Market at close -25-2-2009

Key benchmark indices came off the day's high in mid-afternoon trade as banking stocks and index heavyweight Reliance Industries (RIL) pared gains. However, auto stocks held firm. The BSE 30-share Sensex was up 137.34 points, or 1.55%, off close to 35 points from the day's high.
Recovery in global markets and government's second stimulus for the economy announced during trading hours on Tuesday, 24 February 2009, boosted the domestic bourses today, 25 February 2009.
However, volatility may rule the roost on the bourses in the near term ahead of the expiry of February 2009 derivatives contracts on Thursday, 26 February 2009. As per reports, rollover of Nifty positions from February 2009 series to March 2009 series stood at 54% while marketwide rollover of positions was 42%, as on Tuesday, 24 February 2009.
The government on Tuesday cut excise duty and service taxes in an effort to boost demand and revive growth in economy as it reels under the impact of the global economic crisis. Stand-in finance minister Pranab Mukherjee announced a cut in excise duty to 8% for items attracting 10% duty. The government also extended an across-the-board 4% reduction in excise duty, provided in the first stimulus package, beyond this fiscal-end. Service tax was slashed by 2% across-the-board.
While the reduction in service tax will put additional income in the hands of the consumer as there is a service tax component on many services, the impact of the cut to either to prop up consumer demand or the economy at large, will not be significant, according to a note by a domestic brokerage.
Rather, the latest fiscal stimulus by the government estimated at Rs 30,000 crore could further deteriorate government finances. Just before the announcement of the stimulus package, the global rating agency S&P revised the outlook on the long-term sovereign credit rating on India to negative from stable citing deterioration of the fiscal positions of the government. S&P expects government deficit, including off-budget measures such as oil and fertilizer bonds, to increase to 11.4% in the fiscal year ending 31 March, 2009, from 5.7% in the previous fiscal year.
Standard & Poor's has, nonetheless, affirmed its 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India.
European stocks recovered in early trade on Wednesday, snapping a three-day losing streak, after statements by Federal Reserve chairman Ben Bernanke caused a Wall Street rally. The key benchmark indices in France, Germany and UK were up by between 0.76% to 1.3%.
Asian stocks rose taking relief from Federal Reserve Chairman Ben Bernanke's statements against nationalisation of banks. Key benchmark indices in Singapore, Taiwan, China, South Korea, Hong Kong, Japan rose by between 0.05% to 2.65%.
US stocks surged on Tuesday, 24 February 2009, rebounding from 12-year lows, after Federal Reserve Chairman Ben Bernanke delivered a dose of relief when he signalled that nationalisation of big US banks was not on the cards.
The Dow Jones Industrial Average rose 236.16 points, or 3.32 per cent, to 7,350.94. The Standard & Poor's 500 Index gained 29.81 points, or 4.01 per cent, to 773.14. The Nasdaq Composite Index added 54.11 points, or 3.90 per cent, to 1,441.83.
The Fed chairman's remarks eased frayed nerves that the Treasury's capital-injection plan would hurt banks' shareholders and lead to nationalisation.
At 14:28 IST, the BSE 30-share Sensex was up 137.34 points, or 1.55%, to 8,958.53. At the day's high of 8,995.04 Sensex gained 172.98 points in afternoon trade. At the day's low of 8,913.44 the Sensex rose 91.38 points in early trade.
The S&P CNX Nifty was up 46.10 points, or 1.69%, to 2,780.
The market breadth, indicating the overall health of the market, was strong on BSE with 1,327 shares advancing as compared with 1,011 that declined. A total of 75 shares remained unchanged.
From the 30 share Sensex pack, 25 stocks rose while rest fell. Reliance Infrastructure, Jaiprakash Associates, Bharti Airtel rose by between 2.1% to 5.35%.
Oil exploration and production firms rose as they stand to benefit from lower service tax on exploration & production activities which currently stands at 12.36%. India's largest private sector company by market capitalization and oil refiner Reliance Industries (RIL) rose 1.95% to Rs 1,277.95. The stock came off the day's high of Rs 1,285.
India's largest oil exploration firm by revenue ONGC rose 2.5%. Recent report said the company has discovered oil in the hydrocarbon rich Krishna Godavari basin. Other oil & gas stocks, Reliance Petroleum, Essar Oil, Cairn India and Gail India rose by between 0.05% to 4.18%.
Steel stocks rose on reports steel prices are set to come down by up to Rs 600 a tonne following the government cutting excise duty from 10% to 8%. Jindal Steel, JSW Steel, Steel Authority of India, Tata Steel, Bhushan Steel rose by between 2.29% 3.96%. The cut in prices may spur demand.
However, as steel firms will pass on the entire duty cut by way of reduction in prices, it will not have a favourable impact on profitability of steel firms, according to a note by the domestic brokerage mentioned above.
Other metal stocks also jumped. Sterlite Industries, Hindustan Zinc, Hindalco Industries, National Aluminum Company rose by between 1.61% to 5.22%.
Welspun Gujarat Stahl Rohren surged 4.26% on commissioning its state-of-art steel pipe mill in USA.
IT pivotals rose on US President Barak Obama's efforts to kickstart the US economy and on spurt in ADRs overnight. India's third largest software services exporter, Wipro rose 2.66% as Its ADR rose 2% overnight. India's second largest software services exporter Infosys Technologies jumped 2.79% as its ADR rose 4.65% overnight. India's largest software services exporter by sales TCS gained 2.12%.
Obama on Tuesday night that the United States will emerge from the recession stronger than before. IT firms derive a lion's share of revenue from exports to US. There have been concerns of cut back in technology spend by global firms amid a recession in the US economy and due to the global financial sector crisis.
IT stocks rose despite a stronger rupee. The Indian rupee perked up on Wednesday on the back of firm Asian stock markets, but the near-term outlook remains subdued on economic worries. The partially convertible rupee was at 49.82 per dollar, above Tuesday's close of 49.87/88. A stronger rupee affects operating margin of IT firms negatively as they earn most of their revenues from exports.
Banking stocks rose on hopes the central bank would cut rates to support faltering growth as inflation fell to its lowest in more than 13 months in early February 2009, dropping below 4%, and on overnight jump in American Depository Receipts (ADRs). India's second largest private sector bank by net profit HDFC Bank rose 0.98% as its ADR rose 7.24% on Tuesday, 24 February 2009. India's largest private sector bank by net profit ICICI Bank rose 2.53% to Rs 343.85 off the day's high of Rs 350. Its ADR rose 5.31% on Tuesday. Meanwhile, Life Insurance Corporation of India has hiked its stake in ICICI Bank by 2.04% to 9.38%.
India's largest bank in terms of assets and branch network State Bank of India rose 1.8% to Rs 1,047.50 off the day's high of Rs 1,058.70. The Indian government on Tuesday 24 February 2009 introduced a bill in Parliament which will enable it to increase the capital base of State Bank of India's subsidiaries and issue preference and bonus shares of these entities.
PSU bank stocks, Indian Overseas Bank, Bank of Baroda, Bank of India rose by between 1.43% to 1.74%.
There are expectations that the Reserve Bank of India (RBI) will cut interest rates further to support faltering growth. A sharp fall in inflation has provided room for the central bank to cut rates. The global financial sector crisis and recession in key global economies have pushed economic growth in India down to a six-year low. The Central Statistical Organisation (CSO) has pegged India's projected GDP growth for the year ending March 2009 at 7.1%, the slowest in six years and below the previous year's 9% rise.
Despite a steep cut in policy rates in India since October 2008, there has not been a commensurate reduction in lending rates by banks as fears of rising bad loans have made banks cautious in increasing advances.
Meanwhile, following an across-the-board 2% reduction in service tax, bank customers will see a sharp reduction in credit card charges, loan processing charges and foreign exchange charges among others.
Auto stocks held firm on cut in excise duty by the government yesterday 24 February 2009. India's largest commercial vehicle maker by sales Tata Motors jumped 5.22%. India's second largest commercial vehicle maker by sales Ashok Leyland rose 3.4%.
Other Auto stocks, Maruti Suzuki India, Hero Honda Motors and Mahindra & Mahindra rose by between 0.44% to 8.1%.
Ashok Leyland on Wednesday said it had decided to pass on the full benefit of the tax reduction to customers, and that the average prices of its vehicles will be lowered by Rs 16,000. Tata Motors also reportedly cut vehicle prices by about 2%.
However, price cut alone is unlikely to revive sluggish demand for trucks. Currently, the commercial vehicles (CV) industry is struggling to source retail finance as banks and other financial institutions have refrained from lending to the sector. According the latest report from the Society of Indian Automobile Manufacturers (Siam), sales in the CV industry fell by almost 20% at 3,11,283 units for the period April 2008-January 2009 over the period April 2007-January 2008
High interest rates and a slowdown in the economy have impacted demand for trucks.
Television broadcasters rose as service tax on advertisement sales, which would now stand reduced following an across-the-board 2% reduction in service tax. NDTV and TV 18 India rose by between 2.27% to 3.36%.
From A group stocks, Century Textiles, Spice Communications, Mphasis, Mahindra & Mahindra and Educomp Solutions rose by between 6.86% to 13%. Balrampur Chini, Bajaj Holdings, Alstom Projects, Godrej Consumer, ABB fell by between 1.69% to 3.35%.
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