Market settles at nearly one week closing high

Key benchmark indices edged higher to hit highest closing level in nearly one week on firm European stocks and as US index futures gained. Recent strong buying by foreign funds of Indian stocks also aided sentiment. The barometer index, BSE Sensex, was up 285.53 points or 1.65%, up close to 325 points from the day's low and off about 20 points from the day's high. The market breadth was strong. All the 13 sectoral indices on BSE were in the green. Index pivotal Reliance Industries rose over 1%.

The barometer index, BSE Sensex has fallen 150.97 points or 0.85% in March 2012 so far (till 21 March 2012). The index has surged 2,146.79 points or 13.89% in calendar 2012 so far (till 21 March 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,465.85 points or 16.29%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,209.43 points or 11.15%.



Coming back to today's trade, capital goods stocks reversed initial losses. Banking stocks rose across the board on renewed buying. Realty stocks rose for the second straight day. Cement stocks extended recent gains on reports cement firms have hiked prices by Rs 7 to Rs 10 per bag of 50 kilogram, effective 17 March 2012, after the finance minister announced rationalization of excise duty on packaged cement. IT stocks gained on a weak rupee. Shares of houseware companies rallied on back of huge volumes as these companies may raise prices of its home appliances products by around 2% due to excise duty hike in the Budget. Shares of Tech Mahindra and Mahindra Satyam surged after the board of directors of these companies in a respective meeting today approved amalgamation of Mahindra Satyam with Tech Mahindra.

The market pared gains after moving into the positive terrain after opening lower. It was marginally lower after slipping into the red to hit fresh intraday low in morning trade. It hovered between the positive and negative terrain in mid-morning trade. It surged to hit fresh intraday high in early afternoon trade. Key benchmark indices hit fresh intraday high in afternoon trade. It extended intraday gains to hit fresh intraday high in mid-afternoon trade as European stocks opened higher. It further extended gains in late trade.

Foreign institutional investors (FIIs) bought shares worth a net Rs 111.08 crore on Tuesday, 20 March 2012, as per provisional data from the stock exchanges. FIIs have made substantial purchases of Indian stocks recently. Their inflow totaled Rs 6426.82 crore in eight trading sessions from 9 to 20 March 2012, as per provisional data from the stock exchanges.

The BSE Sensex was up 285.53 points or 1.65% to 17,601.71, its highest closing level since 15 March 2012. The index gained 306.69 points at the day's high of 17,622.87 in late trade. The index declined 40.30 points at the day's low of 17,275.88 in early trade.

The S&P CNX Nifty was up 90.10 points or 1.71% to 5,364.95, its highest closing level since 15 March 2012. The index hit a high of 5,372.35 and a low of 5,256 in intraday trade.

The BSE Mid-Cap index rose 1.95% and outperformed the Sensex. The BSE Small-Cap index gained 1.23% and underperformed the Sensex.

The market breadth, indicating the overall health of the market, was strong. On BSE, 1758 shares rose and 1136 shares fell. A total of 130 shares were unchanged.

From the 30-share Sensex pack, 25 stocks rose and the rest fell.

Index heavyweight Reliance Industries (RIL) rose 1.05% to Rs 768.35. The stock was volatile. The stock hit a high of Rs 773.20 and a low of Rs 755.10. RIL's unit Infotel Broadband Services reportedly plans to launch voice and data services by September 2012. Initially, the services will be launched in a few cities.

RIL's largest gas fields in its flagging KG-D6 block have reportedly hit an all-time low production of about 28 million standard cubic meters per day as the firm shut six wells due to water and sand ingress. Dhirubhai-1 and 3 gas fields in the eastern offshore KG-DWN-98/3 or KG-D6 block, which started production in April 2009 at the rate of 30 mmscmd, saw output plummet to 28.16 mmscmd in the week ended March 4.

Essar Oil (EOL) rose 4.66% after company during market hours today announced the successful commissioning of its new Vacuum Gas Oil Hydrotreating Unit (VGOHDT) and Sulphur Recovery Unit (SRU) at its Vadinar Refinery. With this milestone, the Delayed Coker Unit (DCU) is the only expansion unit that remains to be commissioned as part of EOL's Rs. 8,300-crore Phase I expansion project. The project is now just days away from being fully completed which will expand the capacity of the refinery to 18 Million Metric Tonnes Per Annum (MMTPA) (375,000 barrels per day) and enhance complexity to 11.8 (from 6.1 currently), which is amongst the highest in the world.

Shares of houseware companies rallied on back of huge volumes as these companies may raise prices of its home appliances products by around 2% due to excise duty hike in the Budget. In the Budget for 2012-13, Finance Minister Pranab Mukherjee had proposed to raise excise duty to 12% from 10%. TTK Prestige, Hawkins Cookers and Butterfly Gandhimathi Appliances surged by between 5.55% to 14.65%.

IT stocks mostly gained as rupee dropped to two week low against the dollar on Wednesday as a fall in investors' risk appetite after fresh concerns about China's economic slowdown clouded foreign fund inflow expectations. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports. India's second largest software services exporter by revenue Infosys rose 1.47%.

India's largest software services exporter by revenue TCS rose 3.25%, with the stock extending Tuesday's 1.2% gains after the company announced during market hours on Tuesday the official opening of its Center of Excellence for Oracle Exadata Database Machine.

India's third largest software services exporter by revenues Wipro fell 0.33%.

HCL Technologies (HCL) rose 0.03% after the company and Cisco Systems, Inc. a global leader in information technology products, during market hours today announced that they are jointly creating vertical solutions. First of these solutions is targeted at the financial services industry to improve the end-customer experience.

Union Budget 2012-13 has nothing on the table to bring cheer to the Information Technology and ITES sectors which pleaded for relief from Minimum Alternate Tax (MAT) imposed on SEZ units and boost to the small & medium enterprises (SME) sector.

Tech Mahindra jumped 5.48% and Satyam Computer Services (Mahindra Satyam) surged 4.59% after these companies in a joint statement said during market hours today that the board of directors of these companies considered and approved the amalgamation of Mahindra Satyam with Tech Mahindra, along with certain wholly owned subsidiaries of Mahindra Satyam and Tech Mahindra with a view to consolidate the information technology / software and related businesses and to form a single entity providing services in this sector. Two shares of Tech Mahindra will be issued for every seventeen shares held in Mahindra Satyam.

On a pro forma basis, Mahindra Group will own 26.3% in combined entity. British Telecom will own 12.8%, 10.4% will be held as treasury stock, 34.4% will be held by the public shareholders of Mahindra Satyam and the balance 16.1% will be held by the public shareholders of Tech Mahindra.

Satyam was sold in April 2009 to Tech Mahindra, a unit of Mahindra Group after the founder of the Hyderabad-based company admitted to one of the largest accounting frauds in India.

Cement stocks extended recent gains on reports cement firms have hiked prices by Rs 7 to Rs 10 per bag of 50 kilogram, effective 17 March 2012, after the finance minister announced rationalization of excise duty on packaged cement. UltraTech Cement, Jaiprakash Associates, ACC, India Cements and Ambuja Cements rose by between 1.63% to 6.92%.

Banking stocks rose across the board on renewed buying. PSU bank stocks gained across the board. SBI, Bank of Baroda and Punjab National Bank rose by between 1.8% to 2.96%. The finance minister said in the budget that to protect the financial health of Public Sector Banks and Financial Institutions, Rs 15,888 crore is proposed to be provided for capitalisation in FY 2013.

Bank of India rose 2.8% after bank said during market hours today that it has revised term deposit rates in some maturities, effective from March 22, 2012.

Among private sector banks, HDFC Bank, Axis Bank, Kotak Mahindra Bank and ICICI Bank gained by between 1.34% to 3.32%.

Realty stocks rose for the second straight day. DLF, Unitech, Sobha Developers and HDIL rose by between 1.72% to 8.57%. Union Budget 2012-13 apart from providing some tax sops for affordable homes has not done anything to resurrect the demand for real estate sector.

The finance minister in the budget said government will allow external commercial borrowing (ECB) for low cost housing projects. He also proposed setting up of a Credit Guarantee Trust Fund to ensure better flow of institutional credit for housing loans. The Minister also proposed extending the scheme of interest subvention of 1% on housing loan up to Rs 15 lakh where the cost of the house does not exceed Rs 25 lakh, for another year.

Capital goods stocks reversed initial losses. Bhel, L&T, Punj Lloyd, Thermax, ABB, Siemens, and Praj Industries gained by between 0.73% to 4.56%. Union Budget 2012-13 disappointed power equipment makers which were anticipating that the government might impose an import duty of 14%-19% on mega/UMPP projects. A status quo on existing concessional import duty for mega and UMPP power projects means that domestic equipment makers who are augmenting their capacity continue to face strong competition in the domestic market.

Auto stocks mostly gained. Tata Motors rose 1.71% after falling 4.21% on Tuesday. The company has increased the prices of its commercial vehicles and passenger vehicles following hike in excise duty announced in Union Budget 2012-13 last week.

Small-car maker Maruti Suzuki India rose 0.25%. The government announced an across the board hike in excise duty for passenger vehicles in Union Budget 2012-13 last week.

India's largest utility vehicles and tractors maker by sales Mahindra & Mahindra rose 1.95%. M&M said during market hours on Tuesday that its board of directors has re-appointed Anand Mahindra as Vice-Chairman & Managing Director for a period of five years with effect from 4 April 2012. The board has also re-appointed Bharat Doshi as the Executive Director and Group Chief Financial Officer (CFO) for a period with effect from 28 August 2012 to 31 March 2015.

Among two wheeler makers, Bajaj Auto rose 2.5%. Hero MotoCorp fell 0.07%.

Sugar stocks rose on hopes government may allow additional two million tonnes export due to higher sugar production. Shree Renuka Sugars, Bajaj Hindustan and Balrampur Chini Mills rose by between 5% to 5.48%. The country's sugar production has increased by 14% to 21.16 million tonne till March 15 in the current marketing year that started October last year, according to data released by the Indian Sugar Mills Association (ISMA) on Monday.

Reliance Power (RPL) rose 2.67% after company said during market hours that on a petition filed by RPL, the Delhi High Court has passed an order on 20th March 2012, directing that no coercive steps shall be taken for the time being against RPL, by or on behalf of any of the States procuring power from the proposed Krishnapatnam Ultra Mega Power projects (UMPP) being developed by the company's wholly owned subsidiary, Coastal Andhra Power.

Metal stocks reversed initial losses. Bhushan Steel, Sterlite Industries, Sail, Tata Steel, JSW Steel, NMDC and Jindal Steel & Power rose by between 0.4% to 6.3%.

Union Budget 2012-13 has been positive for the steel sector in general, and the carbon steel/non alloy steel producers in particular. While hike in excise duty from 10% to 12% will increase the excise incidence, they can be passed on to the end customers. On the other hand, basic customs duty on flat rolled products like HR and CR coils of non alloy steel has been hiked from 5% to 7.5%. This should increase the landed cost of imports, and should marginally improve the pricing power of the domestic carbon steel producers like Steel Authority of India, JSW Steel, Tata Steel etc.

Steel producers will also benefit from cut in basic customs duty on capital goods, plant and equipment imported for setting up or substantial expansion of iron ore pellet plants or iron ore benefication plants from 7.5% to 2.5%. Removal of customs duty on steam coal, and cut in countervailing duty on steam coal from 5% to 1% will also bring down the cost of steam coal for the steel producers in general, and players with captive power plants in particular.

Oil exploration stocks fell along with crude oil prices. Cairn India, and ONGC shed by between 0.35% to 0.54%. Shares of Oil India rose 0.92%. Crude oil prices fell on Tuesday with crude futures for April delivery down $2.48, or 2.3%, to settle at $105.61 a barrel on the New York Mercantile Exchange. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms.

Shares of state-run oil-marketing companies (PSU OMCs) rose as crude oil prices fell. Indian Oil Corporation (IOC), HPCL and BPCL rose by between 0.24% to 1.47%. Lower crude oil prices will decrease under-recoveries of state-run oil marketing companies (PSU OMCs) on domestic sale of diesel, LPG and kerosene at controlled prices.The government has already freed pricing of petrol.

Cals Refineries clocked highest volume of 8.89 crore shares on BSE. LIC Housing Finance (1.68 crore shares), Mahindra Satyam (1.14 crore shares), Lanco Infratech (80.63 lakh shares) and HDIL (71.04 lakh shares) were the other volume toppers in that order.

LIC Housing Finance clocked highest turnover of Rs 452.94 crore on BSE. SBI (Rs 129.35 crore), Mahindra Satyam (Rs 88.40 crore), HDIL (Rs 72.42 crore) and TTK Prestige (Rs 86.20 crore) were the other turnover toppers in that order.

The United States on Tuesday exempted Japan and 10 European Union (EU) nations from financial sanctions because they have significantly cut purchases of Iranian crude oil, but left Iran's top customers China and India exposed to the possibility of such steps. The decision is a victory for the 11 countries, whose banks have been given a six-month reprieve from the threat of being cut off from the U.S. financial system under new sanctions designed to pressure Iran over its nuclear program. The list did not, however, include China and India, Iran's top two crude oil importers, nor U.S. allies South Korea and Turkey, which are among the top-10 consumers of Iranian oil.

European stock markets rose on Wednesday, tugged higher by banks, oil and pharmaceutical stocks. Key benchmark indices in France, Germany and UK rose by between 0.06% to 0.23%.

Asian shares were mixed on Wednesday, as concerns about China's slowing economy dampened the optimism generated by a brightening outlook for the U.S. economy. Key benchmark indices in Japan, South Korea, and Hong Kong fell by between 0.15% to 0.73%. Key benchmark indices in China, Singapore, Indonesia and Taiwan rose by between 0.15% to 0.35%.

Trading in US index futures indicated that the Dow could gain 21 points at the opening bell on Wednesday, 21 March 2012. U.S. stocks fell Tuesday, with the S&P 500 Index retreating after a three-session advance that had the index near a four-year high. The U.S. Commerce Department reported housing starts fell last month while permits for future building rose to their highest level since October 2008.