A spat between regulators on oversight of unit linked insurance products or Ulips weighed on the domestic bourses in what was a volatile trading session. Finance Minister Prananb Mukherjee was after market hours quoted as saying in the electronic media that the status quo on Ulips will continue. The BSE 30-share Sensex fell 80.14 points or 0.45%, off close to 140 points from the day's high and up close to 35 points from the day's low. Auto, capital goods and banking stocks led the fall. However, the market breadth was positive. India's largest IT exporter by sales Infosys edged higher ahead of its fourth quarter results on Tuesday, 13 April 2010.The stock market was volatile. The market bounced back soon after opening with a downward gap. The market slipped into the red shortly. The market came off the lower level after hitting a fresh intraday low in morning trade. The intraday recovery gathered further steam later with the key indices turning positive in afternoon trade tracking gains in European stocks. But the market soon slipped into the red. The market hit a fresh intraday low in mid-afternoon trade. It came off the lower level later.
NSE's volatility index India VIX surged after Friday's (9 April 2010) slide. The index rose 8.73% to 20.05. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days. The index is calculated based on the S&P CNX Nifty options prices.
The battle between the two regulators -- insurance regulator the Insurance Regulatory and Development Authority of India (Irda) and stock market regulator Securities and Exchange Board of India -- came out into the open late last week after Sebi barred 14 insurance firms from selling Ulips without its approval. The Sebi order was issued after trading hours on Friday, 9 April 2010. But the next day the Irda told the insurance firms to continue selling Ulips. The insurance regulator also assured Ulip investors that their investments are safe. Ulips are products similar to mutual funds with an added life cover. A large chunk of funds raised through Ulips are invested in equities.
In an order issued on Friday, 9 April 2010, Sebi wholetime member Prashant Saran said Ulips are akin to the characteristics of mutual funds which issue units to the investors and provide exit at net asset value of the underlying portfolio. Ulips launched/offered by these 14 entities are different from the traditional insurance products and they are a combination of insurance and investment, the Sebi order said.
Meanwhile, the Reserve Bank of India (RBI) on Monday allowed foreign institutional investors (FIIs) to use government bond holdings as well as foreign sovereign securities with AAA rating as collateral for stock market transactions, doing away with an earlier rule that only allowed cash to be used. However, cross-margining of government Securities placed as margins by FIIs for their transactions in the cash segment will not be allowed between the cash and the derivative segments of the market, RBI said.
On the macro front, the industrial output rose by lower than expected 15.1% February 2010 and also lower than 16.7% rise in January 2010. Production of capital goods rose 44.4%, while consumer durable goods output grew by an annual 29.9%.
Manufacturing production rose 16% in February from a year earlier, while mining output was up 12.2% and power generation rose 6.7%. A pick up in the economy has seen a rise in inflation with the headline number poised to breach 10% in March, above February's 9.89%. The government will officially announce the inflation data for the month of March on Wednesday, 14 April 2010.
Headline inflation, which was initially driven by high food prices, is now getting a push from other segments. Inflation in manufacturing accelerated to 7.4% in February from 6.5% in January, a sign that inflation is fast becoming a demand-driven problem.
The Reserve Bank of India, citing inflationary pressures and an improving economy, hiked key rates by 25 basis points last month and is expected to raise the rates again by at least the same amount at its policy review on 20 April 2010.
Meanwhile, the stock market remains closed on Wednesday, 14 April 2010, on account of Dr. Babasaheb Ambedkar Jayanti.
Europe stocks slipped into the red on Monday, 12 April 2010, on profit taking after euro zone finance ministers approved an emergency aid mechanism for Greece. The key benchmark indices in UK, Germany and France were down by between 0.01% to 0.07%.
Euro zone finance ministers approved a giant 30-billion-euro ($40.12 billion) emergency aid mechanism for debt-plagued Greece on Sunday but stressed Greece had not requested the plan be activated yet. Together with at least 10 billion euros expected from the International Monetary Fund in the first year, it could add up to the biggest multilateral financial rescue ever attempted.
Most Asian stocks rose on Monday on news the European Union had agreed on Sunday to details of a rescue package if the Greek government needs one. The key benchmark indices in Singapore, Japan, Indonesia and Taiwan rose by between 0.17% to 1.28%. But, the key benchmark indices in China, Hong Kong and South Korea fell by between 0.32% to 0.82%.
The Bank of Korea raised its economic growth expectations Monday to a growth of 5.2% in 2010, compared to the central bank's anticipated 4.6% expansion tipped in December.
Trading in US index futures indicated a flat opening of US stocks on Monday, 12 April 2010. Futures gave up initial gains.
US stocks rose on Friday with the Dow surpassing 11,000 for the first time in a year-and-a-half after Chevron's upbeat outlook and wholesale inventories data reinforced bets on an improving economy. The Dow briefly surpassed the psychologically important 11,000 mark late in the session for the first time since September 2008, when Wall Street was reeling from the credit meltdown, though the index closed a shade below that milestone.
Data showed US wholesale inventories rose more than expected in February and sales at wholesalers reached their highest level in 16 months, brightening prospects for first-quarter economic and earnings growth. The Dow Jones industrial average gained 70.28 points, or 0.64%, to end at 10,997.35. The Standard & Poor's 500 Index rose 7.93 points, or 0.67%, to 1,194.37. The Nasdaq Composite Index added 17.24 points, or 0.71%, to 2,454.05.
Closer home, expectations of good fourth quarter result by India Inc and heavy foreign fund inflows boosted the domestic bourses in the past few weeks with the key benchmark indices surging to their highest level in more than 25 months on Wednesday, 7 April 2010.
The market is entering an important period of quarterly earnings, with IT bellwether Infosys kickstarting the reporting season on Tuesday, 13 April 2010. The Q4 March 2010 results and management commentary on outlook could result in revision in earnings estimates of India Inc by analysts for the year ending March 2011 (FY 2011).
The forecast for the southwest monsoon for 2010 is the next major trigger for the market. Good rains this year after last year's drought will boost farm output and rural incomes. But another monsoon failure will add to inflationary pressure which in turn may hamper the current strong economic rebound. The June-September monsoon season is important for India as about 60% of the country's farmlands are rain-fed and more than half of the workforce is employed in the agriculture sector.
Tokyo-based Research Institute for Global Change has predicted normal monsoon rains in India for the current year. Agriculture secretary P K Basu said in a media interview on Monday, 5 April 2010, that early signs indicate normal monsoon rains this year. The Indian Meteorological Department (IMD) issues a monsoon forecast, usually in the second half of April after considering weather observations in different parts of the world and extrapolating statistical data.
A weakening El Nino is a positive sign for the monsoon, Ajit Tyagi, director general at the India Meteorological Department, said on 18 March 2010. The cyclical heating of the Pacific Ocean known as El Nino will continue to fade, US forecasters said last month. The weather event, which occurs every four to seven years, brings more rain to South America and less precipitation to Asia.
But abnormally hot weather and lower than expected rains are reportedly raising the spectre of India facing another water shortage in the coming kharif season, reports suggest. Rains were 66% lower than normal in March.
The BSE 30-share Sensex fell 80.14 points or 0.45% to 17,853. The Sensex rose 62.11 points at the day's high of 17,995.25 in early trade. The index fell 116.95 points at the day's low of 17816.19 in mid-afternoon trade.
The S&P CNX Nifty fell 22.05 points or 0.41% to 5339.70.
The BSE Mid-Cap index fell 0.1%. The BSE Small-Cap index rose 0.31%. Both the indices outperformed the Sensex.
The various sectoral indices on BSE were mixed. FMCG index (up 0.7%), Realty index (up 0.57%), IT index (up 0.19%), Consumer Durables index (up 0.13%), Metal index (down 0.24%), Oil & Gas index (down 0.33%), outperformed the Sensex. Healthcare index (down 0.52%), Power index (down 0.73%), PSU index (down 0.82%), Bankex (down 0.84%), Auto index (down 0.85%) and Capital Goods index (down 1.25%), underperformed the Sensex.
The market breadth, indicating the overall health of the market, was positive. On BSE, 1582 shares advanced as compared with 1305 that declined. A total of 83 shares remained unchanged. The breadth was much stronger earlier in the day.
Among the 30-member Sensex pack, 18 fell while the rest of them gained.
BSE clocked a turnover of Rs 3989 crore, lower than Rs 4805.12 crore on Friday, 9 April 2010.
Reliance Industries (RIL) rose 0.15% to Rs 1124.30, extending Friday's 1.78% gains. RIL after trading hours on Friday said the company will pay $1.7 billion to form a joint venture at one of the most promising natural gas deposit regions in the US with Atlas Energy, becoming the latest foreign company to invest in shale plays that are expected to be very lucrative. The stock hit a high of Rs 1138.80 and a low of Rs 1122. The firm will pick up a 40% stake in Atlas's operations in the booming Marcellus Shale, a gas project that spans parts of Pennsylvania, West Virginia and New York in the United States and which, according to some geologists, could hold enough natural gas to satisfy US demand for a decade.
Meanwhile, RIL has reportedly made four new gas discoveries at Krishna-Godavari D6 block. The company has requested the Directorate General of Hydrocarbons (DGH) for commercial approval, reports suggest.
India's largest IT exporter by sales Infosys rose 0.16% to Rs 2683.25 ahead of its fourth quarter result on Tuesday, 13 April 2010. The stock was volatile. It hit a high of Rs 2695.90 and a low of Rs 2652.35. The market buzz is that the company may announce a special dividend for the year ended March 2010 (FY 2010) when it unveils its Q4 March 2010 and FY 2010 results. Infosys has declared special dividend every alternate year over the few years i.e. in FY 2004, FY 2006 and FY 2008. The Infosys ADR rose 1.08% on Friday.
The key focus is on Infosys' guidance for the year ending March 2011 (FY 2011). The company unveils its Q4 March 2010 and year-ended March 2010 (FY 2010) results on 13 April 2010. Market men expect a muted revenue and earnings guidance from the IT major after taking into account cross currency impact, planned employee addition, wage hike and higher taxes. The government hiked the minimum alternate tax (MAT) to 18% from 15% in the Union Budget 2010-2011.
Infosys is seen reporting about 1% to 2% growth in net profit in Q4 March 2010 over Q3 December 2009. The IT bellwether's revenue is seen rising 2% to 3% sequentially on the back of higher volume growth.
India's third largest software services exporter by sales Wipro fell 1.06%. Its ADR rose 1.07% on Friday. But, India's largest software services exporter by sales Tata Consultancy Services rose 0.64%.
Capital goods pivotals fell on profit taking after recent strong gains. India's top power equipment maker by sales Bharat Heavy Electricals (Bhel) fell 1.29%. The stock had hit a 52-week high of Rs 2,570 on Friday, 9 April 2010. As per reports, Bhel and Karnataka State Electricity Board are likely to soon announce a Rs 9,000 crore joint venture project to set up a 1,600-megawatts power plant in the state.
India's largest engineering and construction firm by sales Larsen & Toubro (L&T) fell 2.04%. The company, last week, received an order worth Rs 1,060 crore from Gujarat State Petroleum Corporation (GSPC) to build an offshore oil platform.
Among other capital goods stocks, Siemens, ABB, Punj Lloyd, SKF India fell by between 0.04% to 2.1%.
Most auto stocks fell on profit taking after recent strong gains triggered by robust March 2010 sales figures. Vehicle sales in India should grow 10-15% in the fiscal year to March 2011, an industry body said on Friday 9 April 2010. In 2009/10, a total of 1.23 crore vehicles were sold in the country, up 26.4% from the previous fiscal year, data from the Society of Indian Automobile Manufacturers (SIAM) showed.
India's largest commercial vehicle maker by sales Tata Motors fell 3.24% on reports company is planning to sell a part of its shareholding in Tata Cummins, a diesel engine joint venture company, as Tata Motors explores options to divest non-core assets to reduce debt. The stock had jumped 4.51% on Friday after the company reported that the Land Rover brand had its best-ever monthly sales in the British market last month. The Tata Motors ADR rose 3.2% on Friday.
The Tata Motors stock had lost 2.41% on Thursday on reports one of its ultra-cheap Nano cars caught fire on Wednesday, 7 April 2010, perhaps due to a technical snag in its rear portion.
India's largest tractor maker by sales Mahindra & Mahindra fell 2%. As per recent reports the company has raised prices of utility vehicles due to a rise in input and fuel costs, and expenses associated with migrating to new emission norms.
India's top small car maker by sales, Maruti Suzuki India fell 0.66%, extending Friday's losses. The company recently raised prices of its vehicles across different models due to higher input costs and expenses from the introduction of the new Bharat Stage IV emission norms.
But, India's second largest bike maker by sales Bajaj Auto rose 0.35% in volatile trade. Bajaj Auto will distance itself from the parent brand Bajaj and focus on just four motorcycle brands - Boxer, Discover, Pulsar and KTM - as well as the rear-engine three-wheeler brand, phasing out the rest, managing director Rajiv Bajaj was quoted by the media as saying on Thursday.
India's leading bike maker by sales Hero Honda Motors rose 1.47% extending Friday's 2.02% gains.
From this month, 13 cities across the country have switched over to Bharat Stage IV emission norms. Following this, many carmakers, have increased the vehicle prices. With newer technology required for upgradation, auto companies had said they would have to pass on the increased cost to customers. Earlier in February 2010, following the 2% increase in excise duty on all non-oil products to 10% in the Budget, auto players had hiked prices of vehicles by up to Rs 70,000.
Automobile firms are seen reporting strong Q4 results on a healthy volume growth. However, the sector is witnessing a headwind of rising input costs. Recently, Maruti Suzuki raised car prices due to a surge in input costs and shift to new emission norms from 1 April 2010. M&M, too, hiked utility vehicles prices recently.
Banking stocks fell on fears the central bank may raise interest rates in its policy review on 20 April 2010. India's largest bank by net profit and branch network State Bank of India fell 0.69%. Chairman O.P. Bhatt said recently that the bank may raise its lending and deposit rates in a couple of months. The state-owned bank will wait for the Indian central bank's monetary policy action to take a final call on interest moves, Bhatt said.
India's largest private sector bank by net profit ICICI Bank fell 1.27%, reversing early gains. Its ADR rose 2.16% on Friday. India's second largest private sector bank by net profit HDFC Bank was flat. Its ADR rose 2.31% on Friday.
India's largest mortgage finance firm by total income Housing Development Finance Corporation fell 0.78%.
The Reserve Bank of India said on Friday banks would determine their lending rates with reference to the base rate, effective 1 July 2010. To stabilise the system of base rate calculation, banks are allowed to change the benchmark and methodology anytime during the initial six-month period up to end December, it said.
FMCG stocks rose on bargain hunting. Britannia Industries, Dabur India, ITC, Hindustan Unilever and Tata Tea rose by between 0.45% to 2.12%.
Some metal stocks rose after Rusal, the world's largest producer of aluminum, swung back from losses in 2008 to report a bigger-than-anticipated net profit of $821 million. The company also issued a bullish demand outlook for 2010.
Jindal Steel & Power, Hindalco Industries and Hindustan Zinc fell by between 0.24% to 0.9%.
India's largest private sector steel maker by sales Tata Steel rose 0.82%. The company said recently its sales for the fiscal year ended on 31 March 2010 rose 18% from a year ago to 6.17 million tonnes.
Steel Authority of India (Sail) rose 0.62% on bargain hunting after recent sharp losses. The stock had tumbled late last week after the Union Cabinet approved a 20% stake sale in state-run firm in two tranches. The sale is expected to fetch the government Rs 8000 crore ($1.8 billion) in the first sale of 10%. The government currently holds 86% stake in Sail, India's top domestic maker of the alloy.
Meanwhile, copper futures traded on the London Metals Exchange reportedly climbed back above the psychologically important $8,000 a tonne level Monday, with aluminum, zinc, lead and nickel prices also posting strong gains. The optimism was fueled in part by data released over the weekend, which showed China posted a significantly wider-than-expected trade deficit of $7.24 billion in March, as imports soared more than 66% from the year-earlier period on improved demand and higher prices for commodities.
India's largest real estate company by sales DLF fell 0.12% after recent strong gains. The stock had gained in the past few days on reports the company has appointed an advisor to find buyers for Aman Resorts, a luxury hotel chain it had acquired in November 2007, for $400 million.
Among other realty stocks, Indiabulls Real Estate, Phoenix Mills, Sobha Developers fell by between 0.21% to 3.05%.
Shares of IntraSoft Technologies settled at Rs 159.35 on BSE, at a premium of 9.9% over the initial public offer price of Rs 145. The stock debuted at Rs 140, a 3.40% discount over the initial public offer (IPO) price.
Cals Refineries clocked the highest volume of 1.85 crore shares on BSE. Intrasoft Technologies (1.68 crore shares), TCS Software (1.29 crore shares), Rana Sugars (0.87 crore shares) and Birla Power Solutions (0.8 crore shares) were the other volume toppers in that order.
Intrasoft Technologies clocked the highest turnover of Rs 267.71 crore on BSE. ARSS Infra (Rs 83.78 crore), Sesa Goa (Rs 72.91 crore), Tata Steel (Rs 67.06 crore) and Jubilant Food Organosys (Rs 65.26 crore) were the other turnover toppers in that order.
