Most sectoral indices on BSE decline

The key benchmark indices edged lower in choppy trade as macroeconomic worries arising from surging crude oil prices and geopolitical tensions due to crisis in Libya weighed on the sentiment. Global stocks fell as investors were worried about the risk of the unrest in Libya spreading to bigger economies such as Saudi Arabia and China. Eleven out of 13 sectoral indices on BSE were in negative zone. The market breadth was weak. Capital goods, auto, banking and metal stocks witnessed selling pressure. The Nifty fell below the 5,500 level, having moved above and below that level alternatively in intraday trade.



The BSE 30-share Sensex fell 142.15 points or 0.77%, up close to 109 points from the day's low and off close to 162 points from the day's high. Index heavyweight Reliance Industries (RIL) pared intraday strong gains triggered by a deal with BP announced after market hours on Monday, 21 February 2011.

The BSE Sensex is down 2,212.93 points or 10.78% in calendar year 2011 thus far, with foreign funds pressing sales. FII outflow in February 2011 totaled Rs 1846.90 crore (till 18 February 2011). FIIs had sold equities worth Rs 4813.20 crore in January 2011. FII outflow in the calendar year 2011 totaled Rs 6660 crore (till 18 February 2011).

Stocks were volatile. The market dropped amid a bout of initial volatility. The market cut losses in morning trade after hitting a fresh intraday low. The market slipped into the red once again after recovering sharply to trade in green for the brief period in mid-morning trade. The market once again slipped into the red after recouping intraday losses in early afternoon trade. The market once again came off lows later. A sudden slide was witnessed in early afternoon trade. Stocks remained weak in mid-afternoon trade. The market cut losses after hitting fresh intraday low in late trade.

Stocks may remain volatile in the near term ahead of the expiry of the near-month February 2011 derivatives contracts on Thursday, 24 February 2011.

A large number of stock deals cut by foreign institutional investors (FIIs) have reportedly come under the glare of tax authorities for alleged non-payment of securities transactions tax (STT). Over 1,500 verification notices have been served to NSE, India's largest stock exchange, institutional brokerages, which act as intermediaries in secondary market trades, and all leading foreign portfolio funds, most of which are offshore entities. They have been asked to provide details of transactions for the past few years and the STT paid on the deals.

STT is paid for trades where stocks are delivered to the buyer as well as for intra-day transactions where the buyer and seller square up positions before the closing hour. The tax under-recovery relates to deals where participatory notes (or PNs) were issued by FIIs. PNs are notes that allow offshore investors to trade in Indian stocks. The Income-Tax (I-T) department has questioned the PN deals that appear like day trades report said.

European stocks fell on Tuesday, adding to the previous session's retreat as mounting violence in oil-rich Libya prompted investors to cash in on recent lofty gains and turn to safer bets such as bonds. The key benchmark indices in France, Germany and UK declined by between 0.43% to 1.39%.

Asia stock prices slumped across the board on Tuesday as intensifying unrest in Libya made investors worried about the Middle East's political stability going forward, resulting in a sell-off of risk-sensitive assets. The key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan fell by between 1.33% to 2.60%.

Libyan armed forces have reportedly launched strikes on anti-government protesters, causing more than 200 casualties. The nation's leader Moammar Gadhafi said he's still in the capital, rejecting earlier reports that he might have exiled himself. His comments suggest his willingness to hold on to his 41-year-old regime.

Investors were worried about the risk of the unrest in Libya spreading to bigger economies such as Saudi Arabia and China. Chinese authorities detained dozens of political activists over the weekend after postings on the Internet called for people to protest in 13 cities.

Crude oil prices soared on worries about crude supply disruption. US crude was up $7.3 a barrel or 8.47% at $93.50 a barrel. As per reports, international oil companies working in Libya have begun halting operations in Libya, a member of Organization of the Petroleum Exporting Countries, amid intensifying clashes between supporters and opponents of Moammar Gadhafi.

Meanwhile, Moody's Investors Service changed the outlook on the Japan's Aa2 sovereign rating to negative from stable on Tuesday, warning that government policies may not be enough to rein in the country's huge public debt.

Trading in US index futures indicated that the Dow could tumble 121 points at the opening bell on Tuesday, 22 February 2011. US markets were closed on Monday, 21 February 2011, for the President's Day holiday.

Back home, Prime Minister Manmohan Singh said in parliament that the country cannot afford to stall parliament and said he is committed to root out corruption. He said government will set up a Joint Parliamentary Committee (JPC) to probe 2G telecom scam. The Opposition leader Sushma Swaraj later gave a go ahead for the proceeding of the Budget session of the parliament. 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 Budget session of parliament began on Monday, 21 February 2011, with President Pratibha Patil's speech and will last until 21 April 2011.

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 to encourage the growth of domestic steel industry. 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.

The BSE 30-share Sensex fell 142.15 points or 0.77% to 18,296.16. The index rose 19.59 points at the day's high of 18,457.90 in mid-morning trade. The Sensex fell 250.98 points at the day's low of 18,187.33 in late trade.

The S&P CNX Nifty fell 49.40 points or 0.9% to 5,469.20. The Nifty hit high of 5,519.45 in intraday trade.

The BSE Mid-Cap index underperformed the Sensex, falling 0.85%. The BSE Small-Cap index outperformed the Sensex, falling 0.73%.

The market breadth, indicating the health of the market, was weak. On BSE, 1,713 shares declined while 1,125 shares advanced. A total of 101 shares remained unchanged.

The BSE Oil & Gas index (up 1.26%), Consumer Durables index (up 1.21%), IT index (down 0.53%), TECk index (down 0.57%), Realty index (down 0.64%) and FMCG index (down 0.70%), outperformed the Sensex.

The BSE Healthcare index (down 0.85%), Power index (down 0.91%), Metal index (down 1.16%), PSU index (down 1.24%), Bankex index (down 1.85%), Auto index (down 1.93%) and Capital goods index (down 2.12%), underperformed the Sensex.

BSE clocked turnover of Rs 3160 crore, higher than Rs 2776.50 crore on Monday, 21 February 2011.

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

Index heavyweight Reliance Industries (RIL) jumped 2.98% to Rs 985.05, off day's high of Rs 1008.65. The stock was the major gainer from the Sensex pack after the company said after market hours on Monday, 21 February 2011 that British Petroleum (BP) will take 30% stake in 23 oil and gas blocks of the firm. On BSE, 33.15 lakh shares changed hands in the counter. 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 also entered into a 50-50 joint venture for sourcing and marketing of gas in India. The joint venture is also aimed at creating infrastructure for transportation and marketing of natural gas in India. The RIL stock had risen 2.04% on Monday ahead of the announcement.

India's largest engineering and construction firm by sales Larsen & Toubro fell 2.65%. The company, last week, bagged a Rs 1100-crore EPC order from GSECL.

Among other capital goods shares, Thermax, Areva T&D India, Punj Lloyd, Jyoti Structures, Praj Industries, Gammon India, Crompton Greaves, Bharat Heavy Electricals, Everest Kanto Cylinders, Elecon Engineering, SKF India, BEML, Havells India and Siemens fell by 0.51% to 4.38%.

Marketmen expect the government to continue thrust on development spending in the Union Budget 2011-2012 to be unveiled on 28 February 2011. The government may selectively raise import barriers for capital equipment, especially power equipment to facilitate domestic players. The government could also unveil policies to increase capital flows to the infrastructure sector at lower financing costs.

Auto stocks fell on worries of slowdown in sales after crude futures surged to reach its highest levels since October 2008. Hero Honda Motor, Ashok Leyland, Maruti Suzuki India, Tata Motors, TVS Motor Company, Mahindra & Mahindra and Bajaj Auto fell by 0.56% to 3.55%.

Tata Motors fell 2.12%. As per reports, Tata Motors is in talks with Great Wall Motor, China's largest manufacturer of sport utility vehicles, over a possible collaboration with its Jaguar and Land Rover unit. Among other auto stocks

Maruti Suzuki fell 2.38%. The company has unveiled a diesel version of its 'SX4' sedan car.

Fears of a hike in excise duty on automobiles in the Union Budget 2011-12 also weighed on auto stocks. Marketmen expect the government to raise excise duty specifically on diesel cars in the Union Budget 2011-12 to be presented in the Parliament on 28 February 2011.

Banking stocks fell across the board on profit taking. India's largest commercial bank by branch network State Bank of India fell 2.31%. State Bank of India recently raised term deposit rates on two maturity buckets -- 555 days and 1,000 days -- by 25 basis points. Simultaneously, to protect its margins, the bank has marked up its lending rate by 25 basis points. All rate hikes are effective from 14 February 2011.

India's second largest private sector bank by market capitalisation HDFC Bank shed 2.59%. India's largest private sector bank by market capitalisation ICICI Bank slipped 0.98%.

Among other bank shares, Axis Bank, Yes Bank, Bank of India, Bank of Baroda, Karnataka Bank, Federal Bank, Union Bank of India, Allahabad Bank, Canara Bank, Oriental Bank of Commerce, Indian Overseas Bank, Kotak Mahindra Bank, Punjab National Bank and IDBI Bank were down by 0.52% to 3.34%.

It is anticipated 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.

Metal stocks declined. Jindal Saw, Jindal Steel & Power, Steel Authority of India, Sesa Goa, Bhushan Steel, Tata Steel, JSW Steel, Hindustan Zinc, Hindalco Industries and National Aluminium Company fell by 0.19% to 2.58%. However, Sterlite Industries (up 1.42%) and NMDC (up 0.33%), rose.

Consumer durables stock bucked weak market. Gitanjali Gems, Titan Industries and Videocon Industries rose by between 0.88% to 3.65%.

India's largest drug maker by sales Ranbaxy Laboratories dropped 3.05% to Rs 494.20 after the company forecast a 1.75% fall in consolidated sales at approximately Rs 8400 crore for the year ending December 2011. Ranbaxy announced the sales outlook along with the year ended December 2010 (FY 2010) results during market hours today, 22 February 2011. Ranbaxy Laboratories' consolidated net profit surged 404.82% to Rs 1496.75 crore on 16.42% rise in sales to Rs 8550.70 crore in the year ended December 2010 over the year ended December 2009.

Delta Corp gained 1.58% to Rs 70.65 after the company through its subsidiary -- Delta Hospitality & Leisure entered into a share purchase agreement to acquire a majority stake of between 67%-100% in Marvel Resorts.

Aptech spurted 2.97% at Rs 107.40 after the company's wholly owned subsidiary received dividend of $7,229,983, equivalent to Rs 32.65 crore from its Chinese venture.

Balrampur Chini Mills fell 1% to Rs 74 after the company's board approved a proposal for buyback of its own shares.

Goodyear India soared 5.75% to Rs 230, after net profit jumped 104.6% to Rs 22.49 crore on 23.1% rise in net sales to Rs 339.43 crore in Q4 December 2010 over Q4 December 2009.

Reliance Industries reported a highest turnover of Rs 330 crore on BSE. Reliance Industrial Infrastructure (Rs 168.91 crore), State Bank of India (Rs 135.64 crore), Tata Steel (Rs 84.48 crore) and Titan Industries (Rs 76.96 crore), were the other turnover toppers on BSE in that order.

Unitech reported a highest volume of 66.07 lakh shares on BSE. Reliance Communications (45.99 lakh shares), Suzlon Energy (35.17 lakh shares), Reliance Industries (33.16 lakh shares) and Jai Corp (30.92 lakh shares), were the other volume toppers on BSE in that order.