Posts Tagged ‘Indian economy’

SMC Global Securities Selects SunGard Kiodex Risk Workbench

SMC Global Securities, one of India’s largest brokering firms, has selected SunGard’s Kiodex Risk Workbench, a fully integrated Web-based risk management solution, to help its clients in hedging their price risk in foreign exchange, commodities and interest rates.

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SMC Global Securities also selected Kiodex Global Market Data for its independent market data needs.

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Kiodex will help SMC Global Securities establish a corporate hedging desk by assisting with deal capture, reporting and risk analysis of its client portfolios. SMC chose SunGard’s Kiodex Risk Workbench because of its robust risk management tools and its software-as-a-service (SaaS) delivery model, helping companies quickly bring new business to market.

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Mr. D K Aggarwal, chairman and managing director of SMC Comtrade Ltd, said, “With the globalization of the Indian economy, corporations in India need to have proper risk management systems in place. Through this relationship with SunGard, SMC would be in a position to help its clients to effectively manage price risk volatilities in the foreign exchange and commodities space.”

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Mr. Ajay Garg, director, SMC Global Securities, said, “SunGard’s Kiodex Risk Workbench and Kiodex Global Market Data will help us streamline deal entry, capture the dynamics of the commodity markets, and give us the ability to view risk from multiple perspectives so we can focus on assisting our clients with their risk management needs.”

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Kirk Howell, chief operating officer, SunGard’s Kiodex business unit, said, “India is a rapidly growing commodities market. SMC’s selection of Kiodex extends our existing presence in India to the brokerage community.”

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OUR Websites:  http://www.smcindiaonline.com,http://www.smccapitals.com,
http://www.smctradeonline.comhttp://www.smcwealth.com

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Weekly Update 3rd- 7th May 2010

The week started on a positive note on the back of good global tidings. Markets worldwide have gained after Greece decided to tap into the EU- IMF loan, but the rally could not be sustained and fell like nine pins as heightened sovereign debt troubles in Europe sent global markets in a bit of a tizzy.

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On the global front, FOMC maintained the target range for the federal funds rate at 0 to 1/4 percent as the economy is still seeing high unemployment, modest income growth, employers reluctance to add to payrolls & bank lending contraction. It said that it would continue to monitor the economic outlook and financial developments and would employ its policy tools as necessary to promote economic recovery and price stability. Japan saw unemployment rate climbing to five percent indicating job rebound may moderate. Europe equity markets fell after Standard & Poor’s downgraded three Eurozone members.

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Investors withdrew money from the Europe equity funds & debt funds saw net inflow. Closer home too, markets witnessed volatility as traders rolled over their positions in the derivatives segment from the April 2010 series to the May 2010 series. On the flip side the Q4 March 2010 corporate earnings announced so far have been good with net profit of a total of 441 companies rose 28.70% to Rs 29125 crore on 36.40% rise in sales to Rs 249959 crore in the quarter ended March 2010 over the quarter ended March 2009. The IMF is optimistic about the growth of Indian Economy. It has estimated that India’s $1.2 trillion economy will expand 8.8% this year and 8.4% next year, higher than it projected in January. While RBI expects India’s economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias expecting normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The IMD has predicted normal monsoons in 2010 at 98% of Long Period Average subject to an error of (+/- 5%). Besides the passing of the Finance Bill 2010 by FM on Thursday with some minor changes in tax proposals may boost sentiment as the government has pledged to the path of fiscal consolidation rather than political opportunism.

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Overall the world markets were quite volatile in the week gone by with wild swings on both sides. Shanghai and Hang Seng could not recover from the fall though other markets recovered. Base metals also took a sharp correction. The strength in the stock markets is there more in cash stocks rather than front line heavy weight index stocks. Nifty has support between 5200-5150 levels & Sensex between 17400-17300 levels.

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Recent moves in commodities are showing that they are moving in different directions. It is indicating the state of uncertainty, where commodities are moving on their own fundamentals. Safe haven buying may keep gold in upper range. While after a steep fall, base metals may try to trade in a range.

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Approaching summer demand amid availability of ample crude stocks can keep crude oil in a range. Some agro commodities viz., pepper, jeera, chilli, cardamom, mentha etc., may surge on good overseas as well as domestic demand.

SOYABEAN “Influenced by ………..”

Double digit food inflation has become a nightmare for Indian economy. Hot discussion is still on. But the question is how oil seeds will contribute in food inflation,  which is the major part of it and the second largest import item of India. What will be the price behavior of oil seeds in futures? Let us have a look.

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PAST YEAR MOVEMENT.

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If we have a look at the price movements of soyabean in the year 2009, it had started its yearly rally at around Rs 1900 per quintal with recovery in international palm oil and energy prices; it touched a yearly high of Rs 2824 per quintal. Smart recovery in international demand mainly from China and India coupled with crop loss in Brazil and Argentina played crucial role in giving upside to the international oilseeds and edible oil prices. Zero import duty on crude edible oil and very nominal duty on refined palmolein have favoured the import over domestic oils at the expenses of Indian oilseed producers and crushers.

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In the oilseeds complex, soybean futures gave the investors the second highest return of 21.86% after CPO at 28.03%.

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However, by the end of 2009, prices cooled off significantly and glimpsed a downside of and respectively.

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A ROAD TRIP TO CHINA………..

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In a very short time, China has built up what is likely the world’s largest soybean processing sector to produce soymeal & soyoil. U.S. has become.one of the major beneficiaries to satisfy the insatiable demand of China. China is the main driver of global soybean prices. The increasing demand.for animal protein in China & competing demand for its farmland, the country will not be able to increase its production & will have to import the.commodity to retain its huge appetite. China accounted for 79 percent of U.S. soybean exports in the week ended April 8,2010 according to a U.S.

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Department of Agriculture report. China is forecasted to account for 54 % of global imports of the oilseed, and 25% of purchases of the edible oil.this year, according to the U.S. Department of Agriculture.

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EXIM SCENARIO

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During FY09-10, the soy meal exports were lower as compared to previous year except the month of October due to higher export price. Soyabean oil imports may exceed last year’s 990,000 tonne as the premium for soyabean oil over palm oil contract., Soyabean oil costs $92.66 a tonne more than palm oil, according to Bloomberg data. The premium narrowed to $60.81 on March 31, the lowest since November 7, 2007, reducing the appeal of palm oil, its substitute.

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SEMINAR OUTCOME

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Based on the outcome of meeting at 31st All India seminar on rabi oilseeds & oil trade and industry on 12th March, 2010 at New Delhi, total soyabean production has been set lower for this year at 85 lakh tonnes. The marketable surplus for crushing is also estimated to be lower at 75 lakh tonnes. The peak oilseed crushing season is the second half of the financial year, in which mills sign most of their meal supply contracts with overseas agencies. The Advance estimates peg oilseed production at 26.32 million tonnes, as compared to 28.16 million tonnes in last year second advance estimate which is 1.84 million tonnes less than the earlier estimates for 2008-09. However, the resulting overall production of Rabi oilseeds is lower than the earlier year’s 2nd advance estimates of 2007-08 & 2008-09 respectively.

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PRICE ANALYSIS of CURRENT SCENARIO

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NCDEX soybean futures have always been tracking the futures at CBOT& BMD alongwith the oilseeds complex futures at both NCDEX & MCX. This year soybean futures prices have been trading downtrend to sideways, starting the year at 2382 levels to a contract low of 1966.00 levels registered a decline of 13.72 % at the NCDEX.

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At CBOT soybean futures hit a three-month high, upbeat economic data from China strengthened the outlook for U.S. agriculture export demand & tracking firm crude oil market. The current status at the NCDEX & CBOT future market for soybean is in backwardation condition, where the prices of the forth-coming contracts are trading lower than the current month. This reveals that the overall trend is still bearish for this commodity. The factors supporting the bearish trend are:

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•Lack of fresh fundamentals & poor export demand.

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•Subdued trading activity.

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•According to the Solvent Extractors’ Association of India, the soybean stocks as on 1st April is at 4.5 million tonnes.

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•Factors such as record output in Brazil and Argentina is limiting the rally.

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SO, WHAT NEXT?

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In short term, the soybean futures are expected to trade on a positive note due to short covering and fresh buying at lower levels. In medium term, the future market may get some initial strength, taking a support at 2000 levels & also from the lower dollar and higher crude oil prices. If crude oil prices continue to rise, production cost of soybeans likely will continue to rise, & these higher costs necessitate higher corn and soybean prices for farmers to be profitable. However, downside is expected to be limited based on recovery of soybean prices since the beginning of month of April.

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We can expect the futures to witness the level of 2400 in the months to come.

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INDIAN ECONOMY – GAINING STRENGTH Final Part :0

Thank you friends for viewing the first part. Now i am posting the final part here enjoy:)

4.Fresh Investments – Infrastructure being one of the key thrust areas on government agenda would continue to see large investments coming in going ahead. Even the corporate are expected to continue with the capacity additions in the light of huge anticipated demand.

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After the sharpest decline in more than 70 years, world trade is set to rebound in 2010 by growing at 9.5%, according to WTO. Exports from developed economies are expected to increase by 7.5% in volume terms over the course of the year while shipments from the rest of the world (including developing economies and the Commonwealth of independent States) should rise by around 11% as the world emerges from recession. This strong expansion will help recover some, but by no means all, of the ground lost in 2009 when the global economic crisis sparked a 12.2% contraction in the volume of global trade – the largest such decline since world war II . Should trade continue to expand at its current pace, the economists predict, it would not take much of the time to surpass the peak level of 2008 in terms of the volume growth.

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Coming back to India front, the continued demand revival in major markets such as the US and European Union, led exports to remain in the positive territory for the fourth consecutive month with shipments in February growing by 34.8% to $16.09 billion from $11.94 billion during February 2009. India’s Imports too saw a growth of 66.4% to $25.05 billion from $15.06 billion in the corresponding period. Cumulative value of imports for the period April, 2009- February, 2010 showed a degrowth of 13.5% to $248.04 billion from $287.09 billion in the corresponding period as a result of both lower international crude oil prices and slowdown in domestic economic activity.

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India’s two-way trade (merchandize exports plus imports), as proportion of GDP is close to 35%. Now, with the expected improvement in the global trade it would further give a fillip to the economic growth.

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The services sector contributes around 65% to GDP. The lead indicators of service sector activity show that, services such as tourist arrivals, cargo handled by seaports and airports, and passengers handled by international terminals which are dependent on external demand are showing recovery with the improvement in global climate. However, services dependent on domestic demand have exhibited a robust and steady growth during 2009-2010, so far.

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In sum, the expected normal monsoon, buoyancy in industrial production & services suggests continuation of growth momentum. With the fiscal deficit being addressed by the government with large focus on infrastructure spending, improvement in corporate sentiments with respect to capital spending & RBI taking steps to withdraw monetary accommodations in a calibrated way is expected to take economic growth back to 9% levels.

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Stay tuned for more update like this :)

INDIAN ECONOMY – GAINING STRENGTH Part 1

Stock market reflects & discounts the overall conditions in the economy.Besides, stock prices in the market are also governed by the investor behavior & valuations. Sometimes investor’s optimism takes the market valuation to a level that it does not matches up with the actual future growth, thus becoming the basis for correction & vice- versa. It is said that “ markets may remain irrational till the life of human being”. Now let us have a look at the economy to see what lies in the future & how it is shaping up for the next leg of growth.

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Indian economy is expected to grow by 7.2% in the fiscal ended on 31st march 2010 & is projected to expand by 8.55 in the current fiscal year and 9% in the next year. The continued improvement in the sentiments of the manufacturing sector which currently contributes around 15% in GDP is likely to play a major role in taking GDP growth to double digits.

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Strong industrial recovery has been the key underlying strength behind the recovery of GDP. During April- December 2009, the index of industrial production (IIP) increased by 8.6% over the corresponding period. Factors that will drive the growth in the industrial production are:

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  • Improvement in agriculture output- Tokyo-based Research institute for global change has predicted normal monsoon rains in india for the current year. On the belief of climatic conditions will remain normal during the year we expect the improved availability of agricultural output to push up production of manufactured food products..

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  • Rising consumer demand – as the business conditions are improving & corporate are giving wage hikes, we believe this will strengthen the sense of financial security in the minds of urban middle-class. A rise in purchasing power and availability of easy and affordable loans are expected to increase the demand for durable goods like auto, consumer appliances.

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  • More availability of mining products- we expect natural gas & crude oil output would increase as the result of the efforts that are being done by companies like Reliance & Cairn India. Coal Production will also rise owing to the allocation of new coal blocks by the government. Fertilizer & Electricity sector would be the key & direct beneficiary with the improvement in the gas & coal availability.

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    Stay tuned for more on this 🙂

    Indian Industry Expanded At A Fastest Rate in 25 Months :)

    Indian Industry Expanded At A Fastest Rate in 25 Months

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    India’s industrial output rose at a faster-than-expected 11.7 per cent in November  from a year earlier, due to stimulus-backed demand for manufactured goods, particularly consumer goods.

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    Part of the industrial growth, measured by IIP is no doubt due to a low base of last year but it is mostly attributable to stimulus-driven demand.

    Stimulus measures have boosted domestic demand for sure.

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    However, industrial growth was just 2.5% in November 2008.

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    India’s factory production in November was the fastest in 25 months, raising a debate on whether stimulus provided to spur the economy should continue.

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    Meanwhile, manufactured goods, which have around 80% weight in the Index of Industrial Production, which measures industrial growth, grew by 12.7% in November 2009 compared to 2.7% in the same month a year ago.

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    Within this category, consumer durable goods production expanded by 37.3% in the month against just 0.3% a year ago  while industrial output in Q1 of 2009-10 stood at 3.8% and in Q2 at 9.2%.

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    Moreover, with better-than-expected performance in November,  industrial production in the first 2 months of Q3 now expanded at more than 10%, as it grew by 10.3% in October.

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    As such, if the trend is maintained in December, industry would expand at faster pace in the third quarter.

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    On the other hand, the continuous rise of industrial production gives enough hope that the recovery is on a firm footing.

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    Though it is going to fuel the debate whether stimulus provided by the government to boost the economy should be withdrawn now or not.

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    Market experts believe that with respect to stimulus, there could be some withdrawal on the indirect taxes side. This could be required to make up for the fiscal deficit.

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    As part of stimulus, government had cut excise duty by six per cent and service tax by two per cent, besides stepping up Plan expenditure taking the total value of stimulus to Rs 1,86,000 crore.

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    🙂

    FLASHBACK 2009


    For India, 2009, been a great year with the return of a stable government at centre, good FII inflow, 80% increase in the Indian stock market and less terror attacks. But globally, H1N1 influenza and a series of bankruptcy by some big international giants are some events, which we never want to happen again.

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    Putting behind the worst annual performance ever, Indian equities were on a roll in 2009, catapulting a key index by more than 80 percent, to close the year with one of the best gains among emerging markets.

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    At closing bell Thursday, the 30-share benchmark sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was ruling at 17,464.81 points with an impressive gain of 7,817.5 points, or 81.03 percent, over the previous year’s close at 9,647.31 points.

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    This was the best annual performance since 1999 and was in sharp contrast to 2008, when the Sensex ended with a hefty loss of 10,639.68 points or 52.45 percent making it the third-worst performing equities index among emerging markets.

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    The story was no different at the National Stock Exchange (NSE), the other major bourse in the country, where the broader 50-scrip S&P CNX Nifty gained a hefty 2,241.9 points or 75.76 percent when it closed at 5,201.05 points Thursday.

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    The main factors that made key indices rise like a Phoenix was resilience of the Indian economy and impressive growth despite global slowdown that also reflected in corporate earnings and the return of the foreign institutional funds.

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    According to markets watchdog, the Securities and Exchange Board of India, such overseas funds pumped about $17.46 billion into the Indian stock markets in 2009, as opposed to a net sale worth $13.135 billion for the first time in over a decade..

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    ‘The performance in 2009 surpassed the expectations of even the most optimistic person. There were not many places left for foreign funds to invest and India was among the few attractive destinations,’ said Jagannadham Thunuguntla, equity head at SMC Capitals.

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    Even as the Sensex gained 7,817.5 points, some of the 13 sector-specific indices stood out because of their performance — the metals index appreciated the most, up 233.68 percent, while auto followed with a gain of 204.16 points..

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    Similarly, the indices for information technology was up 132.78 percent, capital goods gained 104.26 percent, consumer durables rose 97.8 percent, banking gained 83.9 percent, state-run enterprises inflated 80.54 percent, power moved up by 74.3 percent.

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    On the whole, the year started on a promising note with the government unveiling a second dose of fiscal stimulus to help the economy weather the adverse impact of a slowdown in the global economy — touted as the worst in eight decades.

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    As a result, the Sensex rallied till Jan 6 and gained 7.13 percent in just three days of trading. But then came the confession of a multi-million dollar fraud by Satyam Computer founder B. Ramalinga Raju, triggering a 7.25 percent fall in just one session.

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    Till February, the barometer index was oscillating between 9,000-odd points and 10,300-levels. But as signs of a prolonged economic recession receded the world over, Indian equities found more takers and reflected in steady rise in the index.

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    By the beginning of May it was trading comfortably around the 12,000-point mark and gave a thumping welcome to the electoral victory of the Congress party-led United Progressive Alliance — that even saw suspension of trading as indices hit the upper circuit twice.

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    On that eventful day of May 18, the Sensex stood at 14,284.21 points, gaining 2,110.79 points, or 17.33 percent, over the previous close, while Nifty also rose 17.3 percent, or 636.4 points, to close at 4,308.05 points.

    The remaining months of the year saw a steady rise in the index with interim corrections even as events like the presentation of an industry-friendly national budget and a high growth for the economy during the second quarter boosted investor sentiments.

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    Looking at individual stocks that go into the Sensex basket, the top five gainers during 2009 were Tata Motors, up 398.33 percent at Rs.792.60; Mahindra and Mahindra, up 293.23 percent at Rs.1,080.80; Sterlite Industries, up 230.45 percent at Rs.861.65; Hindalco, up 211.23 percent at Rs.160.75; and Maruti Suzuki, up 199.88 percent at Rs.1,559.65.

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    Only three stocks ended lower — Bharti Airtel was down 54.02 percent at Rs.328.80; Reliance Communications was down 23.92 percent at Rs.172.90; and Reliance Industries which ended lower since the company declared a 1:1 bonus.

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    Looking ahead, the markets expect some more action once the government’s divestment programme gets underway even as investors have their fingers crossed on when the Sensex will breach the magical 21,000 mark.

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    So, overall, the year 2009 has been one of the most significant chapters in the stock market growth with an increase of 80% in its value. Further, we keep our spirits high on FM’s comment that Indian economy can grow at 7.75% in FY10.

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