Market off the leash, soars 240 points

The market advanced throughout the day, except the odd blip in early afternoon trade, as buying coupled with short-covering in the derivatives segment, continued. Shares from the banking, FMCG, IT and metals segment contributed to gains. All BSE sectoral indices settled with gains.

The 30-share BSE Sensex 239.94 points (1.89%), to settle at 12,945.88, while the S&P CNX Nifty gained 66.95 points (1.81%), to finish at 3,764.55.

The benchmark index had seen sporadic buying in the fag hours of the day’s trade, and had also surged to a high of 12,964.94, helped by strong purchases in index pivotals. The Sensex opened positive, at 12,735.91, but had soon slipped into the red, to 12,664.33.

The BSE cash turnover was Rs 2717.98 crore, while the market-wide turnover was Rs 41331.34 crore.

The market-breadth, a measure of the health of the broader market, turned negative after a strong opening. On BSE, 1,376 shares declined, 1,153 advanced and 99 remained unchanged. The BSE Mid-Cap Index ended at 5,341.13, up 9.7 points (0.18%), while the BSE Small-Cap Index settled at 6,369.64, gaining 14.4 points (0.23%), from its previous close.

In the 'A' group, 142 shares advanced and 69 shares declined, while 3 scrips remained unchanged. In the 'B1' Group, 304 shares advanced and 383 shares declined, while 24 shares remained unchanged. The 'B2' group had 364 winners, 474 losers, and 42 unchanged. While only 74 shares advanced, 25 shares declined and a lone share remained unchanged from the BSE 100 Index.

In the BSE 200 Index, against 132 stocks that advanced, 66 declined. Only 2 scrips remained unchanged from this pack.

The BSE 500 Index showed 280 advancers and 208 decliners. A total of 12 shares also remained unchanged in this pack.

Among the 30-Sensex pack, 24 advanced while the rest declined.

There was renewed buying for shares from the banking space. The BSE Bankex, which was the top gainer among sectoral indices, gained 3.96%. ICICI Bank surged 5.35% to Rs 868, on a volume of 7.45 lakh shares, and was the top gainer. The private bank's ADR had gained 1.2% to $38.62 on Tuesday, while state-run State Bank of India gained 3.31% to Rs 984.15. HDFC Bank rose 1.35% to Rs 967. Its ADR had gained 2% to $67.70 on Tuesday.

Other gainers from the banking pack included Centurion Bank of Punjab (up 7.30% to Rs 36.90), Bank of Baroda (up 7.20% to Rs 214), Punjab National Bank (up 3.91% to Rs 452.20), UTI Bank (up 3.37% to Rs 478) and Bank of India (up 3.29% to Rs 156.85).

Reliance Energy advanced 3.12% to Rs 491, on reports that the company was pursuing tie-ups with US companies. A strong 2.46 lakh shares were traded in the counter on BSE today. The firm plans to get into the nuclear energy market. The Indo-US civil nuclear deal calls for massive investment, as India can add up to 20,000 - 40,000 Mw of nuclear generation capacity, which Reliance Energy does not want to miss out on. Apart from nuclear energy, the company has also chalked out aggressive growth plans for wind energy.

Besides, the Anil Ambani-controlled Reliance Energy (REL) has reportedly bagged a contract for developing the Trichy–Dindigul National Highway four-laning project to be undertaken on a build-operate-transeferr (BOT) basis.

Stretching over 88 km in Tamil Nadu on NH-45, the project was floated by the National Highways Authority of India (NHAI) in December 2006 at a cost of around Rs 576 crore. The Reliance Energy scrip had advanced 4% on Tuesday (20 March 2007) to Rs 476.15.

Hero Honda rose 2.63% to Rs 652. The stock had eased on Tuesday on reports that Honda Motorcycle & Scooters India, a wholly-owned subsidiary of Japan’s Honda proposes to foray into the entry-level 100-cc motorcycle segment. Hero Honda currently generates over 75% of its sales volume from the entry-level segment.

IT shares advanced in anticipation of robust set of March quarter results and some large order wins. As a result, the BSE IT Index shot up 1.38%. Satyam Computer (up 1.84% to Rs 453.90), TCS (up 1.24% to Rs 1268), Wipro (up 1.52% to Rs 582) and Infosys (up 2.12% to Rs 2098) were some of the frontline scrip in the sector to post gains. Each of these stocks was trading with losses in the morning.

FMCG pivotals were in demand, with the BSE FMCG Index advancing 2.26%. cigarette major ITC rose 2.77% to Rs 144.85, on high volumes of 24.38 lakh shares. The stock had tumbled over the past few days due to worries that the government may bring cigarettes under the net of Value Added Tax (VAT).

FMCG major Hindustan Lever surged 4.46% to Rs 192.20. Recent reports said the company had hiked prices of its detergent brands, Surf Excel Blue and Surf Excel Quick Wash.

Index heavyweight Reliance Industries (RIL) advanced 1.59% to Rs 1342, on a volume of 6.34 lakh shares. It had staged a smart recovery from a low of Rs 1307.50.

Cement major Gujarat Ambuja Cements was the top loser, down 4.20% to Rs 106.25, on a volume of 20.11 lakh shares. India Cements (down 4.6% to Rs 164.75), Birla Corporation (down 3.38% to Rs 200.20), UltraTech Cement Company (down 2.85% to Rs 775), and Shree Cement (down 2.55% to Rs 996.75) were the other losers.

HDFC (down 1.66% to Rs 1540), Ranbaxy (down 1.52% to Rs 331.25) and Grasim (down 1.30% to Rs 2096.70) were the other prominent losers.

Global consulting and IT major MindTree Consulting topped the value chart with a turnover of Rs 204.70 crore. The newly-listed firm was followed by Reliance Industries (Rs 84.50 crore), Reliance Communications (Rs 78.60 crore), ICICI Bank (Rs 64 crore) and SBI (Rs 54.35 crore).

While IFCI led the volumes table at around 1.07 crore shares, Centurion Bank of Punjab clocked 51 lakh shares, Jagjanani Textiles posted 34 lakh shares, Tele Data Informatics counter had 33.40 lakh shares and AMD Metplast clocked 30.35 lakh shares on BSE.

Jet Airways rose 5.75% to Rs 670.10. It was the fourth-biggest gainer from the 'A' group. The stock surged today on reports that despite possibility of domestic airlines withdrawing the congestion charge of Rs 150 per ticket, they were likely to hike basic fares. Reports suggest that the Directorate General of India has asked all scheduled airlines to withdraw the Rs 150 per ticket congestion charge.

Drug maker Merck tumbled 7.5% to Rs 411.55, and was the biggest loser from 'A' group today. The stock’s fall was due to the scrip turning ex-dividend (dividend Rs 30 per share).

Rajesh Exports rose marginally to Rs 375.40, after its board approved a joint venture with Kerala-based Muthoot Pappachan Group for retailing the company's products across southern India. The Muthoot Pappachan Group is one of the largest non-banking financial company in the south, with operations spread across the five states in that region.

The Muthoot Pappachan Group has 450 outlets spread over Kerala, Karnataka, Tamil Nadu, Maharashtra and Andhra Pradesh. Under the tie-up, the company will manufacture "Shubh Muthoot" pure gold coins of 1,2,4,8 and 20 gms. "Shubh" is a brand owned by Rajesh Exports.

Suzlon Energy was up 0.26% to Rs 993. German wind turbine maker REpower Systems threw its support on Tuesday behind French nuclear reactor group Areva's sweetened 140-euro-per-share takeover offer. Areva's offer values REpower at around 1.14 billion euros ($1.5 billion) and topped a recommended offer worth 126 euros a share from Suzlon Energy. Suzlon had said last week it was still considering its next step. Areva last week raised its offer from 105 euros per share to top Suzlon's bid. Areva had to make a full takeover offer for REpower after amassing a stake of more than 30%.

Nestle India dropped 1% to Rs 900, on reporting 15.7% fall in net profit for the December 2006 quarter.

After trading hours on Tuesday (20 March 2007), Nestle India reported a 15.7% fall in net profit in the December 2006 quarter to Rs 62.46 crore compared to a net profit of Rs 74.16 crore for the quarter ended 31 December 2005. Total Income (net of excise) for the December 2006 quarter rose 18.3% to Rs 743.59 crore from Rs 628.54 crore in the year ago quarter.

Nestle India said profits for the quarter and year ended December 2006 were adversely impacted by a steep increase in prices of commodities, higher operating costs associated with upgraded formulations and manufacturing processes of the infant nutrition products.

IT education bigwig NIIT rose 0.40% to Rs 690, after it struck a partnership with US-based EMC Corporation to offer training in information storage technology. Training will be offered in India and 31 other countries, where NIIT has its network of education centres, a company statement said. Financial details of the partnership were not available.

All European indices were trading with gains, and most Asian ones had ended with gains. Hong Kong's Hang Seng Index rose 0.82% and Japan's Nikkei 225 Index advanced 0.90%.

US stocks rose on Tuesday, as a series of takeover deals bolstered investor confidence and offset apprehension about the latest Federal Reserve rate-setting meeting. The Dow Jones industrial average ended up 61.93 points, or 0.51%, at 12,288.10. The Standard & Poor's 500 Index closed 8.88 points, or 0.63%, in front at 1,410.94. The Nasdaq Composite Index finished up 13.80 points, or 0.58%, at 2,408.21.

As per provisional figures, FIIs were net buyers to the tune of Rs 187.87 crore on 21 March 2007.

Foreign institutional investors (FIIs) turned buyers on Tuesday (20 March 2007), to the tune of Rs 136.30 crore.

The Fed's policy-making Federal Open Market Committee began its two-day meeting on Tuesday. The Fed is expected to hold its benchmark rate steady at 5.25%, but investors will focus on its statement on the outlook for the economy and future interest rate policy.

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

The undercurrent on the bourses remains cautious due to high inflation and rising interest rates. Strong industrial production data released early last week makes a strong case for the Reserve Bank of India (RBI) to raise interest rates at its annual policy review for FY-2008 on 24 April 2007. Industrial output rose 10.9% in January 2007 from a year earlier. The wholesale price index rose 6.46% in the 12 months to 3 March 2007, up from the previous week's annual increase of 6.10% due to higher edible oil and naphtha prices.

The long-term India story remains intact. India’s long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and an acceleration in infrastructure creation.