Market drifts lower as growth in services sector slows

Key benchmark indices snapped three-day winning streak as data showing slowdown in growth in the services sector in March 2012 and weak global stocks hurt sentiment. The barometer index, BSE Sensex, was down 111.40 points or 0.63%, up about 50 points from the day's low and off close to 65 points from the day's high. Interest rate sensitive banking and realty stocks snapped three-day winning streak. Cigarette major ITC hit record high. Bhel extended Tuesday's gains triggered by good provisional results for the year ended March 2012.

The Sensex had surged 538.81 points or 3.15% in three trading sessions to settle at 17,597.42 on Tuesday, 3 April 2012, from a recent low of 17,058.61 on 29 March 2012. The Sensex has gained 81.82 points or 0.47% so far in April 2012 (till 4 April 2012). The index has surged 2,031.20 points or 13.14% in calendar 2012 so far (till 4 April 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 2,350.16 points or 15.52%. From a 52-week high of 19,811.14 on 6 April 2011, the Sensex has lost 2,325.12 points or 11.73%.



Coming back to today's trade, tyre stocks rallied on softening of rubber prices, the main raw materials of tyre companies. Metal stocks declined. The market breadth turned positive from negative in late trade.

The market nudged lower in early trade on weak Asian stocks. The market trimmed losses in morning trade. Weakness continued on the bourses in mid-morning trade after the latest data showed growth in the services sector slipped to a five-month low in March 2012. Weakness continued in early afternoon trade. The market extended losses in afternoon trade as European markets edged lower in early trade. The market pared losses in mid-afternoon trade. The market moved in a narrow range in late trade.

The stock market remains closed tomorrow 5 April 2012 on account of Mahavir Jayanti and again on Friday, 6 April 2012 on account of Good Friday.

The BSE Sensex lost 111.40 points or 0.63% to settle at 17,486.02, its lowest closing level since 2 April 2012. The index fell 160.82 points at the day's low of 17,436.60 in afternoon trade. The index declined 44.16 points at the day's high of 17,553.26 in opening trade.

The S&P CNX Nifty lost 35.60 points or 0.66% to settle at 5,322.90, its lowest closing level since 2 April 2012. The Nifty hit a low of 5,305.30 and a high of 5,338.40 in intraday trade.

The BSE Mid-Cap index fell 0.03%. The BSE Small-Cap index rose 0.4%. Both these indices outperformed the Sensex.

BSE clocked turnover of Rs 2043 crore, lower than Rs 2238.97 crore on Tuesday, 3 April 2012.

The market breadth, indicating the overall health of the market, turned positive from negative in late trade. On BSE, 1,446 shares advanced and 1,344 shares fell. A total of 126 shares were unchanged.

From the 30-share Sensex pack, 23 stocks fell and rest of them rose.

Index heavyweight Reliance Industries (RIL) declined 0.71% to Rs 747.10. The stock gyrated in a band of Rs 744.05 and Rs 757.30. RIL is seen reporting weak Q4 earnings due to falling refining margins and reduced output from its KG-D6 gas blocks.

RIL early this week said its Jamnagar manufacturing unit is planning to take Maintenance and Inspection (M&I) shutdown of one of the diesel hydro treating unit for approximately three weeks duration from 2 April 2012. Routine activity of catalyst replacement is planned to be carried out during this shutdown and the opportunity will also be utilized to carry out revamp jobs so as to further enhance BS-IV grade diesel production capability from DTA refinery, RIL said. Remaining units of refinery, including crude processing units, are planned to operate at full throughput during this period, RIL said.

Cairn India rose 0.46% after the company after market hours on Tuesday said it has struck oil at Krishna-Godavari basin acreage in Andhra Pradesh. Cairn Energy India (CEIL), a wholly-owned subsidiary of Cairn India, reported the discovery in Nagayalanka-SE-1 well in the onshore block identified as KG-ONN-2003/1, a company statement said. CEIL is the operator of the block with 24% stake, while Cairn India holds 25%. The remaining 51% is with state-owned ONGC.

Metal stocks declined as LMEX, a gauge of six metals traded on the London Metal Exchange dropped 0.13% on Tuesday, 3 April 2012. Sterlite Industries, Bhushan Steel, JSW Steel, Tata Steel, Sail, Jindal Steel & Power and Hindustan Zinc shed by between 0.4% to 3.15%. But, Hindalco Industries rose 0.99%, with the stock reversing initial losses.

Domestic steel makers have reportedly raised the prices for both long and flat products by up to Rs 1500 a tonne to partially offset the rising production cost.

Coal India (CIL) fell 0.34% to Rs 341.60. The stock was volatile. The scrip hit a low of Rs 335 and high of Rs 344.45. As per reports, the government has issued a presidential decree to force CIL to guarantee long-term fuel supply to private power firms, as it used its discretionary authority to trump independent directors who resisted pressure from the Prime Minister's Office and said such pacts would harm the company. The rare government directive mandates that CIL will have to pay penalties if it fails to supply 80% of its commitment. But it also gives breathing space to Coal India by leaving it to the board of directors to decide what the penalty will be.

Shares of power generation companies rose as the decree will help power firms run idling plants, sell electricity and secure finance. It will help idling thermal plants with a total capacity of 28,000 megawatts (MW) that have been built by last December, and another 22,000 MW that will be constructed in the next three years. Reliance Power, JSW Energy, Indiabulls Power, GVK Power & Infrastructure, Torrent Power, and Adani Power rose by between 0.12% to 2.98%. Tata Power Company fell 0.35%.

India's largest power generation firm by capacity National Thermal Power Corporation (NTPC) rose 0.24%. During market hours today, 4 April 2012, the company said that the Unit 6 of 500 megawatts (MW) of Farakka Super Thermal Power Station is declared for commercial operation from 4 April 2012. With this, the commercial capacity of Farakka is 2,100 MW and that of NTPC is 31,490 MW.

Zee Entertainment Enterprises fell 2.18% to Rs 134.55. The company said during market hours today that the board of directors of the company at its meeting held today has approved a fresh buy-back of shares of the company up to a value not exceeding 10% of the paid-up capital and free reserves of the company as per audited annual accounts of the company for the year ended 31 March 2011. The buy-back will be under the open market mechanism through the stock exchanges, at a price not exceeding Rs 140 per share subject to the condition that the aggregate consideration payable for buy-back will be limited to Rs 280 crore, Zee said.

Tyre stocks rallied on softening of rubber prices, the main raw materials of tyre companies. CEAT, MRF, JK Tyre & Industries and Apollo Tyres rose by between 3.04% to 10.99%. The benefits of lower rubber prices and higher production capacity will be reflected in the financial performance of tyre companies in the coming quarters.

Interest rate sensitive banking stocks snapped three-day winning streak. India's biggest private sector bank in terms of net profit, ICICI Bank, declined 1.88%. India's second largest bank by net profit HDFC Bank fell 0.6%.

India's largest bank by branch network State Bank of India shed 0.3% to Rs 2164.30. The Executive Committee of the Central Board of the bank, at its meeting held on 30 March 2012 approved the allotment of 3.6 crore shares at an issue price of Rs 2,191.69 per share, to Government of India (GoI) by way of preferential allotment. GoI held 59.4% stake in SBI at end December 2011.

Interest rate sensitive realty stocks also snapped three-day winning streak. DLF, Unitech, HDIL, Godrej Properties, and D B Realty fell by between 0.57% to 3.64%.

According to reports, lenders like Canara Bank and IDBI Bank have slashed home loan rates for new borrowers. Reports suggested that Canara Bank slashed home loan rates by up to 175 basis points (100 basis points equal one percentage point), while IDBI Bank cut rates by up to 75 basis points. In both cases, only new borrowers will benefit, while the existing borrowers will have to continue with the old rates. Reports suggested that other rival banks would be forced to match the cuts in the loan rates.

Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance.

State-owned natural gas distributor GAIL (India) lost 2.8% on reports the Petroleum and Natural Gas Regulatory Board has cut LPG pipeline tariff for moving natural gas through pipelines by 20-24%. The tariff cut is for GAIL's LPG pipelines from Vizag to Secunderabad in Andhra Pradesh. The move comes on the back of a similar cut in tariffs for GAIL's Mumbai network last month.

India's largest engineering and construction firm L&T lost 0.94%. The stock slipped on profit taking after gaining 6.05% in gains in the preceding three trading sessions triggered by the company's construction division securing new orders worth Rs 1875 crore across various business segments in March 2012

L&T during trading hours today, 4 April 2012, said its Electrical & Automation business has completed the share sale formalities for the acquisition of UK-based Thalest Group, which is engaged in offering integrated platform management system and integrated bridge system solutions for naval warships, mercantile marine ships, vessels and floating systems.

India's largest power equipment maker by order book Bharat Heavy Electricals (Bhel) gained 3.54%. The stock extended Tuesday's 1.49% gains triggered by good provisional results for the year ended March 2012. Bhel's provisional net profit rose 14.25% to Rs 6868 crore on 13.76% growth in turnover to Rs 49301 crore in the year ended March 2012 over the year ended March 2011. Bhel's order inflow fell 63.48% to Rs 22096 crore in the year ended March 2012 (FY 2012) over the year ended March 2011 (FY 2011).

Separately, Bhel said on Tuesday it has withdrawn draft red herring prospectus (DRHP) filed with the capital market regulator, Securities and Exchange Board of India (Sebi), for the proposed follow-on public offer. The government was planning to divest 5% of its stake through a follow-on public offer in Bhel, which was approved by the Cabinet in 2011. The Government of India (GoI) owns 67.72% stake in Bhel.

IT pivotals reversed initial gains as Federal Reserve's March meeting suggested the US central bank was less likely to take further stimulus measures. US is the biggest outsourcing market for Indian IT firms. India's third largest software services exporter by revenues Wipro fell 0.53%. India's largest software services exporter by revenue Tata Consultancy Services (TCS) declined 0.05%.

India's second largest software services exporter by revenue Infosys fell 0.17%. The company announces Q4 March 2012 results on 13 April 2012.

The rupee fell on Wednesday dragged by strong overseas dollar as hopes for further monetary stimulus in the United States waned, prompting traders to pare short-dollar positions and hurting demand for riskier assets like equities. The rupee was at 51.12 to the dollar, weaker than Tuesday's close of 50.695/705. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

Mahindra Satyam fell 0.31%. The company announced during market hours today the launch of STAMP, an innovative structural quality service powered by CAST. This new offering aims at analyzing structural quality of the application stack resulting in delivering higher performance, greater reliability and increased security to the customers as well as reducing underlying technical debt, Mahindra Satyam said.

Cigarette maker ITC rose 0.11% to Rs 227.15 on defensive buying. The stock hit record high of Rs 228.50 today. ITC reportedly plans to invest $78.5 million in putting up a new hotel in Colombo, Sri Lanka.

Hindustan Unilever fell 1.08%. Hindustan Unilever and RIL have reportedly entered into a tie-up to collaborate in setting up a chain of beauty and wellness formats across the country. Reports stated that the beauty and wellness formats will be started in Reliance Hypermarkets in May.

Sugar stocks bucked weak market. Bajaj Hindusthan, Balrampur Chini Mills and Shree Renuka Sugars rose by between 0.95% to 1.78%.

Auto stocks were mostly lower. India's largest commercial vehicle maker by sales Tata Motors fell 0.7%, with the stock snapping two day winning streak triggered after the company reporting strong sales for the month just gone by. Tata Motors' total sales (including exports) of Tata commercial and passenger vehicles in March 2012 were 1,00,414 vehicles, a growth of 20% over 83,363 vehicles sold in March 2011. The company's monthly sales crossed 1,00,000 mark for the first time. The company's domestic sales of Tata commercial and passenger vehicles for March 2012 were 95,047 units, a 23% growth over 77,431 units sold in March last year.

Tata Motors clocked record sales of commercial vehicles and passenger vehicles in the year ended March 2012 (FY 2012).

India's largest utility vehicles and tractors maker by sales Mahindra & Mahindra (M&M) shed 1.14%. The company posted 25% increase in sales at 47,001 units in March 2012 over March 2011. This is the highest ever monthly sales number in the history of the company.

M&M's total tractor sales rose 10.2% to 2.35 lakh units in the year ended March 2012 (FY 2012) over the year ended March 2011 (FY 2011). Domestic tractor sales rose 10% to 2.21 lakh units in FY 2012 over FY 2011. For the month of March 2012, the total tractor sales stood at 17,405 units. Exports for the month registered an impressive growth of 33% at 1,485 units, M&M said. The company said it maintained its leadership position in the tractor industry in FY 2012.

India's largest car maker by sales Maruti Suzuki India rose 0.75%, with the stock recovering after two day losses. The company said during market hours on Monday that its total sales rose 3.3% to a record 1,25,952 units in March 2012 over March 2011. The company's domestic sales rose 2.1% to a record 1,12,724 units in March 2012 over March 2011.

The country's largest two-wheeler maker Hero MotoCorp was flat. The company reported 2.41% increase in its sales at 5,28,290 units in March 2012 over March 2011.

The country's second largest two-wheeler maker Bajaj Auto shed 0.9%. The company's total sales rose 9% to 3.35 lakh units in March 2012 over March 2011. Total sales rose 14% to a record 43.49 lakh units in FY 2012 over FY 2011. The data was announced during market hours on Tuesday, 3 April 2012.

Avance Technologies clocked highest volume of 2.4 crore shares on BSE. Kingfisher Airlines (1.87 crore shares), Cals Refineries (1.23 crore shares), Nagarjuna Oil Refinery (64.41 lakh shares) and Suzlon Energy (56.13 lakh shares) were the other volume toppers in that order.

MindTree clocked highest turnover of Rs 95.34 crore on BSE. SBI (Rs 70.70 crore), Max India (Rs 56.93 crore), Gitanjali Gems (Rs 52.67 crore) and Bhel (Rs 43.90 crore) were the other turnover toppers in that order.

Foreign institutional investors (FIIs) bought shares worth Rs 332.47 crore on Tuesday, 3 April 2012, as per provisional data from the stock exchanges. Their inflow totaled Rs 1541.06 crore in three sessions from 30 March 2012 to 3 April 2012, as per provisional data from the stock exchanges.

The next major trigger for the market is Q4 March 2012 and year ending March 2012 (FY 2012) earnings. Investors will focus on the guidance provided by the management for the year ending March 2013 (FY 2013) to gauge the earnings outlook.

IT bellwether Infosys announces Q4 March 2012 results on 13 April 2012. Lube oil major Castrol announces Q1 March 2012 results on 16 April 2012. Private sector bank HDFC Bank unveils FY 2012 results on 18 April 2012. HCL Tech unveils Q3 March 2012 results on the same day. ACC unveils Q1 March 2012 results on 19 April 2012. IndusInd Bank reports FY 2012 results on the same day.

ICICI Bank unveils FY 2012 results on 27 April 2012. Axis Bank announces Q4 results on the same day. Titan Industries and Dabur India unveil FY 2012 results on 30 April 2012. Housing finance major HDFC announces FY 2012 results on 7 May 2012. Colgate Palmolive (India) unveils FY 2012 results on 30 May 2012.

Growth in the Indian services sector slipped to a five-month low in March as optimism about the business outlook in the coming year faded to its weakest level since 2009, a survey showed on Wednesday. The HSBC Markit Business Activity index fell sharply to 52.3 in March from 56.5 the previous month, though it remained above the 50 level that divides growth from contraction for a fifth month.

The expansion of the manufacturing sector slowed for a third month in March as growth in new orders eased and costs for raw materials kept rising, a business survey showed on Monday. The HSBC manufacturing Purchasing Managers' Index (PMI), compiled by Markit, eased to 54.7 in March from 56.6 in February. In January, the PMI reading was 57.5. The index has now stayed above the 50 mark - which shows growth rather than contraction - for three years.

European markets edged lower on Wednesday after the US Federal Reserve dimmed hopes for fresh asset-buying, further underlining its divergence with an embattled Europe that remains in crisis-fighting mode. Key benchmark indices in UK, Germany and France were down by between 1.03% to 1.57%.

The final reading of the Markit eurozone composite purchasing managers index (PMI) for March improved from a preliminary estimate but still pointed to a contraction in the overall business activity in the 17-nation region last month and over the first quarter. The eurozone composite PMI came in at 49.1, up from an earlier estimate of 48.7 but below February's 49.3 reading. The level of 50 separates contraction and expansion

A widely watched gauge of activity in Britain's dominant services sector unexpectedly rose in March, easing concerns about the risk of a recession. The CIPS/Markit purchasing managers index (PMI) for the service sector rose to 55.3 from a reading of 53.8 in February. This is its highest level since January.

The European Central Bank is expected to hold interest rates at a record low of 1% later in the global day today and resist German pressure to flag an exit from its crisis-fighting mode as the euro zone recovery looks increasingly fragile and concerns grow about Spain.

Asian shares eased on Wednesday after the minutes from the US Federal Reserve's March meeting suggested the bank was less likely to take further stimulus measures. Key benchmark indices in Indonesia, Japan, Singapore and South Korea fell by between 0.99% to 2.29%. Stock markets in China, Hong Kong and Taiwan were closed for holiday.

Trading in US index futures indicated that the Dow could fall 90 points at the opening bell on Wednesday, 4 April 2012. US shares dropped on Tuesday after minutes from the Federal Reserve's latest interest-rate setting meeting showed less need for more asset buying. Minutes of the central bank's meeting published on Tuesday showed only two of the policy-setting Federal Open Market Committee's 10 voting members saw the case for additional monetary stimulus. The Fed's assessment of the economy remained cautious as policymakers worried about a still elevated US jobless rate and potential risks to the recovery. The Fed will update its outlook at its next meeting on April 24-25.