Market Close: Buying continues on the broader base but indices remain flat!

Indian markets ended the day on a flat note after a choppy and range bound trade, on F&O expiry day. On back of weak global cues, markets started the day in a negative region and slipped further, just to recover fully in the later half of the trading session. Value buying took the indices above previous close but profit booking on expiry related moves, ended the day with marginal loss. IT, Banking, Auto stock ended in red. Buying interest was seen in Realty, FMCG, Health Care and Power stocks. Small caps outperformed the front line indices while mid caps ended in flat. Asian markets ended mixed, European markets trading in green.

Sensex closed down by 71 points at 16015.56. Weighing on the Sensex are losses in Bajaj Auto (621,-4 percent), Satyam (395.05,-4 percent), SBI (1650.45,-4 percent), Infosys (1440.8,-4 percent) and Tata Motors (655.2,-4 percent). Losses are restricted by gains in Hindalco (172.5,+7 percent), HLL (244,+4 percent), Cipla (211.6,+3 percent), Bharti Tele (824.65,+3 percent) and ITC (200.05,+3 percent).

Getting a loan for two wheelers is not easy any more. Higher down payments and increase in interest rates will reduce the demand for the bikes. SBI have increased the interest rates by 50 bps to 15.50% while Canara Bank increased to 11.50% from 9.5%. ICICI Bank has the highest interest rates of 23%. Banks said that the increase in the interest rates was due to increase in the cost of borrowing money and also the cost of recovering money has gone up. Down payments in some cases have really gone up as high as 30% of the bikes cost. Citi Financials have stopped giving two wheelers loans. Defaults in this segment have shot up to 5% of the total two wheeler loans from 2% last year. Demand of bikes would decrease and impact the companies as they have to even juggle with the higher input cost which eats up the margins. The impact would be more in the rural areas where most of bikes sold are 100cc and Hero Honda is a big player here.

Allahabad Bank has cut the benchmark prime lending rate (BPLR) by 25 basis points. The bank informed that it has brought down its BPLR from the 13.25% to 13% with effect from April 1, 2008. It further said that the reduction is in regard to the present market scenario and the need to provide credit to productive sectors at affordable rate. The bank has already announced a cut in the interest rate of fresh housing loans by 25 basis points in both floating and fixed term loans with effect from April 01, 2008 for loans up to Rs 20 lakhs on all maturities. This accounts for major share in banks portfolio. The cut in rate helps to attract more customers to bank but the increasing prices of real estate could not influence the sales too much.

Technically Speaking: Sensex traded choppy for entire day. It made an intraday high of 16,111 and low of 15,869. The overall breadth was in favor of Advances while Advances stood at 1467 and Declines at 1245. Turnover was pretty good at Rs 6343 cr. Sensex remains under pressure from 16200-16300 range. We see a good upside if that level is broken, and Sensex can move upto 17100. On the lower side, 15780 and 15600 are good supports.