Market snaps three-day falling trend as Govt tables key reform bills

Bargain hunting in index pivotals after three straight days of slide and fall in crude oil prices drove the key benchmark indices higher. The government's move to table the banking sector amendment bill and the Constitution Amendment Bill to facilitate implementation of Goods and Services Tax (GST) -- a major indirect tax reform, also aided recovery. The Sensex was up 149.25 points or 0.84%, off 53.08 points from the day's high and up 109.50 points from the day's low. The barometer index settled below the psychological 18,000 mark after flirting with that level in intraday trade.



The Sensex had lost 519.64 points or 2.83% in previous three trading days. Coming back to today's trade, all the 13 sectoral indices on BSE logged gains. The market breadth was positive.

Banking shares saw mixed trend after the government moved banking sector amendment bill in parliament. Auto and realty shares gained after State Bank of India (SBI)'s chairman OP Bhatt reportedly ruled out any hike by the bank in short term interest rates. Infrastructure stocks rose on government's thrust on infrastructure sector in Union Budget 2011-2012. Select software pivotals gained on firm ADRs. Telecom pivotals edged higher. Sugar shares rose on reports the government is likely to allow 2 lakh tonnes of sugar exports today, 22 March 2011, under unrestricted sales.

The market opened on a firm note on higher Asian stocks. Stocks extended gains in morning trade. The Sensex scaled fresh intraday high in mid-morning trade on reports the government has introduced in parliament the Constitution Amendment Bill in Parliament to facilitate implementation of Goods and Services Tax (GST). The market pared gains in early afternoon trade after BJP leader Sushma Swaraj submitted a privilege notice in the Lok Sabha against Prime Minister Manmohan Singh in connection with the 2008 bribe-for-votes scam.

The market regained vigour in afternoon trade, with the Sensex crossing 18,000 mark. The market scaled fresh intraday high in mid-afternoon trade. Volatility ruled the roost in late trade as key benchmark indices pared gains after striking day's high in mid-afternoon trade.

The BSE 30-share Sensex was up 149.25 points or 0.84% to 17,988.30. The index rose 39.75 points at the day's low of 17,878.80 in morning trade. The Sensex gained 202.33 points at the day's high of 18,041.38 in mid-afternoon trade.

The S&P CNX Nifty was up 49.10 points or 0.92% to 5,413.85 after gyrating between 5,428.15 and 5,376.15 during the day.

The market breadth, indicating the health of the market, was positive. On BSE, 1581 shares advanced while 1323 shares declined. A total of 116 shares remained unchanged. The breadth was much stronger earlier in the day.

The BSE Mid-Cap index rose 0.79% and the BSE Small-Cap index rose 0.54%. Both these indices underperformed the Sensex.

All the 13-sectoral indices on the BSE logged gains. The BSE Realty (up 2.19%), the BSE Auto (up 1.53%), and the BSE Healthcare (up 1.10%), outperformed the Sensex. The BSE IT (up 0.40%), the BSE FMCG (up 0.44%), and the BSE Bankex (up 0.39%), underperformed the Sensex.

The total turnover on BSE amounted to Rs 2934 crore, lower than Rs 3221.94 crore on Monday, 21 March 2011.

Among the 30-member Sensex pack, 25 gained, four declined while one remained unchanged. Sterlite Industries (up 1.47%), Cipla (up 2.21%), and ITC (up 1.19%), edged higher from the Sensex pack.

Index heavyweight Reliance Industries (RIL) advanced 1.20% to Rs 1000.40, halting three-day 5.36% fall, on bargain hunting. Reports that gas output from the company's famed KG-D6 block in the Krishna Godavari basin may decline in the year ending March 2013 (FY 2013) had pulled the stock lower recently. Reports indicated that gas production from RIL's D1 and D3 fields in the Krishna Godavari (KG)-D6 basin could fall 13% to be as low as 38 million standard cubic meters of natural gas per day (mmscmd) in FY 2013. RIL on Friday, 18 March 2011, said the figures mentioned in the report are purely provisional and indicative and are subject to variations based on actual operations in the future years.

Banking shares saw mixed trend after the government moved banking sector amendment bill in parliament. India's largest bank by branch network and net profit State Bank of India advanced 1.52%. India's largest private sector bank by net profit ICICI Bank fell 0.41% to Rs 1002 after its ADR slipped 1.18% on Monday, 21 March 2011. It was the top loser from the Sensex pack. India's second largest private sector bank by net profit HDFC Bank slipped 0.06%.

The government on Tuesday, 22 March 2011, sought parliamentary approval to amend a banking law for allowing investors in private banks to have voting rights proportional to their shareholdings, a long-awaited move to help grow the sector. Currently, the voting right of a single individual or entity in private banks is limited to 10%, irrespective of their shareholding. The bill, introduced by Finance Minister Pranab Mukherjee, also sought to raise the cap on investor voting rights in state-run banks to 10% from 1%, and lift the cap on state-run banks' authorised capital.

Interest rate sensitive auto and realty shares gained after State Bank of India (SBI)'s chairman OP Bhatt reportedly ruled out any hike by the bank in short term interest rates. Majority of property deals are driven by financed funds.

India's largest car maker by sales Maruti Suzuki India surged 3.95% to Rs 1176 after the company's chairman told the media that production at the company's units is continuing normally after last week's major quake in Japan. It was the top gainer from the Sensex pack.

Shares of Maruti Suzuki had lost 10.85% in the preceding seven trading sessions to Rs 1131.35 on 21 March 2011 from a recent high of Rs 1269.10 on 10 March 2011 on concerns the company's imports from Japan may get affected after the devastating earthquake and tsunami hit Japan on 11 March 2011, causing radiation leaks from Japan's Fukushima nuclear power plant.

India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) edged up 1.83%. M&M, last week, announced completion of all formalities related to the acquisition of a majority stake in South Korea's SsangYong Motor Company (SYMC).

India's top truck maker by sales Tata Motors rose 1.22% after its ADR jumped 2.2% on Monday, 21 March 2011. As per recent reports, the company's global vehicle sales rose 14% to 1.02 lakh units in February 2011 over February 2010. Sales of Tata Motors' British brands Jaguar and Land Rover rose 26% to 21,653 units in February 2011 over February 2010, driven by a 33% rise in Land Rover sales.

India's largest bike maker by sales Hero Honda Motors rose 0.65% while India's second largest bike maker by sales Bajaj Auto was unchanged at Rs 1357.

DLF (up 3.23%), Omaxe (up 1.73%), HDIL (up 1.59%), Orbit Corporation (up 1.36%), Indiabulls Real Estate (up 2.70%), and Unitech (up 0.69%), edged higher from the real estate sector.

Select software pivotals gained on firm ADRs. India's second largest software services exporter by sales Infosys rose 0.82% after its ADR gained 1.01% on Monday, 21 March 2011. India's third largest software services exporter by sales Wipro rose 0.09% after its ADR surged 4.13% on Monday, 21 March 2011. India's largest software services exporter by sales TCS declined 0.28%.

Infrastructure stocks rose on government's thrust on infrastructure sector in Union Budget 2011-2012. Jaiprakash Associates (up 2.11%), GMR Infrastructure (up 0.82%), Larsen & Toubro (up 0.89%), Reliance Infrastructure (up 0.26%), Bharat Heavy Electricals (up 1.54%), and Punj Lloyd (up 0.25%), gained.

Lanco Infratech spurted 5.49% after the company said it has emerged as the largest independent power producer in India with an installed capacity of 3292 megawatts. Shares of Lanco Infratech had risen 1.82% to Rs 36.40 in a choppy market on Monday, 21 March 2011 when the announcement was made before trading hours that day.

Telecom pivotals edged higher. India's largest listed cellular services provider by sales Bharti Airtel gained 2.73% while India's second largest listed cellular services provider by sales Reliance Communications rose 0.78%. Idea Cellular was up 1.39%.

The Cellular Operators Association of India (COAI) is reported to have said that less than 5 million cellular subscribers, or less than 1% of the country's total customers, had opted to switch carriers using the mobile number portability (MNP) option. Of these, a net 1,92,761 customers switched to unlistsed Vodafone Essar, while Idea Cellular was next, with net gains of 1,50,789 customers. Bharti Airtel gained a net 1,48,215 customers in MNP, but Reliance Communications was a net loser of 3,06,417 customers.

India's largest private sector steel maker by sales Tata Steel rose 0.42%, extending Monday's gains. After market hours on Friday, 18 March 2011, Tata Steel said it has successfully completed India's first-ever offering of corporate hybrid securities with an issue of Rs 1500 crore ($332 million). The unique features of the securities are that they are perpetual in nature with no maturity or redemption and are callable only at the option of the company. The distribution rate on the securities is set at 11.8% per annum with step up provision if the securities are not called for after 10 years

India's largest power utility firm by capacity National Thermal Power Corporation (NTPC) rose 0.75%. After market hours on Monday, 21 March 2011, NTPC said that the unit-VII of 500 megawatt of Korba Super Thermal Power Project, Stage-III is declared on commercial operation with effect from 21 March 2011.

Coal India jumped 3.50% at Rs 358.25 after striking record high of Rs 370.90, extending recent rise ever since the company increased coal prices late last month. Coal India had not disclosed the quantum of coal price hike but said the price hike will boost company's revenue by about Rs 650 crore for the year ending March 2011 (FY 2011). The price hike would boost Coal India's revenue by about Rs 6,200 crore for the year ending March 2012, it had said.

Healthcare shares rose after the finance minister Pranab Mukherjee on Tuesday announced withdrawal of 5% service tax on air-conditioned hospitals with more than 25 beds and on diagnostic services. Apollo Hospitals Enterprise (up 0.42%), Fortis Healthcare (up 2.03%), and Lotus Eye Care Hospital (up 3.13%), gained.

Sugar shares rose on reports the government is likely to allow 2 lakh tonnes of sugar exports today, 22 March 2011, under unrestricted sales.

Simbhaoli Sugars (up 2.60%), Shree Renuka Sugars (up 2.86%), Balrampur Chini Mills (up 1.85%), Bajaj Hindusthan (up 2.69%), Sakthi Sugar (up 7.26%) and Triveni Engineering & Industries (up 0.67%), rose.

Acropetal Technologies was the top traded counter on the BSE with turnover of Rs 331.50 crore followed by Coal India (Rs 140.48 crore), Fineotex Chemicals (Rs 110.49 crore), Tata Coffee (Rs 92.72 crore and State Bank of India (Rs 86.27 crore), were the other turnover toppers in that order.

Acropetal Technologies clocked highest volume of 2.51 crore shares on BSE. Lanco Infratech (1.25 crore shares), Cals Refineries (1.15 crore shares), Sanraa Media (61.67 lakh shares) and Fineotex Chemicals (59.88 lakh shares), were the other volume toppers in that order.

The government today introduced in parliament the Constitution Amendment Bill to facilitate implementation of Goods and Services Tax (GST). The Bill is likely to be referred to the Parliamentary Standing Committee for scrutiny. The GST seeks to replace multiple indirect taxes, such as the central excise duty and services tax, and state taxes including value added tax, entry tax and purchase tax, with a neat single levy.

The Finance Bill, which completes the budgetary exercise, will be put for vote in parliament on Wednesday, 23 March 2011. In view of the elections in five states (West Bengal, Assam, Kerala, Tamil Nadu and Puducherry), the government has curtailed the Budget Session of Parliament, which will conclude on Friday, 25 March 2011.

Oil prices eased a bit. US crude futures were down 15 cents a barrel or 0.15% to $102.18 a barrel. Oil prices have surged in recent months amid ongoing tensions in the oil-rich Middle East and North Africa region. High global crude oil price is a cause of concern for India which imports 70% of its oil requirements. Surging oil prices have stoked concerns about higher inflation and interest rates.

The Reserve Bank of India (RBI) raised key interest rates at a mid-quarter policy review on Thursday, 17 March 2011 and the central bank said it will continue with its anti-inflationary stance. The central bank also warned that continuing uncertainty about energy and commodity prices may vitiate the investment climate, posing a threat to the current economic growth trajectory.

The near term major trigger for the market is Q4 March 2011 results. Advance tax payments made by top 100 firms based in the country's financial capital --Mumbai reportedly rose by 25% in the Q4 March 2011 over Q4 March 2010, hinting robust earnings. Companies pay advance tax every quarter based on their projected income for the year.

European markets were mixed on Tuesday, 22 March 2011, as a strong finish on Wall Street offset worries that the foreign military intervention in Libya, together with continuing unrest in Yemen and Bahrain, will keep oil prices high. The key benchmark indices in UK and France were up 0.06% and 0.35%. Germany's DAX fell 0.04%.

Asian stocks edged higher for a third day on Tuesday, 22 March 2011, as Japan made progress in stabilizing reactors at a crippled nuclear plant north of Tokyo. The key benchmark indices in China, Hong Kong, Singapore, South Korea and Taiwan were up by between 0.34% to 0.76%. Japanese stocks surged as trading resumed in Tokyo after a holiday-extended weekend and amid continued efforts by Japanese authorities to contain a nuclear crisis. The Nikkei 225 average jumped 4.36%. Indonesia's Jakarta Composite was down 0.03%.

Efforts have resumed at Japan's Fukushima Daiichi nuclear power plant to restore electrical power and cool its overheated reactors, seriously damaged by the 11 March earthquake. The work was interrupted after emissions of white vapour and smoke from two of the reactors.

US stocks rallied for the third straight day on Monday, 21 March 2011 after AT&T announced the purchase of T-mobile from Deutsche Telekom for $39 billion, touted to be the biggest merger & acquisition deal this year. The Dow Jones industrial average jumped over 12,000, a crucial psychological point, to end at 12,036.53, gaining 178.01 points, or 1.50%. The Standard & Poor's 500 Index advanced 19.18 points, or 1.50%, to settle at 1,298.38 and the Nasdaq rallied 48.42 points, or 1.83%, to 2,692.09.

Trading in US index futures indicated that the Dow could rise 14 points at the opening bell on Tuesday, 22 March 2011.