The BSE Sensex, which slipped below the psychological 14,000 level in the opening session, extended its fall as selling continued and touched a low of 13,826.73. However, the benchmark index recovered a bit after the inflation figure hit the market.

India's wholesale price index (WPI) rose 6.63% in the 12 months to 10 February, lower than the previous week's annual increase of 6.73% due to a fall in some food and textile prices, data showed on Friday (23 February). Analysts forecast the figure at 6.70%. The annual inflation rate was 3.81% during the corresponding week of the previous year.

At 12:23 IST the BSE Sensex was down 157.37 points, at 13,863.94. It had opened firm, at 14,071.27, but started declining immediately after.

The benchmark Sensex had sharply fallen close to 167 points on Thursday (22 February), in the last 45 minutes of trade, due to heavy unwinding of derivative contracts on account of their expiry.

The total turnover on BSE amounted to Rs 1782 crore.

The market-breadth, which reflects the overall health of the broader market, was very weak. A host of stocks from the smallcap and midcap space were being heavily sold. Against 1,954 shares declining on BSE, just 446 advanced. Only 50 scrips remained unchanged.

Among the 30-Sensex pack, 24 declined while six advanced.

Private sector ICICI Bank was the top loser, down 3.54% to Rs 914.90, on a volume of 1.39 lakh shares. The scrip had also slipped to a low of Rs 908. A surprise hike in CRR announced recently continues to weigh on the stock. Other banking and financial stocks like SBI (down 2.20% to Rs 1056), HDFC (down 0.71% to Rs 989), UTI Bank (down 4.39% to Rs 496), Union Bank of India (down 3.04% to Rs 98.90) were not spared either.

ITC (down 3.02% to Rs 168.90), Dr Reddys Labs (down 2.93% to Rs 690), and Wipro (down 2.83% to Rs 635) were the other prominent losers.

Maruti Udyog (MUL) was down 2% to Rs 861. Moving ahead with its plan to exit the car maker, the Central Government on Thursday invited expressions of interest (EoIs) from public sector financial institutions, banks and mutual funds for selling its remaining 10.27% stake in the company. The disinvestment process is likely to fetch the government atleast Rs 2,600 crore, based on Thursday's closing of Rs 880 on the BSE. The government had said last year it will completely exit MUL, in which Japan's Suzuki owns a controlling 54.2% stake, by selling its residual 2.96 crore shares (Rs 5 face value). The money raised from the sale will go to the government, and not the National Investment Fund (NIF), as MUL is no longer a public sector company.

Private sector steel maker, Tata Steel, was a top gainer, up 1.51% to Rs 463, on a volume of 9.78 lakh shares. Reports say that Corus has hiked HR/CR prices for European markets by 5-7% for Q2 December 2007. Tata Steel has acquired Corus recently.

Index heavyweight Reliance Industries (RIL) anchored the market, and was up 1.14%, to Rs 1429.90, on a volume of 4.70 lakh shares. It had, however, slipped from a high of Rs 1442.75.

Infosys (up 0.62% to Rs 2302.90) and L&T; (up 0.31% to Rs 1653) were the other gainers.

Power Finance Corporation moved higher and was trading at Rs 113.10 on BSE, a premium over the IPO price of Rs 85. The stock debuted at Rs 104, hit a low of Rs 103.50, and a high of Rs 117. Volumes in the stock were huge, at 2.67 crore shares.

The IPO had received a strong investor response. It was subscribed 77.24 times, amidst heavy bidding by FIIs, and was priced at the upper end of the Rs 73 - Rs 85 price band. NSE has also included the stock in the futures & options segment. The lot size of PFC in the derivative segment is 2,400.

Power Finance Corporation has a large equity base of Rs 1148 crore and the face value per share is Rs 10.

Wockhardt rose 2.13% to Rs 338.95, after the company posted good Q4 December 2006 results. Wockhardts consolidated net profit rose 19.5% in the December 2006 quarter to Rs 87.10 crore from Rs 72.90 crore in the December 2005 quarter. Total income surged to Rs 534.20 crore (Rs 368.90 crore).

Meanwhile, the Union Cabinet approved necessary changes in the law in the forthcoming Budget session to phase out central sales tax (CST). The CST is collected by the Central Government and is distributed among states.

The CST rate will be cut from 4% to 3% from 1 April. The phase-out is expected to be completed by 2010-11. This reduction in CST is likely to result in a loss of Rs 6,250 crore to the states exchequer in 2007-08. The Centre will introduce a legislation to allow states to tax certain identified services and impose additional duties on excise goods like tobacco to compensate states for the loss of revenue due to the phase-out.

Besides, the Union Government is understood to have assured states of budgetary support to cover any shortfalls.

Earlier this year, the Centre had agreed to the states proposal for allowing them to tax 77 services and keep the entire proceeds of it. Of the 77 services, 33 are currently taxed by the Centre, while another 44 are new items to be brought under the service tax net.

For the first year, the Centre will collect the tax and pass on the entire proceeds to states. The 44 new services to be brought under the service tax net include barbers, legal, education, health, sports and performances of Bollywood actors.

The market is expected to remain subdued in the run up to the Union Budget 2007-08 to be read in Parliament next Wednesday (28 February 2007). The Budget session of Parliament begins today.

Caution on the bourses is evident in that the market-breadth has turned weak, whenever the key indices have corrected, over the past few days. Concerns that the government may raise short-term capital gains tax on sale of shares from the current 10% have gained currency. The securities transaction tax (STT) may also go up further. The STT was raised in the previous budget. The removal of 10% corporate surcharge may be offset by removal of certain open-ended exemptions.

Market men expect the finance ministry to give a big impetus to agriculture and infrastructure in the budget.

FIIs turned net sellers on Wednesday (21 February 2007). FIIs were net sellers to the tune of Rs 40.20 crore on Wednesday. Their inflow has been strong this month. Their cumulative inflow in February 2007 has reached Rs 4175 crore. The strong inflow has been triggered by an upgrade in India's sovereign rating to investment grade by global rating agency, Standard & Poor's, on 30 January 2007.

As per provisional data, FIIs were net sellers to the tune of Rs 435 crore on Thursday (22 February 2007), the day when the Sensex lost 167 points. FIIs were net sellers to the tune of Rs 348 crore in index-based futures on the same day. They were net sellers to the tune of Rs 104 crore in individual stock futures. Nifty March futures settled at 4066.65 on Thursday, a premium of 26.65 points over the spot Nifty closing of 4,040.

Revised market lots in NSEs derivatives segment become applicable today. The lot size of the Nifty contract has been cut to 50 from 100. This may boost volumes in the derivatives segment.

Asian markets edged lower on profit-taking on Friday (23 February 2007). Key benchmark indices in Hong Kong, Singapore and South Korea were down between 0.01 - 0.7%. Japans Nikkei was up 0.1%.

US blue-chip stocks declined on Thursday, as a jump in oil prices added to worries about inflation, but a rally in chipmakers' stocks helped the Nasdaq advance late in the session to end at a six-year high.

The Dow Jones industrial average fell 52.39 points, or 0.41%, to end at 12,686.02, with only eight of the 30 stocks in the Dow finishing higher. The Standard & Poor's 500 Index dipped 1.25 points, or 0.09%, to finish at 1,456.38. The Nasdaq Composite Index rose 6.52 points, or 0.26%, to 2,524.94, its highest close since 15 February 2001. Earlier, the Nasdaq hit a six-year