The key benchmark indices pared gains in early afternoon trade after strong opening triggered by firm Asian markets. Capital goods and metal stocks pared gains in early afternoon trade. IT stocks were weak. Healthcare stocks edged higher. Mahindra & Mahindra surged in early afternoon trade. Power stocks were in demand. The market breadth was strong.
Asian markets, which opened before Indian markets, surged after weak US economic data and comments from a Federal Reserve official signalled that US interest rates will continue to head lower. Fed Vice Chairman Donald Kohn said on Tuesday that a weak US economy was a bigger worry than higher inflation risks.
At 11:21 IST, the 30-share BSE Sensex was up 230.88 points or 1.3% at 18,037.07. Sensex touched a high of 18,137.28 in mid-morning trade. At days high, Sensex rose 331.09 points.
The broader CNX S&P; Nifty was up 66 points or 1.25% at 5,336.05.
The next major trigger for the market is the Union Budget 2008-09. With general elections due in 2009, Union Budget 2008-09 to be presented on 29 February 2008 will be the last full-fledged budget of the Congress-led United Progressive Alliance government and it is therefore likely to be a populist budget. Thus, the Finance Minister (FM) is likely to provide higher allocations to several social initiatives like rural upliftment, employment, education, agricultural growth and public health.
Though populist measures will dominate the budget, FM is also expected to take steps to stimulate investment and consumption demand at a time when the economy is witnessing moderation from a solid growth last year. A reduction in personal income tax, if any, will result in increase in disposable incomes which in turn may boost demand for consumer goods.
Expectations are that the corporate income tax rate may be cut or the 10% surcharge on corporate tax may be abolished. The surcharge is 10% on a tax rate of 30%, making the effective corporate tax rate 33%. Another possibility is that of a cut in dividend distribution tax from 15% to 12.5%. Meanwhile, FM may raise the Securities Transaction Tax slightly.
It is also expected that the FM would announce some relief packages for troubled export sensitive sectors like textiles, rubber, jewelry, leather and IT services. These sectors have been hit by rupees surge in the past one year.
The BSE Mid-Cap index was up 1.47% at 7,804.16, while the BSE Small-Cap was up 1.32% at 9,776.30.
The market breadth was strong: on BSE 1,810 advanced as compared to 799 that declined. 52 stocks remained unchanged.
Healthcare stocks rose. Ranbaxy Laboratories (up 3.07% to Rs 432), Cipla (up 0.5% to Rs 202.45) and Dr. Reddys Laboratories (up 0.55% to Rs 552) edged higher.
Power stocks rose. Power Grid Corporation of India surged 8.15% to Rs 110.90. Power Grid Corporation of India will replace Bajaj Auto in the S&P; CNX Nifty index from 14 March 2008, a statement from an NSE joint venture company said late on Tuesday, 26 February 2008. Tata Power Company (up 3.61% to Rs 1,405.75) and NTPC (up 1.28% to Rs 206.50) edged higher.
India's second largest power utility firm by revenue Reliance Energy extended rose 1.11% to Rs 1,716. The company said yesterday its board will meet on 5 March 2008 to consider, buy back of equity shares of the company.
Reliance Power rose 0.44% at Rs 449.80. The company had announced on Sunday 24 February 2008 that its board had approved a proposal for issuing free bonus shares to all categories of shareholders, excluding the promoter group (comprising of Reliance Energy and the ADA Group), in the ratio of 3 shares for every 5 shares held.
Capital goods stocks were in demand. Larsen & Toubro (up 3.83% to Rs 3,653), Bharat Heavy Electricals (up 3.64% to Rs 2,259.90) and Suzlon Energy (up 0.02% to Rs 314.90) edged higher.
Metal stocks pared gains in early afternoon trade. Tata Steel was up 2.07% to Rs 826, off session's high of Rs 833.80. Sterlite Industries was up 0.37% to Rs 849, off from a high of Rs 875. National Alluminium Company rose 1.86% to Rs 472.50, off a high of Rs 482.
Indias largest private sector firm by market capitalization and oil refiner Reliance Industries rose 1.19% at Rs 2,606.30. The company said on Tuesday, 26 January 2008 it had discovered more gas in an exploration block off India's east coast. This is the company's eight discovery in the block.
Among the other sensex gainers, Mahindra & Mahindra (up 4.82% to Rs 660.55), Housing Development Finance Corporation (HDFC) (up 3.72% to Rs 2,670) moved higher.
Among the Sensex losers, Infosys (down 1.57% to Rs 1,636.05), Bajaj Auto (down 1.33% to Rs 2,178.75), Ambuja Cements (down 0.93% to Rs 122.20), Satyam Computer Services (down 0.91% to Rs 445.65) and Grasim Industries (down 1.11% to Rs 3,009), Wipro (down 0.57% to Rs 441.60) edged lower.
Indias largest truckmaker by sales Tata Motors rose 0.75% to Rs 706.85. Tata Motors and Ford reportedly plan to sign a memorandum of understanding possibly on 5 March 2008 for Tata Motors' possible acquisition of Ford's luxury British brands, Jaguar and Land Rover. The complete sale of Jaguar-Land Rover to Tatas will take 6-8 weeks.
Shree Renuka Sugars rose 2.07% to Rs 1,158 after company entered into a lease agreement for a period of 5 years with Balaghat Shetkari Sahakari Sakhar Karkhana Latur, Maharashtra, having a plant capacity of 2500 tcd (tonnes crushed per day).
Great Eastern Shipping Company (GE Shipping) rose 3.67% to Rs 439.05 after company contracted to sell two of its double hull medium range (MR) product tankers 'Jag Panna' (37,145 dead weight tonnage (dwt) and 'Jag Payal' (37,159 dwt). The vessels will be delivered to the buyers during first quarter of financial year 2010.
BGR Energy Systems rose 2.52% to Rs 585.10 after Andhra Pradesh Power Generation Corporation awarded a turnkey balance of plant contract for Rs 793 crore to the company.
In Asia, the key benchmark indices in Hong Kong, China, Japan, South Korea, Singapore and Taiwan were up by between 0.69% to 3.26%.
US stocks rose for a third day on Tuesday as technology companies gained on IBM's plans to buy back $15 billion of its shares and the energy sector advanced on a record high close for oil in New York. The Dow Jones industrial average was up 114.70 points, or 0.91%, at 12,684.92. The Standard & Poor's 500 Index was up 9.49 points, or 0.69%, at 1,381.29. The Nasdaq Composite Index was up 17.51 points, or 0.75%, at 2,344.99.
On the New York Mercantile Exchange, April 2008 crude settled at a record $100.88 a barrel, up $1.65, on Tuesday.
On Tuesday, 26 Februray 2008, the market extended Monday (25 February 2008)'s gains after Railway Minister Lalu Prasad Yadav provided thrust on modernising rail infrastructure in Railway Budget 2008-09 which he presented to parliament on that day. The 30-share BSE Sensex rose 155.62 points or 0.88% at 17,806.19. Keeping the common man in mind, the railway minister also cut passenger fares, with parliamentary elections due in 2009. Firm global markets also helped support domestic bourses.
At the end of Tuesday (26 February 2008)s trading, Nifty saw rollover of 54% to March 2008 contracts from February 2008 contracts. The market wide rollover stood at 53% to 55%.
As per provisional data, FIIs sold shares worth a net Rs 31.99 crore on Tuesday, 26 February 2008. Domestic funds bought shares worth a net Rs 511.33 crore on that day. <>FIIs were net buyers to the tune of Rs 1,193.21 crore in the futures & options segment on Tuesday. FIIs were net buyers of index futures to the tune of Rs 646.57 crore and bought index options worth Rs 325.76 crore. They were net buyers of stock futures to the tune of Rs 225.79 crore and sold stock options worth Rs 4.91 crore.
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