ICICI Bank, L&T lead decline in Sensex

Key benchmark indices posted small losses in what was a volatile trading session. Metal stocks surged even as realty stocks dropped. The barometer index BSE Sensex fell below the psychological 9,000 level. Banking stocks were volatile. Index heavyweight Reliance Industries (RIL) edged lower. The Sensex was down 35.07 points, or 0.39%, up close to 100 points from the day's low and off close to 35 points from the day's high.

Volatility was high. After a weak opening triggered by lower US index futures and mostly lower Asian stocks, the market extended losses in morning trade. It soon staged a strong rebound from lower level. However, the recovery proved short-lived. The market weakened further in afternoon trade.

Expectations of a further easing of the monetary policy by the Reserve Bank of India and buying by foreign funds triggered a strong rebound on the bourses in mid-afternoon trade. High volatility was witnessed in the last one hour of trade.

The market has risen sharply in the past few days. From a recent low of 8,160.40 on 9 March 2009, the Sensex jumped 841.35 points or 10.31% in six trading sessions to 9,001.75 on Thursday 19 March 2009.

The fall in headline inflation to a record low has raised expectations of further easing of the monetary policy by RBI to boost demand in the economy. Inflation based on the wholesale price index (WPI) rose 0.44% in the year through 7 March 2009, a record low for the current series, data released by the government during trading hours on Thursday, 19 March 2009, showed. The rate of growth in inflation was much lower than previous week's annual rise of 2.43%.

Interest rates in India have to fall further to channel more funds into infrastructure projects, Planning Commission member Kirit Parikh said on Friday. The Reserve Bank of India (RBI) has aggressively cut its policy lending rate by 400 basis points since October 2008, but banks are yet to reduce their individual lending rates to that extent.

Parikh also said India needs to use a portion of its foreign exchange reserves to fund mega projects. India needs to spend $500 billion in the five-year period ending March 2012 to upgrade its infrastructure.

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.

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.

Meanwhile, foreign institutional investors are now in buying mode which follows easing of FII selling vigour in the past few days. As per the provisional data released by the stock exchanges, foreign funds bought shares worth a net Rs 23 crore on Thursday. FIIs had bought shares worth a net Rs 975.10 crore in four trading sessions from 13 March 2009 to 18 March 2009.

Foreign funds can take solace in the recent sharp rebound in the rupee against the dollar. The Indian rupee today reversed early gains. The partially convertible rupee was at 50.61 per dollar, below Thursday's close of 50.3650/3850. A recent sharp slide in the rupee to a record low had resulted in a depreciation in the value of FIIs equity portfolio to the extent of the fall in rupee. The rupee hit a record low beyond 52 per dollar early this month.

Domestic institutional investors have been absorbing heavy selling by foreign funds in calendar year 2009. However, 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.

European shares reversed losses. Key benchmark indices in France, Germany were up by between 0.25% to 0.32%. But UK's FTSE 100 was down 0.28%.

Asian markets were a mixed bag today. Key benchmark indices in South Korea, Singapore, China, Indonesia and Malaysia were up by between 0.68% to 1.44%, boosted by US Federal Reserve's plan to end the worst global recession in 60 years by spending $1 trillion buying back debt.

But key benchmark indices in Taiwan, and Hong Kong were down by between 0.33% to 2.26%, on profit taking after recent strong gains.

Trading in US index futures indicated the Dow could slide 20 points at the opening bell on Friday, 20 March 2009.

The BSE 30-share Sensex was down 35.07 points, or 0.39%, to 8,966.68. At the day's high of 8,999.98, the Sensex fell 1.77 points in mid-afternoon trade. At the day's low of 8867.13, the Sensex slipped 134.62 points in afternoon trade.

The S&P CNX Nifty was flat at 2,807.05.

The Sensex is down 680.63 points or 7.59% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 152.10 points or 5.13% in calendar 2009 from its close of 2,959.15 on 31 December 2008.

The BSE clocked a turnover of Rs 2,929 crore, much lower than Rs 3,977.84 crore on Thursday, 19 March 2009.

Nifty March 2009 futures were at 2798.55, at a discount of 8.50 points as compared to the spot closing of 2807.05. Turnover in NSE's futures & options (F&O) segment was Rs 43,647.51 crore, lower than Rs 48,752.20 crore on Thursday, 19 March 2009.

The BSE Mid-Cap index was down 0.47%, underperforming the Sensex while BSE Small-Cap index rose 0.54% outperforming the Sensex.

The BSE Metal index (up 1.61%), the BSE FMCG index (up 0.21%), the BSE Oil & Gas index (up 0.2%), the BSE TECk index (up 0.14%), the BSE PSU index (up 0.03%), the BSE IT index (down 0.08%), the BSE Consumer Durables index (down 0.26%), outperformed the Sensex.

The BSE Power index (down 0.66%), the BSE Healthcare index (down 0.76%), the BSE Auto index (down 1.32%), the BSE Bankex (down 1.95%), the BSE Capital Goods index (down 2.54%), the BSE Realty index (up 4.14%) underperfomed the Sensex.

The market breadth, indicating the overall health of the market, was negative on BSE with 1,214 shares advancing as compared with 1,273 that declined. A total of 64 shares remained unchanged.

From the 30 share Sensex pack, 17 stocks fell while rest rose.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 0.45% to Rs 1,338.55 on profit taking after recent surge. Nonetheless, the stock came off the day's low of Rs 1,321. The company will start production of gas from KG basin, off the east coast, this month. Meanwhile, RIL is reported to be in talks with Essar Oil to source petroleum products from the latter's refinery in Gujarat to restart its retail outlets that were shut for nearly a year.

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 Oil & Natural Gas Corporation (ONGC) rose 3.41% to Rs 755.05 on a surge in global crude oil prices. Crude oil for April 2009 delivery rose 7.21% or $3.47 to $51.61 a barrel on the New York Mercantile Exchange (NYMEX) on Thursday, 19 March 2009 as the dollar tumbled following the US Federal Reserve's plan to pump $1 trillion into the recession-hit economy.

The prices settled above $50 on Thursday, 19 March 2009, for the first time in almost four months, since November 2008. Rise in crude oil prices would result in higher realizations from crude sales for the oil exploration firms.

Three PSU OMCs fell as crude oil prices surged over 7% on the New York Mercantile Exchange on Thursday, 19 March 2009. BPCL, HPCL and Indian Oil Corporation fell by between 0.7% to 3.71%. Higher crude oil prices will increase the under-recoveries for PSU OMCs on sale of fuel at controlled prices.

Telecom firms were mixed on reports telecom companies may reduce text message tariff by 40% from May 2009 for customers outside their home network after being warned by the industry regulator for overcharging. India's largest telecom services provider by sales Bharti Aitel fell 0.37% even as rival Reliance Communications rose 1.12%.

At present, a phone call is cheaper than an SMS for roaming customers, because competition has forced telecom companies to keep call rates low report said. The cut will negatively impact revenues of telecom firms

India's largest electric equipment maker by sales Bharat Heavy Electricals dropped 2.32% on reports the company paid 33.33% lower advance tax at Rs 400 in Q4 March 2009 over Q4 March 2008.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 4.01% despite reports L&T and Grasim Industries are on the verge of settling their 7-year old legal dispute over Grasim`s 0.62% stake in L&T and the latter`s 11.49% stake in Ultratech, the Birla group cement firm. Grasim Industries and Ultratech Cement are Aditya Birla group companies. Shares of Grasim Industries was flat at Rs 1,462.15.

Rate sensitive realty stocks fell on reports falling interest rates have failed to revive housing demand. DLF, Housing Development & Infrastrucutre and Unitech fell by between 0.19% to 2.39%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Akruti City slumped 27.83% after a recent solid surge in the stock price forced the National Stock Exchange to ban derivatives trading in the stocks from end-March 2009.

Metal stocks gained on a surge in metal prices on London Metal Exchange. Steel Authority of India, Hindustan Zinc, Sterlite Industries, Tata Steel, National Aluminum Company and Hindalco Industries rose by between 0.43% to 3.32%.

A measure of six metals jumped 5.6% in London on Thursday, 19 March 2009.

Banking stocks fell in choppy trade on fears of rising defaults in a weakening economy and on weak ADRs. India's largest private sector bank by net profit ICICI Bank fell 4.5%. Its American depository receipts (ADR) fell 3.96% on Thursday, 19 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 largest bank in terms of assets and branch network State Bank of India fell 1.51% to Rs 953.55. Its advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

Other PSU stocks, Punjab National Bank, Bank of Baroda, Bank of India, India Overseas Bank, fell by between 1.13% to 1.97%.

But India's second largest private sector bank by operating income HDFC Bank rose 0.9% to Rs 837.70. The stock was off the day's low of Rs 810.15. Its ADR fell 3% on Thursday. Its advance tax payment rose 10% to Rs 275 crore in Q4 March 2009 over Q4 March 2008.

Investors are concerned about non-performing loans at banks and asset quality, Aditya Singhania, an analyst at Credit Suisse Group, said in a note to clients.

Rate sensitive auto shares were higher on expectations of good sales in the current month. Mahindra & Mahindra and Hero Honda Motors rose by between 0.14% to 0.57%. But India's largest car maker by sales Maruti Suzuki India fell 2.59%.

India's largest commercial vehicle maker by sales Tata Motors fell 6.24%. The stock had risen recently ahead of the launch of its Rs 1-lakh car Nano on Monday, 23 March 2009. Tata Motors paid no advance tax in Q4 March 2009 compared to Rs 75 crore in March 2008.

Some FMCG stocks fell on profit taking after recent gains triggered by expectations of better Q4 March 2009 results following reports of higher advance tax payment by these firms. Nestle India, Tata Tea, United Spirits, ITC, REI Agro, Marico fell by between 0.21% to 3.07%. India's largest FMCG firm by sales Hindustan Unilever rose 1.17%. The company's advance tax payment rose 30% to Rs 130 crore in Q4 March 2009 over Q4 March 2008.

Dabur India fell 1.9% on reports the firm is looking for a buyer for its wellness retail chain 'new-u' as the current economic downturn made it tough for it to pursue its retail plans.

Some healthcare stocks fell after recent gains triggered by expectations of better Q4 March 2009 results on reports of higher advance tax payment by these firms. Sun Pharmaceuticals Industries, Ranbaxy Laboratories, Biocon, Pfizer, Lupin fell by between 0.5% to 4.89%.

Dr Reddy Laboartories fell 3.13% after company said it would re-align its global generics business by gradually exiting some very small markets that contribute less than a percent to revenues.

Outsourcing focussed IT firms recovered on hopes of a revival in the US economy, the biggest market for IT firms. A surprise move by the US Federal Reserve to buy government bonds has revived hopes the battered US economy could soon begin its recovery.

India's largest software services exporter by sales TCS was down 0.97% to Rs 509.80, off the day's low of Rs 500. The company's advance tax payment fell 54.3% to Rs 53 crore in Q4 March 2009 over Q4 March 2008. The company during trading hours on Monday 16 March 2009 said its promoter Tata Sons has pledged more than 12.06 crore shares or 12.33% of the equity capital of the firm.

India's fifth largest IT major by sales HCL Technologies was down 0.24% to Rs 104.235, off the day's low of Rs 102.05. India's third largest software services exporter, Wipro was down 0.86% to Rs 30.70, off the day's low of Rs 227.2 even as its ADR rose 1.95% on Thursday. Recently its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC).

India's second largest software services exporter Infosys Technologies rose 0.12% to Rs 1,297.35, off the day's low of Rs 1,281 as its ADR gained 2.1% on Thursday. Infosys chief and co-founder Mr S Gopalakrishnan said on Sunday, 15 March 2009, the Indian IT industry would tide over the current downturn and might surpass the US in terms of having the largest number of IT professionals in the world in the next three years.

However, the rebound in the rupee against the dollar may cap upside in IT stocks. A stronger rupee affects operating margins of IT firms negatively as they earn most of their revenues from exports.

Vishal Information Technologies declined 5.6% after the company said its only promoter Tutis Technologies has pledged 15 lakh shares representing 1.40% of the equity capital of the firm.

Firstsource Solutions clocked the highest volume of 1.28 crore shares on BSE. Cals Refineries (1.05 crore shares), Satyam Computer Services (95.45 lakh shares), Gujarat NRE Coke (89.33 lakh shares) and Reliance Natural Resources (88.69 lakh shares) were the other volume toppers in that order.

Akruti City clocked the highest turnover of Rs 455.63 crore on BSE. Reliance Industries (Rs 165.75 crore), Educomp Solutions (Rs 136 crore), ICICI Bank (Rs 120.84 crore) and State Bank of India (Rs 81.77 crore) were the other turnover toppers in that order.