Market holds cards close to the chest ahead of RBI meeting

The market chose to remain cautious on the first day of the week, ahead of key events that are to unfold. The outcome of these events have the potential to swing the market either ways.

The first and the most significant of events is the Reserve Bank of India (RBI)’s monetary policy, which will be announced by noon tomorrow. The central bank is expected to hold interest rates steady at its policy review on Tuesday (24 April), although analysts say tightening is not over yet and the central bank may decide to take steps to curb capital inflows that have been driving up the rupee. The central bank will also set out its forecasts for the year, including that on inflation and growth.

Prior to this, it has already raised the reserve requirement for banks three times since December 2006 and raised its main lending rate five times since early-June 2006, to try and curb credit growth as well as inflation.

Also, intense volatility is expected ahead of the expiry of the April 2007 derivative contracts on Thursday (26 April 2007).

The market, which was highly volatile throughout the day, finally settled with modest gains. The benchmark Sensex was in great nick at the start of the session, but pared gains in the second half of trading, as profit-booking set in at the higher levels.

The 30-share BSE Sensex gained 30.92 points, to end at 13,928.33. It had opened firm, at 13,972.81, and vaulted to a high of 14,046.52, as buying continued. Its low for the day is 13,879.39.

The S&P CNX Nifty was up 1.55 points (0.04%), to finish at 4,085.10.

As per provisional data, FIIs were net sellers to the tune of Rs 142.49 crore today. Domestic institutional investors were net buyers to the tune of Rs 258 crore today.

The Sensex had last hit the 14,000 mark on 23 February 2007 and had closed above the coveted mark for the last time on 22 February 2007. The Sensex’s all-time peak is of 14,723.88, which was attained on 9 February 2007. The benchmark Sensex's all-time closing high is 14,652.09, of 8 February 2007.

The market-breadth, which measures the overall health of the market, ended negative, as selling of smallcap and mid-cap shares began. On BSE, 1,387 scrips declined compared to 1,177 that advanced. A total of 83 stocks remained unchanged. The BSE Mid-Cap Index ended at 5,702.44, a gain of 3 points (0.06%), while the BSE Small-Cap Index settled at 6,970.92, down 3 points (0.05%) from its previous close.

The total turnover on BSE was unusually high compared to that in the previous few sessions, thanks to a number of block deals that were executed in a lot of counters.

Three massive block deals of 93.21 lakh shares each (amounting roughly 1.8% of stake), struck in the Gujarat Ambuja Cements (GACL) counter, at an average Rs 116.05 per share on BSE were a salient feature of opening trade. The stock was down 0.61% to Rs 114.75, on total volumes of 3.03 crore shares. Undoubtedly, it was the top-traded counter on BSE with a turnover of Rs 352.55 crore. As per reports, Holcim, the world's second-biggest cement maker, raised its stake in the Indian cement major to nearly 30% in a deal worth $78 million.

Phoenix Mills was the fourth most-traded counter on BSE with a turnover of Rs 119.95 crore. Two block deals of 2.43 lakh shares were executed in the counter on BSE, at an average Rs 1581 per share in early trade.

A block deal of 10.20 lakh shares was struck in the Cairn India counter, at Rs 132 per share, by 14:25 IST.

As a result of the block deals, the total turnover clocked a neat Rs 4111.37 crore on BSE while the total market-wide turnover was at Rs 45203.74 crore.

Among the 30-Sensex pack, 16 declined while the rest advanced.

Shares from the metal pack, bucked the sluggish trend. The BSE Metal Index closed at 9,896.84, up 2%, and was the top-gainer among the sectoral indices.

Tata Steel surged 4.71% to Rs 559.50, on a high volume of 22.96 lakh shares, and was the top-gainer. It had advanced to a high of Rs 560, in intra-day trade.

Maharashtra Seamless (up 5.92%), Jindal Steel (up 5.08%), Sail (up 0.20%), and Jindal Saw (up 2.25%) were the other gainers from the metal space.

REL (up 2.10% to Rs 521.75), Hindalco (up 0.80% to Rs 147.85) and Satyam Computers (up 0.85% to Rs 480.50) were the other gainers.

Reliance Communications advanced 1.62% to Rs 463.80, on expectations of strong earnings growth, driven by a robust rise in the subscriber base and an increased penetration of value-added services. Reliance Communications will announce its results on 30 April 2007.

Bharti Airtel, however, was down 0.95% to Rs 837.55, after striking an all-time high of Rs 867.80. Bharti Airtel unveils its Q4 results on 27 April 2007.

Index heavyweight Reliance Industries (RIL) was up 1.10% to Rs 1558, on a volume of 6.24 shares. It had advanced to a high of Rs 1560, while its low was at Rs 1527.

Drug major Ranbaxy Laboratories lost 0.37% to Rs 342.05, after investing more than $20 million (over Rs 83 crore) in the Romanian subsidiary, Terapia Ranbaxy. The move is a part of the company’s strategy to make the subsidiary its hub for Europe and Commonwealth of Independent States (CIS).

Terapia SA, an 86-year-old company, was acquired by Ranbaxy for $324 million (Rs 1,347 crore) in June, last year. The combined operations of Terapia and Ranbaxy established the largest Romanian generics company, with more than 1,200 employees, of which 350 form the largest professional field force in the Romanian pharmaceutical market. Terapia has a manufacturing plant in Romania, which Ranbaxy is now in the process of upgrading.

Ranbaxy had invested about $10 million (over Rs 40 crore) last year in Terapia and was looking at a similar investment in the same, post-acquisition, a Romanian news paper, Ziarul Financier, had said yesterday quoting Peter Burema, President of Ranbaxy’s global pharmaceutical division.

Cigarette major ITC was the top-loser, down 2.49% to Rs 156.60, on volumes of 17.18 lakh shares. It had also sunk to a low of Rs 154.85.

Banking stocks settled lower, ahead of the Reserve Bank of India (RBI)’s monetary policy meeting tomorrow. SBI (down 1.80% to Rs 1055.40), HDFC Bank (down 0.87% to Rs 986) and ICICI Bank (down 0.15% to Rs 913) declined.

Tata Power Company surged 4% to Rs 568, after it acquired Coastal Gujarat Power, a special purpose vehicle (SPV) formed for Mundra Ultra Mega Power Project (UMPP). A formal execution of the documents took place between Power Finance Corporation (PFC) and Tata Power, under the guidance of the Ministry of Power, Delhi. A performance bank guarantee of Rs 300 crore was provided by the company in favour of PFC. Coastal Gujarat Power has also signed power purchase agreements (PPAs) with seven procurers (distribution licensees) for the sale of contracted capacity and supply of 4000 MW electricity to these licensees but it delineates responsibility of procurers and company for the next important milestone. It also nominates Gujarat Distribution Company as the lead procurer on behalf of all procurers.

ABB gained 2.10% to Rs 3932, on continued buying, expecting a strong set of Q1 March 2007 results. ABB unveils Q1 results on 26 April 2007. Six brokerages expect 26.8 - 50.7% growth in ABB’s Q1 net profit, between Rs 65 crore and Rs 77.30 crore, compared to a net profit of Rs 51.30 crore in Q1 March 2006. Sales are seen rising 25 - 49.2%, between Rs 1003.60 crore and Rs 1198.20 crore, from Rs 802.91 crore in the March 2006 quarter.

Titan Industries plunged 6.20% to Rs 948, after the company reported a 18.5% decline in net profit in the March 2007 quarter. Titan Industries has reported a 18.50% decline in its net profit in the March 2007 quarter at Rs 30.32 crore (Rs 37.21 crore). Net sales surged 39.5% to Rs 605.83 crore from Rs 434.15 crore.

Sun Pharmaceutical Industries plunged 10.61% to Rs 1055, after the stock began trading ex-demerger of its R&D division into a separate company. On 5 April 2007, Sun Pharmaceutical Industries announced that its shareholders will get a share of Sun Pharma Advanced Research Company, which is being spun off for every share they held in Sun Pharmeceuticals. The company has fixed 30 April 2007, as the record-date for this purpose. Sun Pharma Advanced Research Company will be seperately listed on the bourses in due course.

Syngenta India rose by its maximum daily limit of 20% to Rs 625.20, after its parent set an exit price of Rs 730-per-share to delist the company.

Lead acid batteries maker Exide Industries gained 6.48% to Rs 48.50. On Friday (20 April), the company reported strong Q4 March 2007 results. The net profit jumped 49% to Rs 38.51 crore, on 38% growth in sales to Rs 528.89 crore.

IT services firm iGate Global Solutions gained 6.1% to Rs 356.50. Earlier during the month, iGate reported 42% sequential growth in net profit for Q4 March 2007 at Rs 22.65 crore from Rs 15.95 crore in the December 2006 quarter. The software developer had at the time of unveiling Q4 results said, the US subprime mortgage woes were hitting its revenues.

Alfa Laval rose 5.94% to Rs 999. It was the fourth-biggest gainer from the 'A' group scrips of BSE. The company holds a board meeting on 25 April 2007, to consider March 2007 quarter results.

Maharashtra Seamless gained 5.92% to Rs 562.50, ahead of its March 2007 quarter results scheduled on 25 April 2007.

Zee Entertainment Enterprises rose 2.19% to Rs 272.25, on reporting strong Q4 March 2007 results. ZEEL recorded 13% growth in consolidated net profit on a like-to-like basis, giving effect to restructuring in the March 2007 quarter to Rs 60.30 crore (Rs 53.50 crore). Operating revenue rose 11% on a consolidated basis to Rs 384.40 crore (Rs 347.60 crore). For the year ended 31 March 2007, ZEEL clocked 8% growth in net profit to Rs 219.40 crore, on 31% growth in operating revenue to Rs 1441.10 crore.

UltraTech Cement slipped 4.65% to Rs 803, despite the company reporting strong results for the March 2007 quarter. The scrip of Ultratech Cement had opened at Rs 860, a 2.11% rise to yesterday’s closing of Rs 842.15. UltraTech Cement posted a surge in net profit in the March 2007 quarter to Rs 231.54 crore (Rs 132.11 crore). Net sales surged 38.2% to Rs 1465.52 crore (Rs 1060.35 crore).

DTH service provider Dish TV India slumped 4.92% to Rs 104.35, after the Reserve Bank of India (RBI) barred fresh FII-buying in the counter. According to the central bank, the ceiling of 49% for such investment had already been reached in the counter.

The Nikkei average was little changed, giving up some of its earlier gains on Monday, as caution ahead of the earnings announcements put Yahoo Japan Corp and others under pressure. Hoya Corporation extended losses to fall more than 3% after posting a weaker-than-expected gain in the fourth-quarter profit on Monday.

The Nikkei inched up 2.75 points, or 0.02%, to 17,455.37.

Oil prices dropped in Asian trading on Monday after no major disruptions to production were reported around the weekend presidential election in Nigeria. An overseas monitor, however, said the electoral process failed to meet international standards.

Light, sweet crude for June delivery dropped 16 cents to $63.95 a barrel in electronic trading on the New York Mercantile Exchange midmorning in Singapore. The May contract on Friday rose $1.55 to settle at $63.38 a barrel before expiring, while the June contract settled at $64.11, up 79 cents.

FIIs have stepped up buying after Infosys gave a strong guidance for FY 2008 in dollar terms, putting to rest concerns about the impact of a slowdown in the US on India's IT sector. Their inflow for April 2007, till Friday (20 April 2007), aggregated Rs 5120 crore.

US stocks jumped on Friday (20 April), with the Dow closing at a record high after stopping short just 35 points from the 13,000 mark, as Google Inc., and Caterpillar Inc., joined the list of companies reporting stronger-than-expected quarterly results. The Dow Jones industrial average rose 153.35 points, or 1.20%, to end at 12,961.98, its third straight record close. The Standard & Poor's 500 Index was up 13.62 points, or 0.93%, at 1,484.35. The Nasdaq Composite Index was up 21.04 points, or 0.84%, at 2,526.39.