Market Analysis - 29th March 2011

SENSEX  -  19,120.80        +177.66 (0.94%)

NIFTY -      5,736.35           +49.10 (0.86%)

The Indian markets witnessed a straight sixth day of gains as bullish trends continue to rule the market. The positive sentiment in the market stems from declining crude prices, easing inflation worries and most importantly the return of foreign investors on the street. FII's, who had been taking a lot of money out of the Indian markets since the start of the year, have started to invest again, as exchange data indicated.

Bombay Stock Exchange's Sensex ended at 19121.01, up 177.87 points or 0.94 per cent. The 30-share index touched a high of 19226.21 and low of 18944.82 in today's trade.

National Stock Exchange's Nifty closed at 5736.40, up 49.15 points or 0.86 per cent. The broader index touched a high of 5770.35 and low of 5680.70 intraday. 

The markets touched fresh 2 months high but then volatility returned in late afternoon session and the markets pared the gains. The profit booking could be attributed to the weak cues from European markets as they reversed initial gains.

Market breadth was negative on the BSE with 1110 advances against 1843 declines.

As per provisional figures, foreign institutional investors (FIIs) bought shares worth Rs 890.02 crore on Monday, 28 March 2011. FII inflow totaled Rs 3192.41 crore in five trading sessions from 22 March 2011 to 28 March 2011 as per data from the stock exchanges.

Crude continued its slide as the rebel forces continued to make advances against the Libyan forces of Gaddafi. Crude prices are easing as there is a belief that the Libyan conflict will be resolved soon and supplies restored. US crude futures were down 60 cents a barrel or 0.58% to $103.38 a barrel. Rising crude prices had created tension in Indian markets as India imports almost 70% of its crude requirement. With crude prices going down the inflation worries have also calmed a bit.

On the BSE all 13 sectoral indices were in the green. Auto (+1.52%), Teck (+1.35%) and Metal (+1.08%) led the gains on BSE.

IT pivotals rose on upbeat economic data in the US, the key market for Indian software exporters. India's largest software services exporter Tata Consultancy Services gained 2.17% after the company signed a contract with Credit Union Australia to implement core banking solution

Banking stocks extended recent gains after the government last week tabled banking sector amendment bill in parliament. India's largest bank by net profit and branch network State Bank of India rose 1.35%. Reportedly, the bank will launch its Rs 20000 crore rights issue after the first quarter of the fiscal year beginning in April 2011. The issue will raise half the amount needed to sustain the bank's growth over the next five years.

Oil & gas stocks rose after the ninth round of oil and gas block auctions closed on Monday. India's largest oil exploration firm ONGC advanced 1.90% on reports a consortia led by ONGC won 10 blocks in the latest round of bidding for oil & gas blocks in India. 

Telecom stocks were in demand on reports Communications and IT Minister Kapil Sibal on Monday met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee to seek their intervention for the loans to telecom companies as the controversial 2G spectrum allocation virtually blocked flow of funds to the telecom companies. India's second largest listed cellular services provider by sales Reliance Communications jumped 4.18% to Rs 109.60 and was the top gainer from the Sensex pack.  

Shares of aviation firms rose after crude oil futures fell on hopes that Libyan oil may be back to the pipelines sooner than anticipated. Falling crude oil prices have eased worries about higher operational cost for airlines as jet fuel constitutes more than 50% of operating cost for airliners. The prices of jet fuel are linked to the crude oil prices. Jet Airways India (up 3.50%), SpiceJet (up 1.60%) and Kingfisher Airlines (up 1.45%), edged higher. 

European shares reversed initial small gains. The key benchmark indices in Germany, France and UK were down by between 0.20% to 0.53%. 

Asian stocks pared declines as better-than-estimated earnings in China and Hong Kong offset concerns economic growth in Japan will falter as the nation struggled to contain a partial meltdown at a nuclear plant. The key benchmark indices in China, Hong Kong, Singapore, Japan and Indonesia were down by between 0.03% to 0.86%. The key benchmark indices in Taiwan and South Korea rose 0.51% and 0.77%, respectively.

US stocks edged lower on Monday, 28 March 2011, after a late tumble undercut advances from earlier in the day, and as investors cautiously retreated ahead of key data reports later this week. The Dow Jones Industrial Average closed down 22.71 points, or 0.2%, at 12197.88. The Nasdaq Composite fell 12.38, or 0.5%, to 2730.68 and the Standard & Poor's 500-stock index shed 3.61, or 0.3%, to 1310.19.