Sensex climbs nearly 170 points

The market, which suddenly regained its touch in the early-afternoon session of trade, stood firm even in the latter part of the day, as buying continued at the higher levels. All sectoral indices on BSE settled with gains, and shares from the IT sector led the uptrend followed by PSUs, Metals and FMCGs.

The 30-share BSE Sensex rose 169.21 points (1.36%), to end at 12,624.58. The benchmark index had opened higher, at 12,503.75, as buying resumed after a sharp 617-point plunge on Monday. The benchmark Sensex marched ahead, struck an intra-day high of 12,657.75 in the late-afternoon session of trade, on the back of sporadic purchasing. The Sensex’s intraday low was 12,481.86.

The S&P CNX Nifty was up 57.05 points (1.57%), to end at 3,690.65.

The decision taken on Mint Street was expected to inflict the carnage on Dalal Street on Monday. What raised a few eyebrows was its severity. The Sensex shed 617 points, its second-biggest, single-day loss, ever, to close at 12,455. The benchmark index had plunged 826 points (6.76%), to close at 11,391, it's biggest ever, following heavy selling by FIIs, retail investors and a weakness in global markets on 18 May 2006.

On Friday, in a move that surprised many, the Reserve Bank of India (RBI), just a few blocks away from the Bombay Stock Exchange, raised two key policy rates. The attempt was to squeeze money out of the economy that policy-makers felt was the reason why prices were spiralling out of control, and something that the government is trying hard to rein in.

The RBI had lifted its short-term lending rate by 25 basis points to 7.75%, its highest in nearly 4-½ years, after trading ended on Friday (30 March). The central bank also raised the cash reserve ratio (CRR), the proportion of cash banks have to hold with the central bank on deposit, by half a percentage point to 6.5% in two stages, to siphon out Rs 15500 crore from the banking system.

The move had triggered panic over the weekend. Investors realised that with less money in the system, the cost of funds will go up. For corporates, going forward, their profitability could get dented. Which is why, traders hit the sell button on Monday and the Sensex opened 260 points lower than its previous close. Throughout the day, the Sensex lost ground and finally closed just a wee bit above its intra-day low of 12,425. The crash left investors poorer by Rs 1.42 lakh crore.

Market players feel the hike in interest rates could immediately affect sectors like automobiles, banking and real estate, since demand for these depend on bank loans and other such lending agencies.

The BSE cash turnover was Rs 2881 crore, while the NSE's F&O turnover was at Rs 23350.93 crore. The total market-wide turnover was at Rs 32961.21 crore.

The market-breadth was positive on BSE. Against 1,368 shares that had advanced, 1,079 declined and just 95 scrips had remained unchanged. Buying in smallcap and mid-cap counters kept the breadth on a strong footing.

The BSE Mid-Cap Index ended at 5,236.36, up 27 points (0.52%) for the day. The BSE Small-Cap Index ended at 6,313.64, up 20 points (0.31%) for the day.

Among the 30-Sensex pack, 23 advanced and only 7 declined.

PSU power equipment major Bhel spurted 4.85% to Rs 2258, after its net profit rose 42% in FY 2007, to Rs 2385 crore from Rs 1679 crore in FY 2006, as per provisional figures. The provisional turnover rose 28.7% in FY-2007 to Rs 18702 crore from Rs 14525 crore than a year ago. Bhel was the top-gainer. Riding on an all-time high order inflow, power equipment supplier Bharat Heavy Electricals today announced a target of 10 billion dollars (about Rs 44,000 crores) turnover by 2011-12.

"Our fresh order inflows have swelled by a whopping 88 per cent in 2006-07 to Rs 35,633 crores up from Rs 18,938 crores in the previous year. We have doubled the turnover in the last three years. Our next target is to reach 10 billion dollars by 2011-12," Bhel Chairman & Managing Director Ashok K Puri said.

Puri also announced an investment of Rs 3,200 crores to augment its capacity for supplying equipment for up to 15,000 Mw annually. The company is already in the process of increasing the capacity from 6,000 Mw to 10,000 Mw.

Powered by Bhel, the BSE Capital Goods Index advanced 1.1%, at 8,718.07.

NTPC advanced 4.41% to Rs 153.80, as 14.42 lakh shares changed hands in the counter on BSE. Hero Honda advanced 3.39% to Rs 661.

The BSE IT Index gained 2% at 4,766.97. Wipro advanced 3.42% to Rs 536, after investing Rs 375 crore at the Pune facility, ramping up capacity from 6,300 to 17,000 seats. The facility focusses on developing solutions for banking, insurance, and telecom industries.

Infosys Technologies advanced 2.33% to Rs 1966, while TCS rose 1.28% to Rs 1204 and Satyam Computers moved 2.62% higher, at Rs 458.

Tata Steel rose 1.16% to Rs 429, after completing its £6.2 billion (US$12 billion) acquisition of Corus Group. Tata Steel paid 608 pence per ordinary share in cash. The new expanded entity will have a pro forma crude steel production of 27 million tonnes in 2007, and will be the world's fifth-largest steel producer, employing 84,000 personnel across four continents.

Tata Steel on Monday said crude steel production of the company for the year 2006-07, crossed 5 million tonnes. Tata Steel said in a statement that production of hot metal touched 5.55 million tonnes, crude steel at 5.05 million tonnes and saleable steel at 4.93 million tonnes.

The BSE Metal Index closed at 8,219.63 (up 1.08%). SAIL (+ 3.35%), Sesa Goa (+ 2.12%) and Nalco (+ 1.74%) advanced for the day.

Tata Motors gained 1.16% to Rs 677, after saying on Monday vehicle sales in March rose 11% to 62,779 units from 56,406 units a year earlier. Sales of commercial vehicles rose 13% to 30,720 units -- its highest monthly sales to date -- from 27,289 units, while sales of cars and utility vehicles rose 14% to 25,760 units, also the highest monthly sales. Exports fell 3% to 6,299 units from 6,508 units. Vehicle sales in the fiscal year to March 2007, rose 28% to 579,378 units from 454,345 units in the previous year.

Index heavyweight Reliance Industries (RIL) gained 1.90% to Rs 1338.50, on a volume of 8.41 lakh shares. The heavyweight scrip had advanced from a low of Rs 1309.55, to a high of Rs 1346. The BSE Oil and Gas Index surged 1.9%, to 6,287.21. GAIL (up 5.15%), ONGC (up 1.70%), and Chennai Petroleum (up 1.3%) were the other gainers.

Bharat Electronics rose 3.13% to Rs 1502, after the state-run enterprise for defence equipments reported a 22% rise in profit before tax for 2006/07, as per provisional figures. The company announced the provisional figures on Monday (2 April). Bharat Electronics reported profit-before-tax of Rs 1040 crore on provisional revenues of Rs 3960 crore. Exports during the year were at Rs 50.33 crore. The company, which manufactures defence electronics equipment, estimates its order-book position at Rs 9100 crore (as on 1 April 2007).

Bharat Earth Movers (BEML) dropped 5% to Rs 1008, after the company on Monday reported a mere 10% growth in profit-before-tax for FY 2007, with provisional results recording an all-time high turnover of Rs 2600 crore, a growth of 18% over the corresponding figure last year. BEML's profit-before-tax of Rs 315 crore recorded a growth of 10% over that of last year. The export sales stand at Rs 110.05 crore, BEML informed.

Clariant Chemicals India plunged 9.32% to Rs 285.90, after the stock turned ex-dividend today. The company had declared a whopping dividend of Rs 18 per share.

Pitti Laminations jumped 9.27% to Rs 65.40, as its board of directors will consider an issue of 2.40 lakh equity shares, at Rs 120 a piece, for promoters, on 11 April 2007.

All Asian markets were trading with gains, expcept Malaysia (down 0.05%). All European markets had advanced. The Nikkei average climbed 1.27%, as investors returned to shares of Advantest Corp., Honda Motor Co and other stocks, hit by the previous session's sell-off. The Nikkei climbed 215.64 points, to 17,244.05, recouping some of its 1.5% loss of Monday. The broad TOPIX index was up 1.30%, at 1,704.32.

The Hang Seng Index was up 0.97%.

US stocks ended higher on Monday, as a $26-billion buyout deal for credit card processor, First Data Corp., fueled optimism about valuations, countering worries about weak factory activity and turmoil in the housing market. The Dow Jones industrial average was up 27.95 points, or 0.23%, at 12,382.30. The Standard & Poor's 500 Index was up 3.69 points, or 0.26%, at 1,424.55. The Nasdaq Composite Index was up 0.62 points, or 0.03%, at 2,422.26.

Volumes were muted, when the Sensex had tumbled 617 points on Monday (2 April 2007) due to a surprise interest rate increase, rattling investors. The volume of 16.3 crore shares on BSE, on Monday, was much lower than the average daily volume of 21.85 crore shares during March 2007 and 31.31 crore shares during February 2007.

Lack of buying may keep the market sluggish in the near term. Institutional investors may remain on the sidelines ahead of the earnings season, which Infosys flags off by reporting Q4 numbers on 13 April 2007. Traders/operators may start building positions in individual stocks, based on expectations of Q4 results.

Oil prices dropped on profit-taking, as a volatile market appraised the continuing Britain-Iran standoff and the latest kidnappings in Nigeria. Light, sweet crude for May delivery fell 39 cents to $65.55 a barrel in electronic trading on the New York Mercantile Exchange. Prices had risen consistently since 15 British sailors and marines were detained on 23 March 2007, by Iran for allegedly entering its waters.

The cumulative value of India’s exports for April-February 2007, was $ 109126.78 million ($ 109 billion) or Rs.495347.28 crore against $ 88760.40 million ($ 88.7 billion) or Rs 393157.16 crore during the same period last year, a growth of 22.95%, according to the provisional data for merchandise exports available from Directorate General of Commercial Intelligence & Statistics (DGCI&S). Exports during February 2007, were valued at $ 9701.71 million (Rs 42841.09 crore) during February 2007, compared with $ 7834.49 million (Rs.34729.43 Crore) in February 2006.

The cumulative value of India’s imports during April-February 2007, was $ 164985.32 million (Rs 748440.60 crore), which was higher than imports at $ 126336.01 million (Rs.558992.18 crore) during April- February 2006. Imports during February 2007, were valued at $ 14362.69 million (Rs 63423.19 crore) compared with $ 11040.09 million (Rs.48939.50 Crore) in February 2006.

Crude oil imports were valued at $ 4061.40 million in February 2007, compared with $ 4109.96 million in the corresponding period last year, thus registering a negative growth of 1.18%. Crude oil imports during April- February 2007, were valued at $ 52673.46 million, which was 32.52% higher than crude oil imports of $ 39748.35 million in the corresponding period last year.

Non-oil imports were estimated at $ 10301.29 million during February 2007, which was 39.77% higher than growth on non-oil imports of $ 7370.07 million in February 2006. Non-oil imports during April-February, 2007 were valued at $ 112311.85 million, which was 25.67% higher than the level of such imports valued at $ 89370.42 million in April- February 2006. The trade deficit for April-February, 2007 was estimated at $ 55858.54 million, which was higher than the deficit of $ 37575.61 million during April- February 2006.

The major trigger for the market is FY 2008 (year ending 31 March 2008) guidance by IT bellwether Infosys, which will unveil its FY 2008 guidance along with Q4 March 2007 results, on 13 April 2007. In a recent pre-guidance report on Infosys, Merrill Lynch placed a short-term 'sell' on the Sensex heavyweight expecting a conservative guidance from the company due to an uncertain US economic outlook, the appreciation of the rupee versus the dollar and other client-specific issues. Merill Lynch expects Infosys to give an EPS growth guidance in the early 20s.

Australia's central bank meets today, with economists and traders predicting it will raise the benchmark interest rate either this week or next month to stem inflation