EXHILARATION CONTINUES

Investors' exhilaration is showing no signs of waning any time soon in the Indian stock markets as the joy of closing in the positive territory got sextupled this Tuesday, that too on a day when major stock markets across the globe shriveled by quite a margin. Foreign institutional investors are showing renewed vigor in Indian equities following the wilt in international crude oil prices after Libyan rebels advanced against Gaddafi's troops ahead of the quarterly earnings season as they speculated most of the headwinds have been factored in by the markets and that the companies will report strong earnings for the fourth quarter. While the concerns over inflationary pressure too eased to some extent after fall in crude oil prices thereby supporting local sentiments. The NSE's 50-share broadly followed index Nifty, reclaimed the 5,700 mark, an important psychological level, after surging around a percent while Bombay Stock Exchange's Sensitive Index, Sensex garnered over one hundred fifty points to regain the crucial 19,000 level after almost nine weeks. It largely remained a large cap kind of play in the domestic markets as investors showed little interest in the broader markets given the fact that the BSE's Midcap and Smallcap indices went home with losses of 0.02% and 0.44% respectively. On the sectoral front, rate sensitive Auto pocket managed to cling on to the top gainer's position after garnering 1.53% led by heavyweights like Maruti Suzuki which soared 3.12%, being the top gainer on the index while stocks like Tata Motors and Hero Honda too gained 1.55% and 3.02% respectively ahead of the March month sales numbers which are expected to be reported on Friday. Technology counter too remained amid the thick of things and advanced 1.35% on the back of gains in majors like Bharti Airtel which was up 3.36% and Reliance Communication up 4.18%. PSU oil marketing companies like HPCL, BPCL and IOC spurted between 2-3.50% in the day's trade on the back of factors like wilt in international crude oil prices. Index bellwether Reliance Industries remained highly unstable in the session and it slipped marginally by the end of trade after trading in the positive territory for most part of the day. 

On the global front, majority of Asian equity indices finished on a somber note led by Chinese stocks which declined more than half a percent. Japanese Nikkei edged lower in the trade as country struggled to contain a meltdown at a nuclear power plant and investors remained worried over the crippled nuclear plant and the impact of the natural disaster on corporate earnings. The European markets too traded on a cautious note as France's CAC, Germany's DAX and Britain's FTSE exhibited negative trends. On the other hand, the screen trading for US index futures also indicated that the Dow could open on a flat note.

Earlier on Dalal Street, the benchmark got off to a soft start tracking subdued leads from across Asia where investors remained on the sidelines due to the weakness in overnight US markets which withered despite some good economic reports as traders remained apprehensive over Japan's nuclear crisis and violence in the Middle East and North Africa. Thereafter, the indices gradually kept gathering momentum through the day's trade as investors continued to aggressively pile up positions in beaten down blue chip stocks. The frontline indices hit the intraday high levels in the late hours of second half however the benchmarks came off the day's high level in dying hours of trade as investors booked partial profits two days ahead of the March F&O series expiry. Eventually the bourses snapped sixth straight session in the positive terrain and sailed well beyond psychological levels of 19,000 and 5700 just below the psychological levels of 5,700 and 19,000. Being into the F&O expiry week, the markets registered strong volumes, on the expected lines, of over Rs 1.93 lakh crore while the turnover for NSE F&O segment was at over Rs 1.76 lakh crore. Market breadth remained negative as there were 1243 shares on the gaining side against 1724 shares on the losing side while 86 shares remained unchanged.

On charts : The S&P SNX Nifty may face strong resistance around  5753 and 5802 (61.80% retracement ) mark  while its near term support will be around 5,683.75 and 5610. However, Nifty should not close below 5586 level.

Finally, the BSE Sensex surged by 177.66 points or 0.94% to settle at 19120.8 while the S&P CNX Nifty climbed 49.10 points or 0.86% to end at 5736.35. The BSE Sensex touched a high and a low of 19,226.21 and 18,944.82 respectively. The BSE Mid-cap and Small-cap indices fell by 0.03% and 0.36%, respectively.

Reliance Communication up 4.13%, Maruti Suzuki up 3.61%, DLF up 3.26%, Bharti Airtel up 2.88% and Tata Power up 2.37% were the major gainers on the Sensex.

On the flip side, BHEL down 1.48% and ICICI Bank down 0.03% were the only losers on the index.

The Indian government cleared on Monday that even as the global crude prices continue to remain at highly elevated levels, it was not considering an immediate increase in retail fuel prices. This however will lead to surge in under-recoveries of the publically controlled fuel retailers.

India's fuel subsidy bill in the current fiscal is now likely to be around Rs 85,000 crore from Rs 70,000 crore as global crude prices have been at elevated levels for a large part of the March quarter. Further, if prices do not come down soon, or remain at current levels for a large part of next fiscal, the subsidy bill can surge further to beyond Rs 1 lakh crore easily in FY12. This can lead to substantial impact on government's finances.

However, for the moment the government is neither considering a hike in retail prices, nor the finance ministry is looking to tweak the duty structure for the oil products. Union Oil and Gas Minister S Jaipal Reddy on Monday said that despite the surge in under-recoveries of oil marketing companies (OMCs) and increase in subsidy outgo, the government would not increase fuel prices at the moment.

In case of petrol however, he stated that it was totally deregulated and OMCs will take a view on when to increase its prices. State-run Indian Oil, Hindustan Petroleum and Bharat Petroleum currently sell petrol at a discount of about Rs 4.50 a litre despite the fact that government deregulated it completely in June last year. Diesel on the other hand, whose price continues to be dictated by the government, is being sold at a loss of Rs 15.79 a litre.

'As far as petrol is concerned, there is no doubt it is decontrolled... Oil companies must be watching global markets and will take studied decision on raising prices,' he said. On diesel he however, added that it was probably not the right time to talk either about deregulating the key fuel or even increasing its sale price. Hs said it was also too early to call a meeting of the Empowered Group of Ministers (EGoM) on oil sector, which is headed by finance minister Pranab Mukherjee, as everyone was busy with the forthcoming state assembly elections.

The government is unlikely to tinker with fuel prices until the crucial state assembly elections are out of the way. Meanwhile, crude prices have been on the upswing owing to political unrest in some countries in Middle East and Africa and implied apprehensions of a shortage. Average cost of India's crude basket has increased to $110.61 a barrel this month as against $72-73 a barrel about couple of quarters ago. Clearly the situation is no less than alarming though given the election constraint the government is not going to make any move for now. 

Auto up 1.53%, TECk up 1.35%, Metal up 1.08%, IT up 1.06%, and Realty up 0.86% were the major gainers in the BSE sectoral space. There were no losers in the BSE sectoral space.

The Indian government has received 74 bids for 33 oil and gas exploration blocks which were on offer under the ninth round of New Exploration and Licensing Policy (Nelp-IX), with majority of the blocks going to state-owned companies such as ONGC. There were hardly any bids from global energy players.

While the ONGC managed major chunk of the blocks on offer, its share has nonetheless come down compared with last few rounds. The company has won 10 blocks, while another state-owned company Oil India (OIL) won three. Together, the two PSUs had placed bids for a total of 29 blocks. In the last round of NELP, ONGC had got nearly two-thirds of the blocks on offer.

Private sector major Reliance Industries, which had skipped last round of NELP, has won two of the six blocks it bid for in the latest round. Another private player Deep Industries has won four blocks. Sankalp Oil and Natural Resources and Ishar Gas Oil too were awarded three blocks each.

The final award of the rights to explore the blocks will be given by the oil ministry in about 3-4 months after it scrutinizes the 33 winning bids. So far, NELP rounds have generated 87 oil and gas discoveries in 26 exploration blocks with proven hydrocarbon reserves of at least 642 million tonne of crude oil equivalent.

A total of 37 companies, comprising eight foreign companies and 29 Indian, had bid either on their own or as part of a consortium. The government contended that its policy to enhance the number of players in the exploration sector had been achieved as was evident from the fact that 10 new companies (two foreign and eight Indian) had bid. "Evaluation of the bids received under NELP-IX will be undertaken by the Government and the blocks are expected to be awarded within three months. The entire process, including signing of contracts, is expected to be completed in four months," said the Union Oil and Gas Minister S Jaipal Reddy. 

The S&P CNX Nifty touched a high and a low of 5,770.35 and 5,680.70 respectively.

The top gainers on the Nifty were RCOM up 4.37%, Sesagoa up 4.31%, BPCL up 3.47%, Maruti up 3.35% and Dr. Reddy up 3.24%.

The top losers on the index were IDFC down 1.72%, Grasim down 1.38%, BHEL down 1.38%, Reliance Capital down 1.10% and Cairn India down 0.38%.

European markets were trading in mix on Tuesday. France's CAC 40 declined 0.60%, Germany's DAX plunge by 0.74% and Britain's FTSE 100 fall by 0.22%.

Asian equity indices finished the day's trade on the mixed note on Tuesday. Japanese Nikkei edged lower in the trade as country struggled to contain a meltdown at a nuclear power plant and investors remained worried over the crippled nuclear plant and the impact of the natural disaster on corporate earnings. However, Taiwan Weighted surged more than half a percent led by cement and oil counters, offsetting a second successive limit-down finish for computer maker Acer Inc. Banking shares also gave a lift to the main share index. Among Asian indices, Seoul Composite and Taiwan Weighted led the gainers list while Shanghai Composite, Jakarta Composite and Nikkei 225 edged lower in the trade.