First quarterly gain for Sensex since Q4 December 2007

Key benchmark indices managed to clock decent gains in a volatile trade after a nearly 5% fall on the bourses on Monday 30 March 2009. Metal, capital goods and realty stocks rose. Banking, IT stocks and index heavyweights Reliance Industries and Larsen & Toubro came off the day's highs. The BSE 30-share Sensex rose 140.36 points, or 1.47%, up close to 160 points from the day's low but off about 120 points from the day's high.

The S&P CNX Nifty regained the psychological 3,000 level. It had fallen below that level yesterday after a steep slide in equities caused by a setback in global stocks. On Monday, 30 March 2009, stocks around the globe were slammed amid worries about the health of the US auto sector.

Volatility was immense. After opening on a firm note tracking gains in Asian stocks, the market slipped into the red in morning trade. The market recovered in volatile trade later. The market extended gains in afternoon trade tracking firm European markets which opened after Indian market. Volatility was high in mid-afternoon trade. After a sharp surge at about 14:53 IST, the market came sharply off the higher level.

European stocks rebounded on Tuesday from a sharp fall in the previous days as Marks & Spencer Group Plc posted sales that beat analysts' estimates and commodity producers climbed. Key benchmark indices in France, Germany and UK were up by between 1.4% to 2.96%.

Most of the Asian stocks edged up on Tuesday as some investors bet the most painful stretch of corporate earnings damage may be over and bought Asian technology shares. Key benchmark indices in Hong Kong, China, Taiwan, South Korea and Singapore rose by between 0.09% to 1.72%. But Japan's Nikkei stock average was down 1.54% on Tuesday, with trade thin as investors waited for details of a fresh stimulus plan for the economy due out later in the day.

Trading in US index futures showed the Dow could rise 66 points at the opening bell on Tuesday, 31 March 2009. The US markets fell sharply on Monday 30 March 2009 on concerns about potential bankruptcies in the auto sector and worries that some big banks will need a lot more bailout money. The Dow plunged 254.16 points, or 3.3%, to 7,522.02. The S&P 500 index was down 28.41 points, or 3.5%, to 787.53, and the Nasdaq composite index slipped 43.40 points, or 2.8%, to 1,501.80.

Closer home, the fall in headline inflation to a record low has raised expectations of further easing of the monetary policy by the Reserve Bank of India (RBI) to boost demand in the economy. Inflation based on the wholesale prices rose 0.27% in the 12 months to 14 March 2009, a record low and below the previous week's annual rise of 0.44%, data released by the government during trading hours on Thursday, 26 March 2009 showed.

Prime Minister Manmohan Singh on Tuesday, 24 March 2009 said India's economy will revive in a big way in six to seven months as stimulus packages start to take effect. On the same day, Planning Commission Deputy Chairman Montek Singh Ahluwalia scaled down the GDP (gross domestic product) growth projection for the current fiscal to 6.5% from the 7.1% increase estimated by the government earlier during the year, owing to the ongoing global crisis.

Meanwhile, there are signs that the credit flow to businesses is improving. During the fortnight ended 13 March 2009, loans sanctioned by scheduled commercial banks (SCBs), including regional rural banks, went up by Rs 22,423 crore. This was the third fortnight in a row when credit flow went up. Earlier, an extreme risk aversion by banks had chocked credit flow to the industry - the lifeline of business.

Earlier the global financial crisis ends and sooner the risk appetite of global investors and global companies improves, better it will be for India Inc. An increase in risk appetite of global investors/global companies will help Indian firms raise overseas funds required for business expansion. The global financial crisis has chocked the overseas funding route for Indian firms.

Raising funds could become difficult for small and medium enterprises (SMEs) with new lending regulations for banks, popularly known as Basel II norms coming into practice from 1 April 2009. All business units, irrespective of their size, will need to take ratings for their enterprises to secure working capital, loans, and other funds from banks.

Lack of funding has hit a slew of long-gestation infrastructure projects in India. World Bank Chief Economist & Senior Vice-President, Dr Justin Yifu Lin, on 13 March 2009, said if India can improve its infrastructure such as electricity, power, transportation and port facilities, it will be well on its path to achieve a 9-10% growth.

Foreign funds have resumed selling after heavy purchases in the past few days. Foreign institutional investors (FIIs) sold shares worth a net Rs 464.60 crore on Monday, 30 March 2009. Foreign institutional investors (FIIs) sold shares worth a net Rs 270.70 crore on Friday, 27 March 2009, as against a huge inflow of Rs 1317.30 crore on Thursday, 26 March 2009.

The latest sharp fall in the rupee will result in a depreciation in the value of FIIs' equity portfolio to the extent of the fall in the rupee to the extent of the fall in the rupee. A sharp volatility in the rupee may also dissuade fresh buying by foreign funds. The Indian rupee declined sharply on Monday, 30 March 2009, weighed down by the dollar's strength against some currencies and weakness in regional stock markets. The rupee hit a record low beyond 52 per dollar early this month. It had bounced back later. It once again faltered later.

The rupee once again recovered today. The partially convertible rupee was at 50.65 per dollar, stronger than its previous close at 51.17/19. The rupee rose as a rise in Asian stock markets calmed concerns of capital outflows, while the dollar's weakness against some Asian units also helped.

Domestic institutional investors have been absorbing heavy selling by foreign funds witnessed in first two months of calendar year 2009. Mutual funds are likely give support to prices to prop-up year end net asset values (NAVs). Today is the last day of the financial year 2008-09 (FY 2009).

The recent steep volatility in the currency does not augur well for corporate India as it may result in hedging losses for some firms. Meanwhile, the National Advisory Committee on Accounting Standards (Nacas), has reportedly favoured suspending for two years a key rule that requires firms to mark-to-market (MTM) foreign exchange assets and liabilities, a decision which is favourable for corporate India.

Accounting Standard-11 mandates MTM provisioning in the P&L a/cs for forex-related gains and losses. It requires that forex assets & liabilities be recorded at a fair value on the date of preparation of the balance sheet. The demand to suspend this rule, known in accounting circles as AS-11, was made by the Confederation of Indian Industry (CII) on grounds that it could severely distort the earnings of many companies. It was contended that this accounting standard, designed to address normal conditions, should be suspended for the time being, as the present market conditions were not normal.

The upside on the domestic bourses will be capped in the next two months due to political uncertainty ahead of parliamentary election to be held between mid-April 2009 to mid-May 2009. More so at a time when it is highly unlikely that either Congress or BJP will come to power on its own, i.e., without the support of other small/regional parties. Early estimates point a fractured mandate. An alliance led by the Congress party is ahead in pre-poll surveys carried out by several polls.

But in a move which could undermine the chances of a Congress-led alliance getting more seats in the election, RJD supremo Lalu Prasad has announced candidates for 28 of the 40 constituencies in Bihar including from the three seats where Congress has sitting MPs. RJD is one of the key constituents of the current Congress-led UPA government at the Centre.

The Congress, meanwhile, has reportedly sealed a seat-sharing pact with the Nationalist Congress Party (NCP) in the populous Maharashtra state. Relations between the two parties have been prickly as the NCP negotiated with opposition parties to undercut Congress and boost its leader's prime ministerial ambitions. Congress will stand for 26 seats in the state and the NCP for 22. The allies are weighing up their options for a similar deal outside the state.

A latest jolt to the Congress party came from a decision of the regional party in Tamil Nadu viz. the PMK on Thursday, 26 March 2009, to join hands with the All India Anna Dravida Munnetra Kazhagam (AIADMK). PMK is a part of the ruling Congress-led United Progressive Alliance at the centre. The PMK's decision to join AIADMK could give impetus to the Third Front if the PMK and AIADMK join it.

The Congress party on Tuesday 24 March 2009 said it would extend interest relief to farmers and build on the national job guarantee scheme. The focus on populist measures by Congress may weigh on the stock market sentiment especially at a time when the fiscal deficit has risen sharply. Releasing the party manifesto for the election, the Congress party on Tuesday said it would maintain government control over state-run firms in the manufacturing and finance sectors.

Meanwhile, BJP president Rajnath Singh said in an interview to a news agency that the party will speed up foreign investment projects in the country if it wins the parliamentary elections in May 2009. The measure is part of the BJP's election manifesto to be unveiled this week.

Singh said the BJP would be more open to foreign investment than Congress, which was unable to pass major economic reforms and open the economy further up globally due to opposition from leftist allies. Singh said his party would also focus on agriculture, putting more money in the pockets of farmers. More than half of India's 1.1 billion population live in villages.

A group of smaller political parties, including the communists, have formally launched a Third Front in a bid to provide an alternative to the two main parties viz. the Congress and the BJP.

The BSE 30-share Sensex rose 140.36 points, or 1.47%, to 9,708.50. At the day's high of 9,826.22, the Sensex rose 258.08 points in late trade. At the day's low of 9,547.21, the Sensex fell 20.93 points in mid-morning trade.

The S&P CNX Nifty was up 42.80 points or 1.44% to 3,020.95. It hit a high of 3,054.30 and low of 2,966.40.

The BSE clocked a turnover of Rs 3,981 crore, higher than Rs 3,260.81 crore on Monday, 30 March 2009.

Nifty April 2009 futures were at 3016, at a discount of 4.95 points as compared to the spot closing of 3020.95. Turnover in NSE's futures & options (F&O) segment was Rs 48,987.44 crore, lower than Rs 50,238.21 crore on Monday, 30 March 2009.

In the quarter ended 31 March 2009, the Sensex rose 61.19 points or 0.63% from 9,647.31 on 31 December 2008. It was Sensex's first quarterly gain since the December 2007 quarter. In the financial year ended 31 March 2009, the Sensex plunged 5,935.94 points or 37.94% from 15,644.44 on 31 March 2008.

The BSE Mid-Cap index was up 2.27%. It outperformed the Sensex. The BSE Small-Cap index rose 1.46%. It underperformed the Sensex.

The BSE Capital Goods index (up 3.29%), the BSE Healthcare index (up 2.97%), the BSE Realty index (up 2.93%), the BSE Auto index (up 2.44%), the BSE Metal index (up 2.43%), the BSE TECk index (up 2.32%), the BSE IT index (up 2.3%), the BSE FMCG index (up 1.91%), the BSE Bankex (up 1.73%) outperformed the Sensex.

The BSE Consumer Durables index (up 0.52%), the BSE PSU index (up 0.74%), the BSE Oil & Gas index (up 0.87%), the BSE Power index (up 1.44%) underperfomed the Sensex.

The market breadth, indicating the overall health of the market, was strong on BSE with 1,565 shares advancing as compared with 921 that declined. A total of 61 shares remained unchanged.

From the 30 stock Sensex pack 25 stocks gained while the rest fell.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 0.28% to Rs 1,520 on bargain hunting after a slide in the past two days. But the stock came off the day's high of Rs 1,552.40.

Meanwhile, report suggests firm will begin gas production from the Krishna Godavari (KG) basin in 24 to 48 hours, with gas production from the Dhirubhai 6 (D6) block estimated to add close to $2 billion to the company's profit at peak production levels.

RIL's advance tax payment fell 16.47% to Rs 370 crore in Q4 March 2009 over Q4 March 2008.

India's largest oil exploration firm by sales ONGC fell 0.41% to Rs 779.70, off the day's high of Rs 799 as crude oil prices tumbled over 7% on Monday, 30 March 2009. Fall in crude oil prices would result in lower realizations from crude sales for the oil exploration firm. Crude oil for May 2009 delivery tumbled $3.97 or 7.58% to $48.41 a barrel on the New York Mercantile Exchange on Monday, 30 March 2009 after the Wall Street plunged on Obama administration's talk of takeover and bankruptcy for two major US automakers and bank rescues in Europe prompted investors to book profits after a recent run-up.

The strengthening of dollar against euro was also one of the reasons for the sharp fall in crude oil prices. The dollar strengthened to its highest level against the euro in more than a week, limiting the appeal of commodities as an investment.

Shares of oil marketing companies rose after the government recently issued oil bonds worth Rs 10,000 crore to compensate them for under-recoveries on sale of petroleum products at a controlled price during the current financial year. BPCL and HPCL rose by between 2.31% and 2.34% respectively.

Indian Oil Corporation fell 0.09% after company said on Wednesday, 25 March 2009 the government has approved a proposal to absorb its subsidiary Bongaigaon Refinery & Petrochemicals (BRPL). Indian Oil will issue four shares for every 37 shares in BRPL.

Indian Oil Corporation has been issued oil bonds worth Rs 5,817.27 crore, while Bharat Petroleum Corporation has been issued bonds worth Rs 2,144.32 crore. Hindustan Petroleum Corporation has got bonds worth Rs 2,038.41 crore.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 3.33% to Rs 672.65. However, the stock came off the day's high of Rs 689.80. It has bagged an order worth Rs 1100 crore in electrical construction sector.

Other capital goods stocks, Crompton Greaves, Bharat Heavy Electricals Punj Lloyd, Praj Industries, Thermax, ABB, rose by between 0.56% to 6.8%.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. DLF, Housing Development & Infrastructure, Indiabulls Real Estate and Unitech rose by between 1% to 8.07%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Metals stocks gained as industrial copper rose on the London Metal Exchange. Steel Authority of India, Tata Steel, National Aluminum Company, Sterlite Industries, Hindustan Zinc, and Hindalco Industries, rose by between 1.37% to 5.02%.

Banking stocks rose in choppy trade on hopes a further fall in interest rates may boost lending growth and on recovery in bond prices. India's largest bank in terms of assets and branch network State Bank of India rose 4.36% to Rs 1,066.35 off the day's high of Rs 1,083.65. It hit a low of Rs 995.30. Its advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

India's largest private sector bank by net profit ICICI Bank fell 1.58% to Rs 332.60. It hit a high of Rs 345.90 and a low of Rs 314.50. Its American depository receipts (ADR) fell 13.27% on Monday, 30 March 2009. ICICI Bank's advance tax payment remained unchanged at Rs 250 crore in Q4 March 2009 when compared to Q4 March 2008.

India's second largest private sector bank by operating income HDFC Bank rose 2.42% to Rs 967.85. The stock came off a high of Rs 985. It hit a low of Rs 904.10. Its ADR fell 8.49% on Monday. Its advance tax payment rose 10% to Rs 275 crore in Q4 March 2009 over Q4 March 2008.

India's biggest dedicated housing finance firm by operating income HDFC fell 2.71% to Rs 1,411.20. It announced a 50 basis points reduction in its retail prime lending rate (RPLR) to 14% effective Wednesday 25 March 2009.

Bond prices which had tumbled in the past few days recovered today on speculation yields near the highest in four months attracted investors and on speculation the central bank's plan to purchase debt in the coming months will help improve demand for the securities. Bond yields and bond prices are inversely related.

The yield on the 6.05% note due February 2019 declined nine basis points to 6.99% as of 11:34 IST in Mumbai. Ten-year yields have surged 1.74 percentage points since 31 December 2008. The Reserve Bank of India said last week it will buy as much as Rs 80000 crore ($16 billion) of existing government debt via auctions in the next six months. It may be recalled that banks made huge treasury gains in the December 2008 quarter following a surge in bond prices.

Outsourcing focussed IT firms rose on bargain hunting after a sharp slide in the past two trading sessions. India's second largest software services exporter Infosys Technologies rose 2.02% to Rs 1324.10 off the day's high of Rs 1,340. Its ADR fell 0.15% overnight. Recent reports said it may win a large IT project from the government, which will run on a transaction-based pricing model, similar to the passport processing contract its larger rival Tata Consultancy Services (TCS) won last year. The contract is among the many large IT contracts that are up for bidding from government departments or public sector undertakings, reports suggest.

India's third largest software services exporter, Wipro rose 1.78% even as its ADR fell 3.78% on Monday. Recently its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC).

India's largest software services exporter by sales TCS rose 3.3% to Rs 540 off the day's high of Rs 544. The company's advance tax payment fell 54.3% to Rs 53 crore in Q4 March 2009 over Q4 March 2008.

Financial Technologies (India) spurted 6.09% to Rs 619.90 on reports the company is set to revive an initial public offer of its unit Multi Commodity Exchange.

Commercial vehicle makers rose on reports the government plans to extend higher depreciation benefit of 50% on commercial vehicles by three months till June 2009. Ashok Leyland and Tata Motors rose by between 2.26% to 4.64%. The higher depreciation rate translates into lower tax liabilities and lower insurance premiums for buyers of commercial vehicles.

India's largest tractor maker by sales Mahindra & Mahindra rose 3.51% after booking for the company's new vehicle Xylo crossed the 12000 mark since its launch on 13 January 2009.

Some FMCG stocks rose on expectations of better Q4 March 2009 results following reports of higher advance tax payment by these firms. United Spirits, Tata Tea, Nestle India, Britannia Industries and ITC rose by between 0.42% to 4.2%. But India's largest FMCG firm by sales Hindustan Unilever fell 0.5%. The company's advance tax payment rose 30% to Rs 130 crore in Q4 March 2009 over Q4 March 2008.

Some healthcare stocks rose on expectations of better Q4 March 2009 results following reports of higher advance tax payment by these firms. Cipla, Dr Reddy's Laboratories, Ranbaxy Laboratories, Cadila HealthCare, Wockhardt, Biocon rose by between 0.29% to 7.96%.

Sun Pharmaceutical Industries rose 2.79% after the company on Monday 30 March 2009 said it has received approval from the US Food and Drug Administration to sell topiramate tablets, used for the treatment of seizures.

Kalpataru Power Transmission jumped 0.77% on bagging an overseas orders worth Rs 400 crore.

Airline stocks fell on reports aviation turbine fuel (ATF) prices will go up by at least 15% from 1 April 2009. Jet Airways and SpiceJet fell 1.74% and 0.37% respectively while Kingfisher Airlines rose 0.45%. ATF accounts for 50% of an airline's operational expenditure.

Tea shares rose on reports prices of Indian teas are likely to rise in the coming months. Warren Tea, Asian Tea & Exports, Mcleod Russel, Assam Company and Harrisons Malayalam roseby between 5.77% to 20%.

Unitech clocked the highest volume of 1.56 crore shares on BSE. GVK Power & Infrastructure (1.39 crore shares), Cals Refineries (1.2 crore shares), Reliance Natural Resources (1.13 crore shares) and ICICI Bank (1.05 crore shares) were the other volume toppers in that order.

ICICI Bank clocked the highest turnover of Rs 351.08 crore on BSE. Reliance Industries (Rs 254.60 crore), State Bank of India (Rs 169.61 crore), Reliance Infrastructure (Rs 162.78 crore) and Reliance Capital (Rs 146.50 crore) were the other turnover toppers in that order.