The market extended yesterdays steep losses as it opened weak tracking subdued Asian markets. However, it shortly regained the lost ground and moved into the green. The market breadth was positive. FMCG stocks declined while healthcare stocks fell.

At 10:23 IST, the 30-share BSE Sensex was up 14.75 points or 0.1% at 15,075.53. At the days low of 14,919.05 the Sensex lost 147.05 points in early trade. At the days high of 15,088.03 Sensex gained 21.93 points in early trade.

The broader based S&P; CNX Nifty was down 4.25 points or 0.09% at 4,496.70.

The market breadth was positive on BSE with 850 shares advancing as compared to 622 that declined. 51 remained unchanged. Among the 30 stocks from Sensex pack, 19 were trading in red.

The BSE Mid-Cap index rose 0.48% to 6199.96 and BSE Small-Cap index rose 0.47% to 7,451.45. Both these indices outperformed Sensex.

FMCG stocks declined. Hindustan Unilever (down 2.17% to Rs 228), ITC (down 1.55% to Rs 203.85) and United Spirits (down 0.45% to Rs 1454) edged lower.

Healthcare stocks rose. Ranbaxy Laboratories (up 5.17% to Rs 553.60), Dr. Reddys Laboratories (up 1.77% to Rs 705) and Cipla (up 0.46% to Rs 207.60) edged higher.

Bharat Heavy Electricals (up 2.38% to Rs 1407.70), Reliance Infrastructure (up 1.78% to Rs 1,055), Reliance Industries (up 2.08% to Rs 2205), and Hindalco Industries (up 1.31% to Rs 178.25), edged higher from the Sensex pack.

HDFC Bank (down 3.27% to Rs 1,145), Satyam Computer Services (down 1.82% to Rs 482.45) and Tata Consultancy Services (down 1.82% to Rs 900) edged lower from the Sensex pack.

Idea Cellular declined 0.64% to Rs 100.90. The Aditya Birla group-controlled Idea Cellular is reportedly set to acquire the 40.8% stake held by the Modis in Spice Communications for about Rs 2200 crore.

Apollo Sindhoori Capital Investments hit 5% upper circuit at Rs 435.85. The Aditya Birla group is reportedly set to acquire 51% stake in Apollo Sindhoori Capital Investments, a broking firm promoted by Pratap Reddy, the chairman of the Apollo Hospitals group.

SpiceJet rose 4.89% to Rs 34.50. South-Indian based airline Paramount Airways has reportedly joined the race to acquire a stake in low-cost carrier SpiceJet. Recently, there were reports that the Anil Dhirubhai Ambani Group (ADAG) had evinced interest in the airline.

Sanghi Industries rose 1.39% to Rs 61.85. The Rs 1800 crore Sanghi group, which includes Sanghi Industries, is reportedly heading towards an amicable partition between the four Sanghi brothers.

Pantaloon Retail (India) declined 3.74% to Rs 384.95. It reportedly plans to launch its own line of chocolate products, following its decision to drop Cadbury Plc's products from its stores.

Moser Baer India rose 2.12% to Rs 158.95. Moser Baer, on Monday (9 June 2008) inked a pact with the Tamil Nadu government for setting up a Rs 2,000 crore plant at Oragadam, to produce nano materials and photovoltaic products.

Stocks dropped in Asia after US Federal Reserve Chairman Ben Bernanke's warning on inflation on Monday, 9 June 208, fanned expectations of higher US interest rates later this year. Key benchmark indices in Hong Kong, Japan, China, South Korea, Singapore and Taiwan were down by between 0.77% to 5.67%.

The Dow staged a modest rebound on Monday from Friday's nearly 400-point drop, as concerns about US consumer spending and the troubled US housing market were eased by better-than-expected sales figures from McDonald's Corp and a surprising gain in pending home sales. The broader market was little changed, with a drop of more than $4 in the price of oil helping fuel-dependent sectors such as manufacturers, mitigating sharp losses in the financial and technology sectors. The Dow Jones industrial average was up 70.51 points, or 0.58%, to end at 12,280.32. The Standard & Poor's 500 Index was up 1.08 points, or 0.08%, at 1,361.76. But the Nasdaq Composite Index was down 15.10 points, or 0.61%, at 2,459.46.

Oil fell $4 from record highs on Monday, 9 June 2008, on the stronger dollar and profit-taking after surging an unprecedented $16 in the previous two sessions. The slide came after oil jumped nearly $11 on Friday, 6 June 2008, alone as the dollar weakened and on forecasts of falling inventories in the United States and weak supply. US crude settled down $4.19 at $134.35 on Monday, off the record high $139.12 hit on Friday. Oil has surged more than 40% this year as investors pour into commodities as a hedge against the weak dollar and inflation.

Back home, BSE Sensex lost 506.08 points or 3.25% at 15,066.10 on Monday, 9 June 2008, due to a sharp surge in global crude oil price and setback in US stocks on Friday, 6 June 2008.

A surge in global commodity prices led by crude oil spooked stocks across the globe in the past few days. In India, foreign funds have pressed heavy sales. FIIs sold shares worth a net Rs 2984.20 core in the first few days of this month, till 6 June 2008. They had dumped stocks worth a net Rs 5011.50 crore in May 2008. Their outflow in calendar 2008 reached Rs 18660.60 crore, till 6 June 2008. There has been heavy buying by domestic funds led by insurance firms in the past few days, but that has failed to stop the slide on the bourses.

Brokerage earnings downgrades of Indian firms/stock prices amid rising input and interest costs for India Inc, high inflation and drying up of global liquidity due to credit crisis remain major concern for the Indian stock market. If inflation remains high, the Reserve Bank of India (RBI) would be forced to hike repo rate a move that could choke overall growth of the economy. The Indian industry and consumer have already been reeling under high interest rates over the past few months. A further hike in rates would raise interest costs of corporate India and hit bottomline.

After 10 days of debate, the Union government on Wednesday, 4 June 2008 agreed to raise retail petrol and diesel prices by about 10%, more than expected, to help curb losses at its state-owned refiners. A sharp fall in the rupee against the dollar in the past few days has heightened concerns about inflation. This is because the fall in rupee will raise cost of imports which in turn will result in further rise in inflation.

According to rating agency CRISIL, headline inflation is expected to increase by 95 basis points on account of direct and indirect effects of the fuel price hike. The indirect impact which will be felt over the course of the next few months, it states in a note.

A well distributed monsoon will bolster food production, helping douse inflation. Agricultural output in India depends on good rains. The Indian Meteorological Department (IMD)s second monsoon forecast for the crucial annual south-west monsoon (June-September) due this months which may indicate spatial rainfall distribution in the main sowing month of July 2008, will be keenly watched by market men. The IMD has forecast the 2008 monsoon rains would be near-normal and 99% of the average between 1941 and 1990.

A section of the market is of the view that the central bank may only use the reserve requirement route to tame inflation, fearing any hike in rates would further hurt growth already seen moderating to a still strong 8%-8.5% this fiscal year from 9% in 2007/08. To rein in inflation, in its monetary policy review for 2008-09 on 29 April 2008, the RBI raised cash reserve ratio (CRR) by 25 basis points to 8.25% to suck out excess liquidity in the banking system. RBI often says pass-through of high global oil prices is incomplete in India, complicating policy making.

According to a latest monthly June 2008 strategy report by HSBC Global Research, a possibility of Left parties withdrawing support to the government at the centre over the fuel price hike issue, cannot be ruled out. In such an environment with prospects of mid-term polls, the stock market is likely to remain nervous, HSBC says. Parliamentary elections are du