A bout of volatility was witnessed in mid-morning trade as the key benchmark indices reversed direction after hitting 3-month high in early trade. The market breadth was positive. The BSE 30-share Sensex was down 76.43 points or 0.39%, off 200.75 points from the day's high and up 59.84 points from the day's low. Most Asian stocks were in green.
Index Reliance Industries reversed initial gains. IT pivotals declined as the rupee touched a fresh 5-month high against the dollar today, 6 April 2011. Metal stocks saw mixed trend. Auto stocks were in demand on reports auto firms have raised vehicle prices or are considering doing so to partly offset a surge in the cost of raw materials. Bike major Hero Honda Motors extended eleven-day 14.74% rally.
The market opened on a firm note, with sustained inflow from foreign funds and higher Asian stocks boosting sentiment. The Sensex and Nifty hits 3-month highs as the market extended gains in early trade. The market pared gains in morning trade. The market soon reversed direction as profit taking emerged. The Sensex came off lows in mid-morning trade.
At 11:22 IST, the BSE 30-share Sensex was down 76.43 points or 0.39% to 19,610.39. The index gained 124.32 points at the day's high of 19,811.14 in morning trade, its highest level since 7 January 2011. The Sensex declined 136.27 points at the day's low of 19,550.55 in mid-morning trade.
The S&P CNX Nifty was down 17.35 points or 0.29% to 5,892.70. The Nifty struck a high of 5,944.45 in early trade, its highest level since 7 January 2011.
The market breadth, indicating the health of the market, was positive. On BSE, 1,486 shares advanced while 1,116 shares declined. A total of 88 shares remained unchanged. The breadth was much strong earlier in the day.
The total turnover on BSE amounted to Rs. 1664 crore by 11:25 IST compared with Rs. 978 crore by 09:25 IST.
Among the 30-member Sensex pack, 20 declined while the rest of them gained.
IT pivotals declined as the rupee touched a fresh 5-month high against the dollar in early trade today, 6 April 2011. India's second largest software services exporter Infosys Technologies fell 0.59%. The IT bellwether Infosys is seen giving a decent to strong guidance on revenue and earnings for the year ending March 2012 (FY 2012) given underlying strong demand for offshore outsourcing. Infosys unveils Q4 and year ended March 2011 results on 15 April 2011 when it will also gives annual guidance for FY 2012.
India's largest software services exporter TCS shed 0.81% while India's third largest software services exporter Wipro slipped 1.70%. A firm rupee adversely affects operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.
Index heavyweight Reliance Industries (RIL) slipped 0.42% to Rs. 1040.30, off day's high of Rs. 1053.70. RIL, last week, bagged two blocks in the ninth round of oil and gas block auctions held by the government.
India's largest oil exploration firm by capacity Oil and Natural Gas Corporation (ONGC) advanced 0.52%. ONGC is Cairn India's minority partner in the huge Rajasthan oil block but pays the entire royalty to the government, a key reason why the government has delayed its clearance to Vedanta Resources' deal to acquire a controlling stake in Cairn India.
Metal stocks saw mixed trend after LMEX, a gauge of six metals traded on the London Metal Exchange, rose 0.42% on Tuesday, 5 March 2011.
Tata Steel (up 0.18%), Sterlite Industries (India) (up 1.10%), and JSW Steel (up 1.18%), edged higher. Sail (down 0.77%), Nalco (down 0.10%), Jindal Saw (down 0.82%), Hindalco Industries (down 1.09%) and Hindustan Zinc (down 1.11%), declined.
Sesa Goa spurted 3.25%, extending Tuesday's rally triggered by the Supreme Court lifting of a ban on iron ore exports from Karnataka from 20 April 2011. Sesa Goa had curbed its iron ore mining in Karnataka post the state government's ban on iron ore exports, as the company's iron ore realisations were significantly lower in the domestic market compared to the international market. Sesa Goa's 'Narrain' mine in Karnataka has a production capacity of more than 6 million tonnes per annum (mtpa).
Auto stocks were in demand on reports auto firms had raised vehicle prices or are considering doing so to partly offset a surge in the cost of raw materials such as steel, aluminum and natural rubber. This is the second price increase by auto makers since January 2011 as costlier raw materials dent their margins.
India's largest bike maker by sales Hero Honda Motors climbed 0.72% to Rs. 1657, extending eleven-day 14.74% rally. Hero Honda's monthly sales in March 2011 were record monthly sales. Total sales rose 24.4% to 5.15 lakh units in March 2011 over March 2010. It was the top gainer from the Sensex pack.
India's second largest bike maker by sales Bajaj Auto rose 0.07%. The company's total vehicle sales increased 12% to 3.07 lakh units in March 2011 over March 2010. The company announced its March 2011 sales figures during trading hours on Monday, 4 April 2011.
India's top small care maker by sales Maruti Suzuki rose 0.08% on reports the company has increased prices of all vehicles by between Rs. 1,000 and Rs. 10,000 with effect from Monday, 4 April 2011.
India's largest truck maker by sales Tata Motors gained 0.48%. The company had hiked prices of some car models by Rs. 7,000 to Rs. 36,000 from 1 April 2011.
India's top tractor and utility vehicles maker by sales Mahindra & Mahindra declined 1.08%. The company had said on 1 April 2011 it will raise prices of its products within a week to offset higher commodity prices.
Cigarette maker ITC shed 1.49% to Rs. 181.30 on profit booking. The stock had scaled a record high of Rs. 185.35 in intraday trade on Tuesday, 5 April 2011.
The near term major trigger for the market is Q4 March 2011 results which will start trickling in from about mid-April 2011. Investors will scrutinize post-result management commentary to gauge outlook on earnings at a time when rising salaries, raw materials prices and interest rates are pressurizing profit margins of India Inc.
Billionaire investor and international investment icon Warren Buffett who was in his maiden visit to India last month said that he hopes to spend some money in India. His firm Berkshire Hathaway is looking to park funds in large investment destinations and India fits the bill perfectly, he said. India, according to him, is not an emerging market but a very big country with a large number of significant businesses. He said that Berkshire Hathaway would look at possible acquisitions in India as and when there were opportunities.
A recent global investor survey by Franklin Templeton has found that half of respondents plan to invest outside their home country in 2011. Respondents in India are optimistic about the domestic stock market performance being better than the global counterparts. Eighty two percent of respondents in India think that Indian stock market will do better than the rest of the world over the next 10 years.
A survey showed on Tuesday that growth in India's service sector slowed in March from February's blistering seven-month high as new business growth moderated slightly, while price pressures, particularly wages, continued to rise. The seasonally adjusted HSBC Markit Business Activity index, based on a survey of over 450 companies, slipped to 58.8 in March 2011 from 60.2 in February 2011, but remained above the 50 mark that denotes expansion for the 23rd consecutive month.
India imports majority of its crude oil requirements and a surge in crude oil prices over the past few months has sparked inflation and interest rates worries. High oil prices have also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were down 19 cents a barrel or 0.18% at $108.15 a barrel.
Good monsoon this year could help ease food inflation and boost rural income. Recent reports indicate that India will receive good rains during the July-September monsoon season this year. The India Meteorological Department (IMD) is expected to come out with its long term forecast of the summer monsoon rainfall season by the end of this month.
Reserve Bank of India deputy governor Subir Gokarn on Tuesday, 5 April 2011, said inflation remains high even after eight hikes in interest rates in about a year, with both demand and supply-side pressures on prices. He said the central bank cannot afford to be slack on inflation. Restraint now for growth later is the tradeoff that needs to be kept in mind, Gokarn said. The RBI deputy governor said both monetary and fiscal policies have a role to play in tackling the current phase of high inflation, which started out as high food prices, but has now become more generalized. RBI is expected to raise key rates by 25 basis points at its annual 2011-2012 policy review on 3 May 2011.
On the political front, the first phase of assembly polls took place in Assam on Monday, 4 April 2011 in 62 of the 126 assembly constituencies. The second and concluding phase of elections will be held on 11 April 2011 in the remaining 64 constituencies. Assam elections will be followed by elections in Tamil Nadu, Puducherry, West Bengal and Kerala in two months between April and May. While Assam will have two-phased poll, Tamil Nadu, Kerala and Puducherry in one phase and West Bengal in six phases ending on 10 May 2011. The vote count is scheduled for 13 May 2011 for elections held in all the five states.
Asian stocks edged higher after a lackluster start on Wednesday shrugging off China's latest interest rate hike. The key benchmark indices in China, Hong Kong, Indonesia, Singapore and Taiwan were up by between 0.31% to 1.55%. The key benchmark indices in Japan and South Korea fell 0.22% and 0.18%, respectively.
China's central bank raised interest rates on Tuesday for the fourth time since October in a bid to bring stubbornly high inflation under control. Benchmark one-year deposit rates will be lifted by 25 basis points to 3.25% and one-year lending rates will be raised by 25 basis points to 6.31%, the People's Bank of China said in a statement. The rise takes effect from 6 April 2011.
US markets closed nearly flat Tuesday in another light-volume trading session. The Dow Jones Industrial Average finished down 6.13 points, or 0.05%, at 12393.90. The Standard & Poor's 500 index ended fractionally lower as it shed 0.24 point to 1332.63 and the Nasdaq Composite rose by 2 points, or 0.07%, at 2791.19.
Trading in US index futures indicated that the Dow could rise 10 points at the opening bell on Wednesday, 6 April 2011.
Investors' focus centered on Federal Open Market Committee meeting minutes that turned out to paint a familiar picture as the Fed maintained its easy-money policies while offering reassuring words about the economy and signaling vigilance on inflation.
The European Central Bank is widely expected to raise its key refinancing rate by a quarter of a percentage point to 1.25% at a policy meeting tomorrow, 7 April 2011, in what would be the first rate increase since the middle of 2008.
