Sensex crosses 17,000 mark

The key benchmark indices extended gains in mid-morning trade. The
BSE 30-share Sensex was up 172.84 points or 1.03%. The BSE Sensex
crossed psychological 17,000 mark. The BSE Sensex and S&P CNX Nifty
hit their highest level in more than 16 months. IT, auto and
banking stocks rose. Oil exploration stocks also in demand after a
decent debut from state-run Oil India. The stock was currently
trading at a premium of 7.87% over the IPO price of Rs 1,050. The
market breadth was strong.

Overall volumes on the bourses may remain low as traders may
refrain from building large positions this week because this is a
truncated trading week as the market remains closed on Friday, 2
October 2009, on account of Gandhi Jayanti. Further, shares bought
in the cash segment on Tuesday, 29 September 2009, cannot be sold
today, 30 September 2009, due to settlement related issues because
commercial banks are closed today for half-yearly closing of
accounts

Meanwhile government disinvestment official said sees at least 5
stake sales in state firms by March 2010. Meanwhile, the government
is reportedly planning to announce a blueprint for selling its
stake in state-owned firms in the first week of October 2009. The
policy is expected to suggest how the government will eventually
bring down its stake in public sector companies to 75% over a
period of time.

The next trigger for the stock market is Q2 September 2009 results
of India Inc next month. There is optimism about Q2 September 2009
results after advance tax collections registered a positive growth
in the second quarter after witnessing a negative growth in the
first quarter. Corporate advance tax and advance personal
income-tax were up by 14.7% and 1.7%, respectively in the September
2009 quarter. Infosys kickstarts the reporting season on 9 October
2009.

Latest economic data has been strong. The index of six core
industries having a combined weight of 26.7% in the index of
industrial production (IIP) registered a growth of 7.1% in August
2009 compared to a growth of 2.1% in August 2008. During
April-August 2009-10, six core industries registered a growth of
4.8% as against 3.3% during the corresponding period of the
previous year. Coal and cement sector boosted overall growth in the
six infrastructure industries in August 2009.

Meanwhile, the Reserve Bank of India (RBI) deputy governor KC
Chakrabarty has said that rising inflationary pressures could limit
the scope for a sustained growth supported monetary policy stance.
The central bank has aggressively cut policy rates and pumped huge
liquidity in the system in the aftermath of the global financial
crisis last year. It may be recalled Finance Minister Pranab
Mukherjee recently spoke of the need for the fiscal stimulus to
continue for a few more quarters until the economy is back on
track.

Coming back to equities, a section of the market is concerned that
a glut in share sales may suck liquidity from the secondary market.
The corporate sector has raised large sums of money through equity
and equity related instruments in the past six months or so to
either to retire high cost debt or to fund expansion. The supply of
paper by Indian firms appear limitless, raising concerns that
additional share sales will suck liquidity from the secondary
market.

As per one report, companies plan to raise at least Rs 40,000 crore
through initial public offers (IPOs)/follow on public offers (FPOs)
in the second half of the current financial year. Power companies
such as GMR Energy, Indiabulls Power and JSW Energy and state-run
Bharat Heavy Electricals and NTPC are likely to tap the primary
market. Reliance Infratel also announced on Tuesday, 22 September
2009, its intention to raise Rs 5,000 crore from the primary
market. A number of companies are also in the fray to raise funds
by way of qualified institutional placement (QIP), reports suggest.


Most Asian stocks were mixed in volatile trade after a surprise
fall in U.S. consumer confidence. The key benchmark indices in
Japan, South Korea Hong Kong and Singapore fell by between 0.51% to
0.93%. Key benchmark indices in China, Japan and Taiwan were up by
between 0.01% to 1.46%.

Trading in US index futures indicated Dow could open flat today, 30
September 2009.

US markets ended lower on Tuesday, 29 September 2009 as a drop in
consumer confidence dragged on the market. The Dow Jones Industrial
Average fell 47.16 points, or 0.5%, to 9,742.20. The S&P 500 index
dropped 2.38 points, or 0.2%, to 1,060.60, and the Nasdaq Composite
index shed 6.70 points, or 0.3%, to 2,124.04.

The US consumer-confidence index dropped to 53.1 in September from
54.5 in August. Economists had expected the gauge to rise to 57.

Meanwhile, the S&P/case-shiller home price report for July was
better-than-expected. The report showed a 13.3% year-over-year
decline, which was better than the 14.2% decline expected. Home
prices continued to rebound, up for a third straight month in July,
after a three-year slide.

At 11:20 IST, the BSE 30-share Sensex was up 172.84 points or 1.03%
to 17025.75. The Sensex rose 175.88 points at the day's high of
17,028.79 in morning trade, its highest since 23 May 2008. The
barometer index rose 15.55 points at the day's low of 16,868.46 in
early trade.

The S&P CNX Nifty was up 40.85 points or 0.82 % to 5,047.70. It hit
a high of 5,051.40 its highest level since 23 May 2008.

The market breadth, indicating the overall health of the market was
strong. On BSE, 1355 shares rose as compared with 806 that
declined. A total of 65 shares remained unchanged.

Among the 30-member Sensex pack, 25 rose and rest fell.

The BSE Mid-Cap index rose 0.59% and the BSE Small-Cap index rose
0.8%.