Small-cap, mid-cap indices outperform Sensex

Key benchmark indices logged gains for the second straight week trading firm global markets after the US Federal Reserve in an aggressive move announced a plan to buy $1.2 trillion of debt to revive the US economy which is in recession for more than a year. Also buying by foreign institutional investors lifted sentiment. Small and mid-cap indices outperformed the Sensex.

The US Federal Reserve on Wednesday, 18 March 2009 said it would buy $300 billion in longer-dated Treasury over the next six months, along with another $850 billion in mortgage-related debt, to pump liquidity into near-frozen credit markets. On the same day, the Fed kept the benchmark federal funds rate-the interest charged by banks for overnight loans to one another, unchanged in the range of 0 to 0.25%.

Earlier, global stocks had risen after the US Federal Reserve chairman Ben Bernanke on 15 March 2009 said the US economy should start recovering from recession next year if there is the political will to complete the costly rescue of the shattered banking system. Battered US banks showed signs of life after chiefs of Citigroup, Bank of America and JPMorgan Chase made statements saying they have returned to black early this year and assured they should ride out the recession without more taxpayer help.

Foreign institutional investors (FII) turned buyers to the tune of Rs 1132.80 crore in five trading sessions from 13 March 2009 to 19 March 2009. They still remain net sellers in this month and year as their outflow totaled Rs 1143.40 crore in March 2009 and Rs 8084.40 crore in calendar year 2009 (till 19 March 2009).

The BSE 30-share Sensex rose 210.07 points or 2.40% to 8,966.68 in the week ended 20 March 2009. The S&P CNX Nifty gained 87.80 points or 3.22% to 2,807.05 in the week.

The BSE Mid-Cap index gained 120.70 points or 4.57% to 2,761.06 and the BSE Small-Cap index advanced 180.32 points or 6.15% to 3,114.38 in the week.

The Sensex is down 680.63 points or 7.05% 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.

Trading for the week began on an upbeat note with the market advancing on Monday, 16 March 2009 on positive global cues. The BSE 30-share Sensex gained 186.93 points, or 2.13%, to 8,943.54. The S&P CNX Nifty rose 58 points, or 2.13%, to 2,777.25.

Key benchmark indices declined on Tuesday, 17 March 2009 on profit taking after solid gains in the previous three trading sessions. The BSE 30-share Sensex fell 79.72 points, or 0.89%, to 8,863.82 and the S&P CNX Nifty lost 19.80 points or 0.71% to 2,757.45.

Market came sharply off the day's high in late trade on Wednesday, 18 March 2009 as stocks pared gains amid caution ahead of the outcome of the two-day meeting of the US Federal Reserve. The BSE 30-share Sensex rose 112.86 points, or 1.27%, to 8,976.68. The S&P CNX Nifty gained 37.25 points or 1.35% to 2,792.90.

In a day marked with high volatility, key benchmark indices eked out small gains on Thursday, 19 March 2009 on expectations of a further cut in policy rates by the Reserve Bank of India and firm European markets. The BSE 30-share Sensex rose 25.07 points, or 0.28%, to 9,001.75 and the S&P CNX Nifty was up 12.45 points or 0.45% to 2,807.15.

The market dropped on Friday, 20 March 2009 in what was a volatile trading session. Expectations of a further easing of the monetary policy by the Reserve Bank of India and continued buying by foreign funds triggered a strong rebound in late trade after early slide caused by lower Asian indices. The BSE 30-share Sensex slipped 35.07 points, or 0.39%, to 8,966.68 even as the S&P CNX Nifty ended unchanged at 2,807.05

India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 4.38% to Rs 1338.55 in the week ahead of production of gas from KG basin, off the east coast, this month. Meanwhile, as per reports, RIL's advance tax payment fell 16.47% to Rs 370 crore in Q4 March 2009 over Q4 March 2008.

Banking shares gained on hopes lower interest rates may boost lending growth. India's largest private sector bank by net profit ICICI Bank rose 4.60%. 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 0.38%. 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 0.05% after its advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.

Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. DLF (up 12.16%), Indiabulls Real Estate (up 6.58%), and Housing Development & Infrastructure (up 7.85%), rose. Most of the realty deals including sale of commercial property and housing sales is driven by finance.

Akruti City jumped 36.76% on speculative buying. The National Stock Exchange (NSE) in a circular released late evening on 19 March 2009 barred derivatives trade in India's second largest real estate developer by market capitalisation Akruti City from the end of this month. Meanwhile the Securities and Exchange Board of India (Sebi) is reportedly probing three brokerages - two in Mumbai and one in Kolkata - as part of an investigation into the recent massive rise in shares of Akruti City.

Auto shares were mixed as hopes lower interest rates would spur demand for vehicles which is mainly driven by finance were offset by rising crude oil prices which moved past $50 a barrel. India's largest commercial vehicle maker by sales Tata Motors was down marginally by 0.43% ahead of the launch of its Rs 1-lakh car Nano on 23 March 2009. The company did not pay any advance tax in Q4 March 2009 compared to Rs 75 crore in Q4 March 2008.

India's largest car maker by sales Maruti Suzuki India fell 0.15%. But India's largest tractor maker by sales Mahindra & Mahindra spurted 3.15%.

Metal stocks rose on rally in metal prices on London Metal Exchange. India's largest copper maker by sales Hindalco Industries rose 11.87% as it is seen benefiting the most from imposition of import duty by the government on Friday, 13 March 2009. In its bid to safeguard interests of the domestic producers, the government has imposed import duty on aluminium products imported from China.

India's largest steel maker by sales Tata Steel rose 5.64% as its advance tax payment rose 92.41% to Rs 406 crore in Q4 March 2009 over Q4 March 2008. Other metal stocks, National Aluminum Company (up 4.33%), Sterlite Industries (up 11.54%), and Hindustan Zinc (up 11.96%), gained.

Outsourcing focussed IT firms rose on hopes of a recovery in the US economy, their biggest market. India's largest software services exporter by sales TCS rose 0.64%. On 12 March 2009, TCS said it signed a multi-year IT solutions contract with German semiconductor maker Infineon Technologies AG, one of the leading semiconductor manufacturers. The financial details were not disclosed.

India's second largest software services exporter Infosys Technologies was up marginally by 0.08%. 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 rose 8.42% on securing a contract worth $350 million on 16 March 2009.

India's third largest software services exporter, Wipro advanced 3.07%. Last week its unit Wipro Infotech won an outsourcing contract worth Rs 1,182 crore from the Employees State Insurance Corporation (ESIC).

India's largest telecom services provider by sales Bharti Airtel rose 1.90% on reports the company will restructure its businesses into nine verticals under different chief executives, as it looks to expand into areas beyond its mainstay, voice telephony

India's second largest telecom services provider by sales Reliance Communication surged 7.83%.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 4.85% 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 slipped 1.96% while Ultratech Cement rose 0.87%.

Inflation based on wholesale prices rose at a record pace of 0.44% in the week to 7 March 2009 from a year earlier after gaining 2.43% in the previous week, government data released on Thursday, 19 March 2009 showed.

The International Monetary Fund (IMF) on Wednesday, 18 March 2009, said India should rely more on monetary policy to support the economy. IMF said the Indian economy is slowing fast and the outlook for the next year remains uncertain. The main upside risk was a larger-than-anticipated impact of the stimulus measures that the authorities have already implemented.

The IMF forecast India's gross domestic product growth would slow to 6.3% in the 2008-2009 fiscal year, and to 5.3% in 2010. Indian economy has grown at average rate of 9% in the previous four years.

The impact of economic slowdown was clearly visible in advance tax collections as 18 out of 50 big corporate tax payers contributed less to the Government kitty this fiscal compared to Q4 payments in the last fiscal. However, the Government collected 10.54% more from the Rs 16,252.48-crore advance tax paid by 50 big corporates in the fourth quarter this fiscal as against Rs 14,703.19 crore a year ago.

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.

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.

Group of 20-finance ministers meeting at the weekend pledged to combat the global recession and restore the financial system to health. The key priority now is to restore lending, a G- 20 statement on 14 March 2009 said.

At a policy meeting, the Bank of Japan on 18 March 2009 kept interest rates unchanged at 0.1% but said it would broaden its purchases of government bond to bolster liquidity and ensure market stability. The Bank of Japan also forecast that the economy would remain under stress in the new fiscal year and said that substantial liquidity is required to ensure stability in financial markets.

The Bank of Japan had announced late Tuesday, 17 March 2009 that it would provide up to one trillion yen ($10.2 billion) in subordinated loans to financial institutions in an effort to bolster banks' capital ratios and ease strains in Japan's financial system.