Market Close: negative global cues weigh in

The last day of financial year FY08 was bad for Indian markets as it ended with huge losses. Following weak global cues, Indian markets also started in red with worries of high inflation haunting the banking sector. Reports from ICAI (Institute of Chartered Accountants Association) which has urged companies to reveal their mark to market (MTM) losses of all outstanding derivative contracts in their balance sheets this quarter put more pressure on selling. Sensex slipped below the 16k mark as it closed down over by 700. Indices witnessed tremendous selling pressure across all sectors with Banking, IT, Realty, Metals and Oil&Gas been hit the worst. Mid and small caps felt the brunt of the selling pressure at they both ended in the negative zone.

Sensex closed down by 727 points at 15644.44. Weighing on the Sensex are losses in HDFC (2383.75,-9 percent), ICICI Bk (770.1,-8 percent), TCS (810.9,-7 percent), ONGC (981.35,-7 percent) and Wipro (425.3,-6 percent). Losses are restricted by gains in Cipla (219.75,+1 percent), Bajaj Auto (691.45,+1 percent), Bharti Tele (826.1,+0 percent), Dr Reddys (590.95,+0 percent) and ITC (206.35,+0 percent).

Cement companies are likely to hike prices by Rs 3-5/bag beginning April. The government last week withdrew the DEPB incentives on a number of products, including cement. This means that some of the companies will not be able to claim the drawback of import duties paid on any raw material used for manufacturing of items which are exported. In Gujarat, prices are expected to rise by Rs 5-7 per bag due to increase in value added tax (VAT). VAT rate is scheduled to increase in the state from 12.5% to 15% from April 1, 2008. Prices are also set to increase in the South, where government intervention in Tamil Nadu and a softening of prices in some parts of Andhra Pradesh, had ensured there was no price hike in March. Dealers see a hike of Rs 3-5 per bag across the four states from April 1. Cement has seen cost pressures from coal prices and also fuel and transportation costs. The demand supply gap is favorable and so the companies can now at least pass on these cost pressures to the consumers. However for now Cement may be the flavor till as much time the demand supply is in their favor.

IOC is studying various options for becoming an ethanol producer from being just a buyer. The company would be looking at both organic and inorganic prospects for expanding its business in the bio-fuel category. Ethanol is slowly gaining importance. This can be noticed from the fact that, Oil majors are trying to establish sugar, ethanol units. Also, Reliance Industries and Hindustan Petroleum Corporation Ltd (HPCL) were among the companies which were awarded financial contracts for the revival of State-run sugar mills in Bihar. This is in from the view of Oct 2008, where Ethanol blending is extended from 5% to 10%. On back of this, sugar companies, mainly into Ethanol will see interest in time to come, specially, Renuka sugar.

Technically Speaking: Sensex traded in the negative zone for the entire day. It made an intraday high of 16,227 and low of 15,563. The overall breadth of Advances and Declines remained at 1:1. Turnover was pretty good at Rs 6000 cr. Sensex has closed at the 13 Day moving average and that is a support in a sense. There is a gap support and that if held out will lead us to be more comfortable on the upside move which started around 18th of March. 14730 is an important level and markets could see negative if that level is broken.