Market recovers as DMK puts resignation of 6 ministers on hold

The key benchmark indices recovered after Monday's (7 March 2011) 1.43% slide as global equities cheered mild decline in crude oil prices from a 29-month high and as political worries eased after the Dravida Munnetra Kazhagam (DMK) on Monday put on hold the resignation of its six ministers from the Congress-led UPA government at the Centre. DMK is a key ally of the UPA government, with 18 seats in the Lok Sabha. The BSE 30-share Sensex was up 216.98 points or 1.19%, up close to 170 points from the day's low and off close to 30 points from the day's high.



The DMK, which had decided on Saturday, 5 March 2011, that it would pull out its ministers from the UPA government due to difference over seat sharing in assembly polls in Tamil Nadu, said on Monday the resignations were put on hold following a request by Finance Minister Pranab Mukherjee to wait for one more day to sort out the differences.

The market breadth was strong. Index heavyweight Reliance Industries rose close to 1%. Hero Honda Motors recovered in volatile trade after Hero Investments disclosed a steeply discounted price to buy Honda's 26% stake in Hero Honda. IT stocks rose as recent strong economic data indicated a recovery in US economy. US is the key market for Indian IT firms. Telecom stocks were in demand ahead of today's meeting between the telecom minister and chiefs of top telecom firms to discuss various issues in the telecom sector. Auto stocks gained as crude retraced from 29-month high.

The market opened on a firm note as political worries eased after the DMK on Monday put on hold the resignation of its six ministers from the Congress-led UPA government at the Centre. Firmness prevailed in morning trade. The market pared gains in mid-morning trade. The market regained strength in volatile early afternoon trade. The market remained firm in afternoon trade. The market once again pared gains in mid-afternoon trade. The market struck a fresh intraday high in late trade as European stocks and US index futures rose.

The BSE 30-share Sensex was up 216.98 points or 1.19% to 18,439.65. The index rose 43.95 points at the day's low of 18,266.62 in early trade. The Sensex gained 244.14 points at the day's high of 18,466.81 in late trade.

The S&P CNX Nifty was up 57.65 points or 1.06% to 5,520.80. The Nifty hit a high of 5,530.55 in intraday trade.

The BSE Mid-Cap index rose 0.97% and the BSE Small-Cap index gained 0.76%. Both these indices underperformed the Sensex.

All the sectoral indices on BSE were in the green. The BSE TECk index (up 1.98%), IT index (up 1.9%), Metal index (up 1.49%), Bankex (up 1.48%), Realty index (up 1.35%), Consumer Durables index (up 1.33%), outperformed the Sensex. The BSE FMCG index (up 0.09%), Capital Goods index (up 0.42%), Power index (up 0.58%), Healthcare index (up 0.51%), PSU index (up 0.89%), Oil & Gas index (up 0.92%) and Auto index (up 1.15%) underperformed the Sensex.

The market breadth, indicating the health of the market, was strong. On BSE, 1782 shares gained while 1066 shares declined. A total of 113 shares remained unchanged.

The total turnover on BSE amounted to Rs 2858 crore, higher than Rs 2442.57 crore on Monday, 7 March 2011.

Among the 30-share Sensex pack, 25 gained while only five of them declined.

Index heavyweight Reliance Industries (RIL) rose 0.85% to Rs 984.40 as the recent sharp rise in global crude oil prices will improve refining margins. The stock gyrated between day's high of Rs 991.90 and low of Rs 978.15

Metal stocks rose as lower crude oil prices eased concerns about global economic recovery. Steel Authority of India, National Aluminum Company, Jindal Saw, Sterlite Industries, Jindal Steel & Power and Hindustan Zinc gained by between 0.13% to 3.59%.

India's largest private sector steel maker by sales Tata Steel rose 1.94%, on reports the company has signed a binding agreement with Canadian iron ore miner New Millennium Capital Corp to develop the taconite iron ore deposit in Canada.

Telecom stocks were in demand ahead of a meeting between the telecom minister and chiefs of top telecom firms to evolve a clear and transparent regime covering licensing, spectrum allocation and other issues in the telecom sector.

India's top cellular services provider by sales Bharti Airtel jumped 3.16% and was the top gainer from the Sensex pack.

Reliance Communications (up 0.83%), Idea Cellular (up 3.16%), and MTNL (up 2.82%), gained.

IT stocks rose across the board as recent strong economic data indicated a recovery in US economy. US is the key market for India IT firms. India's largest IT exporter by sales TCS rose 1.36%. India's second largest IT exporter by sales Infosys gained 2.53%. India's third largest IT exporter by sales Wipro rose 0.68%.

India's largest power equipment maker by sales Bharat Heavy Electricals rose 0.68%, on bargain hunting after a two-day 5.09% fall. The company on Monday, 7 March 2011, won an order worth Rs 1445 crore for the supply and installation of the main plant package for a power project in Andhra Pradesh state.

Most auto stocks gained as crude retraced from 29-month high. India's second largest bike maker by sales Bajaj Auto rose 1.87%. India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) advanced 0.7% and India's top truck maker by sales Tata Motors gained 2.91%.

India's largest car maker by sales Maruti Suzuki India slipped 0.65%, extending two-day 4.78% slide.

India's top bike maker by sales Hero Honda Motors lost 0.77% to Rs 1,518.15, off day's low of Rs 1472. Hero Investments today disclosed a steeply discounted price to buy Honda's 26% stake in Hero Honda. Hero Investments will buy Honda's 26% stake in Hero Honda at Rs 739.97 per share.

Banking stocks rose as crude oil prices retreated, easing inflation and monetary tightening concerns. HDFC Bank (up 1.32%), ICICI Bank (up 1.3%) and State Bank of India (up 0.83%), gained.

The Reserve Bank of India is expected to raise key policy rates by 25 basis points at its mid-quarter policy review on 17 March 2011 as headline inflation remains high.

Airline stocks rose after crude oil prices cooled off from 29-month highs. Kingfisher Airlines, SpiceJet and Jet Airways rose by between 3.78% to 7.87%. Jet fuel prices are linked to crude oil prices. Jet fuel constitute more than 40% of the operating cost of airliners.

Cals Refineries clocked highest volume of 3.11 crore shares on BSE. BAMPSL Securities (60.45 lakh shares), IFCI (60.07 lakh shares), SpiceJet (57.89 lakh shares) and Nandan Exim (50.55 lakh shares) were the other volume toppers in that order.

Tata Coffee clocked highest turnover of Rs 158.03 crore on BSE. Kotak Mahindra Bank (Rs 124.15 crore), C Mahendra Exports (Rs 93.02 crore), State Bank of India (Rs 93.02 crore), State Bank of India (Rs 76.05 crore) and Bajaj Finserv (Rs 68.03 crore) were the other turnover toppers in that order.

India dedicated equity funds attracted $50 million in net new cash in the week ended 2 March 2011, latest data from global fund tracker EPFR Global showed.

Oil futures pulled back from 29-month highs, after media reports said key members of the Organization of Petroleum Exporting Countries (OPEC) were in the process of increasing oil output to keep prices down. It is hoped that such an increase would make up for any shortfall caused by the unrest in Libya. US crude futures were down $0.28 a barrel or 0.28% to $105.16 a barrel.

The unrest in North Africa and Middle East has pushed global crude prices to their highest levels since 2008 as markets factored in a disruption in supplies from Libya and potentially other major producers. High crude oil prices remain a cause for concern for India which imports majority of its crude oil requirements.

As per reports, the south-west monsoon is likely to be normal for the second straight year in 2011. Good rains would boost farm output that could help the government tame high food prices. Good rains will boost rural income. The India Meteorological Department (IMD) will come out with its first forecast on this year's monsoon season in April 2011 with periodic reviews as the four-month season progresses.

Global rating firm Moody's on Monday, 7 March 2011, said India's recent budget plan for fiscal 2012 is "credit positive" for the Indian government's current Baa3 rating with a stable outlook. The budget projects a deficit of 4.9% of GDP, excluding privatization revenues, down from the 5.3% estimated for fiscal 2011. "This will sustain a faster de-leveraging of government debt than originally forecast, and is credit positive for the Indian government," Moody's said.

Among the positive factors, Moody's cited a liberalization of domestic petroleum prices and one-off price increases in kerosene and liquefied petroleum gas which support the profitability of oil marketing companies, thereby limiting the need to lend to public-sector oil companies. "Nevertheless, high oil prices still pose a risk to the projected budget deficit given the absence of a full or much greater pass through of global oil prices to end users," the rating agency said.

The Central Statistical Organisation (CSO) will unveil the industrial production data for January 2011 on Friday, 11 March 2011. Industrial production growth eased to a 22-month low of 1.6% in December 2010 from an upwardly revised growth of 3.6% recorded in November 2010.

European markets edged higher on Tuesday, 8 March 2011, as a slight retreat in oil prices triggered a moderate recovery in risk appetite. The key benchmark indices in UK, Germany and France rose by between 0.06% to 0.33%.

Asian stocks were trading higher after a subdued start on Tuesday, 8 March 2011, with investors looking for some bargain hunting after recent sharp losses. The key benchmark indices in Hong Kong, Japan, South Korea, Taiwan, Indonesia, China Singapore rose by between 0.19% to 1.71%.

In economic news, Japan posted a current account surplus of 461.9 billion yen in January 2011, down sharply from the surplus of 1.195 trillion yen in December 2010, the Ministry of Finance said on Tuesday.

US stocks fell on Monday, 7 March 2011, as investors continued to fret over the potential impact of rising oil prices amid more turmoil in Libya, while the technology sector was also hurt by an analyst downgrade. The Dow Jones Industrial Average dropped 79.85 points, or 0.66%, to 12090.03. The Standard & Poor's 500-stock index shed 11.02, or 0.83%, to 1310.13 and the Nasdaq Composite got hit even harder, down 39.04, or 1.40%, to 2745.63.

Trading in US index futures indicated that the Dow could gain 46 points at the opening bell on Tuesday, 8 March 2011.