TOP PICKS FOR 1st MARCH

Budget effects gave a roller coaster ride to the markets today & though we managed to close in green, Markets are still in negative zone technically which may rise to 5355 - 5388 & on the downside may slip to 5166 - 5152. Long positions can be taken in ABGSHIP for a target of 385, ABIRLANUVO for a target of 821, ADANIENT for a target of 667, COREPROTEC for a target of 319, HDIL for a target of 180.
                                           HAPPY INVESTING ...........CHEERS !!!!

A ROLLER - COASTER RIDE

It turned out to be a roller-coaster ride for the frontline indices which zoomed over three percent in today's session but finished the day with moderate gains of around half a percent. The Union Budget 2011-12 had a surfeit of positives including retention of excise duty and service tax at 10%, a lower than forecasted fiscal deficit target of 4.6% for FY12, more spending power to consumers through an increase in income tax exemption limit, and permission for foreign investors to invest in Indian mutual funds. The positives led to around a 600 point short covering rally but the jubilation met with strong resistance at crucial 18,300 levels which eventually resulted U-turn for the 30 share benchmark. Weak start for the European counterparts along with towering crude oil prices over fears of supply disruption in the wake of the political turmoil in West Asia, limited the upside for the indices. The NSE's 50-share broadly followed index, Nifty climbed around half a percent and settled below the crucial 5,350 level while the Bombay Stock Exchange's Sensitive Index, Sensex managed to hold on to the psychological 17,800 mark. The broader markets continued their run of underperformance against their larger peers for yet another day as the BSE's midcap and smallcap indices went home with moderate gains of 0.31% and 0.36% respectively. The FMCG counter on the BSE sectoral space settled as the top gainer as it rallied 4.47% underpinned by ITC, the FMCG major, which skyrocketed 8.23% in the absence of any excise duty hike on cigarettes and other tobacco products. The Public sector Undertaking (PSU) pocket too witnessed huge buying interests as it surged 2% on the back of 12.42% spurt in Coal India after the company  opined that it would get $1.4 billion in additional revenue and realizations will go up 12.5% to 13% in the next fiscal year as the firm hiked prices by 30%. The healthcare pack on the other hand remained the only laggard in the space as it settled with loss of 0.04% after stocks of companies like Glenmark Pharmaceuticals and Ranbaxy plummeted 10.20% and 3.59% respectively. Index heavyweight Reliance Industries failed to make its presence felt as it settled with marginally losses on the BSE after erasing all early gains due to profit-booking amid a volatile broader market.

On the global front, majority of Asian benchmarks snapped the day in the positive terrain as investors resorted to hefty buying in undervalued stocks despite the escalating civil upheaval in OPEC-member Libya. Hong Kong's benchmarks, Hang Seng remained the top gainer in the space as it went home after surging by around one and half a percent. But the European markets failed to gain any kind of momentum today as they traded on a somber note with moderate losses with the FTSE 100 sinking around half a percent point. On the other hand, the screen trading for US index futures indicated that the Dow could open on a flat to negative note.

Earlier on the Dalal Street, the benchmark began the day on a firm note as leads from the US markets which snapped Friday's session with good gains lifted regional sentiments to some extent. The frontline indices gradually capitalized on the initial momentum as Finance Minister tabled the progressive and balanced Union Budget 2011-12 in the Lok Sabha. Soon after FM's speech the markets rallied around 600 points in a euphoric atmosphere as participants resorted to hefty buying. However, the indices went into tailspin as the finer print became clearer and the force of profit-booking at higher levels took its toll. Eventually the bourses snapped the session with moderate gains of around half a percent on the last day of the month. The markets registered volumes of over Rs 2.03 lakh crore while the turnover for NSE F&O segment remained at over Rs 1.83 lakh crore on the initial day of a new week. The market breadth on the BSE was positive as there were 1598 shares on the gaining side against 1204 shares on the losing side while 131 shares remained unchanged.

Finally, the BSE Sensex rose 122.49 points or 0.69% to settle at 17,823.40 while the S&P CNX Nifty added 29.70 points or 0.56% to end at 5333.25.

The BSE Sensex touched a high and a low of 18,296.53 and 17,718.88, respectively.

The top gainers on the Sensex were ITC up 8.23%, M&M up 3.19%, Maruti Suzuki up 3.07%, ONGC up 2.93% and Sterlite Inds up 2.38%.

On the flip side, Rel Infra down 4.46%, Jaiprakash Associates down 2.88%, Hero Honda down 2.36%, Tata Motors down 2.11% and Tata Power down 1.79% were the major losers on the index.

The BSE Mid-cap and Small-cap indices soared 0.31% and 0.36%, respectively.

Budget Highlights:

• Foreign dividend tax rate cut at 15% for Indian companies
• Investment linked Deductions for Fertilizers cos 
•  FY12 Net market borrowing target at Rs 3.43 lakh crore  
• No excise duty on Equipment for UMPPs  
• Ship owners allowed duty-free spare parts import  
• Cut customs duty on Petcoke, Gypsum to 2.5%  
• 20% ad-volorem Export Duty on Iron Ore  
• To replace excise duty with ad-valorem duties for Cement  
• Custom Duty on Raw Steel cut  
• Cut customs duty on yarn to 5% from 7.5%  
•  Peak rate for Custom Duty unchanged  
• 1% excise duty on 130 new items  
• Basic Food, Fuel exempted from Central Excise Duty  
• To keep the standard rate for Excise Duty at 10%  
• Direct tax sops to result in Rs 11,500 crore net revenue loss  
• Low withholding of tax of 5% for Notified Infra Funds  
• Service tax retained at 10%  
•  Surcharge reduced from 7.5% to 5% for domestic companies  
• Income tax exemption limit raised to Rs 1.8 lakh from Rs 1.6 lakh 
•  MAT raised to 18.5% from18%  
• FY 13 fiscal deficit target at 4.1%  
• Rs 300 crore provided to promote pulses cultivation in rain-fed areas  
• FY 12 Fiscal Deficit seen at 4.6%  
• FY12 non tax revenue seen at Rs 1.25 lakh crore
• Multi nutrient based subsidy policy for Urea  
• Rs 21,000 crore allocation towards literacy mission  
• To move insurance, pension and banking bills in parliament  
• To introduce self assessment system in Customs  
• To raise rural infra fund from Rs 16,000 crore to Rs 18,000 crore  
• Banks to cover 2,000 villages for opening accounts in FY12  
• Easier service tax refund for goods exporters  
• To give Rs 8000 crore to J&K for development needs  
• SEZs to benefit from easier service tax refund  
• Rs 6000 crore to enable banks to maintain 8% TIER 1 capital  
• Healthcare sector to get allocation of Rs 26,760 crore  
• To infuse Rs 500 crore in Regional Rural Banks (RRBs)  
• To treat capital investment in fertilizer sector as Infra  
• To give Rs 5000 crore to SIDBI to refinance small firms  
• Mortgage risk guarantee fund for home loans to poor  
• Allocated Rs 58,000 crore for social schemes (Bharat Nirman)  
• Education sector allocated Rs 52,057 crore in FY12  
• To set up institution for tracking black money  
• Allocation for farm development hiked to Rs 7860 crore  
• QFIs allowed in to invest in MF scheme  
• FY12 IFCL disbursement target upped to Rs 25,000 crore  
• Direct cash subsidy on kerosene, fertilizers for BPL  
• PPP model has been positive in Infra projects  
• To raise corpus of rural infrastructure development fund to Rs 180 billion in 2011-12  
• To give 3% interest subsidy farmers in FY12  
• Propose to give Rs 3000 crore to NABARD  
• To set up national mission for hybrid, electric vehicles  
• Propose to introduce tax free bonds of Rs 30,000 crore for infra  
• Current A/C gap a concern due to composition of FX flows  
• To give infra status to cold storage chains  
• Rollout of DTC effective April 1, 2012  
• Increased the credit inflow from Rs 3,75,000 crore to Rs 4,75,000 crore  
• FII allowed to invest in Corporate Infra bonds 
• New companies bill to be introduced in current session  
• Upped priority home loan limit to Rs 25 lakh from Rs 20 lakh  
• Infra sector FII cap for bonds with 5 year residual maturity  
• To bring bill to enable RBI to give more private banking licenses  
• Capital infusion of Rs 20,157 crore in PSU banks in FY12  
• Investment in corporate bonds hiked to $40 billion  
• FIIs allowed to invest in MF schemes  
• Discussion on to further liberalize FDI policy  
• Divestment target at Rs 40,000 crore 

All the BSE sectoral indices barring Healthcare (HC), which was down by 0.04%, were trading in the green. Fast Moving Consumer Goods (FMCG) up 4.47%, Public Sector Undertakings (PSU) up 2%, Realty up 1.30%, Capital Goods (CG) up 0.60% and Oil & Gas up 0.58% were the major gainers.

Coal India (CIL) decided to revise the coal prices effective from February 25, 2011, due to the revision of coal prices, the company would generate an approximate additional revenue of Rs. 650 crore in 2010-11 and Rs. 6200 crore in 2011-12.

The board gave the approval for the same at its meeting held on February 25, 2011.

Coal India is the largest coal producing company in the world, based on the company's raw coal production of 431.26 million tons in fiscal 2010. As of March 31, 2010, the company operated 471 mines in 21 major coalfields across eight states in India, including 163 open cast mines, 273 underground mines and 35 mixed mines, which include both open cast and underground mines. The company also produces non-coking coal and coking coal of various grades for diverse applications.

The S&P CNX Nifty touched a high and a low of 5477 and 5308.60, respectively.

The top gainers on the Nifty were ITC up 8.41%, IDFC up 5.32%, Rel Capital up 4.46%, ONGC up 3.78% and BPCL up 3.32%.

On the other hand, Sesa Goa down 6.80%, Rel Infra down 5.07%, Ambuja Cement down 4.30%, Jaiprakash Associates down 3.76% and Ranbaxy down 2.93% were the major losers on the index.

European markets were trading mixed on Monday. France's CAC 40 gained 0.08%, Germany's DAX jumped 0.03%, while Britain's FTSE 100 shed 0.55%.

Most of the Asian equity indices finished in the positive terrain on Monday led by Japanese stocks which increased about one and a half percent as investors shrugged off worries over political turmoil in OPEC-member Libya the country's industrial production increased. However, Seoul Composite dropped more than one percent following threats by North Korea to retaliate against South Korea for participating in annual military drills with the US While, Stock markets in Taiwan remained closed today on account of a public holiday.

TOP PICKS FOR 28th FEB

Markets though ended up in green due to positive economic survey, is still in negative zone being below
5 EMA & 10 EMA, but is awaiting BUDGET on 28th to find a direction, barring positive or negative surprises in the budget technically NIFTY may move up to 5366 - 5401 & on the downside may slip to 5166 - 5152. Long positions can be taken in ABIRLANUVO for a target of 780, MAHLIFE for a target of 367, AREVAT & D for a target of 303, ICSA for a target of 139, BAJAJHLDING for a target of 783.
                                               HAPPY INVESTING .........CHEERS !!!

VOLATILE GREEN

The Railway Budget 2011 turned out to be a low key affair for the equity markets as it failed to give any kind of a direction and markets snapped the day's trade with moderate gains, given the fact that in previous session the benchmarks registered gargantuan three percent laceration on highest ever volumes recorded in the history of Indian stock markets. Meanwhile the economic survey outlined various positives for the Indian economy which led to some buying in the frontline stocks while sanguine Asian and European counterparts too supported local sentiments to a large extent, however the lingering geopolitical tensions in the Middle East and North African nations continued to undermine sentiments as concerns of possible crude supply disruptions loomed on the global front. The benchmarks which got dragged for three straight sessions on the back of weakness in global markets and geo-political tensions managed to ignore the mounting deficit of the railway and instead focused on economic survey forecasting a strong growth of the economy by fiscal 2012. The NSE's 50-share broadly followed index, Nifty climbed three fourth of a percent and managed to hold on to the crucial 5,300 level while the Bombay Stock Exchange's Sensitive Index Sensex could manage only less than half a percent gains and settled at the psychological 17,700 mark. The broader markets continued their run of underperformance against their larger peers as the BSE's midcap and smallcap indices took moderate cuts of around a quarter percent each. The FMCG counter on the BSE sectoral space settled as the top gainer with 2.20% gains after majors like ITC and United Spirits rallied 3% and 6.16% respectively. While the rate sensitive Bankex pocket which remained under tremendous selling pressure and got hammered in previous session, saw some bottom fishing in today's trade as heavyweights like ICICI and SBI garnered 3.55% and 2.09% respectively. On the other hand the Information technology pack remained the top laggard in the space and went home with 0.72% losses as shares of Mphasis took a gigantic 28.43% laceration following a fall in the first quarter net profit which was way below market expectations. While IT bellwether Infosys shelved 0.57% on reports that the Income Tax Department slapped a tax demand of over Rs 450 crore on software giant for wrongfully claiming tax exemption on onshore services by declaring them as software exports. The capital goods index too declined in today's trade by 0.49% as BEML and Reliance Indl Infra respectively shaved off 2.90% and 2.85%.

On the global front, Asian benchmarks snapped the day mostly in the positive terrain as investors resorted to hefty buying in undervalued stocks after oil prices retreated. Hong Kong's benchmarks, Hang Seng remained the top gainer in the space as it went home after surging by around two percent. The sanguine mood reflected in the European markets as they too bounced back with the CAC 40 soaring over a percentage  point. On the other hand, the screen trading for US index futures indicated that the Dow could open with around half a percent gains.

Earlier on the Dalal Street, the benchmark began the first day of a new F&O series with a gap up as investors showed buying interests in railway related stocks in early trade. It remained a fairly volatile session of trade as the frontline indices see-sawed in a range of about 500 points as investors stayed nervous to open long positions at higher levels. The bourses went for some short rallies but they remained short lived as profit booking in some key heavyweight stocks dragged the indices back. The late short covering rally which came after the benchmarks drifted into the red for a brief period helped them to eventually end the session on a positive note ahead of the Union Budget due on Monday. Market is largely banking on the Union Budget 2011 to lift the deteriorating Indian sentiment and marketmen are expecting that macro concerns along with fiscal deficit are addressed on February 28, 2011. The markets registered volumes of over Rs 1.24 lakh crore while the turnover for NSE F&O segment remained at over Rs 1.07 lakh crore on the initial day of a new F&O series. The market breadth on the BSE was abysmal as there were 1273 shares on the gaining side against 1589 shares on the losing side while 100 shares remained unchanged.

On Charts: If the S&P CNX Nifty managed to hold above 5340 and if it sustains above 5401 then only there will be possibility of pullback. Otherwise its downward journey may continue. The support for the Nifty will be around 5262.80, 5,230 and 5,171 marks while resistance will be around 5340 and 5401 level.

Finally, the BSE Sensex advanced 68.50 points or 0.39% to settle at 17,700.91 while the S&P CNX Nifty rose 40.85 points or 0.78% to end at 5303.55.

The BSE Sensex touched a high and a low of 17,812.44 and 17,469.97, respectively.

The top gainers on the Sensex were Tata Motors up 4.43%, ICICI Bank up 3.55%, ITC up 3%, SBI up 2.09% and Jindal Steel up 1.87%.

On the flip side, RCom down 5.40%, Rel Infra down 4.58%, M&M down 3.38%, Hindalco Inds down 2.48% and Sterlite Inds down 2.23% were the major losers on the index.

The BSE Mid-cap and Small-cap indices lost 0.22% and 0.31%, respectively.

Meanwhile, the Indian government on Friday released the Economic Survey 2010-11 saying that the infrastructure structure performance was a mixed bag and more needs to be done to achieve the kind expansion in the core sector that would be required for sustaining a growth of 8-10% for next couple of decades.

The Survey stated that while some of the sectors like telecommunications did exceedingly well in the preceding fiscal, in some others there has been less than targeted achievement. During 2007-08 to 2009-10, capacity addition is lower than the target in power, roads and highways, and in Railways as well.

The Survey estimated that the investment in infrastructure has reached 7.18% of GDP in 2008-09 and is expected to increase to 8.37% in the final year of the 11th Plan. Out of the total 559 monitored Central sector projects costing Rs 150 crore and above, as on October, 2010 14 were ahead of schedule, 117 were on schedule and 293 were delayed. Of the balanced projects, no dates have been fixed for commissioning. Compared with trend however there has been a steady decline in the time and cost over runs of central sector projects costing Rs 150 crore and above; which the Survey says, can be attributed to closer monitoring and system improvements by the Ministries concerned.

However, the performance of core sector over April-November 2010 was a mixed bundle. Crude oil production increased by 11.5% and natural gas production by 19.8%. The civil aviation sector has also performed comparatively better than the previous year. However, the power and cement sectors have grown at comparatively lower rates. Coal-sector growth too has been very low at 0.6 % as compared to the previous year's 8%.

In order to boost the growth, the Survey maintained that a rapid reduction of the infrastructure deficit was a must. Financing infrastructure would be a big challenge in the coming years and to meet the challenge, innovative ideas and new models of financing would be required. Channeling domestic and foreign financial savings of this scale into infrastructure requires a judicious mix of policy interventions which balances the growth and stability objectives.

The Survey found a number of problems that have been delaying the core sector projects including (i) tending of unviable projects; (ii) bad quality of engineering and planning at DPR stage;(iii) lack of standardized and sub-optimal contracts;(iv) land acquisition delays and slow approval processes especially environmental and forest clearances:(v) insufficient optimization of procurement costs (of PSUs) (vi) weak performance management in nodal agencies and PSUs and (vii) inadequate availability of skilled and semi-skilled manpower. In order to speed up the implementation of infrastructure projects, all these issues need to be addressed.

There is also an urgent need to streamline land acquisition and environmental clearance for infrastructure projects. There is a strong case for bringing in parity between the compensation package admissible under the Land Acquisition Act 1894 and that applicable to land acquisition under the National Highways Act 1956 to enable faster acquisition. The Survey observed that it was important that 80% minimum norm for physical acquisition of land before tendering should be strictly enforced through suitable disincentives. In case of road expansion projects, there may also be a case for excluding the land which is part of the original lanes from being counted as part of the acquired land. It also advocated for national forest land bank, with clear paperwork and titles, which would significantly reduce the approval time for forest clearances.

In the BSE sectoral space Fast Moving Consumer Goods (FMCG) up 2.20%, Bankex up 1.86%, Auto up 0.75%, Consumer Durables (CD) up 0.52% and Public Sector Undertakings (PSU) up 0.14% were the major gainers.

On the other hand, Information Technology (IT) down 0.72%, Capital Goods (CG) down 0.49%, TECk down 0.49%, Power down 0.49% and Oil & Gas down 0.12% were the major losers in the BSE sectoral space.

India's FMCG industry has been on a fast growth track mapping a quick recovery in Indian economy, rising disposable incomes and surging middle class. However, the industry is also facing a lot of pressure from high inflation and rising cost of production. The industry therefore has a whole lot of expectations from the forthcoming Budget and is hoping that the finance ministry will provide it the next major trigger.

The foremost demand of the industry is control on inflation. Headline inflation in India has remained at highly elevated levels over the last year or so. Even worse is the situation in the primary commodities where prices have increased by 30-35% in the past two years. There has also been substantial hike in freight rates and packaging costs.

Not only the high inflation impacts the cost of production for the industry and pressurizes its margins but also squeezes the disposable income of people and hence impacts demand side for the industry as well. Citing the example of contraction seen in non-durable goods over recent months in the index of industrial production, the industry has urged the government to take some effective steps to check inflation as it can keep eroding real disposable income even in a fast growing economy and impact the demand for FMCG products. 

The industry is also strongly against any further hike in excise duty. The government had cut the excise duty by 4% following the global economic slowdown and rolled it back by 2% in the budget for current fiscal. Given the strong growth outlook and the need for pursuing fiscal consolidation, it is apprehended that the finance ministry will further hike the excise duty by 2%. The FMCG industry however feels that any further hike, particularly in wake of high inflation, will severely hit both the cost side and demand side of the industry.

Over the last few years, rural India has been becoming an important destination for FMCG products. As the farm incomes have risen over the last decade riding on consistent increase in government support prices of crops and spending on various rural schemes, FMCG products have increasingly found a destination there. However, the potential in rural markets is still far from exhausted. In fact, the industry has just started to realize the potential in rural areas. In this wake, the FMCG companies want the government to substantially increase allocation to rural spending schemes like that National Rural Employment Guarantee Scheme etc. This will boost the disposable income in rural India and further push the demand for FMCG products.

Finally, the FMCG industry has been a strong supporter of goods and services tax (GST) and, in fact, is likely to be one of the biggest beneficiary of the major reform. The application of a uniform indirect tax will help bring down the cost of FMCG products and hence prices. This will provide a major trigger for the demand side of industry. FMCG players therefore want the finance ministry to come out with a compromise formula in the forthcoming Budget that can be acceptable to all the states and would lead to an early implementation of the GST.

The S&P CNX Nifty touched a high and a low of 5338.20 and 5232.75, respectively.

The top gainers on the Nifty were IDFC up 6.13%, Tata Motors up 4.79%, Axis Bank up 4.22%, ICICI Bank up 4.06% and ITC up 3.55%.

On the flip side, RCom down 5.31%, Rel Infra down 3.65%, M&M down 2.65%, Sterlite Inds down 2.33% and Hindalco Inds down 2.22% were the major losers on the index.

European markets were trading in the green on Friday. France's CAC 40 gained 1.16%, Germany's DAX jumped 0.41% and Britain's FTSE 100 advanced 0.35%.

Asian equity indices finished mostly in the positive terrain on last trading day of the week as investors went for beaten down stocks after oil prices eased. Oil prices hovered near $98 a barrel in Asia after reaching $103 the previous day. The investors' sentiments also got boost as Wall Street stabilized after two days of sharp losses amid a political revolt threatening to topple the government of OPEC-member Libya. Hong Kong stocks ended higher with a gain of about two percent for the first session in last four days on Friday, with investors scouting for bargains after the index slumped to a five-month closing low on Thursday.

COLLAPSE

 The Indian frontline indices took a gargantuan three percent laceration after all that dilly dallying, to drift to multi-month low levels with highest ever volumes recorded in the history of Indian stock markets. A series of negative events like the ascend in weekly inflation numbers, surge in crude oil prices in global markets and the escalating crisis in Libya marred the local sentiments on the expiry day of February Futures and Option series. The Indian basket of crude, which comprises Oman-Dubai sour grade crude and Brent dated sweet crude in a 62.3:37.7 ratio, breached the psychological $102-per-barrel mark over fears of supply disruption in the wake of the political turmoil in West Asia, which led to the panic selling as India is dependent on imports of oil to the extent of around 80%. Back on street, the benchmarks got dragged for a third day on Thursday as rising global oil prices mounting inflation pressures triggered concerns of more rate hikes while weakness in global markets and geo-political tensions got culminated in today's fall. Markets are now largely banking on the Union Budget 2011 to lift deteriorating Indian sentiment and marketmen are expecting that macro concerns along with fiscal deficit will get addressed on February 28, 2011. The NSE's 50-share broadly followed index, Nifty sank close to two hundred points to settle below the crucial 5,300 level while the Bombay Stock Exchange's Sensitive Index, --Sensex-- got pounded by about five hundred fifty points to end around the psychological 17,600 mark. The broader markets too had a terrible outing today as they got punctured a tad less than three percentage points, thereby marginally outperforming their larger peers. BSE's rate sensitive Bankex pocket remained under tremendous selling pressure on the sectoral front and got hammered by almost 4% being the top laggard for the second straight session, as heavyweights like ICICI and SBI remained under seller's radar and plummeted 5.43% and 3.48% respectively. The consumer durables counter remained another laggard which went home with 3.89% losses as shares of companies like Gitanjali Gems and VIP Industries respectively shaved off 6.24% and 5.69%. While there remained no gainer on BSE sectoral space, Hero Honda remained the only stock which managed to finish in the positive territory after accelerating 1.61% gains on reports that the company's Indian promoter's got the Foreign Investment Promotion Board (FIPB) nod to raise Rs 4,500-crore from overseas investors to finance the buyout of Japanese partner Honda's stake in Hero Honda through a stake sale to private equity and foreign funds.

On the global front, Asian benchmarks got pummeled for yet another day led by the escalating civil upheaval in Libya as crude surged around a two and half year high amid concern that supplies will be disrupted as turmoil spread in the Middle East and North Africa. Malaysian benchmarks, KLSE Composite bear the maximum brunt in the space as it went home with around one and half a percent cut. The European counterparts too could not stand the global weakness and succumbed to profit booking with the DAX slipping around a percent. On the other hand, the screen trading for US index futures indicated that the Dow could open on a pessimistic note.
Earlier on the Dalal Street, the benchmark began the F&O expiry day on a somber note as investors booked profits in early trade tracking discouraging leads from the US markets which continued their decline for a second straight day. The day largely remained characterized by position squaring amid absence of any positive leads that could lift the disintegrating sentiments. The benchmarks appeared to be on a southbound journey all through the day infringing all key technical levels as optimists remained uncomfortable to open any fresh positions ahead of the Union Budget due on Monday. Eventually the bourses went home with around three percent cuts on record volumes of over Rs 2.99 lakh crore while the turnover for NSE F&O segment too remained at elevated levels at over Rs 2.77 lakh crore on Thursday. The market breadth on the BSE was extremely abysmal as there were 651 shares on the gaining side against 2217 shares on the losing side while 93 shares remained unchanged.
On Charts: The S&P CNX Nifty today took a support around 5,242.50 levels, if it break this levels the next support for the Nifty will be around 5171 and 5040 mark While resistance will be around 5,410 and 5438 mark .If Nifty breaks 5,171 mark, downtrend may continue, while if it manages to cross 5,410 mark it may move further.
Finally, the BSE Sensex flumped 545.92 points or 3% to settle at 17,632.41 while the S&P CNX Nifty crash-dived 174.65 points or 3.21% to end at 5262.70.
The BSE Sensex touched a high and a low of 18,135.12 and 17,559.70, respectively.
The top losers on the Sensex were Tata Motors down 7.54%, JP Associates down 6.20%, ICICI Bank down 5.43%, Jindal Steel down 5.37% and L&T down 4.94%; while Hero Honda up 1.61% was the lone gainer on the index.
The BSE Mid-cap and Small-cap indices plunged 2.91% and 2.77%, respectively.
Meanwhile, food inflation in the country inched up marginally over the week-ended Feb 12, breaking its downward trajectory seen in previous two weeks. Overall trend in the food inflation however continues to remain on the downside probably as the food prices index itself went down. This signals that the strong Rabi harvest expected this year should help the pace of rising prices in this space to come down in coming weeks and months.
According to the data released by the ministry of commerce and industry on Thursday, food price index rose 11.49% on annual basis during week-ended Feb 12, marginally higher compared with 11.05% recorded in the previous week. However, and more importantly, on a sequential or week-on-week basis, the index for food goods decreased by 0.27% to 182.4 from 182.9 for the previous week, mainly due to lower prices of fruits and vegetables (5%). This was third consecutive decline in food prices index, indicating that supply side scenario was improving.
The index for 'Non-Food Articles' group however increased substantially by 3.2 % to 187.1 compared with 181.3 in the previous week. As a result, the broader 'Primary Articles' index, which has a weight of 20.12% in the overall wholesale price index (WPI), also increased by 0.5% to 189.4 compared with 188.5 for the previous week. The annual rate of inflation, calculated on point to point basis, for this group also increased to 15.77% from 14.59% for the previous week.
The index for 'Fuel and Power' with a weight of 14.91% in overall WPI on the other hand increased by 0.2% to 152.4 compared with 152.1 in the previous week due to higher prices of furnace oil and naphtha (2% each). The annual rate of inflation for this group too inched up marginally to 12.14% compared with 11.92% in the previous week.
Even as the food inflation has increased marginally over the latest reported week, the important thing to be watched here is that food prices index has continued to go down on a sequential basis, albeit at a slower pace compared with last couple of weeks. What this indicates is that food prices are coming down following a very strong Kharif harvest and likely to surge in the Rabi harvest.
This will provide the much needed comfort to the Reserve Bank of India (RBI) which has been accused to be 'behind the curve' in fighting inflation and has seen a lot of pressure to take more bolder steps than the 25 basis points hike in short term lending rates it has been implementing since the start of the current fiscal. If the declining trend in food prices continues in coming weeks as well, it will ease the pressure on central bank to impermanent another hike of at least 25 bps in forthcoming policy mid-quarterly review in March.
All the BSE sectoral indices were trading in the red with deep cuts. Bankex down 3.97%, Consumer Durables (CD) down 3.89%, Capital Goods (CG) down 3.77%, Auto down 3.52% and Realty down 3.48% were the major losers.
India's trade deficit is likely to surge sharply over the next three years unless the growth in exports pick up further and is maintained at higher levels, reveals a latest report prepared by the ministry of commerce and industry. Exports will have to pick up rapidly if the deficit is to be kept manageable, it concluded.
According to the current rate of growth in exports and imports, by the year 2014, India's exports are likely to lag behind by over $250 billion of GDP. Deficit as a result will increase from presently 7% of GDP to around 13% of GDP, which can have highly negative impact on India's current account deficit. Already the CAD has become a concern and is likely to be around 3-3.5% of the GDP in current financial year.
The commerce ministry report itself accepted that such a high level of trade deficit was unviable and cannot be sustained. 'The projected BoT (balance of trade) deficit on merchandise account of 13% is clearly cause for serious concern because it can lead to an unsustainable CAD,' the report released on Wednesday stated.
In order to bring down the deficit, the ministry has also prepared a four pronged strategy that will help it boost the country's exports to $450 billion by 2014. Commerce minister Anand Sharma on Wednesday released the draft strategy paper that aims at doubling exports in three years and expressed confidence that the strategy will help keep the trade deficit within manageable limits. 'One of the major reasons to take this initiative and put it in place on urgent basis is because of the widening balance of trade,' the minister said.
With the new strategy, the government expects that the CAD will continue to remain under 10%. "We hope to close the balance of trade and bring the trade imbalance to below 10% of the GDP," said Sharma adding that by the end of the financial year, merchandise exports would cross the $200-billion target set earlier and end the year at around $225 billion. He however cautioned that for doubling the exports, the global economic scenario will have to remain supportive.
The S&P CNX Nifty touched a high and a low of 5423.40 and 5242.50, respectively.
The top losers on the Nifty were Tata Motors down 6.43%, JP Associates down 6.21%, Sesa Goa down 5.75%, Reliance Capital down 5.64% and L&T down 5.31%.
On the flip side, Suzlon Energy up 1.44% and Cairn India up 1.31% were the only gainers on the index.
European markets were trading in the red on Friday. France's CAC 40 lost 0.34%, Germany's DAX plunged 1.14%, while Britain's FTSE 100 shed 0.29%.
Asian equity indices finished the day's trade mostly in the negative terrain on Thursday as Libyan turmoil continued to drive oil prices higher, prompting worries that the economic recoveries in the US and Europe could get disrupted, and potentially hurt Asian growth. London Brent crude rose as high as $116 a barrel for the first time since September 2008, having gained about 10% in the past four sessions. US crude last traded at around $106 a barrel. Most of the Asian counterparts lost more than one percent in the trade today. While, Chinese Shanghai Composite rose more than half a percent as coal shares increased on expectations that surging oil price may lift demand for alternative energy sources.

DOWNTREND EXTENDED

Indian benchmarks witnessed yet another volatile day of trade as investors largely remained on the sidelines ahead of the February series F&O expiry scheduled on Thursday and Union Budget 2011 to be announced on last day of the month. Today's session largely remained characterized by choppiness as the aimless indices moved only sideways in a tight band lacking triggers for most part of the day. The frontline indices seemed reluctant to die down to the selling pressure but the cautiousness eventually got translated into position squaring in the dying hours which dragged the indices by over a percentage point from the high point of the day. By the end of trade, the domestic bourses caught up with the weakness that was prevailing across the globe with European markets struggling to find a bottom as ongoing civil upheaval in Middle East and a big jump in oil prices due to it, weighed on the investors' minds. The NSE's 50-share broadly followed index, Nifty sank over half a percent to settle below the crucial 5,450 support level while the Bombay Stock Exchange's Sensitive Index--Sensex-- shaved off over a hundred points to end below the psychological 18,200 mark. The broader markets on the other hand continued their downtrend as the BSE's midcap index drifted in tandem with the larger peers by 0.67% while the smallcap index, which was holding firm in the face of listless action, shed 0.31% in Wednesday's session. BSE's rate sensitive Bankex pocket remained under tremendous selling pressure on the sectoral front and got pounded by 1.75% as stocks like SBI remained under seller's radar and drifted 3.84%, the most in five weeks after the RBI indicated that a member of an advisory panel on monetary policy recommended last month to hike the repurchase rate by half a percentage point instead of one quarter, to slow inflation. Besides, airline stocks continued their weak run and got clobbered to a large extent in last four days on the back of rising crude oil prices. However, the Oil and Gas counter once again managed to snap the session as the top gainer on the BSE sectoral space gaining 0.53%, since yesterday's star performer Reliance Industries which underperformed Sensex by 32% in last 3 years, along with Gail India amassed 1.15% and 0.23% respectively. The auto pack, after three straight days of hammering, heaved some respite today and got back to its winning ways after bottom fishing in stocks like Hero Honda and Maruti Suzuki which garnered 5.45% and 0.85% respectively was witnessed. Shares of Anil Dhirubhai Ambani Group firms also helped in capping the downside for the local bourses as Reliance Infra skyrocketed 12.24% on the Bombay Stock Exchange after Anil Ambani met Maharashtra Chief Minister Prithviraj Chavan in relation to the MSRDC's plan to construct a coastal road to connect prime South Mumbai locations.

On the global front, Asian benchmarks got pummeled for yet another day led by a selloff in airlines' stocks as crude trades near a two-year high amid concern that crude supplies will be disrupted as turmoil spread in the Middle East and North Africa. Taiwanese benchmarks, Taiwan Weighted bear the maximum brunt in the space as it went home with over one and half a percent cut. The European counterparts too could not stand the global weakness and succumbed to the weakness with the FTSE 100 slipping over half a percent. On the other hand, the screen trading for US index futures though indicated that the Dow could open on an optimistic note.

Earlier on the Dalal Street, the benchmark began the day on a weak note as most investors remained on the sidelines in early trade tracking discouraging leads from Wall Street which witnessed a huge selloff on Tuesday after a long weekend. The indices saw a fairly steady day as they gyrated in a tight range for most part of the day as most traders remained uncomfortable to open fresh positions ahead of the Union Budget due on Monday. But the dying hours saw the frontline indices being dragged to lower than levels on profit booking. The indices eventually went home with over half a percent cut on volumes of over Rs 1.84 lakh crore while the turnover for NSE F&O segment too remained at elevated levels at over Rs 1.69 lakh crore on Wednesday. The market breadth on the BSE was abysmal as there were 1209 shares on the gaining side against 1637 shares on the losing side while 122 shares remained unchanged.

Finally, the BSE Sensex dropped 117.83 points or 0.64% to settle at 18,178.33 while the S&P CNX Nifty dipped 31.85 points or 0.58% to end at 5437.35.

The BSE Sensex touched a high and a low of 18,377.48 and 18,150.01, respectively.

Reliance Infra up 12.24%, Hero Honda up 5.45%, RCom up 1.47%, RIL up 1.15% and HDFC up 0.94% were the major gainers on the Sensex.

On the flip side, SBI down 3.84%, DLF down 3.29%, Tata Power down 2.78%, JP Associates down 2.04% and Infosys down 1.94% were the main losers on the index.

The BSE Mid-cap and Small-cap indices lost 0.67% and 0.31%, respectively.

Meanwhile, given the high inflation that has been witnessed by Indian economy over last one year or so, the government may increase the tax exempted income limit in the forthcoming General Budget to be released on Feb 28, said the financial services conglomerate Goldman Sachs.

'Income tax relief can be provided to lower income brackets to compensate for inflation. This could take the form of raising the tax exemption limit from the current Rs 1.6 lakh,' it said in a report. Currently, income of Rs 1,60,000 is exempted from tax for individuals. However, the limit is higher at Rs 1,90,000 crore for women and Rs 2,40,000 for senior citizens.

In the direct tax code (DTC) to be applicable in next fiscal year according to the finance ministry, the tax exempted income ceiling has been pegged at Rs 2 lakh. However, inflation has been surging over last one year which has eroded the real income of individuals, particularly those at the lower end of the income pyramid. This has led to suggestions that tax exemption limit should be hiked for the coming fiscal itself which will help counter the impact of inflation by raising disposable income. 

However, the finance ministry also faces some serious constraints on how much relief it affords to give to the public. First, as per the revised fiscal consolidation path envisaged in the fiscal responsibility and budget management act, the government has to cut the fiscal deficit to 4.8% in 2011-12 as against 5.5% budgeted in the current year. Further, its spending on flagship social sector schemes like the Mahatma Gandhi National Rural Employment Guarantee Act etc will increase. This obviously necessitates raising the level of revenue and hence limits how much tax relief can be provided. The finance ministry therefore will have to draw a very fine balance between tuning taxation in line with inflation and ensuring buoyancy in revenue. 

In the BSE sectoral space Bankex down 1.75%, Information Technology (IT) down 1.50%, Realty down 1.27%, TECk down 1.27% and Consumer Durables (CD) down 1.25% were the major losers; while Oil & Gas down 0.53% and Auto down 0.47% were the only gainers in the BSE sectoral space.

Rising input costs and cheap Chinese bicycles seem to have taken toll over the margins of cycle manufacturers in Ludhiana, which accounts for over 90% of country's bicycle and bicycle parts output and houses prominent bicycle brands such as Hero Cycles, Avon Cycles, Hi-Bird, etc.

The industry which is grappling with the problem of rising steel prices has demanded that significant steps should be taken in this Union Budget to set up a regulator to monitor steel prices. The industry argues that while ingot (raw material for steel products) rates increased by just 15%, rates of finished items like HR coils, CRC sheet have surged by over 35% in just a few months. Hence, there is urgent need to constitute a regulatory commission to keep a tab on steel making companies for not unnecessarily raising prices.

The industry is saying that there is a need to form a fund by teh government to hhelp upgrade technology to compete better in export markets since cheap Chinese bicycles are eating away the domestic industry's market. Hence, creation of a new fund will help in bridging the technology gap.

India is the second largest bicycle manufacturer in the world, next only to China, but it continues to make old heavy bicycle weighing 18-20 kg while in overseas market bicycles weighing 5-6 kg are available. Industry here has still not been able to develop new products like cycles incorporating aluminium, fiber and carbon made accessories and parts.

The S&P CNX Nifty touched a high and a low of 5495.20 and 5427.55, respectively.

The top gainers on the Nifty were Reliance Infra up 11.97%, Hero Honda up 7.94%, Reliance Capital up 2.41%, Dr Reddy's up 2.02% and RCom up 1.53%.

The top losers on the index were Ranbaxy down 6.70%, SBI down 3.75%, DLF down 3.63%, Tata Power 2.59% and IDFC down 2.48%.

European markets were trading in the green on Wednesday. France's CAC 40 shed 0.14%, Germany's DAX lost 0.35% and Britain's FTSE 100 dipped 0.59%.

Most of the Asian equity indices finished the day's trade in the negative terrain on Wednesday led by a selloff in airlines' stocks as crude trades near a two-year high amid concern that crude supplies will be disrupted as turmoil spread in the Middle East and North Africa. The sentiments in the region also weighed as US markets suffered sharp selloff on Tuesday influenced by the Libyan unrest and all the major indices were down by an average one and half a percent. The turmoil in Libya, which drives nearly two per cent of world oil output, sent London Brent crude prices above $108 a barrel to a two and a half year high.

BATTERED AGAIN

Indian markets have bucked an extremely fragile and discouraging global setup and settled the day with moderate losses given the fact that major Asian stock markets including China and Japan got butchered around two percentage points. Oil prices seemed to control the market movement in today's trade as with every spike in the global prices of crude following escalating civil upheaval in Libya and Bahrain, the nervousness among traders translated into position squaring. Indian crude oil basket has spurted beyond the psychological $100 per barrel level as protests in Libya, one of the 10 richest oil producing countries, escalated while supply side pressures threatened to become more acute. Thanks to the Reliance Industries and BP deal which buttressed the index heavyweight by around 3% and thereby capping the downside risks for the benchmark index. Meanwhile, as the budget session got underway on Monday, the Prime Minister in Lok Sabha gave a formal go ahead to the JPC formation to investigate into the burgeoning 2G spectrum scam, and announced that the government is committed to weed out corruption. The NSE's 50-share broadly followed index, Nifty plunged around a percent to settle above the crucial 5,450 level while the Bombay Stock Exchange's Sensitive Index, or Sensex plummeted over three fourth of a percent to end a tad below the psychological 18,300 mark. The broader markets on the other hand continued their downtrend and declined in tandem with the larger peers.  The BSE's midcap index shaved off 0.85% and smallcap index shed 0.73% in Tuesday's session. The Oil and Gas counter kept buzzing through the day as it surged 1.26% after RIL and Cairn India soared 2.98% and 3.29% respectively, ironically all other shares in the index went home with large cuts. The consumer durables pack too remained amid the thick of the things after majors like Titan Industries and Gitanjali Gems amassed 3.02% and 3.65% respectively. However the capital goods pack remained under tremendous selling pressure and got pounded by 2.12% as bellwether stocks like L&T and BHEL remained under seller's radar and drifted 2.65% and 1.71% respectively. Auto pocket too failed to show strength after yesterday's fall as it once again retreated 1.93% in today's session after shares of Tata Motors and Hero Honda plunged 2.12% and 3.36% respectively. Furthermore, Ranbaxy got vitiated by 4.12%, after posting numbers way below street expectations for the fourth quarter of 2010 as it registered net losses of Rs 98 crore against a net profit Rs 262 crore in Q4 2009.

On the global front, Asian benchmarks got butchered in today's session, pounded by continued political tensions in the Middle East which triggered profit booking in overbought stocks from cautious investors. Chinese benchmarks, Shanghai Composite bear the maximum brunt in the space as it went home with over two and half a percent cut. The European counterparts too could not stand the global weakness and succumbed to the brutal, selling pressure with the CAC 40 witnessing the maximum damage of around one and half a percent. On the other hand, the screen trading for US index futures too indicated that the Dow could open with a cut of around a percent.

Earlier on the Dalal Street, the benchmark began the day on a somber note as negative news flows from the Arab world spooked sentiments not only locally but throughout the Asia as well. The bourses had to deal with geopolitical risks throughout the day protests in Libya against the country's leader of 41 years, Muammar Gaddafi intensified, with several casualties being reported in the strife-stricken nation. The index gyrated below the neutral line in a narrow band through the first half in the absence of any optimistic market triggers. But the second half saw the frontline indices being dragged to lower than comfortable levels as investors squared of positions in auto shares on speculations of a hike in excise duty in the Budget 2011 which is scheduled to be announced three working days later. The indices eventually went home with around a percent cut on significantly large volumes of over Rs 2.05 lakh crore while the turnover for NSE F&O segment too remained at elevated levels at over Rs 1.89 lakh crore on Tuesday. The market breadth on the BSE was abysmal as there were 1125 shares on the gaining side against 1713 shares on the losing side while 101 shares remained unchanged.

Finally, the BSE Sensex declined 142.15 points or 0.77% to settle at 18,296.16 while the S&P CNX Nifty dropped 49.40 points or 0.90% to end at 5469.20.

The BSE Sensex touched a high and a low of 18,457.90 and 18,187.33, respectively.

Hero Honda down 3.36%, L&T down 2.65%, HDFC Bank down 2.59%, Jindal Steel down 2.48% and JP Associates down 2.39% were the major laggards on the Sensex.

On the flip side, RIL up 2.98%, RCom up 1.49%, Sterlite Inds up 1.42%, Reliance Infra down 0.10% and TCS down 0.04% were the only gainers on the index.

The BSE Mid-cap and Small-cap indices dipped 0.85% and 0.73%, respectively.

Meanwhile, India should work towards bringing down the current account deficit (CAD) to around 2% of the gross domestic product (GDP) from around 3% expected for the current fiscal, said the Prime Minister's Economic Advisory Council (PMEAC) has in its latest review of Indian economy.

The Council however believes that at the moment the CAD was not a major issue facing the economy and India had enough foreign exchange reserves to tackle any unforeseen situation. While the CAD is forecasted to be 3% of GDP in 2010-11, it is expected that the deficit will continue to remain elevated at around 2.8% of GDP in 2011-12. The panel however added that the higher levels of CAD for the current and next year must be viewed as a transitional situation.

It recommended that efforts must be maintained to bring down the CAD to a more manageable level of between 2.0 - 2.5% of GDP. This is desirable to impart much needed stability on the external payments front and to reduce the risk the domestic economy runs from volatility in international financial markets. However, in order to do this it is necessary, on one hand, to make our exports more competitive and on the other, to moderate the dependence of the Indian economy on imported fuels to the extent that is possible, said the Council.

It has also raised some concerns on decline in foreign direct investment (FDI) seen in the last one year. According to a recent report prepared by the United Nations Conference on Trade and Development (UNCTAD), FDI inflows into India amounted to just $23.7 billion in 2010, as against $34.6 billion in 2009. This was despite the fact that in the last calendar year, emerging market economies attracted more foreign investment than developed countries for the first time in history as the global economic engine shifts to the EMEs. This clearly indicates that not everything was fine with the policy regime.

The PMEAC in this wake urged the government to look into and correct underlying issues. "While capital inflows have been adequate in the current year to finance the elevated CAD and it is expected this will be so true in the next year also, adequate attention must be paid to take the necessary steps so that the Indian economy is seen to be an attractive destination for foreign investors. This is a task with many facets. The decline in FDI in the current year is a matter of concern and it is important for policy makers to examine what concerns there may be amongst foreign investors, which has resulted in this outcome and take considered and appropriate steps," said the PMEAC.

In BSE sectoral space Capital Goods (CG) down 2.12%, Auto down 1.93%, Bankex down 1.85%, Public Sector Undertakings (PSU) down 1.24% and Metal down 1.16% were the major losers; while Oil & Gas Up 1.26% and Consumer Durables (CD) up 1.21% were the only gainers on the BSE sectoral space.

After years of negligence, the Indian government is likely to give a major boost to the semi conductor industry in the forthcoming Union Budget for FY12. Various experts have been urging the government to take steps in direction given the increasing dependence of the country on imported chips, even in basic equipments.

Analysts have been projecting that the demand for the electronics hardware will rise from $45 billion in 2009 to $400 billion by 2020. What it means is that by 2020, India would be spending more on electronic imports than on oil imports if the domestic production level is not drastically increased from the current levels, which even lag behind small countries like Taiwan. It has been clear for quite some time that the Indian semiconductor space will need some significant break to take it to a level where it can become global competitive.

The new incentive scheme that the government is expected to announce in Budget is an attempt to improve on the package that was introduced under its semiconductor policy - 2007, which has very much failed in its broader objectives of boosting semiconductor industry in India. In 2007, the government had offered 20-25% subsidies to large investments of Rs 1,000 crore to Rs 2,500 crore in semiconductor fab units and eco-system units. However, the policy mainly attracted investments by solar photovoltaic segment only.

Industry insiders have been saying that the government should minimize the threshold for manufacturing units to ensure that any benefits of such policy reach to the young technocrat entrepreneurs.  Since it is not practical for small companies to invest huge sums exceeding Rs 1,000 crore, the government will have to revisit the threshold to follow a bottom up approach, as has been the case with the software industry.

In fact the government had asked for recommendations of the industry and the new policy is being formulated accordingly. It is understood that the new incentive scheme would no longer be totally focused on large projects, rather, it would try to give some sops to the entire value chain of electronic systems, including chips, chip components, accessories, assembly, testing etc. If all these segments are brought under the incentive net, it will surely generate positive currents in the industry.

The S&P CNX Nifty touched a high and a low of 5519.45 and 5437.30, respectively.

The top gainers of the Nifty were RIL up 3.13%, Cairn India up 3.04%, RCom up 1.60%, Dr Reddy's up 1.15% and Sterlite Inds up 1.05%.

The top losers of the index were Ranbaxy down 4.12%, Suzlon down 3.59%, Axis Bank down 3.49%, Hero Honda down 3.47% and BPCL down 3.15%.

European markets were trading in the red on Tuesday. France's CAC 40 lost 1.55%, Germany's DAX shed 0.50% and Britain's FTSE 100 slid 1.22%.

Asian markets ended lower for the second successive session on Tuesday, weighed by continued political tensions in the Middle East which triggered profit booking in overbought stocks from cautious investors. The worsening political crisis in Libya, with mounting violence against pro-democracy protesters, with Libyan security forces reportedly firing on demonstrators from war planes and helicopters made the investor's cautious.

Further Japan's Nikkei average tumbled on Tuesday, slipping from 9-1/2-month highs for its first decline in last seven days as investors pocketed profits after its longest winning streak in over a year, triggered by turmoil in the Middle East that could have a medium-term effect on Japanese stocks.

TOP PICKS FOR 22nd FEB

Markets are again in positive zone being above 5EMA & 10EMA with upward target of 5562 & on the downside may slip to 5482 - 5461. Long positions can be taken in BHUSHANSTL for a target of 438, CENTRALBK for a target of 172, CESC for a target of 337, CUMMININD for a target of 748, SRF for a target of 345.
                                      HAPPY INVESTING ............. CHEERS !!!

SCINTILLATING U TURN

Indian share pulled through an unexpected finish to the initial day of F&O expiry week amid a slew of news continuously flowing from New Delhi, the national capital. The 5,400 level proved as a solid support for the S&P CNX Nifty index which registered a smart re-bound from those levels as investors turned sanguine and resorted to hefty bottom fishing in fundamentally strong and undervalued stocks. Government's consent to opposition's demand for Joint Parliamentary Committee Probe along with a robust GDP projection of nearly 9% for the coming fiscal by C Rangarajan, Chairman of the PM's Economic Advisory Council, underpinned investor sentiment in the dying hours of trade. Meanwhile Indian President Pratibha Patil affirmed that top priority of the government was to combat inflation, especially of food items, and sustaining growth momentum while striving to push economic reforms to encourage foreign and private sector investments in the country. The NSE's 50-share broadly followed index, Nifty surged over a percent to settle around the high point of the day above the crucial 5,500 level while the Bombay Stock Exchange's Sensitive Index, or Sensex soared over two hundred points to end above the psychological 18,400 mark. The broader markets though succumbed to selling pressure as the BSE's midcap index fell 0.04% and smallcap index shed 0.09% in Monday's session, underperforming their larger peers by quite a margin. The IT and TECk counters in the BSE sectoral space snapped the day with maximum gains of 2.76% and 2.11% respectively as bellwethers like Wipro and TCS zoomed 4.12% and 4.24% respectively. The consumer durables pack too remained amid the thick of the things after majors like Titan Industries and Bajaj Electricals amassed 4.64% and 1.86% respectively. Besides, index heavyweights like Reliance Industries and ONGC too made their participation felt after jumping 2.98% and 2.04% respectively. However the Auto pocket remained the only sectoral index that languished in the red zone with 1.18% losses since shares of Tata Motors and Hero Honda plunged 3.33% and 1.66%.

On the global front, Asian benchmarks closed mostly in the negative terrain amid growing concerns of turmoil in the Middle East which underpinned the crude oil prices to rise by more than $1 per barrel in Asian electronic trade. The European counterparts too traded with large cuts as investors resorted to hefty profit booking with the DAX plummeting around a percent, being the top laggard in the space. On the other hand, the screen trading for US index futures too indicated that the Dow could open on a pessimistic note.

Earlier on the Dalal Street, after Friday's over a percent jolt the benchmark showed signs of consolidation for most part of the day's trade as investors lacked conviction. The index gyrated around the neutral line in a narrow band through the first half in the absence of any optimistic market triggers. But Budget-related positive news flow and softening inflation eased investors' apprehensions as the Sensex saw a bounce back post-noon. Sanguine sentiments in the dying hours helped the local bourses pull through a scintillating intraday U-turn and settle around the high point of the day. The indices eventually went home with over a percent gain on the initial day of F&O expiry week and four working days ahead of the Budget 2011. Volumes for markets were lower than Friday at over Rs 1.77 lakh crore while the turnover for NSE F&O segment too remained higher at over Rs 1.63 lakh crore on Monday. The market breadth on the BSE was negative as there were 1397 shares on the gaining side against 1463 shares on the losing side while 112 shares remained unchanged.

On Charts: The S&P CNX Nifty today closed above 5,507 levels, which was crucial level. The next resistance for the nifty will be around 5,572 (38% retracement level) and 5688 (50% retracement level).While support will be around 5,457 (10EDMA) and 5,401 mark, while going forward its major resistance may see around 5,655 mark.

Finally, the BSE Sensex rose 226.79 points or 1.25% to settle at 18,438.31 while the S&P CNX Nifty advanced 59.65 points or 1.09% to end at 5518.60.

The BSE Sensex touched a high and a low of 18,457.49 and 18,082.66, respectively.

TCS up 4.24%, Wipro up 4.12%, Sterlite Inds up 3.31%, ONGC up 2.98% and Jaiprakash Associates up 2.93% were the major gainers on the Sensex.

On the flip side, Tata Motors down 3.33%, Hero Honda down 1.66%, Maruti Suzuki down 1.31%, NTPC down 1.04% and Tata Power down 1% were the main losers on the index.

The BSE Mid-cap and Small-cap indices lost 0.04% and 0.09%, respectively.

Meanwhile, the Indian textile industry has seen strong recovery from the impact of global downturn riding on improving demand from the rich countries and diversification of its export direction. There is however still a number of troubles facing the industry and textile players have lined up a series of expectations from the forthcoming Budget for FY12.

First, the industry has seen one of the severest cost inflation cycle in last one year. Cotton prices have been increasing rapidly on a tight demand-supply scenario in global markets putting pressure on textile companies' margins. Export market on the other hand has become extremely competitive and much more price sensitive compared to pre-crisis period. This has not only impacted margins but competitiveness of textile players as well. While the cap of 5 million bales of exports is nearly exhausted, the industry wants the government to hike export duty on cotton to lower exports immediately and continue with the same in next season as well.

The industry wants the government to hike duty drawback rates by 5% at least by increasing the scope and coverage of duty drawback scheme so as to ensure full reimbursement of various duties including excise duties, custom duties, service tax, education cess and various state level taxes. The demand is also based on argument that rivals like China and Bangladesh have increased these concessions and in a super-competitive export atmosphere which prevails currently, Indian government should also match the steps. 

The industry wants the government to make the funding easier and at reasonable rate of interest. With the central bank hiking its policy rates seven times in the current fiscal so farm market interest rate has been going up, making the working capital costly for the textile players. The industry wants that at least for the small and medium units the government should ensure cheaper working capital by providing interest subvention. The industry is demanding that export loans to be treated at par with the farm loans and therefore made a part of the priority sector lending by the banks. 

Another wish of textile players is that government should scrap the import duty on manmade fibres which will help it source cheaper manmade fabrics. The move will bring the cost of production down and improve the global competitiveness of Indian textile players. Such a move also becomes more important in wake of the surging prices of cotton. However, it has been strongly opposed by the manmade fibre industry and therefore may not make the cut in Budget. 

Further, given the severe shortage of power being faced by the industry, the government has been urged to encourage development of captive power units by textile companies. Towards this end, the government should exempt the diesel used in captive power generation from excise duty and other local levies. Finally, the industry wants an early implementation of the goods and services tax (GST) which will help bring the tax incidence down. The industry wants the government to make sure that the state level levies of around 6% are also refunded to producers by the central government.

In BSE sectoral space Information Technology (IT) up 2.76%, TECk up 2.11%, Consumer Durables up by 1.97%, Oil & Gas up 1.81% and Metal up 1.31% were the major gainers in the BSE sectoral space; while Auto down 1.18% was the sole loser in the sectoral indices.

The S&P CNX Nifty touched a high and a low of 5526.25 and 5413.10, respectively.

The top gainers on the Nifty were Wipro up 4.83%, TCS up 4.32%, Jaiprakash Associates up 3.93%, Sterlite Inds up 3.59% and ONGC up 3.17%.

The top losers on the index were Tata Motors down 3.65%, Hero Honda down 2.18%, Maruti Suzuki down 1.56%, NTPC down 1.51% and DLF down 0.84%.

With the announcement of the Union Budget just days away, the tea industry like any other industry has its set of expectations. The industry has demanded complete exemption from the present level of import duty of 10% on import of filter paper for tea bags as tea bags and instant tea are gaining preference amongst consumers of India and abroad. Another demand of the industry is full exemption from payment of import duty from the present level of 10% on Nylon Cloth for tea bags.

The industry wants continuation of the special purpose tea fund and other additional subsidies which were being provided by the central government earlier, as it is reeling under cost pressures. This will help tea companies upgrade and improve overall tea quality. The industry further wants that the increased weighted deduction on payments made to national laboratories, research associations, universities and other institutions for scientific research from 125% to 175% must be continued as this will help organizations like the Tea Research Association to take up better research and development activities, resulting in production of better quality tea saplings.

The industry will also be benefitted by the extension of concessional import duty on imported plantation machinery as it will help the industry in value adding and hiking exports in the long run. Also, another crucial demand of the industry is that tea plantations should be made under the purview of the Transport Subsidy Scheme under NEIIPP, which would provide much needed cost relief and its enhance competitiveness.

India's tea industry has seen a strong revival over last 2-3 years. After facing years of slump, the industry has remained in bullish scenario over the last three years. Overall, the outlook of tea industry is quite strong at the moment, given the tight global demand supply scenario, and any supportive announcement in the Budget will act as a further catalyst for the industry.

European markets were trading in the red on Monday. France's CAC 40 lost 0.81%, Germany's DAX dipped 0.77% and Britain's FTSE 100 dropped 0.34%.

Asian equity indices finished the day's trade mostly in the negative terrain on Monday amid growing turmoil in the Middle East. The sentiments in the region also weighed as crude oil prices rose by more than $1 per barrel in Asian electronic trade on Monday. Seoul shares slipped by 0.40%, weighed by fall in steelmakers and financials such as POSCO and KB Financial Group, while Chinese main stock index closed with a gain of more than one percent, supported by oil firms after China raised fuel prices to fresh highs, offsetting the impact of a rise in bank reserve requirement ratios

IN TWO MINDS

Markets appear to be confused & in two minds & are in between 5EMA & 10EMA. With Budget just round the corner, Markets are likely to take a decision within a next couple of days. On the upside NIFTY may move up to 5600 & on the downside may slip to 5400. Long positions can be taken in CESC for a target of 337, IDFC for a target of 163, IRB for a target of 215, MONETISPA for a target of 583, RAYMOND for a target of 344.
                                    HAPPY INVESTING............ CHEERS !!!

TREND FOR 18/2

Trend for tomorrow is clearly up, though we are moving up consecutively for last five sessions & may witness some profit booking. the NIFTY if crosses 5562 would clearly be headed for 5745 & on the downside it may slip to 5467. Long positions can be taken in ABB for a target of 700, Neyvelilig for a target of 124, Gmdcltd for a target of 128, Centralbk for a target of 172, Bataindia for a target of 365.
                                                 HAPPY INVESTING...........CHEERS.. !!!

DECLINE IN FOOD INFLATION

Domestic benchmarks snapped yet another day with powerful gains of over a percent on Thursday as second consecutive sharp decline in India's food inflation numbers indicated that supply side scenario was improving. The food price index plunged 2.14% on a week-on-week basis amid expectations that the government may announce fresh measures to boost productivity for key staples in the upcoming budget. The markets welcomed the inflation data as they shifted gears and gradually accelerated to higher levels despite rather tepid cues from the Asian and European counterparts. The frontline indices have managed to extend the winning momentum for the fifth successive day of trade as local investors traded with conviction six working days ahead of the Budget 2011. With the earnings season almost coming to an end, the investors are now eagerly awaiting the Union Budget for further direction; although people at large remain apprehensive that the Budget may not be a market moving event. The NSE's 50-share broadly followed index, Nifty climbed over a percentage point to settle a tad below the crucial 5,550 level while the Bombay Stock Exchange's Sensitive Index, or Sensex hit a double century to end a touch above the psychological 18,500 mark. The broader markets succeeded in tandem with their larger peers as the BSE's midcap index surged 0.91% and smallcap index jumped 0.94%. The capital goods counter on the BSE sectoral space was the top gainer with 1.93% of gains as twelve out of the  thirteen sectoral indices advanced with majors like Suzlon Energy soaring 4.34% followed by L&T which  amassed 2.69%. The rate-sensitive Bankex pocket too kept buzzing through the day's trade as it gathered 1.50% after heavyweights like HDFC Bank and Axis Bank witnessed huge buying interests and went home with 4.15% and 1.62% gains respectively. Besides, index bellwether Reliance Industries made its participation felt today after surging 1.01%. Mahindra Satyam shares settled with 1.52% gains after swelling around 3% in intraday trade after the company agreed to pay to the Class members as consideration, $125 million, subject to the approval of the Reserve Bank of India (RBI). However, the high beta Realty pack remained the only laggard in the BSE sectoral space as it shaved off 0.89% after stocks like Unitech and Ackruti City plummeted 3.80% and 4.66% respectively.

On the global front, most Asian equity indices made a positive close as good earnings announcement across the globe boosted the sentiments of the regional markets. The Hong Kong and the Chinese markets ended in green as the traders welcomed the US Federal Reserve's decision to raise its growth forecast for the world's biggest economy. The European counterparts though appeared in sluggish mood and traded in the negative zone with marginal cuts. On the other hand, the screen trading for US index futures too indicated that the Dow could open on a pessimistic note.

Earlier on the Dalal Street, the index got off to a shaky start tracking mixed cues from the Asian markets which shrugged off the sanguine close of overnight US markets that climbed on the back of some good earnings announcement and few deal making news while economic news too were positive to help the markets move higher. The frontline indices see-sawed around the neutral line in a very tight band in the initial hours as investors remained a bit cautious, however hefty buying at several counters got triggered on the back of the drop in food inflation numbers to a two-month low level. The frontline indices treaded on a northbound journey thereafter as investors gradually started building up positions which helped the benchmarks to snap Thursday's session around high point of the day to eventually settle in the green for five straight sessions. Volumes for markets were higher than Wednesday at over Rs 1.38 lakh crore while the turnover for NSE F&O segment too remained higher at over Rs 1.23 lakh crore on Thursday. The market breadth on the BSE was optimistic as there were 1681 shares on the gaining side against 1126 shares on the losing side while 179 shares remained unchanged.

Finally, the BSE Sensex zoomed 205.92 points or 1.13% to settle at 18,506.82 while the S&P CNX Nifty surged 64.75 points or 1.18% to end at 5546.45.

The BSE Sensex touched a high and a low of 18,532.61 and 18,233.79, respectively.

The top gainers on the Sensex were HDFC Bank up 4.15%, HDFC up 3.15%, Bharti Airtel up 3.14%, L&T up 2.69% and Tata Steel up 2.16%.

Wipro down 1.34%, ONGC down 0.61%, Jindal Steel down 0.57%, HUL down 0.56% and NTPC down 0.44% were the top losers on the index.

The BSE Mid-cap and Small-cap indices soared 0.91% and 0.94%, respectively.

Meanwhile, food inflation in the country eased significantly over the week-ended Feb 5, maintaining its sharp downward trajectory for second consecutive week. Overall trend in the food inflation however continues to remain volatile though the strong Rabi harvest expected this year should help the pace of rising prices in this space to come down in coming weeks.

According to the data released by the ministry of commerce and industry on Thursday, food price index rose 11.05% on annual basis during week-ended Feb 5, significantly slower compared with 13.07% recorded in the previous week. On a sequential or week-on-week basis, the index for food goods decreased by 2.14% to 182.9 from 186.9 for the previous week, mainly due to lower prices of fruits & vegetables (8%) and pulses (1%). This was second consecutive sharp decline in food prices index, indicating that supply side scenario was improving.

The index for 'Non-Food Articles' group too declined by 1.2% to 181.3 compared with 183.5 in the previous week. As a result, the broader 'Primary Articles' index, which has a weight of 20.12% in the overall wholesale price index (WPI), decreased by 1.7% to 188.5 compared with 191.8  for the previous week. The annual rate of inflation, calculated on point to point basis, for this group also decreased to 14.59% from 16.24% for the previous week.

The index for 'Fuel & Power' with a weight of 14.91% in overall WPI on the other hand increased by 0.1% to 152.1 compared with 151.9 in the previous week due to higher prices of aviation turbine fuel (5%) and furnace oil (1%). The annual rate of inflation for this group too inched up marginally to 11.92% compared with 11.61% in the previous week.

The sharp decline seen in food prices, particularly the index itself, over the last two weeks will provide the much needed comfort to the Reserve Bank of India (RBI) which has been accused to be 'behind the curve' in fighting inflation and has seen a lot of pressure to take more bolder steps than the 25 basis points hike in short term lending rates it has been implementing since the start of the current fiscal. If the declining trend in food prices continue, it will ease the pressure on central bank to impermanent another hike of at least 25 bps in forthcoming policy mid-quarterly review in March.

In BSE sectoral space Capital Goods (CG) up 1.93%, Bankex up 1.50%, Auto up 1%, Fast Moving Consumer Goods (FMCG) up 0.80% and TECk up 0.74% were the major gainers; while Realty down 0.89% was the lone loser on the BSE sectoral space.

The Indian government on Wednesday signed its most ambitious free trade agreement (FTA) yet with Japan, a pact being dubbed as one with potential to change economic landscape of Asia in coming years. The FTA is expected to come into force from April this year after being ratified by the Japanese Parliament.

Indian Commerce and Industry Minister Anand Sharma and Japan's Foreign Minister Seiji Maehara signed the pact, which will abolish tariffs on 90% of Japanese exports to India such as auto parts and machinery items and 97% of Indian exports to Japan including farm and fisheries products in terms of trade value over 10 years.

The commerce ministry has dubbed the pact as historical and has estimated that trade between two of the three largest economies in Asia will more than double in just three years to touch $25 billion from currently little over $11 billion a year. While the pact will help Japan get deeper into India's fast growing market and help revive its slowing economy, for India, it opens doors to Japan's vast pharmaceutical market and trade in technology intensive items.

The two countries have been negotiating the FTA since 2007. Following the signing ceremony, the Japanese government will now submit the pact to parliament for ratification. Further, under the pact, the two countries will continue talks over the issue of whether to allow Indian nationals to work in Japan as health workers and care givers, with the aim of reaching a conclusion within two years after the deal takes effect.

With negotiations on the multilateral trade deal under the Doha round of world trade organization (WTO) looking to get extended into 2012 or even beyond, India has been focusing more on bilateral trade agreements and has already entered into trade agreement with the 10 member group ASEAN while negotiations are at advance stages with the European Union. Feasibility studies for FTA with Australia and Canada are on their way.

The S&P CNX Nifty touched a high and a low of 5553 and 5463.40, respectively.

The top gainers of the Nifty were IDFC up 5.55%, HDFC Bank up 4.64%, Suzlon Energy up 4.55%, HDFC up 4.04% and Bharti Airtel up 3.35%.

The top losers of the index were GAIL down 1.21%, HCL Tech down 1.19%, Wipro down 0.95%, RPower down 0.86% and DLF down 0.76%.

European markets were trading flat with negative bias on Thursday. France's CAC 40 lost 0.01%, Britain's FTSE 100 shed 0.09% and Germany's DAX slid 0.03%.

Most of the Asian markets closed the session on a positive note, however the start was sluggish and some indices remained in negative terrain throughout the day but others managed a good closing with Japan's Nikkei stock average rising for a fourth straight session on Thursday to around ten month high. Good earnings announcement across the globe has boosted the sentiments of the regional markets too. The Hong Kong and the Chinese markets ended in green as the traders welcomed the US Federal Reserve's decision to raise its growth forecast for the world's biggest economy. However the property stocks in China came in somber mood after the Beijing city government unveiled new limits on home purchases in the capital.