Market falters once again

The market was highly volatile throughout the day, with the bias being towards bearish, as selling continued throughout the day.

The 30-share BSE Sensex ended 164.36 points (1.26%) lower, at 12,884.99. It had opened higher, at 13,107.37 level, and surged to an intra-day high of 13,145.72.

The S&P CNX Nifty lost 43.65 points (1.16%), at 3,718.

The benchmark Sensex was not able to sustain the higher levels, and succumbed to selling. It had slipped to a low of 12,788.16, as selling picked up. The mood was also dampened by rising inflation figures of today.

Even after a 470-point surge on Thursday (8 March 2007), experts feel that the market is yet to stabilise. Investors are also scared by the severe volatility on the bourses.

The market-breadth was weak. Against 1,066 shares advancing, 1,287 declined. Just 60 shares were unchanged.

The total market turnover amounted to Rs 48901.15 crore

India's wholesale price index rose 6.10% in the 12 months to 24 February 2007, little changed from the previous week's annual increase of 6.05%, data released a little while ago showed on Friday. Analysts were expecting this figure to be at 6.03%. Annual inflation for the week ended 30 December 2006 was revised to 5.89% from 5.58%. It stood at 4.18% in the corresponding week a year ago.

Cement shares were down sharply after India's cement companies agreed to hold prices of the key building material for a year, India's Commerce Minister Kamal Nath said, "Cement makers will hold prices even if there is an increase in input prices,'' Nath said, following a meeting with cement manufacturers. Any tax relief will be passed on to consumers, Nath said. The government did not give any assurances on duty cuts, said Manoj Gaur, President of Cement Manufacturers' Association, in a phone interview. Finance Minister Palaniappan Chidambaram raised taxes on cement in his Budget presented on 28 February 2007. Cement makers earlier said they will reduce prices only if Chidambaram reverses the tax increase.

The decision was announced by Commerce Minister Kamal Nath after a meeting with the cement industry on Friday (9 March 2007). Nath also said that cement makers have committed to absorb all input costs and levies.

The government's close vigil on cement prices had already spooked cement scrips over the past one and a half months. Nath had said on Wednesday (7 March 2007) that the government may consider banning cement exports if that would help cool prices, sending cement shares sliding. Shares in third-biggest cement maker, Gujarat Ambuja Cements (GACL), declined 2.61% to Rs 109.95, while larger rival ACC fell 6.30% to Rs 781.

Grasim tumbled 7.43% to Rs 2069.15, on a volume of 2.91 lakh shares. India Cement (down 8.26%), Mysore Cement (down 9.8%) and Shree Cement (down 9.5%) were the other losers from the cement pack.

NTPC, India 's largest power generating company, rose 2.68% to Rs 139.75. It is planning to float a subsidiary for its international operations. The company plans to make a global foray by building a 700 Mw gas-based power plant in Nigeria and 500 Mw thermal plant in Sri Lanka . NTPC is likely to sign an agreement with the Nigerian government for the $ 700 million project within a month. The Nigerian government has agreed to provide gas for the project, and the electricity generated from the plant will be sold to state-run utilities there. NTPC's other plans in Nigeria include refurbishing gas-based sick power plants for extending their life span to enhance production capacity. This move is part of company's strategy to aggressively expand capacity going forward.

FMCG major HLL was down 0.14% to Rs 183.55, on a volume of 6.60 lakh shares, after surging close to 10% on huge volumes by Thursday (8 March 2007).

Cigarette major ITC was down 3.44% to Rs 154.35, on a volume of 26.22 lakh shares.

PSU engineering major Bhel slipped 3.70% to Rs 2095. It had also slipped to a low of Rs 2063, in intra-day trade.

Index heavyweight Reliance Industries (RIL) was down 2% to Rs 1308.05, on a volume of 9.83 lakh shares.

Tata Steel gained 0.97% to Rs 431.55, after it acquired 100% equity stake in Rawmet Industries Private (Rawmet), a company having its registered office in Kolkata, for an enterprise value of Rs 101 crore. This is the second 100% acquisition of Tata Steel in Orissa. In September 1991, Tata Steel took over the ferro-alloy plant in Bamnipal. Rawmet has a ferro-alloy plant near Cuttack as well, consisting of two 16.5 MVA semi-closed electric arc furnaces with a capacity of producing around 50,000 tonnes per annum of high carbon ferro chrome.

The Board of Rawmet has been reconstituted with nominees of the company. The company's board now consists of five directors, of which four are nominees of Tata Steel. Prior to this, Tata Steel had taken over the ferro-alloy plant at Bamnipal in Jajpur district, one of the first ones to successfully undergo disinvestment.

Idea Cellular settled at a slight premium, at Rs 85.55, on a huge volume of 6.35 crore shares. The stock made its debut on the Bombay Stock Exchange (BSE) and listed at Rs 90, against the IPO price of Rs 75. The stock also hit a high of Rs 94.25, and a low of Rs 84.

Idea Cellular is the sixth-largest mobile operator in India with 13.5 million subscribers by end-February 2007. It had a market share of 8.5% by end-December 2007, and operates in 11 circles. The IPO proceeds are expected to be used for the expansion of existing network, and roll out of services in the Mumbai circle.

The National Stock Exchange (NSE) has also added Idea Cellular in the futures & options segment from day one of its listing today. The lot size of Idea Cellular in F&O segment is 2,700.

Mudra Lifestyle settled at Rs 63.80 on volume of 71.17 lakh shares, a discount of over the IPO price of Rs 90. The stock debuted at Rs 94.80, hit a low of Rs 62.05 and a high of Rs 95. The IPO was priced at the top end of the Rs 75 - Rs 90 price band. The issue was subscribed over four times.

Mudra Lifestyle had issued shares to investors in May 2006 at Rs 60, and to SIDBI and to State Bank of India at Rs 75 each in January 2007, just before the IPO. The post-issue equity of Mudra Lifestyle is Rs 35.99 crore and the face value per share is Rs 10.

A block deal of 31 lakh shares was executed in Welspun Gujarat Stahl Rhoren counter amounting to 2.3% of company’s equity share capital, at Rs 99 per share. The stock settled at Rs 96.90 on total volumes of 42.13 lakh shares.

Mphasis rose 2% to Rs 265.50, after unconfirmed rumours that EDS may hike the open offer price for shareholders. Its open offer, which concluded recently, had drawn a poor response, against the proposed 20% (3.3 crore shares) buyback, EDS managed to attract just 2,201 (0.0013%) shares. The open offer price was set at Rs 204.5 per share.

Punjab Tractors rose 1.81% to Rs 309.50, after Mahindra & Mahindra said it will buy 43.3% stake in the North Indian tractor major at Rs 360 per share. The deal values the north India-based tractor maker at Rs 2200 crore. Although M&M emerged as a top bidder for Punjab Tractor (PTL), the stock was down 2.6% to Rs 745.40 following reports that the Punjab government on Thursday (8 March 2007) ordered a vigilance enquiry into the 2003-disinvestment by the state government, to a financial investor. It may be recalled, in 2003 the private equity investor, Actis, had paid $60 million for acquiring 29% stake in Punjab Tractors.

The state government has also now cautioned new bidders, and anybody participating in further acquisitions, that they will be doing so at their own risks and responsibilities.

Biocon advanced 3.40% to Rs 448.80, after releasing five renal therapy drugs, which are priced 35 – 40% lesser than those available in the market. The new immunosuppressant drugs for renal therapy include Renodapt, Tacrograf, Cyclophil ME, Rapacan and Erypro. Immunosuppressants are medicines that inhibit or prevent the activity of the body's immune system.

Biocon undertook research as well as conducted countrywide multi-centric trials for over four years before launching the drugs, an official with the company said. The company expects to garner 25% of the Rs 300-crore market for renal therapy products in the country. The immunosuppresant drug market itself is worth around Rs 125 crore. The global market for renal therapy drugs is worth around $3.3 billion. It expects to grab a fourth of India's kidney disorder treatment market in the next five years, as part of a drive to boost the branded drug business, Biocon's chief said on Thursday. The Bangalore-headquartered firm will launch kidney disorder drugs in overseas markets such as Latin America, the Middle East, and neighbouring countries in the next six to nine months.

Trading on the bourses was halted from 11:45 to 12:25 IST due to sun outage. It will be however extended till 16:15 IST. The revised trading schedule will be in place till 19 March 2007.

Asian and European markets were trading mixed. The Nikkei share average gained 0.43% on today, as machinery stocks such as Fanuc rose on upbeat machine orders data, while a weak yen lifted shares in Canon Inc and other exporters. The Nikkei closed up 73.73 points at 17,164.04, after booking its largest daily percentage gain since October in the previous session.

Hang Seng was down 0.21% to 19134.88.

In a major development, Morgan Stanley, Citigroup and private equity fund Actis, have entered into agreements to buy 6% stake in the National Stock Exchange (NSE) for undisclosed sums, the exchange informed. The deals will take foreign ownership of NSE to 26%, the maximum allowed by Indian law, after NYSE Group Inc, Goldman Sachs, General Atlantic and Softbank Asian Infrastructure Fund paid $460 million for stakes totaling 20% in January 2007.

As per laws, individual foreign holdings are limited to 5%. Morgan Stanley will buy 3%, while Citigroup will take 2% and Actis 1%, NSE said in a statement late on Thursday.

Of this stake sale, IDBI has sold 2%, SBI sold 1.5%, Corporation Bank sold 0.265%, Union Bank sold 0.125%, Bank of Baroda sold 0.89%, Oriental Bank of Commerce (OBC) sold 0.335%, and Canara Bank sold 0.335% of their stake.

Earlier this week, Singapore Exchange paid $42.7 million for a 5%stake in NSE's rival, the over 150 year old exchange – the Bombay Stock Exchange (BSE), following a similar deal by Deutsche Boerse in February 2007.

The European Central Bank (ECB) raised its benchmark interest rate by a quarter of a percentage point on Thursday (8 March 2007), to 3.75%, and made clear that it was willing to tighten credit further, possibly by the summer, in a humming European economy that could generate inflation.

Meanwhile, the Bank of England (BoE) chose to keep their benchmark interest rate unchanged at 5.25% after increasing it three times in the last six months. Central bankers in Britain are trying to gauge whether they have headed off inflation, amid a booming real estate market and robust consumer demand allowing British retailers to charge higher prices.

Mutual funds are sitting on cash, thanks to collections from some of the recent new fund offers, and may step up purchases at declines. However, the latest data showed that mutual funds, in fact, stepped up sales – they pressed sales worth a net Rs 379.56 crore on Wednesday (7 March 2007), the day when the Sensex had lost 177 points in volatile trade.

FIIs have resumed buying since the last three days, after their heavy sales since late-February 2007. They were net buyers to the tune of Rs 115.80 crore on Thursday (8 March 2007), the day when the Sensex had spurted 470 points.

Recently, trading sessions have also seen FIIs step-up buying in index-based futures. Foreign funds were net buyers to the tune of Rs 948 crore in index-based futures on Thursday (8 March 2007). They were net buyers to the tune of Rs 198 crore in individual stock futures on the same day. The Nifty March 2007 futures had settled at 3,754.15 on Thursday (8 March 2007), a discount of 7.50 points over the spot Nifty closing of 3,761.65.

Wall Street extended its recovery from last week's big plunge, rising on Thursday, after several stable sessions helped buttress investor sentiment and allay some concerns about the economy. The Dow closed up 68.25 points, or 0.56%, at 12,260.70. The Standard & Poor's 500 index climbed 9.92 points, or 0.71%, to 1,401.89, and the Nasdaq composite index advanced 13.09 points, or 0.55%, to 2,387.73.

Oil prices were nearly flat in Asian trading on Friday, as market participants looked for a trading cue from US employment data due later in the day. Light, sweet crude for April delivery dropped 10 cents to $61.54 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore.