Sugar shares hammered

The key benchmark indices eked out small gains mimicking mild gains in global stocks. US index futures were flat. The BSE 30-share Sensex rose 45.79 points or 0.27%, off close to 70 points from the day's high and up 64.24 from the day's low. The market breadth was weak after a strong start. Auto stocks edged higher on fresh buying. Banking shares were mixed. Telecom pivotals saw divergent trend. IT stocks declined on profit taking after recent gains triggered by upbeat US jobs data.

India VIX, a volatility index based on the S&P CNX Nifty index option prices, lost 3.41% to 20.09. The index has witnessed a steep fall in the last few trading sessions after the government tabled the Union Budget for 2010-2011 in the parliament on 26 February 2010. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days. Typically, volatility surges ahead of a major event such as the Budget. It falls after the event.

Index heavyweight Reliance Industries advanced close to 2%, moving past the Rs 1000 mark on reports the firm is close to striking hydrocarbon at its Palar deepwater block in the Cauvery basin. Hero Honda Motors struck a record high to Rs 1940 on BSE in intra-day trade today, 10 March 2010.

The market edged higher in early trade. It surged to hit the day's high in mid-morning trade. The market pared gains in early afternoon trade. The market slipped into the red in afternoon trade. It moved between positive and negative zone near the flat line later.

The follow-on public offer (FPO) of iron ore miner NMDC was subscribed 14% by 16:00 IST on the first day of the issue today, NSE data showed. The government is divesting 8.38% stake in NMDC through the FPO as a part of its aggressive divestment drive to raise funds in a bid to bring fiscal deficit down. The company's FPO will close on Friday, 12 March 2010. The price band has been fixed between Rs 300 and 350.

European markets turned positive, reversing early losses. Key benchmark indices in Germany and France were up by between 0.1% to 0.32%. UK's FTSE 100 index was flat.

Asian stocks fluctuated as shipping lines and oil companies declined, while Australia's largest telephone company rose on speculation it will avoid a breakup. The key benchmark indices in South Korea, Japan, Indonesia, Taiwan and Singapore were up by between 0.08% to 0.80%. However indices in China and Japan declined 0.66% and 0.04% respectively. Hong Kong's Hang Seng index was unchanged.

Chinese stocks snapped a three-day advance amid concerns about policy tightening. China's trade surplus narrowed further to $7.6 billion in February from $14.2 billion in January on surging imports even as the nation's exports continued to rise rapidly, according to reports. February exports jumped 45.7% from the same month of 2009, while imports expanded by 44.7%.

Japan's machinery orders slipped in January 2010 after the biggest jump since 2000, indicating a subdued appetite among the nation's companies to ramp up capital spending even as manufacturing passed its worst. Orders, a signal of business investment in three to six months, dropped 3.7% from December, when they climbed 20.1%, the Cabinet Office said today.

A separate report showed Japan remains plagued by deflation. Producer prices fell 1.5% in February 2010 from a year earlier, the 14th consecutive drop, the central bank said.

US equities ended slightly higher on Tuesday as falling commodity prices pressured materials stocks, offsetting gains in the telecom and industrial sectors. The Dow Jones Industrial Average gained 11.86 points, or 0.11%, to 10,564.38. The Standard & Poor's 500 Index edged up 1.95 points, or 0.17%, to 1,140.45 and the Nasdaq Composite index rose 8.47 points, or 0.36%, to 2,340.68.

Trading in US index futures showed that the US markets could see a flat opening on Wednesday, 10 March 2010. US index futures Futures moved between the positive and negative territory earlier in the day.

Investors will monitor US retail sales for February 2010 and Reuters/University Of Michigan Consumer Sentiment Survey for March 2010, both due on Friday, 12 March 2010, for any hints on the health of the global economy.

Closer home, the government is likely to maintain the distinction between short term and long-term capital gains to encourage long-term savings, as it deliberates the draft direct taxes code (DTC). The finance minister said in his Budget speech that the new direct taxes law could be rolled out from 1 April 2011.

The DTC has proposed to tax capital assets irrespective of the period of holding. The entire capital gains of the assessee is proposed to be added to his income and taxed at the marginal rate.

Currently, any stock market asset held for more 12 months is considered long-term capital assets but for all other assets have to be held for more than 36 months to be considered a long-term asset. Moreover, there is zero capital gains tax on shares held for the long-term while others assets are levied a long-term capital gains tax of 10%.

Meanwhile, Russian Prime Minister Vladimir Putin heads to India Thursday for a visit aimed at tightening the close arms and energy partnerships that Moscow and New Delhi have enjoyed since the Soviet era.

The highlight of the two-day visit is expected to be the signing of several military agreements, including a deal on a Soviet-era aircraft carrier whose troubled history has raised fears over the future strength of relations. Russia supplies 70% of India's military hardware but New Delhi has in recent years also looked towards other military suppliers including Israel and the United States.

Meanwhile, India and China on Tuesday decided to formally back the Copenhagen Accord worked out at the climate summit in December last year. While neither India nor China have said that they would 'associate' with the accord, both countries have agreed to have their names listed in the preamble. The move would come as boost to the accord. With this the four BASIC countries - Brazil, South Africa, Indian and China - which were key players in formulating the accord have agreed to be listed in the chapeau.

On the political front, the Rajya Sabha on Tuesday took a historic and giant step by voting to amend the Constitution, providing one-third reservation of seats in Parliament and State Assemblies for women. The Bill has to be passed by the Lok Sabha and ratified by 50 per cent of the States before it comes into effect.

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.

The government will announce the industrial output data for the month of January 2010 on Friday, 12 March 2010. Industrial output grew 16.8% in December 2009.

Meanwhile, the fourth and the last installment of advance tax by India Inc due on 15 March 2010 will give a broad indication of fourth quarter earnings.

The government said on Friday it will seek parliamentary approval to spend an extra Rs 31780 crore for the fiscal year to end-March 2010, which it plans to fund through savings.

There is no risk that the government will borrow more than planned to fund supplementary spending, Revenue Secretary Sunil Mitra said on Friday. Of the additional spending, Rs 12000 crore would be spent on oil subsidy, Rs 8000 crore on fertiliser subsidy and Rs 2459 crore on food subsidy, among others.

Prime Minister Manmohan Singh said late last week that the economy would grow by at least 8% in the year through March 2011. Asia's third largest economy would expand 7.2-7.5% in 2009-10, he told parliament. Singh said prospects for the winter-sown crop are 'very encouraging'. He also said the government must pay good prices to farmers to ensure higher farm production. The prime minister said the government will take all practical measures to bring down food prices.

He said the government will continue commitment to pubic and private investment in agriculture. The prime minster said there is need to find ways and means to stabilise the sugar economy.

A good harvest is likely to bring down food inflation, which accelerated to nearly 18% in late February. The government, facing mounting criticism for rising food prices, is struggling to meet conflicting aims of controlling food inflation and trying to please farmers by paying them attractive prices.

Chief Economic Advisor Kaushik Basu on Tuesday, 9 March 2010, said inflation would ease by April 2010, with low fiscal deficit and a good rabi (winter) crop improving food supplies. In a couple of months, the slightly lower fiscal deficit will begin to counter inflation, he added. Speaking on the sidelines of a conference in New Delhi Basu said inflation is likely to average 4% in the current financial year.

The newly elected president of industry body FICCI Rajan Bharti Mittal said on Monday there's no room for hardening of interest rates and the Reserve Bank of India should maintain status quo on the rates to allow the industry to make fresh investments. He added that fresh investment announcement have begun across sectors and further increase in interest rates will only hamper economic growth.

Food prices will be keenly watched in coming weeks for the second and third round impacts of the recent fuel price rise. Market men see a 25 basis points hike in the repo and reverse repo rates each by the RBI at the April 2010 policy review.

Prime Minister Manmohan Singh has ruled out rolling back a price hike in fuel prices despite pressure from his main allies, saying populist policies would hurt the economy in the long-term. Petrol prices rose about 6% and diesel prices by 7.75% after the government increased factory-gate taxes and import duties on the fuels as part of last week's 2010-11 union budget 2010-11, which stressed fiscal prudence to cut a wide deficit

Reserve Bank of India (RBI) Governor D Subbarao on Monday, 8 March 2010, said inflation should moderate in the coming months. He said the central bank will ensure that interest rate levels do not have a negative impact on the competitiveness of the economy. Should India need to manage inflationary expectations, the central bank could turn to its traditional mix of policy tools including use of both liquidity and cash reserve requirements, he said.

Subbarao said the government's plans to reduce the fiscal deficit this year and in 2011 would help to manage inflationary expectations and facilitate demand for private credit. The government's borrowing program is likely to proceed smoothly over the next financial year, he said. The government has set its gross market borrowing target for 2010/11 at a record Rs 4.57 lakh crore, up by 1.3% percent from the previous year, a move that has pushed bond prices lower as investors have anticipated a flood of fresh debt supply.

The heavy borrowing plans of the government, needed to fund the estimated 5.5% fiscal deficit for the year, has had analysts concerned it would make funding costlier and scarcer for industry. Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday said the government will raise more than half of its borrowing for the next year by September 2010, allowing more space for private borrowing as the economic growth picks up steam. Ahluwalia also said the government would have to raise state-set retail fuel prices if crude oil prices continued to rise.

Finance minister Pranab Mukherjee's budgetary proposals late last month offered a progressive cut in fiscal deficit over the next three fiscal years, changed personal tax rates lifting disposable incomes in the hand of individuals and reduced surcharge on corporate tax for domestic companies to 7.5% from 10%.

The Finance Minister in his budget speech on Friday, 26 February 2010 said the government aims to introduce the Goods and Services Tax (GST) and implement the direct tax code from 1 April 2011.

The fiscal deficit is pegged at 5.5% of GDP for 2010-2011, lower than an estimated 6.8% for the current fiscal year. The finance minister said the government also aimed to reduce the deficit further to 4.8% of GDP in the year starting 1 April 2011, and to 4.1% in the year from 1 April 2012. He said there is a need to review stimulus and move towards fiscal consolidation and review public spending.

A thrust on the infrastructure sector augurs well from a long-term growth perspective. The Finance Minister has provided Rs 1.73 lakh crore for infrastructure development in 2010-2011, which accounts for over 46% of the total plan expenditure for the year.

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.

Finance Minister Pranab Mukherjee on Wednesday, 3 March 2010 said India's economic recovery is still being driven by public spending and is not yet broad-based, further clouding the debate on the timing of rate hikes by the central bank.

Foreign funds bought shares worth Rs 2173.09 crore and domestic funds sold shares worth Rs 171.66 crore on Tuesday, 9 March 2010, as per provisional data.

The BSE 30-share Sensex rose 45.79 points or 0.27% to 17,098.33. The index rose 130.97 points at the day's high of 17,183.51 in morning trade. The Sensex lost 24.62 points at the day's low of 17,027.92 in early trade.

The S&P CNX Nifty rose 14.75 points or 0.29% to 5116.25.

The market breadth, indicating the overall health of the market was weak. On BSE, 1660 shares declined as compared with 1178 that advanced. A total of 74 shares remained unchanged. The breadth was much stronger in opening trade.

Among the 30-member Sensex pack, 18 advanced while the rest slipped.

BSE clocked a turnover of Rs 4179 crore, lower than Rs 7506.04 crore on Tuesday, 9 March 2010.

The BSE Mid-Cap index fell 0.13% and the BSE Small-Cap index fell 0.21%. Both the indices underperformed the Sensex.

The BSE Oil & Gas index (up 0.93%), the BSE FMCG index (up 0.81%), the BSE Realty index (up 0.59%), the BSE Auto index (up 0.33%), outperformed the Sensex.

The BSE Teck index (down 0.41%), the BSE IT index (down 0.37%), the BSE HealthCare index (down 0.33%), the BSE Metal index (down 0.32%), the BSE PSU index (down 0.2%), the BSE Bankex (down 0.17%), the BSE Capital goods index (down 0.15%), the BSE Power index (down 0.12%), the BSE Consumer Durables index (up 0.19%), underperformed the Sensex.

Auto stocks gained on fresh buying. India's largest bike maker by sales Hero Honda Motors surged 2.94% to Rs 1929.40. It hit a all time high of Rs 1940 today, 10 March 2010. It was the top gainer from the Sensex pack. 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.

India's largest truck maker by sales Tata Motors gained 0.98%. The stock made a comeback on bargain hunting after sliding 3.24% on Tuesday following Germany's Daimler AG offloading its entire stake in Tata Motors in bulk deals. Daimler AG sold its entire about 2.56 crore shares at an average price of Rs 751.67 in Tata Motors through various bulk deals on Tuesday, 9 March 2010.

Tata Sons, the holding entity for Tata Group firms, and Citigroup have acquired a total of 86.5 lakh shares of Tata Motors from Germany's Daimler AG. Tata Sons bought 40 lakh Tata Motors shares at Rs 750 each, while Citi bought 46.5 lakh shares at Rs 752.41 each

India's largest tractor maker by sales Mahindra & Mahindra (M&M) advanced 0.58%, reversing early losses.

However, India's largest car maker by sales Maruti Suzuki India fell 1.34% on fears of rise in competition after rival firm Ford on Tuesday entered the small car market with 'Figo'. It was the top loser from the Sensex pack. Also, two more global auto giants, Nissan and Toyota, have announced their plans to launch cars in India priced in the Rs 4-lakh range.

Index heavyweight Reliance Industries (RIL) advanced 1.8% to Rs 1008.05, moving past the Rs 1000 mark. As per reports, RIL is close to striking hydrocarbon at its Palar deepwater block in the Cauvery basin. In the Palar block, RIL is said to be testing a well. The hydrocarbon success would be known only after testing is completed.

India's largest bank by net profit and branch network State Bank of India (SBI) fell 0.38%, extending Tuesday's 1.28% fall. A bill seeking to reduce Centre's shareholding in the SBI from 55% now to 51% and to allow the bank to raise more capital from the market through preference shares, was introduced in the Lok Sabha on Monday.

The amendment bill seeks to provide for enhancement of the capital of SBI by issue of preference shares, to enable it to raise resources from the market by public issue or preferential allotment or private placement. The bill also aims to provide for flexibility in the management of the bank

Other banking shares saw mixed trend. India's largest private sector bank by net profit HDFC Bank rose 0.18% India's largest private sector bank by net profit ICICI Bank declined 0.76%.

IT stocks declined on profit taking after recent gains triggered by upbeat US jobs data. US is the biggest market for Indian IT firms. India's third largest software services exporter by sales Wipro fell 0.4%. India's second largest software services exporter by sales Infosys slipped 0.9%

But, India's largest software services exporter by sales Tata Consultancy Services (TCS) gained 1.49%. Reports citing Girja Pande, TCS's Asia-Pacific chairman indicated that the company hopes to quadruple its market share in Asia outside India within five to seven years.

Telecom pivotals saw divergent trend. India's largest cellular services provider by sales Bharti Airtel lost 1.1%. As per reports, Bharti Airtel has completed about 60% of its due-diligence of Zain's African assets.

Zain, Kuwait's biggest phone company, and Bharti Airtel said on 15 February 2010 that they had entered into exclusive talks under which the Bharti would buy most of Zain's African assets for $10.7 billion. The exclusive talks will continue until 25 March 2010.

India's second largest cellular services provider by sales Reliance Communications gained 0.06%. The company has announced a new mobile application named Socially. With this application, a user can follow his friends' activities on social networks such as Facebook, Twitter and LinkedIn through a single platform.

Cement stocks gained on recent reports that prices are likely to rise by Rs 5-25 per 50-kg bag. The impeding price hike comes after the finance minister increased the excise duty on cement in the budget to 10% from the earlier 8%, imposed a cess of Rs 50 per tonne on domestic and imported coal and hiked fuel prices, pushing up freight rates for cement companies. ACC, Ambuja Cements, UltraTech Cement rose by between 1.33% to 2.21%.

Metal stocks fell on profit taking, reversing early gains. Tata Steel, Steel Authority of India, Hindustan Zinc, Sesa Goa, Sterlite Industries, JSW Steel and Jindal Steel & Power fell by between 0.01% to 1.95%.

State-run miner NMDC rose 1.12% to Rs 379.85. The company's follow-on offering (FPO) opened for bidding today, 10 March 2010 and will close on Friday, 12 March 2010.

Consumer durables stocks gained on hopes rise in disposable income following widening of tax slabs in the Union Budget 2010-11 may boost sales. Asian Star Company, Blue Star and Rajesh Exports rose by between 0.82% to 6.53%.

FMCG stocks rose after government's thrust on rural spending and social schemes in the budget announced late last month. Rural sector constitutes a major chunk of the sales of FMCG firms. Hindustan Unilever, ITC, Marico rose by between 0.33% to 1.4%.

Oil & Natural Gas Corporation (ONGC) was down 0.49% and Indian Oil Corporation (IOC) rose 0.11% after Oil Secretary S. Sundareshan said on Wednesday that the government has no immediate plans to sell stake in these two state-run firms.

Sugar shares declined after sugar futures sank to 7-month low in the US on Tuesday, 9 March 2010, continuing to retreat from last month's 29-year high, as traders braced for additional supplies from a new harvest season. Bajaj Hindusthan, Balrampur Cihni Mills, Shree Renuka Sugars, Triveni Engineering fell by between 5.29% to 8.88%.

World raw sugar for May 2010 delivery fell 1.25 cents, or 6%, to settle at 20.32 cents a pound on ICE Futures exchange in the US on Tuesday. It was the contract's lowest settlement price since 6 August 2009.

Realty shares gained after sector bellwether DLF hinted that properties would turn dearer as developers would have to pass on the service tax burden to end-users. Indiabulls Real Estate, HDIL and DLF rose by between 0.03% to 2.79%.

The Budget proposed to impose service tax on the realty sector both on commercial rentals as well as on sale of under-construction housing units. The service tax would come to be about 3.5% of the cost of the apartment that includes the value of the land and also the cost of construction, realty body Credai said recently.

Some infrastructure stocks gained following the government's on the infrastructure sector in the latest Budget. The Finance Minister provided Rs 1.73 lakh crore for infrastructure development in 2010-2011, which accounts for over 46% of the total plan expenditure for the year. Bharat Heavy Electricals , Jaiprakash Associates, Punj Lloyd Gayatri Projects rose by between 0.02% to 1.75%.

Texmo Pipes & Products closed at Rs 137.25 on the BSE, at a premium of 52.5% over the initial public offer price of Rs 90. The stock debuted at Rs 101.50, a 12.80% premium over the initial public offer (IPO) price.

Cals Refineries clocked the highest volume of 4.81 crore shares on BSE. Texmo Pipes (3.36 crore shares), Unitech (1.06 crore shares), Shree Ashtavinayak Cine Vision (0.74 crore shares) and Birla Power Solutions (0.67 crore shares) were the other volume toppers in that order.

Texmo Pipes clocked the highest turnover of Rs 462.48 crore on BSE. Reliance Industries (Rs116.13 crore), Tata Motors Rs 90.15 crore), Tata Consultancy Services (Rs 84.87 crore) and Unitech (Rs 79.66 crore) were the other turnover toppers in that order.