Bulls strike Back.

vishal_1986

Par 100 posts (V.I.P)
Comprehensive victory

It was as if Virender Sehwag had regained his long lost touch as the BSE Sensex today finally overcame the blues that it had suffered due to three consecutive sessions of heavy losses, scoring a triple ton. IT managed to collect runs on the back of a recovery in the base-metal prices as also due to recovery in Asian markets, especially Japan's Nikkei that managed a good show on waning concerns of a strengthening yen. The market was also responding to tame inflation data in the US, which generated hopes of a curb to further interest rate hikes.

The Indian market advanced consistently throughout the day, on broad-based buying witnessed in various strata of stocks.

The BSE Sensex ended with a spurt as buying momentum continued throughout the day for key pivotals.

The BSE Sensex advanced 344.08 points (2.90%), to 12,217.81

The S&P CNX Nifty surged 112 points (3.17%), to 3,635.10

Earlier, the Sensex got off to a good start, a positive gap of 89 points, at 11,962.87, extending Tuesday's solid intra-day rebound, when it had swung 576 points, and finally ended with a gain of 51 points.

Sensex has recovered 396 points (3.35%) in the past two trading sessions from its close of 11,822.20 on 15 May 2006. Earlier, it had lost 790 points (6.70%) in 3 trading sessions from the close of 12,612.38 on 10 May 2006 on profit-booking.

The BSE Sensex hit a fresh high of 12,238.81 in the last minute of trade as buying intensified. Its low has been at 11,962.87.

Recovery in Asian markets and in global base-metal prices helped the domestic bourses to rally in early trade.

The benchmark index oscillated a high 276 points, indicating a high degree of volatility.

The advance to decline ratio on BSE was strongly positive at 4.36:1. As many as 2,089 shares advanced as compared to 479 that declined. Only 36 shares remain unchanged. The market breadth was strongly bullish as a whole host of small-cap and mid-cap stocks surged.

The BSE mid-cap index rose 3.36% while the BSE small-cap index was up 3.83%.

The total turnover on BSE amounted to Rs 4,089 crore which is lower as compared to Tuesday's turnover of Rs 5,277 crore

Among the Sensex pack, 27 advanced while only 3 declined.

State Bank of India (SBI) was the biggest gainer, up 8.28% to Rs 999.95 on 6.11 lakh shares

Tata Steel surged 7.50% to Rs 616 on 27.42 lakh shares. The company will unveil its Q4 March 2006 results on Thursday (18 May 2006). There is market talk that the company will declare a rights issue. Also, there are reports that the company is likely to complete acquisition of a minority stake in an overseas coal mine by the end of the current calendar year.

Bajaj Auto surged 5.10% to Rs 3,280 on rumours of bonus/stock split announcement from the company on 19 May 2006, when it unveils its March quarterly results.

ONGC advanced 5.95% to Rs 1,443 while ITC rose 5.68% to Rs 205.50.

Hero Honda jumped 5.30% to Rs 894 while heavyweight Reliance Industries (RIL) was up 4.42% to Rs 1,089.40 on 16.46 lakh shares.

Cipla slipped 1.46% to Rs 259 while Grasim lost 0.80% to Rs 2,165.

Reliance Industries (RIL) was the turnover topper on BSE, aggregating Rs 177.26 crore followed by Tata Steel with Rs 166.27 crore and Bombay Dyeing with Rs 152.25 crore.

A block deal of 6 lakh shares was 6 lakh shares was struck on the Lakshmi Overseas counter at Rs 1,154 per share by 11:18 hours on BSE. The stock closed 0.92% higher at Rs 1,110 on 6.95 lakh shares

Metal stocks surged after a sharp fall in the past few days as product price firmed on the London Metal Exchange (LME). A host of metal stock plunged in the past few days on worries of softening metal prices.

Also, Mittal Steel's takeover of world's second largest steel company–Arcelor, being cleared by regulators from three countries also bolstered metal stocks.

The BSE Metal index surged 5% or 494.40 points on strong buying interest for the stocks in this sector.

Stocks from the pack like JSW steel (up 8.4% to Rs 320), Mukand (up 4.20% to Rs 111.25), Jindal Saw (up 4.35% to Rs 412), Tata Sponge (up 8.95% to Rs 152.35), Jindal Steel & Power (up 4.06% to Rs 2013), Hindustan Zinc (up 13.60% to Rs 959.35), Sterlite Industries (up 3% to Rs 517.20), Nalco (up 5.20% to Rs 306.10), Hindalco (up 1.25% to Rs 217.50), Sail (up 5% to Rs 92.10), Lloyd Steel (up 9% to Rs 14.63), Ispat Industries (up 5% to Rs 17.85 ) and Essar Steel (up 6.10% to Rs 49.60) moved higher.

Real estate scrips were in action today on renewed buying interest. Stocks like Mahindra Gesco Developers (up 20% to Rs 1,288.25), Unitech (up 5% to Rs 9,837.05), Bombay Dyeing (up 17% to Rs 968.55), Bata India (up 14% to Rs 313), Century Textiles (up 7% to Rs 572) surged.

The real estate sector has witnessed tremendous attention over the past two years owing to the booming Indian economy, increasing demand for better quality housing and commercial spaces and, consequently, rising prices of land holdings.

Lupin spurted 6.36% to Rs 1,237.35 after its board meeting held on 17 May 2006 recommended an issue of bonus shares in the ratio of 1:1. Its net profit for FY06 jumped 116% to Rs 182.72 crore compared to Rs 84.36 crore in FY05. Total income during the same period rose from Rs 1, 179.90 crore to Rs 1,678.61 crore.

Dewan Housing Finance jumped 20% to Rs 86.90 on the back of strong Q4 March 2006 results. Its Q4 March 2006 net profit jumped 58% to Rs 15.24 crore (Rs 9.64 crore). Total income rose 45.4% to Rs 71.87 crore (Rs 49.42 crore).

Ranbaxy Laboratories rose 2.3% to Rs 490.20 on plans to launch a new anti-asthma drug in India. It entered into an in-licensing agreement for the Indian domestic market for a new Asthma drug, Doxophylline - a Novel Xanthine Bronchodilator from Eurodrug Laboratories of Netherlands.

Gangotri Textiles, plunged 5% to Rs 57.45 after the company on Tuesday fixed the price of its forthcoming Rs 55 crore follow on public offer in a band of Rs 41 to Rs 46 per share.

Larsen & Toubro (L&T) firmed 3.4% to Rs 2,717 after it picked up 61% stake in International Seaport Dredging promoted by Belgian company, Dredging International NV. L&T said the acquisition is in line with its strategy to position itself in the 'ports and harbours' segment, as the company has been involved in the construction of several ports.

Nagarjuna Construction advanced 4.54% to Rs 380.95 after it secured new orders aggregating Rs 362 crore. These orders comprise of a pipeline project, Sohar Water Network, Phase-I, valued at Rs 116 crore awarded to the company by the Muscat Municipality, Muscat, Sultanate of Oman. This is the first international project bagged by the company. The other orders aggregating Rs 246 crore have been procured from various agencies in India.

Nagarjuna Agrichem jumped 10.60% to Rs 148 on strong Q4 results. Nagarjuna Agrichem reported a 131% growth in Q4 March 2006 net profit, to Rs 5.81 crore as compared to Rs 2.51 crore in Q4 March 2005. Net sales for the same period under consideration rose 38.6%, to Rs 84.90 crore from Rs 61.24 crore.

Aurobindo Pharma rose 1.16% to Rs 670 on issue and allotment of FCCBs worth $ 200 million on 16 May 2006 in two tranches. Tranche A consists of $ 150 million and tranche B consists of $ 50 million. These are issued at 0%, due May 2011, and listed on the Singapore Exchange Securities Trading, Singapore.

Graphite India jumped 7.7% to Rs 305 on the back of robust Q4 March 2006 results. The company reported 81.8% surge in Q4 March 2006 net profit to Rs 27.57 crore (Rs 15.16 crore). Net sales rose 39.7% to Rs 196.94 crore (Rs 140.92 crore).

The strong support from local mutual funds in the past few days has helped the markets to sustain the losses. They stepped up buying even when the market was under correction. Mutual funds bought shares worth a net Rs 794 crore on 15 May – the day when the Sensex plunged 463 points. On 12 May, they had bought shares worth a net Rs 356 crore despite which, the Sensex lost 150 points.

Tame US inflation data helped soothe worries about further US interest rate hikes and boosted major Asian markets on Wednesday. Key indices in Australia, Hong Kong, South Korea, Taiwan, Singapore and Japan were up between 0.06-1.1%.

The Nikkei average gained 0.92% at Wednesday's close, snapping a six-day losing streak as mitigating concern about a strong yen encouraged investors to buy recently battered issues such as Tokyo Electron. Bargain-hunting also helped shares of other exporters with strong earnings prospects, such as Toyota Motor Corp. and Nikon Corp.

The Nikkei rose 149.25 points, to 16,307.67 after falling more than 1,100 points during the previous six sessions.
 
A Comprehensive downturn-- FII PRESS PANIC BUTTON

FIIs press panic button on fear of higher tax rate; press heavy sales



Share prices fell like nine pins as fear that a possible change in taxation laws on sale of shares would raise tax-liability for FIIs, rattled the bourses. Selling accentuated in the last one hour or so. It was the biggest fall in the barometer BSE Sensex in a single trading session. FIIs pressed heavy sales today, dealers said.

The 30-share BSE Sensex was ravaged 826.38 points (6.7%), to settle at 11,391.43 – its lowest level since 17 April 2006. The S&P CNX Nifty squandered 246.20 points (6.77%), to settle at 3,388.90

As many as as 887.36 points were eliminated from the benchmark index at one point in late trading, to hit a low of 11,330.45. It was the steepest fall ever experienced in a single trading session. The previous biggest fall happened on 17 May 2004 (Black Monday), when it lost 565 points on the back of a defeat of the market-friendly National Democratic Alliance (NDA) government in the general elections. It had plunged as much as 842 points in intra-day trade on that day.

BSE clocked a turnover of Rs 4,818 crore today, much higher than Wednesday's Rs 4,116 crore.

The Indian government on Wednesday said it plans guidelines that will help distinguish between investors and stock traders to tax them differently. This raised concerns that the tax liability for FIIs may go up if their profits are treated as business profits. As per current taxation laws, foreign companies are taxed at the rate of 40% and there is apprehension that FIIs may be levied the same rate.

As per existing norms, profit from sale of shares if it is considered as `investment' is taxed at 10%, if it is a short-term capital gain (for shares held for a period of less than one year). Long term capital-gains tax is zero at present, if the shares are held for a period of one year or more. However, there is no uniformity in this regard as of now. Some tax payers pay considering profit from shares as business profits and some others pay taxes taking into consideration long-term and short-term capital gains.

It may be recalled that the Central Board of Direct Taxes (CBDT) had laid down tests in 1989 to distinguish between shares held as stock-in-trade and shares held as investments. It (CBDT) proposes to issue supplementary instructions in this regard to provide further guidelines for determining whether a person is a trader in stocks or an investor. Before issuing the instructions, the CBDT has invited comments from interested parties by May 25.

`If no clarification comes from government or CBDT regarding taxation of FIIs, the market may lose another 200 to 300 points tomorrow' said a dealer with a local brokerage.

Weakness also arose out of a jolt that most Asian markets suffered on prospects of a further rate hike in the United States. The possibility of higher rates on safe-haven US Treasuries has drawn investor interest away from riskier assets in emerging markets. As per latest data, US consumer prices rose faster than expected in April, provoking the concern.

Market men also said that the market was top-heavy following a recent solid surge in share prices and correction was overdue. From a low of 7,685.64 on 28 October 2005, the Sensex jumped 4,926.74 points (64%) to a lifetime closing high of 12, 612.38 on 10 May 2006. Since then, the Sensex has now shed 1,220.95 points (9.6%) to current 11,391.43.

Metal, cement and auto shares plunged along with a number of blue-chips declined sharply as well as rapidly. All the 30-Sensex constituents ended in the red.

The market breadth was appalling. While 2,257 stocks declined on BSE, only 266 rose. Surprisingly, 25 stocks were able to hold their own. Losers outpaced gainers by a ratio of 8.4:1.

Tata Steel softened 13% to Rs 531 on a heavy volume of 44 lakh shares after failing to live up to expectations. It suffered a 14% fall in Q4 March 2006 net profit to Rs 783 crore (Rs 909 crore). Net sales rose 7% to Rs 4,128 crore (Rs 4073 crore) and was as per expectations.

Among other metal shares that bore the brunt of the assault, Sterlite Industries plunged 15% to Rs 438.50, Hindalco lost 12% to Rs 190.40, Nalco shed 11.8% to Rs 270, and Hindustan Zinc shed 9.4% to Rs 856.

Index heavyweight Reliance Industries was humiliated 7.7% to Rs 1,003. A strong 31.5 lakh shares changed hands in the counter on BSE. RIL has a near 11% weightage in the Sensex.

Auto shares declined rapidly. Car major Maruti Udyog eroded 11.5% to Rs 806, Tata Motors lost 9.5% to Rs 870.50 and Bajaj Auto gave away 8% to Rs 2,999.

Cement shares were mauled. ACC plunged 12% to Rs 797, Grasim lost 8.5% to Rs 1985, Gujarat Ambuja Cements shed 8% to Rs 100 and UltraTech Cement lost 5% to Rs 710.

Another Sensex doyen, Infosys, was dented 5% to Rs 3,040. Infosys has a near 10% weightage in the Sensex.

Some of the other major upsets were VSNL (down 13% to Rs 405), MTNL (down 11.9% to Rs 176), Reliance Energy (down 10.7% to Rs 532), ITC (down 7.6% to Rs 189), Bhel (down 7% to Rs 2150), Hindustan Lever (down 7% to Rs 255), ONGC (down 6.6% to Rs 1345), Ranbaxy (down 6.6% to Rs 457), and ICICI Bank (down 5.9% to Rs 589).
 
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