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VOLATILITY TO THE FORE

Date: 10/04/2012

Volatility continued in mid-morning trade as key benchmark indices once again slipped into the red after hitting fresh intraday highs. The barometer index, BSE Sensex, was down 14 points or 0.08%, up about 50 points from the day's low and off close to 65 points from the day's high. The market breadth, indicating the overall health of the market was positive. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. Banking and IT stocks were mixed.

Gas utility stocks tumbled after Petroleum and Natural Gas Regulatory Board (PNGRB) slashed network tariff and compression charges for CNG in respect of the Delhi compressed gas distribution (CGD) network of Indraprastha Gas. Indraprastha Gas and GAIL (India) hit their 52-week lows.

A bout of volatility was witnessed in early trade as key benchmark indices trimmed losses after slipping into the red to hit their lowest level in 1-1/2 weeks after opening higher. The market regained strength in morning trade. Volatility continued as the market once again slipped into the red in mid-morning trade.

BSE Sensex was down 14 points or 0.08% to 17,207.54. The index fell 64.87 points at the day's low of 17,157.27 in early trade, its lowest level since 30 March 2012. The index rose 52.55 points at the day's high of 17,274.69 in morning trade.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,061 shares gained and 1,039 shares fell. A total of 122 shares were unchanged.

From the 30-share Sensex pack, 17 stocks fell and rest of them rose. ONGC, Tata Steel and Sterlite Industries shed by between 1.23% to 1.81%. Tata Motors, Hindustan Unilever and ITC rose by between 1.43% to 1.62%.

Index heavyweight Reliance Industries (RIL) fell 0.34% to R 740.10. The stock was volatile. The stock hit a high of R 746.40 and a low of R 738.30 so far during the day. RIL is seen reporting weak Q4 earnings due to falling refining margins and reduced output from its KG-D6 gas blocks.

RIL early last week said its Jamnagar manufacturing unit is planning to take Maintenance and Inspection (M&I) shutdown of one of the diesel hydro treating unit for approximately three weeks duration from 2 April 2012. Routine activity of catalyst replacement is planned to be carried out during this shutdown and the opportunity will also be utilized to carry out revamp jobs so as to further enhance BS-IV grade diesel production capability from DTA refinery, RIL said. Remaining units of refinery, including crude processing units, are planned to operate at full throughput during this period, RIL said.

Gas utility stocks tumbled after Petroleum and Natural Gas Regulatory Board (PNGRB) slashed network tariff and compression charges for CNG in respect of the Delhi compressed gas distribution (CGD) network of Indraprastha Gas with effect from 1 April 2008. Indraprastha Gas tumbled 31.93% to R 237.55. The stock hit a 52-week low of R 170 today.

Indraprastha Gas (IGL) had proposed to the board a network tariff of R 104.05 per million British thermal units and compression charge of R 6.66 per kg of CNG. The board approved R 38.58 and R 2.75, respectively, bringing these down by 63% and 58.7%. PNGRB has also asked the company to make refunds since the 2008-09 financial year based on the revised changes, since that was the first financial year of operation for the company after the regulator came into being in October 2007.

Among other gas distribution stocks, Gujarat State Petronet, Petronet LNG and Gujarat Gas Company tumbled by between 4.7% to 8.88%.

GAIL (India) fell 2.96% to R 352.40. The stock hit a 52-week low of R 326.35 today.

Reliance Communications (RCom) rose 1.09% after company said during market hours today that it is evaluating a potential public offering and listing in Singapore of its subsea telecommunications infrastructure network business through a Singapore business trust.

Bharti Airtel fell 0.2%. The company said on Tuesday it has launched wireless broadband services in Kolkata, becoming the first company to offer high-speed Internet services using fourth-generation technology in India. Bharti in 2010 paid about R 3314 crore ($648.5 million) to the government for bandwidth to offer wireless broadband services in four of the country's 22 telecom service areas. Last week, Bharti said it had contracted ZTE Corp. to supply and manage its networks on the new technology in the Kolkata service area.

IT pivotals were mixed. India's third largest software services exporter by revenues Wipro rose 1.18%. The company last week said rating agency Standard and Poor (S&P) has upgraded the long term corporate credit rating of Wipro from BBB (outlook positive) to BBB+ (outlook stable).

India's second largest software services exporter by revenue Infosys declined 1%. The company announces Q4 March 2012 results on Friday, 13 April 2012.

India's largest software services exporter by revenue Tata Consultancy Services (TCS) fell 0.64%. The company announces FY 2012 results on 23 April 2012

Interest rate sensitive banking stocks were mixed. India's biggest private sector bank in terms of net profit, ICICI Bank, was flat. India's second largest bank by net profit HDFC Bank fell 0.89%

India's largest bank by branch network State Bank of India rose 1.27%. The bank's Managing Director A Krishna Kumar on Saturday, 7 April 2012, said that the bank is aiming for growth of 20% to 25% in credit and deposit in financial year that began April 2012. The bank is expecting a major improvement in its asset quality for the recently ended fiscal year, he said.

Foreign institutional investors (FIIs) sold shares worth R 269.43 crore on Monday, 9 April 2012, as per provisional data from the stock exchanges.

The next major trigger for the market is Q4 March 2012 and year ending March 2012 (FY 2012) earnings. Investors will focus on the guidance provided by the management for the year ending March 2013 (FY 2013) to gauge the earnings outlook.

IT bellwether Infosys announces Q4 March 2012 results on Friday, 13 April 2012. Lube oil major Castrol announces Q1 March 2012 results on 16 April 2012. Private sector bank HDFC Bank unveils FY 2012 results on 18 April 2012. HCL Tech unveils Q3 March 2012 results on the same day. ACC and Hindustan Zinc unveils quarterly results on 19 April 2012. IndusInd Bank reports FY 2012 results on the same day. Ambuja Cements announces Q1 results on 19 April 2012. Cairn India reports FY 2012 results on 20 April 2012. TCS unveils FY 2012 results on 23 April 2012.

ICICI Bank unveils FY 2012 results on 27 April 2012. Axis Bank and Siemens announces quarterly results on the same day. Maruti Suzuki India unveils FY 2012 results on 28 April 2012. Titan Industries, Godrej Consumer Products, Exide Industries and Dabur India unveil FY 2012 results on 30 April 2012. FMCG giant Hindustan Lever unveils FY 2012 results on 1 May 2012. Shree Cement unveils FY 2012 results on 15 May 2012. Housing finance major HDFC announces FY 2012 results on 7 May 2012. Colgate Palmolive (India) unveils FY 2012 results on 30 May 2012.

On the macro front, data on industrial production for February 2012 and that on inflation for March 2012 could provide cues on the central bank's likely policy stance at the monetary policy review for 2012-13 due on 17 April 2012.

The government will unveil industrial production data for February 2012 on Thursday, 12 April 2012. Industrial production grew 6.8% in January 2012, lower than 7.5% growth recorded in January 2011.

On Friday, 13 April 2012, the government will unveil data on inflation based on the wholesale price index (WPI) for March 2012. The annual rate of inflation, based on monthly WPI, stood at 6.95% (provisional) for the month of February, 2012 (over February 2011) as compared to 6.55% (provisional) for the previous month and 9.54% during the corresponding month of the previous year.

Asian shares were mixed on Tuesday. Key benchmark indices in Indonesia, Singapore, and Taiwan rose by between 0.11% to 0.63%. Key benchmark indices in China, Japan, South Korea and Hong Kong fell by between 0.17% to 1.33%. Asian markets had declined on Monday after weak US job data.

China's imports grew less than expected in March, highlighting concerns of an internal slowdown that could point to weakening demand, customs-department data released on Tuesday showed. China posted a trade surplus of $5.35 billion in March, swinging from a deficit a month earlier, and lifting the nation's trade surplus for the first quarter to $670 million, according to General Administration of Customs data. Exports rose 8.9% from a year earlier to $165.66 billion, while imports rose 5.3% to $160.31 billion

China's gross-domestic-product growth data for Q1 March 2012 is due to be released on Friday, 13 April 2012.

The Bank of Japan (BOJ) on Tuesday left its key interest rate and stimulus programs unchanged besides refraining from announcing any new easing measures.

Trading in US index futures indicated that the Dow could gain 23 points at the opening bell on Tuesday, 10 April 2012. US stocks closed sharply lower Monday on disappointing job growth in March. US markets were closed Friday, giving investors a long weekend to brood over the disappointing report.