Sensex sheds 225 points from the day's high

The BSE Sensex posted small gains and S&P CNX Nifty ended flat as the market reversed most of its earlier strong intraday gains as European stocks gave up early gains and US index futures. Political uncertainty ahead of parliamentary elections also prompted traders to lock in gains after a recent solid surge in share prices. Banking and IT stocks pared intraday gains. Index heavyweights Reliance Industries and Larsen & Toubro also came off the day's highs. Metal stocks slipped. The BSE 30-share Sensex rose 47.02 points or 0.5%, off close to 225 points from the day's high.

The market breadth, indicating the overall health of the market, was negative. The 50-share S&P CNX Nifty fell below the psychological 3,000 mark which it had breached in intraday trade. Nifty today hit the 3,000 level for the first time since 7 January 2009.

The market extended gains in early afternoon trade after a firm opening triggered by an upbeat sentiment across global markets following the US government's plan to mop up toxic assets from banks' balance sheet. The BSE Sensex hit its highest level in more than a month. The market soon cut losses. It recovered in afternoon trade. The market lost ground later amid volatile trade.

Volatility on the bourses may remain high in the next two days ahead of the expiry of March 2009 derivatives on Thursday, 26 March 2009.

From a three-year closing low of 8,160.40 on 9 March 2009, the BSE Sensex has risen 1,310.64 points or 16.06%. The barometer index jumped 457.34 points, or 5.1%, to 9,424.02 on Monday, 23 March 2009, its biggest one-day rise in percentage terms since early December 2008.

Prime Minister Manmohan Singh today said India's economy will revive in a big way in six to seven months as stimulus packages start to take effect.

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%.

Retail inflation is, however, ruling firm even as the whole sale price inflation has touched a record low. Retail inflation as measured by the Consumer Price Index for farm labourer (CPI-AL) and rural labourers (CPI-RL) eased to 10.79% in February 2009, a marginal dip from 11.62% and 11.35% respectively in January 2009. CPI-AL and CPI-RL were at 6.38% and 6.11% in corresponding period last year.

Annual inflation for food articles remains high even though it has eased from the 10 year high of 11.64% witnessed in first week of January 2009. Inflation for food articles stood at 7.35% for first week of March 2009 with double-digit price rise for many items including sugar and gur, pulses and cereals. At the time of announcing a reduction in key short-term interest rates, the RBI said early this month that though consumer price inflation has remained at elevated level due to increase in primary articles prices, it is expected to decline with a lag effect due to sharp fall in the wholesale price inflation.

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.

Meanwhile, foreign institutional investors are now in buying mode which follows easing of FII selling vigour in the past few days. FIIs bought shares worth a net Rs 1182.20 crore in six trading sessions from 13 March 2009 to 20 March 2009.

Foreign funds can take solace in the recent sharp rebound in the rupee against the dollar. However, the currency has been volatile. The partially convertible rupee was at 50.70 per dollar, weaker than Monday's close of 50.46/47. 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.

Meanwhile, a good news for the Asian emerging markets is that the region accounted for the bulk of the healthy inflow into emerging market equities funds during the week ended 18 March 2009, according to the latest data from fund tracker EPFR Global. Emerging market equities, among the riskier asset classes, saw a healthy net inflow of $350.3 million in the latest week. Funds focused on Asia ex-Japan made up the bulk of that overall amount, with a net inflow of $409.2 million.

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. 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. 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 today 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 reported 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.

The Congress party today said it would extend interest relief to farmers and build on the national job guarantee scheme. Releasing the party manifesto for the election, the Congress party said it would maintain government control over state-run firms in the manufacturing and finance sectors.

Meanwhile, after seven successive quarters of decline, the Federation of Indian Chambers of Commerce and Industry's (Ficci's) overall business confidence index has increased in the October-December 2008 with less number of respondents saying economic situation has worsened. The economic and industrial performance may have reached a trough and it would improve from now onwards, found the Ficci's Business Confidence Survey.

The overall Business Confidence Index for the surveyed quarter, which has moved to 44 from 37.8 in the second quarter of 2008-09, had seen a significant deterioration at three levels - economy, industry and organisation.

European shares gave up gains to turn negative early on Tuesday, breaking a three-day winning run after euro zone and UK macro data showed job losses and higher inflation, giving a bleak picture of European economy's state. Key benchmark indices in France, Germany were up by between 0.38% to 0.49%. UK's FTSE 100 fell 1.02%.

Asian equities gained today, 24 March 2009 tracking overnight solid 7% surge in US stocks. The key benchmark indices in Japan, Hong Kong, China, Singapore, South Korea, Taiwan rose by between 0.56% to 3.32%.

But trading in US index futures indicated the Dow could fall 52 points at the opening bell on Tuesday, 24 March 2009.

US stocks surged on Monday, 23 March 2009, with the Dow and the S&P 500 posting their best one-day advance in nearly five months, after the Obama administration unveiled a long-awaited plan to purge toxic assets from bank balance sheets. A report showing a rebound in existing-home sales in February 2009 also added to the positive tone.

The Dow Jones Industrial Average gained 497.48 points, or 6.84%, to 7,775.86. The Standard & Poor's 500 Index rallied 54.37 points, or 7.07%, to 822.91 and the Nasdaq Composite index surged 98.50 points, or 6.76%, to 1,555.77.

The US government is planning to loan private firms money to buy up to $1 trillion of bad assets, then share in the profit or loss when they are sold at a later date. The plan is two-pronged. One part will focus on purchasing toxic securities, the other on purchasing bad loans.

The BSE 30-share Sensex was up 47.02 points or 0.5%, to 9,471.04, its highest close since 13 February 2009. At the day's high of 9,699, the Sensex rose 274.98 points in early afternoon trade. At the day's low of 9,402.64 Sensex lost 21.38 points in late trade.

The S&P CNX Nifty was down 1.20 points or 0.04% to 2,938.70. It came off a high of 3,017.40.

The market breadth, indicating the overall health of the market, was negative on BSE with 1,143 shares advancing as compared with 1,413 that declined. A total of 57 shares remained unchanged. The breadth was strong earlier in the day.

The BSE clocked a turnover of Rs 4,245 crore, higher than Rs 3,718.74 crore on Monday, 23 March 2009.

Nifty March 2009 futures were at 2933.90, at a discount of 4.80 points as compared to the spot closing of 2938.70. Turnover in NSE's futures & options (F&O) segment surged to Rs 78,270.59 crore from Rs 63,299.50 crore on Monday, 23 March 2009.

The BSE Mid-Cap index was down 0.58% and BSE Small-Cap index fell 0.68%. Both the indices underperformed the Sensex.

The BSE Bankex (up 2.18%), the BSE Realty index (up 0.85%), the BSE Capital Goods index (up 0.78%) outperformed the Sensex.

The BSE Metal index (down 2.99%), the BSE Consumer Durables index (down 1.45%), the BSE PSU index (down 0.81%), the BSE Healthcare index (down 0.62%), the BSE IT index (down 0.38%), the BSE Power index (down 0.28%), the BSE TECk index (down 0.15%), the BSE Oil & Gas index (down 0.04%), the BSE Auto index (up 0.05%), the BSE FMCG index (up 0.27%), underperfomed the Sensex.

From the 30 share Sensex pack, 15 stocks rose while rest fell.

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 0.82% to Rs 1,451.65 ahead of production of gas from KG basin, off the east coast. But the stock came off the day's high of Rs 1,472. Petroleum Secretary R.S. Pandey today said natural gas output from Reliance Industries' deep-sea fields in the Krishna Godavari Basin is expected to start in early April 2009, slightly later than expected.

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

Cairn India fell 2.19% on fall in crude oil prices while India's largest oil exploration firm by sales ONGC declined 2.01%. Crude oil fell from the highest level in almost four months on speculation that US stockpiles increased because of lower demand. A gain in the dollar also reduced the appeal of commodities to investors. Crude oil for May delivery fell as much as 68 cents, or 1.3%, to $53.12 a barrel, on the New York Mercantile Exchange.

Fall in crude oil prices would result in lower realizations from crude sales for the oil exploration firm.

Meanwhile, Petroleum Secretary Pandey said Cairn India is expected to start producing crude oil from its fields in the desert state of Rajasthan in a month, and will sell a part of the output to state refiners Indian Oil Corporation and Mangalore Refinery and Petrochemicals.

Shares of oil marketing companies rose after the government issued oil bonds worth Rs 10,000 crore to PSZhe them to compensate for under-recoveries on the sale of petroleum products at a controlled price during the current financial year. BPCL, HPCL and Indian Oil Corporation rose by between 1.31% to 5.32%.

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.

Metal stocks fell on decline in metal prices on London Metal Exchange. Steel Authority of India, Hindustan Zinc, Tata Steel, National Aluminum Company and Hindalco Industries fell by between 1.7% to 5.22%.

Banking shares rose on hopes lower interest rates may boost lending growth. However, stocks pared gains. India's largest private sector bank by net profit ICICI Bank rose 2.44% to Rs 355.10. However, it came off the day's high of Rs 373.30. Its American depository receipts (ADR) surged 15.95% on Monday, 23 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 6.31% to Rs 940.50. The stock came off the day's high of Rs 973.90. Its ADR jumped 23.42% on Monday. Its advance tax payment rose 10% to Rs 275 crore in Q4 March 2009 over Q4 March 2008.

India's largest bank in terms of assets and branch network State Bank of India rose 1.09% to Rs 1,034.65. The stock came off the day's high of Rs 1,088. Its advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

India's biggest dedicated housing finance firm by operating income HDFC rose 2.33% to Rs 1,564.45. The stock came off the day's high of Rs 1,595.

Bond yields rebounded off early lows on Tuesday and matched the previous session's one-week high as investors fretted about a wall of supplies in coming weeks. By 10:05 IST, the yield on the most traded 6.05% 2019 bond was at 6.68%, three basis points above Monday's close of 6.65%, and off an early low of 6.57%.

The benchmark yield has risen 182 basis points from a lifetime low of 4.86% hit in early January 2009, despite the central bank's cumulative 150 basis points of rate cuts since the start of 2009. Bond yields have soared after the government announced a late rush of borrowings totaling Rs 91000 crore ($18.1 billion) since early February 2009, more than doubling the borrowing plan for 2008/09 to Rs 306000 crore. It plans to borrow a record Rs 362000 crore in the 2009/10 fiscal year.

It may be recalled that a solid surge in bond prices (bond prices rise when yields fall) had boosted treasury profits of banks in Q3 December 2008.

Outsourcing focussed IT stocks pared gains as fears a weak global economy would cut the amount firms spent on technology. India's largest software services exporter by sales TCS rose 0.3% to Rs 521.35. The stock came off the day's high of Rs 532.80. The company's advance tax payment fell 54.3% to Rs 53 crore in Q4 March 2009 over Q4 March 2008.

India's fifth largest IT major by sales HCL Technologies rose 0.58% to Rs 104.35 off the day's high of Rs 105.45. India's third largest software services exporter, Wipro gained 1.36% to Rs 242.30. The stock came off the day's high of Rs 248.95 .Its ADR 16.52% 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 second largest software services exporter Infosys Technologies fell 0.58% to 1,322.95. The stock came off the day's high of Rs 1,359.30. Its ADR gained 6.68% on Monday. 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.

The recent high volatility in the rupee also does not augur well for IT firms as the sector derives a lion's share of revenue from exports. A stronger rupee affects operating margins of IT firms negatively as they earn most of their revenues from exports.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. Housing Development & Infrastructure, Unitech and Indiabulls Real Estate rose by between 0.59% to 3.94%. But India's largest realty major by sales DLF fell 0.66%. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Some FMCG stocks rose on expectations of better Q4 March 2009 results following reports of higher advance tax payment by these firms. Nestle India, Dabur India, REI Agro, United Spirits rose by between 0.55% to 5.14%. India's largest FMCG firm by sales Hindustan Unilever rose 0.21%. The company's advance tax payment rose 30% to Rs 130 crore in Q4 March 2009 over Q4 March 2008. While India's largest cigarette maker by sales ITC rose 0.49%.

India's largest drug maker by sales Ranbaxy Laboratories rose 1.83% extending gains for the second straight day after company said drug regulators in the UK and Australia had issued "good manufacturing practice" certificates for its Paonta Sahib facility in India. In February 2009, the US Food and Drug Administration halted reviews of drug applications from Paonta Sahib plant saying it had falsified data.

Other healthcare stocks, Cadila HealthCare, Cipla, Biocon, Pfizer, Lupin, rose by between 0.39% to 2.95%.

India's largest commercial vehicle maker by sales Tata Motors fell 2.41% to Rs 162.05. The stock came off the day's high of Rs 171.95 after the world's cheapest car Tata Nano was unveiled in Mumbai by Tata Group Chairman Ratan Tata on Monday 23 March 2009. The Tata Nano was launched in three models - Base, CX and LX. The booking for Tata Nano will be held between 9 April 2009 and 25 April 2009. The first set of Tata Nano will be delivered in the first week of July 2009. Within 60 days of the closure of bookings, Tata Motors will process and announce the allotment of 1,00,000 cars in the first phase of deliveries, through a computerised random selection procedure.

India's largest tractor maker by sales Mahindra & Mahindra gained 1.23% on reports the company is eyeing acquisition of Birmingham-based ailing vanmaker LDV, which is struggling to keep afloat amid the economic downturn.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) rose 0.53% to Rs 607.90. The stock came off the day's high of Rs 628.70. As per recent 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. Other capital goods stocks, Bharat Heavy Electricals, Punj Lloyd, Thermax, ABB rose by between 0.33% to 2.25%.

Unitech clocked the highest volume of 2.12 crore shares on BSE. Suzlon Energy (1.56 crore shares), Reliance Natural Resources (1.52 crore shares), Cals Refnerirs (82.92 lakh shares) and Satyam Computer Services (68.90 lakh shares) were the other volume toppers in that order.

Akruti City clocked the highest turnover of Rs 296.38 crore on BSE. Reliance Industries (Rs 287.63 crore), Reliance Capital (Rs 248.76 crore), ICICI Bank (Rs 195.69 crore) and State Bank of India (Rs 154.62 crore) were the other turnover toppers in that order.