Auto shares lead decline

The key benchmark indices fell for the fourth day in a row to settle at their lowest level in almost two weeks as world stocks declined and after the latest data showed slower-than-expected growth in industrial output in the month of February 2011. The BSE 30-share Sensex was down 188.91 points or 0.97% off close to 165 points from the day's high and up close to 20 points from the day's low. Concerns over corporate earnings growth and macroeconomic worries arising from high crude oil prices also weighed on the domestic bourses.

The market breadth was weak. Interest rate sensitive realty stocks declined on worries higher interest rates could dent demand for residential and commercial properties. Auto stocks fell on concerns higher interest rates could crimp sales of automobiles. Fears of a hike in domestic fuel prices also weighed on auto stocks as crude hovered near 2-1/2-year high. Shipping stocks fell after the Baltic Dry Index, which tracks rates to ship dry commodities, dropped. Metal stocks also declined. The mid and small-cap indices on BSE managed to outperformed the Sensex.



The market hit 1-1/2-week low in early trade. The market pared losses in morning trade. The market hit fresh 1-1/2-week low in mid-morning trade after the latest data showed lower-than-expected growth in industrial production in February 2011. The market extended losses to hit fresh 1-1/2-week low in early afternoon trade. The market pared losses after hitting fresh intraday lows in afternoon trade. The Sensex hit a fresh 1-1/2-week low in mid-afternoon trade. The market extended losses in late trade.

High global commodity prices will add to pressure on profit margins of Indian firms caused by rising salaries and higher interest rates. Prices of aluminum and copper are seen rising further as Japan rebuilds after last month's massive quake and tsunami.

India imports majority of its crude oil requirements and a surge in crude oil prices over the past few months has sparked inflation and interest rate worries. The Reserve Bank of India (RBI) is seen raising key short term policy rates by 25 basis points at its annual 2011-2012 monetary policy review on 3 May 2011.

High oil prices have also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were down $1.08 at $111.71 a barrel.

The BSE 30-share Sensex was down 188.91 points or 0.97% to 19,262.54, its lowest closing level since 29 March 2011. The Sensex shed 208.86 points at the day's low of 19242.59 in late trade. The index fell 25.15 points at the day's high of 19,426.30 in morning trade.

The S&P CNX Nifty was down 56.30 points or 0.96% to 5,785.70, its lowest closing level since 29 March 2011. The Nifty hit low of 5,777.90 in late trade.

The BSE Mid-Cap index fell 0.7%. The BSE Small-Cap index also declined 0.71%. Both these indices outperformed the Sensex.

The market breadth, indicating the health of the market, was weak. On BSE, 1751 shares declined while 1138 shares advanced. A total of 85 shares remained unchanged.

Among the 30-member Sensex pack, 22 declined while the rest advanced.

BSE clocked turnover of Rs 2536 crore, lower than Rs 2588.21 crore on Friday, 8 April 2011.

Index heavyweight Reliance Industries (RIL) shed 1.67%, with the stock falling for the fifth straight day. The stock moved in a narrow range of Rs 1,020 and Rs 1,000. RIL recently bagged two blocks in the ninth round of oil and gas block auctions held by the government.

Essar Oil fell 2.93% on profit taking. The company announced during market hours today net profit rose 78.33% to Rs 321 crore on 24% rise in gross revenue to Rs 14846 crore in Q4 March 2011 over Q4 March 2010. Net profit jumped 2117% to Rs 654 crore on 25% increase in gross revenue to Rs 53119 crore in the year ended March 2011 over the year ended March 2010.

Essar Oil CEO & Managing Director Naresh Nayyar said, "This is a strong financial result driven by record refinery throughput of 14.76 MMTPA and a healthy uplift of over 80% in gross refining margins (GRMs). Demand for petroleum products in India is expected to continue to grow sharply and we remain focused on delivering our key projects, which in 2011 includes the first phase of our Vadinar refinery expansion. With the successful completion of the IPO of our parent company last year and the subsequent strong financial performance, we also have a robust financial position to fund our expansion programme."

State-run oil marketing companies fell as US crude oil prices traded near 2-1/2-year high. Indian Oil Corporation (down 2.12%), Hindustan Petroleum Corporation (down 2.68%) and Bharat Petroleum Corporation (down 2.02%), declined.

Higher crude oil prices will increase under-recoveries of state-run oil marketing companies on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol.

GAIL (India) fell 1.22%. The company announced during market hours today that Oil & Petroleum minister Shri S. Jaipal Reddy dedicated GAIL's Chainsa-Sultanpur-Neemrana pipeline to the nation. The pipeline has gas transmission capacity of 35 million metric standard cubic metres per day (mmscmd).

India's second largest software services exporter Infosys Technologies rose 0.39%. The market has been abuzz with talks Infosys, an IT sector bellwether, will give encouraging guidance for the year ending March 2012 (FY 2012) given underlying strong demand for offshore outsourcing. Infosys unveils Q4 and year ended March 2011 results on 15 April 2011 when it will also give annual guidance for FY 2012.

Tata Power Company rose 0.35% after company's strategic electronics division (SED) bagged prestigious order to modernise the airfield infrastructure of Indian Air Force (IAF). The program, known as modernisation of airfield infrastructure - Phase I (MAFI-I), is of strategic importance and aims to improve capability of the Airfields to handle the modern combat air fleet being inducted by IAF. The company announced this during market hours today.

Reliance Infrastructure rose 0.84% after company announced during market hours today that it commenced buyback of shares starting from today. The company had announced buyback of shares for an aggregate amount of Rs 1000 crore at a maximum price of Rs 725 per share.Reliance Infrastructure said that the buyback is mainly aimed at reducing short-term volatility in the firm's share price as well as discourage speculative activity in its stock. The buyback offer is also expected to send a strong signal to the capital market on the perceived under-valuation of the stock price and reiterate confidence of management in future growth prospects of the company.

Metal stocks fell on profit taking. Jindal Steel & Power, Sail, Hindalco Industries, Jindal Saw and Nalco fell by between 0.27% to 3.01%.

India's largest steel maker by sales Tata Steel fell 0.74% reversing initial gains ahead of board meet today to consider a proposal to restructure Centennial Steel Company, a wholly owned subsidiary of the company. The company announced this after market hours on Friday, 8 April 2011.

India's largest non-ferrous metals and mining firm by capacity Sterlite Industries fell 0.37% and Hindustan Zinc jumped 1.85%, with the latter extending Friday's 2.95% gains. Parent firm Vedanta Resources said Friday that it achieved record zinc production at its Indian unit Hindustan Zinc in Q4 March 2011 and record production of aluminum for the quarter. The group said refined zinc production was up 29% and aluminum production was up 7%, helped by new smelters becoming operational. Production of iron ore in the quarter dropped 21% due to the state-wide export ban in Karnataka, which has been in place since the end of July.

Interest rate sensitive realty stocks declined on worries higher interest rates could dent demand for residential and commercial properties. Parsvnath Developers, Sunteck Realty, DLF, Orbit Corporation, HDIL and Unitech shed by between 1.61% to 9.75%.

Interest rate sensitive auto stocks fell across the board on concerns higher interest rates could crimp sales of automobiles. Automobile purchases, including that of cars, two-wheelers, utility vehicles and commercial vehicles are substantially driven by financing. Fears of a hike in domestic fuel prices also weighed on auto stocks as crude hovered near 2-1/2-year high.

India's top small car maker by sales Maruti Suzuki declined 1.3%, with the stock falling for the fourth straight day. The company announced on Wednesday, 6 April 2011, that it would recall 13,157 diesel engine cars. The company said it would inspect the 'connecting rod bolt' for units of its Swift and Ritz model diesel cars with engines manufactured between 13 November 2010 and 4 December 2010.

Maruti Suzuki increased the prices of its products by 0.2% to 2.4% from 4 April 2011, depending on the models to offset rising costs of key inputs viz. steel, aluminum, copper and natural rubber.

India's second largest bike maker by sales Bajaj Auto fell 2.55%, with the stock falling for the third straight day. The company's total vehicle sales increased 12% to 3.07 lakh units in March 2011 over March 2010. The company announced its March 2011 sales figures on Monday, 4 April 2011.

India's largest truck maker by sales Tata Motors declined 2.84%, with the stock falling for the third straight day. The company had hiked prices of some car models by Rs 7,000 to Rs 36,000 from 1 April 2011.

India's top tractor and utility vehicles maker by sales Mahindra & Mahindra shed 2.43% with the stock falling for the second straight day. The company has reportedly raised prices on most of its models by 1.5% to 2% recently to offset higher commodity prices.

India's largest bike maker by sales Hero Honda Motors skidded 1.47% with the stock falling for the second straight day. Hero Honda's total sales rose 24.4% to 5.15 lakh units in March 2011 over March 2010. The monthly sales in March 2011 were record monthly sales.

Sun Pharmaceutical Industries rose 2%. The company announced after market hours today that Merck & Co., Inc., and Sun Pharma established a joint venture to develop and commercialize novel formulations and combinations of medicines in emerging markets.

Cement stocks declined as cement firms are seen reporting weak Q4 results due to lower realizations and higher cost of imported coal. ACC, UltraTech Cement, Ambuja Cements and Jaiprakash Associates fell by between 0.53% to 2.96%. Though the performance of cement firms is seen weak on year-on-year basis, the performance would be better on sequential basis on the back of hike in cement prices in Q4 March 2011.

Cigarette maker ITC rose 0.46% to Rs 184.95 on expectations of good Q4 results. The stock hit record high of Rs 188 today.

Bank shares were flat to lower amid worries high inflation and rising interest rates would hurt future profits. India's second largest private sector bank by net profit HDFC Bank shed 2.37%. India's largest private sector bank by net profit ICICI Bank was flat.

India's largest state run bank by net profit and branch network State Bank of India (SBI) was also flat. Pratip Chaudhuri has taken over as the new chairman of State Bank of India the state-run bank said on Thursday 7 April 2011. Chaudhuri, 57, has been working with State Bank for 37 years and takes over from O.P. Bhatt. Before taking up the top role, Chaudhuri was deputy managing director in the international banking division of the bank.

Airline stocks fell as higher crude oil prices raised concerns about higher operating costs. Jet fuel prices are linked to crude oil prices. Jet fuel constitutes 50% of the operating cost for airliners. Kingfisher Airlines, SpiceJet and Jet Airways declined by between 1.03% to 3.58%.

Shipping stocks fell after the Baltic Dry Index, which tracks rates to ship dry commodities, dropped nearly 2% in London on Friday, 8 April 2011. GE Shipping Company, Mercator Lines and Shipping Corporation of India fell by between 1% to 2.47%. The Baltic dry index (BDI), which measures freight costs for dry bulk commodities such as iron ore and coal, fell 25 points, or 1.78% to settle at 1,376 in London on Friday, 8 April 2011.

Cals Refineries clocked highest volume of 4.5 crore shares on BSE. Teledata Technology Solutions (66.20 lakh shares), Suzlon Energy (61.17 lakh shares), Shilpi Cable (56.54 lakh shares) and Alok Industries (51.63 lakh shares) were the other volume toppers in that order.

Tata Coffee clocked highest turnover of Rs 62.75 crore on BSE. State Bank of India (Rs 61.70 crore), Gitanjali Gems (Rs 44.79 crore), Reliance Infrastructure (Rs 39.62 crore) and Tata Steel (Rs 37.64 crore) were the other turnover toppers in that order.

Volumes on the bourses could be low in a truncated trading this week -- the market remains closed on Tuesday, 12 April 2011, on account of Ram Navmi and again on Thursday, 14 April 2011, on account of Dr. Ambedkar Jayanti.

The near term major trigger for the market is Q4 March 2011 results which will start trickling in starting this week. Investors will scrutinize post-result management commentary to gauge outlook on earnings at a time when rising salaries, raw materials prices and interest rates are pressurizing profit margins of India Inc.

Industrial production rose 3.6% in February 2011, lower than market expectations of a 4.8% growth, data released by the government during trading hours today, 11 April 2011, showed. Manufacturing output, which constitutes about 80% of the industrial production, rose an annual 3.5% in February 2011. January's industrial output annual growth rate was revised upwards to 3.9% from 3.7%.

The data of Wholesale Price Index for the month of March 2011 is due later this week. A Capital Market poll pegs a median rate of rise in inflation at 8.4% in March 2011, higher than an annual rise of 8.3% in February 2011.

Good monsoon this year could help ease food inflation and boost rural income. Recent reports indicate that India will receive good rains during the July-September monsoon season this year. The India Meteorological Department (IMD) is expected to come out with its long term forecast of the summer monsoon rainfall season by the end of this month.

European share were lower as investors adopted a cautious stance ahead of the start of US earnings season. The key benchmark indices in France and Germany fell by between 0.02% to 0.62%. UK's FTSE 100 rose 0.1%.

Asian stocks declined on Monday as investors continued to worry about soaring oil prices. The key benchmark indices in China, Japan, Hong Kong, South Korea, Singapore and Taiwan fell by between 0.16% to 0.84%. Indonesia's Jakarta Composite was up 0.11%.

A strong earthquake has rattled Japan's northeast and sparked a fresh tsunami alert on the one-month anniversary of the massive quake and wave that devastated the country's northeastern coast. The US geological survey said the 7.1 magnitude onshore quake hit with a depth of just 10 kilometres, its epicentre 86 kilometres south-southeast of Fukushima city. A warning was issued for a one-metre tsunami, but broadcaster NHK said it had since been lifted.

US stocks fell on Friday as a spike in oil prices revived worries that inflation would derail economic recovery, jolting a market that had been treading water ahead of corporate earnings.

US President Barack Obama and congressional leaders struck a last-minute budget deal on Friday to narrowly avert a government shutdown that would have hit the economy and idled hundreds of thousands of workers.

A slew of major US economic data due this week such as March 2011 retail sales and consumer price index may strengthen expectations that the US will end its $600 billion bond-purchase program in June 2011.

Trading in US index futures indicated that the Dow could gain 31 points at the opening bell on Monday, 11 April 2011.