[R]6:00 PM Mumbai, 8:30 AM New York – Finance Minister Mukherjee said that the government is focused on increasing infrastructure spending but will meet its budget deficit target of 5.5% in the current fiscal year. Reliance Industries may hold more than expected natural gas at its reserves. April exports may have declined 33% matching the decline in March.[/R]

Stocks in Mumbai surged on the back of higher closing in the U.S. and Europe and Asia. The rally in stocks was also prompted by positive comments from Finance Minister Pranab Mukherjee. The government is focusing on infrastructure spending and will remain fiscally prudent.

Mukherjee stressed that sustained growth without additional spending is not likely but the government will stay within the budget deficit target of 5.5%. In the fiscal year ending in March 2009, the budget deficit soared to 10.6% that forced the rating agency Moody’s to lower its debt rating to two notches below investment grade.

The Federation of Indian Export Organizations estimated that exports in April may have declined as much as 33%. The government data showed a decline of 33% in March, a sixth monthly export decline.

Metals and infrastructure stocks closed higher for the second day in a row. The Sensex index increased 520.41 or 3.83% closed to 14,109.64 and CNX Nifty gained 159.35 or 3.9% to 4,276.05.

In trading on BSE, turnover declined to 6,884 crore rupees from 6,938 crore rupees and on the NSE turnover increased to 20,633 crore rupees from 19.358 crore rupees.

Of the 30 stocks in Sensex, 27 increased and 3 declined. Reliance Infrastructure was the most active stock in NSE trading.

Gainers & Losers

Reliance Industries increased 2% to 2,187.20 rupees after its partner in gas fields in Krishna Godavari gas basins estimated that two areas D-3 and D-9 may hold 20 trillion cubic feet of gas reserves. The revised estimates put the gas reserves at twice the amount in the largest gas reserve area D-6. The Reliance partner Hardy Oil & Gas in a statement revised its estimate.

ONGC surged 8.9% to 1,105 rupees after Business Standard reported that the government may revise the price of natural gas to $4.2 million Btu. The publication did not cite any source and 123jump.com could not verify the revision with ONGC.

Reliance Infrastructure surged 14.8% after its board granted 43 million warrants to Anil Ambani with a lower conversion price of 1,000 rupees. The new warrant grant will cancel the previous warrants with a conversion price of 1,822 rupees a share. The revised grant, if exercised will allow the Anil Ambani to purchase 10% stake at a cost of 4,300 crore rupees.

Banks closed higher after government controlled banks are expected to lower interest rate by full one percentage point.

ICICI Bank increased 6.6% to 710.25 rupees, HDFC Bank Ltd gained 5.5% to 1,409.10 rupees and State Bank of India surged 6.1% 1,792.90 rupees. HDFC increased 4.4%.

Software exporters closed higher after the benchmark indexes in the U.S. surged. Infosys increased 2.7%, Wipro gained 1.9% and TCS added 3.4%.
Ranbaxy Laboratories rebounded 7.1% after dropping 8.4%.

Earnings Review

Bharat Heavy Electricals Limited, an engineering and manufacturing company said fourth quarter sales rose 40% to Rs.11,134.38 crore from Rs.7,959.95 crore a year ago. Net profit for the quarter rose 21.3% to Rs.1,347.47 crore or Rs.27.53 per diluted share compared to net profit of Rs.1110.87 crore or Rs.22.69 per share a year ago.

Sales for the fiscal year 2008 rose 31% to Rs.28,089.50 crore from Rs.21,497.71 crore a year ago. Net profit for the year rose 10% to Rs.3,138.21 crore or Rs.64.11 per diluted share compared to net profit of Rs.2,859.34 crore or Rs.58.41 per share a year ago.

Bharat Heavy Electricals Limited, in the last one year traded as high as Rs.2,334.00 in May 2009 and as low as Rs.984.10 in October 2008. Based on the yesterday’s closing price of Rs.2,078.20 the company has market cap of Rs.1.02 trillion.

Brigade Enterprises Limited, the real estate development company said fourth quarter sales fell 72.6% to Rs.35.09 crore from Rs.128.11 crore a year ago. Net profit for the quarter fell 27% to Rs.15.60 crore or Rs.1.21 per diluted share compared to net profit of Rs.21.40 crore or Rs.1.91 per share a year ago.

Net sales for the fiscal year 2008 fell 24% to Rs.349.79 crore from Rs.460.71 crore a year ago. Net profit for the year fell 19.3% to Rs.83.05 crore or Rs.3.13 per diluted share compared to net profit of Rs.102.96 crore or Rs.9.18 per share a year ago.