Small-cap, mid-cap indices outperform Sensex

The key benchmark indices registered small gains in what was a highly volatile trading session. The market attained its highest closing level in more than 25 months. The barometer index BSE Sensex fell below the psychological 18,000 level after racing above that level in early afternoon trade. The Sensex rose 28.65 points or 0.16%, up close to 95 points from the day's low and off close to 75 points from the day's high

Volatility was immense. The Sensex surged past the psychosocial 18,000 mark at the onset of the trading session on firm Asian stocks. It soon fell below that level. The market moved in a narrow range in mid-morning trade. A bout of volatility was witnessed in early afternoon trade as the market came off the higher level soon after hitting a fresh 25-month high. The market slipped into the red in afternoon trade. It regained positive zone later. The market once again slipped into the red in mid-afternoon trade. Fresh selling pulled the market to the day's low in late trade. The market staged a rebound from lower level later with the Sensex regaining positive zone.

NSE's volatility index, India VIX, rose 0.7% to 17.32. The lower level at which the index is currently trading indicates investors' desire to take risk. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days. The index is calculated based on the S&P CNX Nifty options prices.

The market breadth though positive was not as strong as it was earlier in the day. Index heavyweight Reliance industries (RIL) cut early gains. Banking and housing finance firms declined on fears of interest rate hike in the forthcoming Reserve bank of India's review of monetary policy on 20 April 2010. Bharat Heavy Electricals struck a 52-week high of Rs 2559.50 in intra-day trade today, 7 April 2010. Telecom pivotals gained on fresh buying ahead of the auction to provide super fast third generation (3G) service which begins on 9 April 2010. But, FMCG shares declined on profit taking. IT stocks recovered from the day's lows.

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.

Trends indicate that more Indian companies will be upgraded than downgraded in fiscal year 2010/11, the local unit of a global rating agency said on Wednesday. In a reversal of a three-year trend, the rating agency's upgrades outnumbered downgrades in the second half of 2009/10. However, a global credit event on sovereign debt, impact of inflationary expectations on interest rates, and exchange rate volatility were outlined as the key the risks that could affect credit quality.

While the Greek debt crisis is still sending shivers through the global economy, India's central bank looks set to raise interest rates for the second time in as many months on 20 April 2010, and the speedy recovery of Asia's third-largest economy has raised concerns of a possible surge in capital inflows.

Meanwhile, chief statistician Pronab Sen said on Wednesday that the Reserve Bank of India (RBI) will have to further tighten monetary policy on 20 April 2010 if prices continue to rise, as expected, from 9.89% headline inflation in February 2010. He also said the wholesale price index inflation rate in March 2010 is likely to be higher than in the previous month, partly due to base effect.

Power Minister Sushil Kumar Shinde today said that the country will add only 61,000 megawatts of power generation capacity in the five-year period to March 2012, lower than the target of 78,000 megawatts.

Business activity among Indian services companies grew at a slower pace in March 2010, moving away from 17-month highs touched in February, due to a slowdown in new work and employment and rising costs, a survey showed. The HSBC Markit Business Activity Index, based on a survey of 400 Indian firms, fell to 58.1 in March 2010 from 60.9 in February 2010, which was its highest since September 2008.

Meanwhile, Indian companies continue to raise funds for expansion, future growth and in some cases to lower debt. Market men expect Indian companies to raise large sums of money this year from equity issuance which includes initial public offerings, American Depositary Receipts, Global Depositary Receipts, qualified institutional placements etc. Indian firms have so far raised about $10.5 billion from equity, equity related instruments in calendar 2010 so far. The government has targeted raising Rs 40,000 crore from divestment in the financial year ending March 2011.

European stocks slipped in the red on Wednesday, following strong gains made over the past two sessions, as investors awaited euro zone GDP data for more insight on the region's economic health. The key benchmark indices in France, Germany and UK fell by between 0.1% to 0.32%.

Private-sector activity across the 16-nation euro zone expanded at the fastest rate since August 2007, according to the final Markit composite purchasing managers index for the region released Wednesday. The index rose to 55.9 from 53.7 in February, topping a preliminary estimate of a rise to 55.5. A reading of more than 50 indicates an expansion, while a figure of less than 50 signals contraction.

Asian stocks rose on Wednesday as investors bet the Federal Reserve will keep the benchmark US interest rate at a record low. The key benchmark indices in Hong Kong, Japan, Indonesia, Taiwan, South Korea and Singapore rose by between 0.03% to 1.82%. However, China's Shanghai Composite index slipped 0.33%.

The Bank of Japan's policy board decided Wednesday to keep its policy interest rates unchanged and took no further action to fight deflation, as financial markets have stayed relatively calm and there appear some positive signals for the economy. The bank's policy board voted unanimously at the end of a two-day meeting to leave the unsecured overnight call loan rate unchanged at 0.1%, the level it has been since December 2008. The BOJ said in a statement that it will aim to maintain an extremely accommodative financial environment in the conduct of monetary policy.

The World Bank on Wednesday sharply raised its forecast for economic growth in East Asia to reflect reviving global demand, sustained fiscal and monetary stimulus in the region and a rapid rebound in consumer spending. The developing economies of East Asia will grow by 8.7% in 2010, the bank said in a semi-annual economic update. In November, it had projected 7.8% growth. Stripping out China, growth will spurt to 5.5% in 2010 from 1.3% in 2009, the Washington-based lender said. The World Bank said China's economy may expand 9.5% this year from 8.7% in 2009.

Australia's central bank underlined its determination to reduce monetary stimulus on Tuesday when it lifted its benchmark interest rate from 4 to 4.25%, its fifth such rise since October 2009. In an upbeat assessment of the country's outlook, the Reserve Bank of Australia indicated growth this year would be around a trend of 3.25 to 3.5% and inflation during the same period would be close to its 2 to 3% target range.

In US market action, the S&P 500 and the Nasdaq Composite rose modestly on Tuesday as the banking sector got a lift from positive analysts' comments, while minutes from the Federal Reserve's last meeting eased concern over rising interest rates. The Dow Jones Industrial Average shed 3.56 points, or 0.03%, to 10,969.99. The Standard & Poor's 500 Index gained 2 points, or 0.17%, to 1,189.44 and the Nasdaq Composite index rose 7.28 points, or 0.30%, to 2,436.81

US Treasury Secretary Timothy Geithner said on Wednesday that governments must work to bring more people into the banking system as part of efforts to improve the balance of economic growth. Geithner met a group of Indian financial entrepreneurs and local representatives of major US banks at the University of Mumbai to discuss new technologies and business models to deliver banking services to new populations.

Geithner is on an India tour for economic partnership talks with Indian officials. He said on Tuesday that the United States and India must work together on rebalancing global growth and revamping a battered financial system. Geithner lauded India's handling of its economy through the financial crisis, saying it was emerging stronger and faster than most large economies, adding that prospects for both the United States and Indian economies were encouraging in the face of global recovery.

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.

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 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.

Trading in US index futures indicated that the Dow could fall 19 points at the opening bell on Wednesday, 7 April 2010.

Closer home, market regulator Securities & Exchange Board of India (Sebi) has made it mandatory for companies to list shares within 12 days after the closure of a public issue. On Tuesday, the regulator said that this would be applicable to public issues opening on or after 1 May 2010. With this, the number of days between the closing of a public issue and its listing has been reduced by 10 days, from the existing 22 days.

On the macro front, Reserve Bank of India (RBI) executive director Deepak Mohanty said on Tuesday that the recent surge in inflation has raised concern on whether the supply-driven increase could spill over to the generalised inflation process. Mohanty added that prolonged high inflation even if originating from supply side would give rise to increase inflation expectations and cause general prices to rise. Poorly anchored in inflation expectations makes long-term financial planning more complex with potential adverse effects on investment and growth, Mohanty said

Meanwhile, commercial banks will maintain a status quo on interest rates till such time the Reserve Bank of India (RBI) reviews its monetary policy 20 April 2010, an umbrella organisation of the banks said Monday. In a bid to tame the price rise by sucking excess money out of the system, the RBI hiked two major policy rates by 25 basis points each on 19 March2010 in a move that the industry said could impact growth. The repo rate was revised to 5% and the reverse repo rate to 3.5%, marking an end to the easy money policy regime.

Meanwhile, the Indian government is reportedly planning to raise $2.7 billion by listing 10% of Coal India, the world's largest coal producer. The company plan to offer 63.1 crore shares to investors by the end of July or early August at the latest, reports citing the company's chairman Partha S. Bhattacharyya indicated.

The government has taken the first concrete step towards the introduction of the Goods and Services Tax (GST). Since the introduction of the tax would require amendment to the Constitution, the government has sought the Supreme Court's opinion on the amendments proposed. This will ensure these amendments are not challenged in the court later. This has been done through a Presidential reference to the Supreme Court.

Finance Minister Pranab Mukherjee recently 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.

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 last week. 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.

Top banking executives on Monday told the Reserve Bank of India (RBI) that credit growth will be over 20% in the year ending March 2011 (FY 2011) and that 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.

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 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, 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 28.65 points or 0.16% to 17,970.02, its highest closing level since 19 February 2008. The index rose 106.49 points at the day's high of 18,047.86 in early afternoon trade. The Sensex lost 63.06 points at the day's low of 17,878.31 in mid-afternoon trade.

The S&P CNX Nifty gained 8.65 points or 0.16% to 5,374.65, its highest since 5 February 2008. Nifty hit a high of 5,399.65.

BSE clocked turnover of Rs 5863 crore, higher than Rs 5653.09 crore on Tuesday, 7 March 2010.

The BSE Mid-Cap index rose 0.52% and the BSE Small-Cap index rose 0.7%. Both the indices outperformed the Sensex.

The BSE Auto index (up 1.1%), the BSE Oil & Gas index (up 0.76%). the BSE Realty index (up 0.7%), the BSE Power index (up 0.64%), the BSE PSU index (up 0.42%), the BSE FMCG index (up 0.39%), the BSE Teck index (up 0.24%), outperformed the Sensex.

The BSE Bankex (down 0.4%), the BSE Metal index (down 0.13%), the BSE Consumer Durables index (down 0.11%), the BSE IT index (down 0.07%), the BSE Capital Goods index (down 0.01%), the BSE HealthCare index (up 0.09%), underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1666 shares advanced as compared with 1219 that declined. A total of 88 shares remained unchanged. The breadth was much stronger in afternoon trade.

Among the 30-member Sensex pack, 19 advanced while the rest of them slipped.

Cement stocks rose on strong shipment figures in the month of March. India's largest cement maker by sales ACC jumped 2.41% on reports the company is planning to ramp up its annual production capacity to 30 million tonnes by the end of this financial year through brownfield projects.

Among other cement stocks, Ambuja Cements, India Cements and Ultratech Cement rose by between 0.12% to 2.27%.

India's largest truck maker by sales Tata Motors gained 2.42%. The company reported a 38% jump in sales in March 2010 from a year earlier.

Index heavyweight Reliance Industries (RIL) rose 0.7% to Rs 1,129. The stock rose in volatile trade after moving in a band of Rs 1123.05 to Rs 1171. RIL is producing 63-64 million standard cubic metres a day (mmscmd) of gas from the D6 block off India's east coast, executive director P.M.S. Prasad said on Tuesday. The company is producing 21,000 barrels per day of oil from the block, he added.

Telecom pivotals gained ahead of the auction which begins on 9 April 2010 to provide super fast third generation (3G) service in the country's booming cellular market. The government is hoping to reap around $8 billion from the sale of 3G airwaves. India's largest listed cellular services provider by users Bharti Airtel rose 1.41%.

India's second listed largest cellular services provider by users Reliance Communications gained 0.31%.

3G allows mobile phone users to surf the Internet, video conference and download music, video and other content at a much faster pace than the current second-generation or 2G service.

India's largest real estate company by sales DLF gained 1.2%. The stock extended two-day gains on recent 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, Phoenix Mills, Akruti City and Ansal Properties rose by between 1.37% to 4.23%.

Capital goods pivotals saw divergent trend. India's top power equipment maker by sales Bharat Heavy Electricals (Bhel) rose 0.27% to Rs 2535.50, extending recent gains on reports the company plans to re-enter wind turbine manufacturing space in the next three months. The stock rose to a 52-week high of Rs 2559.50 in intra-day trade today, 7 April 2010.

India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 0.58% on profit booking. The company on Monday said it has received an order worth Rs 1,060 crore from Gujarat State Petroleum Corporation (GSPC) to build an offshore oil platform.

FMCG stocks declined on profit taking. India's largest FMCG company by sales Hindustan Unilever dropped 2.07%. Among other FMCG stocks, Nestle India, Marico and United Breweries fell by between 0.15% to 2.02%.

Banking and housing finance shares edged lower on fears of an impending hike in key policy rates by the Reserve Bank of India at its monetary policy review meet scheduled to be held on 20 April 2010.

India's largest bank by net profit and branch network State Bank of India fell 0.55% extending Tuesday's losses. Chairman O.P. Bhatt said on Tuesday 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 private sector bank by net profit ICICI Bank fell 1.13%. But, India's second largest private sector bank by net profit HDFC Bank rose 0.11%.

India's largest mortgage finance firm by total income Housing Development Finance Corporation fell 0.67%.

IT stocks staged a comeback in late trade after sliding in early trade on the back of a firm rupee. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports. The rupee edged lower after hitting a 19-month high against the dollar.

India's third largest software services exporter by sales Wipro rose 0.08% to Rs 715.60, off day's low of Rs 708. India's largest software services exporter by sales Tata Consultancy Services rose 0.48% to Rs 798.55, recovering from day's low of Rs 780

India's second largest software services exporter by sales Infosys slipped 0.21% to Rs 2644.05 after sliding to day's low of Rs 2560.40

India's largest private sector steel maker by sales Tata Steel fell 0.19%. The company said on Tuesday its sales for the fiscal year ended on 31 March 2010 rose 18% from a year ago to 6.17 million tonnes.

India's top power utility firm NTPC rose 0.86% on reports the company plans to add 4,000-4,500 mega watt generation capacity in the fiscal year to March 2011. For the current financial year, the company plans capital expenditure of Rs 28000 - 29000 crore, 70% of which will be met through debt.

India's largest private sector power utility firm by sales Reliance Infrastructure rose 1.92%. The company said on Monday it commissioned a 600 megawatt unit at the Rajiv Gandhi Khedar Thermal Power Plant at Hisar in Haryana.

Cals Refineries clocked the highest volume of 4.27 crore shares on BSE.Shree Ashtavinayak Cine Vision (1.43 crore shares), Birla Power Solutions (1.32 crore shares), NHPC (1.27 crore shares) and Bellarpur Industries (1.23 crore shares) were the other volume toppers in that order.

ARSS Infra clocked the highest turnover of Rs 355.71 crore on BSE. Jubilant Food Organosys (Rs 343.94 crore), Axis Bank (Rs 248.39 crore), Persistent Systems (Rs 102.06 crore) and Reliance Industries (Rs 94.58 crore) were the other turnover toppers in that order.