BSE Small-cap, Mid-cap indices extend gains

The key benchmark indices dropped in volatile trade as crude oil prices near 2-1/2-year highs triggered profit taking after the market scaled 3-month high at the onset of the trading session. Nevertheless, select side counters surged and the market breadth was strong, with revival of inflow from foreign funds boosting sentiment. Small-cap and mid-cap indices on BSE extended recent strong gains. The BSE 30-share Sensex was down 74.62 points or 0.38%, off close to 200 points from the day's high and up close to 60 points from the day's low.



With heavy inflows over the past few days, foreign institutional investors (FIIs) are now net buyers of Indian stocks in 2011. FIIs bought shares worth a net Rs 1562.70 crore during two trading sessions on Monday, 4 April 2011 and Tuesday, 5 April 2011, the latest data from Securities & Exchange Board of India (Sebi) showed. FII inflow in April 2011 totaled Rs 5650 crore (till 5 April 2011). FIIs had bought equities worth Rs 6897.80 crore in March 2011. FII inflow in calendar year 2011 totaled Rs 3149.10 crore (till 5 April 2011).

Index heavyweight Reliance Industries and ICICI Bank edged lower. Bike major Hero Honda Motors extended eleven-day 14.74% rally. NTPC gained on reporting good provisional Q4 result. Telecom stocks edged lower. IT stocks declined as the rupee touched a fresh 5-month high against the dollar today, 6 April 2011. Realty stocks extended recent gains on continued value buying. Bank shares dropped on worries high inflation and rising interest rates would hurt future profits.

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 rates worries. 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 for May 2011 delivery were down 17 cents a barrel or 0.16% at $108.17 a barrel. The contract traded as high as $108.78 a barrel on Monday, 4 April 2011, the highest front-month price since 24 September 2008.

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.

Reserve Bank of India deputy governor Subir Gokarn on Tuesday, 5 April 2011, said inflation remains high even after eight hikes in interest rates in about a year, with both demand and supply-side pressures on prices. He said the central bank cannot afford to be slack on inflation. Restraint now for growth later is the tradeoff that needs to be kept in mind, Gokarn said. The RBI deputy governor said both monetary and fiscal policies have a role to play in tackling the current phase of high inflation, which started out as high food prices, but has now become more generalized. RBI is expected to raise key rates by 25 basis points at its annual 2011-2012 policy review on 3 May 2011.

The market opened on a firm note, with sustained inflow from foreign funds and higher Asian stocks boosting sentiment. The Sensex and Nifty hits 3-month highs as the market extended gains in early trade. The market pared gains in morning trade. A sudden slide pulled the market into the negative zone in mid-morning trade. The Sensex came off lows later. The market regained positive zone in early afternoon trade. The market soon slipped into the red. Volatility continued in late trade.

The BSE 30-share Sensex was down 74.62 points or 0.38% to 19,612.20. The Sensex declined 136.27 points at the day's low of 19,550.55 in mid-morning trade. The index gained 124.32 points at the day's high of 19,811.14 in morning trade, its highest level since 7 January 2011.

The S&P CNX Nifty was down 18.30 points or 0.31% to 5,891.75. The Nifty struck a high of 5,944.45 in early trade, its highest level since 7 January 2011.

Small-cap and mid-cap indices on BSE extended recent strong gains. The BSE Mid-Cap index rose 0.47% and the BSE Small-Cap index rose 0.78%. Both these indices outperformed the Sensex.

The sectoral indices on BSE were mixed. The BSE Realty index (up 3.18%), BSE Consumer Durables (up 1.11%), BSE Power index (up 0.73%), BSE PSU index (up 0.56%), BSE Auto index (up 0.26%), BSE Oil & Gas (up 0.14%), BSE Healthcare (up 0.04%), BSE FMCG (down 0.11%) and BSE Capital Goods index (down 0.11%) outperformed the Sensex.

The BSE Teck index (down 0.84%), BSE IT (down 0.69%), BSE Bankex (down 0.43%) and BSE Metal index (down 0.41%) underperformed the Sensex

The total turnover on BSE amounted to Rs 3928 crore higher than Rs 3698.77 crore on Tuesday, 5 April 2011.

The market breadth, indicating the health of the market, was strong. On BSE, 1,777 shares advanced while 1,161 shares declined. A total of 107 shares remained unchanged.

Among the 30-member Sensex pack, 20 declined while the rest of them gained.

IT pivotals dropped as a firm rupee could dent guidance on software exports in future quarters. The rupee touched a fresh 5-month high against the dollar today, 6 April 2011. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

India's third largest software services exporter Wipro lost 2.93% to Rs 466.10, retreating from day's high of Rs 483.10. It was the top loser from the Sensex pack. India's largest software services exporter TCS shed 1.25% to Rs 1223.85, after striking day's high of Rs 1247.

India's second largest software services exporter Infosys Technologies fell 0.27% to Rs 3270.60, off the day's high of Rs 3297.65. 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.

Telecom stocks also declined. India's second largest listed cellular services provider by sales Reliance Communications lost 1.2%. Reliance Telecom, a unit of Reliance Communications (RCom), clarified on Monday, 4 April 2011, that as part of ongoing investigations in relation to the entire telecom sector in India, certain preliminary charges were filed on Saturday, 2 April 2011 in a court by the CBI against three group executives namely, Gautam Doshi, Surendra Pipara and Hari Nair. The company said that all the three executives deny all charges and will defend themselves in the appropriate legal proceedings.

Reliance Telecom said these preliminary charges have no impact on the business, operations and licences of Reliance Telecom and are not connected in any manner to any other of Reliance Anil Dhirubhai Ambani (ADA) group's listed firms.

India's top listed cellular services provider by sales Bharti Airtel dropped 1.86%. The company said on Tuesday it had reached 2 million customers on its third-generation (3G) mobile network. Bharti had launched its India 3G network in January 2011. Idea Cellular shed 5.05%.

Index heavyweight Reliance Industries (RIL) fell 0.11% to Rs 1043.85. The stock hit high of Rs 1053.70 and low of Rs 1040. RIL, last week, bagged two blocks in the ninth round of oil and gas block auctions held by the government.

India's largest oil exploration firm by capacity Oil and Natural Gas Corporation (ONGC) advanced 0.68%. ONGC is Cairn India's minority partner in the huge Rajasthan oil block but pays the entire royalty to the government, a key reason why the government has delayed its clearance to Vedanta Resources' deal to acquire a controlling stake in Cairn India.

Vedanta group firm Sesa Goa today said it has received clearance from Securities and Exchange Board of India (Sebi) to proceed with the open offer for 20% of shares of Cairn India at Rs 355 per share. The company announced this during market hours today. In August 2010, Cairn India's parent firm Cairn Energy had agreed 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. Shares of Cairn India were down 3.87%.

Sesa Goa jumped 3.71%, extending Tuesday's rally triggered by the Supreme Court lifting of a ban on iron ore exports from Karnataka from 20 April 2011. Sesa Goa had curbed its iron ore mining in Karnataka post the state government's ban on iron ore exports, as the company's iron ore realisations were significantly lower in the domestic market compared to the international market. Sesa Goa's 'Narrain' mine in Karnataka has a production capacity of more than 6 million tonnes per annum (mtpa).

Bank shares dropped on worries high inflation and rising interest rates would hurt future profits. India's largest private sector bank by net profit ICICI Bank shed 0.86%. India's second largest private sector bank by net profit HDFC Bank was down 0.58%.

India's largest state run bank by net profit and branch network State Bank of India (SBI) rose 0.1% in volatile trade. SBI has reportedly extended its 'teaser rate' home loan scheme - a popular, yet controversial product - by a month. The home loan scheme offers a discount in the interest rate for the first three years. The interest rate structure of the scheme remains unchanged, reports added.

Anil Ambani controlled power generation firm Reliance Infrastructure rose 1.21%. Reliance Infrastructure has said that it has made adequate arrangements to meet the requirement of its customers after Tata Power, last week, said it had stopped supplying electricity to Reliance Infrastructure. Reliance Infrastructure said its consumers will continue to get uninterrupted and quality power supply. The two companies have been involved in a dispute about the supply of power in the Mumbai city distribution area.

Tata Power had last week said that it will stop supplying electricity to Anil Ambani controlled Reliance Infrastructure and divert the 200 megawatts the company provided to its rival to its own consumers from now.

Shares of Tata Power Company were down 0.71%. During market hours today, 6 April 2011, the company said that a consortium of the company and SN Power Norway has bagged the 'Dugar Hydro Electric Project' in Chenab Valley in Himachal Pradesh, India. The capacity of Dugar Hydro Electric Project is estimated to be approximately 236 megawatt.

India's largest thermal power generator by sales NTPC rose 1.78% after provisional net profit rose 24.17% to Rs 2505.42 crore on 17.74% rise in net sales to Rs 14488 crore in Q4 March 2011 over Q4 March 2010. The company announced its provisional Q4 results during market hours today.

Realty stocks extended recent gains on continued value buying. Ackruti City, DLF, Indiabulls Rela Estate, HDIL and Unitech rose by between 0.63% to 8.33%.

Select auto stocks were in demand on reports auto firms had raised vehicle prices or are considering doing so to partly offset a surge in the cost of raw materials such as steel, aluminum and natural rubber. This is the second price increase by auto makers since January 2011 as costlier raw materials dent their margins.

India's second largest bike maker by sales Bajaj Auto rose 0.54%. 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 duringtrading hours on Monday, 4 April 2011.

India's top small care maker by sales Maruti Suzuki declined 1.4%. The company announced after market hours today 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 has reportedly increased prices of all vehicles by between Rs 1,000 and Rs 10,000 with effect from Monday, 4 April 2011.

India's largest bike maker by sales Hero Honda Motors shot up 2.22%, extending eleven-day 14.74% rally. Hero Honda's monthly sales in March 2011 were record monthly sales. Total sales rose 24.4% to 5.15 lakh units in March 2011 over March 2010. It was the top gainer from the Sensex pack.

India's largest truck maker by sales Tata Motors gained 1.19%. 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 declined 0.93%. The company had said on 1 April 2011 it will raise prices of its products within a week to offset higher commodity prices.

Metal stocks fell on profit taking. Tata Steel, Sterlite Industries (India), Sail, Nalco, Jindal Saw, Hindalco Industries and Hindustan Zinc shed by between 0.17% to 1.93%.

Teledata Technology Solutions clocked highest volume of 2.63 crore shares on BSE. Cals Refineries (1.78 crore shares), HFCL (1.24 crore shares), Suzlon Energy (1.23 crore shares) and SpiceJet (1.13 crore shares) were the other volume toppers in that order.

BF Utilities clocked highest turnover of Rs 147.90 crore on BSE. Reliance Industrial Infrastructure (Rs 111.27 crore), State Bank of India (Rs 103.65 crore), Mahindra Satyam (Rs 81.83 crore) and Sesa Goa (Rs 72.48 crore) were the other turnover toppers in that order.

The near term major trigger for the market is Q4 March 2011 results which will start trickling in from about mid-April 2011. 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.

Billionaire investor and international investment icon Warren Buffett who was in his maiden visit to India last month said that he hopes to spend some money in India. His firm Berkshire Hathaway is looking to park funds in large investment destinations and India fits the bill perfectly, he said. India, according to him, is not an emerging market but a very big country with a large number of significant businesses. He said that Berkshire Hathaway would look at possible acquisitions in India as and when there were opportunities.

A recent global investor survey by Franklin Templeton has found that half of respondents plan to invest outside their home country in 2011. Respondents in India are optimistic about the domestic stock market performance being better than the global counterparts. Eighty two percent of respondents in India think that Indian stock market will do better than the rest of the world over the next 10 years.

Standard & Poor's Ratings Services said today that it had affirmed the 'BBB-' long-term and 'A-3' short-term unsolicited sovereign credit ratings on India. The outlook on the long-term rating is stable, it said. The ratings on India reflect the country's good economic growth prospects and its fairly strong external position. Positive investment trends further underpin the ratings, with foreign direct investment and portfolio investments covering a large share of the current account deficit. Nevertheless, the country's weak fiscal profile and structural problems temper its strengths. Structural problems not only constrain efficiency but also preclude a large share of the population from benefiting from the country's rising prosperity, it added.

A survey showed on Tuesday that growth in India's service sector slowed in March from February's blistering seven-month high as new business growth moderated slightly, while price pressures, particularly wages, continued to rise. The seasonally adjusted HSBC Markit Business Activity index, based on a survey of over 450 companies, slipped to 58.8 in March 2011 from 60.2 in February 2011, but remained above the 50 mark that denotes expansion for the 23rd consecutive month.

On the political front, the first phase of assembly polls took place in Assam on Monday, 4 April 2011 in 62 of the 126 assembly constituencies. The second and concluding phase of elections will be held on 11 April 2011 in the remaining 64 constituencies. Assam elections will be followed by elections in Tamil Nadu, Puducherry, West Bengal and Kerala in two months between April and May. While Assam will have two-phased poll, Tamil Nadu, Kerala and Puducherry in one phase and West Bengal in six phases ending on 10 May 2011. The vote count is scheduled for 13 May 2011 for elections held in all the five states.

European stocks edged higher in volatile trade on Wednesday, with basic resources stocks offering support as the price of gold continued to surge. The key benchmark indices in France, Germany and UK were up by between 0.15% and 0.71%.

The European Central Bank is widely expected to raise its key refinancing rate by a quarter of a percentage point to 1.25% at a policy meeting tomorrow, 7 April 2011, in what would be the first rate increase since the middle of 2008.

Asian stock markets were mostly higher Wednesday, as investors took a rate hike from China's central bank in their stride, while gold plays around the region gained as the metal's price touched a record high. The key benchmark indices in China, Hong Kong, Indonesia, Singapore and Taiwan were up by between 0.56% to 1.69%. The key benchmark indices in Japan and South Korea fell 0.32% and 0.17%, respectively.

China's central bank raised interest rates on Tuesday for the fourth time since October in a bid to bring stubbornly high inflation under control. Benchmark one-year deposit rates will be lifted by 25 basis points to 3.25% and one-year lending rates will be raised by 25 basis points to 6.31%, the People's Bank of China said in a statement. The rise takes effect from 6 April 2011.

US markets closed nearly flat Tuesday in another light-volume trading session. The Dow Jones Industrial Average finished down 6.13 points, or 0.05%, at 12393.90. The Standard & Poor's 500 index ended fractionally lower as it shed 0.24 point to 1332.63 and the Nasdaq Composite rose by 2 points, or 0.07%, at 2791.19.

Trading in US index futures indicated that the Dow could rise 67 points at the opening bell on Wednesday, 6 April 2011.