ONGC reverses initial decline

Firm start of European markets helped Indian stocks hit their highest level in more than two-weeks. The BSE Sensex was up 239.57 points or 1.31% to 18,471.63, up 205.02 points from the day's low. The market breadth was strong. The market surged as slower-than-expected GDP growth in Q4 March 2011 eased concerns of an aggressive monetary tightening by the central bank to tame inflation.

Index heavyweight Reliance Industries (RIL) extended intraday gains. Oil exploration major ONGC reversed initial losses in volatile trade. Most auto stocks gained ahead of May 2011 monthly vehicle sales figures that will start trickling from Wednesday, 1 June 2011. Metal stocks and IT stocks were in demand on renewed buying.

The market edged higher in early trade on firm Asian stocks. The market extended initial gains to hit fresh intraday high in morning trade. In a bout of volatility, the key benchmark indices regained strength after sliding sharply from the day's high in mid-morning trade soon after the latest data showed that the Indian economy grew by a slower-than-expected 7.8% in Q4 March 2011 and also slower than a revised 8.3% growth in Q3 December 2010. The Sensex hit two-week high in early afternoon trade. The market extended gains to fresh intraday high in afternoon trade buoyed by positive opening of European markets.

The latest data showed that the Indian economy grew by a slower-than-expected 7.8% in Q4 March 2011 and also slower than a revised 8.3% growth in Q3 December 2010. The manufacturing sector output rose 5.5% and farm output rose 7.5% in Q4 March 2011. The GDP grew 8.5% in the fiscal year ended March 2011.

At 13:21 IST, the BSE Sensex was up 239.57 points or 1.31% to 18,471.63. The Sensex jumped 243.15 points at the day's high of 18,475.21 in afternoon trade, its highest level since 16 May 2011. The index rose 34.55 points at the day's low of 18,266.61 in early trade.

The S&P CNX Nifty was up 77.55 points or 1.42% to 5,550.65. The Nifty hit a high of 5,552 in afternoon trade, its highest level since 13 May 2011.

The market breadth, indicating the health of the market, was strong. On BSE, 1689 shares advanced while 968 shares declined. A total of 115 shares remained unchanged.

The total turnover on BSE amounted to Rs. 1756 crore by 13:25 IST

Among the 30-member Sensex pack, 28 stocks gained while only two of them declined.

Index heavyweight Reliance Industries (RIL) rose 0.87% to Rs. 947.90, extending intraday gains. RIL is reportedly buying regasified liquified natural gas (R-LNG) from Royal Dutch Shell and Petronet LNG at double the price. The move comes in the wake of shortage of natural gas from its D6 fields in the Krishna-Godavari (KG) basin.

India's largest oil & gas exploration firm by sales ONGC rose 0.77% to Rs. 280.55, rebounding from the day's low of Rs. 270.25. After market hours on Monday, ONGC said net profit declined 26.09% to Rs. 2790.86 crore on 5% rise in sales income to Rs. 15554 crore in Q4 March 2011 over Q4 March 2010. ONCG attributed the weak Q4 results to higher discounts on crude sales given to PSU OMCs to meet their underrecoveries on fuel sales at government controlled prices. ONGC gave discount of Rs. 12136 crore to PSU OMCs in Q4 March 2011, sharply higher than 4999 crore in Q4 March 2010.

ONGC said it continues to be zero debt company. ONGC also said on Monday that it has notified three more oil and gas discoveries.

Metal stocks were in demand on renewed buying. Sesa Goa (up 1.84%), Tata Steel (up 1.05%), Hindustan Zinc (up 1.03%), JSW Steel (up 1.56%), Sterlite Industries (up 2.03%), Hindalco (up 0.54%) and Sail (up 0.39%) gained.

India's largest sponge iron producer by sales Jindal Steel & Power surged 2.91% to Rs. 654.14 and was the top gainer from the Sensex pack.

IT stocks rose on renewed buying. India's second largest software services exporter Infosys rose 0.58%. The IT firm last week said it had received a subpoena from a grand jury in a US district court that requires the company to provide certain documents and records related the company's sponsorships for and uses of B1 business visas. Infosys said it intends to comply with the subpoena and to cooperate with the investigation.

India's largest software services exporter TCS gained 1.40%, with the stock gaining for the fourth straight day. The company announced during market hours on Monday that it has unveiled the next generation treasury solution and that leading private bank HDFC Bank will harness this integrated platform for greater efficiency.

India's third largest software exporter Wipro rose 1.18%, with the stock gaining for the third straight day. Wipro Infrastructure Engineering -- a division of company has signed an agreement with Spanish Company CESA for the manufacture of precision engineered components for the aerospace and defence sector. The agreement involves transfer of technology as well as manufacturing workload for aerospace actuators and related precision engineering components from CESA to Wipro. The announcement was made last week.

India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 0.5% to Rs. 661.30, off day's low of Rs. 649.25. Nevertheless, the stock extended Monday's 5.34% slump triggered by muted growth in Q4 March 2011 net profit. The company said during market hours on Monday that net profit rose 6.4% to Rs. 606.50 crore on 27.3% rise in gross revenue and other income to Rs. 7391.20 crore in Q4 March 2011 over Q4 March 2010. Regarding the future outlook, M&M said with both input costs and interest rates rising, the current economic environment is quite challenging. The company said it expects to rise to this challenge through continuous focus on new product introduction, process innovation and cost control.

But, most auto stocks rose ahead of May 2011 monthly vehicle sales figures that will start trickling from Wednesday, 1 June 2011. India's largest car maker by sales Maruti Suzuki India rose 0.78%. India's top bike maker by sales Hero Honda Motors gained 0.41%.

India's largest commercial vehicles (CV) maker by sales, Tata Motors rose 0.43% on bargain hunting. The stock had witnessed a steep fall recently amid a cautious future outlook from the auto major. Tata Motors said at the time of announcing the year ended March 2011 (FY 2011) results on Thursday, 26 May 2011, that the current macro economic factors like high inflation, rising interest rates, slower industrial growth have the potential to adversely impact CV demand. The company also said that commodity prices and concerns about rising costs continue for the CV division.

Tata Motors on Saturday, 28 May 2011, launched its budget car Tata Nano in Sri Lanka. The company said it is also introducing five new commercial vehicles in Sri Lanka viz. The Tata Divo luxury coaches and semi low-floor air-conditioned Tata Marcopolo buses for passenger transportation and, for cargo movement, the Tata Prima 4928 tractor-trailor, Tata 1618 truck and the Tata Super Ace, a high-end variant from the Tata Ace family. Tata Motors is a market leader in commercial vehicles in Sri Lanka.

India's second largest bike maker by sales Bajaj Auto rose 1.23% with the stock extending three days' gains. Net profit surged 164.89% to Rs. 1400.39 crore on 23.54% rise in total income to Rs. 4199.97 crore in Q4 March 2011 over Q4 March 2010. Huge extraordinary (EO) income boosted Bajaj Auto's net profit in Q4 March 2011. The result was announced on 18 May 2011.

Pharma major Cipla shed 0.88% to Rs. 326.65 and was the top loser from the Sensex pack. The stock declined on profit booking after gaining 3.55% on Monday.

Among the side counters, Essar Shipping Ports & Logistics (up 23.23%), Vimta Labs (up 20%), Rajapalayam Mills (up 18.12%), Orissa Minerals Development Company (up 15.23%), and PVR (up 13.23%), surged.

The annual monsoon rains hit Kerala two days earlier than expected, boosting prospects for a harvest that could spur Asia's third-largest economy. The India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA).

Good rains would help ease food inflation and boost rural income. Rainfall that comes within 96% to 104% of the long-term average is considered a normal monsoon season, but this alone doesn't guarantee a good crop. The timing and spread of the rains are equally important. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector, which lacks irrigation facilities on more than half its farm land. Monsoon rains usually enter India's mainland through the southern state of Kerala in the first week of June, gradually progressing to cover most of central and northern India by July, before retreating in September.

European markets were firm in opening trade on Tuesday as sovereign debt worries may be soothed temporarily, on signs that tougher austerity measures will be implemented by the Greek government. The key benchmark indices in UK, Germany and France were up by between 0.71% to 1.23%.

Asian stocks rose on Tuesday amid speculation European officials will sanction more assistance for Greece. The key benchmark indices in China, Hong Kong, Japan, Singapore, South Korea and Taiwan rose by between 0.19% to 2.32%. Indonesia's Jakarta Composite was flat.

Moody's Investors Service today placed the Government of Japan's Aa2 local and foreign currency bond ratings on review for possible downgrade.

Trading in US index futures indicates that the Dow could gain 87 points at the opening bell on Tuesday, 31 May 2011. US markets were closed on Monday, 30 May 2011, for Memorial Day.