Four-day rally halts abruptly

The market snapped its four-day long dream run, to settle with modest losses due to profit-booking. The Sensex had surged a sharp 878 odd points in the past four trading sessions, on value-buying with short-covering lending support.

The 30-share BSE Sensex settled 22.10 points lower, at 13,285.93. Short-covering in the derivatives market kept the losses under check. The benchmark index was extremely volatile in the first few minutes of the opening session. It had opened slightly higher, at 13,386.95, also the day’s high, but had immediately begun declining. It then dipped to a low of 13,196.90, from where it again started recovering.

The Sensex moved 190.05 points in that range.

The S&P CNX Nifty settled 14.85 points (0.38%) lower, at 3,861.05.

Rollover from the March 2007 contracts to the April 2007 contracts has already started. With the market scheduled to remain closed next Tuesday (27 March) for a public holiday, only four trading sessions are left before the expiry of the March 2007 contracts.

The important inflation data that analysts awaited today was released. India's wholesale price index rose 6.46% in the 12 months to 10 March 2007, matching the previous week's annual increase, data showed on Friday. The figure was slightly lower than a forecast of 6.51% in a poll of analysts. The annual inflation rate was 3.80% during the corresponding week of the previous year.

The market-breadth was weak, as selling started for small-cap and mid-cap stocks. On BSE, against 1,545 scrips declining, 1,055 advanced. A total of 76 scrips also remained unchanged. There were close to 1.5 losers for every gainer on BSE. In the 'A' group, 89 shares had advanced and 120 shares had declined, while 5 scrips remained unchanged. In the 'B1' Group, 277 shares had advanced and 419 shares had declined, while 13 shares remained unchanged. The 'B2' group had 339 advancers, 505 decliners, and 34 unchanged shares.

While only 47 shares advanced, 52 shares had declined, and a single scrip remained unchanged from the BSE 100 Index.

In the BSE 200 Index, against 96 stocks that advanced, 102 declined. Only two scrips remained unchanged from this pack.

The BSE 500 Index showed 220 advancers and 271 decliners. A total of nine scrips also remained unchanged in this pack.

The total turnover on BSE cash market was Rs 3988.85 crore. The total market wide turnover was at Rs 45804.21 crore, lower than Rs 51,363.4 crore on the previous day.

Among the 30-Sensex pack, 18 declined while the rest had advanced.

Cigarette maker ITC was the top loser, down 3.44% to Rs 144, on a volume of 17.77 lakh shares after Maharashtra proposed a hike in tax on cigarettes in its annual Budget. ITC had dipped to a low of Rs 143.60.

Tata Motors was down 2.20% to Rs 788, on reports that sales of cars across the board, which showed good growth in February, may not retain the tempo in March. With car loan rates moving north steadily, manufacturers as well as dealers are a worried lot. Over the last two months, car loan rates have seen a rise of 250 basis points (2.5%), and are now in the 14.5 - 16% range. No upside in sales in the immediate future is expected. A dealer for Tata Motors put the decline at 15% this month. In Mumbai, too, dealers are worried about the sales slump.

Gujarat Ambuja Cements (down 1.95% to Rs 105.80), TCS (down 1.57% to Rs 1283.45) and ONGC (down 1.50% to Rs 839.50) were the other losers.

Engineering and construction major L&T surged 3.88% to Rs 1634, on a volume of 4.85 lakh shares, and was the top gainer. It had touched a high of Rs 1641.10, in intra-day trade.

Cipla (up 2.66% to Rs 241.20), Bhel (up 2.37% to Rs 2280.25), and Dr Reddy’s (up 1.25% to Rs 1588) were the other gainers.

Index heavyweight Reliance Industries (RIL) was up 0.28% to Rs 1378, on a volume of 6.20 lakh shares. It had advanced to a high of Rs 1384, in the late afternoon session.

Ratings agency CRISIL rose by its maximum daily limit of 5%, to Rs 2,490.30, after market regulator, Securities & Exchange Board of India (Sebi), on 22 March 2007 approved a proposal making IPO grading mandatory. Companies coming out with IPOs will have to get their issue graded by one of the three rating agencies CRISIL, ICRA or CARE. The Sebi decision of mandatory grading of IPOs will help boost revenue of ratings agencies, given the prevailing strong primary market conditions.

Cement stocks, which were strong in the opening session, settled in red. ACC (down 1.21% to Rs 744), Grasim (down 0.04% to Rs 2080), Gujarat Ambuja Cements (down 1.95% to Rs 105.80) and India Cement (down 0.88% to Rs 164.15) declined.

The government’s tight vigil on cement prices has already taken its toll on cement scrips, which have tumbled in the last two month. From Rs 1115.80 on 22 January 2007, ACC tumbled to Rs 721.90 by 16 March 2007. It did come off that low later.

A confrontation is on between the government and cement industries due to rising prices. The government is trying to combat inflation and wants cement companies, who it believes have been profiteering, to moderate prices.

Later, on 9 March 2007, cement makers promised the government that they will not further raise prices for one year. But they also did not cut prices.

For the March 2007 quarter, cement firms are likely to show strong growth in profits as cement prices remain firm on a year-on-year basis.

Most sectoral indices on BSE ended in the red today as consolidation was under way on the bourses after a solid recent surge. The BSE FMCG Index was the major loser. It lost 20.52 points (1.2%), to settle at 1,689.47, as ITC declined sharply. ITC has a huge 46.89% weightage in the BSE FMCG Index.

The BSE Capital Goods Index ended with strong gains. It rose 156.72 points (1.75%), at 9,129.78. It was the top-gainer among sectoral indices of BSE.

Debutant Indiabulls Real Estate topped the turnover chart, clocking Rs 437.15 crore, on BSE. The stock settled at Rs 325.65, on total volumes of 1.24 crore shares, after touching a low of Rs 325.65 and a high of Rs 414.80, on BSE. Exchanges had set Rs 407 as the base price for the scrip with a 20% price band. Indiabulls Real Estate (IBREL) was formed following the de-merger of the real estate business of Indiabulls Financial Services (IBFSL). The company was listed on the bourses today. The total equity capital of IBREL is Rs 35.93 crore, consisting of 17.96 crore shares of Rs 2 each.

Nahar Exports and Nahar Spinning Mills tumbled 20% each as trading in both counters resumed after a two-month suspension for restructuring. Nahar Exports (NEL) plunged to Rs 60.75 and Nahar Spinning Mills (NSML) to Rs 149.05.

A day before resumption of trading, the stock exchanges had fixed Rs 75.90 as a base price with 20% daily price band for NEL. The base price of NSML was set at Rs 186.30 with 20% daily circuit band. The restructuring involved the transfer of the textiles business of NEL to NSML. In consideration of that, NSML issued 55 equity shares of Rs 5 each for every 100 equity shares of Rs 10 each held in NEL on the record date. The investment business of NSML was demerged into another group firm Nahar Capital and Financial Services (NCFSL). In consideration, NCFSL issued an equity share of Rs 5 each against every equity share of Rs 10 each held in NSML on the record date. NCFSL will be listed on the bourses in due course.

In a nutshell, NEL issued 70 equity shares of Rs 5 each for every 100 fully paid up equity shares of Rs 10, held prior to reorganisation of the equity share capital of the company.

Term lending institution IFCI surged 6.74% to Rs 30.90, on huge volumes of 4.58 crore shares, after appointing Ernst & Young as an advisor for the induction of a strategic investor in the company. The board of IFCI on Thursday approved the appointment of an advisor for induction of a strategic partner in the firm. The stock had risen 8.2% on Thursday (22 March 2007) to Rs 28.95 ahead of the announcement, which hit the market after trading hours. Meanwhile, the National Stock Exchange (NSE) today barred market participants from taking fresh position in the futures & options segment of IFCI, as open interest in the stock had reached the permissible limit.

India’s fourth-largest FMCG player Dabur India surged 3.10% to Rs 93, on reports that it was said to be in advanced talks with Singapore-based personal products compnay, UNZA Holdings, for an equity stake. Industry sources said that the deal could be announced in the first quarter of the next fiscal. UNZA sells personal care products in South East Asia under brands such as Safi, Enchanteur, Eversoft and Romano, and household products under the brand name Vigor and Maxkleen.

KSB Pumps rose 2.39% to Rs 512, in a weak market, despite reporting strong Q4 December 2006 results. KSB Pumps had registered a net profit of Rs 12.10 crore for the December 2006 quarter compared to a net profit of Rs 8.50 crore in the December 2005 quarter. Net sales for the December 2006 quarter went up to Rs 108.30 crore from Rs 86.70 crore in the year ago quarter.

Most Asian and European markets were trading with losses. The Nikkei 225 Index was up 0.35%, while the Hang Seng Index was up marginally 0.01%. The Nikkei average rose 0.35% on Friday, as investors picked up laggards like Mitsubishi UFJ Financial Group and other bank shares, while a softer yen boosted auto shares such as Honda Motor Co Ltd. On the week, the Nikkei added 4.4%, the biggest weekly climb since January 2006.

The Securities & Exchange Board of India (Sebi) authorised all institutional investors, domestic and foreign, to short sell in the cash segment of the capital market. “The time frame for this will be decided fairly quickly,” Sebi Chairman M Damodaran said after the market regulator’s board meeting on Thursday. Sebi held preliminary discussions with stock exchanges who also have agreed, he added.

Though naked short selling will not be allowed, investors will have to fulfill their delivery obligation by borrowing shares through the securities lending and borrowing (SLB) mechanism. The SLB mechanism can be implemented through a clearing corporation or the custodian route, where investors can lend their shares to those who sold short. Of course, the lending investors could earn a fee for the shares lent.

In yet another major development, the Union Cabinet on Thursday decided to raise the foreign direct investment (FDI) ceiling in the telecom sector up to 74%, from the prevailing 49%. The Cabinet clearance came after the Department of Telecom (DoT) and security agencies reached a consensus on allowing remote access with certain safeguards.

In December 2006, the Cabinet had extended the deadline for telecom operators to comply with the norms for an increased foreign direct investment limit of 74%. The deadline expires on 2 April 2007.

FIIs have stepped up buying, as they pumped Rs 713 crore on 22 March in Indian equity market. Gross purchases were Rs 2594.60 crore while gross sales amounted to Rs 1881.50 crore. As per provisional figures, FIIs were net buyers to the tune of Rs 127 crore today

The US Federal Reserve's policy-setting meeting on Wednesday dropped an explicit reference to the possibility of taking rates higher in its statement, sparking talk abut the next move of a cut. But a day later, investors soon started to consider that the US central bank may not be in a hurry to cut rates and that the dollar may be oversold, as the Fed also reiterated that inflation was still its main concern.

The Fed left interest rates unchanged at 5.25% on Wednesday. Rate hikes in the United States tend to drain cash from the emerging markets, but rate-cuts tend to hike dollar flows into developing economies such as India.

The next major trigger for the domestic bourses is Q4 March 2007 earnings, reports of which by corporates will start next month. Analysts expect Q4 results to be strong. Market men will closely watch what company managements have to say about the outlook for FY 2008.

US stock indices ended Thursday's session little changed after a profit warning from Motorola knocked tech shares lower, stalling a global equities rally sparked by the Federal Reserve's signal that it was less inclined to raise interest rates. The Dow Jones industrial average gained 13.62 points, or 0.11%, to end at 12,461.14. But the Standard & Poor's 500 Index dipped 0.50 of a point, or 0.03%, to finish at 1,434.54. The Nasdaq Composite Index slipped 4.18 points, or 0.17%, to 2,451.74.

US oil continued to climb, after surging on Thursday when a fall in gasoline stocks fuelled concerns of tight supplies ahead of the driving season in the world's top consumer. NYMEX crude for May delivery rose 21 cents to $61.90 a barrel.