Volatility mars Indian indices

Indian stock markets had a rather volatile outing today although they managed to trade into the positive for a larger part of the day. While the indices began the day's proceedings on a positive note, profit booking at higher levels took toll and pushed the indices towards the dotted line. However, they recovered as buying activity intensified and the final trading hour saw the indices close well into the positive. While the BSE-Sensex closed higher by around 84 points, the NSE-Nifty closed higher by around 26 points. The BSE Mid cap and the BSE Small cap also notched gains of 1% each. With respect to sectoral indices, gains were largely seen in banking and Oil and gas stocks.

As regards global markets, Asian indices closed weak today while European indices have opened mixed. The rupee was trading at Rs 49.93 to the dollar at the time of writing.

As per a leading business daily, pharma major Ranbaxy has opened a new production facility in Morocco with the aim of establishing a direct presence in the North African pharma market. The size of the Moroccan pharma market has been pegged at US$ 1 bn. The facility has undergone successful audit of the plant by the Moroccan Health Authorities. The importance of this facility is set to increase in the coming years as Ranbaxy looks to use it as a base to market products to other African countries. With the addition of Morocco, Ranbaxy now has three manufacturing facilities in Africa; the other two are located in Nigeria and South Africa respectively. It must be noted that Ranbaxy's revenues from the US have been volatile on account of running into trouble with the US FDA and the company is looking to strengthen its presence in other geographies to augment its revenue stream. The stock closed higher today.

Auto stocks closed mixed today. While Bajaj Auto and Tata Motors (Telco) found favour, Mahindra & Mahindra Ltd. (M&M) and Ashok Leyland closed into the red. As per a leading business daily, car sales in India grew by 13% YoY in February largely on account of a surge in demand as customers expect a rise in prices post the Budget. This is on the possibility that the government may roll back 2% excise concession given as stimulus during the 2008-09 slowdown and that diesel cars may have additional taxes imposed on them. While Maruti reported a 7% YoY increase in vehicle sales, Hyundai Motor India's sales were up by 13% YoY and that of Tata Motors was up 5.4%. Two-wheeler sales grew by 12% YoY with motorcycles growing by 8% YoY. Hero Motocorp led the pack as its sales grew by 9.5% YoY.

Indian stock markets shed initial gains
01:30 pm

Indian stock markets indices have shed initial gains during the last two hours of trade. consumer durables and capital goods stocks witnessed maximum buying interest while IT stocks witnessed maximum selling pressure.

The BSE-Sensex is up by 77 points, while the NSE-Nifty is up by 26 points. BSE Mid cap index and the BSE Small cap index are up by 0.85% and 0.65% respectively. The rupee is trading at 49.94 to the US dollar.

As per a leading financial daily, Index of industrial Production (IIP) accelerated by 6.8% YoY in January 2012 from 1.8% YoY increase in the preceding month. The pick-up in momentum has come on the back of an 8.5% rise in the output of the manufacturing sector that constitutes three fourths of the index. Even electricity recorded a robust growth of 3.2% but mining output declined by 2.7% in January. As per Use-based classification, basis goods output grew by 1.6% whereas capital good and intermediate goods saw production declining by 1.5% and 3.2%, respectively during the month. Consumer goods output recorded a steep jump of 20.2% on a 42% jump in consumer non-durables. On a cumulative basis , IIP expanded by 4% during April-January 2012 .

Pharma stocks have been trading mixed with Wockhardt and Torrent Pharma leading the gainers and Cipla and Glenmark Pharma trading the weakest. As per a leading financial daily, Biocon is planning to enter US markets from Financial Year 2013 by selling its anti-cholesterol drug- atorvastatin. The market for atorvastatin has recently opened up in US for generic companies. In doing so, the company is following footsteps of Watson and Ranbaxy, that have already launched their products in the US markets and are currently under six months exclusivity phase. The company has seen considerable growth in branded atorvastatin (Statix) and sales of active pharmaceutical ingredients (API). Besides, Biocon is also planning to tap the European market, where it has been selling atorvastatin with its partners. The company has a significant presence in emerging and unregulated markets with Statix. The stock was trading in the red.

Indian stock markets trade strong
11:30 am

Indian stock markets indices are trading strong over the last two hours of trade. Banking and Capital goods stocks witnessed maximum buying interest while IT stocks witnessed maximum selling pressure.

The BSE-Sensex is up by 103 points, while the NSE-Nifty is up by 30 points. BSE Mid cap index and the BSE Small cap index are up by 0.99% and 0.97% respectively. The rupee is trading at 49.96 to the US dollar.

Energy stocks are trading in the green led by Reliance Industries Limited (RIL) and Gas Authority Of India Ltd. (GAIL). According to a leading financial daily, GAIL India is planning to set up a joint venture with state-run hydropower company Uttarakhand Jal Vidyut Nigam (UJVN) to set up two gas based power plants. Initially, these two projects will be of 350 MW but later the capacity of these projects would be increased to 450 MW. The joint venture will invest Rs 25 bn towards the project. The majority of the power from these power plants would be sold to Uttarakhand through a long-term power purchase agreement (PPA). UJVN has got 50 acres of land in Kashipur and has identified another 55 acres of land in Haridwar for the two gas plants.

Auto stocks are trading mixed with Tube Investments and Escorts leading the gains. However, Maruti Suzuki and Ashok Leyland are on the losing end. According to a leading financial daily, Tata Motors (Telco) owned Jaguar Land Rover (JLR) is thinking of introducing crossover vehicles. The idea is to launch a vehicle which is a mix between a sedan and a sports utility vehicle (SUV). It may be noted that the auto company had recently unveiled Jaguar Sportbrake XF (at the Auto Expo) which is very different form its flagship sedans. The company is overwhelmed with the response that this has received. However, Jaguar would keep away from the delivery of pure SUVs under Jaguar brand as of now. JLR is also planning to strengthen its global distribution network by 20% in the next 5 years.

Indian stock markets open firm
09:30 am

Asian stock markets have opened the day on a mixed note with stock markets in South Korea (down 0.7%) and Malaysia (down 0.6%) leading the losses. However, markets in Japan (up 0.4%) and Singapore (up 0.1%) are trading firm. The Indian stock markets have opened on a firm note. Stocks in the banking and IT space are the major gainers.

The BSE-Sensex is up by around 269 points (1.5%), while the NSE-Nifty is up by around 35 points (0.7%). However, mid cap and small cap stocks have opened on a flat note with the BSE Mid cap and BSE Small cap indices up by 0.03% and 0.02% respectively. The rupee is trading at Rs 49.91 to the US dollar.

Auto stocks have opened the day on a strong note with Ashok Leyland and TVS Motors leading the gains. Last year the Munjal family owned Hero MotoCorp separated from a long term joint venture with Japanese firm Honda. This led to worries about how India's largest two-wheeler maker by volumes would make up for the technology deficit on account of Honda's exit. As per a leading financial daily, Hero MotoCorp is now building its own in-house capabilities to make its own engines. For this, the company is set to team up with AVL of Austria, which the world's largest privately owned engine developer. This technology tie-up with AVL will help the two-wheeler maker to develop technology for its most popular 100cc bikes such as Splendor and Passion.

Steel stocks have opened the day on a positive note with JSW Steel and Jindal Saw Ltd leading the gains. Indian steel major Tata Steel has commenced preparatory work of underground mining project at its Sukhinda Chromite Mine (SCM). The mine has a chromite beneficiation facility of 6.5 lakh tonnes per annum. According to a statement by the company, trackless mine technology and complete underground mechanisation will be part of the technology backbone of the project. Moreover, the company will adopt underground methods with 100% backfilling of voids with paste. Currently, the Sukhinda mine is the only Indian producer of hexavalent chrome-free chrome concentrate, which is made through a patented herbal treatment process. This earns green credits to the company's environmental initiatives.

World food prices on the rise again

Recently, some of the economies such as Indian and Chinese started witnessing good trends as far as inflation is concerned. China's inflation fell sharply in February 2012 to a 20-month low of 3.2%. In India, inflation too broke the shackles of 9-10% levels and came down to around 7.5% level during the month of January 2012. All this was expected to give the respective governments more leeway to stimulate their slowing economies. The Indian apex bank Reserve Bank of India (RBI) was also expected to ease its monetary stance.

However, recently released United Nation's food index data may force these countries or their government agencies to rethink before taking any expansionary fiscal or monetary measures. As per the United Nation data, global food prices rose by 1% on month-on-month basis in February 2012. This was second consecutive monthly rise in the global food prices.

Well, some economists believe that it is just a short term trend. In their view, this shooting up of the food prices is mainly on account of major buying interest from Iran. Iran is currently paying a premium for food items in the light of tough stand taken by the western countries against it. Looking at the global food production forecasts, economists expect that FY13 would witness comfortable food prices as compared to FY12.

But this is just an expectation. That too mostly based on good weather assumptions. Reality is that food prices are going up. And it is not just food prices. Price of one of the most important commodities, crude oil, is adding to woes as well. And looking at the Iran unrest, it does not seem to be easing off soon. All this definitely does not augur well for the India economy which has been struggling with stubborn inflation for quite some time now.

Now the policy makers would be facing a great dilemma when they sit for deciding on monetary policies. High interest rates have already hurt the pace of the Indian economy to the extent that we are now talking about sub-7% growth rate. However, in the scenario of rising food and oil prices, easing monetary policies may again propel inflation figures northward.

This presents a great dilemma for RBI. What RBI is going to choose? A little slowdown in the near term with controlled inflation. Or easing out liquidly and lowering interest rates in order to bring the growth momentum on track. We would come to know soon.