Market Analysis - 16th March 2011

Market analysis

Sensex – 18,358.69         +191.05 (1.05 %)

Nifty     – 5,511.15          +61.50 (1.13 %)

Nikkei: 8,920,    +3.7%

Topix: 801,        +4.5%

Indian markets followed global cues and witnessed a pullback rally leading to both the Sensex and Nifty closing more than a percent above previous day’s close. Rate sensitive sectors like Realty, bank and auto led the rally.

Since the opening trades, the markets moved in a positive range, buoyed by a 5.7% rebound in Tokyo stocks, after a particularly shaky day yesterday, when the Nikkei closed down 11%, its lowest ever drop in 40 years.

National Stock Exchange's Nifty ended at 5510, up 60.35 points or 1.11 per cent. The index touched a high of 5535.10 and low of 5475.95 in trade today.

NSE gainers and losers

Bombay Stock Exchange's Sensex closed at 18358.76, up 191.12 points or 1.05 per cent. The 30-share index hit a high of 18444.47 and low of 18263.68 intraday.

BSE gainers and Losers

BSE Midcap Index was up 1.35 per cent and BSE Smallcap Index moved 1.26 per cent higher.

Amongst the sectoral indices, BSE Realty Index gained 2.50 per cent, BSE Bankex moved 2.17 per cent higher and BSE Auto Index was up 1.44 per cent.

Analysts commented that the market understood that the japanese stocks were oversold, but the uncertainty surrounding the Fukushima plant kept the investors nervous. They further said that yesterdays fall in stocks was due to increased panick and could not be attributed to any fundamentals.

Asian markets received a boost after the US Fed said that it will continue with its loose monetary policy in a bid to reduce Japan related losses and keep up the momentum of economic growth in US.

The key benchmark indices were also buoyed by expectations of decent to strong Q4 March 2011 earnings following reports companies across sectors have paid significantly higher tax in Q4 March 2011 compared with the year-ago period. As per reports, advance tax payments made by top 100 firms based in the country's financial capital rose by 25% in the Q4 March 2011 over Q4 March 2010, hinting robust earnings. Companies pay advance tax every quarter based on their projected income for the year. Higher advance tax collections reflect more income for firms indicating that companies' sales are growing to meet rising demand.

European stock markets gave up early gains to trade Lower Wednesday, led by losses for banking stocks. The key benchmark indices in UK and France were down 0.54% and 0.38% respectively. Germany's DAX rose 0.24.Global ratings firm Moody's late Tuesday cut of Portugal's long-term government bond rating by two notches, to A3, saying the country will continue to face low growth and funding pressure for years, even if it taps the European Union bailout fund.

The wholesale price index (WPI) rose an annual 8.31% in February 2011 on higher fuel and manufactured product prices. The figure was above market expectations and it was also higher than the annual rise of 8.23% in January 2011. The annual reading for December 2010 was revised upwards to 9.41% from 8.43%. 

  

 All eyes will be on RBI as it goes in for its mid quarter policy review on 17th. Economists expect RBI to raise the repo and reverse repo rates by 25 bps. Market movement will also depend on how the global markets react to the Japanese story