RENEWED ENTHUSIASM

After a day's break, local benchmarks showed renewed enthusiasm and fervor as they went on to re-conquer their respective psychological levels on the northbound journey and snapped the five session downtrend by vivaciously rallying by over 2% points. Bullish investors aggressively piled up positions in not only heavyweight stocks but in the broader markets too ahead of the quarterly result season which will formally commence after bellwether Infosys' result announcement on April 15, 2011. Sanguine leads from across the globe too underpinned the frontline indices while PMEAC's reports that India's headline inflation might come down to around 7% by May, too encouraged investors to initiate long positions. The over 3% laceration in international crude oil prices which were trading around two and half year high levels in the previous session, on the back of apprehensions of sluggish demand and slow economic recovery, too eased investor concerns. The NSE's 50-share broadly followed index Nifty, settled with triple digit gains, above the crucial 5,900 support level while Bombay Stock Exchange's Sensitive Index, Sensex swelled by around four hundred fifty points to close a tad below the psychological 19,700 mark. The broader markets also witnessed hefty buying interests as the BSE's Midcap Index went home with gains of 1.40% while the Smallcap Index surged 1.30%. On the sectoral front, the capital goods pack which got pounded in the previous session following the disappointing 3.6% growth in February IIP numbers, grabbed the top gainer's position in the session after garnering 2.92% on the back of 5.54% rally in heavyweight Siemens India while stocks like L&T and BHEL too surged by 3.62% and 1.59% respectively. The rate sensitive Auto counter too remained amid the thick of things as it garnered 2.54% on the back of strength in heavyweights like Hero Honda and Maruti Suzuki which soared 5.86% and 3.37% respectively. Among individual stocks, index heavyweight Reliance Industries made its presence felt in the session as it jumped 1.44% by the end of trade while bellwether Infosys surged 2.05% on expectations of a strong quarterly earnings performance on Friday. Meanwhile, various midcap and smallcap stocks like SPARC and DCB kept buzzing all through the day and settled with gains of 20% and 15.50% respectively.

On the global front, all the Asian equity indices rallied at brisk pace in the session led by Japanese stocks which rose about one percent as country's carmakers climbed after Nomura Holdings Inc. said they were "oversold" and oil prices witnessed some ease. The European markets too are displaying an optimistic tone as the France's CAC, Germany's DAX and Britain's FTSE 100 are trading with around a percent gain. On the other hand, the screen trading for US index futures indicated that the Dow could open with half a percent gains.

Earlier on Dalal Street, the benchmark started the day on a weak note as leads remained subdued from the Asian markets where most indices traded below the neutral line tracking discouraging cues from the overnight US markets which plunged on the back of rising concerns over Japanese nuclear catastrophe and also because of the unanticipated drop in US exports. Selling pressure immediately got arrested after the weak start as investors opted to pile up positions in the beaten down rate sensitive and capital goods counters. However, buying gathered greater momentum in rate sensitive counters like Auto and Banking and IT companies along with other blue chip stocks in the second half of trade and the indices sailed beyond various psychological levels on the upside. Eventually, the northbound journey halted around the high point of the day above the crucial 5,900 and 19,700 levels. Markets registered strong volumes of over Rs 1.50 lakh crore compared to Monday, while the turnover for NSE F&O segment too remained higher at over Rs 1.35 lakh crore. Market breadth remained highly optimistic as there were 1960 shares on the gaining side against 971 shares on the losing side while 98 shares remained unchanged.

Finally, the BSE Sensex surged  by 434.32 points or 2.25% to settle at 19,696.86 while the S&P CNX Nifty gained 125.80 points or 2.17% to end at 5 5,911.50.

The BSE Sensex touched a high and a low of 19,737.33 and 19,101.63 respectively. The BSE Mid-cap and Small-cap indices surged by 1.40% and 1.30%, respectively. 

Jaiprakash Associate up 7.09%, Hero Honda up 5.86%, HDFC up 3.92%, HDFC Bank up 3.30% and L&T up 3.26% were the major gainers on the Sensex.

On the flip side, Tata Power down 0.51% and Sterlite Industries down 0.40% were the only losers on the index.

India's business process outsourcing (BPO) industry is expected to expand by 23.2% in the current calendar year to touch $1.4 billion as compared with $1.14 billion in 2010, says a recent study by renounced technology consultant Gartner. The expansion will come from both increase in volume and value.

The firm also expects growth to continue in coming years as well with the size of Indian outsourcing industry increasing to $2.47 billion in 2014. That figure would have more than doubled the current size of BPO industry. "Changing demographics, increasing affluence and economic growth in Asia/Pacific continues to drive shared services and BPO adoption", Gartner, said.

However, despite rapid growth seen in last few years, India is still only the second largest BPO market in the world, according to the report. The country with the largest business process outsourcing market is Australia, which is more than three times as large as the BPO market in India. Growth in India though is much faster and long term potential for Indian BPO industry is high and increasing further. India will, as a result, catch Australia perhaps within the current decade. 

Since 2008, a host of US and European multi-national BPO services providers, who concentrated primarily on the offshore market, have started focusing on the Indian domestic market. However, analysts point out that in order to target the Indian market, outsourcers will have to adopt cost and revenue models that are different from the ones that they use elsewhere. The trend is already visible with many large players looking to develop India specific models. 

Banking and financial services, communications, government, technology and travel and transportation were the largest BPO services consumers in the region. With technology intensity in most businesses increasing, BPO market is expected to continue growing at a rapid pace, with any potential moderation in growth from the rich world being compensated by increasing demand from the emerging markets where overall economic growth is much faster.

Capital Goods up 2.73%, Auto up 2.54%, Bankex up 2.32%, FMCG up 2.24% and IT up 2.15% were the major gainers in the BSE sectoral space. There were the no losers in the BSE sectoral space.

The S&P CNX Nifty touched a high and a low of 5,923.60 and 5,735.55 respectively.

The top gainers on the Nifty were Hero Honda up 7.37%, JP Associate up 7.36%, Siemens up 5.44%, HDFC up 4.50% and IDFC up 3.85%.

The top losers on the index were Sun Pharma down 0.88%, Cairn down 0.72%, Tata Power down 0.61% and Sterlite Industries down 0.29%.

India's headline inflation, that continues to remain above the 8% level despite a series of policy rate hikes by the central bank over last financial year, might come down to around 7% by May, said the Prime Minister's Economic Advisory Council (PMEAC) Chairman C Rangarajan.

The PMEAC Chief expects that inflation was softening, particularly in food commodities and results would be visible in couple of months. 'I think the inflation numbers will show some decline in the month of March but certainly by April or May. Weekly data that are available indicate that the food price inflation is coming down,' Rangarajan said while talking to media persons on the side lines of an industry event.

Rangarajan, a former Governor of the Reserve Bank of India (RBI) himself, said that since food price inflation was persistent for a long time it was also getting extended to the manufacturing side that was why the overall inflation was not coming down as fast we expected. "But certainly by April-May we should be closer to 7%," Rangarajan said adding that measures taken by the government and the RBI will show impact going forward.

Inflation remains the biggest problem facing Indian policy makers. High and sticky inflation has also led most researchers to downwardly revise growth forecast for India. Most recently, the International Monetary Fund (IMF) had lowered growth projection for India by about 30 basis points owing to high inflation and potential further monetary tightening by the central bank. The RBI has already hiked its policy rates eight time last fiscal and is expected to continue the fight against inflation deep into 2011 as well.

In context of the government having any plans to deregulate diesel prices within current financial year, Rangarajan stated that the fiscal numbers indicated in the budget clearly showed that there would be some policy decisions relating to petroleum products during the year. 'However, the timing of the decision will depend on when the inflation rate falls. I think some policy action relating to the petroleum and diesel prices will have to be taken during the course of the year,' he said.

European markets were trading green on Wednesday. France's CAC 40 increased by 0.79%, Germany's DAX was gained by 1.02% and Britain's FTSE 100 surges by 0.94%

All the Asian equity indices finished the day's trade in the positive terrain on Wednesday led by Japanese Nikkei which rose about one percent as country's carmakers climbed after Nomura Holdings Inc. said they were "oversold" and oil prices witnessed some ease. Moreover Chinese Shanghai closed with a gain of about on percent as gains in financials and real estate plays outweighed losses in resources firms. Other indices like Seoul Composite, Straits Times and KLSE Composite too witnessed good gain on Wednesday.