Reliance Infrastructure, Hero Honda vault as Sensex, Nifty scale 25-month highs

The key benchmark indices attained their highest closing level in more than 25 months aided by firm Asian stocks and higher US index futures. US markets settled at 18-month highs on Thursday, 1 April 2010 and some Asian markets zoomed to 19-month highs in today's trade buoyed by an upbeat US job data. The BSE 30-share Sensex rose 243.06 points or 1.37%, up close to 240 points from the day's low and off close to 10 points from the day's high.

NSE's volatility index, India VIX, edged lower, extending Thursday's (1 April 2010) sharp slide. The index fell 2.55% to 17.17. 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 came off the higher level in early trade after a firm opening triggered by positive global cues. The market surged to a fresh 25-month high in early afternoon trade. Stocks held firm in afternoon trade. The market extended gains in mid-afternoon trade to hit fresh 25-month highs. Buying frenzy in index pivotals in late trade helped indices register fresh multi-month highs later.

The market breadth was strong. Auto stocks were in demand following good March 2010 monthly sales of auto firms. Metal stocks rose following firm prices on the London Metal Exchange on 1 April 2010. IT stocks declined in volatile trade on a firm rupee. Among heavyweight stocks, index heavyweight Reliance Industries (RIL) advanced almost 3%.

Stock-specific action may rule the roost in the near term based on expectations of Q4 March 2010 results. IT bellwether Infosys kickstarts the reporting season on 13 April 2010.

Emerging market equity funds ended March 2010 with their seventh consecutive week of inflows, bringing net inflows to nearly $7.6 billion in the first quarter. All four of the major fund groups took in modest amounts of fresh money, ranging from a net $6 million for Latin America Equity Funds to $222 million for EMEA Equity Funds. China equity funds, however, recorded inflows for only the third week so far this year as some investors continue to be put off by rich valuations, growing exchange rate and trade frictions with the United States and uncertainty about just how far authorities will go to prevent a property bubble.

Asian markets edged higher on Monday, 5 April 2010, as a strong US job report boosted confidence the global economy is recovering. Key benchmark indices in Indonesia, Japan, South Korea and Singapore were up by between 0.09% to 2.02%. Markets in Australia, New Zealand, China, Hong Kong and Taiwan were shut for holidays.

US markets advanced on Thursday, 1 April 2010 on upbeat economic data. However, anxiety about March payrolls report scheduled to be released on Friday 2 April 2010 and profit booking before the long Easter weekend, capped gains. The Dow Jones Industrial Average climbed 70.44 points, or 0.65%, to 10,927.07. The Standard & Poor's 500 Index rose 8.67 points, or 0.74%, to 1,178.10 and the Nasdaq Composite index added 4.62 points, or 0.19%, to 2,402.58.

An index of US manufacturing activity in March 2010 rose to its highest level in over five-and-half years, the Institute for Supply Management said. Earlier, a US Labour Department report showed initial weekly claims for jobless benefits fell more than expected.

US employers created jobs in March 2010 at the fastest rate in three years, the strongest signal yet that the US recovery is on a solid footing. US nonfarm payrolls rose 162,000 in March, the largest since March 2007, and only the third time payrolls have increased since the recession hit in late 2007. The unemployment rate held steady at 9.7% for a third straight month, the Labor Department said on Friday.

Trading in US index futures indicated that the Dow could rise 30 points at the opening bell on Monday, 5 April 2010.

The US Federal Reserve holds a closed-door meeting on Monday to review the discount rate, now at 0.75%. That rate is what Fed banks charge to institutions seeking emergency funds.

European equity markets were closed on Monday, 5 April 2010, for a holiday.

The world economy could grow 4.1% this year, 0.2 points more than previously forecast, the International Monetary Fund (IMF) said in the latest draft during the weekend of its World Economic Outlook. The US economy is now expected to grow 3% this year, instead of the 2.7% forecast in the IMF's January report. The IMF is due to publish its next World Economic Outlook on 21 April 2010.

According to the draft, euro zone growth this year is now forecast to be 0.8%, down 0.1 points from January's estimate. In 2011, the figure is seen at 1.5%, also down 0.1 points from a previous estimate, the report said.

Closer home, top banking executives have told the Reserve Bank of India (RBI) that credit growth will be over 20% in FY 2011 and they don't expect interest rates to go up soon. They don't feel there is any upward pressure on interest rates. Some bank chiefs met RBI Governor D. Subbarao ahead of the annual monetary policy scheduled for 20 April 2010 to discuss on issues including outlook on credit, deposit growth, lending rates, economic growth and inflation.

Finance Minister Pranab Mukherjee during the weekend said the economy would soon return to the 9% growth trajectory, helped by various measures announced in the Union Budget 2010-11. He said the economy would post 8.25-8.75% growth in the current fiscal after recording 7.2% growth in 2009-10, which is impressive by global standards.

Prime Minister Manmohan Singh recently said that the economy would get back to 9% growth by the end of the Eleventh Five Year Plan period, and do even better after that.

After clocking 9% plus growth for three straight years till 2007-08, the country's GDP grew by a relatively modest rate of 6.7% in 2008-09 on account of the international financial crisis.

The food price index rose 16.35% in the year to 20 March 2010, higher than an annual rise of 16.22% in the previous week, government data showed on Thursday. The fuel price index rose 12.75%, higher than an annual rise of 12.68% in the previous week. Fuel costs have risen following a hike in domestic fuel prices and an upswing in world crude prices. The primary articles index was up 13.86% in the year to 20 March 2010.

India's manufacturing growth slowed down in March 2010, dropping from a 20-month-record in February 2010, as mounting cost pressures took a toll on expansion in output, a survey released on Thursday showed. The HSBC Markit Purchasing Managers' Index , based on a survey of 500 companies, fell to 57.8 in March 2010 from 58.5 in February 2010, which was the strongest since June 2008. A reading above 50 means activity is expanding. The new orders index fell to 62.7 in March from 64 in February

Industrial output in February is expected to have grown 16% year-on-year, Industry Secretary said on Wednesday. The output in January grew an annual 16.7%.

Foreign direct investment rose 15.4% to $1.72 billion in February 2010 over February 2009, government said Wednesday.

Exports in February grew 34.8% on year to $16.09 billion, Trade Minister Anand Sharma said on Wednesday. Exports are expected to grow 15-20% in the year that starts on 1 April 2010, Sharma said. Imports, too, maintained momentum growing by 66% to $25 billion underscoring the strong revival in the domestic economy.

The BSE Sensex vaulted 7,819.27 points or 80.5% in the year ended March 2010 (FY 2010) helped by heavy purchases by foreign institutional investors. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 14,792.31 crore in March 2010. Indian companied raised over Rs 47,800 crore through public offers during the fiscal 2009-2010, following buoyant secondary market.

Global credit rating agency Standard & Poor's, last month, revised the outlook on India to stable from negative due to improved government finances.

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. 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 today, 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, said on 18 March 2010. The cyclical heating of the Pacific Ocean known as El Nino will continue to fade, US forecasters said last month. The weather event, which occurs every four to seven years, brings more rain to South America and less precipitation to Asia.

The BSE 30-share Sensex rose 243.06 points or 1.37% to 17,935.68, its highest closing since 19 February 2008. The index rose 255.92 points at the day's high of 17,948.54 in late trade. The Sensex gained 1.04 points at the day's low of 17,693.66 in early trade.

The S&P CNX Nifty rose 77.90 points or 1.47% to 5,368.40 its highest closing since 5 February 2008. Nifty hit an intra-day high of 5,377.55.

The market breadth, indicating the overall health of the market, was strong. On BSE, 2224 shares advanced as compared with 642 that declined. A total of 59 shares remained unchanged.

The total turnover on BSE amounted to Rs 4398 crore lower than Rs 4704.59 crore on Thursday,1 April 2010.

From the 30 Sensex stocks, 24 advanced while the rest of them slipped.

The BSE Mid-Cap index rose 1.45% and the BSE Small-Cap index rose 1.97%. Both the indices outperformed the Sensex.

The BSE Realty index (up 2.66%), the BSE Oil & Gas index (up 2.03%), the BSE Auto index (up 2%), the BSE Bankex (up 1.86%), the BSE Metal index (up 1.71%), the BSE Power index (up 1.46%), the BSE HealthCare index (up 1.44%), outperformed the Sensex.

The BSE IT index (down 0.02%), the BSE FMCG index (up 0.33%), the BSE Capital Goods index (up 0.44%), the BSE Consumer Durables index (up 0.7%), the BSE Teck index (up 0.72%), the BSE PSU index (up 0.97%), underperformed the Sensex.

India's largest private sector power utility firm by sales Reliance Infrastructure jumped 5.1% to Rs 1067.45 after the company commissioned a 600 megawatt unit at the Rajiv Gandhi Khedar Thermal Power Plant at Hisar in Haryana. It was the top gainer from the Sensex pack.

But India's largest engineering and construction firm by sales Larsen & Toubro (L&T) was down 0.15% at Rs 1647.45. The stock slipped from day's high of Rs 1660. The company today said it has received an order worth Rs 1,060 crore from Gujarat State Petroleum Corporation (GSPC) to build an offshore oil platform.

Some other capital goods stocks rose. Praj Industries, ABB, Bharat Heavy Electricals, BEML and Siemens rose by between 0.7% to 4.02%.

Index heavyweight Reliance Industries (RIL) gained 2.88% to Rs 1125.15 after a foreign brokerage upgraded the stock to buy from neutral citing earnings growth, exploration and production upside.

RIL is reportedly likely to raise crude oil imports by about 22% this year ended March 2011 as it ramps up production at its giant complex, further stamping its mark on world markets.

Auto stocks were in demand following robust March 2010 sales figures. India's top motorbike maker by sales Hero Honda Motors surged 4.4% after it said sales rose 17% in March 2010 over March 2009.

India's largest truck maker by sales Tata Motors gained 0.64% after it reported a 38% jump in sales in March 2010 from a year earlier.

India's top small car maker by sales, Maruti Suzuki India rose 0.35%. The company raised the price of its vehicles across different models due to higher input costs and expenses from the introduction of the new Bharat Stage IV emission norms. Among different models, Ritz and A-Star will cost Rs 1,000 more; Estillo will become costlier by Rs 2,500 and Swift will cost Rs 3,750 more. Popular model Maruti 800 will also see a price rise of Rs 3,000 costlier, among others.

India's leading tractor maker by sales Mahindra & Mahindra spurted 2.5% after sales rose 20% to 31,698 vehicles in March 2010 over March 2009.

India's second largest two- wheeler maker Bajaj Auto gained 5.78% to Rs 2115 after it reported 85.12% spurt in its motorcycle sales at 2,44,828 units in March 2010 over March 2009. The stock hit a lifetime high of Rs 2215 in intra-day trade today.

Metal stocks were in demand after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 1.13% on 1 April 2010. Sterlite Industries, Hindalco, Jindal Stainless, National Aluminium Company and Hindustan Zinc rose by between 0.41% to 1.58%.

Steel stocks were in demand after steel maker hiked prices on increase in input costs. JSW Steel gained 2.34% after the company hiked steel prices by between 5-7% effective from 1 April 2010.

Shares of the world's No. 8 steelmaker Tata Steel gained 4.06% after the company raised prices in India by a range of Rs 2,500 to Rs 3,000 a tonne. Indian operations account for a quarter of its global capacity of about 30 million tonnes.

India's largest real estate company by sales DLF shot up 3.28% 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.

Among other realty stocks, Omaxe, Indiabulls Real Estate, Unitech, HDIL rose by between 1.35% to 3.4%.

India's largest mobile services provider by sales Bharti Airtel advanced 4.45%. On 30 March 2010, Bharti Airtel cinched a deal to buy most of the African operations of Kuwait's Zain for $9 billion, making it the No.2 cellular company on the African continent and setting India's biggest carrier a tough financial and management challenge. The two companies, which entered exclusive talks in mid-February, signed a legally binding definitive agreement in Amsterdam, where Zain's Africa subsidiary is based.

IT stocks fell on a firm rupee. India's largest software services exporter by sales Tata Consultancy Services (TCS) fell 0.64%. India's third largest software services exporter by sales Wipro fell 0.04% to Rs 723,25 after touching day's low of Rs 713.10

India's second largest software services exporter by sales Infosys was flat at Rs 2672.90. The stock recovered from day's low of Rs 2640.10

The rupee rose to a 19-month high against the dollar on Monday, tracking gains in domestic shares, with a weak dollar overseas also helping the sentiment. The partially convertible rupee was at 44.43/44, stronger than Wednesday's close of 44.89/90. The foreign exchange market was shut on Thursday for the annual book closing of banks, and also for Good Friday.

A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

Shares of oil marketing firms (PSU OMCs) fell after crude oil prices gained more than $1 a barrel on the New York Mercantile Exchange on Thursday, 1 April 2010. Bharat Petroleum Corporation (BPCL) (down 0.8%), Hindustan Petroleum Corporation (HPCL) (down 2.02%) and Indian Oil Corporation (IOC) (down 1.46%), edged lower

Higher crude oil prices will increase under-recoveries of state-run oil firms on domestic sale of petrol, diesel, LPG and kerosene at controlled prices. Light, sweet crude oil gained $1.11 or 1.3%, to $84.87 a barrel on the New York Mercantile Exchange on Thursday, 1 April 2010, the highest settlement price since 9 October 2008, after upbeat US economic data signaled better oil demand ahead..

Banking stocks were in demand tracking firm American depository receipt (ADR) on Thursday, 1 April 2010. India's largest private sector bank by net profit ICICI Bank rose 3.28% after its ADR gained 1.99%.

India's second largest private sector bank by net profit HDFC Bank advanced 0.21% after its ADR jumped 3.46%.

India's largest bank by net profit and branch network State Bank of India (SBI) rose 1.61% after the bank said its special home loan scheme has been extended up to 30 April 2010.

The Reserve Bank of India (RBI), last week, relaxed asset classification norms for loans for projects that have been delayed by factors beyond the promoters' control. Under the current norms, infrastructure projects have to commence operations within two years of completion. For non-infrastructure project loans, the deadline for starting operations is six months. If projects are not started within that period, banks must treat them as bad debts.

In its latest notification, however, RBI said banks could continue treating an infrastructure loan as "standard" for another two years if the commencement of the project has been delayed due to arbitration proceedings or a court case. However, to avail of the extension, the account must be serviced regularly, or the interest due be paid regularly.

Shares of Pradip Overseas settled at Rs 107.15 on BSE, at a discount of 2.6% to the initial offer price of Rs 110. The stock debuted at Rs 120, a premium of 9.10% over the issue price.

Cals Refineries clocked the highest volume of 3.34 crore shares on BSE. Pradip Overseas (1.95 crore shares), Birla Power Solutions (1.93 crore shares), Shree Ashtavinayak Cine Vision (1.67 crore shares) and Ispat Industries (0.7 crore shares) were the other volume toppers in that order.

ARSS Infra clocked the highest turnover of Rs 289.78 crore on BSE. Pradip Overseas (Rs 209.32 crore), Jubilant Food Organoyss (Rs 151.93 crore), Tata Steel (Rs 123.75 crore) and Reliance Industries (Rs 90.55 crore) were the other turnover toppers in that order.