BSE Mid-Cap, Small-Cap indices in red

High volatility was the order of the day as the key benchmark indices, which hovered in negative territory for most part of of the trading session, spurted in late trade. IT stocks led the rally. The 50-unit S&P CNX Nifty crossed 5500 mark, with the sentiment boosted by the government's decision on Sunday to concede opposition parties' demand for setting up a Joint Parliamentary Committee (JPC) to investigate the 2G spectrum scam, which could end the deadlock in the parliament.



Index heavyweight Reliance Industries (RIL) jumped more than 2% ahead of the company's announcement after trading hours of an equal joint venture with British Petroleum for sourcing and marketing of gas in India. Reliance Anil Dhirubhai Ambani (ADA) group shares rose across the board. All the sectoral indices on BSE, barring the BSE Auto index, were in green. The BSE 30-share Sensex rose 226.79 points or 1.25%, up close to 356 points from the day's low and off close to 19 points from the day's high.

The market breadth, indicating the health of the market, was negative, having recovered from a weak breadth earlier in the day. The BSE Mid-Cap and Small-Cap indices were in the red, underperforming the Sensex. European and Asian stocks were fell as tensions continued to flare in the Middle East and North Africa.

The BSE Sensex is down 2,070.78 points or 10% in calendar year 2011 thus far, with foreign funds pressing sales. FII outflow in February 2011 totaled Rs 2,091.40 crore (till 17 February 2011). FIIs had sold equities worth Rs 4813.20 crore in January 2011. FII outflow in the calendar year 2011 totaled Rs 6904.50 crore (till 17 February 2011).

The market was volatile right from the onset of the trading session today. The Sensex regained positive zone soon after slipping into the red for a brief period after a positive start. The market slipped into the red once again to hit fresh intraday low. The market pared gains in morning trade after recovering sharply from the day's low. Volatility continued in mid-morning trade as the Sensex alternatively swung between positive and negative terrain in mid-morning trade. The market cut losses after hitting fresh intraday low in early afternoon trade.

The Sensex recovered once again after hitting fresh intraday low. The market slipped into the red once again after recovering sharply from the day's low to trade in the green for a brief period in mid-afternoon trade. The market surged to fresh intraday high in late trade.

Stocks may continue to remain volatile this week ahead of the expiry of the near-month February 2011 derivatives contracts on Thursday, 24 February 2011.

There is a need for tight monetary and fiscal policies to deal with high inflation, C. Rangarajan, the chairman of the Prime Minister's Economic Adivisory Council, said on Monday. He said he expects headline inflation to ease to 7% by March 2011. The industrial sector is likely to grow at 8.1% in the fiscal year ending March 2011 and the growth rate is expected to quicken to 9.2% in the following year, Rangarajan said.

President Pratibha Patil said on Monday that the key priority for the Government in the fiscal year ending in March 2012, is to rein in inflation. Addressing a joint session of Parliament today, 21 February 2011, she said that the common man must be protected from spiraling food prices. There is a need for a more conducive environment for attracting foreign direct investment (FDI), the President said, adding that the global economic landscape is complicated.

Patil said the government was considering a series of measures to weed out corruption, from fast tracking graft cases against civil servants to clipping the powers of ministers. "My government stands committed to improving the quality of government and enhancing transparency, probity and integrity in public life," Patil said. "A Group of Ministers is considering all measures, including legislative and administrative, to tackle corruption and improve transparency.

There is a need to balance environmental and developmental needs, Patil said. "My government has constituted a group of ministers to look into all issues relating to the reconciliation of environmental concerns arising out of different kinds of developmental activities, without in any way diluting our pursuit of ecologically sustainable growth paths," she said. The Budget session of parliament which started today will continue till 21 April 2011.

Prime Minister Manmohan Singh is expected to make a statement on the Joint Parliamentary Committee (JPC) on the 2G spectrum scam in Parliament on Tuesday, 22 February 2011 and a resolution on the JPC will be moved on Thursday, 24 February 2011, as per media reports. The 2G scam, which may have cost the exchequer up to $39 billion in lost revenue, has led to the sacking and arrest of a former minister. The Central Bureau of Investigation raided a television channel owned by the family that runs the DMK last week in connection with allegations that it had been paid $47 million by firms which had benefited from the 2G mobile licence sale.

The next major trigger for the stock market is Union Budget 2011-2012 to be unveiled by finance minister Pranab Mukherjee on 28 February 2011. Investors will watch if the Finance Minister announces measures to rein in inflation and inflationary expectations.

Pawan Kumar Bansal, the minister of parliamentary affairs said on Friday, 18 February 2011, said the government will introduce a legislation on goods and service tax (GST) in the Budget session of parliament beginning 21 February 2011. The original deadline of 1 April 2010 for roll-out of GST has already been missed due to the lack of consensus between the Centre and states on the issue. GST is India's most ambitious indirect tax reform plan, which aims to stitch together a common market by dismantling fiscal barriers between states.

Railway Budget will be announced on Friday, 25 February 2011. The Economic Survey will be tabled in the parliament on the same day after the Railway Budget.

Marketmen expect the government to continue thrust on development spending in the Budget. The capital goods sector expects the government to selectively raise import barriers for capital equipment, especially power equipment to facilitate domestic players. For the auto sector, marketmen expect the government to keep excise duty rate unchanged in the Budget. In the previous budget, the excise duty was increased by 2%.

The IT industry expects extension of the sunset clause on tax exemption for software technology parks under Section 10 A/10 B which is due to expire in March 2011. For the metal sector, marketmen expect hike in import duty on HR coil from 5% to 10% in the Budget. The metal industry also expects a continued thrust on infrastructure spending in the Budget.

Banking and financial sector anticipates that the government might reduce the tenure limit for tax exempt deposits from five years to three years in the Budget. Market men also expect government subsidy/concessions on interest rates to be provided on lending to State Electricity Boards (SEBs) given their weak financial health. Another expectation is that of a hike in limit of refinancing from India Infrastructure Finance Company (IIFCL) to commercial bank loans for public-private partnership (PPP) projects in critical sectors from the current Rs 6000 crore.

The cement sector has sought a uniform rate of excise duty on cement as compared to differential rate of excise duty on cement sold above or below maximum retail price (MRP) of Rs 190 per 50 kilogram bag. The FMCG sector anticipates a continued thrust and higher allocations to social and developmental programs.

The media sector expects a relaxation of foreign direct investment (FDI) norms i.e. an increase in FDI limits from currently 49% in direct to home (DTH) and cable, 26% in news broadcasting & print media and 20% in radio sector.

European shares slipped on Monday on growing uncertainty over the impact of political tension in oil producing regions after escalating social unrest in Libya over the weekend. The key benchmark indices in France UK and Germany fell by between 0.31% to 0.76%.

Over the weekend unrest in the Middle East and North Africa spread to Morocco for the first time, defying predictions the country would likely be spared calls for greater democracy. Morocco has been a monarchy for 1000 years. Crowds marched in the capital of Rabat this weekend, asking for changes. Meanwhile, in Libya fierce clashes between protesters and security forces left at least 173 people dead, according to reports.

Asian stocks eased on Monday as a fresh round of policy tightening from China and spreading unrest in the Middle East and Africa encouraged profit-taking after last week's solid gains. The key benchmark indices in Hong Kong, Taiwan, Indonesia, South Korea and Singapore fell by between 0.05% to 0.53%. The key benchmark indices in Japan and China rose by 0.14% to 1.14% respectively.

Beijing on Friday, 18 February 2011, raised banks' required reserves to a record 19.5% which would reduce the amount of deposits the country's lenders can loan out.

US markets are closed today, 21 February 2011, for the President's Day holiday. Buying frenzy continued in US stocks on Friday, 18 February 2011, which posted gains for the third consecutive week.

The G20 finance ministers after a two-day meeting on Friday, 18 February 2011, and Saturday, 19 February 2011, reached a compromise deal to correct global economic imbalances and expressed concern over excessive commodity price volatility impacting the world food security. The finance ministers and central bank chiefs, who could not reach a broad consensus on framing rules for current account deficit and real exchange rate and reserves, said "our aim is to agree, by our next meeting in April," on a set of indicative guidelines to ensure orderly economic growth.

The BSE 30-share Sensex rose 226.79 points or 1.25% at 18,438.31. The index jumped 245.97 points at the day's high of 18,457.49 in late trade. The Sensex fell 128.86 points at the day's low of 18,082.66 in mid-afternoon trade.

The S&P CNX Nifty rose 59.65 points or 1.09% to 5,518.60.

The BSE Mid-Cap index fell 0.04% and the BSE Small-Cap index fell 0.09%. Both these indices underperformed the Sensex.

The market breadth, indicating the health of the market, was negative, recovering from weak breadth earlier in the day. On BSE, 1465 shares declined while 1395 shares advanced. A total of 112 shares remained unchanged.

BSE clocked turnover of Rs 2762 crore, lower than Rs 3723.62 crore on Friday, 18 February 2011.

The IT index (up 2.76%), TECk index (up 2.11%), Consumer Durables index (up 1.97%), Oil & Gas index (up 1.81%), Metal index (up 1.31%), outperformed the Sensex. The Bankex index (up 0.99%), FMCG index (up 0.95%), Realty index (up 0.61%), PSU index (up 0.60%), Capital Goods index (up 0.57%), Healthcare index (up 0.51%), Power index (up 0.30%), Auto index (down 1.18%), underperformed the Sensex.

Among the 30-member Sensex pack, 20 rose while the rest fell.

Index heavyweight Reliance Industries (RIL) rose 2.04% to Rs 956.50. The company said after market hours today, 21 February 2011 that British Petroleum (BP) will take 30% stake in 23 oil and gas blocks of Reliance Industries. The deal would fetch Reliance Industries $7.2 billion. RIL would also be entitled to future performance payments of up to $1.8 billion based on exploration success that results in development of commercial discoveries. These payments and combined investment could amount to $20 billion, RIL said in a statement.

The two petroleum majors have entered into a 50-50 joint venture for sourcing and marketing of gas. The joint venture is also aimed at creating infrastructure for gas transportation.

State-owned Oil and Natural Gas Corp's (ONGC) rose 2.98% after an independent audit showed the company's 64 domestic fields have total reserves of 1.06 billion tonnes (Bt) of oil and oil equivalent natural gas .ONGC, in preparation for its share sale next month, had engaged Gaffney Cline and Associates (GCA) and DeGolyer & MacNaughton (D&M) to audit 64 domestic fields of the company. GCA prepared audited etimates for Mumbai High field and D&M prepared audited estimates for 63 other fields.

IT stocks rose on expectations the ongoing recovery in developed markets economies could drive demand for export driven IT sector. India's second largest IT exporter by sales Infosys rose 2.05%, reversing initial losses. The company said last week it has expanded operations in Thiruvananthpuram, inaugurating first software development block (I) at Technopark Campus II (SEZ) with a total investment of Rs 180 crore.

India's largest IT exporter by sales TCS jumped 4.24%, reversing initial losses. India's third largest IT exporter by sales Wipro rose 4.12%, with the stock gaining for the second straight day.

Among other IT shares, MphasiS, Tech Mahindra, Rolta India, HCL Technologies, Financial Technologies, Oracle Financial Services Software and Aptech rose by 0.29% to 4.37%

The IT industry expects extension of the sunset clause on tax exemption for software technology parks under Section 10 A/10 B which is due to expire in March 2011.

Some FMCG stocks gained on possible announcement of reforms in agriculture sector and populist majors in Union budget 2011-12. The FMCG sector derives substantial revenue from the rural sector. Ruchi Soya Industries, ITC, Tata Global Beverages, Hindustries Unilever and Marico rose by 0.32% to 2.12%.

Some consumer durables stocks also rose. Titan Industries, Rajesh Exports and Videocon Industries rose by 0.06% to 4.64%.

Auto stocks fell on fears the government may rollback fiscal stimulus by hiking excise duty on automobiles in Union Budget 2011-12 to be presented in the Parliament on 28 February 2011. Tata Motors, TVS Motor Company, Escorts, Hero Honda Motors, Maruti Suzuki India, Ashok Leyland and Mahindra & Mahindra fell by 0.01% to 3.33%. However, Bajaj Auto rose 0.22% to Rs 1338.20, coming off day's low of Rs 1322.20.

Metal stocks rose as LMEX, a gauge of six metals traded on the London Metal Exchange gained 1.31% on Friday, 18 February 2011. JSW Steel, Sterlite Industries, Jindal Saw, NMDC, Jindal Steel & Power, Bhushan Steel, Hindalco Industries, National Aluminium Company, Hindustan Zinc and Steel Authority of India rose by 0.12% to 4.12%. However, Tata Steel was down 0.08% at Rs 637.45.

Reliance Anil Dhirubhai Ambani (ADA) group shares rose across the board. Reliance Communications, Reliance Infrastructure, Reliance Capital, Reliance MediaWorks, Reliance Power and Reliance Broadcast Network gained by between 0.53% to 4.34%.

ARSS Infrastructure Projects reported a highest turnover of Rs 138.41 crore on BSE. State Bank of India (Rs 118.99 crore), Reliance Industries (Rs 100.07 crore), Tata Steel (Rs 99.97 crore) and Tata Motors (Rs 79.89 crore), were the other turnover toppers on BSE in that order.

Cals Refineries reported a highest volume of 88.45 lakh shares on BSE. Unitech (74.08 lakh shares), Shree Ashtavinayak Cine Vision (50.46 lakh shares), Reliance Communications (42.99 lakh shares) and Time Technoplast (37.78 lakh shares), were the other volume toppers on BSE in that order.