors was subscribed 3.67 times and 1.24 times, respectively. However, qualified institutional buyers had not shown any interest in the issue.

YC Deveshwar re-appointed Chairman of ITC

The shares of ITC are trading at 192, up by Rs. 1 or 0.76% over the previous close.

Yogesh Chander Deveshwar has been reappointed as ITCchairman for another five years, according to reports.


A resolution to this effect will be placed beforeshareholders for approval at the company’s forthcoming annual general meeting,reports stated.

The shares of ITC are trading at 192, up by Rs. 1 or 0.76% over the previous close. It touched the day's high and low at Rs. 192 and 191, respectively.

Even though ITC does not have a retirement age, Deveshwar’sextension has been the subject of discussion since his five-year term was closeto ending, added reports.

India HDFC falls after 16.5 mln shares change hands

Shares in India's top mortgage lender, Housing Development Finance Corp , fell as much as 1.8 percent in early deals on Tuesday after 16.5 million shares, or 1.12 percent of equity, changed hands at 643 rupees each on the Bombay Stock Exchange.

Identity of the buyers and sellers were not immediately known.

At 9:25 a.m. (0355 GMT), shares in HDFC were down 0.6 percent at 653 rupees after falling as low as 645.50 in firm Mumbai market .

On Monday, two sources with knowledge of the matter had said Citigroup had decided to reduce its stake in HDFC to about 10 percent from 11.4 percent via stock market deals. (Reporting by Manoj Dharra and Devidutta Tripathy; Editing by Ranjit Gangadharan)

BSE Sensex rises 0.3%; May inflation data in focus

The BSE Sensex rose 0.3% in early trade on Tuesday, with banks leading the rise, taking cues from strong Asian markets.

At 9:17 a.m. (0347 GMT), the 30-share BSE index was up 0.32% at 18,324.92 points, with 26 components advancing. The 50-share NSE index was up 0.4% at 5,502.75.

Financials such as State Bank of India, ICICI Bank and HDFC Bankwill be in focus as the data would provide cues on the Reserve Bank of India's (RBI) rate decision on Thursday.

The wholesale price index is expected to have risen 8.70% in May from a year earlier, up slightly from the previous month, thanks to rising food and fuel prices, a Reuters poll showed.

Economists expect the RBI to continue with its hawkish view as it attempts to control rising inflation.

Top mortgage lender Housing Development Finance Corp will be on the radar after sources said Citigroup has decided to reduce its stake in the firm to about 10% from 11.4% via stock market deals.

The MSCI's measure of Asian markets other than Japan was up 0.9% by 0304 GMT, while Japan's Nikkei rose 0.2%.

The Nifty India stock futures in Singapore were up 0.1%.

On Monday, the 30-share BSE index closed barely changed at 18,266.03 points.

STOCKS TO WATCH

* Tata Communications after the telecoms firm said it had increased its effective holding in South Africa's second-biggest fixed-line phone operator Neotel to 61.5% from 49%.

* Oricon Enterprises Ltd after the firm said it had alloted 2.2 million shares to Clearwater Capital.

Moneycontrol.com

Market continues downtrend momentum: Ashwani Gujral

Ashwani Gujral, Chief Market Strategist, ashwanigujral.com, in a chat with ET Now, gives his views on market outlook.

Not holding to that 5550 mark ahead of the weekend?

Today's fall is a bit worse than yesterday's fall because today we retested 5600 and then came back down fairly sharply. Key stocks are breaking down, something like a Tata Motors is breaking down below 1050. Banking, metals, auto are unable to give leadership. You have an odd Hindustan Lever, ITC, which are trying to pull it up and Reliance, which was doing its bit has now again slipped below 950, so the market does not look as strong as it was looking say three days back and long positions clearly should be protected. As a disclosure, we have taken short positions around 5540. Now for the day, you can sell into Axis Bank with a stop of about 1280, a target of 1200. The bank index has turned and is doing much worse than the Nifty . Hindalco, we can sell with a stop of about 195, a target of 180 and maybe buy something like an Exide Industries with a stop of about 159, a target of 170.

Reliance to partner world leaders for new businesses, says Mukesh Ambani

Bullish on adding further financial muscle to energy-to-retail conglomerate led by him, Mukesh Ambani on Friday said Reliance Industries will partner world leaders for entering new businesses in the country.

Although he was silent on specific details for the future course of action of RIL's entry into financial services and telecom businesses, Ambani said that a partnership-led transformation would be one of the top agenda going forward.

"... transformation is at the top of the Reliance agenda for a renewed organisation that will deliver continuous growth," Ambani said.

Addressing shareholders at the company's 37th AGM here, Ambani listed among the top agenda "a partnership transformation that will enable Reliance to partner with world leaders to enter new business domains in India". He also promised "a business transformation that will fundamentally strengthen the constitution and character of the organisation".

Ambani said Reliance was endowed with a strong balance sheet and it was reinforcing its constitution with the business transformation initiative. "Reliance is forging new partnerships to pursue new growth opportunities," he said, while adding that the group was determined to improve its ranking among global businesses.

Ambani went on to talk about a talent transformation to help it attract best talent in the country and abroad, an innovation-led technology transformation to explore new businesses and a market-transformation to help Reliance explore new consumer markets.

The RIL Chairman and MD said Reliance has transformed many sectors and redefined the way industries operate and has always been able to foresee changes in business trends.

Ambani said the focused efforts would be undertaken to transform Reliance into a "renewed and refreshed organisation prepared for opportunities and challenges of a 21st century world". He said the year 2010 presented the company with opportunities in market growth and for investments across each of its businesses.

At the same time, RIL also had to confront challenges arising out of high commodity and input prices and inflationary trends, he added.

Still, RIL added significantly to its financial strength and its enterprise value has grown to over USD 75 billion, Ambani said.