Market snaps three-day winning streak

The key benchmark indices slipped on profit taking after solid gains in the last three trading sessions. IT and realty stocks were fell even as auto stocks gained. Index heavyweight Reliance Industries slipped. The BSE 30-share Sensex lost 79.72 points, or 0.89%, up close to 60 points from the day's low but off about 160 points from the day's high. The market weakened soon after the Sensex breached the psychological 9,000 level in early afternoon trade. The barometer index settled below the 9,000 mark.

Volatility was high today as the key benchmark indices moved between the positive and negative zone in early trade. Profit taking after a near 10% surge in the BSE Sensex in the past three trading sessions, pulled the market lower in morning trade.

The market staged a strong rebound as buying by foreign funds, data showing a surge in foreign direct investment in India in January 2009, and preliminary data on advance tax payment by India Inc showing pockets of strength in a slowing economy, boosted sentiment. Firm Asian markets also supported the rally. The BSE Sensex hit the psychological 9,000 mark in early afternoon trade.

The market weakened in afternoon trade as investors cashed in on gains after a recent solid surge in share prices. It extended losses in volatile mid-afternoon trade on weak European markets. The market cut losses in late trade.

The upside on the domestic bourses would 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.

Foreign funds bought a net $26 million of Indian stocks last week, compared with net sales of $543 million in the previous five-day period, according Securities and Exchange Board of India data. Foreign institutional investors (FIIs) have pressed heavy sales in the past few days.

As per provisional data released by the stock exchanges, FIIs bought shares worth a net Rs 415.12 crore today, 17 March 2009 while domestic funds sold shares worth a net Rs 152.70 crore.

Meanwhile, FIIs have responded enthusiastically to the government's decision to increase the cumulative investment limit in corporate debt from $ 6 billion to $ 15 billion. In an open bidding held at the National Stock Exchange (NSE) today, 17 March 2009, a total of 24 bidders were allocated investments of Rs 29350 crore, the highest ever investment allocation by FIIs in India. In comparison, the net investment of FIIs in 2008 was only Rs 12069 crore. Since January 2009, FII's net investment in debt instrument has fallen by Rs 634 crore.

As per the Securities and Exchange Board of India (Sebi) data, $8 billion (Rs 41,000 crore) was available for allocation to FIIs and their sub-accounts in an open bidding platform.

Attractive interest rates have lured foreign funds to Indian debt market. For instance, corporate debt returns in the US are 1-1.5%, whereas in India, the rates are as high as 8-9%. Bonds floated by state-run firms fetch yields in the range of 9.30%, which are about 300 basis points higher than 10-year G-Sec yields. As per reports, FIIs are likely to invest in attractive PSU bonds floated by quasi-government entities like Power Finance Corporation and Rural Electrification Corporation.

Meanwhile, foreign direct investment (FDI) in India in January 2009 was up 55% at $2.73 billion from $1.76 billion for the same month in the preceding year. Up to September this fiscal year, the monthly inflows were in excess of $2 billion. However, the following three months witnessed a sharp dip in the overseas investment, due to the backdrop of the global financial crisis. The January figures bring a renewed hope that India is back on the radar of global investors.

Corporate earnings indications from the fourth quarter advance tax payout seems to be a mixed bag. Banking and insurance firms have paid higher taxes in the fourth installment. But India's biggest private sector firm and oil refiner Reliance Industries (RIL), India's biggest software exporter TCS and India's biggest dedicated housing finance firm in terms of revenue HDFC have paid lower advance tax.

Advance tax payment gives indication on the outlook on earnings. Thus if a company pays higher advance tax, it could indicate a good financial performance for the quarter and vice versa. India's biggest engineering & construction firm by revenue L&T has paid 61.76% higher advance tax in the fourth installment whereas metal producer Hindalco has paid 53.3% lower advance tax.

European shares fell on Tuesday, snapping a five-day winning streak as banks declined after data showed an increase in US credit card defaults. Oil shares tracked a fall in crude. The key benchmark indices in France, Germany and UK were down by between 0.98% to 1.96%.

Asian shares rallied on Tuesday despite a slight pullback on Wall Street, with financials rallying for another day in many markets amid hopes governments would take further action to deal with the toxic debt still plaguing the sector. Key benchmark indices in Japan, Hong Kong, China, South Korea, Taiwan rose by between 1.41% to 3.41%. Key benchmark indices in Hong Kong and Singapore fell by between 0.76% to 1.72%.

The rally in financial shares gathered pace following reports that Standard Chartered Bank, which has a strong emerging-markets presence, didn't plan any layoffs or restructuring and reiterated its strong capital position. Sentiment for financial has been bolstered after major global banks, including Citigroup and Bank of America, last week, said they may not need further capital injections from the US government. An HSBC Holdings official said the banking giant won't need a bailout from the UK.

The Nikkei newspaper Monday reported the Japanese central bank was considering purchasing junior debt issued by domestic banks to help improve their capital and support the financial system. The government, through its various arms, is also reportedly moving to inject public funds in some regional banks, in addition to providing low-cost loans to non-financial companies.

Trading in US index futures indicated the Dow could fall 4 points at the opening bell on Tuesday, 17 March 2009. Alcoa tumbled 11.6% in after hours trading after the largest US aluminum producer cut its dividend 82% and launched initiatives to reduce costs by more than $2.4 billion annually by 2010.

The BSE 30-share Sensex was down 79.72 points, or 0.89%, to 8,863.82. At the day's high of 9,024.12, the Sensex gained 80.58 points in early afternoon trade, its highest level since 19 February 2009. At the day's low of 8,801.79, Sensex fell 141.75 points in mid-afternoon trade.

The S&P CNX Nifty was down 19.80 points or 0.71% to 2,757.45.

The BSE Sensex had risen 783.14 points or 9.59% in the past three trading sessions to 8,943.54 on 16 March 2009 from a 3-year closing low of 8,160.40 on 9 March 2009. The Sensex is down 783.49 points or 8.12% in calendar 2009 from its close of 9,647.31 on 31 December 2008. The S&P CNX Nifty is down 201.70 points or 7.44% in calendar 2009 from its close of 2,959.15 on 31 December 2008.

The BSE clocked a turnover of Rs 3,956 crore, higher than Rs 3,504.97 crore on Monday, 16 March 2009.

Nifty March 2009 futures were at 2756, at a discount of 1.45 points as compared to the spot closing of 2757.45. Turnover in NSE's futures & options (F&O) segment surged to Rs 53,883.76 crore from Rs 48,027.96 crore on Monday, 16 March 2009.

The market breadth, indicating the overall health of the market, was positive. On BSE 1,347 shares advanced as compared with 1,162 that declined. A total of 62 shares remained unchanged. The breadth was much stronger in early trade.

The BSE Mid-Cap index down 0.16% and BSE Small-Cap index rose 0.39%. Both the indices outperformed the Sensex.

The BSE Auto index (up 1.06%), the BSE Power index (up 0.73%), the BSE FMCG index (up 0.57%), the BSE Metal index (up 0.13%), the BSE PSU index (down 0.28%), the BSE Healthcare index (down 0.3%), the BSE Capital Goods index (down 0.39%), the BSE Realty index (down 0.83%) outperformed the Sensex.

The BSE Bankex (down 2%), the BSE IT index (down 1.72%), the BSE Oil & Gas index (down 1.46%), the BSE TECk index (down 1.05%), the BSE Consumer Durables index (down 0.94%) underperfomed the Sensex.

From the 30 share Sensex pack 20 stocks fell while rest gained.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) fell 1.98% to Rs 1,300.35 as RIL's advance tax payment fell 16.47% to Rs 370 crore in Q4 March 2009 over Q4 March 2008. The stock came off the day's high of Rs 1,341.75.

Banking stocks fell on fears of rising defaults in a slowing economy. The stocks were volatile. India's second largest private sector bank by operating income HDFC Bank fell 2.27% to Rs 825.40, off the day's low of Rs 808.80. Reports suggest Oman's largest lender Bank Muscat will sell its entire stake in HDFC Bank. HDFC Bank's advance tax payment rose 10% to Rs 275 crore in Q4 March 2009 over Q4 March 2008. Its ADR fell 1.6% on Monday.

India's largest bank in terms of assets and branch network State Bank of India fell 3.87% to Rs 949.60, off the day's high of Rs 968. 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 rose 0.46% to Rs 324.15, off the day's low of Rs 315.15. Its American depository receipts (ADR) jumped 7.12% on Monday, 16 March 2009. Its advance tax payment remained unchanged at Rs 250 crore in Q4 March 2009 when compared to Q4 March 2008.

Outsourcing focussed IT firms fell as fears a weak global economy would cut the amount firms spent on technology off a weak rupee. India's largest software services exporter by sales TCS fell 4.31% as 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 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 third largest software services exporter, Wipro fell 0.42%. Recently its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC). Its ADR rose 0.96% on Monday.

India's second largest software services exporter Infosys Technologies fell 1.76%. Its ADR fell 0.91% on Monday. 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.

India's fifth largest IT major by sales HCL Technologies fell 0.39%. The company secured a contract worth $350 million on Monday, 16 March 2009.

The Indian rupee turned weak as stocks weakened. The partially convertible rupee was at 51.48 per dollar, compared to Monday's close of 51.385/395. The rupee has declined sharply in the past few days. It hit a record low beyond 52 a dollar recently. A weak rupee boosts revenues of IT firms in rupee terms as IT companies earn a lion's share of revenue from exports.

Rate sensitive realty stocks fell on reports falling interest rates have failed to revive housing demand. DLF, Indiabulls Real Estate, Peninsula Land, Unitech, Housing Development & Infrastructure fell by between 1.33% to 4.53%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

India's largest steel maker by sales Tata Steel fell 0.12% even as the company's advance tax payment rose 35.33% to Rs 406 crore in Q4 March 2009 over Q4 March 2008.

India's largest aluminum maker by sales Hindalco Industries rose 2.34% even as the company's advance tax payment fell 53.33% to Rs 70 crore in Q4 March 2009 over Q4 March 2008.

Some of the FMCG stocks rose on expectations of better Q4 March 2008 results following reports of higher advance tax payment by these firms. Ruchi Soya, Britannia Industries,ITC and United Spirits rose by between 0.13% to 7.02%. But India's largest FMCG firm by sales Hindustan Unilever fell 0.74% even as the company's advance tax payment rose 30% to Rs 130 crore in Q4 March 2009 over Q4 March 2008.

Some healthcare stocks, too, rose on expectations of better Q4 March 2008 results on reports of higher advance tax payment by these firms. Biocon, Glenmark Pharmaceuticals, Lupin, Matrix Laboratories rose by between 1.97% to 7.48%.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 1.45% even as the company's advance tax payment rose 61.76% to Rs 275 crore in Q4 March 2009 over Q4 March 2008.

India's largest cement maker by sales ACC fell 1.12% even as it paid 36.9% higher advance tax at Rs 319 crore in the March 2009 quarter over the March 2008 quarter.

Diversified firm Grasim Industries fell 1.01% as company's advance tax payment fell 76.79% to Rs 65 crore in Q4 March 2009 over Q4 March 2008.

Auto shares rose on hopes lower interest rates and fall in fuel prices would spur demand for vehicles which is mainly driven by finance. Hero Honda Motors, Mahindra & Mahindra and Maruti Suzuki India rose by between 0.91% to 1.55%.

India's largest commercial vehicle maker by sales Tata Motors rose 3.4% even as it paid no tax in Q4 March 2009 compared to Rs 75 crore in March 2008.

Jai Corp galloped 5.52% after 17.80 lakh shares, or 0.99% equity of the company changed hands in two block deals on the BSE and the NSE.

Asian Paints gained 2.47% after the company said the promoters revoked a portion of the shares they had pledged.

Rolta India clocked the highest volume of 1.92 crore shares on BSE. Unitech (1.81 crore shares), Reliance Natural Resources (1.65 crore shares), Cals Refineries (1.4 crore shares) and Suzlon Energy (1.31 crore shares) were the other volume toppers in that order.

Akruti City clocked the highest turnover of Rs 459.22 crore on BSE. ICICI Bank (Rs 304.11 crore), Reliance Industries (Rs 252.64 crore), Educomp Solutions (Rs 184.36 crore) and Everonn Systems (Rs 136.62 crore) were the other turnover toppers in that order.