Market Close: A huge rush as global woes wane !

It was a strong trading day and the fourth day at a stretch. Heavyweights supported the rally. Sustained buying in Sensex majors kept the momentum in the market. This was on the back of strong US markets rally overnight and a spillover effect of short covering. Global markets rallied on the back of no rate hike by the US Fed.

The FM meeting with cement companies had nothing to support cement stocks. Pharma, Software however helped the gains. Mid and small caps did not find many takers. Power sector stocks saw strong gains. The 123 agreement for the Nuclear deal with the US is around the corner and that helped fuel in interest.

Sensex ended up by 362 points at 13308.03 helped up by gains in BHEL (2230.05,+6 percent), HDFC Bk (1023.25,+6 percent), Maruti (831.1,+5 percent), ONGC (852.25,+5 percent) and SBI (1028.5,+5 percent). Restricting the gains are Grasim (2080.8999,-1 percent).

Volumes were higher than the last three days but still not enough to match up to a month ago. The volumes were around Rs 3500 cr still considered low given the fact that next week is FNO settlement for March.

As per a leading business daily, the country's ten largest banks have indicated to the RBI that the continued tightness in liquidity might compel them to slow down credit growth substantially in FY08. This outlook was manifested in the fact that the overnight call money rates rose to a decade's high of 75% last week, before closing at 40%. These highs follow the demand for funds to meet advance tax payments, government bond auctions and the impact of increases in the cash reserve ratio (CRR). To ease liquidity exigencies at some banks, the RBI has allowed banks with excess investment in government bonds (SLR) to borrow from it through the repo route. Although the RBI has been targeting a credit growth of 20% for FY07, the same has sustained at 29% yoy until February 2007. The major gainers in PSU Banks are Bank of India 10%, Canara Bank and PNB closed up by 7.38%.

TRAI's announcement of a reduction in Access Deficit Charges (ADC), which were paid by these service providers to BSNL for funding rural telephony. The total amount of ADC for 2007-08 has been reduced to Rs 2000 crore from the existing level of Rs 3200 crore. This is a big benefit for VSNL, ADC on outgoing international long distance calls has been reduced to zero from existing level of 80 paise per minute and ADC on incoming international long distance calls has been reduced to Re 1 per minute from existing Rs 1.60 per minute. The TRAI has also reduced the ADC on percentage revenue share on domestic calls to 0.75% from existing 1.50% of Adjusted Gross Revenue (AGR) of all service providers. The reduced ADC should see tariffs come down for both domestic and international calls making mobile phones all the more affordable. The move to reduce the ADC is in keeping with TRAI's earlier proposal (in February 2006) of phasing out the ADC by 2008-09 or merging it with the USO (Universal Service Obligation). The major gainers were VSNL and R Com. VSNL closed up by 10% and R Com ended up by 4%.

VSNL rallied on the news on the sale of its land bank of 773 acres through an open market sale. The plan may not require cabinet approval as it is in line with the existing shareholders? and share purchase agreements between the government and VSNL. The intention of the move is to bridge the estimated revenue deficit of Rs 71,478 crore for 2007-08. Govt. is expected to take 50% (estimated Rs. 5,000 cr) of the proceeds generated through the sale of land. VSNL has a surplus and of 773 acres out of which major chunk of 524 acres is in Pune while 128 acres is located in Delhi. The remaining land is located in Kolkata (35 acres) and Chennai (86 acres). Valuation expected is large.

Technically Speaking: It was a Bull session for the whole day. Sensex touched intraday high of 13326 and low of 13071. Sensex has closed near the resistance zone of 13350-13400. A close above these levels will take Sensex back into bull orbit. With the expiry nearing in, likely to see some volatility before we break above those levels. Support lies at 13146-12986. Market turnover stood at Rs 3555 cr. Market breadth was in favor of Advances, in the ratio of 1.6:1.