Sensex gains 245 points, closes at 17,228

Talks of boost in government spending uplift Indian market sentiment

The Sensex gained 245 points from the previous day’s close, ending the day at 17,228, while the Nifty closed at 5,148, up 81 points.

Reliance Industries Limited (RIL) is reportedly in talks with more than a dozen banks to club together a war chest of $8 billion-$10 billion for the acquisition of LyondellBasell, the world’s third-largest petrochemical company that has filed for bankruptcy in the US. The stock rose 2%.

Tata Steel rose 2% after the company said its sales rose 34.5% to 498,000 tonnes in November 2009 over November 2008.

Larsen & Toubro rose 1% after the company said that it had received an order worth Rs844 crore from the Nuclear Power Corporation of India for construction work at an atomic power project in western India.

Kiri Dyes & Chemicals has executed a purchase agreement for acquisition of DyStar Group and its selective assets. The stock shot up 9%.

New Delhi Television has entered into a conditional agreement with Turner Asia Pacific Ventures for the sale of most of its indirect stake in NDTV Imagine, which is held through its subsidiary NDTV Networks Plc. The total transaction size is $117 million and involves a sale of 76% of NDTV Imagine for a consideration of $67 million together with the subscription to fresh shares in NDTV Imagine by TAPV for $50 million. The stock was up 3%.

Gammon Infrastructure surged 7% on reports that the company would buy 24% stake in Indira Container Terminal and would increase the stake to 50% over three years.

Mahindra Systech said that it would consolidate Mahindra Ugine, Mahindra Forgings and other unlisted companies. All five companies will be consolidated under one company. Mahindra Ugine gained 5% and Mahindra Forgings shot up 10%.

During trading hours, the government said that it will seek Parliamentary approval to spend an extra Rs25,725 crore ($5.5 billion) for the fiscal year to end-March 2010. The gross additional expenditure would be Rs30,943 crore, of which Rs5,217 crore would be met through savings, the government said.

The government will spend an extra Rs3,000 crore on fertiliser subsidies and Rs3,460 crore on food subsidies. The government would also spend Rs800 crore on an equity infusion in State-run carrier Air India.

According to finance minister Pranab Mukherjee, the government will complete share sales through public offers in three State companies by the end of March 2010. Divestment of 5% each in NTPC and Rural Electrification Corp and 10% in unlisted Satluj Jal Vidyut Nigam is under implementation and there is a need to adhere to fiscal prudence as early as possible, he said.

As per media reports, Reserve Bank of India (RBI) governor D Subbarao said that measures to control capital inflows into India could not be ruled out in case there was a surge in foreign funds that had to be contained. The RBI governor said that he was not willing to debate at this time on the instruments or timing, as this would depend on how the situation evolves.

Meanwhile, the government has partially lifted the ban on rice and wheat exports by allowing organic varieties of these grains for overseas sale, as per reports.

According to the Manpower Employment Outlook Survey, India Inc is all set to step up hiring in the last quarter this fiscal as employers are more optimistic than their counterparts in other nations. The survey said brisk hiring is anticipated by Indian employers during the upcoming quarter.

It further added that with 38% of employers expecting total employment to increase, 2% forecasting a decrease and 53% predicting no change, the net employment outlook is a robust 36% and once seasonal adjustment is added to the data, the outlook stands at 39%.

India’s employment outlook in January-March is better than bigger economies including Australia at 19%, Canada at 13%, China at 11% and the US at 6%.

During the day, Asia’s key benchmark indices in China, Hong Kong, Japan, South Korea, Taiwan and Indonesia fell by between 0.09%-1.18%, as US Federal Reserve chairman Ben Bernanke’s comments on the outlook for the economy prompted investors to stay cautious.

The Japanese government unveiled a 7.2 trillion yen ($81 billion) economic stimulus package.

On Monday, 7 December 2009, the Dow Jones Industrial Average was up 1 point while the S&P 500 and the Nasdaq Composite were down 3 points and 5 points respectively after Mr Bernanke said the economy faced “formidable headwinds.”

In premarket trading, the Dow was trading 16 points higher.

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