Market scales 28 week closing high

Key benchmark indices gained for the second straight day to scale highest closing level in 28 weeks as latest government data showed that inflation in January eased to a 26-month low. Sustained buying demand from foreign funds also supported gains. The BSE Sensex was up 75.73 points or 0.43%, off close to 40 points from day's high and up close 105 points from the day's low. The market breadth was positive. Index heavyweight Reliance Industries (RIL) was marginally lower. Truck major Tata Motors spurted to scale a 52-week high after reporting stellar Q3 earnings during trading hours today, 14 February 2012.

The Sensex has jumped 655.02 points or 3.8% in February 2012 so far. The barometer index has surged 2393.65 points or 15.48% in calendar 2012 so far. From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,712.71 points or 17.92%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 1,962.57 points or 9.9%.



Coming back to today's trade, pharma major Cipla dropped over 6% in reaction to Q3 results announced after market hours on Monday, 13 February 2012. Power generation major Tata Power Company extended Monday's slide after the company reported a sharp fall in net profit in Q3 December 2011 after market hours on Friday, 10 February 2012. Bank stocks were mixed.

The wholesale price index (WPI) rose a slower-than-expected 6.55% in January 2012 from 7.47% in December 2011, government data showed on Tuesday. Primary articles inflation came in at 2.25% from 3.07% in the previous month, manufacturing inflation at 6.49% from 7.41% and fuel inflation at 14.21% from 14.91%. The annual reading for November was revised up to 9.46% from 9.11% reported earlier.

Foreign institutional investors (FIIs) bought shares worth a net Rs 469.77 crore on Monday, 13 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 8558.56 crore in first nine trading sessions this month, as per provisional data from the stock exchanges. The inflow early this month comes on the top of heavy purchases last month. FIIs bought shares worth a net Rs 10357.70 crore in January 2012, as per data from Securities & Exchange Board of India (Sebi).

The BSE Sensex was up 75.73 points or 0.43% to 17,848.57, its highest closing level since 3 August 2011. The index gained 117.49 points at the day's high of 17,890.33 in late trade. The index fell 30.26 points at the day's low of 17,742.58 in early trade.

The S&P CNX Nifty was up 25.85 points or 0.48% to 5,416.05, its highest closing level since 2 August 2011. Nifty hit a high of 5,428.05 and low of 5,377.95 in intraday trade.

The BSE Mid-Cap index rose 1.15% and the BSE Small-Cap index gained 0.83%. Both these indices outperformed the Sensex.

The total turnover on BSE amounted to Rs 3,129 crore, higher than Rs 3,111.75 crore clocked on Monday, 13 February 2012.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1619 shares advanced and 1275 shares declined. A total of 118 shares were unchanged

Among the 30-member Sensex pack, 15 declined while the rest declined.

L&T jumped 3.87% and was the top gainer from the Sensex pack.

India's largest truck maker by sales Tata Motors jumped 3.74% to Rs 267.90 after consolidated net profit rose 40.51% to Rs 3406 crore on 44% rise in net revenue to Rs 45260 crore in Q3 December 2011 over Q3 December 2010. The stock hit a 52-week high of Rs 272.40 today. The result was announced during trading hours today, 14 February 2012.

Tata Motors said consolidated revenues grew on the back of growth in volumes, improved product and market mix. Jaguar Land Rover (JLR) sales in the Q3 December 2011 grew 36.7% to 86,322 units supported by overwhelming response to the recently launched 'Range Rover Evoque'.

Among other auto stocks, Hero MotoCorp, M&M and Maruti Suzuki India gained by between 1.93% to 3.24%.

Index heavyweight Reliance Industries (RIL) was flat at Rs 848.15. The stock hit a low of Rs 843.20 and high of Rs 854.50. Reports on Monday indicated that the company has signed a pact with France's Dassault Aviation for partnering in the defence and homeland security sector in India. India is the world's largest arms importer with plans to spend $100 billion on weapons over the next decade.

India's largest oil exploration firm by market capitalization ONGC fell 1.67%. The government reportedly plans to put its derailed disinvestment drive back on track this week with a likely 5% stake sale in ONGC to raise Rs 12000 crore through an auction on the stock exchanges. An empowered group of ministers (EGoM) is scheduled to meet this week to decide the price band and methodology of ONGC's share sale, reports added.

India's largest software services exporter by revenue TCS shed 0.4%. The company has reportedly bagged a multi-year deal from Denmark's largest telecommunications firm TDC, replacing incumbent CSC. The deal is likely to be worth over $100 million, reports added.

India's third largest software services exporter by revenues Wipro fell 0.36%. India's second largest software services exporter by revenue Infosys rose 0.58% reversing initial losses.

The main industry body -- the National Association of Software and Services Companies (Nasscom) last week said that the pace of revenue growth of the sector will likely moderate next fiscal year amid continued global economic uncertainty. Exports from the IT sector may grow 11%-14% in the year that starts on 1 April 2012 to $76 billion-$78 billion, compared with an estimated $68.7 billion this fiscal year, an increase of about 16%, Nasscom said. The body said it will review its export forecasts in October 2012.

With its large English-speaking and relatively cheap workforce, India remains a preferred outsourcing destination for companies in developed markets. India's share in global outsourcing was 58% in 2011, up from 55% in 2010, Nasscom said.

Pharma major Cipla tumbled 6.28% to Rs 320.95 and was the top loser from the Sensex pack. The company's net profit rose 16% to Rs 269.91 crore on 13.99% rise in net sales to Rs 1711.47 crore in Q3 December 2011 over Q3 December 2010. The net profit fell short of market expectations. The result was announced after market hours on Monday, 13 February 2012. Material cost decreased by about 4.7% on a year-on-year basis mainly on account of rationalization of product mix and markets. While such measures would result in increased margins, there could be an adverse effect on revenues in the short term.

During the quarter, Cipla posted a growth of more than 13% in income from operations. Domestic sales grew by more than 18% and export sales grew by about 11% for the quarter. Operating margins and profits after tax increased by about 23% and 16% respectively on a year-on-year basis.

The increase in staff cost (Rs 52 crore) was due to annual increments as well as increase in manpower and was in line with the previous quarter. Other expenditure increased by about Rs 56 crore mainly due to increase in selling expenses, professional fees and factory expenditure such as repairs & maintenance, power & fuel, etc. The increase in selling expenses is in line with the increase in turnover. Tax for the current quarter increased mainly due to expiry of tax benefits on export oriented unit (EOUs), Cipla said in a statement.

Reliance ADA Group shares edged higher. Reliance Communications, Reliance Infrastructure, Reliance Capital, Reliance MediaWorks and Reliance Power gained by between 0.7% to 5.82%.

Bank stocks were mixed. India's largest commercial bank by net profit and branch network State Bank of India (SBI) jumped 3.26%. During market hours on Monday, 13 February 2012, SBI reported 15.38% rise in net profit to Rs 3263.04 crore on 20.46% growth in total income to Rs 29787.37 crore in Q3 December 2011 over Q3 December 2010. SBI's provisioning for non-performing assets jumped 84.16% to Rs 3006.12 crore in Q3 December 2011 over Q3 December 2010.

The bank's ratio of net non-performing assets rose to 2.22% as on 31 December 2011 from 2.04% as on 30 September 2011 and 1.61% as on 31 December 2010. The ratio of gross non-performing assets rose to 4.61% as on 31 December 2011 from 4.19% as on 30 September 2011 and 3.17% as on 31 December 2010.

On a consolidated basis, SBI posted 16.37% growth in net profit to Rs 4318.08 crore on 16.74% rise in total income to Rs 43155.95 crore in Q3 December 2011 over Q3 December 2010.

India's largest private sector bank by branch network ICICI Bank rose 0.81%.

India's second largest bank by net profit HDFC Bank shed 0.82% to Rs 517.70. The stock had hit a record high of Rs 525.70 on Friday, 10 February 2012.

Rising bad loans of Indian banks don't raise any immediate concerns, but the central bank will still meet the representatives of the lenders to discuss the issue, a deputy governor of the Reserve Bank of India said on Monday, 13 February 2012. The sectors that are putting stress on banks and the issues are well known, K.C. Chakrabarty told reporters on the sidelines of a conference. The central bank will meet bank representatives either later this month of early March, he added.

Private sector power generation major Tata Power Company fell 3.61%. The stock extended Monday's 2.48% decline after the company reported a sharp fall in net profit in Q3 December 2011 after market hours on Friday, 10 February 2012. On a consolidated basis, the company reported 40.6% fall in net profit to Rs 262.67 crore on 50.6% growth in net sales to Rs 6645.87 crore in Q3 December 2011 over Q3 December 2010.

PSU OMCs rose on reports the prices of petrol may enhance by about Rs. 3 per litre early next month after the assembly election in Uttar Pradesh. Oil marketing companies (PSU OMCs) incur under recoveries on domestic sale of diesel, LPG and kerosene at controlled prices. The government has already freed pricing of petrol. Oil companies revise petrol prices every two weeks.

BPCL and HPCL gained by between 0.19% to 1.54%.

Indian Oil Corporation fell 1% reversing initial gains. Net profit rose 52.2% to Rs 2488.44 crore on 42.2% growth in total income to Rs 115989.38 crore in Q3 December 2011 over Q3 December 2010.

Due to oil prices being raised internationally in recent months on tensions over Iran's nuclear programme and this year, companies fears heavy losses, who have been unable to adjust retail prices. The increase in the price of petrol will have implications for inflation, interest rates and the auto industry, reports added.

Interest rate sensitive realty stocks rose on expectations recent sharp fall in inflation could provide room for the Reserve Bank of India to start cutting interest rates in the coming months to prop up slowing economy. Purchases of both residential and commercial property are largely driven by finance. Lower interest rates may revive property demand. DLF, Unitech, HDIL, Sobha Developers and Indiabulls Real Estate rose by between 0.68% to 6.82%.

With property prices and interest rates rising with each passing year, the government is reportedly considering raising the tax exemption on interest paid on housing loans to up to Rs 3 lakh annually from the existing limit of Rs 1.5 lakh in the coming budget, which is scheduled to be tabled in Parliament on 16 March.

Lanco Infratech clocked highest volume of 2.34 crore shares on BSE. Cals Refineries (1.29 crore shares), SuryaChakra Power Corporation (1.04 crore shares), HDIL (87.21 lakh shares) and IFCI (75.82 lakh shares) were the other volume toppers in that order.

SBI clocked highest turnover of Rs 194.78 crore on BSE. Tata Motors (Rs 107.16 crore), HDIL (Rs 90.78 crore), Reliance Communications (Rs 69.28 crore) and ICICI Bank (Rs 63.50 crore) were the other turnover toppers in that order.

Ranbaxy Laboratories and ABB unveil Q4 December 2011 results on 23 February 2012.

Meanwhile, after nine years, the Reserve Bank of India (RBI) late Monday evening tweaked the bank rate, a medium-term signal rate. The bank rate, a benchmark rate at which RBI buys or re-discounts bills of exchange or other commercial papers eligible for purchase, was hiked with immediate effect to 9.5% from 6%. The hike was done to realign it with the marginal standing facility (MSF) rate as a one-time technical adjustment to link it with the main policy repo rate, an RBI release said. The release added that henceforth, the bank rate will change whenever there is a change in the repo rate.

Reports indicate that the finance ministry is considering a proposal to increase excise duty from 10% to 12%, although still lower than the level before the 2008 financial crisis. The move is aimed at helping the government improve its fiscal situation but it is expected to push up the cost of almost all manufactured goods from food products to consumer durables and automobiles.

Industrial production rose a slower-than-expected 1.8% in December 2011, government data showed on Friday, 10 February 2011. The growth in December 2011 was sharply lower than 5.9% growth in November 2011. Manufacturing output, which constitutes about 76% of industrial production, rose 1.8% from a year earlier, the statistics office said.

India's January exports rose 10.1% to $25.4 billion while imports rose 20.3% to $40.1 billion, leaving a trade deficit of $14.7 billion, Trade Secretary Rahul Khullar said on Thursday, 9 February 2012. India's exports reached $242.8 billion between April and January, Khullar said, citing provisional data.

The Indian economy is estimated to grow 6.9% in the current fiscal year through March 2012 (FY 2012), sharply slower than the 8.4% expansion reported last year, according to a government forecast released on Tuesday, 7 February 2012. The new expectation is due to weaker growth in manufacturing and farm output, data from the ministry of statistics and implementation showed. The government expects manufacturing output to grow 3.9% this fiscal year compared with a 7.6% increase a year earlier. Farm output is expected to rise 2.5%, compared with 7% last year. In December 2011, the government had cut its growth projection for FY 2012 to between 7.25% and 7.75% from an initial forecast of 9%.

Finance Minister Pranab Mukherjee will present the annual budget for 2012/13 on 16 March 2012, while the railways budget will be presented on 14 March 2012. The budget session of parliament will start on 12 March 2012, Pawan Kumar Bansal, minister of parliament affairs, said recently. The government will present on March 15 the Economic Survey for 2011/12, a document on the state of economy prepared by the economic division in the ministry of finance. The annual budget is usually presented on the last working day of February. However, the budget has been delayed this time due to the ongoing assembly polls. Polling for assembly elections in five states concludes in early March 2012.

European markets were reversed initial losses on Tuesday as positive economic data lifted sentiment. The key benchmark indices in UK, Germany and France were up by between 0.13% to 0.41%.

A gauge of German investor sentiment rose more sharply than expected in February to post its first positive reading since May, the Mannheim-based Center for European Economic Research, or ZEW, reported Tuesday. The ZEW expectations index rose to 5.4 from minus 21.6 in January.

Rating agency Moody's on Monday chopped the debt ratings of Italy, Spain and Portugal and put France, Britain and Austria on warning, saying they were increasingly vulnerable to the eurozone crisis. Casting doubt over whether Europe's leaders were doing enough to reverse the downslide of the region's economy and financial sector, Moody's also cut its ratings for Slovenia, Slovakia and Malta. Moody's also questioned whether Europe was pulling together adequate resources to deal with the crisis.

Rating agency Standard & Poor's (S&P) downgraded 34 of 37 Italian banks on Friday, 10 February 2012, citing a reduced ability to roll over their wholesale debt and expected weak profitability. The move follows S&P's downgrade of Italy's sovereign rating last month to BBB+, part of a mass downgrade of nine euro zone countries. S&P said weak profitability and increased cost of capital could lead Italian banks to write down a large part of the goodwill they booked during a wave of industry consolidation over the past decade.

Euro-area finance ministers will convene in Brussels on Wednesday, 15 February 2012, in an extraordinary meeting that was set after they declined in a special session on 9 February 2012 to ratify the 130 billion-euro ($172 billion) package for Greece.

Asian markets were mixed on Tuesday after Bank of Japan's policy easing offset Moody's cut in ratings, outlooks on nine European countries. Key benchmark indices in Indonesia, Taiwan, China and South Korea were down by between 0.15% to 0.36%. Key benchmark indices in Hong Kong, Singapore and Japan rose by between 0.15% to 0.59%.

Japan's central bank surprised markets with a further loosening of monetary policy by increasing its asset buying and lending scheme.

Trading in US index futures indicated that the Dow could gain 7 points at the opening bell on Tuesday, 14 February 2012. US stocks rose on Monday after Greece's parliament approved reforms needed to qualify for a cash disbursement and avoid an unruly default. The Dow Jones industrial average rose 72.81 points, or 0.57%, to 12,874.04. The S&P 500 Index gained 9.13 points, or 0.68%, to 1,351.77 and the Nasdaq Composite index added 27.51 points, or 0.95%, to 2,931.39.