Market indices continued to scale new highs backed by healthy inflows from FII's. The Sensex crossed the 6800 barrier for the first time ever, and did it comfortably. FII's have so far pumped in more than Rs10,000 crore in 2005 and have become more aggressive post budget. The Sensex closed at 6850, up 65 points and the Nifty at 2148, a gain of 19 points. Nifty futures closed at a marginal discount to the spot index.

Crude ended higher at $53.5 after touching an intra day high of $55 to a barrel. US markets were mixed, with the Dow managing a positive close while the NASDAQ ended with losses. Indian ADR's had a good day with MTNL going up by more than four per cent. The tech pack, Infosys, Satyam and Wipro posted good gains while Tata Motors went up by two per cent. HDFC Bank, ICICI Bank and VSNL posted marginal gains while Dr. Reddy's was the sole loser.

Inflation, for the week ended 19 February, dropped to 4.83 per cent from 5.01 per cent the week before. The drop in inflation came as a pleasant surprise for the market, which was expecting around five per cent. Lower inflation levels may be short lived though, with steel prices going up and the prices of petroleum products expected to be revised upwards next month.

Newswire Dow Jones has reported that the government may go ahead with its divestment plans in Maruti, BHEL and Balco in the next financial year. It has also reported that Oil India and Power Grid Corporation may come out with IPO's in the last quarter of next fiscal year. Left parties are opposed to further stake sale by the government in BHEL and Balco.

Telecom Tribunal TDSAT has ruled against Reliance Infocomm in the international call re-routing case. The tribunal dismissed all arguments put forward by Reliance and imposed a penalty for violation of license terms. Reliance is expected to move the Supreme Court against this order. The order had little effect on the Reliance stock price, which closed with gains of more than two per cent.

Bajaj Auto has announced that Rahul Bajaj would step down on April 1 as managing director. His son Rajiv Bajaj is set to take over as MD while Rahul Bajaj would remain as chairman.

The Punjab National Bank has set the price band for its second public issue between Rs350 and 390. The stock soared as ten per cent of the issue is reserved for existing shareholders. It should be noted that the stock is trading at a huge premium to the proposed issue price. Indian Overseas Bank also went up on plans for a GDR issue.

ICICI Bank, SAIL and SBI posted new 52 week highs. Zee Telefilms gained more than seven per cent after remaining weak for many weeks. IT stocks also remained firm with Wipro gaining more than three per cent. Auto stocks, led by Tata Motors and Maruti, continued their rally while HDFC and HDFC Bank posted good gains.

Mid-cap action
Commercial vehicles manufacturer Eicher motors experienced a good rally after it reported a forty per cent volume growth in February. The company is going trough a restructuring exercise and has sold its tractor manufacturing plants to focus on its core business of commercial vehicles.

Steel manufacturer Jisco announced an increase in price by Rs1000 per tonne from April and expects a 25 per cent top line growth in the next financial year. The company is in the process of merger with its associate Jindal Vijayanagar Steel and the merged entity, to be called Jisco, is expected to be listed on the stock exchanges later this month.

World's largest mutual fund, Fidelity, picked up a three per cent stake in the software company, Financial Technologies, which is also the promoter of commodity exchange MCX. Fidelity bought the stake from Reliance Capital. The stock went up by more than twelve per cent.

Paper major Bilt rose more than six per cent on news about the company's plans for capacity expansion and possible overseas acquisitions to secure pulp supplies. The company expects its top line to grow to Rs3000 crore over the next two years.

Tyre stocks too made smart gains, led by market leader MRF and JK Industries, the latter going up by as much as ten per cent. Optic fibre manufacturers also moved up on higher demand expectations. Smaller IT companies like Aftek Infosys and Zensar Technologies made substantial gains.

Construction major Jaiprakash Associates and associate company Jaypee Hotels saw good buying. Group company Jaiprakash Hydro Power is coming out with an IPO and ten per cent of the issue has been reserved for shareholders of group companies. Other construction stocks like Gammon India and IVRCL also posted substantial gains.

Mid-day Multimedia, publisher of Mumbai afternoon newspaper Mid-day, went down by twelve percent. The Indian Express group has picked up a ten per cent stake in the company from the promoters at Rs60 per share, a good 35 per cent discount to yesterday's closing price. It may be recalled that Bennett Coleman, publishers of Times of India, had also picked up a 7.5 per cent stake in the Mid-day.

Asian markets generally traded firm except for Taiwan and Malaysia. European markets are trading firm at opening. US market direction would depend to a large extent on employment and retail sales data expected today.

Though a correction was due today, nobody can argue against the flood of money coming in from FII's. The fact that indices are in completely new territory makes even technical predictions hazardous. It looks more like the events at the beginning of this year, when the frenzy was followed by a major drop in the indices, unless the market see periodic corrections.

*Disclaimer: The author doesn't have any position in the stocks specifically mentioned above at the time of writing this article. This analysis/report is only for the purpose of information and is not an investment advice. Readers are advised to consult a certified financial advisor before taking any investment decisions. While efforts have been made to ensure the accuracy of the information provided in the content the author or publisher shall not be held responsible for any loss caused to any person whatsoever.

Other articles by Rex Mathew

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List of general reports on finance