RIL, bank stocks lead initial gains

Key benchmark indices trimmed gains after a firm opening. The barometer index, BSE Sensex, was up 108.27 points or 0.62%, off about 80 points from the day's high and up close to 25 points from the day's low. The market breadth was strong. All the 13 sectoral indices on BSE were in the green. Mostly higher Asian stocks underpinned sentiment. Index heavyweight Reliance Industries (RIL) edged higher in early trade on reports RIL and BP PLC will submit a joint plan to the government to develop the D6 natural gas block and its satellite fields as an integrated unit. Bank stocks gained on renewed buying.

At 09:30 IST, the BSE Sensex was up 108.27 points or 0.62% to 17,554.02. The index rose 190.99 points at the day's high of 17,636.74 in early trade. The index gained 84.69 points at the day's low of 17,530.44 in early trade.



The S&P CNX Nifty was up 34.65 points or 0.66% to 5,315.85. The index hit a high of 5,336.70 and a low of 5,306.45 in intraday trade.

The market breadth, indicating the overall health of the market, was strong. On BSE, 830 shares rose and 309 shares fell. A total of 27 shares were unchanged

Among the 30-share Sensex pack, 25 gained while rest of them fell. TCS, Maruti Suzuki India and Jindal Steel & Power fell by between 0.52% to 0.94%. Bhel, Tata Steel and Tata Motors rose by between 1.3% to 1.9%.

Index heavyweight Reliance Industries (RIL) rose 0.99% on bargain hunting after Monday's near 5% slide. BP PLC and Reliance Industries (RIL) will reportedly submit a joint plan to the government to develop the D6 natural gas block and its satellite fields as an integrated unit. The proposal, which will be submitted in the next few weeks, will seek to maximise the use of existing infrastructure to develop all the fields which haven't been worked on yet, BP India chief Sashi Mukundan told reporters on Monday, 27 February 2012. The proposal is significant in that it will seek approval to develop an entire block as one unit, rather than follow the current practise of getting clearance for one oil or natural gas field at a time.

In 2011, BP purchased a 30% stake in 21 RIL's oil and gas blocks across India, including D6, which is India's biggest gas discovery so far. RIL is facing declining output at D6 due to reservoir complexity, a natural decline in reserves and delays in developing satellite fields. Output at the D1, D3 and MA fields in the D6 block has plunged to about 38 million metric standard cubic meters a day (MMSCMD) from 60 MMSCMD in June 2010. It is estimated that output will fall further to 27.60 MMSCMD in the next financial year starting April, and to 22.60 MMSCMD in the year after that.

RIL at the fag end of the trading session on Friday, 24 February 2012, announced that its wholly-owned subsidiary Reliance Holding USA, Inc. priced a $500 million reopening of its existing 5.4% Guaranteed Senior Notes due 2022. The additional notes will be consolidated and will form a single series with the $1,000 million 5.4% Guaranteed Senior Notes due 2022 and will be fully and unconditionally guaranteed by RIL. Reliance Holding USA, Inc. will apply the net proceeds to fund its ongoing capital expenditure, to make business investments, to refinance its existing debt and for general corporate purposes.

Bank stocks edged higher on renewed buying. India's biggest private sector bank in terms of branch network, ICICI Bank, rose 1.65% after the stock slumped almost 5% on Monday.

State Bank of India rose 1.04% after declining 3.70% on Monday. The bank on Monday, 27 February 2012, cut interest rates on education loans. Loans of up to Rs 4 lakh will now be charged an interest rate of 13.50%, down from 13.75% earlier, while those between Rs 4 lakh and Rs 7.5 lakh will be charged 13.25%, instead of 14.25% earlier. Loans above Rs 7.5 lakh will be given at an interest rate of 12.00%, a quarter percentage point less than earlier.

Meanwhile, the bank's managing director, Krishna Kumar, told the media on Monday, 27 February 2012, that the bank is not considering giving any fresh loans to loss-making Kingfisher Airlines. He said any decision to give fresh loans to Kingfisher depends on discussions within a consortium of banks.

India's second largest bank by net profit HDFC Bank rose 0.33% to Rs 515. The stock had hit a record high of Rs 538.85 in intraday trade on 22 February 2012.

Bank of Baroda rose 1.24% after the board of directors of the bank approved issuing up to 5% of pre-issue paid up capital of the bank to Life Insurance Corporation of India (LIC)/mutual funds on preferential basis. The bank announced this after during trading hours on Monday.

Foreign institutional investors (FIIs) bought shares worth a net Rs 329.09 crore on Monday, 27 February 2012, as per provisional data from the stock exchanges. FIIs have bought shares worth a net Rs 23767.99 crore in this month so far (27 February 2012), as per provisional data from the stock exchanges. The inflow 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 initial public offer (IPO) of commodity exchange Multi Commodity Exchange of India (MCX) was subscribed a massive 54.13 times. The IPO closed on Friday, 24 February 2012. MCX has priced its IPO at the upper end of the Rs 860-1,032 a share price band, raising about Rs 663 crore through the issue.

The government will announce Q3 December 2011 gross domestic product (GDP) data tomorrow, 29 February 2012. The GDP growth stood at 6.9% in Q2 September 2011, the slowest in over two years.

The government is working with state governments for early implementation of a goods and services tax (GST), Finance Minister Pranab Mukherjee said on 22 February 2012.

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. 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. The counting of the votes takes place on 6 March 2012, with the results due on the same day.

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.

Most Asian stock markets edged higher on Tuesday on positive economic data in the US. Key benchmark indices in Hong Kong, Indonesia, Singapore, and South Korea rose by between 0.09% to 0.38%. China's Shanghai Composite fell 0.39%.

Japan's Nikkei Average fell 0.76%. Japanese retail sales rose 1.9% in January 2012 from a year earlier compared to December's gain of 2.5%, the Ministry of Economy, Trade and Industry said Tuesday.

German lawmakers approved Monday a politically unpopular second bailout for Greece. The vote on Germany's contribution to the €130 billion rescue package passed with a large majority, despite opposition from within German Chancellor Angela Merkel's Christian Democratic Union.

Meanwhile, credit rating agency Standard & Poor's on Monday cut Greece's long-term ratings to 'selective default', the second ratings agency to proceed with a widely expected downgrade after the country announced a bond swap plan to lighten its debt burden.

Trading in US index futures indicated a flat opening of US stocks on Tuesday, 28 February 2012. US stocks ended mostly higher on Monday, as data showed further improvement in the US housing market. An industry group reported that contracts for home resales hit a near two-year high in January.