Market snaps two-day winning streak

The key benchmark indices edged lower, snapping last two days' gains, as world stocks fell on continued fighting in Libya and on a rating downgrade on Spain. Today's slide came on the back of lower turnover on the BSE. The BSE 30-share Sensex was down 141.97 points or 0.77%, up close to 70 points from the day's low and off close to 100 points from the day's high. The market breadth was negative. European stocks dropped after Moody's Investors Service cut its rating on Spanish sovereign debt.



The Sensex had risen 247.28 points or 1.35% in the preceding two trading sessions to settle at 18,469.95 on Wednesday 9 March 2011 from 18,222.67 on Monday, 7 March 2011, as crude oil retraced from 29-month high, which helped ease inflation concerns.

Coming back to today's trade, index heavyweight Reliance Industries (RIL) dropped in volatile trade. Banking stocks fell as high crude oil prices stoked inflation and monetary tightening concerns. Metal stocks declined on worries high global crude oil prices may derail global economic recovery. IT exporters saw mixed trend. Select power equipment makers rose after prices of copper declined in the international market.

The market edged lower in early trade as Asian stocks fell on escalating fighting in Libya. The market recovered after hitting a fresh intraday low in morning trade. The market came off highs in mid-morning trade. The market moved in a narrow range in early afternoon trade. The key benchmark indices weakened further and were near the day's lows in afternoon trade as crude oil prices rose. An intraday recovery in afternoon trade proved short-lived with the market soon losing ground again in mid-afternoon trade as European stocks fell. The market once again came off lows at the fag end of the trading session.

The BSE 30-share Sensex was down 141.97 points or 0.77% to 18,327.98. The Sensex lost 208.69 points at the day's low of 18,261.26 in morning trade. The index fell 39.11 points at the day's high of 18,430.84 in early trade.

The S&P CNX Nifty was down 36.60 points or 0.66% to 5,494.40. The Nifty oscillated between 5,516.30 and 5,468.45 during the day.

The BSE Mid-Cap index fell 0.07% and the BSE Small-Cap index declined 0.25%. Both these indices outperformed the Sensex.

Except BSE Realty index, all the rest sectoral indices on BSE were in the red. The BSE Metal index (down 1.3%) and Bankex (down 1.16%) underperformed the Sensex. The BSE Realty index (up 0.67%), Auto index (down 0.05%), Capital Goods index (down 0.08%), Power index (down 0.2%), PSU index (down 0.2%), Oil & Gas index (down 0.33%), Healthcare index (down 0.4%), FMCG index (down 0.46%), Consumer Durables index (down 0.53%), IT index (down 0.53%) and TECk index (down 0.54%), outperformed the Sensex.

The market breadth, indicating the health of the market, was negative. On BSE, 1562 shares declined while 1279 shares gained. A total of 111 shares remained unchanged.

The total turnover on the BSE amounted to Rs 2487 crore, lower than Wednesday's Rs 3435 crore.

Among the 30-share Sensex pack, 21 declined while rest of them gained.

Index heavyweight Reliance Industries (RIL) slipped 0.95% to Rs 984.45. The stock hit high of Rs 993 and low of Rs 981.90. RIL's gas production is expected to rise 23% to 65 million metric standard cubic meters (mmscmd) daily from its gas-producing block in the Krishna Godavari basin, off country's east coast, from April 2011. RIL currently produces 53 mmscmd a day.

India's largest oil exploration firm by market capitalization Oil & Natural Gas Corporation (ONGC) rose 1.62%. Reports the company's upcoming Rs 14,000 crore follow-on-public offer (FPO) may be postponed until May or June 2011 on the back of weak global markets triggered short covering.

Banking stocks dropped ahead of a monetary policy review from the central bank next week. India's largest private sector bank by net profit ICICI Bank lost 1.87% and India's second largest private sector bank by net profit HDFC Bank fell 0.16%. India's largest bank by net profit and branch network State Bank of India shed 1.63%.

Six out of 10 economists polled by Capital Market expect 25 basis points increase in repo rate and reverse repo rate each from the Reserve Bank of India (RBI) at a mid-quarter policy review on 17 March 2011. The rest 4 economists expect no change in policy rates.

Food price index rose an annual 9.52% in the week to 26 February 2011, slower than a 10.39% rise in the previous week as prices of vegetables, potatoes and rice declined, data showed on Thursday, 10 March 2011. Fuel price index climbed up 9.48% in the same week from 12.56% a week earlier.

IT exporters saw mixed trend. India's second largest software services exporter Infosys declined 0.25% and India's largest software services exporter TCS fell 1.52%. But, India's third largest software services exporter Wipro rose 0.69%.

Metal stocks declined on worries high global crude oil prices may derail global economic recovery. LMEX, a gauge of six metals traded on the London Metal Exchange dropped 2.52% on Wednesday, 9 March 2011. Hindalco Industries, Sterlite Industries, Jindal Steel & Power, JSW Steel shed by between 0.81% to 2.95%.

India's largest private sector steel maker by sales Tata Steel lost 2.59% after Tata Steel Group Director (Procurement) Kees Gerretse said expenses on key raw material are likely to go up by $1 billion in the current fiscal to $7 billion due to a rise in input costs. The costs on inputs would further escalate by around 15% next fiscal over 2010-11 levels, he added, attributing the rise to higher iron ore and coking coal prices, which went past $300 a tonne as a result of a global scarcity in the wake of floods in Australia's Queensland.

India's second largest listed cellular services provider by sales Reliance Communications (RCom) fell 0.45% to Rs 99.75, halting Wednesday's 9.36% rally. The counter clocked high volume of 75.60 lakh shares. The company after market hours on Wednesday, 9 March 2011, said it completed final documentation with China Development Bank (CDB) for aggregate financing of Rs 8700 crore ($1.93 billon) with a maturity period of 10 years, which will result in an annual interest cost savings of more than Rs 500 crore.

RCom said the loan would be fully underwritten by China Development Bank and would be funded by a syndicate of Chinese banks and financial institutions including China Development Bank. The drawdown of the loan, which will be used for paying mobile spectrum fees and buying telecom equipment, is likely to start this month, the company said.

Select power equipment makers rose after prices of copper declined in the international market. Crompton Greaves (up 3.26%), Kalpataru Power (up 4.06%), Alstom Projects (up 6.42%), EMCO (up 1.61%), ABB (up 2.46%) and Bharat Heavy Electricals (up 0.3%), rose.

Copper is one of the main inputs for power equipment and easing of copper prices from record highs has eased concerns about margin pressure for copper equipment makers.

India's top bike maker by sales Hero Honda Motors advanced 0.26%. The Hero group investment vehicle Hero Investments during market hours on Monday, 8 March 2011, disclosed a steeply discounted price to buy Japanese joint venture partner Honda's 26% stake in Hero Honda Motors at Rs 739.97 per share. The Hero Group had in December 2010 agreed to buy Honda's 26% stake in Hero Honda Motors for an undisclosed sum.

India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) fell 0.19%. India's top truck maker by sales Tata Motors rose 0.15%. India's largest car maker by sales Maruti Suzuki India gained 0.24%.

Figures released by the auto industry body Society of Indian Automobile Manufacturers (Siam) showed domestic vehicle sales registered 21.32% growth to 13,70,932 units in February, 2011 over February 2010. Domestic passenger car sales rose 22.63% to 189,008 units in February 2011, from 154,132 units in February 2010. Two-wheeler sales increased 22.04% to 1,022,272 units in February 2011 from 837,653 units in the corresponding period last year. Sales of commercial vehicles climbed 10.49% to 64,057 units while motorcycle sales grew 20.8% to 776,051 units.

Some realty stocks edged higher. DLF, Indiabulls Rela Estate and Unitech gained by between 0.79% to 1.47%.

Shares of Acropetal Technologies settled at 98.45 on BSE, a premium of 9.38% over the initial public offer price of Rs 90. The stock debuted at Rs 130, a premium of 44.44% over the initial public offer (IPO) price.

Acropetal Technologies clocked highest volume of 4.52 crore shares on BSE. Cals Refineries (2.37 crore shares), Sanraa Media (1.28 crore shares), Karuturi Global (76.95 lakh shares) and Reliance Communications (75.60 lakh shares) were the other volume toppers in that order.

Acropetal Technologies clocked highest turnover of Rs 445.58 crore on BSE. Tata Coffee (Rs 171.54 crore), Tata Steel (Rs 106.64 crore), State Bank of India (Rs 105.77 crore) and Reliance Capital (Rs 81.87 crore) were the other turnover toppers in that order.

US crude futures were down 62 cents a barrel or 0.59% to $103.76 a barrel, with prices witnessing volatility after moving past $105 a barrel earlier. 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. India imports majority of its crude oil requirements.

A series of massive explosions in Libya on Wednesday, 9 March 2011, erupted into fires near an oil facility outside of Ras Lanuf--an important oil depot--as forces loyal to Libyan ruler Moammar Gadhafi attacked an opposition stronghold. The rebels control the eastern part of the country, while pro-regime forces are holding most areas near the capital, Tripoli.

European markets dropped on Thursday, 10 March 2011 after Moody's cut its rating on Spanish sovereign debt. The key benchmark indices in UK, Germany and France were down by between 0.63% to 0.92%.

Asian stock markets fell on Thursday after surprisingly weak Chinese trade data hit markets already nervous that higher oil prices will cut global growth. The key benchmark indices in Hong Kong, Singapore, China, Japan, Taiwan, South Korea and Indonesia were down by between 0.56% to 1.47%.

Japan's gross domestic product fell at an annualized 1.3% rate in the quarter ended December 2010, more than the 1.1% contraction reported last month. Besides, the Bank of Korea raised the benchmark seven-day repurchase rate to 3% from 2.75%, for the second time this year after inflation exceeded its target ceiling for two consecutive months.

China swung to a surprise trade deficit in February of $7.3 billion, its largest in seven years. China exports grew 2.4% in February from a year earlier, the customs agency said on Thursday, well short of forecasts for a rise of 26.2%. Imports increased 19.4% missing market expectations of a 32.3% increase.

The Bank of Korea raised interest rates for the fourth time in less than a year on Thursday to fight inflation. Bank of Korea said the monetary policy committee raised the 7-day repurchase agreement rate by 25 basis points to 3%.

US stocks edged narrowly lower on Wednesday, 9 March 2011, as tensions in Libya trapped trading in a tight range on the two-year anniversary of the bull market's start. The Dow Jones Industrial Average edged down 1.29 points, or 0.01%, to 12213.09. The Nasdaq Composite fell 14.05, or 0.51%, to 2751.72 and the Standard & Poor's 500-stock index slipped 1.80 points, or 0.14%, to 1320.02.

In economic data, wholesale inventories rose a more-than-expected 1.1% to a seasonally adjusted $436.88 billion in January 2011, its highest level since November 2008.

Trading in US index futures indicated that the Dow could fall 47 points at the opening bell on Thursday, 10 March 2011.

The fourth advance tax payment installment due 15 March 2011 will provide a cue on Q4 results of individual firms. Indian corporates are required to pay advance tax in four installments based on estimated tax liability for the year under review.

As per provisional figures, foreign funds bought shares worth Rs 131.17 crore and domestic funds bought shares worth Rs 112.99 crore on Wednesday, 9 March 2011.

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.

India's exports rose 49.8% to $23.6 billion in February 2011 over the previous year on the back of increased demand from markets like North America, Asia and Africa. During April-February, 2011, the country's merchandise shipments grew by 31.4% to $208.2 billion, surpassing the export target of $200 billion for the fiscal ending March 2011.

Imports rose 21.2% to $31.7 billion in February 2011 over the previous year. During April-February, 2011, imports rose 18% to $305.3 billion, leaving the trade deficit amount at $97.1 billion.

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.

The Central Statistical Organisation (CSO) will unveil the industrial production data for January 2011 on Friday, 11 March 2011. A Capital Market poll of 15 economists expects a median 2.8% growth in industrial production in January 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.

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.

Direct tax collections rose 20.75% to Rs 3,36,117 crore in April-February 2011 period from a year-ago period. The government mopped up around Rs 18,616 crore in the month of February 2011, marginally higher than Rs 18,616 crore collected in the previous month. Corporate income tax receipts in the first 11 months were up 24% to Rs 2,23,612 crore from 1,80,318 crore in the same period a year ago. Personal income tax grew 14.76% to Rs 1,12,114 crore. The government has so far achieved 75.38% of the revised targeted estimate of Rs 4.5 lakh crore for the entire fiscal year ending March 2011.

The Congress and DMK on Tuesday, 8 March 2011, clinched a seat sharing deal for the forthcoming assembly polls in Tamil Nadu (TN), ending a crisis that threatened to slow planned reforms by the Congress-led United Progressive Alliance (UPA) coalition government at the Centre.

The government plans to implement financial sector reforms. The Union Cabinet recently gave its approval for introduction of a Banking Laws Amendment Bill 2011 in Parliament. This Bill seeks to among other things lift the 10% voting rights cap in private sector banks and pave the way for the Reserve Bank of India to give some additional banking licences to private sector players. The proposed Bill will seek to amend the Banking Regulation Act, 1949, so as to remove the voting rights cap for private sector banks. The bill also proposes that an individual or institution can hold a more than 5% stake in a bank only after receiving approval from the central bank

Finance minister Pranab Mukherjee, in his Budget speech on 28 February 2011 had said the UPA government was committed to taking financial sector reforms further. He said the government planned to move on the Insurance Laws (Amendment) Bill 2008, Life Insurance Corporation (Amendment) Bill 2009, the revised Pension Fund Regulatory and Development Authority (PFRDA) bill, first introduced in 2005 and the Banking Regulation (Amendment) Bill 2011, among others.