Softening bias to prevail at start

We must accept finite disappointment, but never lose infinite hope." - Martin Luther King, Jr.

Disappointing results from Alcoa and China’s surprising hike in the CRR seems to have spooked the already sluggish global equity markets. The Indian market too eased off despite Infosys’ stellar results and strong IIP numbers. With inflation flaring up in recent times, the market fears a sharp reaction from the RBI at this month’s policy meeting. But, concerns on interest rates appear to be exaggerated. A small increase in CRR or even in policy rates should not be such a big issue for markets. Especially one considers the amount of monetary easing that was undertaken to combat the financial turbulence.

Central banks around the globe are unlikely to reverse the monetary stimulus at the same pace as they unleashed them at the height of the financial crisis. The unwinding in the stimulus is going to be a gradual process unless economic recovery outpaces expectations.

The Nifty is all set to fall below 5200 at the start given the weakness across global markets. Metals shares could take a hit following the China announcement on the CRR hike. The Nifty could find some support at 5180-5150 levels. If it breaches this range it could head for 5050. On the upside resistance remains at 5250 and 5310.

Results Today: Bajaj Holdings, Infomedia 18, REC, Sintex, Tata Metaliks, Texmaco and Zenotech Labs.

FIIs were net sellers in the cash segment on Tuesday at Rs3.63bn on a provisional basis. The local funds were net buyers of Rs4.5bn, according to figures published on the NSE's web site. As per the SEBI figures, FIIs were net buyers of Rs47.44n in the cash segment on Monday. This included the proceeds from the Reliance Industries' treasury share sale.

Indian markets extended their losing streak for fourth straight trading session on Tuesday. Markets seem to be ignoring every positive surprise. Neither Infosys nor better than expected IIP data was able to keep up the sentiment on Dalal-Street. In addition, cues from the Asian and the European markets were not that encouraging proving to be another dampener.

The interest rate sensitive sectors were under pressure along with the PSU and the Consumer Durables stocks. Even the broader markets lost their sheen with both the Mid-Cap and the Small-Cap indices losing 1.5% each after showing strength for past couple of days.

India's industrial production surprisingly accelerated in November 2009, beating the most optimistic of predictions, data released by the Government showed on Tuesday. It also reinforced a growing view that the RBI will start reversing its loose money policy at its policy meeting in the last week of this month.

Industrial output, as measured by the Index of Industrial Production (IIP), rose by 11.7% in November 2009 as against expectations of 10%, the Commerce Ministry data revealed. The General Index stood at 298.9 in November 20096 versus 267.6 in the year-ago period. IIP had grown by 2.5% in November 2008.

The BSE Sensex lost 104 points to end at 17,422 after touching a high of 17,612 and a low of 17,392. The Nifty lost 39 points to end at 5,210.

Equity markets in Asia ended in the mixed. The Nikkei in Japan was up 0.7%, while Australia's S&P/ASX ended lower by 1%. The Shanghai SE Composite declined 0.2% and Hang Seng index in Hong Kong slipped 0.4%.

In Europe, stocks were trading lower as well. The DAX in Germany was down 0.7% and the CAC 40 index in France was down 0.6%. The FTSE in the UK was down 0.4%.
Coming back to India, among the BSE sectoral indices, the Realty index was the top loser, shedding 3.1%, followed by the Metal index that was down 2.3% and the BSE Banking index was down 2%. The BSE Mid-Cap index fell 1.2% while BSE Small-Cap index was down 1.2%.

Among the 30-components of Sensex, 23 stocks ended in the negative terrain and 7 ended in the green. DLF, RCom, Tata Steel, Sterlite Industries and ICICI Bank were among the top losers.

On the other hand, Wipro, TCS and Infosys were among the top gainers.

Outside the frontline indices, the big losers in the broader market were Adani Ent, REI Agro, Idea, MTNL and Balrampur Chini. On the other hand, gainers included Thermax, Jai Corp, Madras Cement and Crompton Greaves.

Shares of Infosys shot up by over 4% to end at Rs2587 after the company’s Q3 results beat market expectations.

Infosys posted a net profit of Rs15.82bn for the quarter ended December 31, 2009 as against Rs15.4bn in the same quarter last year. This translates into a sequential growth of 2.7%. However, on a YoY basis it fell 3.6%.

Revenue for the reporting quarter stood at Rs57.41bn as against Rs55.85bn in the quarter ended September 30, 2009. This translates into a sequential growth of 2.8%. Year on Year, it declined 0.8%.

Shares of Reliance Industries ended flat at Rs1083. Reports stated that the company wants Russian owner Leonid Blavatnik and other founders to jointly promote the chemicals maker.

Reliance has in total raised over Rs93bn from sale of treasury stock and had sweetened its offer last week, valuing Lyondell at US$13.5bn, up from US$12bn in an initial offer disclosed in November.

Punj Lloyd announced that it secured contract worth Rs9.47bn from Ind-Barath Energy (Utkal) Ltd for execution of partial Balance of Plant and Civil Work on a 2X350 MW Thermal Power Project in Orissa.

Shares of Punj Lloyd lost 1% to end at Rs210. The scrip opened at Rs213 it touched an intra-day high of Rs214.8 and a low of Rs210 and has recorded volumes of over 2.2nm shares on NSE.

Suven Life Sciences announced that two product patents were granted in China and Russia corresponding to two of their new chemical entities (NCEs) for the treatment of disorders associated with neurodegenerative diseases and these patents are valid until 2023 and 2024 respectively.

The granted claims of the patents include the class of selective 5-HT compounds discovered by Suven and are being developed as therapeutic agents and are useful in the treatment of cognitive impairment associated with neurodegenera disorders such as Alzheimer's disease, Affention deficient hyperactivity disorder (ADHD), Huntington's disease, Parkinson and Schizophrenia.

Shares of Suven Life surged by over 7.5% to end at Rs32.6. The scrip opened at Rs30.5 it touched an intra-day high of Rs33.3 and a low of Rs30.5 and recorded volumes of over 0.8mn shares on BSE.

Shares of Exide Industries erased early gains and ended flat at Rs121. The stock hit an intra-day high of Rs128 after the company posted a net profit after tax of Rs1304.8mn for the quarter ended December 31, 2009 as compared to Rs561.5mn for the quarter ended December 31, 2008.

The total income has increased from Rs7892.3mn for the quarter ended December 31, 2008 to Rs9139.3mn for the quarter ended December 31, 2009.