Catch the blues!

You don't have to travel around the world to understand that the sky is blue everywhere.

The colors seem to be changing as the heat get on. The bears had literally painted the world red and bulls are slowly latching on to blue chips hoping to turn the world green (not with envy). The world's worries are not over as yet but global cues this morning show an encouraging sign. Don't pick up battered mid-caps or small caps. Grab the blue chips, which have got chipped to a large extent in recent months.

On a cautious note, the Indian economy is facing some headwinds in the form of soaring inflation, industrial slowdown, high interest rates, a volatile currency and moderation in earnings growth. Given all these negative factors, along with the lack of confidence among bulls, the market is likely to see pressure at higher levels. While the long term outlook still remains positive, near term is a cause for worry.

Keep tabs on the global developments for any fresh bad news emerging from the depressed credit markets. Despite the pull-back in US shares over the past few sessions, there are fears that some more skeletons may tumble out of the sub-prime closet.

The bulls managed to regain some lost ground yesterday with the BSE Sensex almost rising by almost 2%. The NSE Nifty's rise (up 0.8%) was subdued mainly due to heavy selling in Cairn India, SAIL, Unitech, Sterlite and Suzlon. These shares are not there in the Sensex. However, the rally came on lower volumes even in an F&O expiry week. Also, market breadth was highly unfavourable to the bulls. This bounce lacked conviction and FII flows have been rather erratic, making it tough to predict a clear direction. The same also holds true for the local funds.

FIIs were net buyers of Rs3.76bn (provisional) in the cash segment yesterday while local institutions pulled out Rs2.53bn. In the F&O segment, foreign funds were net buyers to the tune of Rs18bn yesterday. On March 19, FIIs were net buyers of Rs5.37bn in the cash segment while Mutual Funds offloaded shares worth Rs2.91bn on the same day.

Most Asian markets, barring China and Taiwan, are trading smartly higher this morning. The Nikkei in Tokyo gained 166 points or 1.3% at 12,646 while the Hang Seng in Hong Kong was up 698 points or 3.3% at 21,806. The Hong Kong market was shut yesterday.

The Kospi in Seoul gained 19 points or 1.2% at 1675 while the Straits Times in Singapore rose 52 points or 1.8% at 2980. The Shanghai Composite in China was down 55 points or 1.5% at 3570 and the Taiex in Taiwan shed 36 points or 0.4% at 8828.

The MSCI Asia Pacific Index added 1.9% to 138.55 as of 11:02 a.m. in Tokyo, on course for its first three-day gain since the period ended Feb. 27. All 10 industry groups advanced.

US stocks gained for the second day running on Monday amid news reports that JP Morgan Chase was boosting its bid for Bear Stearns. Economic data, pointing to signs of stability in the troubled housing sector, also managed to calm frayed nerves.

The S &P 500 Index added 20.37 points, or 1.5%, to 1,349.88 as nine of its 10 industry groups advanced. The Dow Jones Industrial Average rallied 187.32 points, or 1.5%, to 12,548.64. The Nasdaq Composite Index surged 68.64 points, or 3%, to 2,326.75.

Market breadth was positive. Nine stocks rose for every two that fell on the New York Stock Exchange.

The major indexes extended their early gains after the National Association of Realtors reported that sales of existing homes unexpectedly rose in February for the first time in seven months, easing concern that tighter credit standards and plunging prices would hurt demand.

Shares of Bear Stearns soared nearly 89% after JP Morgan quintupled its offer to $10 a share from an initial $2 a share, with the sweetened bid valuing the 85-year-old firm at more than $1bn. JP Morgan Chase shares rose 1.3%.

The surge helped lift others in the financial sector with Merrill Lynch, AIG, Goldman Sachs and Citigroup leading gains among the blue chips. Shares of Tiffany & Co. gained more than 10% after the luxury-goods retailer raised its profit forecast for the current fiscal year.

The Department of Justice approved the XM Satellite-Sirius merger, over a year after it was first announced. XM shares jumped 15.5%, while Sirius shares gained 8.6%.

Oil and gold prices fluctuated after sliding in the early trades. US light, crude oil for May delivery fell 98 cents to settle at $100.86 a barrel on the New York Mercantile Exchange. Oil prices hit a record $111.80 in electronic trading last week.

COMEX gold for April delivery fell $1.30 to settle at $918.70 an ounce. Gold hit an all-time trading high of $1,033.90 an ounce one week ago.

The dollar gained versus both the euro and yen. Since hitting an all-time low versus the euro and a 12-year low versus the yen last week, the dollar has recovered a bit. Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.55% from 3.36% late on Thursday.

Markets in Europe were shut for extended Easter holiday.

In the emerging markets, the Bovespa in Brazil gained 1.4% to 59,812 while the IPC index in Mexico jumped nearly 2% to 29,634. The RTS index in Russia advanced 1.85% to 2000 and the ISE National 30 index in Turkey shot up 4% to 51,214.

Volatility to continue

It was strong start to the first session of the week. After coming back from one of the longest breaks Indian markets have taken in recent years, bulls staged a strong start despite weak cues from the Asian markets. Markets lost ground in the mid afternoon trades as selling pressure in the Metal and the Realty stocks dragged the benchmark Sensex to low of 15,056. However, staged a strong come back towards the fag end of the session, the index heavyweights like HDFC, Wipro, ICICI Bank and Hindustan Unilever led from the front

Finally, the BSE benchmark Sensex added 294 points to 15,289 and the Nifty index added 35 points to close at 4609. Overall about 563 stocks advanced; 2,121 stocks declined while 33 stocks remained unchanged. Among the 50 Nifty, 31 stocks ended in positive territory. On the other hand, 18 stocks ended in red.

GTL Ltd gained by half a percent to Rs236 after Vanu Inc on March 20, 2008 announced a strategic alliance with GTL LTD to address the Shared Active Infrastructure Services Market in India. The Company and Vanu Inc, is the leading software radio innovator for the wireless infrastructure industry. The scrip touched an intra-day high of Rs239 and a low of Rs230 and recorded volumes of over 56,000 shares on BSE.

Shree Cement was down by over 3% to Rs966. The company said that they have expanded clinker production capacity. The scrip touched an intra-day high of Rs989 and a low of Rs948.

Micro Technologies lost over 5% to Rs181. The company announced the launch of new and unique one pack solution of Premises Security product called the Micro ISS (Intelligent Surveillance System). The scrip touched an intra-day high of Rs191 and a low of Rs177 and recorded volumes of over 25,000 shares on BSE.

Great Offshore was down by a percent to Rs591. The Company said that they would consider buyback of shares on March 31. The scrip touched an intra-day high of Rs651 and a low of Rs573 and recorded volumes of over 27,000 shares on BSE.

Aurobindo Pharma edged lower by 0.2% to Rs248. The company announced that it signed agreement with TAD Italy. The scrip touched an intra-day high of Rs259 and a low of Rs241 and recorded volumes of over 85,000 shares on BSE.

Marico bounced back and gained by 1.2% to Rs62. The stock had initially slipped after the company said that they would discontinue distribution alliance with Indo Nissin. The scrip has touched an intra-day high of Rs63 and a low of Rs60 and recorded volumes of over 83,000 shares on BSE.

Petron Engineering advanced by 3% to Rs199 after the company announced that it secured Rs33.7mn contract. The scrip touched an intra-day high of Rs195 and a low of Rs184 and recorded volumes of over 49,000 shares on BSE.

Corporate Front Page

Reliance Industries has decided to shut down all the petroleum retail outlets owned by it directly. (ET)
Reliance Industries is evaluating a plan to set up its third refinery at Jamnagar to reach a total capacity of 100mmtpa. (BS)
The Indian JV of Fiat and Tata Motors plans to invest Rs23.4bn in its Ranjangaon facility in Pune, taking the total investment to Rs40.4bn. (ET)
Oil India plans to go ahead with its IPO despite the stock market falling more than 29% from its peak in January. (BS)
Petronet LNG is keen to join existing coal bed methane projects in Australia and plans to bid for gas blocks in the next auction. (ET)
BPCL and GAIL will float a joint venture — God's Own Gas Company (Go Gas) — for marketing CNG and piped gas in Kerala and Karnataka. (BS)
ICICI Bank has entered into a Rs11.5bn equity-cum-debt deal with Jaypee Infratech for the 165km Taj Expressway. (ET)
Ranbaxy, Cipla and Aurobindo Pharma are in the race for the US$200mn South African government tender to supply anti-HIV drugs. (ET)
The NPPA has asked Cipla to pay Rs628.5mn as interest on alleged unpaid overcharged amounts in respect of four drugs. (BS)
Cipla is developing a basket of combination-drugs, including medicines for allergic rhinitis, asthma and cardiac-problems for developed markets. (BL)
Cipla is set to launch the world's first triple drug combination inhaler for patients of chronic obstructive pulmonary disease in India. (DNA)
TCS has been selected to provide its flagship electronic signature platform for US-based Prudential Financial Inc. (BL)
The USFDA has asked the US subsidiary of Sun Pharma to withdraw many batches of its generic Metformin Hydrochloride tablets. (BS)
Tata Motors and Ford are expected to complete the Jaguar-Land Rover deal on March 26. (ET)
Eicher Motors will replace its existing Skyline and Cruiser buses with a new range that will meet all specifications of the Indian bus-code. (BL)
Future group is all set to tie up with Cisco Systems to implement RFID technology across all its retail formats. (ET)
Emami Group, now in the midst of an expansion-diversification mode, plans to spend Rs2.5bn on its edible oils unit in Haldia. (BL)
GHCL's Board has accorded an in-principle approval to spin off its home textile and retail businesses into separate units. (BL)
Punjab National Bank plans to raise fresh capital of Rs5bn by issuing upper tier-II bonds on a private placement basis. (BL)
Rain Group is expanding the capacity of its cement plant in Kurnool, by adding 1.5mn tons by May, besides augmenting its CPC production. (BL)
Madras Cements plans to expand cement capacity to 10 MTPA by Q2 FY09 and to increase grinding capacity by 1MTPA each at Kolaghat, Chennai and Salem facilities with an investment of Rs15.2bn. (DNA)
Gulf Oil Corp has announced the launch of four-stroke motorcycle oil Gulf Pride 4T Plus 10W-30, a synthetic blend oil. (BL)
Allcargo Global Logistics has purchased a 650 ton capacity Leibherr-LR-1650 crawler crane and ordered 10 more crawler and telescopic cranes having 150-400 ton capacity. (DNA)
Aarvee Denims is expecting to almost double its turnover in 2008-09 on the back of its Rs700mn expansion plan. (BS)
LIC has increased its stake in Reliance Communications to over 5%. (ET)
Nicholas Pharma has launched a pilot project in Rajasthan to take its drugs to rural areas where there is no proper public health system. (BS)
Raheja Developers will foray into hospitality sector with the Indian Hotels Company. (ET)
GMR group is diversifying in the real estate sector with a Rs33bn deal. (ET)
Aries Agro is targeting a turnover of Rs2bn during FY10 on the back of its proposed capacity expansion plans. (BS)
BP is likely to enter into a strategic tie-up with Cals, a Spice Energy holding company, for its proposed US$1bn refinery at Haldia. (ET)
Hyundai Motor plans to sell buses in India from 2009. (Mint)
National Dairy Development Board has started the process of merging Mother Dairy Fruit & Vegetable and Dhara Vegetable Oil & Foods Co. (ET)
UK-based Cobra Beer targets to sell 20 mn cases in India by 2012 and will infuse US$80mn in setting up and acquiring new breweries. (ET)
LG Electronics is targeting to sell around 1.5mn refrigerators in 2008. (ET)

Economic Front Page

The Centre is contemplating amending the land acquisition law to ensure adequate compensation to people whose lands are acquired. The Government also says that no agricultural and irrigated land should be taken for SEZs. (FE)
According to telecom regulator TRAI, India is set to become the second largest wireless network in the world in April. (ET)
The Government will raise Rs960bn from the market in April-September by issuing securities to part-finance its expenditure in 2008-09. (BS)
TRAI may rethink on phasing out access deficit charge this year. (BL)
Banks and financial institutions have settled NPAs of about Rs30bn in 2007-08 through the auction route, which is 25% less than last year. (FE)
Five million DTH subscribers may be able to switch from their current service providers to new players by installing an add-on device. (BS)
The NHAI has projected an expenditure of Rs280bn for FY09 to complete its ongoing projects and the new projects announced under NHDP. (BS)
The Government warned telecom companies to put the required security system in place within 15 days or stop the Blackberry services. (BS)
Aluminium prices have been reduced by Rs10,000 per ton from March 20. (ET)
Coal production in the 11th Five Year Plan period is expected to increase by 680mn tons from 460mn tons. (ET)
Orthodox tea production during the next five years is expected to touch 130mn kg from 80mn kg. (ET)
The Government is considering cutting import duty on soya oil. (ET)
The Government is mulling the abolition of import duty on all grades of steel. (FE)
Steel manufacturers say they would reduce prices provided the excise duty on the alloy is brought down to a reasonable level. (BS)