Oil & gas, metal stocks lead rally

A decline in crude oil prices to below the psychological $100 a barrel level aided a rally on the domestic bourses, with the oil's fall offsetting data showing higher headline inflation in February 2011. Reports that the Union Cabinet is likely consider a Constitution Amendment Bill tomorrow, 15 March 2011, to pave the way for implementation of Goods and Services Tax (GST), also boosted sentiments. The GST is a major indirect tax reform. Most Asian markets recovered after a subdued start even as Japanese stocks tumbled as investors continued to assess the financial impact of Friday's (11 March 2011) devastating earthquake that hit Japan.



The BSE 30-share Sensex was up 265.39 points or 1.46% to 18,439.48, up 284.05 points from the day's low and off 24.36 points from the day's high. The 50-unit S&P CNX Nifty settled above the psychological 5,500 mark. The market breadth turned positive in late trade after oscillating between positive and negative during the day.

A slide in crude oil prices eased fears of an aggressive monetary tightening by the Reserve Bank of India (RBI) to stem inflation and inflationary expectations. India imports majority of its crude oil requirements. Oil prices fell on worries Friday's (11 March 2011) massive earthquake in Japan and the resulting impact on the nation's refining capacity could crimp demand in the near term. US crude futures were down $1.68 per barrel or 1.66% to $99.48 a barrel. Oil prices have come off 29-month highs after a sharp recent rally triggered by unrest in oil rich Middle East and North Africa regions.

Index heavyweight Reliance Industries advanced over 2.5%. Anil Dhirubhai Ambani (ADA) group shares were in demand after the Reliance Capital-Nippon Life deal. Banking stocks rose as crude oil prices retreated, easing inflation and monetary tightening concerns. Metal stocks rose on on hopes for reconstruction opportunities in quake-hit Japan. Most auto stocks rebounded from the day's lows as crude oil prices fell. Shares of aviation and state-run oil marketing companies advanced as crude oil prices declined. Tyre shares saw an across the board rally as rubber futures plunged to three-month lows.

The market edged higher in early trade as a decline in crude oil prices helped ease inflation worries. The key benchmark indices pared gains after striking a fresh intraday high in morning trade. A bout of volatility was seen as the key benchmark indices raced to fresh intraday highs in mid-morning trade. The key benchmark indices pared gains in early afternoon as headline inflation in February 2011 came above market expectations. The market held positive zone in afternoon trade. The market surged to head closer to day's high in mid-afternoon trade. The market rallied to the day's high in late trade.

The BSE 30-share Sensex was up 265.39 points or 1.46% to 18,439.48, its highest closing since 9 March 2011. The index fell 18.66 points at the day's low of 18,155.43 in early trade. The Sensex rose 289.75 points at the day's high of 18,463.84 in late trade.

The S&P CNX Nifty was up 86.05 points or 1.58% to 5,531.50, its highest closing since 4 March 2011. The Nifty oscillated between high of 5,537.30 and low of 5,434.25 during the day.

The market breadth, indicating the health of the market, turned positive. The breadth oscillated between negative and positive throughout in the day. On BSE, 1,517 shares advanced and 1,378 shares declined. A total of 142 shares remained unchanged.

The total turnover on BSE amounted to Rs 2968 crore, lower than Friday's turnover of Rs 3639.44 crore.

The BSE Mid-Cap index rose 0.49% to 6,561.48 and the BSE Small-Cap index rose 0.26% to 7,920.72. Both these indices underperformed the Sensex.

All the 13 sectoral indices on the BSE logged gains. The BSE Oil & Gas (up 2.24%), the BSE Metal (up 2.01%), and the BSE IT (up 1.48%), outperformed the Sensex. The BSE Capital Goods (up 0.70%), the BSE Auto (up 0.69%), and the BSE FMCG (up 0.69%), underperformed the Sensex.

Among the 30-share Sensex pack, 26 gained while only four of them declined.

Reliance Capital jumped 9.83% after the company said Nippon Life Insurance signed a pact to acquire a 26% stake in its life insurance venture -- Reliance Life Insurance (RLIL). The company made this announcement during trading hours today, 14 March 2011. Nippon Life Insurance will invest an aggregate value of Rs 3062 crore ($680 million) to acquire a 26% strategic stake in Reliance Life Insurance (RLIL). This transaction pegs the total valuation of RLIL at approximately Rs 11500 crore ($2.6 billion). The company made this announcement during trading hours today, 14 March 2011.

Other Anil Dhirubhai Ambani (ADA) group shares were in demand after the Reliance Capital-Nippon Life deal. Reliance Mediaworks (up 2.85%), Reliance Broadcast Network (up 1.85%), and Reliance Power (up 3.58%), gained.

India's second largest listed cellular services provider by sales Reliance Communications jumped 5.66% to Rs 101.75 and was the top gainer from the Sensex pack.

Reliance Infrastructure surged 3.70% on reports the company hopes to bag 10% of highway projects of up to Rs 80,000 crore likely to be awarded every year. The company aims to tie up funds for all its 25 projects worth Rs 40,000 crore by end of the fiscal.

India's largest listed telecom operator by sales Bharti Airtel fell 0.42% to Rs 321.50 and was the top loser from the Sensex pack. The company today announced the launch of its 'airtel broadband TV', which will allow its broadband users to watch live TV on their computers for a monthly rental of Rs 99

Index heavyweight Reliance Industries (RIL) advanced 2.66% to Rs 1018 after gyrating between Rs 1020 and Rs 991.80 during the day. 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) slipped 0.11%, on profit booking. The stock had surged in the past two trading sessions on reports the government has deferred the share sale of the state-owned firm to the second half of 2011 following a faux pas in the appointment of independent directors on the company's board. The government plans to sell 5%, or 42.78 crore equity shares, through the follow-on public offer (FPO) to raise up to Rs 12000 crore.

Cairn India rose 1.69%. The Securities and Exchange Board of India (Sebi) said on Monday it had issued final observations on Vedanta's open offer for Cairn India. Cairn Energy agreed six months ago to sell up to 51% in its Indian unit to Vedanta in a deal valued at up to $9.6 billion, which had been delayed as the government looked into issues of royalty payments.

GAIL (India) rose 3.98% on reports of lower borrowing costs as the company intends to tap cheaper external commercial borrowings to fund its massive expansion programme.

Shares of state-run oil marketing companies advanced as crude oil prices declined. HPCL (up 4.41%), BPCL (up 4.78%), and Indian Oil Corporation (up 1.54%), edged higher.

Lower crude oil prices will reduce under-recoveries of PSU OMCs on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.

India's top power utility firm NTPC rose 1.83% on reports the company may change its strategy on securing critical fuel supplies by seeking long-term coal supply agreements instead of trying to buy overseas mines outright. As per reports, the rethink comes against the backdrop of NTPC's failure to secure equity in coal mines in countries such as Australia, Indonesia and South Africa.

India's largest carmaker by sales Maruti Suzuki India rose 0.58% to Rs 1260 in volatile trade. The stock had declined to day's low of Rs 1218.35 amid concerns that the powerful earthquake and tsunami that struck Japan last week may hurt its imports from the country. Maruti Suzuki has substantial imports of raw materials from its Japanese parent Suzuki Motor.

Most other auto stocks also rebounded from day's lows. India's top truck maker by sales Tata Motors rose 1.33%. India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) rose 0.79%.

India's top bike maker by sales Hero Honda Motors was down 0.13%. India's second largest bike maker by sales Bajaj Auto was up 0.77%.

Metal stocks rose on hopes for reconstruction opportunities in quake-hit Japan. Sterlite Industries (up 1.84%), Hindalco Industries (up 1.63%), Jindal Steel & Power (up 1.61%), LMEX, a gauge of six metals traded on the London Metal Exchange dropped 0.38% on Friday, 11 March 2011.

India's largest private sector steel maker by sales Tata Steel surged 3.49%. As per reports, global miner Rio Tinto inched closer to gaining control of coal producer Riversdale Mining after a $3.9 billion sweetened bid rallied more shareholders to accept the offer but Riversdale's top shareholders Tata Steel and CSN still hold the key.

Nalco surged 2.32% to Rs 476.70 after striking a 52-week high of Rs 481.50 ahead of 16 March 2011 record date a two-for-one stock split and 1:1 bonus issue.

Banking stocks rose as crude oil prices retreated, easing inflation and monetary tightening concerns. HDFC Bank (up 1.57%) and ICICI Bank (up 1.34%), gained.

India's largest bank by branch network and net profit State Bank of India (SBI) rose 1.13%. Reportedly, the bank is likely to launch its mega Rs 20,000-crore rights issue in the first quarter of the year ending March 2012.

The wholesale price index (WPI) rose an annual 8.31% in February 2011 on higher fuel and manufactured product prices, government data showed on Monday, 14 March 2011. The figure was above market expectations and it was also higher than the annual rise of 8.23% in January 2011. The annual reading for December 2010 was revised upwards to 9.41% from 8.43%.

The Reserve Bank of India (RBI) undertakes a mid-quarter policy review on Thursday, 17 March 2011. Twelve out of 16 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) on 17 March 2011. The rest 4 economists expect no change in policy rates.

Shares of aviation firms advanced after crude oil declined. Jet fuel constitutes more than 50% of operating cost for airliners. Jet Airways (up 6.78%), SpiceJet (up 3.7%) and Kingfisher Airlines (up 3.73%), rose.

Tyre shares saw an across the board rally as rubber futures plunged to three-month lows on fears demand may slow after a massive earthquake struck Japan on 11 March 2011. Rubber is a key raw material used for tyre manufacturing. Apollo Tyres (up 3.25%), Ceat (up 8.93%), MRF (up 7.36%), Goodyear India (up 4.90%), and Balkrishna Industries (up 2.40%), surged.

Sudar Garments clocked highest turnover of Rs 191.56 crore on BSE. Tata Coffee (Rs 191.14 crore), Reliance Capital (Rs 151.82 crore), Fineotex Chemical (Rs 129.42 crore), and Acropetal Technologies (Rs 100.73 crore) were the other turnover toppers in that order.

Sudar Garments clocked highest volume of 1.59 crore shares on BSE. Acropetal Technologies (90.52 lakh shares), Cals Refineries (83.7 lakh shares), Fineotex Chemical (81.69 lakh shares) and Shree Nath Commercial & Finance (78.32 lakh shares) were the other volume toppers in that order.

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.

As per reports, the Union Cabinet is likely consider a Constitution Amendment Bill tomorrow, 15 March 2011, to pave the way for implementation of Goods and Services Tax (GST), a major indirect tax reform proposal. The GST will subsume indirect taxes like excise duty and service tax at the central level and VAT on the states front, besides local levies.

Meanwhile, 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.

Finance Minister Pranab Mukherjee said Saturday that the biggest challenge before the nation is to ensure inclusive growth. Financial inclusion is an important priority of the government as only 38% of the 87,051 bank branches of scheduled commercial banks are in rural areas and only 40% of the country's population has bank accounts, Pranab Mukherjee said.

European markets were trading lower on Monday, 14 March 2011, as markets continue to look at the impact of the earthquake and tsunami that hit Japan on Friday. They key benchmark indices in UK, Germany and France were down by between 0.09% to 0.90%.

Select Asian stock markets turned positive on Monday, 14 March 2011, after a subdued start as Japan worked to contain its worst nuclear accident in at least 33 years following the nation's biggest earthquake. The key benchmark indices in China, Hong Kong, South Korea and Indonesia were up between 0.17% to 0.80%. The key benchmark indices in Singapore and Taiwan were down 0.26% and 0.56% respectively.

The Japanese benchmark, Nikkei 225, plunged 6.18% following the devastating earthquake that struck the country's northern region on Friday, 11 March 2011. Deaths from the tragic quake and tsunami waves are expected to exceed 10,000, and the risk of major radiation from a nuclear-plant meltdown remained on Monday, as officials struggled to control damage to its nuclear reactors.

The Bank of Japan initially made moves to support financial markets, injecting 7 trillion yen ($85.5 billion) into the short-term money markets in the morning. That was reportedly increased to a record 15 trillion yen later in the day.

In an unanimous vote the Bank of Japan also kept, as expected, its benchmark rate at 0-0.1%. The central bank said it was still sticking to its view that the world's third largest economy would resume its moderate recovery, though warned about a likely drop in economic output after the disasters and vowed to do whatever necessary to limit the economic fallout.

US markets ended higher on Friday, 11 March 2011, as concerns over the 'Day of Rage' protests in Saudi Arabia did not impact the world largest oil producer, allaying fears that the unrest in West Asia would engulf other countries. The Dow Jones industrial average climbed back above 12,000, rising 59.79 points, or 0.5%, to 12,044.40. The Standard & Poor's 500 index rose 9.17 points, or 0.7%, to 1,304.28.

In economic news, US retail sales posted their largest gain in four months in February. Sales rose 1% for the eighth straight month of gains as shoppers stepped up purchases of autos, clothes and other goods. Auto sales rose 2.3%, clothing sales added 0.8% and receipts at sporting goods, hobby, book and music stores increased by 1.3%. Sales of building materials and garden equipment were up 0.6%.

Trading in US index futures indicated that the Dow could slide 52 points at the opening bell on Monday, 14 March 2011.