Stocks resume their upward march

Growth in Chinese industrial production strengthened the Indian market rally

The Indian stock market continued its bull run on Wednesday on hopes of a robust recovery in the global economy after China reported strong growth in industrial production for October. The Sensex closed at 16,850, up 409 points, while the Nifty gained 122 points to close at 5,004.

Asian markets also gained on buoyant Chinese macro data. The key benchmark indices in Hong Kong, South Korea, Taiwan and Singapore rose by between 0.82%-1.61% while Japan remained flat.  However the Shanghai Composite fell 0.11%.
On Tuesday, 10th November, the Dow Jones Industrial Average was up 20 points at 10,247, the S&P 500 index ended flat at 1,093 while the Nasdaq Composite Index fell three points to close at 2,151.

Meanwhile in premarket trading on Wednesday, the Dow Jones index was trading 61 points higher.

In the Indian market, IT stocks continued to firm up after the president of industry body Nasscom said the sector will regain double-digit growth from April 2010. Tata Consultancy Services was up 3% while Infosys Technologies and Wipro were up 4% each.

Shipping stocks rose after the Baltic Dry Index breached the 3,500 level on Tuesday. Shipping Corporation of India, Mercator Lines and Great Eastern Shipping Company were up by 9%, 14% and 6%, respectively.

Jubilant Organosys shot up 20% on news that its wholly owned subsidiary Jubilant Biosys has signed a pact with Singapore-based Duke University for global research and drug development.

C&C Constructions jumped 6%, after the company’s board approved raising funds through various modes.

Rural Electrification Corporation rose 5% after the company received government’s approval for a follow-on public offer of 17.17 crore shares.

Shree Renuka Sugars was up 2%, after the company acquired Vale Do Ivai S.A., a Brazil-based sugar and ethanol company, while Ballarpur Industries went up 2% after the company redeemed debentures worth Rs1,000 crore issued by its a step-down subsidiary, BILT Graphic Paper Products.

Pyramid Saimira Theatre was locked at the lower circuit limit of 10% at Rs 19.65 after the Securities and Exchange Board of India barred the company from trading in the capital market for seven years.

India’s largest small-car marker Maruti Suzuki remained flat despite data showing that total car sales in October rose 34% to 132,615 units. Sales of trucks and buses, a gauge of economic activity, rose 52% last month to 42,562 units.
Meanwhile, trade secretary Rahul Khullar said exports fell 11.4% to $12.5 billion in October 2009 over October 2008. Between April and October 2009, exports were at $90.4 billion, down 26.5% from the year-ago period, he added.

As per media reports, C Rangarajan, chairman of the prime minister’s economic advisory council, made a statement that the Reserve Bank of India may withdraw some monetary stimulus if inflation rises towards the end of 2009. The fiscal deficit needed to be reduced by 1%-1.5% in the next fiscal year, he said.

Finance secretary Ashok Chawla said on Wednesday that the rising capital inflows into India were not a concern any more and the authorities were monitoring the situation. He also said India’s economy was unlikely to reach growth rates of 8%-9% until exports revived. Earlier this month, the trade minister had said exports may start growing in annual terms from the March 2010 quarter.

Meanwhile, data showed that China’s industrial production surged 16.1% in October 2009 from a year earlier after record loan disbursals by banks so far this year. The industrial production growth exceeded market expectations. Retail sales climbed 16.2%.  The growth in urban fixed-asset investments in the first ten months of this year was 33.1%, easing from the 33.4% growth in the first nine months of 2009. The consumer price index fell 0.5% from a year earlier and the producer price index shrank 5.8%, with each dropping more than economists had estimated but still showing an increase from data in the previous month.

Exports, a key engine for China’s economic growth and a major source of employment for its people, dropped at a higher-than-expected 13.8%, though the contraction was an improvement over the 15.2% decline in September 2009.

New loans issued by Chinese financial institutions dropped in October 2009 to their lowest monthly level this year, suggesting mainland Chinese authorities were scaling back a key source of stimulus for the economy. However, China’s key broad measure of money supply, M2, rose 29.42% at the end of October 2009 from a year earlier, in line with expectations.
— Swapnil Suvarna [email protected]

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