Small-cap, mid-cap indices nudge higher

The key benchmarks edged lower as profit taking emerged after the market scaled two-year high on Monday, 29 March 2010. Nevertheless, the market breadth was strong, with some side counters surging sharply. The BSE 30-share Sensex fell 121.18 points or 0.68%, off close to 195 points from the day's high and up close to 30 points from the day's low. IT stocks fell on a firm rupee. Banking and auto stocks also edged lower. But, realty stocks gained.

NSE's volatility index, India VIX, surged for the third day in a row. The index rose 5.71% to 19.80. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days. The lower the index, which is based the S&P CNX Nifty option prices, the higher the market's desire to take risk.

The market edged higher in early trade on firm Asian stocks. It remained range-bound later. The market slipped into the red in morning trade. It came off the lower level in mid-morning trade, regaining positive zone. The market once again moved in a narrow range in early afternoon trade. The market once again slipped into the red in mid-afternoon trade. Stocks extended losses in late trade.

European shares edged higher on Tuesday, helped by gains for mining giant BHP Billiton and Swiss bank UBS, but Irish banks dropped sharply for the second straight day. The key benchmark indices in Germany and France were up by 0.02% to 0.15%.

Romania and Hungary cut interest rates to fresh lows on Monday as monetary policymakers looked to support growth in response to an improved assessment of market risk in central and eastern Europe

Asian stocks rose on Tuesday after a report showed that US consumers continued to spend last month, with the sentiment also boosted by Greece's success in raising money from the debt market. The key benchmark indices in Hong Kong, Japan, Indonesia, South Korea, Taiwan, China and Singapore rose by between 0.15% to 1.01%.

Japan's industrial production fell in February and the unemployment rate held at the lowest level since March 2009, underscoring an uneven economic recovery that has yet to end deflation. The 0.9% drop in factory output from a month earlier snapped 11 straight gains and followed a 2.7% increase in January, the Trade Ministry said in Tokyo. The jobless rate stayed at 4.9% after two monthly declines.

Though still in the green, US index futures were off the day's highs. Trading in US index futures indicated that the Dow could gain 15 points at the opening bell on Tuesday, 30 March 2010.

US stocks rose on Monday 29 March 2010 as miners and energy companies advanced on dollar weakness and investors bought recent high fliers as the quarter's end approached. Stocks got a boost from news US consumer spending rose for a fifth straight month in February. The Dow Jones Industrial Average rose 45.50 points, or 0.42%, to end at 10,895.86. The Standard & Poor's 500 Index inched up 6.63 point, or 0.57%, to 1,173.22. The Nasdaq Composite Index gained 9.23 points, or 0.39%, to close at 2,404.36.

On Monday, data showed personal spending in the US rose for the fifth consecutive month in February 2010. All eyes are now on Friday's (2 April 2010) crucial non-farm payrolls for March 2010. The US economy is expected to add some 200,000-odd jobs in March, which would be the largest gain since the recession.

The International Monetary Fund is more optimistic about the prospects for global economic growth than it was in January, but the world is experiencing an uneven recovery, IMF managing director Dominique Strauss-Kahn said on Monday.

Back home, foreign funds have made heavy purchases of Indian stocks this month, helping stocks register strong gains. The Sensex had jumped 1,457.15 points or 8.96% to a 2-year closing high of 17711.35 on Monday, 29 March 2010, from a low of 16,254.20 on 25 February 2010. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 13,799.52 crore this month, till 29 March 2010. Finance secretary Ashok Chawla said on Tuesday, 23 March 2010, that foreign capital flows into India are currently not posing any concern.

Meanwhile, stock brokers have advised investors not to sell shares bought on Wednesday, 31 March 2010, the next day i.e. on Thursday, 1 April 2010, due to clubbing of settlement by the stock exchanges. There will be no settlement of shares/funds on 1 April 2010 due to annual closing of books of accounts of commercial banks. The current financial year ends on Wednesday, 31 March 2010.

The stock market remains closed on Friday, 2 April 2010, on account of Good Friday.

Encouraging Q4 March 2010 advance tax figures of top Indian firms, indicating good Q4 March 2010 results, boosted Indian equities over the past few days. The market also witnessed a strong post-Budget rally driven by sustained buying by foreign funds since the presentation of the Union Budget 2010-2011 on 26 February 2010. Global credit rating agency Standard & Poor's, last week, revised the outlook on India to stable from negative due to improved government finances.

The stock market gave a thumbs up to 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 GDP growth of about 8% and inflation of about 4.5% for 2010-2011.

The forecast for the southwest monsoon for 2010 is the next major trigger for the market. Good rains this year after last year's drought will boost farm output and rural incomes. But another monsoon failure will add to inflationary pressure which in turn may hamper the current strong economic rebound.

Tokyo-based Research Institute for Global Change has predicted normal monsoon rains in India for the current year. Agriculture secretary Prabeer Kumar Basu had also told media in Delhi last week that the monsoon rains for the year will be normal. The Indian Meteorological Department (IMD) issues a monsoon forecast, usually in the second half of April after considering weather observations in different parts of the world and extrapolating statistical data.

The headline inflation was near 10% in February, prompting the RBI to unexpectedly raise its key lending and borrowing rates by 25 basis points each on 19 March 2020. The Reserve Bank has said it is imperative to anchor inflationary expectations and analysts have forecast another rate hike during the policy review on 20 April 2010.

Meanwhile, the latest economic data showed infrastructure sector output grew 4.5% in February from a year earlier, lower than an upwardly revised annual growth of 9.5% in January. During April-February, the first 11 months of the 2009/10 fiscal year, output rose 5.3% from 2.9% a year ago. The infrastructure sector accounts for 26.7% of India's industrial output.

The headline inflation should peak in March with demand-side pressures likely having a short-term impact on prices, the central chief statistician Pronab Sen said on Friday.

The government will sell 63% of its bond issuance for the new fiscal year in the first half, slightly less than expected, giving a near-term respite to satiated bondholders and helping send yields sharply lower on Monday. Yields fell further on Tuesday. The government on Monday said it will sell Rs 2.87 lakh crore ($64 billion) of bonds in the first half of 2010/11, which starts on 1 April 2010. The bulk of the government's first-half borrowing, or Rs 2 lakh crore, will be in the 10-year and longer segment.

Meanwhile, the government reportedly wants to now classify all equity placements before a public offer to any investor, including private equity firms, or employees as promoter equity. This implies that Indian companies will have to offer more shares in a public offering to investors, in keeping with changes in rules proposed by the government to boost public holding in listed firms and liquidity. This will form part of the new rules under which all listed companies will have to consistently maintain a public holding of at least 25%.

The BSE 30-share Sensex fell 121.18 points or 0.68% to 17,590.17. The Sensex rose 72 points at the day's high of 17,783.35 in early trade. The barometer fell 153.13 points at the day's low of 17,558.20 in late trade.

The S&P CNX Nifty fell 40.40 points or 0.76% to 5,262.45.

The BSE Mid-Cap index rose 0.15% and the BSE Small-Cap index rose 0.78%. Both the indices outperformed the Sensex.

Most sectoral indices on BSE edged lower. BSE IT index (down 2.19%) and BSE Healthcare index (down 0.94%) underperformed the Sensex. BSE Realty index (up 1.42%), PSU index (up 0.8%), Power index (up 0.16%), FMCG index (down 0.02%), Auto index (down 0.1%), Consumer Durables index (down 0.17%), Capital Goods index (down 0.22%), Oil & Gas index (down 0.29%), and Bankex (down 0.55%), outperformed the Sensex. The BSE Metal index was unchanged, outperforming the Sensex.

The market breadth, indicating overall health of the market was strong. On BSE, 1690 shares advanced as compared with 1104 that declined. A total of 92 shares remained unchanged.

From the 30 Sensex shares, 19 stocks fell and the rest rose.

BSE clocked turnover of Rs 4121 crore, lower than Rs 4608.48 crore on Monday, 29 March 2010.

Index heavyweight Reliance Industries (RIL) fell 0.55%, on profit taking after recent sharp gains. As per the market buzz, RIL's Q4 advance tax surged to Rs 770 crore in Q4 March 2010 from Rs 365 crore a year ago.

Reliance Industries on 14 March 2010 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.

Rate sensitive banking stocks fell on profit taking after recent strong gains. India's largest bank by net profit and branch network State Bank of India (SBI) fell 0.59%.

India's largest private sector bank by net profit HDFC Bank fell 2.98% after hitting an all-time high of Rs 1986 on Monday. But, India's largest private sector bank by net profit ICICI Bank rose 0.73%, extending Monday's 0.56% gains. The bank's Q4 advance tax payment surged to Rs 350 crore versus Rs 250 crore a year ago.

As per reports the annual growth in bank credit has for the first time exceeded the Reserve Bank of India's (RBI's) estimate of 16% for 2009-10. According to latest data from RBI, loan disbursement by scheduled commercial banks, including regional rural banks, recorded 16.04% growth at the end of 12 March 2010, on a year-on-year basis. This is above RBI's projection of 16% credit growth in this financial year.

Rate sensitive realty shares rose on bargain hunting after a recent fall triggered by worries higher interest rate on housing loans may crimp demand. Indiabulls Real Estate, HDIL, DLF, Omaxe, Sobha Developers, Omaxe, Unitech, rose by between 0.48% to 3.28%.

Meanwhile, the introduction of the contentious service tax on apartments that are still under construction in the Union Budget 2010-2011 may reportedly put pressure on property prices.

Auto stocks fell on profit taking after the recent gains. India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 0.69%, reversing early gains. The company's board will today consider a scheme of arrangement between Mahindra Shubhlabh Services (MSSL), a subsidiary and Mahindra & Mahindra which envisages demerger of the agri inputs business of MSSL into M&M. Meanwhile, M&M paid Rs 236 crore in advance tax in Q4 March 2010 versus nil payment a year earlier.

India's largest car maker by sales Maruti Suzuki India fell 1% extending recent slide triggered by fears increase in competition may dent sales. Recently, Ford India entered the small car market with 'Figo'.

Bajaj Auto fell 0.17%. The company said recently it is targeting sales of 40 lakh vehicles in the year ending March 2011. The company sold 25.78 lakh vehicles in the first eleven months of the current fiscal year ending March 2010.

India's largest bike maker by sales Hero Honda Motors fell 1.9%. The company's board at a meeting held today, 30 March 2010, declared a silver jubilee special dividend of Rs 80 per share.

But, Tata Motors rose 2.25%, extending recent gains after after the company sold a 20% stake in Telco Construction Equipment Company to Japan's Hitachi Construction Machinery Company for a consideration of Rs 1159 crore. Telcon supplies a wide range of construction equipment such as excavators, mining shovels and dumpers to the construction and earth-moving sector.

Increase in raw material prices coupled with costs associated with new emission norms could force auto makers 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.

Auto Component makers rose on hopes of strong fourth quarter result. Clutch Auto, Bharat Seats, Sona Koyo Steering, Bharat Forge, Gabriel, Exide Industries and Ramkrishna Forgings rose by between 0.57% to 6.32%.

IT stocks extended recent losses on recent strong gains in rupee against the dollar. The rupee retreated from near 19-month highs on Tuesday afternoon as some banks booked profits after the sharp rally while month-end dollar demand from oil firms and importers also weighed. India's largest software services exporter by sales Tata Consultancy Services (TCS) fell 1.32% falling for the third straight day. The company said recently it signed a five year contract with Malaysia Airlines for providing end-to-end information technology infrastructure services.

India's second largest software services exporter by sales Infosys fell 2.64%, falling for the third straight day. Infosys' fourth quarter advance tax payment doubled. India's third largest software services exporter by sales Wipro fell 1.92%.

The partially convertible rupee was at 45.09/10 per dollar, after touching 44.88, its strongest since 10 September 2008 and weaker than its close of 44.9575/9675 on Monday. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

Metal stocks rose after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 3.01% on Monday, 29 March 2010., Sesa Goa, NMDC, Sterlite Industries, Steel Authority of India, Hindustan Zinc, National Aluminum Company, Gujarat NRE Coke rose by between 0.36% to 4%.

But, India's largest steel maker by sales Tata Steel fell 1.14%. The company reportedly plans to tap the global depository receipt (GDR) market for raising at least $500 million (Rs 2,300 crore). The money is to be raised within the next two quarters, to capitalise the balance sheet, report said. Tata Steel's Q4 advance tax payment rose to Rs 513 crore from Rs 406 crore a year earlier.

India's largest drugmaker by sales Ranbaxy Laboratories fell 0.99% on reports Daiichi Sankyo plans to delist Ranbaxy Laboratories. The Japanese drugmaker owns 64% in Ranbaxy. The report said the third-largest Japanese drugmaker was working on the buyback price to gain full control of Ranbaxy and integrate the Indian firm with itself. Daiichi had bought a majority stake in Ranbaxy in 2008 to diversify its operations into generic drugs and emerging markets.

Among other Pharma stocks, Dr Reddy's Laboratories, Biocon, Cipla and Lupin fell by between 0.46% to 3.1%.

India's largest mobile services provider by sales Bharti Airtel was flat. As per reports Bharti Airtel and Kuwait's Zain are likely to sign agreements for the Bharti's $9 billion buy of Zain's African assets today, 30 March 2010. India's second largest mobile services provider by sales Reliance Communications fell 1.13%.

India's largest mortgage lender, Housing Development Finance Corporation (HDFC) fell 0.99% after gaining 2.04% on Monday on reports the company plans to rejig its investments in unlisted companies to capture their value. It will transfer shares of select securities to a special purpose vehicle (SPV) and bring in strategic investors in the SPV. HDFC has investments in companies such as Lafarge, Chalet Hotels, IL&FS , IL&FS Education, National Stock Exchange (NSE), L&T Urban Infrastructure and Maruti Countrywide, which it does not consider as strategic to its business.

India's largest engineering and construction firm by sales, L&T, fell 1.18% on profit taking. The company said today it bagged orders worth Rs 1126 crore for metallurgical, material handling & water sector projects. The stock had risen 1.43% on Monday after the company said it bagged an order worth Rs 1400 crore.

India's largest FMCG maker by sales Hindustan Unilever rose 0.52%, gaining for the second straight day after the company sold remaining 49% in Capgemini Business Services (India) to Cap Gemini S.A.

But other FMCG stocks fell. United Spirits, Marico, ITC, Nestle India fell by between 0.02% to 1.31%.

Shares of IL&FS Transportation Networks settled at Rs 273.75 on BSE, at a premium of 6.10% over the initial public offer price of Rs 258. The stock debuted at Rs 287, a premium of 11.2% over the initial public offer (IPO) price.

Cals Refineries clocked the highest volume of 1.83 crore shares on BSE. IL& FS Transportation (1.65 crore shares), Bellary Steels (1.4 crore shares), DQ Entertainment (1.23 crore shares) and Birla Power Solutions (0.85 crore shares) were the other volume toppers in that order.

IL& FS Transportation clocked the highest turnover of Rs 452.11 crore on BSE. Hindustan Copper (Rs 163.37 crore), DQ Entertainment (Rs 135.16 crore), NMDC (Rs 124,44 crore) and ICICI Bank (Rs 92.11 crore) were the other turnover toppers in that order.