Sensex sheds over 300 pts; all sectoral indices in red

The benchmark Nifty was consistently trading below the 5300 level after the news that Mauritius government agreed to restart talks of revising the Double Taxation Avoidance Agreement (DTAA) treaty with India.

Finance Secretary said Mauritius gave in-principle nod to mull treaty review. He said they would discuss Mauritius tax treaty in July-August.

He also said, "We await Mauritius confirmation on tax treaty review date. We need framework before levying tax on Mauritius investment." "We can't arbitrarily tax investment routed from Mauritius," he added.

Stocks with investments from Mauritius as well as companies, which pledged shares, came in under pressure as more than 40% of India's total foreign direct investments (FDIs) come from Mauritius. GTL crashed 61% and GTL plummeted 41% despite clarification from company.

KS Oils tumbled 18%. Delta Corp, Alok Industries, HDIL, Lanco Infratech, IVRCL and Punj Lloyd fell 6-8%.

The 30-share BSE Sensex was trading at 17,523, down 348 points and the 50-share NSE Nifty slipped 107 points to 5,259. About nine shares declined for every one share advancing.

All sectoral indices were in the red. BSE Oil & Gas, Realty, IT, Power, Auto, Metal, Healthcare and TECk indices dropped 2-4%.

Heavyweights Reliance Industries, ONGC, TCS, NTPC, ITC, Infosys, HDFC Bank and Wipro were down 2-3.5%. Tata Motors and Cairn India fell 4%.

Reliance Communications was down 8% and Reliance Infrastructure down 7%. Reliance Capital and Reliance Power were down 4-4.5%.

The sell-off in global markets too added some more pressure on our markets. European markets like France's CAC, Germany's DAX and Britain's FTSE were down 1% each. US index futures namely Dow Jones and Nasdaq lost 0.5% each.

RIL cuts headcount; mulls accountability-linked pay for staff

Billionaire Mukesh Ambani-led Reliance Industries has cut its headcount for third year in a row and is mulling a salary model where pay is based on accountability and responsibility of its staff.

The company's staff strength fell by 704 workers during the fiscal year ended March 31, 2011, and stood at 22,661 employees.

RIL has disclosed its latest headcount in its 2010-11 annual report, where it also disclosed a new compensation model being mulled over at the company.

"FY-11, saw a significant change in the company's compensation and banding management process. On the variable pay front, efforts are afoot to move towards accountability and responsibility driven variable pay programmes designed uniquely for various levels," it added.

The company's headcount stood at 23,365 employees at the end of fiscal ended March 31, 2010, during which its employee strength had fallen by 1314. During the fiscal year 2008-09 also, the company's headcount had fallen by 808 people.

RIL is one of the biggest employers among the non-IT private sector companies in the country and the company's profitability has been on a sharp uptrend in recent years. During 2008-09, RIL's total headcount had declined for the first time in six years, despite the company hiring more than 1,500 engineers that year.

The steepest fall so far has been in 2003-04, when the headcount fell from 12,915 to 11,358 employees. During 2006-07 it rose by a massive 12,156 people while in 2007-08 the headcount rose by close to 791 employees.

Along with its subsidiaries such as Reliance Retail , the company had a total workforce in excess of 48,000 at the end of 2007-08, according to the company's annual filing for that year for its shareholders.

RIL has not disclosed specific numbers of employees of subsidiaries for the years 2008-09, 2009-10 and 2010-11.

RIL's average employee age stood at 41 years during 2010-11, unchanged from the level in previous fiscal. The average age of employees at the company had increased from 34 years to 39 years during 2008-09.

Reliance Industries Ltd. (RIL) may buy out Bharti from Axa JV; stock up

Mukesh Ambani-controlled Reliance group is in talks to buy out Bharti in the life insurance firm Bharti Axa Life. Reliance, which has spelt out its aspirations to build a financial services empire, is understood to be in advanced stage of negotiations with the Mittals-led Bharti which has been looking for an exit for the past one year.

At 9:45 am, shares of Reliance Industries were trading 0.53% up at Rs 979 on the Bombay Stock Exchange .

According to a Reliance insider, "the group is indeed keen to enter insurance and has been approached by two to three companies, but is yet to finalise a partner." A Reliance spokesperson declined to comment on the matter while a Bharti spokesperson said, "As a policy, we do not comment on rumours or speculation".

Bharti Axa Life is one of the struggling players in the insurance industry with a market share of 1.1%. The firm, a joint venture in which Bharti owns 74% equity and the Paris-headquartered Axa group holds 26%, started operations in 2006. The company's new business premium income has dropped 17% to Rs 364 crore in 2010-11.

For Reliance, financial services and particularly insurance, are capital intensive avenues to deploy its large investible surplus generated by the petrochemicals business. A month ago, Reliance Industries, the country's largest private sector company, announced a financial services joint venture with New York-based DE Shaw .

"Life insurance with its huge opportunities is an obvious area that it will look into. Unlike general insurance where the key element is risk, the life business is a combination of savings and risk," said a senior investment banker.

At the peak of the stock market boom, the life insurance industry emerged as a formidable domestic investor. Fuelled by investor interest in Ulips, a market-linked product, insurance companies were competing with foreign portfolio investors in the local securities market. In 2007, of the total premium income earned by insurance companies, 80% was Ulip investment; of this close to 70% went into stocks.

While Ulip inflow has fallen as expenses have been capped and agents are less eager to promote the product, for investors Ulip has transformed into a more transparent product. "For a group taking up insurance business, traditional products like endownment are equally alluring with their higher margins," said a senior official of an insurance company.

Reliance's entry into financial services services is a development that is closely tracked by corporates and markets. It's perceived that the group will build businesses like non-banking financial services, insurance and asset management where entry barriers are low compared to banking.

Coal India strikes record high

The key benchmark indices recovered after hitting fresh intraday lows. The BSE 30-share Sensex was down 36.59 points or 0.19% to 19,255.43, up 42.80 points from the day's low and off 101.07 points from the day's high. The market breadth turned negative from positive. Weak Asian stocks and data showing sustained selling by foreign institutional investors this week weighed on the sentiment.

Index heavyweight Reliance Industries (RIL) snapped a four-day 6.35% fall on bargain hunting. Oil exploration major Oil and Natural Gas Corporation extended Thursday's gains triggered by reports of rise in oil and oil equivalent gas production in the year ended March 2011. Coal India struck record high on reports of getting imported coal at discounted prices. Auto shares were mixed. Cement shares rose as top cement firms -- UltraTech Cement and ACC early this week forecast strong growth in cement demand at the time of announcing January-March 2011 quarter results. Most bank stocks declined as the central bank is seen raising key short-term interest rates by a minimum 25 basis points at a policy review early next week.

As per provisional data released by the stock exchanges, foreign institutional investors (FIIs) sold shares worth Rs. 832.59 crore on Thursday, 28 April 2011. Foreign funds sold shares worth a net Rs. 796.80 crore in secondary equity markets in three trading sessions from Monday, 25 April 2011 to Wednesday, 27 April 2011, as per data from the Securities and Exchange Board of India (Sebi).

At 11:25 IST, the BSE 30-share Sensex was down 36.59 points or 0.19% to 19,255.43. The index gained 64.48 points at the day's high of 19,356.50 in early trade. The Sensex fell 79.39 points at the day's low of 19,212.63 in morning trade, its lowest level since 20 April 2011.

The S&P CNX Nifty was down 6 points or 0.10% to 5,779.45. The Nifty hit low of 5,764.50, its lowest level since 20 April 2011.

The market breadth, indicating the health of the market, turned negative from positive breadth earlier in the day. On BSE, 1060 shares advanced while 1320 shares declined. A total of 99 shares remained unchanged.

The total turnover on BSE amounted to Rs. 1129 crore by 11:25 IST compared with Rs. 741 crore by 10:25 IST.

Among the 30-member Sensex pack, 16 gained while the rest declined.

Index heavyweight Reliance Industries (RIL) rose 0.68% to Rs. 980.50, halting a four-day 6.35% fall, on bargain hunting. Reportedly Mukesh Ambani-controlled Reliance group is in talks to buy the stake held by Bharti Enterprises in an Indian insurer joint venture with AXA Group. Bharti AXA is a joint venture between Bharti Enterprises, which controls India's largest listed cellular services provider Bharti Airtel, and AXA, Europe's second biggest insurer. Shares of Bharti Airtel declined 0.61%.

RIL said recently that it is drawing up a plan to raise gas production from its D6 deepwater block in the Krishna Godavari basin in the Bay of Bengal, off India's east coast. RIL said the reservoirs in the block are more complicated than previously expected and continuous and significant efforts are underway for understanding these reservoirs. RIL said it is trying to identify well locations for incremental production and sustenance.

Gas output from the block touched a peak of 60 million metric standard cubic meters a day (mmscmd) last year. Production has now fallen to 50 mmscmd as against a target of 69.8 mmscmd, S.K. Srivastava, head of India's upstream regulator, said last week. He also said that Reliance hasn't given any satisfactory response on the matter.

Integrated development plan for all other discoveries in KG-D6 is being conceptualized to augment production in the most capital efficient manner, RIL said on 25 April 2011. The company said it is studying various options such as recompletion of wells and compression to increase gas production.

India's largest oil exploration firm by market capitalization Oil and Natural Gas Corporation (ONGC) rose 0.52%. The stock extended Thursday's close to 2% gains triggered by reports the company's oil and oil equivalent gas production rose 1.8% to 62.03 million tonnes in the year ended March 2011 over the year ended March 2010.

Coal India rose 1.28% to Rs. 381.10 after striking a record high of Rs. 383.30 on reports the company has received 27 proposals from 16 companies for getting imported coal at discounted prices.

India's largest private sector bank by net profit ICICI Bank rose 0.28% on strong Q4 results. During market hours on Thursday, the bank reported a 44% jump in net profit to Rs. 1452 crore on 23% growth in net interest income to Rs. 2510 crore and an 18% growth in fee income to Rs. 1791 crore in Q4 March 2011 over Q4 March 2010. Consolidated net profit rose 16.85% to Rs. 1567.93 crore in Q4 March 2011 over Q4 March 2010.

The bank said its savings deposits increased by 26% to Rs. 66,869 crore as at 31 March 2011 from Rs. 53,218 crore as at 31 March 2010. The CASA (current & savings accounts) deposits ratio increased to 45.1% as at 31 March 2011 from 41.7% as at 31 March 2010. ICICI Bank's net non-performing asset ratio decreased to 0.94% as at 31 March 2011 from 1.87% as at 31 March 2010 and 1.16% as at 31 December 2010.

Most bank stocks declined as the central bank is seen raising key short-term interest rates by a minimum 25 basis points at a policy review early next week. India's second largest private sector bank by net profit HDFC Bank slipped 1.66% while India's largest bank by net profit and branch network State Bank of India declined 0.73%.

Auto shares were mixed. India's largest bike maker by sales Hero Honda Motors lost 2.10% to Rs. 1660.50 ahead of declaration of its year ended March 2011 result on 4 May 2011. It was the top loser from the Sensex pack.

India's largest tractor and utility vehicles maker by sales Mahindra & Mahindra (M&M) slipped 1.47%. The company on Wednesday announced the launch of its next generation passenger carrier Maxximo Mini Van priced at Rs. 3.2 lakh. Maxximo Mini Van will compete with Tata Magic and Maruti Omni in the mini van segments.

India's largest truck maker by sales Tata Motors fell 0.63%. Recent reports indicated the company has cut production in April 2011 of its sports-utility vehicles and cars--besides the Nano--by 15%-20% over March 2011. The production cut is normal balancing in production, reports said.

India's largest car maker by sales Maruti Suzuki India rose 1.12%. Chief Executive Shinzo Nakanishi said at the time of announcing Q4 results early this week that Maruti will make efforts to protect and increase margins going forward. Net profit fell 8.4% to Rs. 2288.60 crore on 24.60% increase in total income, net of excise, to Rs. 37522.40 crore in the year ended March 2011 (FY 2011) over the year ended March 2010. The company announced the FY 2011 results during trading hours on Monday, 25 April 2011. The company said adverse currency movement (particularly on exports), higher commodity prices and new model launches impacted the company's profits in the year ended March 2011.

India's second largest bike maker by sales Bajaj Auto rose 0.52%. The company announces its Q4 March 2011 result on 18 May 2011.

India's largest household products maker Hindustan Unilever gained 2.26% to Rs. 285 and was the top gainer from the Sensex pack. Reportedly the company has formed customer care teams to help boost efficiency and sales after studying product demand and customer behaviour at supermarkets.

India's second largest listed cellular services provider by sales Reliance Communications rose 0.96% on bargain hunting after sliding over 5% on Thursday on investor worries about the ongoing telecoms licencing graft case.

Reliance Infrastructure rose 0.16%. The company said after market hours on Thursday it bought back additional 2 lakh shares on Thursday, 28 April 2011, under its buyback programme of up to Rs. 1000 crore. The company has so far bought back 10 lakh shares under the buyback programme.

GVK Power Infrastructure advanced 2.07% to Rs. 24.65 after a large bulk deal of 1.5 crore shares was executed on the counter at Rs. 24.15 per share at 09:47 IST on BSE.

Crompton Greaves tumbled 9.92% on high volume of 14.49 lakh shares after consolidated net profit declined 18% to Rs. 251.43 crore on 16% rise in net sales to Rs. 2908.03 crore in Q4 March 2011 over Q4 March 2010. The result was announced after market hours on Thursday, 28 April 2011.

Cement shares rose as top cement firms -- UltraTech Cement and ACC early this week forecast strong growth in cement demand at the time of announcing January-March 2011 quarter results. ACC (up 0.26%), India Cements (up 0.23%), Madras Cement (up 1%), UltraTech Cements (up 2.15%), Shree Cement (up 0.23%), (up 8.28%), Prism Cement (up 2.66%), gained. Ambuja Cements surged 2.39% on massive volume of 5.34 crore shares on NSE.

The corporate results announced so far have been good. The combined net profit of a total of 380 companies rose 23.2% to Rs. 30693 crore on 26.3% rise in sales to Rs. 261302 crore in Q4 March 2011 over Q4 March 2010.

Nine of 14 economists polled by Capital Market expect 25 basis points (bps) hike in key short-term interest rates while five expect a 50 bps hike in short-term rates on 3 May 2011 when the Reserve Bank of India (RBI) undertakes its annual 2011-2012 monetary policy review. A cumulative hike of 75-100 bps in short-term rates is expected during the financial year ending March 2012 (FY 2012). 100 bps is one percentage point or 1 %. Economists expect inflation based on the wholesale price index (WPI) to slide to a median 7.8% in FY 2012 from 9.4% in the year ended March 2011 (FY 2011). The poll shows that economists expect inflation to remain high in the first half of the year and slide in the second half of the year.

A sharp surge in global crude oil prices over the past few months has raised macroeconomic worries. India imports majority of its crude oil requirements and high oil prices have raised concerns about widening current account deficit. High oil prices have also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were down 38 cents or 0.34% at $112.48 a barrel.

The India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA).

Good rains, if they arrive on time and if they are well spread, would help ease food inflation and boost rural income. Rainfall that comes within 96% to 104% of the long-term average is considered a normal monsoon season, but this alone doesn't guarantee a good crop. The timing and spread of the rains are equally important. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector, which lacks irrigation facilities on more than half its farm land. Monsoon rains usually enter India's mainland through the southern state of Kerala in the first week of June, gradually progressing to cover most of central and northern India by July, before retreating in September.

Asian stocks declined on Friday after a report showing slowdown in US economy sparked concern whether earnings improvement can be sustained. The key benchmark indices in Singapore, South Korea, China, Taiwan, Indonesia and Hong Kong slipped by between 0.02% to 1.07%. Japanese markets are closed for a public holiday.

US stocks extended their multi-year highs on Thursday as the market clung to optimism generated by the Federal Reserve's plans to keep interest rates low. The Dow Jones Industrial Average rose 72.35 points, or 0.6%, to 12763.31, its highest close since 20 May 2008. The Nasdaq Composite index added 2.65, or 0.1% to 2872.53, its highest close since 12 December 2000 and the Standard & Poor's 500-stock index rose 4.82, or 0.4%, to 1360.48, finishing at its highest level since 9 June 2008.

In economic news, US gross domestic product grew at an annual rate of 1.8% in the first quarter compared with a 3.1% gain in the fourth quarter last year. Initial jobless claims for the week ended 23 April 2011 rose by 25,00 to 429,000, the highest level since January 2011 and pending home sales index of contract signings rose 5.1% to 94.1 in March 2011, from 89.5 in February 2011.

Trading in US index futures indicates a flat opening on Friday, 29 April 2011.

Reliance Industries hires McKinsey for corporate restructuring

India's largest corporarte, Reliance Industries has hired business consultancy firm McKinsey to advice it on a business transformation plan which would catapult the company's enteprise value by another $ 80 billion in the next 10 years. RIL will also take help from its independent director and former dean of Kellogg's management school Dipak Jain to chart out the new business reorganisation plan.

ET NOW has learnt from three independent sources that the new corporate structure would lead to changes in the top management team. Though the current core team of Chairman Mukesh Ambani comprising of Manoj Modi, PMS Prasad and Kamal Nanavati will remain untouched, a few new faces will be hired to head new economy businesses like telecom, retail and financial services. RIL has already sounded off head hunting firms to poach talent from rival companies.

On the Bombay Stock Exchange, RIL's stock was trading at Rs 1021.70, up by over 1 percent since previous close. RIL is working in a plan to make a foray into new growth areas. The plan includes merger and acquitions apart from setting up new businesses. In the last one year, Reliance has made some big ticket acquistions in the United States to buy stake in shale gas assets.

In India , Reliance bought 14.8 per cent stake in Oberoi Hotels and spent Rs 4500 crore in taking over Infotel Broadband to launch 4G telecom services in the country. The company recently sold 30 per cent stake in its Krishna Godavari based gas assets for $ 7.2 billion to BP. The new corporate restructuring is expected to enable RIL transform itself into one of tge world's biggest conglomerates.

Last year, Mukesh Ambani's RIL and younger brother's Anil Dhirubhai Ambani Group (ADAG) dropped the earlier non-compete agreement and signed a new non-compete agreement. After this, RIL has been looking for opportunities in power sector across generation, transmission and distribution.

The company is currently looking for strategic partners, such as service providers, infrastructure providers, device manufacturers and other participants to expand its infocomm business. Last month, RIL also announced to establish a joint venture with US-based investment and technology development firm DE Shaw group to build financial services business in India. ADAG is already present in telecom, power and financial services.

RIL's main businesses under older Ambani brother have been exploration and production of oil and gas, petroleum refining and marketing, petrochemicals, textiles, retail and special economic zones. RIL has now become the world's largest producer of polyester yarn and fibre, is among the world's top ten producers of various petrochemicals and is the largest producer of gas in India.

economictimes.indiatimes

Sensex hits one-week high; ITC scales record high

The key benchmark indices surged, snapping four days' losses as world stocks rose and as a slide in crude oil prices from 2-1/2-year peak helped ease macroeconomic concerns. The barometer index BSE Sensex struck one-week high. The Sensex was provisionally up 466.34 points or 2.42%, up close to 635 points from the day's low. The market breadth, indicating the health of the market, was strong.

Bank shares rose across the board on expectation of good Q4 results. Capital goods and auto stocks rose on renewed buying. IT stocks rose ahead of IT bellwether Infosys' Q4 result on Friday, 15 April 2011. Cigarette maker ITC scaled a record high.

The market recovered after hitting 2-week low at the onset of the trading session, tracking recovery in Asian stocks. The market moved into the positive zone to hit fresh intraday high in morning trade. The market extended initial gains to hit fresh intraday high in mid-morning trade. The market trimmed gains in early afternoon trade. The market struck a fresh intraday high in afternoon trade. The Sensex extended gains in mid-afternoon trade. The barometer index surged to hit one-week high in late trade.

As per provisional figures, the BSE 30-share Sensex was up 466.34 points or 2.42% to 19,728.88. The Sensex rose 468.83 points at the day's high of 19,731.37 in late trade, its highest level since 6 April 2011. The Sensex shed 168.91 points at the day's low of 19,101.63 in early trade, its lowest level since 29 March 2011.

The S&P CNX Nifty was up 136.80 points or 2.36% to 5,922.50 as per provisional figures. The Nifty hit high of 5923.60 in late trade, its highest level since 8 April 2011. The Nifty hit low of 5,735.55 in early trade, its lowest level since 29 March 2011.

The market breadth, indicating the health of the market, was strong. On BSE, 1,941 shares advanced while 977 shares declined. A total of 93 shares remained unchanged. The breadth was negative at the onset of the trading session.

Among the 30-member Sensex pack, 28 advanced while only two of them declined.

BSE clocked turnover of Rs. 3373 crore, higher than Rs. 2588.21 crore on Monday, 11 April 2011.
Index heavyweight Reliance Industries (RIL) rose 1.36% to Rs. 1020.80, off the day's low of Rs. 998 as refining margins are seen rising on the back of high crude oil prices. RIL recently bagged two blocks in the ninth round of oil and gas block auctions held by the government.

ONGC gained 1.78% after chairman A. K. Hazarika was quoted by the media as saying that the company will sign an agreement during the week-end to purchase a 25% stake in the Satpayev exploration block in Kazakhstan. The government has approved a total investment plan of $400 million. This includes a signature bonus of $13 million and $80 million as a fee for taking the stake in the block. The rest will be spent on exploration activities.

IT stocks rose ahead of IT bellwether Infosys' Q4 result on Friday, 15 April 2011. India's second largest software services exporter Infosys Technologies rose 2.29%, with the stock gaining for the second straight day. The market has been abuzz with talks Infosys will give encouraging guidance for the year ending March 2012 (FY 2012) given underlying strong demand for offshore outsourcing. Infosys will give annual guidance for FY 2012 at the time of announcing Q4 March 2011 results on Friday.

India's largest software services exporter TCS advanced 2.23%. The company will announce Q4 result on 21 April 2011. India's third largest software services exporter Wipro gained 3.19%. The company will announce Q4 result on 27 April 2011.

Cigarette maker ITC rose 2.81% to Rs. 190.15 on expectations of good Q4 results. The stock hit record high of Rs. 190.50 today.

India's largest dam builder by sales Jaiprakash Associates surged 7.58% after executive chairman Manoj Gaur was quoted as saying the company aims to maintain a growth rate of 40% and aims to scale down debt significantly in the year ending March 2012 (FY 2012). It was the top gainer from the Sensex pack.

Bank shares rose across the board on expectation of good Q4 results. India's second largest private sector bank by net profit HDFC Bank rose 3.65%. The bank will announce Q4 result on 18 April 2011. India's largest private sector bank by net profit ICICI Bank gained 2.68%. The bank will announce Q4 result on 28 April 2011.

India's largest state run bank by net profit and branch network State Bank of India (SBI) edged up 1.46%. Pratip Chaudhuri has taken over as the new chairman of State Bank of India the state-run bank said on 7 April 2011. Chaudhuri, 57, has been working with State Bank for 37 years and takes over from O.P. Bhatt. Before taking up the top role, Chaudhuri was deputy managing director in the international banking division of thebank.

Capital goods stocks rose on renewed buying. Punj Lloyd, ABB, Larsen & Toubro, BEML and Bhel rose by between 0.85% to 5.38%.

Auto stocks rose on strong domestic demand. India's top small car maker by sales Maruti Suzuki rose 3.41%, with the stock snapping last four days' losses. The company announced last week that it would recall 13,157 diesel engine cars. The company said it would inspect the 'connecting rod bolt' for units of its Swift and Ritz model diesel cars with engines manufactured between 13 November 2010 and 4 December 2010.

Maruti Suzuki increased the prices of its products by 0.2% to 2.4% from 4 April 2011, depending on the models to offset rising costs of key inputs viz. steel, aluminum, copper and natural rubber.
India's largest truck maker by sales Tata Motors gained 2.61%, with the stock snapping last three days' slide. The company had hiked prices of some car models by Rs. 7,000 to Rs. 36,000 from 1 April 2011.

India's top tractor and utility vehicles maker by sales Mahindra & Mahindra rose 2.73% with the stock snapping last two days' fall. The company has reportedly raised prices on most of its models by 1.5% to 2% recently to offset higher commodity prices.

India's largest bike maker by sales Hero Honda Motors gained 6.34% with the stock snapping last two days' losses after company today declared an interim dividend of Rs. 70 per equity share for the year ended March 2011. Hero Honda's total sales rose 24.4% to 5.15 lakh units in March 2011 over March 2010. The monthly sales in March 2011 were record monthly sales.

India's second largest bike maker by sales Bajaj Auto rose 1.6% with the stock snapping last three days' losses. The company's total vehicle sales increased 12% to 3.07 lakh units in March 2011 over March 2010. The company announced its March 2011 sales figures on 4 April 2011.
The market was closed on Tuesday, 12 April 2011, on account of Ram Navmi. The near term major trigger for the market is Q4 March 2011 results which will start trickling in starting this week when IT bellwether Infosys unveils earnings on Friday, 15 April 2011. Investors will scrutinize post-result management commentary to gauge outlook on earnings at a time when rising salaries, raw materials prices and interest rates are pressurizing profit margins of India Inc.

European stocks rose Wednesday, boosted by strength in the auto sector and tracking gains in Asia, as investors looked to the next round of US earnings reports. The key benchmark indices in UK, Germany and France were up by between 0.78% to 0.84%.

Japanese stocks led recovery in Asian markets on Wednesday on reports Japan's Renesas Electronics Corp. would restart a key factory that was hit by last month's quake in June 2011, a month earlier than expected. The key benchmark indices in Japan, China, South Korea, Indonesia, Singapore, Hong Kong and Indonesia rose by between 0.55% to 1.56%.

Meanwhile, Japan's government on Wednesday downgraded its assessment of the economy for the first time in six months, saying it is showing weakness after a devastating earthquake and tsunami last month battered the northeast coast.

US stocks dropped on Tuesday on worries falling oil prices could set off a reversal in the high-flying energy sector, while Alcoa's leaner-than-expected revenue disappointed. US trade deficit shrank in February as a slowdown in demand both at home and abroad hit imports and exports. The trade gap totaled $45.8 billion, down 2.6% from January despite another monthly rise in oil prices to their highest since October 2008, the Commerce Department said on Tuesday.
Trading in US index futures indicated that the Dow could gain 45 points at the opening bell on Wednesday, 13 April 2011.

Back home, high global commodity prices will add to pressure on profit margins of Indian firms caused by rising salaries and higher interest rates. Investors can take some solace in a recent slide in crude oil prices from 2-1-/2-year highs.

A surge in crude oil prices over the past few months has sparked inflation and interest rate worries. The Reserve Bank of India (RBI) is seen raising key short term policy rates by 25 basis points at its annual 2011-2012 monetary policy review on 3 May 2011.

India imports majority of its crude oil requirements and high oil prices have raised concerns about widening account deficit. High oil prices have also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were up 29 cents or 0.27% at 106.54 a barrel.

Industrial production rose 3.6% in February 2011, lower than market expectations of a 4.8% growth, data released by the government on Monday showed. Manufacturing output, which constitutes about 80% of the industrial production, rose an annual 3.5% in February 2011. January's industrial output annual growth rate was revised upwards to 3.9% from 3.7%.
The data of Wholesale Price Index for the month of March 2011 is due on Friday, 15 April 2011. A Capital Market poll pegs a median rate of rise in inflation at 8.4% in March 2011, higher than an annual rise of 8.3% in February 2011.

The International Monetary Fund has marginally cut its 2011 economic growth forecast for India to 8.2% from 8.4% as persistent inflation pressure forced aggressive monetary tightening.
Good monsoon this year could help ease food inflation and boost rural income. Recent reports indicate that India will receive good rains during the July-September monsoon season this year.

The India Meteorological Department (IMD) will give its first official forecast for the June to September monsoon on 19 April 2011.

India Infoline

With Mukesh Ambani on board, Bank of America wants RBI nod for loans to Reliance Industries

Bank of America is trying to figure out the regulatory barriers in doing business with India's largest private company Reliance Industries (RIL) whose chairman Mukesh Ambani has joined the board of the parent, Bank of America Corporation .

According to Indian regulations, a bank in India is not permitted to lend to any of its directors and companies where directors have board presence.

BankAm India officials have discussed the matter once with the Reserve Bank of India and are likely to seek further clarifications soon. A bank spokesperson declined to comment on the matter.

A few legal and compliance heads of other banks that ET spoke to felt that going strictly by the law, BankAm India should have no problems in taking fund as well as non-fund exposure to RIL or any of Reliance's group companies. "In India, BankAm functions through branch offices, and Mr Ambani has been appointed as a director on the board of the bank's global holding company. So, technically, there is no problem, but RBI has to spell this out," said the legal head of a large local bank.

However, in the past, the Indian banking regulator has often favoured stern interpretations of the law. Under the circumstances, the MNC bank does not want regulatory issues to crop up at a later point.

Foreign banks, including BankAm, have business relationships at different levels with large Indian companies. Besides rupee loans from Indian branches, offshore offices of foreign banks give loans that are considered as external commercial borrowings by a company in India. Also, these banks, through their offices in other jurisdictions, fund cross-border acquisitions by Indian business groups. For some of the MNC banks, derivative transactions with Indian companies constitute a slice of their treasury operations.

A master circular of the Reserve Bank of India gives a list of the dos and don'ts. Apart from loans and guarantees, banks are also restricted from cutting complex derivatives deals with a company having a common director. Except forwards and other plain vanilla currency and money market transactions which are cash-settled, derivatives involving an extended credit period are not allowed.

"It depends on how RBI chooses to interpret the regulations. Currently, foreign banks have advisory boards in India which don't have the status of a statutory board. So, the board of a foreign bank refers to the board of the parent which is beyond RBI's jurisdiction," said a senior official of an European bank. Many foreign banks use their offices outside India to lend to Indian corporates and the central bank's rules on exposure to single company or a group doesn't apply.

In India, BankAm and Merrill Lynch (which BankAm acquired) carry out various businesses: banking through BankAm branches, investment banking and equity broking through DSP Merrill Lynch, and a non-banking finance company through DSP ML Capital . For RIL, which every bank wants as a corporate client, it makes little difference if it can't borrow from the US bank. But BankAm India will not like losing the RIL account to other lenders.

Realty stocks extend recent gains

A bout of volatility as the key benchmark indices dropped once again after recovering from the day's low in morning trade, as oil prices hovering near 2-1/2-year sparked inflation and interest rates worries. The BSE 30-share Sensex was down 27.65 points or 0.14%, off close to 35 points from the day's high and up close to 40 points from the day's low. The market breadth was strong. Index heavyweight Reliance Industries (RIL) extended initial losses. Maruti Suzuki India fell after recalling some diesel cars. Print media shares rose across the board on renewed buying. Realty stocks extended recent gains on value buying.

The market edged lower in early trade as crude hovered near 2-1/2-year highs. A bout of volatility as the key benchmark indices dropped once again after recovering from the day's low in morning trade.

India imports majority of its crude oil requirements and a surge in crude oil prices over the past few months has sparked inflation and interest rates worries. The Reserve Bank of India (RBI) is seen raising key short term policy rates by 25 basis points at its annual 2011-2012 monetary policy review on 3 May 2011.

High oil prices have also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were down 50 cents a barrel or 0.46% at $108.33 a barrel. The price had climbed 49 cents to $108.83 a barrel in New York on Wednesday, 6 April 2011, the highest settlement since 22 September 2008.

Good monsoon this year could help ease food inflation and boost rural income. Recent reports indicate that India will receive good rains during the July-September monsoon season this year. The India Meteorological Department (IMD) is expected to come out with its long term forecast of the summer monsoon rainfall season by the end of this month.

At 10:20 IST, the BSE 30-share Sensex was down 27.65 points or 0.14% to 19,586.98. The index gained 8.68 points at the day's high of 19,620.88 in early trade. The Sensex fell 69.21 points at the day's low of 19,542.99 in early trade.

The S&P CNX Nifty was down 12.60 points or 0.21% to 5,879.15.

The market breadth, indicating the health of the market, was strong. On BSE, 1469 shares advanced while 670 shares declined. A total of 78 shares remained unchanged.

Among the 30-member Sensex pack, 16 gained while only five of them declined. Bharti Airtel, TCS and HDFC Bank fell by between 0.96% to 1.74%. Hindalco Industries, HDFC and Tata Power Company rose by between 1.07% to 1.41%.

Index heavyweight Reliance Industries (RIL) fell 0.51%. RIL, last week, bagged two blocks in the ninth round of oil and gas block auctions held by the government.

Most auto stocks fell on profit taking after recent strong gains triggered by strong vehicle sales in the month of March 2011 and hike/likely hike in vehicle prices. India's top small care maker by sales Maruti Suzuki declined 1.01%, extending Wednesday's 1.4% fall. The company announced after market hours on Wednesday that it would recall 13,157 diesel engine cars. The company said it would inspect the 'connecting rod bolt' for units of its Swift and Ritz model diesel cars with engines manufactured between 13 November 2010 and 4 December 2010.

Maruti Suzuki increased the prices of its products by 0.2% to 2.4% from 4 April 2011, depending on the models to offset rising costs of key inputs viz. steel, aluminum, copper and natural rubber.

India's second largest bike maker by sales Bajaj Auto fell 0.05%. The company's total vehicle sales increased 12% to 3.07 lakh units in March 2011 over March 2010. The company announced its March 2011 sales figures on Monday, 4 April 2011.

India's largest truck maker by sales Tata Motors declined 1.08%. The company had hiked prices of some car models by Rs. 7,000 to Rs. 36,000 from 1 April 2011.

India's top tractor and utility vehicles maker by sales Mahindra & Mahindra shed 0.42%. The company had said on 1 April 2011 it will raise prices of its products within a week to offset higher commodity prices.

India's largest bike maker by sales Hero Honda Motors rose 0.25%, with the stock gaining for the thirteenth straight day. Hero Honda's total sales rose 24.4% to 5.15 lakh units in March 2011 over March 2010. The monthly sales in March 2011 were record monthly sales.

Realty stocks extended recent gains on continued value buying. Ackruti City, DLF, Indiabulls Rela Estate, HDIL and Unitech rose by between 0.43% to 2.43%.

Mahindra Satyam rose 2% after the Supreme Court directed the Central Board of Direct Taxes (CBDT) to maintain status quo over its demand of Rs. 617 crore in income tax till Friday, 8 April 2011. It also asked CBDT to work out Satyam's actual liability.

Print media shares rose across the board on renewed buying. Jagran Prakashan, Sandesh, DB Corp, HT Media and rose by between 1.69% to 5.73%.

Indian stocks had witnessed a sharp rally recently on the back of heavy inflow from foreign funds. As per provisional figures FIIs bought shares worth Rs. 528.47 crore on Wednesday, 6 April 2011. FIIs bought shares worth a net Rs. 1562.70 crore during two trading sessions on Monday, 4 April 2011 and Tuesday, 5 April 2011, the latest data from Securities & Exchange Boardof India (Sebi) showed. FII inflow in April 2011 totaledRs. 5650 crore (till 5 April 2011). FIIs had bought equities worth Rs. 6897.80 crore in March 2011. FII inflow in calendar year 2011 totaled Rs. 3149.10 crore (till 5 April 2011).

The near term major trigger for the market is Q4 March 2011 results which will start trickling in from about mid-April 2011. Investors will scrutinize post-result management commentary to gauge outlook on earnings at a time when rising salaries, raw materialsprices and interest rates are pressurizing profit margins of India Inc.

On the macro front, the government will unveil data on some wholesale price indices for the year through 26 March 2011 viz. the food price index, the primary articles index and the fuel price index at about 12:00 IST.

Standard & Poor's Ratings Services on Wednesday affirmed the 'BBB-' long-term and 'A-3' short-term unsolicited sovereign credit ratings on India. The outlook on the long-term rating is stable, it said. The ratings on India reflect the country's good economic growth prospects and its fairly strong external position. Positive investment trends further underpin the ratings, with foreign direct investment and portfolio investments covering a large share of the current account deficit. Nevertheless, the country's weak fiscal profile and structural problems temper its strengths. Structural problems not only constrain efficiency but also preclude a large share of the population from benefiting from the country's rising prosperity, it added.

A survey showed on Tuesday that growth in India's service sector slowed in March from February's blistering seven-month high as new business growth moderated slightly, while price pressures, particularly wages, continued to rise. The seasonally adjusted HSBC Markit Business Activity index, based on a survey of over 450 companies, slipped to 58.8 in March 2011 from 60.2 in February 2011, but remained above the 50 mark that denotes expansion for the 23rd consecutivemonth.

On the political front, the first phase of assembly polls took place in Assam on Monday, 4 April 2011 in 62 of the 126 assembly constituencies. The second and concluding phase of elections will be held on 11 April 2011 in the remaining 64 constituencies. Assam elections will be followed by elections in Tamil Nadu, Puducherry, West Bengal and Kerala in twomonths between April and May. While Assam will have two-phased poll, Tamil Nadu, Kerala and Puducherry in one phase and West Bengal in six phases ending on 10 May 2011. The vote count is scheduled for 13 May 2011 for elections held in all the five states.

Asian stocks were mixed on Thursday after Portugal became the latest European country to plead for a bailout. The key benchmark indices in China, Indonesia and Taiwan rose by between 0.09% to 0.2%. The key benchmark indices in Hong Kong Singapore and South Korea fell by between 0.04% to 0.5%.

Portugal's caretaker government gave in to market pressures on Wednesday and joined Greece and Ireland in seeking an emergency bailout. The decision came after the government was forced to pay much higher rates to sell more debt.

Japanese stocks rose 0.16% off day's high after the Bank of Japan further eased its monetary policy, while leaving policy rates unchanged at the end of its two-day meeting. The Bank of Japan said Thursday that its policy board unanimously voted to keep its overnight call rate range from zero to 0.1%, and it also established a special lending facility for financial institutions in areas hit by the 11 March 2021 earthquake and tsunami.

US markets inched forward in relatively light volume on Wednesday, with investors adding selectively and avoiding large bets ahead of earnings.

Trading in US index futures indicated that the Dow could fall 12 points at the opening bell on Thursday, 7 April 2011.

The European Central Bank is widely expected to raise its key refinancing rate by a quarter of a percentage point to 1.25% at a policy meeting today, 7 April 2011, in what would be the first rate increase since the middle of 2008.

India Infoline

Sensex up 75 pts in morning trade on strong FII buying

MUMBAI: The BSE benchmark Sensex firmed up by 75 points in early trade on Monday on persistent buying in select counters, mainly IT and tech, on the back of sustained capital inflows by foreign funds, coupled with higher Asian cues.

The BSE benchmark Sensex resumed higher at 19,473.93 and shot up further to 19,566.29 before quoting at 19,495.75 at 1015 hours, showing a net gain of 75.36 points, or 0.39 per cent, from last weekend's level.

The NSE 50-share Nifty also firmed up by 14.60 points, or 0.25 per cent, to quote at 5,840.65 at 1015 hours.

Index heavyweight Reliance Industries (RIL) was trading firm. Wipro surged by 1.50 per cent after the company said it will acquire the oil and gas information technology practice of US-based Science Applications International Corporation ( SAIC).

Other gainers were Hero Honda (1.90 per cent), Infosys Tech (1.51 per cent), M&M (1.51 per cent), HDFC Bank (1.30 per cent), Jindalsteel (1.29 per cent) and TCS (1.21 per cent).

As per provisional figures, foreign funds bought shares worth Rs 415.28 crore last Friday. FII inflow totaled Rs 8,963.42 crore in the nine trading sessions from March 22 to April 1.

Most Asian stocks rose in early trade after a report showed US jobs grew faster than forecast. The key benchmark indices in Hong Kong, Indonesia and Singapore were up by between 0.08 per cent and 1.11 per cent. However, South Korea's Seoul Composite slipped by 0.49 per cent. The Chinese market is closed today for a local holiday.

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