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Markets flat, consumer durables
March, 12th 2010

The equity benchmark indices were caught in no trade zone, on lower than expected industrial output data and Asian markets sulking further.

The BSE 30-share Sensex was down by 0.16 per cent while the broad-based National Stock Exchanges Nifty was showing a loss of near  0.1 per cent.

Eight out of 13 sectors were trading in negative zone. Consumer durable and capital goods indices were leading the list of losers after the shrink in the respective sectoral industrial production on month-on-month basis. Both indices were down by half a per cent while IT and power indices slipped by a quarter per cent.

Consumer durable major, Salora International slipped 2 per cent, Blue Star dipped by 1.6 per cent while BPL was trading 1 per cent down. Among the capital goods stocks, Punj Lloyd was down by near 1.2 per cent, BHEL slipped by 1 per cent while Suzlon, L&T and ABB were down by near 0.5 per cent.

Sensex heavy weight Reliance Industries was up by near 0.5 per cent while NMDC shot up by more than 1.5 per cent. As per reports, RIL is close to striking hydrocarbon at its Palar deepwater block in the Cauvery basin. In the Palar block, RIL is said to be testing a well. The hydrocarbon success would be known only after testing is completed.

BSE Midcap Index surged 0.14 per cent and BSE Smallcap Index moved 0.24 per cent higher.

Among the 30-member Sensex pack, 16 rose while the rest fell.

IT stocks fell on weak jobs data in the US as it is the biggest market for Indian IT firms. India's third largest software services exporter by sales Wipro fell 0.05 per cent. India's second largest software services exporter by sales Infosys fell 0.61 per cent.

But, India's largest software services exporter by sales Tata Consultancy Services (TCS) rose 0.18 per cent, with the stock gaining for the straight third day. Girja Pande, TCS's Asia-Pacific chairman reportedly indicated that the company hopes to quadruple its market share in Asia outside India within five to seven years.

Consumer durables stocks gained on hopes rise in disposable income following widening of tax slabs in the Union Budget 2010-11 may boost sales. Titan Industries, Asian Star Company, Videocon Industries and Rajesh Exports rose by between 0.21 per cent to 0.86 per cent.

India's largest drug maker by sales Ranbaxy Laboratories rose 0.63 per cent after the company said on Friday it is planning to achieve $3 billion in consolidated turnover by 2012 as part of its medium-term business plan. Among other healthcare stocks, Pfizer, Cipla, Dr Reddy's Laboratories and Sun Pharmaceutical Industries rose by between 0.12 per cent to 0.79 per cent.

Fortis Healthcare jumped 3.53 per cent after the company said it will buy 23.9 per cent of Singapore's Parkway Holdings from US buyout firm TPG Capital as a part of its expansion drive into Asia and the Middle East.

Auto stocks rose on strong vehicle sales last month. India's largest truck maker by sales Tata Motors rose 0.38 per cent. The stock had lost 3.24 per cent on Tuesday after Germany's Daimler AG offloaded its entire stake in Tata Motors in bulk deals. Daimler AG sold its entire about 2.56 crore shares at an average price of Rs 751.67 in Tata Motors through various bulk deals on Tuesday, 9 March 2010.

Tata Sons, the holding entity for Tata Group firms, and Citigroup have acquired a total of 86.5 lakh shares of Tata Motors from Germany's Daimler AG. Tata Sons bought 40 lakh Tata Motors shares at Rs 750 each, while Citi bought 46.5 lakh shares at Rs 752.41 each

India's largest tractor maker by sales Mahindra & Mahindra (M&M) rose 1.6 per cent. Mahindra & Mahindra is reportedly in talks with the Sonalika group to pick up a stake in the unlisted firm's unit which makes sports utility vehicles.

India's largest car maker by sales Maruti Suzuki India rose 0.54 per cent on bargain hunting after registered losses in the past two trading days triggered by fears of rise in competition after rival firm Ford on Tuesday entered the small car market with 'Figo'. Maruti Suzuki India, on Thursday said that Japanese auto giant Nissan has placed orders for 35,000 units of its small car A- Star for 2010-11 to sell it in the European market. Nissan sources the A-Star from Maruti's Manesar facility and sells it in the European market as 'Pixo'.

But, India's largest bike maker by sales Hero Honda Motors fell 0.05 per cent, extending Thursday's 0.98 per cent decline. Hero Honda has shortlisted Karnataka as one of the states for setting up its fourth manufacturing plant. Hero Honda Motors has reportedly proposed an investment of Rs 2,000 crore for the upcoming plant.

IVRCL Infrastructures & Projects rose 1.65 per cent, extending gains for the second consecutive day, after the company fixed 19 March 2010 as the record for a liberal 1:1 bonus issue.

Phillips Carbon Black jumped 5.32 per cent after the company's board approved raising up to Rs 200 crore via qualified institutional placement.

The market pared gains soon after hitting 1-1/2 month high at the onset of the trading session. It regained strength in morning trade. The market once again trimmed gains in mid-morning trade.

The market sentiment remains firm on sustained buying by foreign funds since the presentation of the Union Budget 2010-2011 on February 26. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 7815.98 crore this month, till 11 March 2010.

The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2 per cent hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8 per cent and inflation of about 4.5 per cent for 2010-2011.

Investors will eye figures of advance tax payment by top Indian firms which will give an indication of fourth quarter March 2010 earnings. The fourth and the last installment of advance tax is due on 15 March 2010.

The government will today unveil industrial production data for January 2010. Industrial production is expected to have risen more than 16.5 per cent in January 2010. Industrial output rose a robust 16.8 per cent in December 2010.

Food prices moderated slightly while fuel price inflation accelerated in late February adding pressure on the Reserve Bank of India (RBI) to raise rates at its April policy review. The wholesale price inflation (WPI) was at 8.56 per cent in January, just above the Reserve Bank of India's (RBI) end-March projection of 8.5 per cent.

The food price index rose 17.81 per cent in the 12 months to 27 February 2010, marginally lower than an annual rise of 17.87 per cent in the previous week. The recent government decision to raise fuel prices has also stoked inflation. The fuel price index rose 11.38 per cent in the 12 months to 27 February 2010, shooting up from an annual rise of 9.59 per cent in the previous week.

Market expectations of a rate hike remain unchanged as traders expect the RBI's next move will be to raise its benchmark lending and borrowing rates by at least 25 bps each to 5 per cent and 3.5 per cent respectively.

Policymakers including the deputy chairman of the planning commission have said earlier this week that food prices will moderate over the next few months.

Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.

Meanwhile, the follow-on public offer (FPO) of iron ore miner NMDC was subscribed 79 per cent at the end of the second day of the issue on Thursday. The FPO ends today, 12 March 2010.The government is divesting 8.38 per cent stake in NMDC through the FPO as a part of its aggressive divestment drive to raise funds in a bid to bring fiscal deficit down. The price band has been fixed between Rs 300 and 350.

Asian stock markets were mixed on Friday with investors worried about inflationary pressures in China. The key benchmark indices in China, Hong Kong, Indonesia and Taiwan fell by between 0.03 per cent to 0.26 per cent. The key benchmark indices in Japan, Singapore and South Korea rose by between 0.13 per cent to 0.77 per cent.

Investors are wary China may start raising interest rates to keep a lid on mounting inflationary pressures. The data released Thursday showed that China's inflation rate jumped to 2.7 per cent in February from 1.5 per cent in January

Meanwhile, Japan's industrial output rose 2.7 per cent in January, revised data showed on Friday, boosted by a sharp rise in production of cars and chemical products. The figure compared with an initial reading of a 2.5 per cent rise and a 1.9 per cent increase in December 2009, the trade ministry said.

Global investors are awaiting further insight into the state of the US economic recovery on Friday, 12 March 2010 when data on US retail sales and consumer sentiment figures will be out. The numbers are expected to indicate how big an appetite Americans have for spending.

Trading in US index futures indicated Dow could fall 8 points at the opening bell on Friday.

On Wall Street on Thursday, 11 March 2010, stocks were confined to a narrow trading range for most of the session, but a late bounce in financials pushed the S&P 500 to a 17-month high above the 1,150 mark. The Dow Jones industrial average finished up 44.51 points or 0.4 per cent, to 10,611.84. The S&P 500 index rose 4.63, or 0.4 per cent to 1,150.24. It now stands at its highest level since 1 October 2008. The Nasdaq Composite index rose 9.51 points or 0.4 per cent at 2,368.46.

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