Wednesday, February 25, 2009

Market Analysis 25-02-09

Market Commentary 25-02-09

Indian market today ended the day in positive zone on significant buying led by announcement of third stimulus package by the government on 24th February and rate cut expectations. The stimulus includes 2% cut in service tax rates to 10% and reduction in excise duty from 10% to 8%. Along with this firm cues from the global markets also contributed to the northward journey. Though, market came off of the day’s high during final trading hours as few key stocks pared gains. Market was exhibiting a bit of volatility ahead of expiry of month derivative contract on 26th Feb 2009. 

The domestic market today opened on pleasant note supported by positive global markets. The US markets on Tuesday gained momentum after a six-session of losing streak after Federal Reserve chairman Ben Bernanke calmed the increasing fears of bank nationalization plan by the Obama administration. In the domestic arena, second stimulus package for the economy announced on 24th Feb, also lifted the domestic bourses. Further, benchmark indices continued to trade on positive zone on strong buying over the ground. However, during the last trading hours market was not able to hold the momentum as pace of gaining ground restricted and market came off the days’ high. BSE Sensex ended around 8,900 mark and NSE Nifty closed above 2,750 level. From the sectoral front, most of the indices ended in green. Besides, Auto, IT, Teck, Metal, Metal, Oil & Gas, Power and Bank stocks contributed to most of the buying. Midcap and Smallcap stocks also followed the same trend. However, Reality and Capital Goods stocks remained out of favour during the trading session.

Among the Sensex pack 23 stocks ended in green territory and 7 in red. The market breadth indicating the overall health of the market remained positive as 1228 stocks closed in green while 1188 stocks closed in red and 107 stocks remained unchanged in BSE.

The BSE Sensex closed higher by 80.50 points at 8,902.56 and NSE Nifty ended up by 28.6 points at 2,762.5. Broader market indices were in green as BSE Mid Caps and Small Caps ended with gains of 14.53 points and 18.58 points at 2,756.98 and 3,134.69 respectively. The BSE Sensex touched intraday high of 8,995.04 and intraday low of 8,879.72. 

Gainers from the BSE Sensex pack are M&M Ltd (7.90%), Tata Motors (5.87%), Reliance Infra (3.6%), Sterlite Industries (3.20%), TCS Ltd (2.85%), Infosys Tech (2.72%) and Wipro Ltd (2.47%).

Losers from the BSE Sensex pack are Ranbaxy Lab (3.54%), HDFC (2.68%), L&T Ltd (2.08%), DLF Ltd (1.75%) and HUL (1.75%).

On 24th February, the Finance Minister Pranab Mukherjee announced the much-awaited third stimulus package. The stimulus has offered across-the-board cut in excise and service tax rates to save and support the domestic economy. The stimulus includes 2% cut in service tax rates to 10%. The minister announced that on goods that attract 10% excise duty will now be charged at 8%. However, excise rates on items that attract 8% and 4% excise duty will not be changed. Further the excise duty on bulk cement has been fixed at 8% or Rs 230 per tonne. The customs duty on Naphtha will continue beyond March 31, 2009.

According to Goldman Sachs, the combined fiscal deficit of India at around 11% of GDP is now among the highest in the world. The deficit is unlikely to come down in the next few years. Also, global rating agencies like Moody''s, Fitch and S&P have warned that India''s rating may be downgraded. Policymakers insisted that rising deficit is expected to continue, given the government''s increased spending is likely to continue.

On the global markets front the Asian markets which opened before the Indian market, closed higher on the back of overnight gains in the US markets. Shanghai Composite, Nikkei 225, Hang Seng, Seoul Composite and Straits Times index ended up by 5.92, 206.56, 192.66, 2.35 and 3.2 points at 2,206.57, 13,005.08, 7,461.22, 1,6146.79 and 1,067.08 respectively. 

European markets which opened after the Indian market are also trading up. In London FTSE 100 is trading higher by 55.68 points at 3,872.12 and in Frankfurt the DAX index is trading up by 70.39 points at 3,966.14.

The BSE Auto index ended up by (3%) or 76.34 points at 2,622.38 on reduction in excise duty to 8% from 10%. Gainers are M&M Ltd (7.90%), Amtek Auto (6.57%), Tata Motors (5.87%), Bharat Forge (3.57%) and Bajaj Auto (3.47%).

The BSE IT index ended higher by (2.52%) or 51.27 points to close at 2,086.93 on US President Barak Obama''s efforts to set in motion the US economy. Mphasis Ltd (6.77%), TCS Ltd (2.85%), Infosys Tech (2.72%), Wipro Ltd (2.47%) and Oracle Fin (1.97%) ended in positive territory.

The BSE Teck index gained (1.56%) or 26.79 points to close at 1,739.95. Mphasis Ltd (6.77%), Adlabs Films (4.47%), TCS Ltd (2.85%), IOL Netcom (2.75%) and Infosys Tech (2.72%) ended in green.

The BSE Metal stocks gained (1.28%) or 58.57 points to close at 4,642.64 mainly on reports that steel prices are set to come down by up to Rs 600 a tonne following the government cutting excise duty from 10% to 8%. Main gainers are Nalco (4.14%), Jindal Steel (3.70%), Hindalco (2.43%), Welspan Gujarat SR (2.01%) and Sterlite In (1.37%).

The BSE Oil & Gas index closed with increase of (1.03%) or 62.03 points at 6,087.30 as benefited from lower service tax on exploration & production activities which currently stands at 12.36%. Scrips that gained are Cairn Ind (3.22%), ONGC Ltd (2.37%) and Reliance (1.01%).

The BSE Reality index lost (0.39%) or 5.60 points at 1,447.29. Main losers are Anant Raj (4.99%), Mahindra Life (2.77%), DLF Ltd (1.75%) and Housing Dev (0.99%).

Suzlon Energy Ltd closed up by 2.22% as Suzlon Energy Australia Pty Ltd., a step-down wholly owned subsidiary of Suzlon Energy Ltd has entered into an agreement with AGL Energy Ltd for supply of 54 units of Suzlons S88-2.1 MW wind turbine generators translating to 113.4 MW capacity in Australia in 2009.

Hindustan Dorr Oliver Ltd gained 19.40%. The company has informed that the Company has bagged a prestigious order for Uranium Ore Processing Plant from Uranium Corporation of India Ltd (UCIL) worth Rs 441 crores for their Greenfiled Ore Mining and Processing facility of capacity 3000 MTPD coming up at Tumalapalle in Andhra Pradesh on LSTK basis.

Satyam Computer gained 2.62%. The company has got the approval from SEBI for issuing preferential shares to a strategic investor at a price, which can be lower than what rules allowed till now.

Ashok Leyland gained 3.26%, due to likely cut in truck prices following a cut in excise duty may boost sagging demand.

DLF dropped 1.75%. The company has reduced the prices for the flats by up to Rs 13 lakh at its new residential project in Chennai and this is the third city, after Bangalore and Hyderabad, where the price reduction have been announced in the last few weeks. In the coming days, Gurgaon, Panchkula and Kochin may also see similar project launc  
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