Sensex closes below 18K

The NSE 50-share Nifty ended the week on a somber note below the 5400-mark. It was a newsflow heavy week for the market with intense global and local cues. While the market showed strength post-budget, the recent global events, like the Mideast turmoil and Japanese crisis, have proved to be its undoing in the last 10 odd trading sessions.

US crude oil futures jumped USD 2 a barrel after Thursday's settlement following a vote by the United Nations Security Council authorizing the imposition of a no-fly zone over Libya.

The Nifty ended below technical support level of 5375 ignoring positive cues from Asian markets, which ended trade on higher note, barring Straits Times. Nikkei topped the list with 2.7% gain. European markets too were trading in positive territory.

The Sensex shut shop at 17878.81 down 271.06 points or 1.49% and the Nifty closed at 5367.5 down 79.25 points or 1.46%. The Advance Decline ratio would also favor bears for the next week. About 1050 shares advanced, 1805 shares declined, and 515 shares remain unchanged.

The shares of Reliance Industries closed down Rs 38 or 3.71% to Rs 998 after the petroleum major told the oil regulator that gas production from its KG Basin block could be lower than earlier estimates, according to a report on indianpetro.com. The website is a news, information and market intelligence provider in the Indian oil & gas, power and fertilizer sectors.

The People's Bank Of China raised reserve requirement ratio for banks by 50 basis points on Friday. The Indian regulator RBI raised key policy rates by 25 basis points each on Thursday in its fight to tame inflation below 8% mark.

Oil & gas sector took the lead in Sensex drubbing followed by auto, realty, IT, banking and telecom stocks. All BSE sectoral indices ended in red indicating the grip of bears on the market. The broader markets ended with marginal losses.

In the F&O space, Nifty futures ended with 15 points premium with addition of 3.7 million shares in open interest. The open interest put call ratio now stands at 1.14. India VIX also ended above 25 mark favoring bears.

Another worrying factor was higher turnover recorded today. The total turnover for the day was Rs 141839 crore. NSE F&O segment clocked turnover of Rs 128391 crore. In the cash segment, NSE Cash segment recorded Rs 10590 crore while BSE Cash segment registered Rs 2857 crore turnover.

Reliance Infra, Mahindra and Mahindra, Reliance Indsutries, Reliance Power, BPCL, HDFC, Hero Honda ended with losses in range of 2-4%. Tata Steel, Tata Power, Ambuja Cements, Ranbaxy Labs, Bharti Airtel and Cairn India shut shop with marginal gains.

Top gainers on the BSE Midcap: MVL, Kansai Nerolac, OnMobile Global, IndiaBulls Power and Motherson Sumi were up 5-9%.

Top losers on the BSE Midcap: KGN Industries, Persistent, Gammon India, Chennai Petro and JM Financial were down 4-5%.

Top gainers on the BSE Smallcap: Piramal Life, Zenith Infotech, Fame India, IFB Industries and Nitesh Estates were up 9-20%.

Top losers on the BSE Smallcap: Kolte-Patil, Prime Focus, PVR, Rossell Tea and Gujarat Apollo were down 5-7%.

RIL down 3%

The shares of Reliance Industries fell Rs 32 or 3% to Rs 998 early Friday after the petroleum major told the oil regulator that gas production from its KG Basin block could be lower than earlier estimates, according to a report on indianpetro.com. The website is a news, information and market intelligence provider in the Indian oil & gas, power and fertilizer sectors.

Reliance is said to have responded to the points raised by the regulator regarding the expansion of production capacity and operational efficiency at the KG Basin block.

A few days back S K Srivastava, the Director-General of the sectoral regulator, the Directorate General of Hydrocarbons, was quoted saying that as per the approved field development plan (FDP), gas production in KG basin should rise to 67 mmscmd in April.

“Both the announcements are contradictory,” said Vivek Mahajan, Head of Research, Aditya Birla Money. “How can 67 become 38 suddenly? I may recommend buying RIL if the stock falls to Rs 955-975. Statements should be made with due care,” he said.

In its replies to the regulator, RIL has said that production of natural gas and crude oil could drop even further, unless radical changes can be implemented at the block. 

“RIL is now more of a trader’s bet. Long term investors should stay away unless the confusion over gas production gets clear,” said Sunil Jain, head of research, Nirmal Bang, adding that the stock was likely to be range bound for a while.”

Nifty Slips

Indian equities opened on a positive note mirroring global cues. However, it soon slipped into the red. Oil & gas, banks trades lower while some buying was seen in auto, metal, banks, capital goods stocks. Brent Crude was trading at USD 116 per barrel.

Among frontliners, Hindalco, Cairn India, HUL, HDFC, ICICI Bank, Tata Steel, Ambuja Cements, Rel Com, Rel Power, Rel Infra, Maruti and ONGC were the top gainers, while losers include heavyweight names like Reliance Industries, TCS and BPCL.

At 09.17 am, the Sensex was up 101.31 points or 0.56% at 18251.18, and the Nifty was up 19.75 points or 0.36% at 5466.40.

About 631 shares advanced, 156 declined, and 2583 shares remained unchanged. Gautam Shah, JM Financial said that, "The mini 'Channel' pattern continues to be applicable on the charts with resistance seen at 5560 and support around 5370 on the Nifty. A breakout in any direction may lead to a 100-point move. Our bias continues to be on the downside. A close above the 5640 on the Nifty and 18800 on the Sensex is required to confirm a trend reversal."

Aditya Narain of Citigroup believes that the unfortunate earthquake in Japan should have a fairly limited impact on Indian market. "India's exports to Japan are small. However, we believe the possible indirect impact on India's nuclear energy policy, the reaction of Japanese businesses regarding Indian operations and investment and Japanese capital flows into India could have a greater bearing over time."


Asian markets were trading higher in the morning. They were up in the range of 0.5-1.5%.
The US markets broke the 3-day losing streak on speculations that Japan will control the nuclear crisis. The CBOE volatility index fell 9% versus 20% on Wednesday. Positive economic data also provided a fresh impetus to the markets.


Dow Jones Industrial Average added 1.39% or 161.29 points at 11774.59. Nasdaq Composite gained 0.73% or 19.23 points at 2636.05. Standard & Poor's 500 rose 1.34% or 16.84 points at 1273.72.


F&O cues:

Total Futures Open Int down Rs 183 cr, Total Options Open Int up Rs 659 crore
Total stock futures Open Int add 75 lakh shares in Open Int
Nifty futures Open Int add 2.34 lakh shares in Open Int, prem at 20 pts versus prem of 12 pts because of massive cash based selling
Nifty Open Int PCR down at 1.25 versus 1.33 -Total Put shed 19.7 lakh shares, call add 26 lakh shares
Highest Open Int outstanding at 5400 put, 5300 put, 5500 call
Nifty 5500 call add 10.5 lakh (16%) shares in Open Int
Nifty 5600 call add 7.4 lakh (12%) shares in Open Int
Nifty 5400 call add 4.2 lakh (13%) shares in Open Int
Nifty 5400 Put shed 14.3 lakh (13%) shares in Open Int
Nifty 5500 put shed 12.5 lakh (22%) shares in Open Int
Nifty 5100 Put shed 3 lakh (5%) shares in Open Int
Nifty 5600 put shed 1.8 lakh (8%) shares in Open Int
Nifty April 5500 Put add 1.88 lakh (21%) shares in Open Int
Nifty April 5800 call add 1.27 lakh (8%) shares in Open Int
India VIX up 1.5% at 25.26; Orchid and Suzlon in FNO Curb 




Market cues:

Global markets recover post G7's Joint Intervention; yen falls nearly 3% against USD. FIIs net sell USD 27.6 million in the cash market on Mar 16. MFs net buy Rs 286 crore in the cash market on Mar 16. NSE F&O Open Int was up Rs 476 cr at Rs 1.39 lakh crore

Banks hike lending rates after RBI rate hike?

The Reserve Bank of India (RBI) hiked its key policy rates by 25 basis points -- the seventh time this financial year 2010-11. Over the last year, the central bank has raised repo rate and reverse repo rates by 175 bps to 6.75% and 225 bps to 5.75% respectively. Repo is the rate at which banks borrow from RBI and reverse repo is the rate at which banks park their surplus money with RBI.

Following the latest hike, bankers expect lending rates to rise once more before the slack season kicks off. But depositor may have little to cheer about as bankers feel deposit rates may have peaked for the time being. Most banks are offering rates between 9.25 and10.25%.

The non-food credit growth of the banking industry has already surpassed RBI’s indicative projection of 20%. It is currently at around 23% for the fortnight ended February 25, 2011.
Here is a synopsis of the existing lending rates of some frontline banks:

Banks	Base rate	BPLR
Allahabad Bank	9.50% (50 bps)	13.75% (25 bps)
Bank of Baroda	9.50% (50 bps)	13.75% (50 bps)
Central Bank of India	9.50% (50 bps)	13.75% (50 bps)
Corporation Bank	9.40% (50 bps)	13.60% (35 bps)
Dena Bank	9.45% (50 bps)	14.50% (75 bps)
Dhanlaxmi	8.75% (50 bps)	17.25% (75 bps)
HDFC Bank	8.70% (50 bps)	17.25% (75 bps)
ICICI Bank	8.75% (50 bps)	17.50% (50 bps)
IDBI Bank	9.50% (50 bps)	14.00% (25 bps)
Indian Bank	9.50% (50 bps)	13. 75% (50 bps)
IOB	9.00% (50 bps)	13.25% (25 bps)
Kotak Mahindra Bank	8.75% (50 bps)	17.50% (50 bps)
PNB	9.50% (50 bps)	13.00% (50 bps)
SBI	8.25% (25 bps)	13.00% (25 bps)

Commercial banks are not permitted to lend below base rate. However, old customers of banks still continue to repay their loan with BPLR. Banks’ efforts are on to convert their old BPLR customers into base rate system.

Sensex Erases yesterday's Gains

The Sensex shaved off yesterday's gains at 13:43 hours on the back of sell-off in Reliance Industries, TCS, HDFC, Infosys, ICICI Bank, NTPC, ITC, SBI and Bharti Airtel. Crude turned back above USD 111.5 a barrel could be another reason behind this fall in the afternoon trade.

"Anything that causes unrest in Saudi Arabia or causes a supply side event in the Middle East will cause a sharp rebound in prices," National Australia Bank commodity economist Ben Westmore said. But Japan continues to weigh on the market after that massive earthquake followed by tsunami and blasts in nuclear plants in northern region devastated Japan.

"There is so much uncertainty in Japan and its ability to drive economic recovery that it's something that is casting a shadow on the outlook for global growth," said Westmore.

But the market remained unaffected by the rate hikes as it already factored in the 25 basis points hike in repo and reverse repo rates by the Reserve Bank of India to control inflation.

"Based on the current and evolving growth and inflation scenario, the Reserve Bank is likely to persist with the current anti-inflationary stance," RBI said in its mid-quarterly review announced today.

Raamdeo Agrawal, Joint MD Motilal Oswal Financial Services Ltd said RBI has acted on expected lines. "Problem of inflation is still on top of RBI’s mind, so they have continued tightening monetary policy even at the cost of growth momentum slackening”.

The 30-share BSE Sensex fell 192 points to 18,166 and the 50-share NSE Nifty slipped 58 points to 5,452 Even the market breadth was in favour of declines; about 500 shares advanced as against 761 shares declined on National Stock Exchange.