MARKETS CONSOLIDATE

Domestic benchmarks snapped the session on a flat note as they consolidated on Monday's  after rising around one and half a percent. Investors remained cautious right from the initial hours of trade as leads from across the world remained subdued because of escalating prices of international crude which are hovering around the highest level since 2008 on the back of geopolitical risks to supplies and on expectations of improving economic growth. Meanwhile investors also took cues from the HSBC Markit survey which showed slight moderation in India's service economy to 58.8 in March as compared with 60.2, the seven-month high seen in February amidst continued pressure on costs, particularly due to rising wages and also owing to high overall inflation. Reports that India's central bank accepting that inflation in the country continues to remain at elevated and unacceptable levels despite the continued monetary tightening delivered by it throughout the last financial year, too did no good to the local sentiments. However a late short covering rally in metal and information technology counters helped the frontline indices to recuperate from the low point of session. The NSE's 50-share broadly followed index Nifty, settled on an absolutely flat note as it held on to the crucial 5,900 support level while Bombay Stock Exchange's Sensitive Index, or Sensex drifted a tad above the psychological 19,700 level. However, contrary to their larger peers, the broader markets carried forward yesterday's rally as BSE's Midcap and Smallcap indices went home with gains of 0.79% and 1.38% respectively, outclassing the large caps by quite a margin. On the sectoral front, the Consumer Durables pocket grabbed the top gainer's position as stocks like Bajaj Electricals and Whirlpool garnered 3.38% and 2.79% respectively. The Metals counter too remained amid the thick of things and advanced 1.21% on the back of surge in heavyweights like Sesa Goa and Sterlite Industries which zoomed 6.36% and 2.57%. On the other hand, the weakness was witnessed in Oil and Gas counters which languished at the bottom of the table with 0.46% losses. Index heavyweight Reliance Industries failed to make its presence felt in the session as it slipped by 0.56% by the end of trade. 

On the global front, Asian equity indices finished the day's trade in the mixed terrain. South Korean benchmark Seoul Composite remained the top gainer in the space after rising over half a percent, supported by gains in technology stocks like LG and Hynix Semiconductor. The European markets traded in the red terrain as France's CAC, Germany's DAX and Britain's FTSE slipped by around half a percent point. On the other hand, the screen trading for US index futures indicated that the Dow could open in the red zone.

Earlier on Dalal Street, the benchmark got off to a positive start as investors remained optimistic amid expectations of encouraging fourth quarter earnings by corporate. However, the indices slipped into the red terrain in no time as investors followed unenthusiastic leads from the US and Asian markets. The indices moved only sideways in a tight range till mid morning session but drifted to intraday lows in the initial moments of the second half. However, a sudden revival was witnessed thereafter as investors covered their short positions in the dying hours of trade to eventually recover most of the lost ground and settle around the crucial support levels. Markets registered higher volumes of over Rs 1.20 lakh crore compared to Monday while the turnover for NSE F&O segment too remained on the higher side at over Rs 1.04 lakh crore. Market breadth remained extremely positive as there were 1985 shares on the gaining side against 944 shares on the losing side while 75 shares remained unchanged.

Finally, the BSE Sensex declined by 14.19 points or 0.08% to settle at 19,686.82 while the S&P CNX Nifty closed tad higher by 1.60 points or 0.03% to end at 5,910.05.

The BSE Sensex touched a high and a low of 19,770.21 and 19,523.54 respectively. The BSE Mid-cap and Small-cap indices gained by 0.79% and 1.38%, respectively. 

Sterlite Industries up 2.83%, Reliance Communication up 2.79%, TCS up 2.30%, Tata Motors up 2.04% and Hero Honda up 1.66% were the major gainers on the Sensex.

On the flip side, Tata Power down 1.77%, Mahindra & Mahindra down 1.49%, Hindustan Unilever down 1.45%, Larsen & Toubro down 1.34% and HDFC down 1.30% were the Major losers on the index.

In a move aimed at giving some leeway to players in the forex market, the government has capped service tax on foreign exchange transactions at Rs 5,000. Forex market players had protested the imposition of services tax and it was apprehended that the tax will impact volumes in the market.

In order to moderate the impact of the tax proposal, the government has issued a notification by which the maximum tax paid on a particular transaction will not exceed Rs 5,000. According to the notification, tax on foreign exchange transactions would be calculated at the rate of 0.1% of the gross amount of currency exchanged for an amount up to Rs 1,00,000, subject to the minimum amount of Rs 25.

For transactions between Rs 1 lakh and Rs 10 lakh, the tax rate would be Rs 100, plus 0.05% of the gross amount of currency exchanged, while transactions above Rs 10 lakh would be subject to a fixed rate of Rs 550 plus 0.01% of the gross amount of the currency exchanged. The maximum tax payable for any transaction has been capped at Rs 5,000.

Union Finance Minister Pranab Mukherjee had, in the FY12 General Budget, proposed two new methods for calculation of service tax on forex transactions. Under the first method the service tax would be charged at 0.1% of the gross amount of currency exchanged. A second option is to compute service tax at .0%1 of the difference between the price at which transaction is implemented and the Reserve Bank of India's (RBI) reference rate for the day of transaction per unit of Indian currency involved in the transaction.

The changes have been made to take care of the concerns raised by bankers and other forex market players who had contended that a higher services tax will not only impact their costs but can also dampen volumes in forex market and hence hamper price discovery and boost grey markets. The government has already exempted the commercial banks from paying services tax when they enter into transactions with other commercial banks. However, transactions involving customers of banks will be taxed as per the revised provisions.

Consumer Durables (CD) up 1.58%, Metal up 1.21%, TECk up 0.61%, Realty up 0.60%, and IT up 0.51% were the major gainers in the BSE sectoral space.Oil & Gas down 0.46%, FMCG down 0.40%, Bankex down 0.23% and Capital Goods (CG) down 0.04% were the only losers in the BSE sectoral space.

The S&P CNX Nifty touched a high and a low of 5,928.65 and 5,855.85 respectively.

The top gainers on the Nifty were Sesa Goa up 6.87%, Ranbaxy up 3.13%, Sterlite Industries up 2.77%, SAIL up 2.62% and RCOM up 2.61%.

The top losers on the index were Tata Power down 1.97%, DLF down 1.82%, Kotak Bank down 1.55%, Bajaj Auto down 1.55% and Hindustan Unilever down 1.47%.

Slight moderation has been observed in India's service economy when compared with the seven-month high seen in February amidst continued pressure on costs, particularly due to rising wages and also owing to high overall inflation, though the overall performance of the services sector remains strong.

The seasonally adjusted HSBC Markit Business Activity index, based on a survey of over 450 companies, which has come to be regarded as an excellent advance indicator of economic activity, showed slight moderation to 58.8 in March from 60.2 seen in February. However, in an absolute sense the overall level of index continues to indicate substantially rapid expansion in the services sector.

According to the Survey, Indian companies reported a marked rise in new business during March, with positive expansion sustaining continuously since May 2009. However, the latest expansion of new business slowed slightly from February's eight-month high, which brought down the overall index slightly. Employment in the services sector also rose at the fastest rate since June 2010, indicating increasing demand side of the businesses.

At the same time, inflationary pressures continued to increase in March, as both input and output prices rose at stronger rates than in the previous survey period. The increase in input prices was only marginally weaker than January's series record high, while the latest rise in charges was the fastest since July 2008.

Overall, the Indian service providers remained optimistic regarding future business prospects in March. Over half of the companies surveyed expect activity to increase over the next twelve months, boosted by growth of new work intakes. Ongoing improvements in general economic conditions and increased marketing activity are projected to support the rise in new business.

Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India and ASEAN at HSBC said, 'The growth momentum in the services sector remains strong, although it eased a bit in March. However, input costs and prices charged are still trending up and at a faster pace. This highlights that inflation remains the dominant concern, not growth, calling for RBI to continue the tightening cycle.'  European markets were trading in mix on Tuesday. France's CAC 40 declines 0.59%, Germany's DAX was dropped by 0.32% and Britain's FTSE 100 crash by 0.40%.

Asian equity indices finished the day's trade on a mixed note on Tuesday. Japanese Nikkei dropped more than one percent in today's trade as investors remained worried on concerns linger over the crisis at Fukushima, which has seen radiation emitted into the air, contaminating farm produce and drinking water. Tokyo Electric Power (TEPCO), which operates the plant, sank about 19 percent, headed for its lowest close in almost 60 years. However, Seoul Composite rose more than half a percent supported by gains in technology stocks LG and Hynix Semiconductor edged higher in the trade today.

Meanwhile, stocks markets in China, Hong Kong and Taiwan remained closed on account of a public holiday.

A BIT OF PROFIT BOOKING

Local markets continue to reel under pressure in the absence of any firm cues; persistent profit booking is being witnessed after the main indices saw their highest close in nearly three months in the previous session. Though the benchmark Sensex rallied by over 68 points in opening trade today on the back of strong FII inflows amid expectations of encouraging fourth quarter earnings by corporate but quickly slipped into negative territory following mixed to negative cues from regional counterparts and Brent crude surging above $121/bbl. The crude prices advanced to the highest level since 2008 crimping market gains across Asia. Brent crude was hovering around $121/bbl due to unrest in Yemen and elections in Nigeria.

On the global front, despite overnight gains in the US market, Asian shares are trading lower as Japan's inability to tame a nuclear crisis cast a shadow over investment sentiment. Japan's benchmark Nikkei 225 index dropped substantial weight, amid frantic --and unsuccessful --efforts to control a radioactive leak at a nuclear plant damaged by earthquake and tsunami that struck off the country's northeastern coast on March 11.Back home, on the BSE Sectoral front, stocks from Consumer Durable, Healthcare and power stocks are struggling hard to push the market's momentum on the positive side, however, stocks from Auto, Information Technology and TECk space are playing the culprits behind. Nevertheless, the broader indices have emerged victorious for the third consecutive session thereby contributing to the gains of over 0.50% each. Meanwhile, the benchmark 30 share index-Sensex--on BSE is trading below its 19700 mark while Nifty holding onto its slender gains is still above its 5900 physiological level respectively. In the overall market advances have thumped declines in the ratio of 1516:788, while, 65 shares remained unchanged.

The BSE Sensex is currently trading at 19,678.82, down by 22.91 points or 0.12%. The index has touched a high of 19,770.21 and a low of 19,625.90 respectively.  There were 14 stocks advancing against 16 declines on the index.

The broader indices continued their winning streak for the third consecutive session; the BSE Mid cap and Small cap indices surged 0.58 % and 1.16% respectively. 

The top gaining sectoral indices on the BSE were, Consumer Durable (CD) up 1.52%, Healthcare (HC) up 0.56%, Power up 0.41%, Capital Goods (CG) up 0.34% and Public Sector Undertaking (PSU) up by 0.19%. While Auto down by 0.50%, Information Technology (IT) down by 0.45% and TECk down by 0.25% were the only losers on the index.

The top gainers on the Sensex were Reliance Communication up 1.88%, Hindalco Industries up 1.76%, BHEL up by 1.57%, Sterlite Industries up 1.07%and Cipla was up by 0.85%.

On the flip side, Tata Power down 1.29%, Infosys down 0.91%, Bajaj Auto down by 0.90%, M&M down by 0.69% and Jindal Steel down by 0.58% were the top losers on the index.

Meanwhile, the Reserve Bank of India (RBI) has implemented eight hikes in its key policy rates including repo or the rate at which it lends to banks and reverse repo or the rate at which it allows banks to park their surplus liquidity with it. Further, with inflation still high, the central bank is expected to continue tightening its monetary policy stance deep into the calendar year 2011.

The rate hikes implemented by the RBI so far have already resulted in some firming up of market rates as cost of funding for banks go up. However, most bankers and analysts feel that despite further tightening in monetary policy expected from the RBI, market rates may not rise significantly further from the current levels in calendar year 2011. 

This is because even as the RBI tightens its monetary policy, liquidity scenario in the system is expected to improve with government pushing up spending. Much of the liquidity crisis faced by banks through most of the second half of fiscal year 2010-11 was due to a slump in government spending amidst stand-off in Parliament and procedural delays. With Parliament running well now, bankers expect that government spending will remain strong.

Further, the first half of the fiscal is generally a leaner period for credit demand and as such bankers may not feel have the space to jack up their rates or else the demand could go further down. In fact, many bankers have been saying that right now market conditions do not permit any further increase in rates. Credit demand usually starts increasing by second half of the financial year. By then, however, inflation is expected to come down which will again have a softening impact on interest rates.

Also, the government has budgeted its market borrowing at a lower than expected level at Rs 4.17 lakh crore which is only slightly higher than last year in absolute terms. It also plans to keep the fiscal deficit within 4.6% of the gross domestic product (GDP). This will also ease pressure on rates. With nearly 60% of the government borrowings expected to be completed in first half, rates may remain stable in second half as well.

There are a couple of downside risks however. In case the inflation continues to remain at elevated levels, it will dampen the real interest rates and hence boost the nominal rates. However, economists feel that in case inflations continue to remain at elevated levels, it will impact overall economic growth and hence the investment demand will slowdown. This will directly impact the credit off-take by bankers, again taking the pressure off the market rates.

A greater risk comes from the optimistic nature of government's fiscal deficit estimate. While the government has budgeted the deficit at 4.6% of the GDP, many analysts feel that with crude prices continuing to remain above the $100 barrel, the subsidy spending is likely to surge significantly beyond the levels seen in the last fiscal. This can force the government to wither increase its market borrowings or issue bonds for partial delivery of subsidy. Both these actions can put significant upward pressure on market rates in the second half of the fiscal.

The S&P CNX Nifty is currently trading at 5,909.65, up by 1.20 points or 0.02%. The index has touched a high of 5,928.65 and a low of 5,887.55 respectively.  There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were Ambuja Cement up by 2.39%, Ranbaxy up by 2.22%, Sesagoa up by 2.18%, Reliance Communication up by 2.11% and Hindalco Industries up by 1.78%.

Tata Power down by 1.26%, Infosys down by 0.92%, Power Grid Corporation down 0.90%, Bajaj Auto down by 0.89% and Punjab National Bank was down by 0.82 %, were the major losers on the index.

Asian markets were trading mixed; Jakarta Composite was down by 0.51%, KLSE Composite shed 0.14% and Nikkei 225 declined 1.47%.

On the flip side, Straits Times was up by 0.49%, Seoul Composite gained 0.38%.

GLOBAL MARKETS UPDATE 5/4

         US ISM manufacturing index declined slightly to 61.2 in March from 61.4 in February, in line with the   consensus forecast of 61.1. Nevertheless, the ISM manufacturing index remains at its highest level since 2004.

 

   Australia's trade balance unexpectedly swung to a deficit in February for the first time in almost a year as disruptions from natural disasters cut mining shipments and higher fuel prices boosted imports. The shortfall was of AUD 205 mn from a revised AUD 1.43 bn surplus in January.

  US Nonfarm Payrolls rose 216k in March to beat market consensus of 190k. Private payrolls rose 230k, which was also stronger than consensus forecasts of 206k. New Zealand business confidence slumped to a two-year low in the first quarter after an earthquake killed at least 170 people and forced companies to close in the nation’s second-largest city. 

  Federal Reserve Chairman Ben Bernanke Monday downplayed inflation fears which led some of colleagues to recently warn tighter monetary policy may be needed to keep prices in check.

  At least two sons of Muammar Gaddafi are proposing a resolution to the Libyan conflict that would entail pushing their father aside to make way for a transition to a constitutional democracy under the direction of his son Seif al-Islam el-Gaddafi, a diplomat and a Libyan official briefed on the plan.

  Yesterday Indian stock markets opened firm tracking cues from Asia. The indices remained strong with gains remaining broad based and Capital Goods and Technology stocks leading the way. The Sensex rose 1.5% to close at 19,702 and the Nifty gained 1.4% to close at 5,908. Overnight, most US stocks advanced sending the S&P 500 Index higher for a second day as optimism about takeovers outweighed a drop in technology shares following a report showing lower chip sales.

  Today, Asian stocks dropped, with the regional benchmark index retreating from a 3-week high, after Tokyo Electric Power Co. began dumping radioactive water from its crippled nuclear plant and semiconductor stocks declined. The Indian equity benchmarks opened in the green but gains were soon erased at the time of writing with technology related stocks leading the decline.

TOP PICKS FOR 5th APRIL

Markets clearly are in an upward momentum with the NIFTY having its first upward target of 5944 & on the down side it may slip to 5812. Long positions can be taken in JINDALPHOT for a target of 195, MASTEK for a target of 153, NUCLEUS for a target of 102, PATELENG for a target of 224, PTC for a target of 102, WOCKPHARMA for a target of 364.
                                                             HAPPY INVESTING..........CHEERS !!!

MARKETS SURGE

A day after consolidating, Indian benchmarks carried forward their exhilaration as they turned back to winning ways and spurted around one and half a percentage points capturing crucial 5,900 and 19,700 levels for the first time in 2011. Interests of overseas institutional investors in the domestic equities showed little signs of fading any time soon, as they continued to pile up positions in not only frontline stocks but more so in the smallcap and midcap spaces. Riding high on Team India's cricket world cup success, euphoric investors even overlooked the spike in crude oil prices which soared to around two and half year highs due to persistent turbulences in the Arab world. While pressure exerted by 2G Scam linked telecom shares too got offset as supportive leads from across the globe limited the downside risks for the local bourses. The NSE's 50-share broadly followed index Nifty, after garnering close to one and half a percent points conquered the crucial 5,900 support level while Bombay Stock Exchange's Sensitive Index, Sensex fell just short of hitting a triple century of gains and closed above the psychological 19,700 level. In the broader markets the BSE's Midcap and Smallcap indices outclassed their larger peers by quite a margin as they went home with strong gains of 1.67% and 2.83% respectively. On the sectoral front, the Capital Goods pocket grabbed the top gainer's position after garnering 2.38% as heavyweights like BHEL surged 2.84% on reports that the company's provisional net profit for the year ended 2010-11 grew to at Rs 6021 crores against Rs 4311 crores in the same period a year ago while its turnover climbed to Rs 43451 crores from Rs 34154 crores a year ago. The Information technology counter too remained amid the thick of things and advanced 2.18% on the back of surge in bellwethers like HCL Tech and TCS each which zoomed 4.59% and 2.70%. Index heavyweight Reliance Industries too made its presence felt in the session by surging 1.41% by the end of trade. While there remained no sectoral laggard in the space, individual stocks like RCom which plunged 2.24%, followed by HUL down 1.62% were the prominent losers.

On the global front, most Asian equity indices finished the day's trade in the positive terrain led by Hong Kong's shares which was up by  about one and half a percent while Japanese Nikkei too snapped the day's trade on the higher note supported by export-oriented stocks on the back of a weaker yen. The European markets too traded on a flat note as France's CAC, Germany's DAX and Britain's FTSE exhibited mixed trends. On the other hand, the screen trading for US index futures indicated that the Dow could open with marginal gains.

Earlier on Dalal Street, the benchmark got off to a steady start in the morning trade tracking leads from Asian markets which traded with conviction as sentiments took support from Wall Street which closed higher on Friday. The indices pared some of initial gains in the mid-morning session and touched intraday low levels. However, a sudden revival was witnessed thereafter as stocks of Auto and IT companies led them to a northward direction. Eventually the benchmarks managed to hold on to the 5,900 and 19,700 levels as they snapped the session around high point of the day with almost one and half a percent gains. On the expected lines, markets registered low volumes of over Rs 1.02 lakh crore while the turnover for NSE F&O segment too remained at the lower side at over Rs 0.86 lakh crore. Market breadth remained extremely positive as there were 2437 shares on the gaining side against 477 shares on the losing side while 74 shares remained unchanged.

Finally, the BSE Sensex climbs by 281.34 points or 1.45% to settle at 19,701.73 while the S&P CNX Nifty zooms by 82.40 points or 1.41% to end at 5908.45.

The BSE Sensex touched a high and a low of 19,729.60 and 19,449.36 respectively. The BSE Mid-cap and Small-cap indices gained by 1.67% and 2.83%, respectively. 

Mahindra & Mahindra up 4.75%, Jaiprakash Associate up 3.25%, BHEL up 2.84%, HDFC Bank up 2.78% and TCS up 2.70% were the major gainers on the Sensex.

On the flip side, Reliance Communication down 2.24%, Hindustan Unilever down 1.62%, Cipla down 1.51%, Sterlite Industries down 0.37% and Reliance Infrastructure down 0.30% were the Major losers on the index.

A study by the Reserve Bank of India (RBI) has said that China was getting unfair advantages in bilateral trade with India due to relatively undervalued Yuan. In a research paper titled 'The implications of renminbi revaluation on India's trade', the RBI said China's policy of keeping its renminbi artificially down against the US dollar was impacting India's exports to the communist nation as well.

'By keeping renminbi (RMB) undervalued against the US dollar (USD) and depreciating it in line with the USD in the international market without taking into account the economic fundamentals of China, it invariably and distinctly provides competitive advantage over its trade competitors and trade partners including India,' said the research paper. This is not the first time the RBI has signaled towards undue advantage China corners do due to its relatively cheaper currency.

'In this context, one of the factors favoring China is the cost advantage of its exports, influenced by various domestic factors. Factor like production-oriented subsidies for firms and industries does support China model. The cost of production as well as productivity of labor also becomes an added advantage in its export promotion,' the RBI study observed.

India's trade deficit has been on the rise against China and most economists have been, at least partially, blaming this on undervalued renminbi. In the financial year ending March 2010, the deficit stood at $19.2 billion in a total bilateral trade of around $60 billion. Concerns have been raised by economists and policy makers alike that such a high trade deficit was unsustainable and India must take steps to bring it down.

The Indian government has been somewhat soft in criticizing the currency policies of the Chinese government, which has come under severe attack from the US on the same matter, probably in wake of the two Asian giants looking to improve relations. However, the central bank had raised the same issue earlier as well and seems to reflect a feeling deeper in the Indian policy makers, particularly in wake of surging trade gap with China. The government also probably does not mind when the concerns are raised by a seemingly autonomous body like the RBI. 

Capital Goods (CG) up 2.38%, IT up 2.18%, TECk up 1.84%, Auto up 1.83%, and Bankex up 1.78% were the major gainers in the BSE sectoral space. There was no loser in the BSE sectoral space.

The S&P CNX Nifty touched a high and a low of 5,918.70 and 5,833.20 respectively.

The top gainers on the Nifty were Mahindra & Mahindra up 4.90%, HCL Tech up 4.51%, Cairn up 3.71%, JP Associates up 3.30% and HDFC Bank up 3.05%.

The top losers on the index were Reliance Communication down 2.42%, Hindustan Unilever down 1.69%, Sesa Goa down 1.64%, GAIL down 1.48% and Cipla down 1.31%.

India's tyre makers failed to make much out of the cut in import duty on rubber that was obtained following a lot of lobbying by the industry. Over the last quarter, total rubber imports into the country totaled around 10,000 tonne only, despite the fact that government had allowed 40,000 tonne of imports at concessional rates.

Rubber prices remained at highly elevated levels over most of the second half of last financial year, causing a significant cost escalation for the tyre industry, 50% of whose total cost is constituted by natural rubber. This resulted in protest by the industry to high import duty for natural rubber at 20% which allowed domestic rubber producers to jack up prices in line in with the surging international prices. After a much delay and deliberations, the government finally agreed to provide lower import duty to 7.5% for 40,000 tonne of imports.

This was supposed to help tyre companies bring down their cost of production even as demand was surging and capacity constraints were becoming increasingly evident. However, despite the government accepting the demand, the industry failed to make much benefit out of it. This is mainly because there were a lot of procedural delays that narrowed the window of imports and also the global went further up, neutralizing any potential gains from cut in import duty.

According to the tyre industry players, although the government issued notification for cut in import duty on December 22, 2010 itself, the procedures delays like finalization of a selection criteria for eligible importers meant actual imports under the concessional duty rate could not happen before middle of February 2011. By this time the global prices had surged further, which left little incentive for tyre makers to import despite the lower duty applicable at that time.

Tyre industry has faced substantial increase in cost of production over the last financial year. Not only the prices of natural rubber but that of other key inputs, including carbon black and nylon thread, as well have been rising in line with surging crude prices. Labour and other costs too have been increasing. As a result the industry has been facing pressure on margins. The only positive for the industry has been the fact that its demand side has remained robust on back of surging automobile sales which has given the space to tyre makers for passing on at least part of the increase in cost to consumers.

European markets were trading in mix on Monday. France's CAC 40 declines 0.10%, Germany's DAX was up by 0.05% and Britain's FTSE 100 increased by 0.24%.

Asian equity indices finished the day's trade mostly in the positive terrain on Monday as investors remained confident after Wall Street closed higher on Friday on the back of better-than-expected non-farm payrolls report and as the US unemployment rate fell to a two-year low. Japanese Nikkei snapped the day's trade on the higher note supported by export-oriented stocks on the back of a weaker yen and Hong Kong shares remained the biggest gainer amongst the Asian counterparts surging by about one and a half percent. However, Stock markets in China and Taiwan remained closed on occassion of Tomb Sweeping Festival and Children's Day respectively.

MARKETS TRADE FIRM

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MARKETS COME OFF THEIR HIGHS

The domestic stock market that opened higher from the previous week's levels on the back of higher inflows from foreign institutional investors (FIIs) and strong global markets, have come off from their highs as crude oil prices again stoked concerns relating to inflation and spikes in interest rates. Further fall in stocks related to a 2G probe also soured investor's sentiment as CBI on Saturday charged a former minister, Reliance ADA group and the Indian joint venture partners of Telenor and Etisalat, in a multi-crore telecoms licensing corruption scandal. However, the undertone still remains positive due to positive global cues as Asian stocks are trading higher, tracking the cues from Wall Street where stocks closed higher on Friday on the back of upbeat US employment data. US non-farm payroll employment increased by 216,000 in March following an upwardly revised increase of 194,000 jobs in February. Meanwhile, US future indices were trading mixed in the screen trade.

Back on Dalal Street, on the BSE sectoral front, Stocks from IT, TECk and PSU counters are showcasing strong performance while stocks from Realty, Oil & Gas and Power space are languishing at the bottom. Gains India's third largest software services exporter-- Wipro-- had a rub off effect on IT stocks as the IT stocks gained after the reports that the company will acquire the oil and gas information technology practice of US-based Science Applications International Corporation (SAIC) for $150 million. Both the benchmark indices are trading above their physiological level of 19400 (Sensex) and 5800(Nifty) respectively. While the broader indices continuing their winning streak for second consecutive session are faring well, as they continue to outperform their larger peers. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1846:475, while, 86 shares remained unchanged.

The BSE Sensex is currently trading at 19,472.09, up by 51.70 points or 0.27%. The index has touched a high of 19,566.29 and a low of 19,449.36 respectively. There were 16 stocks advancing against 14 declines on the index.

The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 1.07% and 1.62% respectively. 

The top gaining sectoral indices on the BSE were, IT up by 1.41%, TECk up by 1.08%, PSU up by 0.65%, Auto up by 0.57% and Metal was up by 0.56% while, Realty down by 0.37%, Oil & Gas down 0.35% and Power down 0.06%  were the lone loser on the index.

The top gainers on the Sensex were Hero Honda up by 1.81%, Infosys up by 1.67%, Mahindra & Mahindra up by 1.45%, Wipro up by 1.44% and Jindal Steel was up by 1.16%.

On the flip side, Reliance Communication down by 2.82%, Hindustan Unilever down by 2.06%, Reliance Infra down by 1.33%, CIpla down 1.18% and HDFC down by 1.17% were the top losers on the index.

Meanwhile, the high powered panel that has been tasked with rewriting the rules governing the Indian financial sector will begin its work from Tuesday when it meets for the first time. The exercise was announced by the government nearly a year ago to bring Indian financial sector laws in line with modern ways of conducting businesses and the constitution of the panel was announced last month.

The Financial Sector Legislative Reforms Commission (FSLRC), which is headed by former Justice B N Srikrishna, include 10 bankers, regulators, economists and sector experts as its members. The committee that will hold its first meeting on April 5 has been empowered to recommend the whole gamut of such changes that are required to be implemented in laws and regulations governing the Indian financial sector to make the system more robust.

"The FSLRC will remove ambiguity, regulatory gaps and overlaps among the various legislations making them more coherent and dynamic and help cater to the requirements of a large and fast growing economy in tune with the changing financial landscape in an inter-connected financial world," read an official release by the government in this respect adding that the committee would help usher the next generation of reforms.

The UPA government had faced a lot of criticism for its failure to push economic reforms in its last term due to its dependence on left parties. This time around when the UPA won elections with a better mandate and formed the government without support of left wing parties, it was hoped that it will finally boost the reform agenda. So far however, it has failed to live up to those expectations. The finance ministry is now hoping that the panel will help it bring the much needed legislative changes to help implement the next phase of reforms. 

Members of the commission include former PFRDA chairman Dhirendra Swarup, former chairman of Axis Bank P J Nayak, Prime Minister's Economic Advisory Council (PMEAC) member M Govinda Rao and IIM professor Jayant Verma, among others. The panel will study the financial sector regulators as a whole and is also likely to recommend on issues relating the current regulatory set up and interaction between different financial sector regulators.

The S&P CNX Nifty is currently trading at 5,840.90, higher by 14.85 points or 0.25%. The index has touched a high of 5,867.50 and a low of 5,833.20 respectively. There were 28 stocks advancing against 22 declines on the index.

The top gainers of the Nifty were IDFC up 2.22%, Hero Honda up by 1.77%, HCL Tech up by 1.65%, Infosys up by 1.65% and Sun Pharmaceuticals up by 1.57%.

RCom down by 2.95%, HUL down by 1.99%, Sesa Goa down 1.48%, Reliance Infra down by 1.40% and HDFC down 1.33% were the major losers on the index.

Asian markets were trading mostly in the green;Hang Seng surged 1.09%, Jakarta Composite added 0.14%, KLSE Composite inched up 0.09%, Nikkei 225 gained 0.34% and Straits Times rose 0.34%.

On the flip side, Seoul Composite declined 0.59% was the lone looser in the Asian pack.