Market slips for the second straight day

The key benchmark indices registered small losses tracking weak global stocks. The market fell for the second straight day. The BSE 30-share Sensex lost 31.04 points or 0.17%, off close to 60 points from the day's high and up close to 85 points from the day's low. Infosys led a rally in IT pivotals after the IT sector bellwether issued a stronger revenue guidance in dollar terms which indicated robust outsourcing demand. The Sensex had declined 80.14 points or 0.45% to 17,853 on Monday, 12 April 2010.

Capital goods, auto, banking and metal stocks edged lower in today's trade. Index heavyweight Reliance Industries (RIL), too, drifted lower. Oil exploration stocks fell whereas PSU OMCs rose as crude oil prices declined. The market breadth was negative.

Stocks were volatile. The market extended initial losses to hit a fresh intraday low in morning trade on weak Asian stocks. Index heavyweight Infosys led recovery in mid-morning trade. But the intraday recovery proved short lived as the market weakened once again in early afternoon trade. The market once again recovered from lower level later.

Infosys edged higher after initial volatility. The stock jumped 3.69% to Rs 2782.35, off the day's low of Rs 2635. Infosys has reported a 2.6% growth in net profit to Rs 1,600 crore on 3.5% rise in revenues to Rs 5,944 crore in Q4 March 2010 over Q3 December 2009 as per International Financial Reporting Standards (IFRS). Infosys expects a between a 1.2% decline to a growth of 2.9% in earnings per share (EPS) on consolidated basis at between Rs 106.82 to Rs 111.28 in the year ending March 2011 (FY 2011) over the year ended March 2010 (FY 2010). But the IT bellwether expects to do better in dollar terms. It has projected a between 5.3% to 9.6% growth in earnings per American depository share (ADS) in FY 2011 over FY 2010.

The IT bellwether has given a stronger guidance in dollar terms, projecting a 16% to 18% growth in revenue at between at between $5.57 billion to $5.67 billion for the current year. In rupee terms, Infosys has given guidance of a between 9% to 11% growth in consolidated revenue at between Rs 24796 crore to Rs 25239 crore in FY 2011 over FY 2010.

Meanwhile, the stock market heaved a sigh of relief as two warring regulators on Monday, 12 April 2010, decided to maintain a status quo on unit linked insurance plans or Ulips, keeping in abeyance the orders issued by both last weekend. Ulips are products similar to mutual funds with an added life cover. A large chunk of funds raised through Ulips are invested in equities.

The finance ministry stepped in to resolve a tussle between the stock market regulator Securities & Exchange Board of India (Sebi) and insurance regulator Insurance Regulatory and Development Authority of India (Irda) on oversight of Ulips. As per reports, the government has asked the two regulators to seek a legal mandate from a court on oversight of Ulips. On Friday 9 April 2010, Sebi barred 14 insurance firms from selling Ulips without its approval, to which Irda reacted the next day by directing insurers to ignore the order.

The fourth quarter earnings of India Inc are major near term trigger for the market. This is because the Q4 March 2010 results and management commentary on outlook could result in revision in earnings estimates of India Inc by analysts for the year ending March 2011 (FY 2011).

Expectations of good fourth quarter result by India Inc and heavy foreign fund inflows boosted the domestic bourses in the past few weeks with the key benchmark indices surging to their highest level in more than 25 months on 7 April 2010.

European shares edged lower on Tuesday, with metal stocks declining after results from US aluminum giant Alcoa missed analyst estimates and as broker downgrades added pressure. The key benchmark indices in UK, France and Germany were down by between 0.11% to 0.39%.

Most Asian stocks fell on Tuesday, with raw-material producers and Japanese exporters drifting lower after Alcoa Inc.'s revenue trailed analyst estimates and the dollar weakened. The key benchmark indices in Japan, Hong Kong, South Korea, Singapore and Taiwan were down by between 0.16% to 1.08%. But, key benchmark indices in Indonesia, China and South Korea rose by between 0.02% to 1.02%.

Japan's corporate goods price index, the main gauge of wholesale prices, fell 1.3% in March from a year earlier, Bank of Japan data showed Tuesday.

Trading in US index futures indicated that the Dow could fall 20 points at the opening bell on Tuesday, 13 April 2010.

US stocks closed in positive territory on Monday, 12 April 2010, helped by a downturn in the dollar and an aid plan for Greece. The gains were, however, modest as investors exercised some caution ahead of the earnings season. The Dow managed to close above 11,000 after some late-session turbulence. It was the Dow's third straight gain and the first time it closed above that level since September 2008. The Dow Jones Industrial Average gained 8.62 points or 0.08% to 11,005.97. The Nasdaq rose 3.82 points or 0.16% to 2457.87 and the S&P 500 gained 2.11 points or 0.16% to 1196.46.

Back home, the chief economic adviser to the finance ministry Kaushik Basu said on Tuesday said that the economy is likely to have expanded 8.5% in the March 2010 quarter. Basu said the estimate was based on his back of the envelope calculation. The latest data showed that industrial output rose 15.1% in February from a year earlier, less than a rise of 16.7% in January.

Rising inflation remains a key cause for concern. A sharp surge in interest rates may adversely impact private investment demand. The government will announce the inflation data for the month of March on Wednesday, 14 April 2010. Investors have already priced a 25-basis point rate rise at the Reserve Bank of India's policy review on 20 April 2010 after it raised rates last month.

The forecast for the southwest monsoon for 2010 is another major trigger for the stock 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. The June-September monsoon season is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector.

Tokyo-based Research Institute for Global Change has predicted normal monsoon rains in India for the current year. Agriculture secretary P K Basu said in a media interview on Monday, 5 April 2010, that early signs indicate normal monsoon rains this year. 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.

A weakening El Nino is a positive sign for the monsoon, Ajit Tyagi, director general at the India Meteorological Department, had said on 18 March 2010.

Asia and Pacific economies are recovering strongly from last year's slowdown and should coordinate on unwinding easy policy and freeing up exchange rates, the Asian Development Bank (ADB) said on Tuesday. Developing Asia, a diverse group of 45 economies including China, Azerbaijan, India, Singapore and Papua New Guinea, was set to grow 7.5% in 2010 and 7.3% in 2011, picking up from 5.2% in 2009, the ADB said in its Asian Development Outlook 2010.

The BSE 30-share Sensex fell 31.04 points or 0.17% to 17,821.96. The Sensex rose 29.78 points at the day's high of 17,892.78 in early trade. The index fell 116.91 points at the day's low of 17,736.09 in morning trade.

The S&P CNX Nifty declined 16.75 points or 0.31% to 5,322.95.

The BSE Mid-Cap index fell 0.3% and underperformed the Sensex. The BSE Small-Cap index fell 0.06% and outperformed the Sensex.

Most sectoral indices on BSE declined. Auto index (down 1.32%), Bankex (down 0.87%), Oil & Gas index (down 0.58%), Healthcare index (down 0.56%), FMCG index (down 0.45%), Consumer Durables index (down 0.45%), PSU index (down 0.45%), Metal index (down 0.3%), and Realty index (down 0.27%), underperformed the Sensex.

IT index (up 3.09%), Teck index (up 2.04%), Power index (up 0.38%), and Capital Goods index (down 0.11%), outperformed the Sensex.

BSE clocked turnover of Rs 4544 crore, higher than Rs 4275.02 crore on Monday, 12 April 2010.

The market breadth, indicating the overall health of the market, was negative. On BSE, 1355 shares advanced as compared with 1531 that declined. A total of 80 shares remained unchanged.

Among the 30-member Sensex pack, 20 fell while the rest of them gained.

IT pivotals rose after Infosys' strong revenue guidance in dollar terms. India's third largest software services exporter by sales Wipro rose 2.45%. India's largest software services exporter by sales Tata Consultancy Services rose 2.8%.

Reliance Industries (RIL) fell 0.44% on profit taking after recent strong gains. RIL after trading hours on Friday, 9 April 2010, said the company will pay $1.7 billion to form a joint venture at one of the most promising natural gas deposit regions in the US with Atlas Energy, becoming the latest foreign company to invest in shale plays that are expected to be very lucrative. The firm will pick up a 40% stake in Atlas's operations in the booming Marcellus Shale, a gas project that spans parts of Pennsylvania, West Virginia and New York in the United States and which, according to some geologists, could hold enough natural gas to satisfy US demand for a decade.

Meanwhile, RIL has reportedly made four new gas discoveries at Krishna-Godavari D6 block. The company has requested the Directorate General of Hydrocarbons (DGH) for commercial approval, reports suggest.

Oil exploration stocks fell as oil fell for a fifth straight session to below $84 on Tuesday, almost erasing April's gains as a forecast increase in US crude stocks highlighted rising supplies and weak demand in the world's largest energy consumer. US crude oil for May delivery slid 80 cents to $83.54 a barrel, down 4% from an 18-month high of $87.09 hit last week. The fall in crude oil prices would result in lower realizations from crude sales for oil exploration firms. Cairn India and ONGC fell by between 0.96% to 2.89%. But Oil India rose 0.99%.

The correction in crude oil prices, however, lifted PSU OMCs. BPCL and HPCL rose by between 0.82% to 1.67%. But, Indian Oil Corporation fell 0.66%. Lower oil prices will reduce under recoveries at the state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at a controlled price.

FMCG stocks fell on profit taking. United Spirtis, Hindustan Unilever ITC and Dabur India fell by between 0.25% to 0.89%.

India's largest real estate company by sales DLF rose 0.52% after recent strong gains. The stock had gained in the past few days on reports the company has appointed an advisor to find buyers for Aman Resorts, a luxury hotel chain it had acquired in November 2007, for $400 million.

But other realty stocks fell. Indiabulls Real Estate, Unitech, HDIL fell by between 0.64% to 1.84%.

Banking stocks were mixed. India's largest private sector bank by net profit ICICI Bank fell 2.37%, with the stock sliding for the second straight day. Its ADR fell 1.66% on Monday. But, India's second largest private sector bank by net profit HDFC Bank rose 0.11%, reversing early losses.

India's largest bank by net profit and branch network State Bank of India was flat. Chairman O.P. Bhatt said recently that the bank may raise its lending and deposit rates in a couple of months. The state-owned bank will wait for the Indian central bank's monetary policy action to take a final call on interest moves, Bhatt said.

India's largest mortgage finance firm by total income Housing Development Finance Corporation fell 2.65%, with the scrip falling for the second straight day.

The Reserve Bank of India said late last week banks would determine their lending rates with reference to the base rate, effective 1 July 2010. To stabilise the system of base rate calculation, banks are allowed to change the benchmark and methodology anytime during the initial six-month period up to end December, it said.

Auto stocks fell on profit taking after recent strong gains triggered by robust March 2010 sales figures. Vehicle sales in India should grow 10-15% in the fiscal year to March 2011, an industry body said on Friday 9 April 2010. In 2009/10, a total of 1.23 crore vehicles were sold in the country, up 26.4% from the previous fiscal year, data from the Society of Indian Automobile Manufacturers (SIAM) showed.

India's largest commercial vehicle maker by sales Tata Motors fell 1.02% falling for the second straight day. The stock had jumped 4.51% on Friday after the company reported that the Land Rover brand had its best-ever monthly sales in the British market last month.

India's largest tractor maker by sales Mahindra & Mahindra fell 1.8%, with the stock falling for the second straight day. India's top small car maker by sales, Maruti Suzuki India fell 0.37%, with the scrip sliding for the third straight day. The company recently raised prices of its vehicles across different models due to higher input costs and expenses from the introduction of the new Bharat Stage IV emission norms.

India's leading bike maker by sales Hero Honda Motors fell 5.29% on turning ex-dividend for a special dividend Rs 80 per share. The company on 30 March 2010, had declared a Silver Jubilee special dividend of 4000% i.e. Rs. 80 per equity share of Rs. 2 each and fixed 15 April 2010 as the record date for the same.

But, India's second largest bike maker by sales Bajaj Auto rose 0.95%. Bajaj Auto will distance itself from the parent brand Bajaj and focus on just four motorcycle brands - Boxer, Discover, Pulsar and KTM - as well as the rear-engine three-wheeler brand, phasing out the rest, managing director Rajiv Bajaj was quoted by the media as saying last week.

From this month, 13 cities across the country have switched over to Bharat Stage IV emission norms. Following this, many carmakers, have increased the vehicle prices. With newer technology required for upgradation, auto companies had said they would have to pass on the increased cost to customers. Earlier in February 2010, following the 2% increase in excise duty on all non-oil products to 10% in the Budget, auto players had hiked prices of vehicles by up to Rs 70,000.

Automobile firms are seen reporting strong Q4 results on a healthy volume growth. However, the sector is witnessing a headwind of rising input costs. Recently, Maruti Suzuki raised car prices due to a surge in input costs and shift to new emission norms from 1 April 2010. M&M, too, hiked utility vehicles prices recently.

Metal stocks fell after aluminum major Alcoa Inc. posted sales that missed analysts' estimates. Sterlite Industries, Hindalco Industries and Hindustan Zinc fell by between 1.17% to 2.53%.

Steel Authority of India (Sail) fell 2.71%, extending recent losses after the Union Cabinet approved a 20% stake sale in state-run firm in two tranches. The sale is expected to fetch the government Rs 8000 crore ($1.8 billion) in the first sale of 10%.

But, India's largest private sector steel maker by sales Tata Steel rose 1.36%. The company said recently its sales for the fiscal year ended on 31 March 2010 rose 18% from a year ago to 6.17 million tonnes.

Capital goods pivotals were mixed. India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 0.46% in volatile trade. The company, last week, received an order worth Rs 1,060 crore from Gujarat State Petroleum Corporation (GSPC) to build an offshore oil platform.

India's top power equipment maker by sales Bharat Heavy Electricals (Bhel) rose 1.14%. The stock had hit a 52-week high of Rs 2,570 on Friday, 9 April 2010.

Cals Refineries clocked the highest volume of 3.5 crore shares on BSE. Birla Power Solutions (1.45 crore shares), FCS Software (0.97 crore shares), City Union Bank (0.69 crore shares) and Balaji Telefilms (0.53 crore shares) were the other volume toppers in that order.

Infosys clocked the highest turnover of Rs 507.70 crore on BSE. Tata Motors (Rs 132.15 crore), Tata Motors-DVR (Rs 82.49 crore), State Bank of India (Rs 77.55 crore) and Tata Consultancy Services (Rs 76.13 crore) were the other turnover toppers in that order.

The stock market remains closed on Wednesday