Post Market Commentary - Feb 28 2008

The Sensex opened marginally (15 points) lower at 17,811 on mixed cues from the Asian markets. The index moved into positive zone and touched a high of 17,922 in early trades.

The index could not hold gains and slipped back into negative territory. The index touched a low of 17,690 - down 232 points from the day's high - but rebounded into positive zone in late trades.

The Sensex finally ended on a flat note (down two points) at 17,824.

The NSE Nifty moved up 17 points to end at 5,285.

The BSE market breadth was marginally negative - out of 2,784 stocks traded, 1,444 declined, 1,276 advanced today.

INDEX MOVERS...

Hindalco gained 4% to Rs 204. Bajaj Auto moved up 3.6% to Rs 2,255.

HDFC and Mahindra & Mahindra added over 3% each to close at Rs 2,775 and Rs 680, respectively.

BHEL gained 2.7% at Rs 2,324. Wipro, Cipla and Satyam advanced over 2% each to Rs 450, Rs 206 and Rs 447, respectively.

Ranbaxy moved up nearly 2% to Rs 445. Tata Steel and HDFC Bank were up around 1.5% each at Rs 824 and Rs 1,471, respectively.

...AND THE SHAKERS

DLF dropped over 2% to Rs 805. SBI and Reliance declined 2% each to Rs 2,039 and Rs 2,537, respectively.

Reliance Energy slipped nearly 2% to Rs 1,601.

Infosys, ACC and ICICI Bank were down around 1% each at Rs 1,599, Rs 808 and Rs 1,103, respectively.

VALUE & VOLUME TOPPERS

OnMobile topped the value chart with a turnover of Rs 271.35 crore followed by Reliance Capital (Rs 186 crore), debutant Manjushree Extrusions (Rs 173.35 crore), Reliance Energy (Rs 149.65 crore) and Reliance Energy (Rs 147.70 crore).

Manjushree Extrusions led the volume chart with trades of around 3.16 crore shares followed by Tulsi Extrusions (1.27 crore), Reliance Natural Resources (1.09 crore), Nagarjuna Fertilisers (1.07 crore) and Ispat Industries (80.85 lakh).

Metal and health care stocks trigger late Sensex bounce back

A late bout of hectic buying action in metal, health care and other heavyweight counters triggered a major rally in the Sensex, which otherwise lingered in negative territory for better part of the trading session. On the back of a weak Asian indices, the Sensex witnessed extreme volatility in early trades. After resuming weak at 17,810, the index advanced sharply and touched the intra-day high of 17,921, thereafter Sensex began to dip sharply on heavy profit taking to touch the day's low of 17,690. While the market remained subdued thereafter, the Sensex on fresh buying support rebounded sharply at close. The Sensex finally ended the session with marginal loss of a single point at 17,825, while the Nifty advanced 17 points to close at 5,285.

Sectoral indices were mixed on the Bombay Stock Exchange (BSE). The BSE Metal index led the pack with a surge of 1.98% followed by BSE HC index , which gained 1.72%, and BSE Auto index which moved up 1.18%. BSE CG, Power and PSU indices gained marginally and closed in positive territory. Among the losers the BSE Reality index dropped 1.47%.

Leading the upsurge Hindalco flared up 4.03% at Rs203.85. Among other major gainers Bajaj Auto shot up by 3.61% at Rs2,255, HDFC rose 3.39% at Rs2,775, M&M jumped by 3.26% at Rs680 and BHEL added 2.68% at Rs2,323. Cipla, Satyam, Ranbaxy, Tata Steel and Wipro gained 1-2% each. Select frontline counters, however, witnessed profit taking. DLF dropped 2.37% at Rs805, while SBI declined 2.11% at Rs2,038. RIL, REL, Ambuja Cement and Infosys ended with steady losses.

Among other major gainers NALCO soared 7.01% at Rs477.95, Tata Communications flared up 6.56% at Rs518, Spice Tele rose 5.78% at Rs36.60 and Sun Pharma added 5.58% at Rs1,259.

Over 3.15 crore Manjuhsree shares changed hands on the BSE followed by Tulsi Extrusion (1.27 crore shares), RNRL (1.09 crore shares), Nagarjuna Fertilisers (1.07 crore shares) and Ispat Industries (0.80 crore shares).

Nifty outscores Sensex

The barometer index BSE Sensex ended flat ahead of presentation of Union Budget 2008-09 by the Finance Minister P Chidambaram in Parliament. However, Nifty recorded gains against a flat closing for Sensex. Normally, the rise or fall in Sensex in a day is about three times that of Nifty.

The market had recovered from lower level in early afternoon trade after the finance ministry tabled Economic Survey - a report card on the economy during this fiscal in partliament at about 12:00 IST, the recovery was short lived. Derivatives contracts for February 2008 series expired today, 28 February 2008.

Auto, metal, healthcare stocks rose. Realty stocks fell. Reliance Industries slipped. The market breadth was weak. European markets which opened after Indian market were subdued in early trade. Asian markets, which opened before Indian market, were mixed.

The 30-share BSE Sensex ended down 1.51 points or 0.01% at 17,824.48. Sensex hit a low of 17,692.13 in mid-morning trade. At the day's low, Sensex lost 133.86 points. Sensex touched a high of 17,921.51 in initial trade. At day’s high it rose 95.52 points.

The broader CNX S&P Nifty was up 16.7 points or 0.32% at 5,285.1.

National Alluminium Company (up 7.96% to Rs 482.70), Tata Communications (up 7.84% to Rs 525.25), Dr. Reddy’s Labooratories (up 5.66% to Rs 572.35), Sun Pharmaceutical Industries (up 4.46% to Rs 1,254.20) and Hindalco Industries (up 4.26% to Rs 204.30) were top five gainers from Nifty pack. These five scrips have a combined weightage of 3.3% in Nifty. Four of these five stocks are not a part of Sensex. Hindalco which is a Sensex stock has a 1.38% weightage in the barometer index.

BSE clocked a turnover of Rs 4,822 crore today 28 February 2008 compared to a turnover of Rs 5,876.55 crore on Wednesday, 28 February 2008.

Nifty March 2008 futures were at 5271, at a discount of 14.10 points as compared to spot closing of 5285.10.

NSE's futures & options (F&O) segment turnover was Rs 61,065.26 crore, which was lower than Rs 63,256.76 crore on Wednesday, 27 February 2008.

Maintaining economic growth at about 9% a year will be a challenge due to inflation and infrastructure constraints, and raising the rate to double digits will be even harder, the Economic Survey for 2007-08 said. Agricultural sector growth is estimated to slow to 2.6% in the year ending March 2008, from 3.8% the year before, it said. Development of adequate infrastructure is a critical prerequisite for sustaining the economic growth momentum, the survey said.

It said containing inflation was a priority, because rising prices hurt the poor, and putting pressure on interest rates hit both savings and investment. The survey said Inflation should remain moderate in the coming months due to policy measures taken over the last year.

A surge in capital inflows, including foreign direct investment, would continue in the medium term although short-term inflows may moderate due to slightly slower growth, the survey said. Any reduction in excess capital flows from the high levels of 2007 may affect the equity markets in the short term but will make the task of monetary management easier, the survey said.

Finance Minister (FM) P Chidambaram today said that he was confident of achieving 11th Plan target of 9% growth. BSE Consumer Durables index (down 0.81% to 4,795.14), BSE Oil & Gas index (down 0.84% to 11,164.87), BSE Bankex (down 0.81% to 10,073.91), BSE Realty index (down 1.47% to 9,833.10), BSE IT index (down 0.14% to 3,967.40), BSE FMCG index (down 0.05% to 2,253.95) underperformed Sensex.

BSE PSU index (up 0.33% to 8,499.34) , BSE Power index (up 0.38% to 3,748.11), BSE HealthCare index (up 1.7% to 3,925.75), BSE Capital Goods index (up 0.56% to 16,598.88) BSE Auto index (up 1.18% to 4,829.86) and BSE Metal index (up 1.98% to 16,972.01) outperformed Sensex.

The market breadth was weak: on BSE 1452 declined as compared to 1,269 that advanced. 41 stocks remained unchanged.

India’s largest engineering & construction firm by revenue Larsen & Toubro rose 0.28% to Rs 3,641.20. It recovered from its lows of Rs 3,600.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries declined 1.97% at Rs 2,536.70. The company said on Tuesday, 26 January 2008 it had discovered more gas in an exploration block off India's east coast.

Realty stocks fell. India’s largest real estate player by market cap DLF declined 2.37% to Rs 805.35. DLF will reportedly invest about $5 billion or Rs 20,000 crore to build and operate more than 25,000 hotel rooms in the next 7-8 years. The New Delhi-based real estate major is also in talks to set up nine super luxury hotels across India, the reports added. Indiabulls Real Estate (down 1.02% to Rs 647.30) and Unitech (down 1.56% to Rs 376.45) edged lower.

Auto stocks rose. Hero Honda Motors (up 3.73% to Rs 747.30), Mahindra & Mahindra (up 3.26% to Rs 680.15), Bajaj Auto (up 3.61% to Rs 2,255) and Maruti Suzuki India (up 0.34% to Rs 834.95) edged higher. India's largest truck maker by sales Tata Motors rose 0.4% to Rs 710.25.

Metal stocks rose. Sterlite Industries (up 3.93% to Rs 853.70), Steel Authority of India (up 3.88% to Rs 252.80) and Tata Steel (up 1.56% to Rs 823.70) edged higher.

Healthcare stocks edged higher. Cipla rose 2.23% to Rs 206.05 and Ranbaxy Laboratories rose 1.88% at Rs 444.55.

NTPC, India's biggest power generation firm by revenue, rose 0.79% to Rs 203.95. NTPC has signed a loan agreement for 68.56 million euros with Nordic Investment Bank to part fund its capital expenditure. The 12-year loan carries a floating interest rate linked to EURIBOR, and is without a sovereign guarantee, the company said after market hours on Wednesday, 27 February 2008.

HDFC (up 3.39% to Rs 2,775.35) and Bharat Heavy Electricals (up 2.68% to Rs 2,323.60) edged higher from the Sensex pack.

Ambuja Cements (down 1.38% to Rs 121.20) and Reliance Energy (down 1.88% to Rs 1,600.70) edged lower from the Sensex pack.

Tulsi Extrusions clocked highest volume of 1.27 crore shares on BSE. Reliance Natural Resources (1.09 crore shares), Nagarjuna Fertilisers and Chemicals (1.07 crore shares), Ispat Industries (80.83 lakh shares) and Centurion Bank of Punjab (76.62 lakh shares) were other vlume toppers in that order.

OnMobile Global clocked highest turnover of Rs 271.36 crore on BSE. Reliance Capital (Rs 186.13 crore), Reliance Industries (Rs 149.63 crore), Reliance Energy (Rs 147.68 crore) and Reliance Natural Resources (Rs 146.13 crore) were other turnover toppers in that order.

As per provisional data on NSE.Foreign institutional investoes (FIIs) sold shares worth Rs 809.1 crore today, 28 February 2008 . Domestic funds bought shares worth Rs 732.38 crore.

With general elections due in 2009, Union Budget 2008-09 to be presented on 29 February 2008 will be the last full-fledged budget of the Congress-led United Progressive Alliance government and it is therefore likely to be a populist budget. Thus, the Finance Minister (FM) is likely to provide higher allocations to several social initiatives like rural upliftment, employment, education, agricultural growth and public health.

Though populist measures will dominate the budget, FM is also expected to take steps to stimulate investment and consumption demand at a time when the economy is witnessing moderation from a solid growth last year. A reduction in personal income tax, if any, will result in increase in disposable incomes which in turn may boost demand for consumer goods.

Expectations are that the corporate income tax rate may be cut or the 10% surcharge on corporate tax may be abolished. The surcharge is 10% on a tax rate of 30%, making the effective corporate tax rate 33%. Another possibility is that of a cut in dividend distribution tax from 15% to 12.5%.

Meanwhile, FM may raise the Securities Transaction Tax (STT) slightly. STT is currently at 0.125% on delivery trades. STT is 0.025% on non-delivery trades on sell transactions. STT is 0.017 % in futures & options segment on sell trasactions.

It is also expected that the FM would announce some relief packages for troubled export sensitive sectors like textiles, rubber, jewelry, leather and IT services. These sectors have been hit by rupee’s surge in the past one year.

European markets were subdued. France’s CAC 40, Germany’s DAX and UK’s FTSE 100 were down by between 0.97% to 1.11%.

Asian markets were mixed today. Key benchmark indices in Hong Kong, and Singapore, were up by between 0.44% to 0.89%. Key benchmark indices in Japan, South Korea ,China were down by between 0.75% to 1.13%. Financial markets in Taiwan are closed for a holiday.

US stocks were little changed on Wednesday after a rally fizzled when doubts emerged that lifting investment caps on the two largest home financing companies was enough to prevent deeper damage to the housing market. The Dow Jones industrial average was up 9.36 points, or 0.07%, at 12,694.28. The Standard & Poor's 500 Index was down 1.27 points, or 0.09%, at 1,380.02. The Nasdaq Composite Index was up 8.79 points, or 0.37%, at 2,353.78.

Federal Reserve Chairman Ben Bernanke on Wednesday signaled a readiness to cut interest rates again to prevent further damage to the weak US economy, even as he took note of rising inflation risks. Delivering the Fed's semiannual report on the economy to Congress, Bernanke made clear the central bank was worried a deepening housing slump, softening jobs market and tighter credit could dim an already bleak economic outlook