The ‘Defined Growth Endowment Plan’ from Star Union Dai-ichi will fetch just 3.25%
On rallies, look out for resistance at 5,620 and then at 5,690
As expected the market carried on with yesterday's upward trend from the start of trading today. The Sensex and Nifty opened positive at 18,527 and 5,561. The Sensex soon hit its intra-day high at 18,636, but started falling immediately on profit-booking and hit the intra-day low of 18,515 (Nifty 5,559), which is above the lows in the past one month, on a drop in the HSBC Markit Purchasing Managers' Index.
The Markit Index, based on a survey of around 500 companies, edged down to 57.5 in May from 58 in April, weighed down by a slower expansion rate for new orders, surging prices and labour shortage.
On the positive side, data released by the commerce ministry showed India's merchandise exports rose 34% to $23.8 billion in April 2011 over the corresponding period last year, while imports for the month rose 14% to $32.8 billion over the previous period. Oil imports rose 7.7% to $10.2 billion. The trade deficit in April 2011 narrowed to $8.98 billion from $11.03 billion a year earlier. This helped the market to regain strength.
The six core sector industries showed reasonable growth of 7.4% in March this year over the 6.8% achieved in March 2010 to give ample indication that there is unlikely to be any further deceleration in overall industrial growth during the month.
An hour before the close today, the Nifty hit its intra day high of 5,597, which is close to the resistance of 5,600. The Sensex rose 106 points to close at 18,609 and the Nifty gained 32 points to close at 5,592. Look out for 5,620 and then 5,690 as next resistances on the Nifty.
The major gainers on the Sensex were Reliance Communication (up 4.81%), NTPC (up 3.43%), Larsen & Toubro (up 2.33%), Bharti Airtel (up 1.95%) and Reliance Infrastructure (up 1.81%). Weak passenger car sales in May 2011 saw Tata Motors fall the most (1.19%). Tata Steel (down by 1.17%), DLF (down 0.9%), Reliance Industries (down 0.53%), Bajaj Auto (down 0.43% were the major losers. In the 30 Sensex stocks, 22 gained, while seven fell, and ONGC ended flat. The Nifty had 31 stocks in the green, while 19 were losers.
The advance-decline ratio on the National Stock Exchange (NSE) was 1093:593.
BSE Capital Goods index was the major gainer, up by 1.38%, and was followed by BSE TecK index that gained 1.06%. BSE Consumer Durables index dropped 0.56% and the BSE Healthcare fell 0.36%.
Cambridge Solutions was the top gainer on the NSE, up 20.03%. Cambridge Integrated Services Group Inc, USA ("CISGI") a 100% subsidiary of the Company has incurred operational losses continuously over recent years due to continued decline in revenue generated in the business. In view of the unsatisfactory returns and significant future commitments of the CISGI business, the board of directors at its meeting on 31 May 2011 approved the sale of the USA workers' compensation and third party administration operations of CISGI to Sedgwick Claims Management Services, Inc. The consideration to be paid by Sedgwick is $22.7 million which was to be paid in cash on 31 May 2011. Of this, $3 million will be held in escrow for up to 18 months.
Clutch Auto was another top gainer on the NSE, up 20%. Subject to the requisite approvals, the board of directors approved the demerger of the auto ancillary technology division. The new entity is likely to seek listing. The scheme of arrangement between Clutch Auto, Clutch Developers and CA Clutch Vision has been approved. As per the scheme, the auto ancillary technology division shall be demerged to CA Clutch Vision.
Vikash Metal & Power, the major loser on the Nifty, fell 14.46%. The company has recommended a dividend at the rate of Re 0.25 per share (2.5%) for the financial year 2010-11. BEML fell 6.60% on poor FY11 earnings.
In the global arena, China's official purchasing managers' index (PMI) hit a nine-month low in May, a survey showed, reinforcing evidence that economic growth is slowing under the weight of government credit curbs and power shortages. The PMI, which is designed to provide a snapshot of conditions in China's vast manufacturing sector, fell to 52 from 52.9 in April, China Federation of Logistics and Purchasing said.
Except for Hang Seng, KLSE Composite and Seoul Composite, all other Asian indices ended positive. Europe was trading weak at the time of writing.
The Indian corporate sector has managed to turn in a surprisingly robust performance in Q4 of this fiscal, despite a gloomy outlook—operating profit of 1,094 companies grew by 20% and net profit grew by 17%
Despite all the talk of gloom and doom, the Indian corporate sector has performed better than expected in the fourth quarter of the year 2010-11. While a few negative factors were causing concern —like rising inflation and a tight interest rate regime—Indian companies have posted better-than-expected results. This brings out the inherent resilience in the country's corporate sector.
The sales growth of 1,094 companies of the sample size of 1,300 companies tracked by Moneylife grew by 22%; operating profit went up 20%; net profit was up by 17%. Tata Consultancy Services Ltd reported a 37% increase in sales to Rs7,969.75 crore; it also clocked a healthy 49% rise in net profit (at Rs2,149.18 crore). Its operating profit was also up by 48%. Bharat Heavy Electricals Ltd managed a 32% increase in sales (at Rs18,380.50 crore) and a healthy increase in operating profit (49% up at Rs4,293.60 crore).
Despite the fact that the current macroeconomic outlook has not been very bright for oil companies, and with pressure from under-recoveries, BPCL (Bharat Petroleum Corporation Ltd) managed to post a huge 45% increase in operating profit at Rs1,664.55 crore.
Reliance Power Limited and Southern Petrochemicals Industries Corporation Limited have shown sharp growth in sales to Rs21.92 crore and Rs868.08 crore during this quarter (March 2010 sales were Rs1.32 crore and Rs119.90 crore respectively).
In the jewellery counter, Su-Raj Diamonds & Jewellery Limited has shown 75% sales increase to Rs1,567.69 crore and 20% increase in net profit to Rs33.81 crore.
But there were a few firms which did not perform in this quarter—Ranbaxy Laboratories Limited reported a 43% decline in sales to Rs1,095.81 crore. Moser Baer India Limited suffered a 21% decline in sales to Rs458.95 crore in the quarter ending March 2011.
Tata Communications Ltd maintained its sales performance with quarterly sales of Rs863.60 crore.