After opening firm, the indices slipped into the red after news that foreign investors have increased their futures positions on the sell side. The sensex went close to its all time high of 6954 before retracing. Sensex closed at 6853, down 54 points and the Nifty at 2154, down 13 points. The Nifty futures discount to the spot index narrowed to 6 points.

US markets rebounded on easing crude prices. Crude declined close to 3 per cent on higher output expectations. The Dow gained close to half a percent while NASDAQ ended flat. Most Indian ADR's ended weak with Satyam, ICICI Bank, Wipro, HDFC Bank, Tata Motors and Dr. Reddy's all losing ground. MTNL continued its rally gaining more than 3 per cent and Infosys gained a per cent.

Index of Industrial Production (IIP) is up 8.4 per cent for the period April to January of the current year as compared to a growth of 6.7 per cent in the previous year. Manufacturing growth for January 2005 at 9.3 per cent over the corresponding month of last year confirms the up trend in manufacturing. Considering that this growth is on an already high 7.2 per cent reported for January 04 makes it more heartening.

Inflation for the week ended February 26 inched up marginally to 4.95 per cent from 4.83 reported for the previous week. However, this was lower than the consensus market estimate of over 5 per cent. The RBI governor indicated that growth rate for fiscal 2005 should be higher than the earlier estimate of 6.5 per cent while cautioning about pressure on price levels going forward.

SBI has reported credit growth of 20 per cent for the current year while indicating that credit demand is at its highest for the past 50 years. It may be recalled that ICICI Bank had also come out with similar statements in the recent past. The rapid growth in credit off take points to capacity creation by industry after growing on efficiency gains for some time now.

ICICI Securities has recommended to the government that unlisted public sector telecom giant BSNL should buy out the government's stake in MTNL, which is a listed company. This much anticipated merger would create a very strong telecom player with a pan-India footprint and a huge customer base. This may lead to a possible listing of BSNL on the bourses and it would be one of the most valuable companies in the Indian market. Investors should note that there will not be any open offer for MTNL under the takeover code as a government company, BSNL, is buying the stake from the government.

Promoter Sunil Mittal has sold his entire personal holdings in Bharti TeleVentures. However, his group continues to hold around 25 per cent in the company through a holding company. The stock ended marginally higher.

After yesterday's huge block deal in HDFC Bank, today it was the turn of parent company HDFC to report a block deal of more than 6 lakh shares. Yesterday, Deutsche Securities, the investment arm of German banking giant Deutsche Bank, had picked up close to 4 per cent stake in HDFC Bank. This had led to market talk about Deutsche Bank taking a strategic stake in the Indian private sector banking major. Deutsche Bank today denied any move to take a strategic stake.

The steel pack made decent gains led by SAIL and Tata Steel with two per cent each. There are reports of South Korean steel giant Posco increasing steel prices by 8 per cent which confirms a sustained uptrend in steel prices. Tata Steel has indicated a price revision in April while SAIL says it is not considering any increase now.

Bank stocks continued their run up in morning trades with SBI touching yet another 52 week high of Rs750. The PNB public issue closed today. ICICI bank has increased the stake in its mutual fund joint venture with Prudential to 51 per cent.

Front line stocks ONGC, Reliance and ITC corrected today and pulled the indices down. The Tech pack also remained weak.

Mid-cap action
Cigarette manufacturers Godfrey Philips and VST Industries maintained their uptrend. The smaller tobacco companies have been attracting considerable interest over the last one week. Godfrey Philips has gained more than 30 per cent in the last 3 trading sessions.

Mid-cap IT company Zensar Technologies announced a major deal with Japanese financial group Nomura. The deal is expected to add $10 m to Zensar's top line next year with significant opportunities to scale up over the next 5 years. The stock gained more than 10 per cent.

Aban Lloyd Chiles Offshore, the south based offshore oil drilling services company, announced plans to raise additional resources through issue of GDR or FCCB. The company may also consider a stock split to improve liquidity. The stock hit its upper circuit of 5 per cent in morning trades. Dolphin Offshore, another drilling company was also locked in the upper circuit.

There was action in the smaller private sector bank counters like Federal Bank and Karnataka Bank. Federal Bank gained more than 7 per cent while Karnataka Bank gained more than 4 per cent.

Mid-cap steel companies Uttam Galva, Mukand, Tata Metaliks and Mahindra Ugine saw considerable demand. Uttam Galva shot up more than 15 per cent on sustained buying. US mutual fund Fidelity is understood to be positive on Uttam Galva.

Yesterday's big winners McDowell and Titan Industries continued to buzz, while some like ITI, Trent and Pantaloon ended in the red.

Most Asian markets recovered from yesterday's fall. Hong Kong, Taiwan and Singapore closed with marginal losses. US markets may open firm on news of Intel upgrading its earnings projections.

The market breadth continues to be positive as mid-caps remain firm. News that FII's were net buyers to the tune of $300 million yesterday would prop up the market Monday morning. Intra-day volatility will be the norm.

Market: Indices

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