Sensex, Nifty scale 2-1/2-week highs

Key benchmark indices edged higher for the third straight trading session to attain their highest closing level in 2-1/2 weeks as firm global stocks boosted sentiment. The barometer index, BSE Sensex, jumped 225.95 points or 1.28%, off close to 30 points from the day's high and up about 135 points from the day's low. World stocks rose on optimism of a Greece bailout. Index heavyweight Reliance Industries (RIL) advanced close to 3%. The market breadth was positive.

From a recent low of 17,145.52 on 7 March 2012, the BSE Sensex has gained 668.10 points or 3.89% in three trading sessions. The barometer index has risen 60.94 points or 0.34% in March 2012 so far (till 13 March 2012). The index has surged 2,358.70 points or 15.26% in calendar 2012 so far (till 13 March 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,677.76 points or 17.69%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 1,997.52 points or 10.08%.



Coming back to today's trade, interest rate sensitive bank stocks rose for the second day in a row after the Reserve Bank of India (RBI) after market hours on Friday, 9 March 2012, announced a reduction of 75 basis points in banks' cash reserve ratio (CRR) requirement to ease liquidity situation in the banking system. Car major Maruti Suzuki India struck a 52-week high. Pharma major Sun Pharmaceutical Industries scaled record high.

Software pivotals were mixed ahead of the US Federal Reserve policy meeting later Tuesday. IT major Wipro edged lower after the Azim Premji Thrust, the promoters of Wipro, said it will sell up to 3.5 crore shares of Wipro via an offer for sale mechanism prescribed by Sebi. Coal India gained after the company said that its board of directors has approved payment of interim dividend of Rs 9.50 per share for the year ending March 2012 (FY 2012) as recommended by the Audit Committee of the company.

Key benchmark indices surged in early trade on firm Asian equities. The market extended initial gains in morning trade to hit its highest level in nearly two weeks. The market held firm in mid-morning trade. Firmness continued in early afternoon trade. The market was hovering near intraday highs in afternoon trade. The market remained firm in mid-afternoon trade. The market pared gains after hitting a fresh intraday high in mid-afternoon trade.

The BSE Sensex surged 225.95 points or 1.28% to settle at 17,813.62, its highest closing level since 24 February 2012. The index jumped 255.25 points at the day's high of 17,842.92 in mid-afternoon trade. The index rose 92.56 points at the day's low of 17,680.23 in early trade.

The S&P CNX Nifty jumped 69.95 points or 1.31% to settle at 5,429.50, its highest closing level since 23 February 2012. The index hit high of 5,438.65 and a low of 5,390.80 in intraday trade.

The BSE Mid-Cap index rose 1.21% and the BSE Small-Cap index gained 1.03%. Both these indices underperformed the Sensex.

The total turnover on BSE amounted to Rs 2910 crore, higher than Rs 2353.78 crore clocked on Monday, 12 March 2012.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,712 shares rose and 1,215 shares fell. A total of 129 shares were unchanged.

Among the 30-share Sensex pack, 25 gained while only five of them declined.

Index heavyweight Reliance Industries (RIL) rose 2.72% to Rs 818.65, with the stock extending two-day 4.66% gain. RIL along with BP PLC 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 is significant in that it will seek approval to develop an entire block as one unit, rather than follow the current practice 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.

Essar Oil rose 2.34% after the company announced during market hours today the successful commissioning of a Diesel Hydrotreater Unit I (DHDT-I) at its Vadinar Refinery. With the phase wise commissioning of three additional units slated for the end of this month, the refinery is now firmly on track to complete the Phase I expansion by March 2012, which entails the addition of nine new units that will expand capacity to 18 million metric tonnes per annum (MMTPA) (375,000 barrels per day) and enhance complexity to 11.8 (from 6.1 currently). With this commissioning, Essar Oil's capital expenditure programme is beginning to taper downwards and will see substantial pick up in revenue and profitability of the company going forward, the company said.

India's largest pharmaceuticals firm by market capitalisation Sun Pharmaceutical Industries rose 1.28% to Rs 583.15. The stock hit a record high of Rs 589.20 in intraday trade today, 13 March 2012.

Biocon tumbled 6.31% after the company and Pfizer announced termination of their alliance to commercialize Biocon's biosimilar versions of insulin and insulin analog products. The company made this announcement before trading hours today, 13 March 2012. The two companies have agreed that due to the individual priorities for their respective biosimilars businesses, it is in their best interest to move forward independently.

Interest rate sensitive auto stocks were mixed. India's largest car maker by sales Maruti Suzuki India rose 2.27% to Rs 1367.90. The stock hit a 52-week high of Rs 1382 in intraday trade today, 13 March 2012.

India's largest commercial vehicles maker by sales Tata Motors shed 0.21% on profit booking. The stock had gained 6.57% in prior three trading sessions.

India's largest utility vehicles maker Mahindra & Mahindra (M&M) declined 1%. During market hours Friday, 9 March 2012, M&M said, as part of its ongoing rationalisation of finished stocks, it would be observing no production days up to 2 days per week for the remaining period of March 2012 at the company's tractor plants located at Rudrapur, Nagpur and Jaipur. The management does not envisage any material adverse impact on availability of tractors in the market due to adequacy of tractor stocks to serve the market requirements, the company said.

India's largest bike maker by sales Hero MotoCorp rose 1.81%. Recent reports indicated that the company is building in-house capabilities to make its own engines by teaming up with the world's largest privately-owned engine developer AVL of Austria.

India's second largest bike maker by sales Bajaj Auto shed 0.43%. TVS Motor Company rose 0.9%.

The Budget announcement by Finance Minister Pranab Mukherjee on 16 March 2012 is expected to bring bad news for the automobile sector, with a likelihood of more taxes, especially on diesel vehicles, which will lead to price hikes and further slowdown in demand.

Bank stocks rose for the second day after the Reserve Bank of India (RBI) announced a reduction of 75 basis points in banks' cash reserve ratio (CRR) requirement to ease liquidity situation in the banking system. The announcement was made after trading hours on Friday, 9 March 2012.

India's largest bank by branch network State Bank of India gained 0.75%. The stock extended Monday's 3.96% advance. The bank's chairman Pratip Chaudhuri was quoted by the media as saying on Sunday, 11 March 2012, that the bank may go in for a follow-on-public-offer (FPO) or institutional placement of shares next fiscal to fund its business growth.

India's biggest private sector bank in terms of branch network, ICICI Bank was flat at Rs 929.60, off day's high of Rs 943.35. India's second largest bank by net profit HDFC Bank rose 0.95%.

Software pivotals were mixed ahead of the US Federal Reserve policy meeting later Tuesday. US is the biggest outsourcing market for Indian IT firms. India's largest software services exporter by revenue TCS gained 0.63%.

Shares of India's third largest software services exporter by revenues, Wipro, lost 1.29% to Rs 431.50 after the Azim Premji Trust, the promoters of Wipro, after market hours on Monday, 12 March 2012, said it will sell up to 3.5 crore shares of Wipro. The trust will sell the stake tomorrow, 14 March 2012, via an offer for sale mechanism prescribed by Sebi. The auction through the stock exchanges mechanism will begin at 9:15 IST and end at 13:30 IST.

The shares on offer from the trust represent 1.42% of Wipro's equity capital. The Azim Premji Trust held 8.66% stake in Wipro as on 31 December 2011. Total promoter holding in Wipro stood at 79.15% as on 31 December 2011.

India's second largest software services exporter by revenue Infosys rose 1.51%. During market hours today, 13 March 2012, the company announced its partnership with GlaxoSmithKline to optimize digital channels across the latter's global consumer healthcare and pharmaceuticals business lines. The partnership in association with Fabric Worldwide, a WPP company, will simplify and improve effectiveness of how GSK delivers digital engagement with consumers and healthcare professionals, Infosys said.

Jet Airways India spurted 7.64%. Jet Airways said during market hours today, 13 March 2012, it will clear its service tax arrears of Rs 35 crore on 15 March 2012. It said that the service tax department has already received Rs 35 crore as per the mutually accepted payment schedule and that the carrier will pay an equal amount to the authorities on 15 March 2012.

Kingfisher Airlines fell 3.05% after Finance Minister Pranab Mukherjee reportedly said today, 13 March 2012, that State Bank of India has no plans to lend more to the debt-laden air carrier.

Shares of companies whose fortunes are linked to orders from Indian Railways were mostly lower ahead of the railway budget. BEML, Simplex Casting, Stone India, Kalindee Rail Nirman and Titagarh Wagons fell by between 0.25% to 3.87%. Kernex Microsystems and Texmaco rose by between 0.48% to 0.67%. The Railway Budget will be presented tomorrow, 14 March 2012.

Given the financial condition of railways, this Rail Budget is likely to seek a two-year moratorium on paying dividend to the government.

Interest rate sensitive realty stocks rose on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance. HDIL, DB Realty and Unitech rose by between 1.89% to 4.63%.

India's largest real estate developer by sales DLF advanced 1.61%. After market hours on Monday, 12 March 2012, the company said it received an order from Competition Commission of India (CCI) in connection with information filed by Magnolia Flat Owners Association against the company. DLF said that conclusion of the said order is similar to the order of the CCI dated 16 August 2011. However, the order says that since a penalty has been imposed in the earlier case, it will not be appropriate to separately impose penalty again in the instant case. DLF said it will take requisite legal action against the order at the Competition Appellate Tribunal (COMPAT). DLF said it believes that it has a strong case.

Property consultants and real estate developers have reportedly demanded industry status to the realty sector in the forthcoming Budget. They have also sought incentives to promote affordable housing and an increase in the tax exemption on home loans. To boost supply, they have also asked for a single-window clearance for real estate development projects and foreign direct investment (FDI) in multi-brand retail to create demand for retail space in shopping malls.

Textile stocks gained after trade secretary Rahul Khullar told reporters on Monday a panel of ministers will likely review a halt on fresh cotton exports from India in two weeks. Arvind Mills, Patspin India, Jindal Cotex, Birla Cotsyn, Jindal Worldwide, Alok Industries and Vardhman Textile rose by between 0.51% to 5.14%. The government has flip-flopped on the issue of banning cotton exports. After saying it was lifting a ban on overseas sales of the fibre on the weekend, Khullar said on Monday no fresh exports would be allowed and only the quantity permitted to be sold before the ban will be allowed to be shipped.

Cement stocks rose on reports the recent hike in railway freight rates is expected to push up cement prices by Rs 8 to Rs 10 a 50-kg bag. ACC, Ambuja Cements, Jaiprakash Associates and India Cements gained by between 1.22% to 4.91%. UltraTech Cements rose 1.38% to Rs 1493.20. The stock hit a record high of Rs 1501 today. There are expectations that the Government may increase excise duty by two per cent in the Budget to make up for the widening fiscal deficit, reports said.

Metal stocks edged higher on renewed buying. Sail, Bhushan steel, Hindustan Zinc, Hindalco Industries, Tata Steel, Nalco, and Jindal Steel & Power rose by between 1.45% to 5.04%.

India's largest non-ferrous metal firm by capacity Sterlite Industries (India) jumped 5.06% to Rs 120.35 with the stock extending two-day 4.75% gain. It was the top gainer from the Sensex pack.

Coal India gained 1.8% after the company said that its board of directors has approved payment of interim dividend of Rs 9.50 per share for the year ending March 2012 (FY 2012) as recommended by the Audit Committee of the company. The announcement was made after market hours on Monday, 12 March 2012.

Meanwhile, as per reports Children's Investment Fund, a foreign institutional investor, has threatened to sue Coal India's board and has threatened to pursue legal action against individual directors for failing to protect minority investors' interests. The investment fund is protesting the government interference in coal pricing, reports added.

Capital goods shares extended Monday's gains after data released on that day showed that capital goods production fell 1.5% in January 2012 from a year earlier, compared with a revised 16.3% decline in December 2011. Capital goods production had risen 5.3% in January 2011 from a year earlier. Larsen & Toubro, Bhel, BGR Energy Systems, Crompton Greaves, Siemens, ABB, Suzlon Energy and SKF India rose by between 0.05% to 6.55%.

PSU stocks rose after Finance Minister Pranab Mukherjee said on Tuesday the government plans to raise Rs 30000 crore by selling stakes in state-run firms in the fiscal year that begins on 1 April 2012. MTNL, ONGC, RCF, REC, Neyveli Lignite, and Bharat Electronics rose by between 1.29% to 3.89%.

The government has also set a target of Rs 25000 crore from asset sales for the 2013/14 fiscal year, Mukherjee told lawmakers in a written reply. Mukherjee said the projections are based on the medium-term fiscal policy laid out last year.

Cals Refineries clocked highest volume of 3.02 crore shares on BSE. Suzlon Energy (1.37 crore shares), Lanco Infratech (1.36 crore shares), Avance Technologies (94.90 lakh shares) and Surya Chakra Power Corporation (83.68 lakh shares) were the other volume toppers in that order.

Multi Commodity Exchange of India (MCX) clocked highest turnover of Rs 183.87 crore on BSE. SBI (Rs 92.18 crore), Glodyne Technoserve (Rs 70.50 crore), HDIL (Rs 52.65 crore) and United Breweries (Rs 49.67 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) made substantial purchases of Indian stocks over the past two trading sessions. FIIs bought shares worth a net Rs 1298.64 crore on Monday, 12 March 2012, as per provisional data from the stock exchanges. Their inflow totaled Rs 2583.29 crore in two trading sessions on 9 and 12 March 2012, as per provisional data from the stock exchanges

Data on advance tax for the last installment of 15 March 2012 may provide cues on Q4 March 2012 corporate earnings.

Finance Minister Pranab Mukherjee said on Tuesday the government plans to raise Rs 30000 crore by selling stakes in state-run firms in the fiscal year that begins on 1 April 2012. The government has also set a target of Rs 25000 crore from asset sales for the 2013/14 fiscal year, Mukherjee told lawmakers in a written reply. Mukherjee said the projections are based on the medium-term fiscal policy laid out last year.

Industrial production grew 6.8% in January 2012 from a year earlier, sharply higher than a revised 2.5% rise in December 2011, helped by a strong rebound in manufacturing output, data released by the government on Monday, 12 March 2012, showed. Manufacturing output, which has a 75.5% weight in the index of industrial production, rose 8.5% from a year earlier in January. It had risen a revised 2.6% on year in December. Electricity production increased 3.2% from a year earlier in January while capital goods output shrank 1.5%.

The Reserve Bank of India (RBI) after market hours on Friday, 9 March 2012, surprised the markets by slashing the cash reserve ratio (CRR) by 75 basis points to 4.75% from 5.5% to ease liquidity situation. The CRR cut, effective the fortnight beginning 10 March 2012, will inject around Rs 48000 crore of primary liquidity into the banking system. At the 3rd quarter policy review in late January 2012, RBI had announced a cut of 50 basis points in CRR, thereby injecting Rs 32000 crore into the cash-strapped system.

The government will release data on inflation based on the wholesale price index (WPI) for February 2012 tomorrow, 14 March 2012. WPI inflation for February 2012 is projected at 6.7% as per the median estimate of a poll of economists carried out by Capital Market. WPI inflation stood at 6.55% in January 2012.

The Reserve Bank of India (RBI) is slated to announce a mid-quarter review of the monetary policy on Thursday, 15 March 2012, a day before the presentation of the Union Budget 2012/13.

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.

Stating that the United Progressive Alliance (UPA) was committed to honest and efficient governance, President Pratibha Patil on Monday said the country would soon be back on the high growth path of eight to nine percent from the seven percent estimated for the current fiscal. Addressing the joint session of Parliament on first day of the budget session, the President said the long-term fundamentals of the Indian economy remain robust. The government plans to achieve a 9% annual growth target in the five-year plan period ending on 31 March 2017.

Mukherjee will present the annual budget for 2012/13 on Friday, 16 March 2012, while the railways budget will be presented on Wednesday, 14 March 2012. The government will present on Thursday, 15 March 2012 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 assembly polls.

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.

Meanwhile, the parliamentary standing committee on finance on Friday, 9 March 2012, gave its approval to a revised version of the proposed Direct Taxes Code (DTC) Bill, 2010. The committee has recommended a more progressive tax regime, which entails widening of the income-tax slabs, increasing the exemption limit for savings and raising the ceiling for wealth tax. If accepted, these recommendations will increase disposable incomes in the hands of taxpayers, encourage savings and levy a higher tax on the rich, besides reducing compliance costs for the income-tax department.

The DTC Bill, 2010, consolidates and integrates all the direct tax laws and replaces both the Income Tax Act, 1961, and the Wealth Tax Act, 1957. The committee headed by Bharatiya Janata Party leader Yashwant Sinha, which submitted its report to the Lok Sabha speaker on Friday, 9 March 2012, has also recommended abolition of the securities transaction tax (STT). The committee has favoured a corporate tax rate of 30% and also recommended that the government should calibrate the capital gains tax regime for long term and short term.

Securities Transaction Tax (STT) is applicable to the purchase or sale of equity shares, derivatives, units of equity-oriented funds through a recognised stock exchange in India or the sale of a unit of an equity-oriented fund to a mutual fund. STT is payable equally by the purchaser and seller at 0.125% of the transaction value on delivery based transactions. On non-delivery based transactions in equities or units of an equity oriented fund, it is payable by the seller at 0.025%. In case of sale of options in securities, STT is levied at the rate of 0.017% of the option premium to be paid by the seller. In case of sale of options in securities where the option is exercised, STT is levied at 0.125% of the settlement price and is paid by the purchaser. In case of sale of futures in securities, STT at 0.017% is to be paid by the seller.

European markets edged higher on Tuesday on a surprise jump in German economic sentiment. Key benchmark indices in UK, Germany and France were up by between 0.5% to 1.05%.

Euro-area finance ministers on Monday, 12 March 2012 signed off on a second Greek bailout and will give a formal approval on Wednesday, 14 March 2012, a day before the International Monetary Fund board votes on its contribution.

Asian markets edged higher on Tuesday on optimism that the Euro-area finance chiefs will complete the second Greek bailout. Key benchmark indices in Hong Kong, Japan, Indonesia, Singapore, South Korea and Taiwan were up by between 0.09% to 1.31%.

The Bank of Japan held off on easing monetary policy on Tuesday after last month's surprise loosening, but board member Ryuzo Miyao unsuccessfully proposed a further easing by increasing the bank's asset-buying and loan scheme by 5 trillion yen ($61 billion). As widely expected, the BoJ maintained its key policy rate at a range of zero to 0.1% by a unanimous vote. The bank left its asset purchase fund at 30 trillion yen and a credit-loan program at 35 trillion yen.

Trading in US index futures indicated that the Dow could gain 67 points at the opening bell on Tuesday, 13 March 2012.

US stocks ended on a flat note on Monday, 12 March 2012 after Federal Reserve Chairman Ben Bernanke stopped short of giving a strong signal of more stimulus during testimony in front of the US House of Representatives Financial Services Committee. The Dow Jones Industrial Average gained 37.69 points, or 0.29%, to 12,959.71. The Standard & Poor's 500 index rose 0.22 points, or 0.02%, to 1,371.09. The Nasdaq Composite index dropped 4.68 points, or 0.16%, to 2,983.66.

Analysts don't expect the US Federal Reserve to make any changes to its interest rate policy at today's policy meeting. The Fed has pledged to keep short-term interest rates at a record low until at least late 2014.