Nifty scales 3-month closing high

The key benchmark indices took a breather after Monday's (4 April 2011)'s 1.45% rally amid a divergent trend in pivotals. Intraday volatility was high. The BSE 30-share Sensex was down 14.91 points or 0.08%, up close to 165 points from the day's low and off close to 80 points from the day's high. The 50-unit S&P CNX Nifty ticked slightly higher scaling 3-month closing high. The broad market depicted strength as a number of small-cap and mid-cap stocks extended recent gains. The market breadth was strong. European stocks and US index futures were trading lower. Asian stocks ended mixed.



Index heavyweight Reliance Industries came off day's low after reversing initial gains. Banking major State Bank of India reversed intraday losses. Cigarette maker ITC retreated after scaling a record high in intraday trade today. Bike maker Hero Honda Motors extended gains for 11th session. Other auto stocks were mixed.

Vedanta group companies were in spotlight on buzz the Securities and Exchange Board of India (Sebi) has approved Vedanta's open offer to buy stake in Cairn India. IT pivotals were off day's lows. Telecom pivotals gained.

Intraday volatility was high. The key benchmark indices reversed direction after hitting 3-month highs at the onset of the trading session as oil prices hovering near two-and-a-half year highs raised inflation and interest rate worries. Volatility gripped the bourses in mid-morning trade as the key benchmark indices recovered afetr hitting fresh intraday lows. Volatility heightened in mid-morning trade as the key benchmark extended losses. Weakness continued in early afternoon trade. The market came off lows in afternoon trade. Stocks remained volatile in mid-afternoon trade. The market moved into in the green in late trade before slipping into the red again towards the close of the trading session.

The BSE 30-share Sensex was down 14.91 points or 0.08% to 19,686.82. The Sensex fell 178.19 points at the day's low of 19,523.54 in afternoon trade. The index gained 68.48 points at the day's high of 19,770.21 at the onset of the trading session, its highest level since 7 January 2011.

The S&P CNX Nifty was up 1.60 points or 0.03% to 5,910.05, its highest level since 6 January 2011. The Nifty struck a high of 5,928.65 in early trade.

The BSE Mid-Cap index rose 0.79% and the BSE Small-Cap index rose 1.38%. Both these indices outperformed the Sensex.

Most of the sectoral indices on BSE were in the green. The BSE Consumer Durables (up 1.58%), BSE Metal index (up 1.21%), BSE Teck index (up 0.61%), BSE Realty index (up 0.6%), BSE IT (up 0.51%), BSE PSU index (up 0.47%), BSE Auto index (up 0.32%), BSE Healthcare (up 0.24%), BSE Power index (up 0.13%) and BSE Capital Goods index (down 0.04%) outperformed the Sensex.

The BSE Oil & Gas (down 0.46%), BSE FMCG (down 0.4%) and BSE Bankex (down 0.23%) underperformed the Sensex

The total turnover on BSE amounted to Rs 3681 crore, higher than Rs 3212.45 crore on Monday, 4 April 2011.

The market breadth, indicating the health of the market, was strong. On BSE, 2,009 shares advanced while 931 shares declined. A total of 74 shares remained unchanged.

Among the 30-member Sensex pack, 18 declined while the rest of them gained.

Index heavyweight Reliance Industries (RIL) fell 0.47% to Rs 1044.95. The stock hit high of Rs 1057.75 and low of Rs 1039.50. RIL, last week, bagged two blocks in the ninth round of oil and gas block auctions held by the government.

IT pivotals recovered from intraday lows. India's second largest software services exporter Infosys slipped 0.13% to Rs 3279.50 after declining to today's low of Rs 3231. The IT bellwether is seen giving a decent to strong guidance on revenue and earnings 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 gives annual guidance for FY 2012.

India's third largest software services exporter Wipro lost 0.08% to Rs 480.15 after touching day's low of Rs 472.20. The company after market hours on Friday, 1 April 2011, said it will acquire the oil and gas information technology practice of US-based Science Applications International Corporation (SAIC) for $150 million (about Rs 670 crore).

India's largest software services exporter TCS surged 2.3% to Rs 1239.40, rebounding from day's low of Rs 1202.55. The stock hit all time high of Rs 1243.90 in intraday trade today.

India's largest state run bank by net profit and branch network State Bank of India (SBI) rose 1.14% to Rs 2793.90, staging a recovery from day's low of Rs 2742.40. 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.

Leading private banks edged lower. India's largest private sector bank by net profit ICICI Bank shed 0.83%. India's second largest private sector bank by net profit HDFC Bank was down 0.29%.

Cigarette maker ITC shed 0.38% to Rs 184.10, halting three-day gains, on profit booking. The stock scaled a record high of Rs 185.35 intraday trade today.

Vedanta group companies were in spotlight on buzz the Securities and Exchange Board of India (Sebi) has approved Vedanta's open offer to buy stake in Cairn India. 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. The Indian government has not approved the deal yet, and the closure of the deal also needed the Sebi approval for launching an open offer to buy more shares from public shareholders in Cairn India as per the Indian rules.

India's largest non-ferrous metals maker by capacity Sterlite Industries surged 2.83% to Rs 178 and was the top gainer from the Sensex pack. Shares of Cairn India were down 0.59%, tracking a decline in crude oil prices

Sesa Goa spurted 6.54% on reports the Supreme Court ordered lifting of a ban on iron ore exports from Karnataka from 20 April 2011. Sesa Goa's 'Narrain' mine in Karnataka has a production capacity of more than 6 million tonnes per annum (mtpa). A ban on exports from the state had affected company's revenue.

Telecom pivotals gained. India's second largest listed cellular services provider by sales Reliance Communications surged 2.79%. The stock had lost ground on Monday, 4 April 2011 after the Central Bureau of Investigation (CBI) on Saturday, 2 April 2011, filed a chargesheet against three officials of the Anil Dhirubhai Ambani (ADA) Group, with respect to 2G spectrum scam.

Reliance Telecom, a unit of Reliance Communications (RCom), clarified on Monday 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 gained 0.08%. 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 jumped 2.83% after the company announced after market hours on Monday that it is in the process of filing necessary application before the Delhi High Court seeking vacation of the ex-parte stay on amalgamation of Spice Communications with the company. The Department of Telecommunications (DoT) has obtained an ex-parte stay from the Delhi High Court against sanctioning the amalgamation of Spice Communications with the company.

Private sector utility firm Tata Power Company lost 1.77% and was the top loser from the Sensex pack. The company said on Friday, 1 April 2011, that it will stop supplying electricity to Reliance Infrastructure and divert the 200 megawatts the company provided to its rival to its own consumers from now.

Reliance Infrastructure shed 1%. Reliance Infrastructure said it has made "adequate arrangements" to meet the requirement of its customers after Tata Power 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.

India's largest electric equipment maker by sales Bharat Heavy Electricals (Bhel) gained 1.64%, extending Monday's advance triggered by strong provisional financial performance for the year ended March 2011 (FY 2011). Provisional net profit rose 40% to Rs 6021 crore on 27% rise in turnover to Rs 43451 crore in the year ended March 2011 (FY 2011) over the year ended March 2010 (FY 2010). The result was announced during market hours on Monday, 4 April 2011.

Bhel said a change in accounting policy on provision for warranty obligation for construction contracts boosted profit before tax (PBT) by Rs 414 crore in FY 2011. The change in accounting policy boosted turnover by Rs 2456 crore in FY 2011. Bhel expects new order inflows to rise by 10% in the year ending March 2012 from Rs 60507 crore in the year ended March 2011. Bhel's order book registered a muted growth of 2.48% to Rs 60507 crore in FY 2011 over FY 2010.

Pharma major Cipla rose 1.57% on reports it has applied for a "voluntary license" for Merck's anti-HIV drug Isentress saying the drug is exorbitantly priced and is inaccessible to needy patients in India.

Most metal stocks rose in volatile trade on strong domestic demand. JSW Steel, Jindal Steel & Power, National Aluminum Company, Tata Steel and Steel Authority of India gained by between 0.45% to 2.83%.

Auto shares were mixed. India's largest utility vehicles and tractor maker by sales Mahindra & Mahindra (M&M) dropped 1.49%. M&M's total sales rose 19.9% to 57,370 in March 2011 over March 2010. Tractor sales rose 22.8% to 19,848 units and automotive sales rose 18.4% to 37,522 units. The tractor segment posted its highest-ever domestic sales in March 2011. The company announced the monthly sales data recently.

India's largest bike maker by sales Bajaj Auto fell 1.02%. 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 during trading hours on Monday, 4 April 2011.

India's largest bike maker by sales Hero Honda Motors advanced 1.66%, extending ten-day 12.87% 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.

India's top small car maker by sales Maruti Suzuki India rose 0.95% on reports the company has raised prices of all its car models by between Rs 1,000 and Rs 10,000 because of higher raw material costs. Maruti's total sales rose 28.2% to 1.21 lakh units in March 2011 over March 2010. Total sales rose 24.80% to 12.71 lakh units in the year ended March 2011 (FY 2011) over the year ended March 2010. The company announced the monthly and yearly sales data during trading hours on Friday, 1 April 2011.

India's top truck maker by sales Tata Motors rose 2.04%. The company's total sales rose 11% to 83,363 units in March 2011 over March 2010. Domestic sales rose 9% to 77431 units in March 2011 over March 2010 while exports jumped 45% to 5932 units. Sales of commercial vehicles increased 15% to 49753 units while passenger vehicle sales declined 1.1% to 29,543 units. The company announced the monthly sales data during trading hours on Friday, 1 April 2011. Tata Motors raised prices on some of its passenger and utility vehicles effective 1 April 2011.

Ashok Leyland was flat. The company's total vehicle sales rose 20.87% to 12,168 units in March 2011 over March 2010. The company unveiled the monthly sales figures after market hours on Monday, 4 April 2011.

Sugar shares edged higher on momentum buying. While the government extended the period of sugar stockholding limits, it cushioned the move by raising the cap on stock quantity to 500 metric tonnes from 200 tonnes from 1 April 2011. Bajaj Hindusthan, Shree Renuka Sugar and Balrampur Chini Mills rose by between 2.21% to 6.52%.

Cals Refineries clocked highest volume of 3.73 crore shares on BSE. Alok Industries (1.14 crore shares), SpiceJet (99.32 lakh shares), Suzlon Energy (75.46 lakh shares) and Kohinoor Broadcasting (70.40 lakh shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 109.17 crore on BSE. ARSS Infra (Rs 82.79 crore), Patel Engineering (Rs 80.02 crore), Lovable Lingerie (Rs 79.05 crore) and Sesa Goa (Rs 64.82 crore) were the other turnover toppers in that order.

Heavy buying by foreign funds triggered a strong rally in Indian shares recently. As per provisional figures, foreign funds bought shares worth Rs 604.51 crore on Monday, 4 April 2011. FII inflow totaled Rs 9567.93 in ten trading sessions from 22 March 2011 to 4 April 2011 as per data from the stock exchanges.

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 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.

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 were down 72 cents a barrel or 0.66% at $107.75 a barrel after a report that the sons of Libyan leader Muammar Qaddafi are seeking his ouster. Crude had hit 2-1/2-year high on Monday, 4 April 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.

Reserve Bank of India deputy governor Subir Gokarn today, 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. Inflation rate which was previously believed to be unacceptable is now the new norm, Gokarn added. 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.

Gokarn 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.

On the political front, an estimated 75% voters reportedly exercised their franchise during the first phase of assembly polls 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 lower on Tuesday as Moody's Investors Service on Tuesday downgraded Portugal's long-term government-bond ratings by one notch to Baa1 from A3, and put the rating on review for possible downgrade. The key benchmark indices in France, Germany and UK fell by between 0.31% and 0.62%.

Moody's said it sees increased political, budgetary and economic uncertainty in Portugal, following the recent resignation of the government, complicating the government's ability to reach "ambitious" deficit-cutting targets.

Asian stocks were mixed after Japan's Tokyo Electric Power Co. began dumping radioactive water from its crippled nuclear plant. The key benchmark indices in Indonesia and Japan were down 0.38% and 1.06%. The key benchmark indices in Singapore and South Korea were up 0.20% and 0.69%. Markets in China, Hong Kong and Taiwan were closed for a public holiday.

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 blue-chip stocks eked out small gains Monday. The Dow Jones Industrial Average added 23.31 points, or 0.19%, to finish at 12400. The Nasdaq Composite shed 0.41 point, or 0.01%, to 2789.19 and the Standard & Poor's 500-stock index edged up 0.46 point, or 0.03%, to 1332.87.

Trading in US index futures indicated that the Dow could fall 23 points at the opening bell on Tuesday, 5 April 2011.

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.