MARKETS TRADE FIRM

The benchmark indices continue to trade firm giving a sense that bulls are back in action and the last trading session was just a temporary phenomena where bulls took a small pause after eight-day long winning streak. Broader markets are also trading firm with BSE Mid-cap and Small-cap indices gaining 1.54% and 2.37%, respectively. All the sectoral indices on BSE are trading in green. Asian markets too are trading mostly in green, barring Jakarta Composite and Seoul Composite which are currently trading marginally in red. The market breadth on the BSE was in favour of advances in the ratio of 2197:459 while 73 scrips remained unchanged.

Cement stocks are mostly trading higher after reporting good dispatch number for the passing month. UltraTech Cement's production for the month of March 2011 rose by 2.40% at 37.53 lakh million tonnes and dispatches increased by 2.19% at 37.77 lakh million tonnes over March 2010. Ambuja Cement has reported a 1.98 per cent growth in its production at 19.54 lakh tonnes in March compared to the same month last year. The cement major's output was 19.16 lakh tonnes in March 2010. ACC has posted an increase of 12.37% in its March 2011 cement despatches at 2.18 million tonnes against 1.94 million tonnes in March 2010. Similarly, its production for the month under review also surged by 12.88% to 2.19 million tonnes from 1.94 million tonnes in the year ago period. Ultra Tech Cements was trading up by 0.79%, ACC was up by 1.33% and Ambuja Cements was up by 0.78%.

National Aluminium Company (Nalco) achieved its highest-ever metal production of 443,597 tonnes in 2010-11, against a previous best of 431,488 tonnes in 2009-10 and metal sales of 438,952 tonnes, against a previous best of 435,979 tonnes in 2009-10.

The BSE Sensex gained 204.75 points or 1.05% at 19,625.14. The index touched a high and a low of 19,635.97 and 19,449.36 respectively.

The BSE Mid-cap and Small-cap indices gained 1.54% and 2.37%, respectively.

All the sectoral indices on the BSE are trading in the green. Capital goods up 1.73%, IT up 1.66%, BANKEX up 1.48%, Power up 1.43% and Teck up 1.42% were the major gainers.

The top gainers on the Sensex were JP Associates up 2.57%, M&M up 2.24%, Hero Honda up 2.05%, HDFC Bank up 2.04% and Jindal Steel up 1.75%.

On the flip side, RCom down 2.15%, Cipla down by 1.56%, HUL down 1.50%, Reliance Infra down 0.40% and Sterlite Industries down 0.40% were the losers on the index.

Meanwhile, Global rating agency Fitch has lowered its growth forecasts for India for the current financial year, mainly on account of rising oil prices resulting from the unrest in the Middle East that can further fuel the inflationary pressures in India, as well as the potential impact of the possible slowdown generated in Japan by earthquake and tsunami last month. 

The Indian economy managed a strong expansion of 8.7% in the last fiscal, according to Fitch, which was in line with its expectation. However, the agency feels that things will be a tad more difficult in the next financial year owing to the ongoing high inflation in the country and high crude prices that can further fuel the inflationary tendencies. The Reserve Bank of India (RBI) will be forced to continue its policy tightening deep into the current financial year which will also have an impact on investment cycle in the country.

"Further tightening from the Reserve Bank of India seems likely, leaving an already slowing economy facing an awkward combination of stubbornly high inflation and more headwinds from further policy tightening," said the Fitch in a policy research note. It however, left the growth projection for FY13 unchanged for now at 8%.

The RBI had last month in its mid-quarterly policy review raised repo rate or the rate at which it lends to banks and reverse repo rate, the rate at which it lets banks to park their surplus liquidity with it by 25 basis points (bps) each to 6.75% and 5.75% respectively. This was the eighth time the central bank had raised the key policy rates in the last financial year as it looked to counter the increasingly sticky looking inflation.

However, despite the continued tightening in policy stance by the RBI throughout the last fiscal, headline inflation inched up unexpectedly in February. Further, even as food prices softened, the non-food manufacturing or the core inflation showed a significant jump in February, indicating pressures were increasing on capacities and further tightening in monetary stance might be required to ensure the economy did not get overheated. Most economists expect the RBI to hike its policy rates by another 50-100 bps at least within the current calendar year, which will have a slowing down impact on Indian economy. The S&P CNX Nifty gain 59.55 points or 1.02% at 5885.60. The index touched high of 5888.05 and a low of 5833.20, respectively.

The top gainers on the Nifty were HCL Tech up 3.02%, JP Associates up 2.62%, HDFC Bank up 2.37%, M&M up 2.23% and Hero Honda up 2.12%.

On the other hand, RCom down 2.33%, HUL down 1.55%, Cipla down 1.28%, SesaGoa down 1.26% and Gail down 1.16% were the major losers on the index.

All the Asian markets are trading in green barring Jakarta Composite and Seoul Composite that has plunged by 0.65% and 0.24%.

Hang Seng advanced 1.20%, KLSE Composite up 0.01%, Nikkei 225 up 0.11%, Straits Times up 0.55% and Taiwan Weighted was up 0.25%.