Sensex slips, midcap shines; Bank Nifty at new closing high

The market fell marginally Wednesday on account of profit booking but the outperformance of broader indices continued with the BSE Midcap and Smallcap indices gaining close to 2 percent.

The BSE Sensex declined 52.76 points to close at 24805.83 while the NSE Nifty held 7400-mark for the second consecutive session, down 13.60 points to 7402.25.

Overall it was a consolidation day after the market seeing record closing highs in previous session. Experts feel the market is waiting for more triggers that are monsoon, Budget expectations etc. They continued to be bullish on Indian equities.

Brokerage house UBS has retained its bullish view on Indian equities  believes that investors will be willing to pay a premium on expectations of higher growth. UBS has a Nifty target of 8000 by December-end, based on a 15 percent earnings growth in FY16.

"There could be upside to this target based on how policymaking evolves over next few months, which could flow through to earnings estimates and multiples higher than average," said the UBS note to clients.

Index heavyweights like Reliance Industries, HDFC, HDFC Bank and ITC were down 0.8-1.5 percent. Top telecom operator Bharti Airtel lost 1.6 percent and state-run oil & gas producer ONGC dropped nearly 2 percent.

India's largest software services exporter TCS slipped 2 percent as its CEO Natarajan Chandrasekaran sees 59.7 percent jump in overall salary hike. According to its annual report, TCS' brand value increased by USD 3 billion in 2014. Its rivals Infosys and Wipro were down over 0.5 percent.

However, Bank Nifty ended at record closing high today, up 0.5 percent to 15,333.40. Top lenders like State Bank of India and ICICI Bank gained 1.5 percent and 0.75 percent, respectively followed by Axis Bank with 1.7 percent. IDBI Bank shot up 16 percent.

Top two-wheeler maker Hero Motocorp was the biggest gainer, rising over 3 percent while its rival Bajaj Auto gained 1.6 percent. Maruti Suzuki was more than 1 percent.

Engineering and construction major L&T and FMCG major Hindustan Unilever gained 1.2 percent and 1.9 percent, respectively. Tata Steel and Hindalco Industries extended rally, up 2 percent and 2.55 percent, in addition to 6.7 percent and 3.3 percent in previous session, respectively.

NMDC surged 5.25 percent. The iron ore producer increased iron ore lumps prices for June by 7 percent and iron ore fines prices by 8.6 percent, reports CNBC-TV18 quoting agencies.

IDFC was up 3.82 percent as the non-banking finance company says it will bring down foreign shareholding in company below 50 percent and gives in-principle approval for domestic fundraising.

In the broader space, insurance companies like Reliance Capital and Max India rallied 5-9 percent on hopes of FDI increase .

National Fertilizer, Fertilisers and Chemicals Travancore, Rashtriya Chemicals and Fertilisers rallied 6-20 percent. Fertiliser ministry has prepared a roadmap for rationalisation of subsidy and this roadmap will be discussed in the proposed meeting with Prime Minister Narendra Modi.
 
Advancing shares beat declining ones by a ratio of 2127 to 917 on the BSE.

03:50 pm ECB meet
A slowdown in the euro zone's economic recovery in the first quarter was confirmed, likely reinforcing calls for bold action by the European Central Bank this week to fight low inflation and high unemployment.

The 18-nation bloc's economy expanded by just 0.2 percent in the three months to March, the EU's statistics office Eurostat said, illustrating the fragility of the rebound.

Euro zone inflation has been stuck in the European Central Bank's 'danger zone' of below 1 percent since October and coupled with weak growth poses a risk for the recovery.

03:40 pm Market closing
The market ended in red but the Nifty managed to hold 7400. The Nifty was down 13.60 points at 7402.25. The Sensex fell 52.76 points at 24805.83.

Midcap and smallcap stocks stole the show once again with both the indices gaining 2 percent once again. Capital goods, metals and realty stocks were also in buyers' radar.

However, oil & gas and IT stocks dragged the indices. TCS, ONGC, Bharti Airtel, Reliance and HDFC were laggards in the Sensex. Among the gainers were Hero MotoCorp, Hindalco, HUL, Tata Steel and Bajaj Auto.

03:30 pm Budget expectation
The Indian government is mulling tax breaks for launching real estate investment trusts (REITs) this Budget. This investment opportunity, Ashutosh Limaye, JLL India, says will reap benefits in the long-term.

Spekaing to CNBC-TV18, Limaye says the government should give tax breaks as well as clarity on taxation for REITs to pick up.

''Furthermore, it will lead to many unlisted companies going public. Companies like DLF, Prestige Estates and IndiaBulls that have good office or shopping centre portfolio are likely to be benefited,'' he adds.

03:20 pm Rupee
Hamish Pepper, Asia-Pacific FX Strategy, Barclays in an interview to CNBC-TV18 said the house has become more constructive on the rupee. They have revised the rupee forecast lower to 58/USD from 60/USD for three months and to 59/USD from 61/USD previously for six to twelve months.

The main reason for the revision in forecast was because of much stronger than expected Lok Sabha election outcome.

Barclays is looking at the Budget to track rupee movement.

03:10 pm High five to e-tailers
Prime Minister Narendra Modi's government could allow foreign direct investment in India's e-commerce sector as early as next month, paving the way for global online retailers such as Amazon to expand their business, four people with knowledge of the matter told Reuters.

A more robust online retail sector will spur manufacturing and help an economic revival, said the people, who are privy to discussions within the new government. An announcement is expected in next month's budget.

India currently bans global online retailers from selling goods directly to customers but allows them to own 100 percent of a marketplace business, where third-party suppliers can use their platform. Both Amazon and eBay use such a platform to operate in the country.

02:56pm Forensic audit for road toll projects
Sources told CNBC-TV18 that National Highway Authority of India (NHAI) plans to conduct forensic audit for 26 road toll projects to check under reporting of toll road revenue. This audit is for projects having revenue sharing model with NHAI, say sources.

It is learnt that forensic auditor for 8 toll road projects has already been appointed. According to sources, projects of GVK and Soma Infra are under forensic audit scanner.

NHAI plans to streamline collection of toll via online monitoring, say sources.

GVK and Soma Infra did not respond to CNBC-TV18 query.

02:50pm Gayatri Projects up 5%
Gayatri Projects says its SPV HKR Roadways (HKRRL) has received a provisional completion certificate from the independent consultant, as stipulated under the Concession Agreement, on May 30 2014, and commenced collection of toll with effect from June 1, 2014.

02:40pm Interview
National Fertilizer (NFL) was in the limelight following news reports that fertiliser ministry has written to the government seeking extra gas for urea plants.

In an interview to CNBC-TV18, Neeru Abrol, Director-Finance & CMD of National Fertilizers, said that the company has asked the government to provide additional 2.8 mmscmd 'domestic gas' to its Panipat, Bathinda, Nangal units.

NFL is currently purchasing and producing gas from the spot R-LNG (regasified liquefied natural gas), which is quite high and affects their working capital requirement, which in turn hikes interest costs.

Though NFL is doubtful of getting the entire 2.8 mmscmd, it expects to get around 0.7 mmscmd of gas.

02:30pm Market Update
Equity benchmarks lost ground in last hour of trade. The Sensex fell 76.13 points to 24782.46 and the Nifty declined 21.35 points to 7394.50. About 2005 shares have advanced, 957 shares declined, and 92 shares are unchanged.

Index heavyweights extended losses. Reliance Industries lost 1.5 percent followed by Infosys with 1.2 percent, ITC 0.8 percent, HDFC Bank 0.9 percent and HDFC 0.3 percent. Bharti Airtel and TCS plunged 2 percent each.

02:20pm Sahara case
Supreme Court has refused to release Sahara's Subrata Roy from jail. SC dismissed Sahara's petition seeking Roy's release from jail. It also dismissed Sahara's petition to shift Roy to guest house.

The court has allowed Sahara to sell Amby Valley properties for bail and also allowed to sell 9 other properties for bail money.

02:10pm Sensex at 100000?
Karvy Stock Broking in its note says, "We would believe that earnings growth for new five to six year business cycle should be atleast 20 percent considering the economy will revive from a very low base. If the infrastructure cycle revives quickly, the earnings growth revival will be faster with even 25 percent CAGR looking possible."

"A multiple rerating is also possible as cost of equity goes down in the next few years with the decrease in risk free rate. An earnings growth between 20-25 percent and multiple rerating from 15x to 16-17x in the next few years can lead to a 25 percent compounding of Sensex returns, which will take it to 100,000 levels by Calendar year 2020!," it adds.

02:00pm The market continued to be lacklustre in afternoon trade but the broader indices consistently beat benchmarks. The Sensex slipped 28.92 points to 24829.67 and the Nifty declined 8.70 points to 7407.15.

The BSE Midcap and Smallcap indices gained 1.5 percent each. Advancing shares outnumbered declining ones by a ratio of 2014 to 915 on the BSE.

Two-wheeler major Hero Motocorp topped the buying list, rising nearly 4 percent followed by ICICI Bank, L&T, State Bank of India, Hindustan Unilever, Tata Steel, Bajaj Auto, Hindalco Industries and Maruti Suzuki with 1-2.5 percent.

However, TCS, Reliance Industries, Infosys, Bharti Airtel, Sesa Sterlite, Wipro, NTPC and HDFC Bank declined 1-2 percent.

2:00 pm Disclosure for commodity market: The commodity markets regulator has launched a fresh attempt to rebuild volume on domestic commodities exchanges, after their credibility was dented by last year's failure of the National Spot Exchange Ltd (NSEL).

The regulator said it had asked its capital market counterpart to require companies to disclose their commodity trading positions on domestic futures markets, seeing this as a way of boosting the credibility of those markets, in turn boosting activity.

The regulator has been trying to increase disclosure by market participants, hoping to give confidence to smaller companies for instance to hedge on the exchange platforms.

1:50 pm Buzzing: Shares in SeQuent Scientific Ltd  surge nearly 10 percent, adding to their 10 percent surge in the previous session, after several foreign investors bought the company's stock via bulk deals.

Morgan Stanley Asia, Merrill Lynch Capital Markets Espana and Route One Fund bought about 0.4 million shares each at 250 rupees per share, BSE data shows.

SeQuent is engaged in the development and manufacture of pharmaceuticals and speciality chemicals.

1:40 pm FII view: India's current account deficit (CAD) has improved considerably, but the fundamental rebalancing of economy is yet to take place, said Manoj Pradhan, Global Economist, Morgan Stanley. He sees India achieving growth of 6.8 percent in 2 years. He considers election results as an inflection point for India.

In an interview to CNBC-TV18, Pradhan said that he hopes the new government concentrates on measures to accelerate growth and slow down inflation. He feels allowing gold imports to rise may pose a risk. On international markets, he thinks economies like the US, Europe, Japan, China and emerging markets are all ''undecided stories as uncertainty poses a risk to asset prices''.

1:30 pm HSBC PMI: Activity in India's huge services industry expanded for the first time in nearly a year in May, driven by a surge in new business, a survey showed on Wednesday. The HSBC Services Purchasing Managers' Index, compiled by Markit, rose to 50.2 in May from 48.5 in April, the first rise above the 50 mark that divides growth from contraction since June last year. A landslide win for Narendra Modi and his Bhartiya Janata Party - which created India's first majority government in three decades - has fuelled expectations for key economic reforms after years of policy paralysis.

1:20 pm Market outlook: Brokerage house Kotak Securities is of the view that the market is already discounting FY2016 earnings, and is no longer cheap. It however expects valuations to stay expensive because of the positive sentiment among investors.

"Earnings upgrades look difficult in the short term. Thus, economic reforms that can drive economic and earnings growth in the medium term will be critical," says the Kotak note to clients. The brokerage feels investors would be better off taking some money off the table in sectors like banking, capital goods, cement, and metals & mining where investors appear to be expecting too much too soon.

The market is marginally in red with the Nifty holding above 7,400. The Sensex is down 18.47 points at 24840.12 and the Nifty is down 4.75 points at 7411.10. About 1930 shares have advanced, 906 shares declined, and 96 shares are unchanged.

Banks and rate sensitives are higher while IT stocks are dragging. Midcaps are outperforming benchmark indices. Hero MotoCorp, Tata Steel, Hindalco, Bajaj Auto and HUL are top gainers in the Sensex. Among the losers are TCS, Coal India, Infosys, NTPC and Sesa Sterlite.

Global markets are cautious as investors look ahead to key risk events this week. Caution sets in ahead of Thursday's ECB meet and US nonfarm payrolls report on Friday.
 
Meanwhile, Gold was hovering near a four-month low hit in the previous session, as investors await US economic data, amid increasing optimism about growth and sluggish bullion demand in Asia.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 1.8 tonnes to 787.08 tonnes on Tuesday.

The inflow could be supportive in the near term, but the fund's overall holdings are still near 5-year lows, indicating bearish sentiment.

Asian physical demand, which usually tends to provide a floor to prices during sharp losses, has been weak as many expect gold to go lower. Asia is home to major gold consumers, China and India.

12:58pm FII view
Brokerage house UBS has retained its bullish view on Indian equities, and is of the view that investors will be willing to pay a premium on expectations of higher growth.

UBS has a Nifty target of 8000 by December end, based on a 15 percent earnings growth in FY16.

"There could be upside to this target based on how policymaking evolves over next few months, which could flow through to earnings estimates and multiples higher than average," said the UBS note to clients.

The brokerage is bullish on banks (including PSU ones), oil & gas, power, infrastructure, cement, and media. It is bearish on two-wheelers, FMCG and pharma. It is neutral on four-wheelers, metals & mining and IT Services.

12:50pm Gold Update
Gold was treading water, hovering near a four-month low hit in the previous session, as investors await US economic data, amid increasing optimism about growth and sluggish bullion demand in Asia.

Markets are eyeing US private hiring data later on Wednesday and nonfarm payrolls on Friday to gauge economic strength. Gold is often seen as an investment-hedge at times of economic uncertainty.

Spot gold was flat at USD 1,245.80 an ounce by 0636 GMT. The metal hit a four-month low of USD 1,240.61 on Tuesday, before closing flat and snapping a five-day losing streak, reports Reuters.

12:35pm Economy
India's current account deficit (CAD) has improved considerably, but the fundamental rebalancing of economy is yet to take place, said Manoj Pradhan, Global Economist, Morgan Stanley. He sees India achieving growth of 6.8 percent in 2 years.

He considers election results as an inflection point for India.

In an interview to CNBC-TV18, Pradhan said that he hopes the new government concentrates on measures to accelerate growth and slow down inflation. He feels allowing gold imports to rise may pose a risk.

12:25pm Suven gains 5%
Suven Life Sciences announced today that its drug discovery portfolio has expanded into several new therapeutic areas such as major depressive disorder (MDD), obesity and pain through Neuronal Nicotinic Receptor modulators which resulted in the grant of one (1) product patent from USA (8653071), corresponding to the new chemical entity (NCE) for the treatment of disorders associated with neurodegenerative diseases. This patent is valid through 2030.

12:10pm Market Expert
Technical charts indicate that Nifty is headed for 7500, feels Phillip Capital's Vineet Bhatnagar. He sees the Nifty trading in a range between 7000 and 7500, and does not expect much resistance on the upside. In an interview with CNBC-TV18, Bhatnagar says investors are not worried about a sharp correction at this stage.

12:00pm The market remained directionless in noon trade. The Sensex declined 14.13 points to 24844.46 and the Nifty slipped 2.35 points to 7413.50 but the broader markets continued to outperform benchmarks.

The BSE Midcap and Smallcap indices gained 1.4 percent each. About 1845 shares have advanced, 851 shares declined, and 95 shares are unchanged.

Hindalco Industries, Tata Steel, Bajaj Auto, Hero Motocorp, Maruti Suzuki, Jindal Steel, NMDC, Punjab National Bank and Bank of Baroda topped the buying list, rising 1-3.5 percent. However, TCS, Wipro, Infosys, ITC, Sesa Sterlite, HCL Technologies and Sun Pharma fell 1-3 percent.

Fertiliser stocks like FACT, National Fertiliser and RCF gained 7-20 percent as report suggests that fertiliser ministry has prepared a roadmap for rationalisation of subsidy for the sector. This roadmap will be discussed in the proposed meeting with Prime Minister Narendra Modi, say sources.

Shares of insurance companies too gained strength. Max India rallied 13 percent and Reliance Capital jumped 5 percent.

12:00 pm Houseview: Brokerage house UBS has retained its bullish view on Indian equities, and is of the view that investors will be willing to pay a premium on expectations of higher growth.

UBS has a Nifty target of 8000 by December end, based on a 15 percent earnings growth in FY16.

"There could be upside to this target based on how policymaking evolves over next few months, which could flow through to earnings estimates and multiples higher than average," said the UBS note to clients.

The brokerage is bullish on banks (including PSU ones), oil & gas, power, infrastructure, cement, and media. It is bearish on two-wheelers, FMCG and pharma. It is neutral on four-wheelers, metals & mining and IT Services.

11:50 am Bond market: The benchmark 10-year bond yield was down 3 basis points on day at 8.57 percent, its lowest level since Jan. 21 as the dovish central bank policy tone continues to cheer market sentiment.

The central bank while keeping rates unchanged at its policy review also toned down its rhetoric on inflation and hinted it would not raise interest rates further as long as inflationary pressures continued to ease.

Traders are now betting the rate tightening cycle is done with while some are also expecting a rate-cut sometime later in the fiscal year.

A rise in US yields and some intermittent profit-taking could act as speed breakers in the market rally, however, traders see the 10-year yield hitting 8.50 percent this week.

11:40 am Interview: An appreciating rupee may help boost confidence in the economy, but it may spell trouble for export-oriented sector like the IT companies.

Vineet Nayyar, Executive Vice-Chairman, Tech Mahindra, feels that IT companies may see some decline in margins due to rupee gains, but he believes, and as pointed by economists, that hardening of the ''currency will not take place because the current account deficit (CAD) is bound to increase with greater investment going in''.

In the long-term he doesn't see rupee hardening beyond a point. ''You may at best see oscillations around 60 per dollar,'' he said, adding that foreign exchange is not going to be an issue for the IT growth.

11:30 am Buzzing: Most tyre stocks are on buyers' radar as global rubber prices have hit five-year lows. Domestic rubber prices, too, have fallen over demand concerns leading to a glut scare. There is a sluggish demand from major consumer market like China.

Stocks like Ceat India, Dunlop India, JK Tyre and Industries rallied 3-5 percent intraday.

As per reports, rubber prices have slumped around 30 percent this year and hit five-year lows. Global supply is forecast to exceed demand by 241,000 tonnes in 2014 for a fourth year of glut, according to International Rubber Study Group (IRSG), which ruled out any near-term rebound in prices.

11:20 am FII view: Morgan Stanley's Ridham Desai feels investors should be invested in cyclical stocks at this point. In an interview to CNBC-TV18, Desai said he is recommending investors to buy automobile, energy, cement and private bank stocks. He is however, bearish on capital goods shares, as he feels an upswing in capex cycle could take longer than what the market is expecting.

Desai sees technology stocks as contrarian bets, which could pay off over the longer term. While the market is pleased with RBI's dovish tone at in its second credit policy, Desai feels that may not necessarily be a good thing for the market. According to Desai, the dovish stance is a positive only if the government backs the central bank's efforts to rein in inflation, with a credible fiscal consolidation plan.

The market is flat with negative bias. The Sensex is down 49.18 points at 24809.41 and the Nifty is down 10.05 points at 7405.80. About 1708 shares have advanced, 722 shares declined, and 92 shares are unchanged.

Hindalco, Tata Steel, Bajaj Auto, BHEL and Hero MotoCorp are top gainers in the Sensex. Among the laggards are TCS, Infosys, Wipro, M&M and ITC.

Gilts are positive following RBI's dovish monetary policy statement. Participants also build positions on expectations of FII demand. Rupee recovered after opening lower on profit taking by traders.

Brent is between USD 108-109 levels per barrel as investors are eyeing US oil inventory. Gold is still near 4-month lows.

Asian markets are mostly lower. Japanese markets are treading with caution in anticipation of Prime Minister Shinzo Abe's economic policy announcement, now rumoured to be next week.

10:55am Autoline Industries up 5%
Autoline Industries on Tuesday says with regard to disinvestment of shares of company's wholly owned subsidiary - Autoline Industries Inc, USA, the company has not received any suitable offer till date.

"As and when suitable and acceptable offer is received, the board meeting will be convened (expected by end of June, 2014) to consider the proposals received in this regard," it adds.

10:45am JP Morgan downgrades Reliance
JP Morgan downgraded Reliance Industries to neutral from overweight, saying share prices already reflect positive catalysts even as fundamentals remain on "a solid footing", reports Reuters.

"While we remain positive on Reliance Industries' strategy of organic growth in core businesses, we believe the current share price already reflects the positive catalysts that were identified in our upgrade in Q4 CY13," JP Morgan said in a note dated on Wednesday.

12:35am FII view
Morgan Stanley's Ridham Desai feels investors should be invested in cyclical stocks at this point. In an interview to CNBC-TV18, Desai said he is recommending investors to buy automobile, energy, cement and private bank stocks.

He is however, bearish on capital goods shares, as he feels an upswing in capex cycle could take longer than what the market is expecting.

Desai sees technology stocks as contrarian bets, which could pay off over the longer term.

10:25am Wockhardt under pressure
Shares of drug maker Wockhardt fell 3 percent as USFDA has found 12 procedural lapses in its US facility in Illinois.

The inspection, which was carried out by the FDA officials between January 22 and March 26 this year, pointed out that the responsibilities and procedures applicable to the quality control unit are not in writing and fully followed.

"There is a failure to thoroughly review any unexplained discrepancy and the failure of a batch or any of its components to meet any of its specifications whether or the batch has already been distributed," the report said in one of the observations.

10:15am More capital infusion in banks likely?
Banking Secretary G S Sandhu said there was little scope for allocating more funds to recapitalize state-owned banks. In an interaction with CNBC-TV18, Sandhu said the Rs 11,200 crore allocated in the Vote on Account would be sufficient.

A steep rise in bad loans has eroded the capital base of most state-owned banks. However, the government is not in a position to provide adequate capital to these banks given the precarious state of its own finances.

Sandhu is of the view that state-owned banks should start disinvesting some government equity.

He said the government may have to cut its shareholding below 58 percent in some banks.

10:00am Equity benchmarks continued to consolidate from early trade due to lack of triggers. The Sensex slipped 20.93 points to 24837.66 and the Nifty fell 6.85 points to 7409.

The broader markets outperformed benchmarks with the BSE Midcap and Smallcap indices rising over a percent. About 1463 shares have advanced, 559 shares declined, and 74 shares are unchanged.

Top IT services exporter TCS fell 2 percent as TCS CEO Natarajan Chandrasekaran sees 59.7 percent jump in overall salary hike. According to its annual report, TCS' brand value increased by USD 3 billion in 2014.

Shares of ITC, Infosys, Mahindra & Mahindra, ONGC, ICICI Bank, Wipro, Sesa Sterlite and Coal India declined 0.3-1.5 percent.

However, Tata Steel extended gains to 2.5 percent, in addition to 6.7 percent rally in previous session. Bajaj Auto and Hindalco Industries jumped over 2 percent. Tata Motors, Hero Motocorp, BHEL and GAIL gained 1-1.7 percent.

10:00 am Bond market: Trading in corporate bonds stood at ten-month high level of Rs 93,945.86 crore at leading stock exchanges BSE and National Stock Exchange in May. Earlier, Rs 1.10-lakh-crore worth of corporate bond trading was reported by NSE and BSE in July 2013. According to the Sebi data, corporate bonds trading in May this year was 25.2 percent higher than Rs 75,040.23 crore reported in April 2014.

At NSE, bonds worth Rs 79,106 crore were traded in May, accounting for 84.2 percent of the total corporate bond trading in the month. BSE witnessed bonds trading worth Rs 14,839.85 crore in the month.

9:55 am Parliament session: The 16th Lok Sabha will meet for the first time today. Congress leader Kamal Nath will be sworn in as the protem speaker and then homage will be paid to Late Gopinath Munde after which the house is expected to be ajourned for the day. The newly elected members will take oath on Thursday. On Friday the election for the speaker will take place and the president will address both the houses on June 9.

Tamil Nadu Chief Minister Jayalalitha met Prime Minister Narendra Modi yesterday. This was their first meeting since Modi assumed office. On the issue of supporting the NDA in Rajya Sabha, Jayalalithaa remained non-committal. But, she left a window open, saying she will take a decision on the matter when the situation arises.

9:50 am Fall:  Shares of Wockhardt fell 4 percent intraday on concerns of USDA's alarm on its procedural lapses.

The US Food and Drug Administration has found as many as 12 procedural lapses in drug maker Wockhardt 's US facility in Illinois. The inspection, which was carried out by the FDA officials between January 22 and March 26 this year, pointed out that the responsibilities and procedures applicable to the quality control unit are not in writing and fully followed.

The quality control unit lacks authority to review production records to assure no errors occurred and fully investigate errors that have occurred, it further said. The FDA has already issued warning letters to two of the Wockhardt's plants in India.

9:40 am FII view: Bharat Iyer, JP Morgan says the brokerage house expects recovery in the economy and corporate earnings over the near-term to be relatively muted in relation to current elevated market expectations.

''Consequently, we would avoid companies with high leverage or where expectations of a turnaround are premised on regulatory / political largesse. We would particularly caution against chasing beta in the financials like PSU banks and NBFCs as well as the investment cycle space like private sector infrastructure conglomerates,'' he adds.

According to Iyer, since the beginning of the year we have been advocating playing a potential economic recovery through high-quality financials, commercial vehicles, cement and resources.

9:30 am Budget expectations: Budget preparations are in full swing. The finance ministry has virtually ruled out any capital infusion to PSU banks this fiscal. It is planning a new law to crackdown on big ticket willful defaulters to curb the rising bad loans and there are talks of tax breaks to real estate investment trusts to boost infra lending.

Also, the upcoming budget may bring good news for the cash-strapped realty sector. Sources say north block is actively mulling tax breaks for real estate investment trusts or REITs. Draft guidelies for REITs were unveiled by the market regulator in September last year, but industry experts had written them off saying REITs would not be successful unless the finance ministry played ball with tax breaks.

The market opened on a flat note on Wednesday after seeing record closing highs in previous session. The Sensex rose 37.75 points to 24896.3 while the Nifty fell 0.80 point to 7415.05. About 808 shares have advanced, 240 shares declined, and 32 shares are unchanged.

Among gainers, Hindalco Industries, Bajaj Auto, Tata Motors, Tata Steel, GAIL, NMDC, DLF and Jindal Steel rallied 1-2 percent. However, Sesa Sterlite, M&M, Coal India, ONGC, Bharti Airtel and HCL Technologies declined 0.7-1 percent.

The Indian rupee slipped marginally in the early trade. It opened lower by 4 paise at 59.42 per dollar as against previous day's closing value of 59.38 a dollar.

NS Venkatesh of IDBI Bank expect rupee to trade between a narrow range of 59.3-59.5/dollar.He also expects the yield on the 10-year bonds to range between 8.5-8.55 percent.

On the global front, Asian markets were mixed while US stocks eased off their lows but still closed in the red in lackluster trading Tuesday a day after the Dow and S&P 500 hit fresh highs. In Europe, shares closed lower on Tuesday after weak euro zone inflation data.

In commodities, crude prices rise after industry data showed a bigger-than-expected fall in crude stockpiles in the United States. From precious metals space-- gold snapped its losing streak as the stock markets beat a retreat after a series of record highs on Wall Street.