Nifty moves past 5,200

The key benchmark indices hit their highest level in nearly two months in a late surge as encouraging advance tax figures of top Indian firms for Q4 March 2010 indicated better fourth quarter results. Higher European stocks aided the rally on the domestic bourses. Metal, capital goods, auto and consumer durables stocks rose. Two index heavyweights Reliance Industries and L&T surged. The market breadth was strong. The BSE 30-share Sensex was provisionally up 231.91 points or 1.35%, up close to 245 points from the day's low and off close to 20 points from the day's high.

After an initial rise the market pared gains in morning trade as some Asian markets reversed early gains. The market moved between positive and negative terrain near the flat line in mid-morning trade. The market nudged higher again in early afternoon trade. Stocks extended gains in afternoon trade. The market hit its highest level in nearly two months in mid-afternoon trade. It extended gains in late trade.

The stock exchanges have revised the settlement schedule due to a bank holiday today, 16 March 2010 on account of Gudi Padwa, the first day of the Marathi New Year. As a result, investors were not allowed to sell shares today which they had bought in the cash market on Monday, 15 March 2010.

The Q4 March 2010 advance tax payment numbers of top Indian firms were encouraging. Reliance Industries has paid Rs 770 crore as advance tax for the March quarter compared with Rs 365 crore a year ago. Infosys' tax outgo has doubled to Rs 250 crore from Rs 125 crore. Tata Consultancy Services paid Rs 178 crore, compared from Rs 53 crore earlier. State-run Union Bank of India paid Rs 185 crore compared with Rs 253 crore a year ago. ICICI Bank's Q3 advance tax stood at Rs 350 crore versus Rs 250 crore a year ago. Asian Paints paid Rs 60 crore, versus Rs 43 crore year earlier.

State Bank of India has paid Rs 1857 crore verses Rs 1810. HDFC paid Rs 280 crore, unchanged from a year earlier. Tata Motors paid Rs 115 crore versus Nil a year ago. Bank of Baroda paid Rs 300 crore verses Rs 280. Zee Entertainment Enterprises paid Rs 97 crore versus Rs 109. Tata Steel paid Rs 513 crore versus Rs 406 crore. L&T paid Rs 270 crore versus Rs 275 crore. Bajaj Auto paid Rs 177 crore versus Rs 60 crore. M&M paid Rs 235 crore versus nil a year earlier.

Cement maker ACC paid Rs 330 crore compared to Rs 340 crore a year ago. Ambuja Cement paid Rs 120 crore, compared with Rs 125 crore a year ago. Aditya Birla Group firm Grasim Industries paid Rs 216 crore as advance tax in the period under review, as compared to Rs 65 crore a year ago. Life Insurance Corp of India (LIC) has paid Rs 864 crore as advance tax for the March quarter, compared with Rs 810 crore year ago.

On the macro front, the headline inflation topped expectations and came within touching distance of double digits in February 2010, making a rate increase by the Reserve Bank all but inevitable at its scheduled April 2010 policy review. Annual wholesale price inflation accelerated to 9.89% in February, the highest since October 2008 and well above the Reserve Bank of India's end-March projection of 8.5% and the 8.56% January reading.

The inflation data comes on the heels of a 16.7% annual jump in industrial output in January, with the unexpectedly strong economic pickup also backing the case for the central bank to raise policy rates by at least 25 basis points. The December inflation figure was revised upwards to 8.1% from 7.3%. Rising inflation and the government's plan to borrow a record $100 billion in the fiscal year that starts 1 April 2010, most of which is expected in the first half, have weighed on bond prices.

The borrowing plan complicates the central bank's job as raising rates aggressively would also push up borrowing costs of the government.

India would be only the second Group of 20 country, after Australia, to raise interest rates as the global economy recovers from the financial crisis.

The high inflation was mainly due to the continued rise in food prices, which climbed 17.8% from a year earlier in February and central bank deputy governor Shyamala Gopinath said price growth should moderate over time. Inflation in manufacturing accelerated to 7.42% in February from 6.55% in January, indicating that inflation has now spilt over to the broader economy.

Coming back to stocks, equities have witnessed a good post-Budget rally driven by sustained buying by foreign funds since the presentation of the Union Budget 2010-2011 on 26 February 2010. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 8847.36 crore this month, till 15 March 2010.

The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.

Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.

Europe stocks rose on Tuesday with markets awaiting euro zone inflation and the German ZEW survey of investor confidence, along with a decision on interest rates from the Federal Reserve later. The key benchmark indices in France, Germany and UK rose by between 0.75% to 0.89%.

Asian shares turned mixed after a firm start on Tuesday ahead of a Federal Reserve policy meeting later in the global day and the Bank of Japan (BoJ) policy decision on Wednesday, 17 March 2010. The key benchmark indices in Japan, Hong Kong and South Korea fell by between 0.09% to 0.28%. But, the key benchmark indices in China, Singapore and Taiwan rose by between 0.12% to 0.80%.

The BoJ has maintained its benchmark unsecured overnight call loan rate at 0.1% since December 2008 -- the same month Fed policy makers cut their federal-funds rate target to a range of 0% to 0.25%. Japanese central bankers are expected to discuss additional liquidity-boosting steps at their two-day policy board meeting, which started Tuesday. They will likely focus on a proposal to double the scale of a lending facility introduced in December, according to recent media reports.

It is widely expected that the US Federal Reserve will keep the fed funds rate, its key lending rate, at a historic low near zero when it meets on Tuesday, 16 March 2010. That means investors and analysts will again pore over the economic assessment statement the Fed releases. They will be looking for changes to the Fed's wording and its members' voting patterns to get a sense of when rates might go up.

It could take several months of solid, significant economic growth before the Fed starts to tinker with the language of its statement or interest rates. Consistent job growth is probably the single biggest factor the Fed will look at when determining when to considering raising rates.

Trading in US index futures indicated that the Dow could rise 18 points at the opening bell on Tuesday, 16 March 2010.

After being down all day, the Dow Jones and S&P eked out some gains on Monday, 15 March 2010 led by Wal-Mart after Citigroup upgraded the stock to buy & raised the price target. Stocks had struggled throughout the session as the dollar gained after a warning from Moody's on US and other nations with triple A debt ratings. Moody's said its ratings remain intact but warned that credit risks have grown. There were also worries about tightening in China. The Dow Jones industrial average rose 17.46 points, or 0.16% to end at 10,642.15. The Standard & Poor's 500 Index edged up 0.52 point, or 0.05% to end at 1,150.51. The Nasdaq Composite Index lost 5.45 points, or 0.23% at 2,362.21.

Global economic recovery will be stronger than previously estimated this year, helped by robust growth in China and India, the OECD's Secretary General said on Monday.

Close home, the BSE 30-share Sensex was up 231.91 points or 1.35% to 17,396.90 as per provisional figures. The barometer index rose 251.56 points at the high of 17,416.55 in late trade, its highest since 21 January 2010. The Sensex fell 14.93 points at the day's low of 17,150.06 in morning trade.

The S&P CNX Nifty was up 73.15 points or 1.43% at 5202.05 as per provisional figures. It hit the day's high of 5209.25 in late trade, its highest since 21 January 2010.

The BSE Mid-Cap index rose 1.08% and the BSE Small-Cap index rose 1.27%.

BSE clocked a turnover of Rs 3729 crore, higher than Rs 3408.08 crore on Monday, 15 March 2010.

The market breadth indicating the overall health of the market was strong. On BSE, 1777 shares advanced as compared with 1057 that declined. A total of 75 shares remained unchanged.

Among the 30-member Sensex pack, 23 rose while the rest fell.

Index heavyweight Reliance Industries (RIL) rose 3.68%, extending Monday's 0.64% gains. As per the market buzz, RIL's Q4 advance tax surged to Rs 770 crore in Q4 March 2010 from Rs Rs 365 crore a year ago.

Reliance Industries on Sunday announced a sports and entertainment joint venture with IMG Worldwide, a global leader in sports marketing and management. The equal venture, IMG Reliance, will set up modern infrastructure and coaching facilities for sports and create and operate sports and entertainment assets including celebrity management.

Consumer durables stocks rose on hopes rise in disposable income following widening of tax slabs in the Union Budget 2010-11 may boost sales. Titan Industries, Videocon Industries, Blue Star, Lloyd Electric, Rajesh Exports rose by between 0.26% to 3.01%.

Most auto stocks rose on higher advance tax payment in the fourth installment. India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 3.13%. The company paid Rs 235 crore in advance tax in Q4 March 2010 versus nil payment a year earlier.

India's largest commercial vehicle maker by sales Tata Motors' rose 2.26%, extending Monday's 0.91% gains after group global sales rose 59% in February from a year earlier, the company said in a statement on Monday.

India's largest car maker by sales Maruti Suzuki India rose 1.03% on bargain hunting after falling in the last four days on fears increase in competition may dent sales. Last week Ford India entered the small car market with 'Figo'. Maruti Suzuki India, last week said that Japanese auto giant Nissan has placed orders for 35,000 units of its small car A- Star for 2010-11 to sell it in the European market. Nissan sources the A-Star from Maruti's Manesar facility and sells it in the European market as 'Pixo'.

India's largest bike maker by sales Hero Honda Motors was flat. Hero Honda has shortlisted Karnataka as one of the states for setting up its fourth manufacturing plant. Hero Honda Motors has reportedly proposed an investment of Rs 2,000 crore for the upcoming plant.

A rise in raw material prices coupled with costs associated with new emission norms could force them to increase prices further, which may hit volumes. The government raised excise duties on large cars and sport utility vehicles by 2%, which was immediately passed on by vehicles makers, including top carmaker Maruti Suzuki and utility vehicle makers Mahindra & Mahindra and Tata Motors. From 1 April 2010, all vehicles will have to comply with Euro IV emission norms across 13 major cities, adding to costs and setting the stage for another round of price hikes.

India's largest engineering & construction firm by sales Larsen & Toubro (L&T) rose 3.52%. The company on Monday said that it won orders worth Rs 2000 crore. L&T's advance tax payment fell marginally to Rs 270 crore in Q4 March 2010 from Rs 275 crore a year earlier.

Among other capital goods stocks, ABB, Bharat Heavy Electricals, BEML, SKF India and Crompton Greaves rose by between 0.28% to 1.85%.

Metal stocks rose on strong domestic demand. Steel Authority of India, Sterlite Industries, JSW Steel, Hindalco Industries rose by between 0.1% to 2.69%.

India's largest steel maker by sales Tata Steel rose 3.35%, extending Monday's 0.42% gains. Its Q4 advance tax payment rose to Rs 513 crore from Rs 406 crore a year earlier.

Gujarat NRE Coke gained 1.08%, after one of the promoter group companies revoked a substantial portion of the pledged shares

IVRCL Infrastructures & Projects advanced 3.40%, as investors scrambled to accumulate the stock ahead of the record date for a liberal 1:1 bonus issue.

NIIT Technologies rose 1.06%, after the company said it will implement a cargo ground handling solution for PT JAS in Indonesia.

Nucleus Software Exports gained 1.84%, after the company secured an export order for one its software products for an undisclosed sum.