A STABLE DAY

It turned out to be a stable day for the Indian benchmarks which sustained sanguinity for the third successive session and climbed well over half a percent point and managed to get the better of the crucial support levels. Optimistic cues from across the globe underpinned the investors' conviction locally as they overlooked the worrisome food inflation numbers which increased for the second consecutive week ended March 12. After early weakness, the crude oil prices bounced back due to rising fears over supply disruptions as Gaddafi denied surrendering to Western forces in any circumstances and data showing US gasoline stocks fell more than expected in the week to March 18. While marketmen remained of the belief that spiraling oil prices and towering inflation numbers are going to make it difficult for an emerging market like India to log higher than expected growth regardless of scoring higher on the GDP scale. The decline in index heavyweight Reliance which shaved off around a quarter percent point was off-set by the upsurge in rate-sensitive counters. The NSE's 50-share broadly followed index Nifty, which traded below 5,400 levels three sessions ago, ricocheted above the crucial 5,500 support level while Bombay Stock Exchange's Sensitive Index, Sensex garnered close to one hundred fifty points and regained the psychological 18,350 mark. The broader markets too traded on healthy note and performed in tandem with their larger peers. The BSE's midcap index went home with gains of 0.78% while the smallcap index climbed 0.67% points. On the sectoral front, high beta Realty counter continued to remain at the top of the table for the third straight day after rising 2.83% led by heavyweights like Unitech which surged 9.61% after a brokerage firm upgraded its call on the stock. Also, hefty position build up was witnessed in the rate sensitive Auto index which soared 1.40% after Ashok Leyland zoomed 5.24% while Mahindra & Mahindra spurted 2.88% as  it proposed to set up a Rs 300-crore tractor plant at Zaheerabad in Andhra Pradesh. On the other hand Oil and Gas index languished at the bottom of the table with 0.25% losses dragged by stocks like RIL and Gail India which plunged 0.25% and 2.24% respectively. Debutant, Lovable Lingerie settled at Rs 249.20, versus its issue price of Rs 205 a share.

On the global front, majority of Asian equity indices finished in the positive terrain on the back of increase in commodity prices and some Japanese manufacturers said that they would restart work at factories shut by the March 11 earthquake and tsunami. The European markets after opening on a weak note, pared losses as France's CAC, Germany's DAX and Britain's FTSE traded in the green zone with strong gains. On the other hand, the screen trading for US index futures also indicated that the Dow could open on a positive note.

Earlier on Dalal Street, the benchmark got off to a gap up start as leads from the global front underpinned regional sentiments. Optimistic close on Wall Street, in-line growth in New Zealand's Q4 GDP numbers, and the marginal wilt in crude oil prices filliped investors' mood as they overlooked the weakness in Japanese markets which fell on worries over parts shortage and production halt. The frontline indices traded in a narrow band through the day's trade led by gains in realty and auto stocks. The fifty stock nifty slipped below the crucial 5,500 level in the early moments of second half but recovered immediately to eventually settle around the high point of the day because of sustained buying interests across the board. The markets registered volumes of over Rs 1.13 lakh crore while the turnover for NSE F&O segment too remained on the lower side compared to Wednesday at over Rs 0.99 lakh crore. Market breadth remained positive as there were 1599 shares on the gaining side against 1259 shares on the losing side while 140 shares remained unchanged.

Finally, the BSE Sensex surged by 144.58 points or 0.79% to settle at 18,350.74 while the S&P CNX Nifty climbed 42.15 points or 0.77% to end at 5,522.40.

The BSE Sensex touched a high and a low of 18,373.97 and 18,269.32 respectively. The BSE Mid-cap and Small-cap indices increased by 0.78% and 0.67%, respectively.

Hindalco Inds up 4.25%, Mahindra & Mahindra up 2.88%, BHEL up 2.82%, TCS up 2.76% and Jaiprakash Associates up 2.00% were the major gainers on the Sensex.

On the flip side, Maruti Suzuki down 0.60%, Bajaj Auto down 0.42%, Hindustan Unilever down 0.30%, RIL down 0.25% and DLF down 0.13% were the major losers on the index.

Based on the recommendations of Foreign Investment Promotion Board (FIPB) in its meeting held on March 11, 2011, Government of India has approved 14 Proposals of Foreign Direct Investment (FDI) amounting to Rs. 1289.85 crore approximately.

Among those that got the green signal, the biggest one is by the Dhunseri Investments, Kolkata which has been allowed to issue equity shares to the non-resident shareholders consequent upon demerger to the tune of Rs 715 crore. Another major project is by Ghir Investments which got the approval of the FIPB for induction of foreign equity in an investing company. The Mauritius based company proposes to bring in FDI worth Rs 530 crore.

Among others, Gremach Infrastructure Equipments and Projects got the ex-post facto approval for issue of warrants.  The company is engaged in the business of providing equipments on rental for infrastructure projects. Similarly, PCRD Services, Singapore has got approval from the finance ministry to increase the foreign equity percentage in an investing company.

The finance ministry deferred a decision on 27 proposals which include one by Forbo Holding AG, Lindenstrasse, Switzerland to set up a new WoS to undertake the business of manufacturing, sale, distribution, lease, import and export of power transmission belts. Similarly, a proposal by Punj Lloyd for bringing in FDI to undertake additional activities of manufacture, assembly and repair of defence equipment has been postponed too.    

Realty up 2.83%, Auto up 1.40%, Capital goods (CG) up 1.27%, Consumer durables (CD) up 1.25%, and Metal up 1.03% were the major gainers in the BSE sectoral space.

On the other hand Oil & Gas down 0.25% and Health Care (HC) down 0.09% were the only losers in the BSE sectoral space.

Despite the continued tightening of monetary policy by the Reserve Bank of India (RBI) and some uptic in market rates as well, demand for credit continues to remain robust, a heartening sign for an economy that is anticipated to slowdown because of rising cost of financing.

According to the data compiled by the central bank, credit offtake from the banking industry grew by over 23% for the one-year period ended March 11, which also signals that the India Inc is doing just fine, at least till now, despite the ongoing high inflation and in response the continued monetary tightening by the Indian monetary authority. According to the RBI, total credit offtake during the period under review stood at Rs 39.37 lakh crore as against Rs 32.20 lakh crore a year ago.

However, even as the credit growth remains robust, deposit growth is only gradually improving and as a result the gap between the deposit and credit growth is widening. During the period under discussion, total deposits with the scheduled commercial banks in India went up to about Rs 52.85 lakh crore compared with Rs 45.50 lakh crore as on March 12, 2010, which works out to be a growth of around 16.1% on an annual basis.

Clearly, the gap between the deposit and credit growth rate is substantial. The central bank has been pointing out that the increasing difference between the two was also one of the reasons for the liquidity crunch which has been in the deficit mode for last several months. While government spending will ease the temporary liquidity crunch, a more structural issue is the slower growth in deposits as compared with loans. 

Banks have also been looking to adhere to the advice of the central bank and several of them have raised their deposit rates over last one quarter or so. This has had its impact on deposit growth rate which has improved from around 13% a quarter ago to 16.5% presently. The latest figure is much close to the RBI's fiscal-end target of 17% given in the January policy review. The growth in deposits nonetheless is still much slower compared to growth in loans and banks will have to further push the former to maintain equilibrium in the system.       

The S&P CNX Nifty touched a high and a low of 5,529.00 and 5,496.10 respectively.

The top gainers on the Nifty were Hindalco up 4.46%, IDFC up 3.80%, Kotak Bank up 3.66%, Ambuja Cement up 3.20% and M&M up 3.08%.

The top losers on the index were GAIL down 1.71%, Dr Reddy down 1.05%, Suzlon down 0.98%, Cairn down 0.92% and Maruti down 0.82%.

European markets were trading in green on Thursday. France's CAC 40 gained 0.60%, Germany's DAX increased 0.73% and Britain's FTSE 100 surged by 0.85%.

Asian equity indices finished mostly on the higher note on Thursday on the back of increase in commodity prices and as some Japanese manufacturers said that they would restart work at factories shut by the March 11 earthquake and tsunami. Seoul Composite surged more than one percent supported by firm gains in auto players including Hyundai Motor and as foreign investor buying continued for a seventh consecutive session. The higher close of Wall Street overnight also aided the sentiments in the region. However, Japanese Nikkei remained in the red amid continued uncertainty about the stability of a troubled nuclear power complex.