Volatility may rise ahead of derivatives expiry

The market may remain under pressure next week after inflation recorded fastest rise in more than 16 years in early August 2008, increasing the likelihood of the Reserve Bank of India (RBI) raising interest rates again.

With no major key events scheduled in the forthcoming week, the market will closely watch global stock market cues. But it may turn volatile on account of expiry of August 2008 derivatives contracts on Thursday, 28 August 2008.

The wholesale price index rose 12.63% in 12 months to 9 August 2008, above the previous week's annual rise of 12.44%, government data released on Thursday, 21 August 2008, showed. Inflation for the week ended 14 June 2008 was revised upwards to 11.80% from 11.42%.

Rising inflation rate has dashed hopes of any relaxation in the monetary policy. Market expects Reserve Bank of India (RBI) to raise the rates further in its next monetary policy review two months from now.

On 29 July 2008, the Reserve Bank of India (RBI), at its quarterly policy review, raised repo rate by 50 basis points to a seven-year high of 9% to curb inflation and dampen inflationary expectations. RBI also raised the cash reserve ratio (CRR), the proportion of funds that banks must keep on deposit with it, by 25 basis points to 9%.

Market will closely watch developments on the Indo-US nuclear deal. A two-day meeting of the 45 countries of the Nuclear Suppliers Group (NSG) began in Vienna on Thursday, 21 August 2008. A green signal by the NSG is required for the deal to proceed to the US Congress for final ratification. As per reports, nuclear supplier nations at a meeting on Thursday, 21 August 2008, proposed conditions for lifting a global ban on fuel and technology exports to India, a step required to implement a US-India nuclear cooperation deal.

A further rise in crude oil prices may act as a dampener for the stock markets. Light, sweet crude for September 2008 delivery surged $5.62 to $121.18 a barrel on Thursday, 21 August 2008 on the New York Mercantile Exchange (NYMEX) on weaker dollar and worries about tightening output from OPEC countries.

Foreign institutional investors (FIIs) sold shares worth Rs 1109.50 crore in August 2008 (till 21 August 2008). FIIs sold shares worth Rs 28,411.50 crore in the calendar year 2008. Mutual funds sold shares worth Rs 983.50 crore in August 2008 (till 21 August 2008).

Sensex sheds 323 points on weak global cues

Weak global cues kept the market under pressure throughout the week. Shares in the interest rate sensitive sectors like banking, real estate and automobile witnessed selling pressure. A bounce back in crude oil prices also kept investors on the edge.

The barometer index BSE Sensex declined 322.69 points or 2.19% to 14,401.49 in the week ended Friday, 22 August 2008. The S&P CNX Nifty lost 103.25 points or 2.33% at 4327.45 in the week.

The BSE 30-share Sensex is down 5885.50 points or 29.01% in calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 6805.28 points or 32.09% away from its all-time high of 21,206.77 struck on 10 January 2008.

The BSE Mid-Cap index fell 96.57 points or 1.66% to 5,726.85 in the week. The BSE Small-Cap index slipped 184.59 points or 2.60% to 6,925.85 in the week.

Foreign institutional investors (FIIs) sold shares worth Rs 1109.50 crore in August 2008 (till 21 August 2008). FIIs sold shares worth Rs 28,411.50 crore in the calendar year 2008. Mutual funds sold shares worth Rs 983.50 crore in August 2008 (till 21 August 2008).

The market extended previous week�s losses on Monday, 18 August 2008. The BSE 30-share Sensex lost 78.52 points or 0.53% to 14,645.66. The S&P CNX Nifty was down 37.65 points or 0.85% to 4,393.05.

Fears of more losses from the US mortgage crisis globally hit domestic bourses on Tuesday, 19 August 2008. The market, however, recovered from lower level in late trade. The BSE 30-share Sensex lost 101.93 points or 0.7% to 14,543.73. The S&P CNX Nifty was down 24.80 points or 0.56% to 4,368.25.

The market posted decent gains on Wednesday, 20 August 2008, snapping losses made in the five successive trading sessions. However, it came off from a intra-day high hit in late trade. The BSE 30-share Sensex rose 134.50 points or 0.92% to 14,678.23. The S&P CNX Nifty rose 47.50 points or 1.09% to 4,415.75.

Bears took charge on Thursday, 21 August 2008 as caution prevailed ahead of the weekly inflation data to be released after the trading hours on that day. Rate sensitive realty and banking stocks took a beating. The BSE 30-share Sensex lost 434.50 points or 2.96% to 14,243.73. The S&P CNX Nifty was down 131.90 points or 2.99% to 4,283.85.

On Friday, 22 August 2008, key benchmark indices clocked decent gains after posting steep losses in the previous trading session. The BSE 30-share Sensex gained 157.76 points or 1.11% to 14,401.49. The S&P CNX Nifty gained 43.60 points or 1.02% to 4327.45.

World�s sixth largest steel maker Tata Steel fell 3.53% to Rs 594.45 in the week. Anglo-Dutch steelmaker Corus, which is controlled by Tata Steel, has entered into exclusive negotiations with Klesch & Company to sell its two aluminium smelters in the Netherlands and Germany. It follows an unsuccessful attempt in December 2007 to sell the smelters.

India�s largest private sector firm by market capitalisation and oil refiner Reliance Industries fell 1.30% to Rs 2,245.65. The Bombay High Court on Thursday, 21 August 2008, suggested that the warring Ambani brothers go back to their mother Kokilaben and have the dispute settled.

The division bench of Justices JN Patel and KK Tated are hearing the dispute between the Anil-Ambani controlled Reliance Natural Resources (RNRL) and Mukesh Ambani�s Reliance Industries (RIL) over supply of natural gas from the later's eastern offshore Krishna-Godavari gas fields. Ram Jethmalani, counsel for RNRL, said Anil Ambani was ready to meet his elder brother any time, any place. The case hearing has been adjourned to 1 September 2008.

India�a largest engineering and construction firm by sales Larsen & Toubro fell 2.09% to Rs 2,604.90. As per reports, Larsen & Toubro is close to buying equity stake in coal mines in Australia and Indonesia to increase its focus on the power sector. In the next couple of years, L&T hopes to have 4,000-6,000 megawatt (MW) of power plants under development and the equity in coal mines abroad will be to feed these power plants.

India's largest drug maker by sales Ranbaxy Laboratories rose 4.61% to Rs 522.80. Japan's Daiichi Sankyo's open offer to buy a 20% stake in Ranbaxy at Rs 737 per share commenced on 16 August 2008. The offer closes on 4 September 2008.

India�s second largest cement maker by sales Ambuja Cements fell 5.55% to Rs 80. As per reports, Ambuja Cements plans to expand in the south Indian market by transporting the building material by sea route. It is one of the few domestic cement makers having expertise in using sea routes for transporting cement.

India�s largest cigarette maker by sales ITC fell 4.71% to Rs 182.10. The company said on Tuesday, 19 August 2008, its information technology arm has acquired US-based technology firm Pyxis Solutions for an undisclosed sum.

India�s largest commercial bank State Bank of India fell 7.86% to Rs 1,346.25. The bank�s staff and its seven subsidiaries went on strike on 18 August 2008, protesting the merger of subsidiary State Bank of Saurashtra with the bank.

India�s largest private sector bank by net profit ICICI Bank fell 4.27% to Rs 644.50. The bank has reportedly sold about $275 million from its credit derivative portfolio in its foreign branches. The transaction, closed a few weeks ago, will enable ICICI Bank to cut its mark-to-market losses, reports suggested.

India�s largest real estate developer by market capitalisation DLF fell 3.42% to Rs 483.95.

India's largest passenger vehicle maker by sales Maruti Suzuki (India) fell 2.87% to 631.85. The company reportedly plans to increase its vehicle exports to 2,00,000 units annually by 2010-11.

India's largest commercial vehicle maker Tata Motors fell 1.54% to 425.60. The company scrapped a plan to raise Rs 3000 crore by issuing convertible preference shares due to adverse market conditions. However, the plan to sell rights shares worth Rs 4200 crore remains unchanged.

The wholesale price index rose 12.63% in 12 months to 9 August 2008, above the previous week's annual rise of 12.44%, government data released on 21 August 2008, showed. Inflation for the week ended 14 June 2008 was revised upwards to 11.80% from 11.42%.

The Union Cabinet on Thursday, 21 August 2008 cleared the policy guidelines for the commercial rollout of Internet Protocol TV (IPTV) services, a new cable TV delivery system that would benefit both telecom players and consumers. The Cabinet also gave its approval to amend the policy guidelines for downlinking of television channels to allow broadcasters to provide content to IPTV service providers. Currently, downlinking norms allow broadcasters only to share their channels with cable and direct-to-home platforms. IPTV involves delivery of television and video signals over a broadband network.

Auto stocks may see action

The BK Chaturvedi Committee, set up to examine the financial position of oil companies, has reportedly suggested a price hike of Rs 2.5 a litre for petrol and Rs 0.75 for diesel each month to fully reflect the global price scenario by March 2009 and 2010 respectively. It also recommended scrapping import duties.

Hero Honda and Srei Infrastructure Finance have reportedly bought stakes from IFCI and Stock Holding Corporation of India in the National Stock Exchange (NSE) at Rs 3,500 per share, valuing the NSE at close to $4 billion.

Reliance Industries reportedly plans to invest about $22.75 million for work on its discovered deepwater Cauvery asset.

Lakshmi Mittal, chief executive of steel company Arcelor Mittal, is believed to have evinced interest in budget carrier SpiceJet, suggest reports.

Mahindra & Mahindra reportedly plans to list its newly formed two-wheeler venture on the stock markets to raise money for expansion and unlock shareholders' value.

The Indian government has reportedly rejected the proposed 35:65 joint venture of Societe Generale with State Bank of India for custodial and depoistary services, after the Reserve Bank of India raised concerns about the French major's securities scam in Europe.

The talks between the Dhoots of the Videocon group and Mahendra Nahata of Himachal Futuristic Communications to buy out the latter's 36% stake in all-India mobile licence holder Datacom Solutions have reportely failed due to valuation differences.

Datacom Solutions, the telecom services arm of the Videocon group, has reportedly short-listed IT majors, Tata Consultancy Services (TCS), Tech Mahindra and Wipro for supplying technology solutions on a revenue-sharing basis. The contract is valued at about Rs 3000 crore, spread over seven years.

Industrial production data may set direction

The market will take cues from June 2008 industrial production figures which the government will release on Tuesday, 12 August 2008. Falling crude oil prices and improvement in south west monsoon will provide some relief to investors. Rising inflation remains a major worry for the markets in the medium term.

The government will release June 2008 industrial production data at 12:00 IST on 12 August 2008. Reserve Bank of India�s recipe to contain inflation by increasing the lending rates is expected to hurt industry, manufacturing sector and the overall growth momentum. Industrial production grew at the slowest pace in more than six years in May 2008, at 3.8%, as against 10.6% in the same month of 2007, with manufacturing showing signs of acute deceleration.

Inflation remains a major concern for the central bank. Inflation based on the wholesale price index rose 12.01% in 12 months to 26 July 2008, slightly above the previous week's annual rise of 11.98%, government data released on 7 August 2008 showed.

Reserve Bank of India (RBI) on 29 July 2008, raised repo rate by 50 basis points to a seven-year high of 9% to curb inflation and dampen inflationary expectations. RBI also raised the cash reserve ratio (CRR), the proportion of funds that banks must keep on deposit with it, by 25 basis points to 9%. The central bank left its reverse repo and bank rates unchanged. Responding to the RBI's monetary tightening, top lenders HDFC and ICICI Bank and a number of state run bank have raised interest rates.

The aggregate results of 2,988 companies showed 5.1% rise in net profit to Rs 63,752 crore on 37% rise in sales to Rs 7,64,023 crore in Q1 June 2008 over Q1 June 2007. The net profit growth is now in single digits the lowest in the past 20 quarters. In the June 2008 quarter, a number of companies were hit by mark-to-market (MTM) losses on their foreign exchange (forex) exposure.

Crude oil prices have declined sharply from record high $147.27 a barrel hit on 11 July 2008. Oil held near $118 a barrel on Friday 8 August 2008. India imports 70% of its crude requirement. The rising crude oil prices affects the fiscal deficit position of the country and its sovereign rating.

India's monsoon was above average for the first week in August 2008, helping ease a dry spell that had threatened to delay sowing of crops including rice and cotton. Farmers in India, the world's second-largest rice producer, rely on the timing of the monsoon to decide which crops to grow. Showers in July 2008, the wettest month in the June-September season, were 18% below average, undermining prospects for record grain output critical to lowering food inflation.

Marketmen will keenly watch the development of India�s nuclear deal with US. The Board of Governor of the International Atomic Energy Agency (IAEA) on 1 August 2008 unanimously adopted the India-specific safeguards agreement, a key step in operationalisation of the Indo-US nuclear deal.

With the go-ahead from IAEA, India will now seek a waiver from 45 nuclear supplier nations allowing trade with a non-NPT (Non-Proliferation Treaty) country and then ratification from the US Congress, to finalise the deal. Most big powers have backed the deal.

Foreign institutional investors (FII)�s bought shares worth Rs 1,527.90 in the first few days of August 2008 (till 7 August 2008). FIIs sold shares worth Rs 25,774.20 in the calendar year 2008, till 7 August 2008. Mutual funds sold shares worth Rs 286.10 in the month of August 2008 (till 7 August 2008).

Markets headed for a volatile session

Local bourses are likely to stay range-bound amidst mixed global cues. However volatility is expected to be high ahead of the inflation data that will be released after market hours today, 7 August 2008. Inflation measured by wholesale price index is forecast to have risen 12.02% in the 12 months to 26 July 2008, up from previous week�s rise of 11.98%.

US crude rose 26 cents to $118.84 a barrel today, 7 August 2008 on fears over slowing US demand. The contract is almost 20% off the record of $147.27 a barrel hit on 11 July 2008.

Meanwhile, Prime Minister�s Economic Advisory Council (EAC) Chairman C. Rangarajan on Wednesday, 6 August 2008 projected a moderation in India�s economic growth to 7.5-8% this fiscal with no change in the Reserve Bank�s monetary stance until inflation cools down to reasonable levels. He expects the rate of inflation to ease to 8-9% by the end of the current fiscal in March 2009 from the prevailing level of close to 12%.

Asian markets were trading mixed today, 7 August 2008. China's Shanghai Composite rose 0.69% or 18.74 points at 2,738.11, Hong Kong's Hang Seng gained 1.30% or 285.76 points at 22,235.51. However, Japan's Nikkei plunged 1.21% or 161 points at 13,093.89, Taiwan's Taiwan Weighted slipped 0.04% or 2.46 points at 7,023.78, Singapore's Straits Times was down 1.14% or 33.02 points at 2,853.76 and South Korea's Seoul Composite lost 1.20% or 19.02 points at 1,559.69.

US stocks advanced on Wednesday, 6 August 2008 as a drop in oil prices and a better-than-expected profit report from the technology major Cisco Systems helped ease worries about the financial sector. The Dow Jones industrial average added 40.30 points, or 0.35%, to 11,656.07. The Nasdaq Composite index rose 28.54 points, or 1.21%, to 2,378.37.

Back home, stocks ended volatile session slightly higher extending gains for the second straight day yesterday, 6 August 2008. The BSE 30-share Sensex rose 112.47 points or 0.75% to 15,073.54 and the S&P CNX Nifty rose 14.70 points or 0.33% to 4,517.55, yesterday 6 August 2008.

The BSE Sensex is down 5,213.45 points or 25.69% in the calendar year 2008 so far from its close of 20,286.99 on 31 December 2007. It is 6,133.23 points or 28.92% away from its all-time high of 21,206.77 struck on 10 January 2008.

Foreign institutional investors were net equity buyers worth Rs 1815.74 crore while mutual funds sold shares worth Rs 804.36 crore yesterday, 6 August 2008, according to provisional data on NSE.

Foreign institutional investors (FIIs) were net buyers of Rs 2364.20 crore in the futures & options segment yesterday, 6 August 2008. They were net buyers of index futures to the tune of Rs 2332.22 crore and bought index options worth Rs 160.56 crore. They were net sellers of stock futures to the tune of Rs 152.83 crore and bought stock options worth Rs 2364.20 crore.

Meanwhile, the Reserve Bank of India (RBI) on Wednesday, 7 August 2008 allowed exchange-traded currency futures by putting out guidelines on the same. Three exchanges have applied to the Securities and Exchange Board of India to start the currency futures --- the Bombay Stock Exchange, the National Stock Exchange and MCX.

The Centre�s direct tax revenues continue to be buoyant, with net collections recording a 46.95% growth in the first four months of the current fiscal. Data released on Wednesday, 7 August 2008 showed that net direct tax collections stood at Rs 71,648 crore during April-July 2008 as compared with Rs 48,756 crore collected in the same period last year.

Auto stocks may see action

The government on Wednesday, 6 August 2008 ruled out an immediate reduction in petrol and diesel prices following softening of global crude prices saying the domestic rates were still pegged at roughly half of the current international prices. Global crude oil prices have eased from the highs of $147 per barrel to $117.75 a barrel in the past three weeks.

The promoters of Zandu Pharmaceuticals have reportedly filed a petition in the Bombay High Court challenging Emami�s purchase of shares in the company from the Vaidya family, co-promoters of Zandu. On the other hand, Emami has sent legal notices to directors of Zandu claiming it has not received the agenda of Zandu�s annual general meeting to be held on 9 August 2008.

Captain GR Gopinath may reportedly sell 2% stake in Air Deccan, which is now being merged with Kingfisher Airlines of the UB Group chief Vijay Mallya. Gopinath holds 9.11% stake in Air Deccan of which 7.11% is locked-in, the reports added.

Steel Authority of India (SAIL)'s estimated cost for modernising and capacity expansion at its plants has reportedly increased by three times over the past four years to Rs 90,000 crore.

Bharat Forge reportedly plans to manufacture ultra-heavy forgings catering to the power sector including nuclear power plants and would involve an investment of Rs 1000 - Rs 1200 crore over a five-year period.

Housing Development Finance Corporation (HDFC) is reportedly in talks with GE Money to buy its Indian home loan business. GE Money has mandated some global investment banks to find a strategic investor for the business.

The government has reportedly paid about Rs 28000 crore as subsidies to fertiliser producers till July-end and plans to pay Rs 8000 crore per month until February 2009.

Indian tyre makers may reportedly undertake further price hikes to ease out cost pressures even as crude oil prices are softening and the rubber crop is entering the peak production season starting November this year.

JSW Energy, a unit of JSW Steel, reportedly plans to enter the power distribution business as part of its plans to become an integrated power firm. It plans to bid for the likely privatisation of power distribution in certain regions of Maharashtra.

Market likely to see volatile session

Local bourses open lower tracking negative cues from overseas markets. Caution may prevail ahead of Federal Reserve meeting scheduled after Indian market hours today to decide on US interest rates.

US crude futures tumbled yesterday, 4 August 2008, as OPEC output rose for the third month in a row in July, outweighing concerns about Tropical Storm Edouard. On the New York Mercantile Exchange, September crude settled down $3.69 at $121.41 a barrel.

Most Asian markets were trading lower today, 5 August 2008. China's Shanghai Composite was down 0.61% or 16.80 points at 2,724.94, Hong Kong's Hang Seng plunged 1.61% or 362.23 points at 22,152.69, Taiwan's Taiwan Weighted slipped 1.85% or 129.20 points at 6,848.16, Singapore's Straits Times fell 0.65% or 18.80 points at 2,857.28, South Korea's Seoul Composite lost 0.30% or 4.69 points at 1,538.36. However, Japan's Nikkei rose 0.27% or 34.85 points at 12,968.03

US stocks fell yesterday, 4 August 2008, as shares of energy and commodity-related companies tumbled on falling oil and metals prices and investors worried the housing slump could fuel further losses at financial companies. The Dow Jones Industrial Average fell 42.17 points, or 0.37%, to 11,284.15, the Standard & Poor's 500 Index slid 11.30 points, or 0.9% to 1,249.01, while the Nasdaq Composite Index dropped 25.40 points, or 1.10%, to 2,285.56.

Back home, key indices ended lower in a turbulent session yesterday, 4 August 2008. The BSE Sensex slipped 78.82 points or 0.54% to 14,577.87 and the NSE Nifty shed 18 points or 0.41% to 4395.35.

Foreign institutional investors were net sellers of equity worth Rs 507.81 crore while mutual funds net sold 46.97 crore yesterday, 4 August 2008. According to provisional data on NSE.

Foreign institutional investors (FIIs) were net sellers of Rs 631.90 crore in the futures & options segment on Monday, 4 August 2008. They were net sellers of index futures to the tune of Rs 227.23 crore and sold index options worth Rs 86.38 crore. They were net sellers of stock futures to the tune of Rs 348.99 crore and bought stock options worth Rs 30.70 crore.

Meanwhile, international credit rating agency Moody�s Corporation has cautioned that they might be looking at revising India�s rating downward. This is the second rating agency other than S&P that has given out a red flag on India�s economic fundamentals.

Hindalco Industries may see action

Hindalco Industries is reportedly considering downsizing its Rs 5000 crore rights share issue by 15% - 20% because of the uncertain state of the capital markets. Instead, the company will generate more funds internally.

NTPC is reportedly in negotiations to buy a coal mine in Indonesia and take a long lease on another. The company is also looking at coal assets in other parts of the world.

Oil and Natural Gas Corporation (ONGC) and Gujarat State Petroleum Corporation have reportedly revised their gas reserves estimates in their blocks off the country's east coast by nearly three times. The revised reserves of the two firms totals 14 trillion cubic feet.

Reliance Power will reportedly raise Rs 2500 crore from IDBI for building an ultra-mega power project in Andhra Pradesh.

Reliance Communications is reportedly set to float a $500-million tender for its GSM 3G networks. While the winner of the tender will provide all hardware components, the company will lease all passive infrastructure from Reliance Infratel.

The government reportedly plans to bring iron ore under price control by making it mandatory for miners to sign long-term supply contracts with steel firms instead of selling at high spot prices.

Private equity firm General Atlantic LLC could reportedly pick up a minority stake in Wockhardt Hospitals, the healthcare unit of drug maker Wockhardt. The deal size is likely to be $80 million-$100 million for a 20% stake, the reports added.

Ceat has reportedly been able to re-negotiate prices for a bulk of its existing export orders for the next 4-5 months on steep surge in cost of inputs such as rubber and carbon black.

Andrew Yule, Axis IT&T, Dhampur Sugar, KDL Biotech, Kinetic Engineering, McDowell Holdings, PNB Gilts, Sakthi Sugars, Samtel Colour, Upper Ganges Sugar, Uttam Sugar, DCM Shriram Industries and Simbhaoli Sugars will be shifted to trade-to-trade (T2T) segment from 8 August 2008.

Market seen opening lower

Key benchmark indices may open lower tracking weak cues from overseas markets. US light crude for September delivery rose 77 cents at $125.87 today, 4 August 2008, on supply worries, lifted by concern over Iran's nuclear activities, further violence in Nigeria, and a tropical storm that has formed near the Gulf of Mexico.

With the Q1 June 2008 earnings season over, there is lack of any major near term trigger for the domestic bourses. Aggregate results of 1977 companies showed 37.3% rise in net profit on 5.1% rise in net sales in Q1 June 2008 over Q1 June 2007.

Asian markets were trading lower today, 4 August 2008. China's Shanghai Composite fell 1.17% or 32.73 points at 2,769.08, Japan's Nikkei slipped 1.02% or 133.53 points at 12,961.06, Hong Kong's Hang Seng plunged 0.99% or 227.26 points at 22,635.34, Taiwan's Taiwan Weighted slipped 0.30% or 21.02 points at 6,981.52, Singapore's Straits Times was down 1.07% or 31.02 points at 2,875.05, and South Korea's Seoul Composite lost 2.48% or 39.03 points at 1,534.74.

Stocks fell on Wall Street on Friday, 1 August 2008 pushed by billions in losses at largest US automaker General Motors, higher unemployment figures and rising oil prices. The blue-chip Dow Jones Industrial Average dropped 51.70 points, or 0.5%, to 11,326.32. The broader Standard & Poor's 500 Index fell 7.07 points, or 0.6%, to 1,260.31. The technology- heavy Nasdaq Composite Index lost 14.59 points, or 0.6%, to 2,310.96.

Back home, local benchmark indices advanced on Friday, 1 August 2008 brushing aside weak global cues, as prospects of the Indo-US nuclear being operationalised took centre stage after the UN nuclear watchdog endorsed that India met all safeguard standards. The Bombay Stock Exchange's Sensex surged 300.94 points or 2.10% to 14,656.69,and the National Stock Exchange's Nifty ended gained 80.60 points or 1.86% to at 4413.55, on that day.

Deputy Finance Minister Pawan Kumar Bansal said that the coalition government has the support to push through three major reforms in the banking, insurance and pension sectors in the next parliamentary session, which is likely to begin on 11 August 2008.

The 30-share BSE Sensex rose 381.75 points or 2.67% to 14,656.69 and the CNX S&P Nifty rose 101.7 points or 2.35% to 4413.55, in the week ended 1 August 2008.

Foreign institutional investors were net sellers of equities worth Rs 587.28 crore while mutual funds net bought Rs 396.34 crore of equity on Friday, 1 August 2008, according to provisional data on NSE.

Foreign institutional investors (FIIs) were net buyers of Rs 196.55 crore in the futures & options segment on 1 August 2008. They were net buyers of index futures to the tune of Rs 460.53 crore and bought index options worth Rs 341.77 crore. They were net sellers of stock futures to the tune of Rs 732.50 crore and purchased stock options worth Rs 126.46 crore

Market may take cue from global equities, oil price

With the Q1 June 2008 earnings season over, there is lack of any major near term trigger for the domestic bourses. The market will now closely watch movement in crude oil prices and global stock markets. A further slide in oil price may boost investor confidence in the short term. On Thursday, 31 July 2008, the front-month US crude oil contract settled at $124.08, down $2.69 for the day and off sharply from a record above $147 a barrel on 11 July 2008.

The highly volatile July 2008 series of derivative contracts expired on Thursday, 31 July 2008 with poor rollovers. As per reports, Nifty rollover of positions from July 2008 series to August 2008 series stood at 65.05% as compared to 70.07% in the previous series. Even in single stock futures, rollovers were relatively muted at 79.19% compared to 82.05% in the previous series.

Marketmen will be keenly watching the International Atomic Energy Agency (IAEA) meet, scheduled on Friday, 1 August 2008 to consider the India-specific safeguards agreement, which will be a key step for the operationalisation of the Indo-United States nuclear deal. If the deal moves ahead, it could boosts power and capital goods sector stocks.

Stubbornly high inflation still remains a concern. The wholesale price index rose 11.98% in the 12 months to 19 July 2008, above the previous week's reading of 11.89%. The Reserve Bank of India (RBI) hiked repo rate by 50 basis points (bsp) and cash reserve ratio (CRR) by 25 bps at its quarterly policy review on Tuesday, 29 July 2008. Repo rate has now reached 9%, a level last seen in October 2000. CRR is also at 9%, for the first time since November 1999.

In the near term, the market trend is likely to dictated by the progress of the monsoon. India's annual monsoon rains from 17 to 23 July were 33% below the long-term average, the Indian Meteorological Department. Rainfall since 1 June 2008 has been 2% below the same average.

Stocks of the public sector units will continue to remain in focus as there are expectations that the government may push forward some economic reforms, which were stalled over the past four years due to opposition from Left parties. Left parities had stalled privatisation of state-run firms, pension reforms, higher foreign limits in insurance and more liberal norms for foreign bank.

Some analysts, however, feel that a major big-bang push to reforms is unlikely as the government will focus primarily on bringing down inflation ahead of key state polls and parliamentary elections, which are due in May 2009.

Foreign institutional investors (FIIs) sold shares worth Rs 1836.80 crore in the month of July 2008. FIIs sold shares worth Rs 26705.10 crore in the calendar year 2008. Mutual funds have bought shares worth Rs 1223.50 crore in the month of July 2008, till 30 July 2008.

Tata Motors, ITC slump

The key benchmark recovered from intra-day lows to trade in the green for a brief period before again sliding marginally lower in mid-morning trade. Global cues were mixed. Crude oil surged by more than $4 a barrel yesterday, 30 July 2008. The market breadth was strong.

ITC and Tata Motors slumped on weak Q1 results and were the major losers from the Sensex pack. Metal and power stocks gained. Banking shares were under pressure ahead of the inflation data for 12 months to 19 July 2008 to be released after trading hours today, 31 July 2008. FMCG stocks declined.

The market may remain volatile throughout the day today, 31 July 2008 as futures & options contracts for July 2008 series expire. As per reports, marketwide rollover of positions from July 2008 series to August 2008 series stood at 61%, while that of Nifty was 54%, as of Wednesday 30 July 2008.

At 11:19 IST, the 30-share BSE Sensex was down 20.49 points or 0.18% at 14,262.25. The market had witnessed a bout of volatility at the onset of the trading session. The Sensex opened 72.27 points higher at 14,359.48 and rose further to an intra-day high of 14,360.21 in early trade. At the day's high, the Sensex rose 73 points. At the day’s low of 14,168.79, the Sensex lost 118.42 points in early trade.

The broader based S&P CNX Nifty was down 19.1 points or 0.44% at 4,332.65.

The market breadth was strong on BSE with 1,148 shares advancing as compared to 866 that declined. 61 remained unchanged.

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

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) rose 1.44% to Rs 2,194.25.

FMCG stocks fell. India’s largest cigarette maker in terms of sales ITC tumbled 4.47% to Rs 179.40. It was the top loser from Sensex pack. After market hours yesterday, 30 July 2008, the company reported 4% drop in net profit at Rs 748.67 crore on 18% growth in net turnover to Rs 3,900 crore in Q1 June 2008 over Q1 June 2007. The drop in net profit was attributed to the increase in excise duties on non-filter cigarettes in the Union Budget 2008, steep rise in commodity prices and store rentals.

Britannia Industries (down 1.34% to Rs 1,337), Dabur India (down 0.17% to Rs 90.55) and United Breweries (down 1.53% to Rs 154.10) edged lower.

Metal stocks rose. Hindalco Industries (up 1.61% to Rs 142.40), National Aluminum Company (up 1.05% to Rs 442.30), Steel Authority of India (up 0.74%t o Rs 137.05), Sterlite Industries (up 1.69% to Rs 633) and Tata Steel (up 3.01% to Rs 648.60) edged higher.

Power stocks rose. NTPC (up 1.58% to Rs 173.55), Reliance Infrastructure (up 1.77% to Rs 986.30), Reliance Power (up 2.39% to Rs 166.85), Tata Power Company (up 1.19% to Rs 1,128.75) edged higher.

Banking shares were under pressure ahead of the weekly inflation data, which will be released after market hours today, 31 July 2008. State Bank of India (down 1.06% to Rs 1,372), HDFC Bank (down 1.69% to Rs 1074), and ICICI Bank (down 0.99% to Rs 631.50), edged lower from frontline banking pack.

Maruti Suzuki India (down 2.56% to Rs 573.75), Bharti Airtel (down 1.35% to Rs 799.05), Tata Consultancy Services (down 1.11% to Rs 829.25), ACC (down 0.91% to Rs 585.95), Infosys (down 0.89% to Rs 1,588.40) edged lower from Sensex pack.

Wipro (up 3.48% to Rs 437.15), DLF (up 2.54% to Rs 503.15), ONGC (up 1.07% to Rs 1,001.30), Mahindra & Mahindra (up 0.76% to Rs 517.40) edged higher from Sensex pack.

Tata Motors, the country’s top truck manufacturer in terms of sales lost 5.38% to Rs 393.90 after the company reported 30.10% fall in net profit to Rs 326.11 crore on 14.40% rise in net sales to Rs 6928.44 crore in Q1 June 2008 over Q1 June 2007. The company announced the results during trading hours yeserday, 30 July 2008, when the stock had risen 4.91% to Rs 416.30

On the New York Mercantile Exchange, September 2008 crude surged $4.58, or 3.75%, to $126.77 a barrel yesterday, 30 July 2008 after data showed a surprise drawdown in gasoline stocks last week.

Asian markets were trading mixed today, 31 July 2008. Key benchmark indices in China and Taiwan were down by between 0.65% and 1.53%. However, indices in Hong Kong, Japan Singapore and South Korea were up by between 0.44% and 0.98%.

US markets surged yesterday, 30 July 2008 after encouraging jobs data and the central bank's attempts at boosting liquidity in the financial markets offset a surge in oil prices. The Dow Jones jumped 186.13 points, or 1.63%, to 11,583.69. The Standard & Poor's 500 index rose 21.06 points, or 1.67%, to 1,284.26, and the Nasdaq Composite index advanced 10.10 points, or 0.44%, to 2,329.72.

Market regulator, Securities & Exchange Board of India (Sebi) yesterday, 30 July 2008 finalised the guidelines that would allow a retail investor investing in an initial public offering to pay only to the extent of shares allotted to him and not pay 100% upfront advance for shares applied, as is the current norm. The payment system, called Application Supported by Blocked Amount (ASBA), will require retail investors bidding at a cut-off price, to apply through self-certified syndicate banks (SCSBs), in which they have accounts.

Sensex breaches 14,000 on positive global cues

The key benchmark indices opened strong on positive global cues and due to a further fall in crude oil prices. The barometer index BSE Sensex breached 14,000 mark. Banking stocks were major gainers after yesterday (29 July 2008)’s steep fall. Reliance Industries gained. The market breadth was strong.

New York's main contract, light sweet crude for September 2008 delivery slumped $2.54 to $122.19 a barrel on the New York Mercantile Exchange yesterday, 29 July 2008.

US stocks surged overnight, benefiting from a steep drop in oil prices and an unexpected rise in US consumer confidence after Merrill Lynch's announcement of yet another write-down and capital-raising exercise, raising hopes that the turning point in the year-long credit crisis was close. The Dow Jones Industrial Average rose 266.48 points, or 2.39 per cent, at 11,397.56, the Standard & Poor's 500 Index gained 28.82 points, or 2.33 per cent, at 1,263.19 and the Nasdaq Composite Index rose 55.40 points, or 2.45 per cent, at 2,319.62.

Asian markets were trading higher today, 30 July 2008. China's Shanghai Composite, Japan's Nikkei, Hong Kong's Hang Seng, Taiwan's Taiwan Weighted, Singapore's Straits Times and South Korea's Seoul Composite were up by between 0.55% to 2.06%.

At 10:23 IST, the 30-share BSE Sensex was up 291.55 points or 2.11% at 14,082.97. The index gained 305.06 points at the day’s high of 14,096.60, hit in early trade.

The broader based S&P CNX Nifty up 69.65 points or 1.66% at 4,259.50.

The BSE Mid-Cap index was rose 1.68% to 5,580.65 and the BSE Small-Cap index was up 1.31% to 6,920.71.

The market breadth was strong on BSE with 1,161 shares advancing as compared to 290 that declined. 26 remained unchanged.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries rose 2.01% to Rs 2,127.10.

Bank stocks recovered from Tuesday's steep fall caused by further monetary tightening by the Reserve Bank of India at its quarterly policy review. HDFC Bank (up 5.84% to Rs 1,089), ICICI Bank (up 3.77% to Rs 630.30) and State Bank of India (up 1.82% to Rs 1,345.60) edged higher.

Reliance Infrastructure (up 3.73% to Rs 942), Tata Steel (up 3.47% to Rs 604.60), Jaiprakash Associates (up 3.42% to Rs 156.70), Bharat Heavy Electricals (up 2.82% to Rs 1,636), Ranbaxy Laboratories (up 2.57% to Rs 487) were major gainers from Sensex pack.

India’s largest motorbike maker by sales Hero Honda Motor rose 3.38% to Rs 761. On Tuesday, the company reported 44% surge in profit after tax to Rs 272.87 crore on 16% growth in turnover to Rs 2890.25 crore.

Power generation major NTPC fell 3.03% to Rs 173.05. On Tuesday, 29 July 2008, NTPC reported 27.1% fall in net to Rs 1726.53 crore on 5.87% growth in total income to Rs 10256.70 crore in Q1 June 2008 over Q1 June 2007.

Cairn India fell 1.62% to Rs 224.50. It has reported consolidated net profit of Rs 138.58 crore in the quarter ended June 2008 compared to net loss of Rs 71.44 crore in the quarter ended June 2007. Total income rose 65.71% to Rs 461.43 crore in the quarter ended June 2008 over the quarter ended June 2007.

Punj Lloyd surged 6.13% to Rs 25.25. It has reported 88% growth in consolidated net profit to Rs 111.85 crore on 87.4% growth in total income to Rs 2658.16 crore in Q1 June 2008 over Q1 June 2007. The company said its current order book stands at a robust Rs 21162 crore.

Jet Airways rose 5.37% to Rs 457. Jet Airways’ net profit jumped 364.31% to Rs 143.38 crore on 46.1% growth in total income to Rs 2899.15 crore in Q1 June 2008 over Q1 June 2007. The strong Q1 result was due to one-time benefit in the form of reversal in the prior period excess depreciation of Rs 916 crore.

Ashok Leyland was flat at Rs 28.15. Ashok Leyland’s net profit declined 42.66% to Rs 50.56 crore on 16.4% growth in total income to Rs 1896.02 crore in Q1 June 2008 over Q1 June 2007.

Omaxe rose 1.56% to Rs 117.40. Realty firm Omaxe’s consolidated net profit fell 22.7% to Rs 56.66 crore on 3.4% growth in total income to Rs 354.38 crore in the quarter ended 308 June 2008 over the quarter ended June 2007.

GVK Power & Infrastructure rose 3.93% to Rs 39.70. GVK Power & Infrastructure’s consolidated net profit rose 207.8% to Rs 40.55 crore on 38.8% growth in total income to Rs 141.37 crore in the quarter ended 308 June 2008 over the quarter ended June 2007. IT and research and development services firm MindTree said on Tuesday it has completed the open offer to acquire equity stake in Aztecsoft. The company said it now holds 79.9% in Aztecsoft.

MindTree rose 2.14% to Rs 368. MindTree said on Tuesday, it will soon commence the process of merging Aztecsoft with the company. The board of directors of New Delhi Television (NDTV) has approved setting up of a new company for building infrastructure in the form of studio, production facilities etc. wherein offshore subsidiaries of NDTV will invest up to $ 50 million as cumulative convertible preference shares or any other instrument as deemed appropriate.

In the near term, the market the market may remain volatile ahead of expiry of futures & options contracts for July 2008 series on Thursday, 31 July 2008. As per reports, marketwide rollover of positions from July 2008 series to August 2008 series stood at 44%, while that of Nifty was 48%, as of Tuesday 29 July 2008.

As per the provisional figures foreign institutional investors (FII)'s sold shares worth Rs 538.27 crore while domestic funds sold shares worth Rs 254.59 crore yesterday 29 July 2008.

Foreign institutional investors (FIIs) were net sellers of Rs 1939.47 crore in the futures & options segment on 28 July 2008. They were net sellers of index futures to the tune of Rs 1166.31 crore and bought index options worth Rs 81.46 crore. They were net sellers of stock futures to the tune of Rs 883.85 crore and purchased stock options worth Rs 29.22 crore.

The Reserve Bank of India (RBI) yesterday 29 July 2008, raised repo rate by 50 basis points to a seven-year high of 9% to curb inflation, now running close to 12%, and dampen inflationary expectations. The RBI also raised the cash reserve ratio (CRR), the proportion of funds that banks must keep on deposit with it, by 25 basis points to 9%. The central bank left its reverse repo and bank rates unchanged. The tone of the monetary policy was extremely hawkish.

ONGC may rally on robust Q1 outcome

ONGC on Monday, 28 July 2008, reported 44% surge in net profit to Rs 6636 crore on 47% growth in turnover to Rs 20,123 crore in Q1 June 2008 over Q1 June 2007. The company attributed the strong performance to higher price realization on crude oil and cost management.

ONGC’s strong Q1 show was despite a sharp increase in subsidy burden to Rs 9,811 crore in Q1 June 2008 compared to a subsidy burden of Rs 3,649 crore in Q1 June 2007. ONGC has to shoulder the subsidy burden to partially offset the under-recoveries suffered by the public sector oil marketing companies due to selling petroleum products below the cost price

Bank stocks will be in the thick of the action on a day when the Reserve Bank of India (RBI) announces its quarterly review of the monetary policy at about 12:00 IST. Given high inflation, tight monetary policy stance will continue.

State-run oil refining-cum-marketing firm BPCL on Monday posted net loss of Rs 1029 crore in Q1 June 2008 as compared to net profit of Rs 239 crore in Q1 June 2007, hit by an increase in raw material costs and purchase of traded goods. Revenues rose 61.2% to Rs 39569 crore in Q1 June 2008 over Q1 June 2007.

Neyveli Lignite Corporation’s net profit rose 1.58% to Rs 285.83 crore on 33.6% growth in total income to Rs 1237.62 crore in Q1 June 2008 over Q1 June 2007.

TVS Motor Company reported 7% fall in profit after tax to Rs 7.02 crore on 15.3% growth in revenue to Rs 924.74 crore in Q1 June 2008 over Q1 June 2007.

Bosch reported 33.7% growth in profit to Rs 219.72 crore on 19.7% growth in total income to Rs 1335.67 crore in Q1 June 2008 over Q1 June 2007.

EIH reported 3.56% growth in net profit to Rs 38.01 crore on 9.49% growth in total income to Rs 255.78 crore in Q1 June 2008 over Q1 June 2007.

Titagarh Wagons said on Monday, 28 July 2008, it had worth a Rs 200-crore order for manufacturing of 900 wagons. The company said its outstanding order book stood at a little over Rs 1000 crore as on 30 June 2008.

Cinemax India said on Monday, its board has its board had approved setting up of a wind power project. The board has also approved issue of securities, the company said.

Ashok Leyland said on Monday it was developing a new range of trucks for global markets. The company will begin the rollout of a new range of "Unitruck" 16-49 tonne trucks from 2010, the company said. These trucks will meet the demand for various applications in local and global markets, it said, and also feature a new family of 6-cylinder engines.

Market inches ahead amidst volatility; ICICI Bank drops after dismal Q1 result

Key benchmark indices opened lower dampened by serial blasts in Bangalore and Ahmedabad, which rocked the nation late last week. Market witnessed high volatility in early trade. Banking stocks declined ahead of monetary policy review by the central bank scheduled tomorrow. Reliance Industries fell. FMCG stocks rose. The market breadth was positive. Global cues were mixed.

Crude oil edged higher after a sharp correction from record high last week. US light crude for September delivery rose 46 cents to $123.72 a barrel.

At 10:22 IST, the 30-share BSE Sensex was up 43.03 points or 0.3% at 14,322.74. The index lost 55.56 points at the day’s low of 14,219.38, hit in early trade. The index gained 94.49 points at day’s high of 14,369.43 hit in early trade.

The broader based S&P CNX Nifty rose 12.4 points or 0.29% at 4,324.25.

The BSE Mid-Cap index was up 0.27% to 5,587.39 and the BSE Small-Cap index was up 0.46% to 6,809.63.

The market breadth was positive on BSE with 752 shares advancing as compared to 515 that declined. 40 remained unchanged.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries slipped 1.55% to Rs 2,114. India’s largest private sector firm by market capitalization and oil refiner Reliance Industries slipped 1.55% to Rs 2,114. The stock extended a sharp fall witnessed on Friday, 25 July 2008, after its Q1 June 2008 results disappointed investors.

FMCG stocks rose. India’s largest FMCG major by sales Hindustan Unilever rose 0.93% to Rs 234.35. Net profit of Hindustan Unilever rose 13.20% to Rs 558.18 crore on 21.09% growth in sales to Rs 4215.67 crore in Q2 June 2008 over Q2 June 2007. The company announced the results at the fag end of the trading session on Friday, 25 July 2008.

ITC (up 1.83% to Rs 192.25) and United Spirits (up 0.51% to Rs 1,264.90) edged higher.

Banking stocks declined ahead of Reserve Bank of India (RBI’s) monetary policy review scheduled tomorrow 29 July 2008. India’s largest private sector bank in terms of net profit ICICI Bank declined 4.77% to Rs 625.50. The bank’s net profit declined 6% to Rs 728 crore on 1.6% growth in total income to Rs 9429.98 crore in Q1 June 2008 over Q1 June 2007. Treasury losses and slower growth in advances have taken a toll on ICICI Bank’s profits for the first quarter of the current financial year.

Axis Bank (down 1.96% to Rs 698.50) and Kotak Mahindra Bank (down 2.56% to Rs 545.35) edged lower.

India’s largest commercial bank State Bank of India (SBI) rose 1.5% to Rs 1,470.15. The bank’s net profit rose 15% to Rs 1640.79 crore on 32.4% growth in total income to Rs 16203.07 crore in Q1 June 2008 over Q1 June 2007.

Sterlite Industries declined 5.17% to Rs 572 and Tata Power Company rose 1.63% to Rs 1,032. Sterlite Industries and Tata Power Company will replace Ambuja Cement and Cipla in Sensex from today, 28 July 2008.

Ambuja Cement rose 0.67% to Rs 82.65. Net profit of Ambuja Cements declined 32.51% to Rs 577.02 crore on 8.20% growth in sales to Rs 1569.77 crore in the quarter ended June 2008 over the quarter ended June 2007.

ONGC (up 2.85% to Rs 1,011) , Bharat Heavy Electricals (up 2.54% to Rs 1,698.55), Reliance Communications (up 1.69% to Rs 511.60) edged higher from Sensex pack.

SRF declined 1.11% to Rs 124.90. The company said on on Friday, 25 July 2008, said its board approved capital expenditure worth Rs 115 crore. The approval includes a Rs 92.65 polyester polymerisation chip plant and fluorospeciality facility with a capacity of 400 tonnes per annum at Bhiwadi in Rajasthan at an investment of Rs 22.50 crore.

Punjab National Bank rose 0.31% to Rs 490. It said on Friday, 25 July 2008, it plans to sell stake in PNB Gilts.

Punjab Tractors rose 3.58% to Rs 221.05. Punjab Tractors said after trading hours on Friday, its board will meet on 30 July 2008, to consider amalgamation of the company with Mahindra & Mahindra (M&M), which holds a controlling stake in the firm.

Amara Raja Batteries declined 5.37% to Rs 123.25.Net profit of Amara Raja Batteries declined 16.69% to Rs 14.92 crore 46.55% growth in sales to Rs 314.49 crore in the quarter ended June 2008 over the quarter ended June 2007.

Expiry of futures & options contracts for July 2008 series is on Thursday, 31 July 2008. As per reports, marketwide rollover of positions from July 2008 series to August 2008 series stood at 19%, while that of Nifty was 24%, as of Friday 25 July 2008.

Asian markets were trading mixed today, 28 July 2008. China's Shanghai Composite, Japan's Nikkei, Singapore's Straits, Hong Kong's Hang Seng rose between 0.11% to 1.4%. However, South Korea's Seoul Composite declined 0.24% to 1,593.52.

US markets advanced on Friday, 25 July 2008 on better than expected economic of durables, new home sales and consumer sentiment eased concerns of economic slowdown. The Dow Jones rose 21 points at 11,370 while the Nasdaq Composite gained 30 points to 2,310. The S&P 500 index climbed 5.22 points at 1257.76.

Back home, markets cracked on Friday, 25 July 2008 on weak global cues and profit booking by investors after a recent sharp surge in a short span. The 30-share BSE Sensex fell 502.07 points or 3.40% at 14,274.94 and the broader based S&P CNX Nifty slipped 121.7 points or 2.74% at 4311.85, on that day.

As per provisional data, foreign funds sold shares worth a net Rs 565.73 crore and domestic institutional investors sold shares worth a net Rs 302.41 crore on Friday, 25 July 2008

RBI’s monetary policy review to set direction

Volatility may rule the roost on the bourses next week. The Reserve Bank of India (RBI)’s monetary policy review, futures & options expiry for July 2008 series, progress of monsoon, and results of key index pivotals will dictate the trend.

Soaring inflation which is hovering near 13-year high has been a key concern for the financial markets. Inflation has consistently stayed above the Reserve Bank of India (RBI)’s tolerance level of 5.5% set for the current fiscal. The Reserve Bank of India (RBI) is set to review the monetary policy on 29 July 2008. Marketmen opine that RBI may further hike short-term interest rates or the repo rate as well as statutory deposit requirements or the cash reserve ratio (CRR). RBI had increased short-term lending rates for banks and CRR by 0.5% each on 24 June 2008 to control surging inflation.

The wholesale price index (WPI)-based annual rate of inflation stood at 11.89% for the week ended 12 July 2008, marginally lower than the 11.91% reported in the previous week. The annual inflation rate was 4.76% during the corresponding week last year.

Volatility may remain high ahead of the expiry of futures & options contracts for July 2008 series on Thursday, 31 July 2008.

The progress of the monsoon will also be watched very closely, as it will influence the GDP figures. Monsoon rains were 33% below average in third week of July 2008, according to Indian Meteorological Department. The cumulative rainfall after the onset of South West Monsoon has been 2% lower than the long period average (LPA). Rains in July account for a third of the four- month monsoon season from June to September and are crucial for sowing crops. Scant rainfall is bad news for the government, which is battling runaway inflation, which has surged to a 13-year high, largely due to a sharp rise in commodity prices.

There are expectations that the government may push forward some economic reforms which had been stalled over the past four years due to opposition from Left parties, after it won trust vote in parliament on Tuesday, 22 July 2008. Left parities had stalled privatisation of state-run firms, pension reforms, higher foreign limits in insurance and more liberal norms for foreign bank. The government has retained power thanks to support from regional parties including Samajwadi Party (SP), a regional party in Uttar Pradesh.

Some analysts, however, feel that a major big-bang push to reforms is unlikely as the government will focus primarily on bringing down inflation ahead of key state polls and parliamentary elections which are due in May 2009.

A sharp cooling off crude oil which touched record high of $147 per barrel early this month augurs well for the Indian economy. It is currently hovering at about $126 a barrel. Any sharp rebound in oil prices would dampen the sentiment.

Q1 earnings have been a mixed bag so far. A total of 482 companies reported 14.5% rise in net profit on 34% rise in net sales in Q1 June 2008 over Q1 June 2007. The overall earnings of the corporate sector are seen rising about 15% in Q1 June 2008 over Q1 June 2007. That would be well below the 20-25% growth seen over the past few years.

Larsen & Toubro, Sterlite Industries, Sun Pharma, HDFC Bank, Oil & Natural Gas Corporation, Ranbaxy Laboratories, Cairn India, NTPC, among the frontline companies will declare their June 2008 quarterly results in the forthcoming week.

Among other companies , Indian Overseas Bank, Wockhardt, Tata Communications, Sun TV Network, Mundra Port & Special Economic Zone, Tata Tea, Bharat Petroleum Corporation, Britannia Industries, Bank of India, Kotak Mahindra Bank, Bank of Baroda, Jet Airways, Punj Lloyd, Gail India, Hero Honda Motors, Neyveli Lignite and GMR Infrastructure, will declare June 2008 quarter results.

Market extends gains for third straight week

The key benchmark indices extended gains for the third straight week in the week ended Friday, 25 July 2008, buoyed the Congress-led coalition government winning confidence vote in parliament, sharp correction in crude oil and short covering of derivatives positions.

The barometer index BSE Sensex gained 639.54 points or 4.69% to 14,274.94 in the week ended Friday, 25 July 2008. The S&P CNX Nifty edged up 219.60 points or 5.36% to 4,311.85 in the week.

The BSE Mid-Cap index rose 333.20 points or 6.35% to 5,572.59. The BSE Small-Cap index advanced 322.89 points or 5.01% to 6778.78.

Foreign institutional investors (FIIs) were net buyers to the tune of Rs 43 crore in the month of July 2008 so far, till 24 July 2008. FIIs sold shares worth Rs 25,422.30 crore in the calendar year 2008. Mutual funds have bought shares worth Rs 882.20 crore in the month of July 2008 so far, till 23 July 2008.

Trading for the week started on an upbeat note. The 30-share BSE Sensex gained 214.64 points or 1.57% at 13,850.04 and the broader based S&P CNX Nifty advanced 67.25 points or 1.64% at 4159.50 on Monday, 21 July 2008. Index pivotals were in demand on strong rally in Asian stocks.

Market extended gains on Tuesday, 22 July 2008 ahead of the government's trust vote in parliament. The 30-share BSE Sensex advanced 254.16 points or 1.84% at 14,104.20 and the broader based S&P CNX Nifty advanced 80.6 points or 1.94% at 4240.10, on that day.

Markets galloped on Wednesday, 23 July 2008 after the Congress-led coalition government won a confidence vote in parliament late on Tuesday, 22 July 2008, raising hopes for economic reforms. The 30-share BSE Sensex surged 838.08 points or 5.94% at 14,942.28 and the broader based S&P CNX Nifty advanced 236.70 points or 5.58% at 4476.80, on that day.

The market snapped its five-day rally on Thursday, 24 July 2008 as investors booked profits at higher level. The 30-share BSE Sensex lost 165.27 points or 1.11% at 14,777.01 and the broader based S&P CNX Nifty fell 43.25 points or 0.97% at 4433.55, on that day.

The market extended losses on Friday, 25 July 2008 following overnight sharp setback in US stocks. The sentiment was also hit by seven blasts that took place in Bangalore. The 30-share BSE Sensex lost 502.07 points or 3.40% at 14,274. 94 and the broader based S&P CNX Nifty fell 121.70 points or 2.74% at 4311.85, on that day.

India’s largest private sector firm by market capitalization and oil refiner Reliance Industries (RIL) rose 1.64% to Rs 2147.35 in the week. RIL reported 13.2% growth in net profit to Rs 4110 crore on 40.65% increase in total income to Rs 41,805 crore in Q1 June 2008 over Q1 June 2007. The results were announced after market hours on 24 July 2008.

India’s second largest listed telecom services provider by sales Reliance Communication galloped 15.60% to Rs 503.10 after it called off tie-up talks with South Africa's MTN Group, Africa's biggest mobile phone group, citing legal issues.

However, India’s largest listed cellular services provider by sales Bharti Airtel fell 0.69% at Rs 796.45. The company reported 44.86% growth in net profit to Rs 2046.79 crore on a 39.72% increase in revenue to Rs 7952.32 crore in Q1 June 2008 over Q1 June 2007.The company announced the results before trading hours on 24 July 2008.

Banking shares advanced in anticipation of reforms in the banking sector after the UPA government won trust vote in parliament. India’s largest private sector bank by assets ICICI Bank rose 6.36% to Rs 656.85 and India’s second largest private sector bank by assets HDFC Bank rose 9.06% to Rs 1127.15

India’s largest state run bank by assets State Bank of India vaulted 11.47% to Rs 1448.75. The Union cabinet approved the merger of unlisted State Bank of Saurashtra with its parent State Bank of India (SBI) on Thursday, 24 July 2008.

India’s largest drug maker by sales Ranbaxy Laboratories surged 10.01% at Rs 481.25 after the company said a UK court had quashed the country's Serious Fraud Office's (SFO) prosecution of the firm's subsidiary. Ranbaxy said in a statement the English Crown Court had also declined an application by the SFO for permission to appeal to the English Court of Appeal. However, the SFO retained a right to appeal to the court directly, the Indian firm said.

India's largest passenger carmaker by sales Maruti Suzuki (India) slipped 1.50% to Rs 614.40. Its net profit fell 6.8% to Rs 465.85 on a 20.9% increase in sales to Rs 4753.58 crore in Q1 June 2008 over Q1 June 2007. The company announced the results after trading hours on 21 July 2008.

India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) advanced 8.15% at Rs 1654.90. Its net profit rose 33.1% to Rs 384.41 crore on a 33.9% increase in sales to Rs 4329.24 crore in Q1 June 2008 over Q1 June 2007. The company's outstanding order book stood at Rs 95,000 crore as on 30 June 2008. The company announced the results after trading hours on 21 July 2008.

World’s sixth largest steel maker Tata Steel climbed 4.26% at Rs 617.90 after its Thailand unit reported a surge in quarterly net profit and on expectations for a domestic price rise.

Shares of firms which are potential beneficiaries of the Indo-US nuclear deal surged after the Indian government won parliamentary vote of confidence clearing the way for the landmark civilian nuclear deal with the US. Reliance Infrastructure (up 15.08% to Rs 984.65), Alstom Projects India (up 6.60% to Rs 428.70), Rolta India (up 5.41% to Rs 288.60), Walchandnagar Industries (up 4% to Rs 267.70), Areva T&D India (up 12.56% to Rs 1655.25), Larsen & Toubro (up 3.16% to Rs 2625.60), National Thermal Power Corporation (up 8.19% to Rs 187.50), surged.

Among mid-cap stocks, McDowell Holding (up 48.73% to Rs 141), Phoenix Mills (up 45.29% to Rs 165.85), ITI (up 44.42% to Rs 38.20), Reliance Natural Resources (up 38.11% to Rs 95.50), Adlabs Films (up 26.83% to Rs 528.05), HMT (up 41.82% to Rs 75.45), and Strides Arcolabs (up 38.56% to Rs 190.45), surged.

Inflation based on the wholesale price index rose 11.89% in 12 months to 12 July 2008, below the previous week's annual rise of 11.91%, government data released on 24 July 2008 showed. Inflation for the week ended 17 May 2008 was revised upwards to 8.66% from 8.10%.

Participating in a debate on the trust motion in parliament, Finance Minister P Chidambaram on 22 July 2008, said the gross domestic product (GDP) growth in the fiscal year 2007/08 was close to 9.1%. He said the government has targeted farm credit of 2.8 trillion rupees ($65 billion) for the fiscal year ending in March 2009. Debt waiver of Rs 66,477 crore was granted to farmers so far, he said.

RIL, RNRL may see action ahead of court hearing

Hearing on the petition of Reliance Natural Resources (RNRL) seeking the Bombay High Court to restrain Reliance Industries (RIL) from selling natural gas from its KG basin gas fields to third parties has been adjourned till Wednesday, 23 July 2008.

The petroleum ministry has reportedly sought oil bonds worth Rs 50,600 to partly compensate state-run oil firms for selling fuel at subsidised rates during the first half of 2008.

The founders of real estate developer Unitech are reportedly looking to enter the general insurance sector and would rope in a foreign partner. The founders have already diversified into the telecom sector.

Tech Mahindra reportedly plans a capital expenditure of $150 million over the next three years to ramp up its physical infrastructure such as buildings and real estate as well as enhance its technology.

Indian Oil Corporation reportedly plans to enter city gas distribution business and is in talks with Oil and Natural Gas Corporation (ONGC) and Gujarat State Petroleum Corporation for sourcing gas.

The Children's Investment Fund, a UK-based hedge fund, has reportedly picked up less then 10% stakes in Indian Overseas Bank, Punjab National Bank, Vijaya Bank, Bank of Baroda and Union Bank of India.

JP Morgan Chase is reportedly investing Rs 130 crore for 33% stake in a special purpose vehicle (SPV) of Alok Infrastructure, a unit of Alok Industries. The SPV will develop a realty project in a prime location in Mumbai.

Net profit of Siemens spurted 107.2% to Rs 169.43 crore on a 1.5% increase in sales to Rs 1809.68 crore in Q3 June 2008 over Q3 June 2007.

Net profit of Alfa Laval (India) rose 29% to Rs 25.92 crore on a 31.1% increase in sales to Rs 194.23 crore in Q2 June 2008 over Q2 June 2007.

Net profit of Bihar Caustic & Chemicals soared 101.8% to Rs 13.28 crore on a 55.9% jump in sales to Rs 52.78 crore in Q1 June 2008 over Q1 June 2007.

Net profit of NOCIL surged 473.4% to Rs 11.64 crore on a 73.9% increase in sales to Rs 128.39 crore in Q1 June 2008 over Q1 June 2007.

Zee Entertainment, Aztecsoft, Crompton Greaves, Gujarat Industries Power, Infotech Enterprises, J Kumar, Mahindra & Mahindra Financial, Mastek, Patni, Pidilite, SEL Manufacturing, Shree Renuka and Sterlite Technologies, among others will declare their June ended quarter results today.

Rally to gain strength as government retains power, oil falls

The market is set to extend solid gains registered over the past four days after the Congress-led United Progressive Alliance (UPA) government late on Tuesday, 22 July 2008, retained power by winning trust vote in parliament. The end to political uncertainty following the trust vote will boost share prices. The government had sought trust vote after Left front early this month withdrew support. A further fall in oil prices and firm global markets will also aid further upmove on the domestic bourses.

The Indian stock market had surged sharply in the past four days ahead of the trust vote on expectations that the government will win the vote. Sensex jumped 1528.4 points or 12.15% in last four trading sessions to 14,104.20 on Tuesday, 22 July 2008, from its close of 12575.80 on 16 July 2008.

As per provisional data released by the stock exchanges, foreign funds on Tuesday, 22 July 2008, sold shares worth a net Rs 597.35 crore. Foreign funds sold shares worth a net Rs 111.90 crore on Monday, 21 July 2008, data released by market regulator Securities & Exchange Board of India (Sebi) on Tuesday, 22 July 2008, showed.

A section of the market reckons that the government may push forward economic reforms given that it has retained power without the support of Left parties. There has been a virtual halt in reforms process in the last four years due to strong opposition to reforms from Left parties. Left parities had stalled privatisation of state-run firms, pension reforms, higher foreign limits in insurance and more liberal norms for foreign bank

But some analysts feel that a major big-bang push to reforms is unlikely as the government will focus primarily on bringing down inflation ahead of key state polls and parliamentary elections which are due in May 2009. Inflation is nearly 12% annually, its highest in more than 13 years.

A major relief for the Indian stocks and economy is cooling off of global crude oil prices from record high hit early this month. Oil was down 35 cents at $128.07 a barrel in Asia today, 23 July 2008, after falling more than $3 to a six-week low in the previous session as the threat of Hurricane Dolly to oil drillers and refiners eased, and concerns over faltering US energy demand increased. High oil and commodity prices have been a key cause for surging inflation and rising interest rates.

With political uncertainty over, the focus will now shift to quarterly review of the monetary policy by the Reserve Bank of India (RBI) on Tuesday, 29 July 2008 and Q1 results of India Inc. The results announced so far have been a mixed bag.

Fall in oil prices boosted US stocks on Tuesday, 22 July 2008. The Dow Jones industrial average rose 135.16 points, or 1.18%, to 11,602.50, while the Standard & Poor's 500 Index ended up 17.00 points, or 1.35%, at 1,277.00. The Nasdaq Composite Index was up 24.43 points, or 1.07%, at 2,303.96.

Asian stocks were firm today, 23 July 2008. Key benchmark indices in Hong Kong, Japan, South Korea, Singapore and Taiwan were up between 1.2% to 3.3%. The key benchmark index in China was almost unchanged.

Avoid Vishal Information IPO: India Capital Markets

India Capital Markets has come out with a report on Vishal Information Technologies' IPO. It has recommended investors to ignore the issue.

The issue has opened for subscription with its initial public offering (IPO) of 2.79 million equity shares of face value Rs 10 each. The issue will close on July 24, 2008. The price band has been fixed at Rs 140-150 per equity share.

India Capital Markets' report on Vishal Information Technologies' IPO:

Given the nature of business, we believe that the entry barrier in the segment is very low. Moreover the work of digitizing out of copyright books can be done by any players in the data conversion business. Since this is an established market, overseas we believe there would be many other experienced players in this line of business, overseas. VITL is still to prove its ability in the POD segment.

The projects executed by the company are mainly for data conversion/ digitization which take around 6 months on an average for completion. It takes around 6-9 months for VITL to receive the payments from the date of submission of invoices. The average debtor days for FY07 & FY08 are 226 & 242 days, respectively.

VITL derives significant portion of its revenue from very limited clients with top 3 contributing 56% of total revenue. Its largest three clients – UK based client, European client & American client contributing 21%, 19% and 16% respectively in FY08. Management expects this trend to continue, going forward. Any slow down from volume of business from any of these clients can have significant impact on its financial performance.

Valuation:

Globally, digital publishing is a USD 430 billion industry. Out of the given industry, the addressable market for VITL is 10- 15% which works up to USD 43 -65 bn., which is a sizable market. Given, the top line performance of the company along with decent margins, explains the delivery expertise of the company. However given, the nature & size of the business, we believe there could be many other players in its serving segment. With presence of established players in this segment, VITL will have to take on these big players for expanding its reach, which seriously questions its scalability. Moreover, “out of copyright” books can be digitized, by any players in the digitization segment.

Though the financials of the company is sound, there’s nothing unique about the company which can give us the confidence to expect consistent flow of business. The issue is priced on lower & upper price band of Rs 140 & Rs 150, at a P/E multiple of 12.35 & 13.23 at diluted FY08 earnings. Based on the facts in RHP and the given economic & market conditions, we recommend to ignore the issue.

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