Tuesday, April 29, 2008

Market turns volatile

The market witnessed a bout of volatility ahead of Reserve Bank of India`s monetary policy review scheduled at 12:00 IST. Rate sensitive banking and auto stocks edged higher while realty stocks were mixed. Metal stocks rose. The market breadth was positive. Asian markets which opened before Indian market were mixed.

At 11:28 IST, the 30-share BSE Sensex was up 63.05 points or 0.37% at 17,078.94. Sensex hit a high of 17,114.56 in early trade. At the day`s high, Sensex rose 98.6 points. Sensex lost 4.36 points at the day`s low of 17011.60 hit in mid-morning trade.

The broader based S&P CNX Nifty was up 11.3 points or 0.22% at 5,100.95.

The market breadth was positive on BSE with 1180 shares advancing as compared to 1098 that declined. 62 remained unchanged.

The BSE Mid-Cap index rose 0.16% to 7078.60 and BSE Small-Cap index rose 0.23% to 8,729.77.

Metal stocks rose. Tata Steel (up 2.77% to Rs 799.25), National Alluminium Company (up 2.05% to Rs 448.50), Hindalco Industries (up 0.46% to Rs 187.05), Steel Authority of India (up 0.45% to Rs 176.60) edged higher.

Banking stocks rose. State Bank of India (up 0.62% to Rs 1,747.50) and ICICI Bank (up 0.68% to Rs 900.50) edged higher. India`s second largest private sector bank by net profit HDFC Bank declined 0.47% to Rs 1,510.

Auto Stocks edged higher. India`s largest tractor maker by sales Mahindra & Mahindra (up 0.12% to Rs 636), Maruti Suzuki India (up 0.02% to Rs 722.50), Hero Honda Motors (up 2.06% to Rs 835) , Tata Motors (up 0.06% to Rs 634) edged higher.

Realty stocks were mixed. Indiabulls Real Estate (down 0.71% to Rs 536.95) and Unitech (down 1.41% to Rs 289.35) edged lower. Lanco Infratech (up 1.7% to Rs 496.40) and DLF (up 0.4% to Rs 671.45) edged higher.

Infosys (down 1.11% to Rs 1,646.50), Bharat Heavy Electricals (down 1.05% to Rs 1,848), Tata Consultancy Services (down 0.66% to Rs 877) edged lower from Sensex pack.

Jaiprakash Associates (up 2.25% to Rs 256.80), HDFC (up 1.84% to Rs 2772.90), Ranbaxy Laboratories (up 1.75% to Rs 487.10) edged higher from Sensex pack.

Hindustan Unilever declined 0.12% to Rs 246.75. Net profit of Hindustan Unilever declined 3.04% to Rs 380.95 crore on 19.14% rise in sales to Rs 3793.94 crore in Q1 March 2008 Q1 March 2007. The board of the company has approved the change in the financial year to April-March.

Reliance Communications declined 0.35% to Rs 582 while Bharti Airtel fell 2.36% to Rs 905.95. Reliance Communications said on Monday, 28 April 2008, it would offer unlimited national long distance calls within its network for a fixed rental with immediate effect. Earlier yesterday, sector leader Bharti Airtel slashed long distance and roaming tariffs by 43% effective 30 April 2008.

Berger Paints India rose 8.1% to Rs 44.70. The company has acquired 100% equity of Bolix S.A. (Bolix), a leading provider of external insulation finishing system (EIFS) in Poland, from Advent International, a global private equity group for $38.6 million.

India Tourism Development Corporation hit 5% upper circuit at Rs 94.90. It hit a 52-week high of Rs 94.90 today.

The outcome of the decision of the Reserve Bank of India (RBI)`s annual policy review at 12:00 IST will set direction for the bourses which have witnessed a solid rebound over the past few days on the back of good Q4 March 2008 results and on the back of firm global markets. Given the high inflation, the central bank may hike key rates.

It its latest report on macroeconomic and monetary developments in 2007/08 released on Monday, 28 April 2008, RBI has said that the global food prices were likely to remain firm as supply side pressures did not appear to be abating. The central bank said steps takes by the government to rein in prices should help curb inflation. It, however, said the inflation risks on account of oil prices remain incipient.

RBI has noted that freely priced fuel items such as naphtha had increased substantially since February 2007 alongside rising global oil prices, while prices of petrol and diesel, which are government-controlled, had partially adjusted. But prices of kerosene and cooking gas had not been raised by the government for several years.

RBI felt there were some demand-side pressures. Domestic iron and steel prices saw a sharp increase in line with recent hardening in international steel prices, it said, while cement price rises could be attributed largely to strong demand from construction domestically. A survey of professional forecasters by the central bank showed that the Indian economy is expected to grow 8.1% in the 2008/09 fiscal year that began this month. In 2007/08, the gross domestic product is estimated to have grown 8.7%.

A cause for concern is the fall in business confidence index. A survey of 392 companies by Federation of Indian Chambers of Commerce and Industry (FICCI), showed that concerns about an economic slowdown, inflation and rising costs hurt business confidence of Indian firms during October-December 2007 period. The FICCI business confidence index declined to a new five-year low of 55.3 points in the third quarter of 2007/08, from 61.2 in the previous quarter.

On the flip side, a pointer to the fact that the long term India growth story remains intact is the outcome of the latest 2008 US-India Business Council (USIBC) survey, according to which, India is, and will continue to be, a premier destination for investment by US firms, with a large number of respondents rating future economic growth in India as highly sustainable.

The initial batch of Q4 March 2008 results have been good with the exception of Tata Consultancy Services (TCS).

Meanwhile, the Lok Sabha is slated to pass the Finance Bill 2008-09 today, 29 April 2008.

The two-day US Federal Reserve policy meeting ends on Wednesday, 30 April 2008. The market expects the Fed to cut interest rates by 25 basis points to 2% and then signal that its rate-cutting cycle may be over for now in the face of mounting global energy and food inflation pressure.

As per provisional data, FIIs sold shares worth a net Rs 38.33 crore on Monday, 28 April 2008. Domestic funds sold shares worth a net Rs 166.61 crore on Monday.

FIIs were net buyers of Rs 455.13 crore in the futures & options segment on Monday. According to data released by the NSE, FIIs were net buyers of index futures to the tue of Rs 214.86 crore and bought index options worth Rs 137.14 crore. They were net buyers of stock futures to the tune of Rs 24.42 crore and bought stock options worth Rs 78.72 crore.

US stocks ended flat on Monday, 28 April 2008, as a $23 billion takeover of Wm Wrigley Jr Co, the world`s largest chewing gum maker, by Mars Inc, the maker of M&Ms candy, helped offset downbeat comments by influential investor Warren Buffett about the economy. Buffett said US could be mired in a longer and deeper recession than most people think.

Asian stocks were mixed today. Key benchmark indices in Hong Kong and China were up by between 1.11% to 1.86%. Key benchmark indices in Singapore, Taiwan and South Korea were down by between 0.71% to 2.07%. Japanese markets were closed for a national holiday.

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