CRUDE OIL AND METALS REVIEW

Greek bonds advanced for the first time in 2 weeks amid speculations that the debt-stricken country will get an international bailout. Market sentiment improved with the euro recovering and USD and JPY falling. Commodity prices also rebounded. On the other side of the Atlantic, US' retail sales data were strong enough to keep investors bullish in the near-term.

WTI crude oil price rallied to 86 in European session (intra-day high: 86.37). The contract dropped over the past 2 days as Greece's woe and oil inventory increased more than anticipated.

Yields on 2-year Greek notes slipped -18 bps after surging over +200 bps in the past 3 weeks as European Commission spokeswoman Amelia Torres said members are 'ready to act' to put in place the financial assistance for Greece. Moreover, Greece planned to announce today the amount of an April 13 auction of Treasury bills. Comments from ECB President Trichet and billionaire investors Soros increased optimism.

At an interview today, Trichet reiterated his stance that a default on Greece 'is not an issue. Regarding the use of the EU-IMF package, the President said 'at this moment in time I don't expect this mechanism to be necessary'.

Soros also said in an interview that Greece 'should not default and there is a solution...There is a need to understand that when there is a rescue effort, which Europe is now putting together, it has got to be at a concession rate of interest, not at the market rate, because the market rate reflects only uncertainties and doubts about the political will to have a rescue'.

In the US, sales at 31 chains soared +9% in March, though maybe followed by a -3% drop in the coming month, according to the International Council of Shopping Center. Easter holiday, mild weather condition and low base in 2009 were key factors boosting sales.

Gold price resumed strength as the dollar weakened. The benchmark contract surged to as high as 1159 earlier today.

SILVER:

Despite edging higher to 18.26, silver's upside moment remains unconvincing with 4 hours MACD staying below signal line. We'd stay intraday neutral and expect some retreat o 4 hours 55 EMA (now at 17.70) sooner or later. Nevertheless, another rally would still be expected as long as 16.55 support holds. Above 18.26 will target a retest of 18.925/19.50 resistance zone next.

In the bigger picture, as silver is still trading well above medium term rising trend line, rally from 8.4 might not be over yet. Fall from 19.50 might be just a correction that's completed with three waves down to 14.65. Another high above 19.50 could be seen. Nevertheless, there is no change in the broader view that medium term rise from 8.4 is merely part of the whole consolidation pattern that started at 21.44 (2008 high). Hence, even in case of a new high above 19.50, we'd continue to look for reversal signal as silver enters into 19.55/21.44 resistance zone. On the downside, break of 16.55 support, though, will revive the bearish case that silver has already topped out and will turn focus back to medium term trend line support instead.

GOLD:
Gold's rally is still in progress and reaches as high as 1159 so far. Intraday bias remains on the upside and gold should be targeting 1163 resistance next. Break will bring retest of 1227.5 high. On the downside, below 1144.0 minor support will suggest that a temporary top is formed and bring retreat because staging another rally.

In the bigger picture, price actions from 1227.5 are treated as correction to rise from 931.3 only, no doubt. The lack of impulsive structure of rise from 1044.5 argues it's possibly part of consolidation from 1227.5, rather than resumption of the long term up trend. Above 1145.8 will bring retest of 1227.5 high but upside will likely be limited there and bring at least one more fall before the consolidation concludes. On the downside, below 1084.8 support will shift favors to the case that correction from 1227.5 is developing into a three wave move with another low below 1044.5.

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INDIAN STOCK MARKET THE WEEK AHEAD

The market is entering an important period of quarterly earnings, with IT bellwether Infosys kickstarting the reporting season on Tuesday, 13 April 2010. The Q4 March 2010 results and management commentary on outlook could result in revision in earnings estimates of individual firms from analysts for the year ending March 2011 (FY 2011). The market sentiment remains firm due to sustained buying by foreign funds.

The key economic data on tap is industrial production for February 2010 on Monday, 12 April 2010, to be followed by inflation for March 2010 on Wednesday, 14 April 2010. The stock market has already priced in a rate hike of at least 25 basis points in April 2010. However, a substantially stronger-than-expected industrial production data and higher-than-expected rise in inflation may fuel expectations for a 50-basis-point hike in policy rates when the central bank reviews policy on 20 April 2010.

Industrial production is seen rising 16% in February 2010 from a year earlier, a tad lower than an annual rise of 16.7% in January 2010. The headline inflation for March 2010 is expected at above 10%, topping February's 9.89% rise. The Reserve Bank of India, citing inflationary pressures and an improving economy, hiked key rates by 25 basis points last month.

Foreign institutional investors (FIIs) continue to mop up Indian stocks. As per data from the stock exchanges, FIIs bought equities worth a net Rs 1535.15 crore in the first few days this month on the top of a heavy inflow of Rs 14792.32 crore last month.

Funds investing in emerging-market stocks attracted the highest inflows in six months in the week ended 7 April 2010, garnering $3.27 billion, according to EPFR Global. All four big fund groups in this category took in fresh cash, with Asia ex-Japan funds helped by gains to China equity funds which had their best week since late January 2010. China equity funds drew $190 million.

Coming back to fourth quarter results, automobile firms are seen reporting strong Q4 March 2010 results on a healthy volume growth. However, the sector is witnessing a headwind of rising input costs. Recently, Maruti Suzuki raised car prices due to a surge in input costs and shift to new emission norms from 1 April 2010. M&M, too, hiked utility vehicles prices recently.

The Society of Indian Automobile Manufacturers (Siam) expects vehicle sales in India to grow 10-15% in the fiscal year to March 2011 (FY 2011). A total of 12.3 million vehicles were sold in the country in the year ended March 2010 in FY 2010, up 26.4%, Siam data showed.

An abnormally high loan growth at the fag end of March 2010 may underpin Q4 March 2010 earnings from the banking sector. However, huge treasury gains in Q4 March 2009 could negatively impact bottom line growth due to a base effect.

As far as Q4 results of the cement sector is concerned, a positive impact of higher cement prices may be partially negated by higher power and fuel costs arising from increase in prices of domestic and imported coal, higher incidence of excise as the government increased excise duties in the Union Budget 2010-11 and higher freight cost as prices of diesel increased post budget.

Steel firms are seen reporting strong Q4 results on the back of a sharp increase in realizations and low base effect as volumes in Q4 March 2009 were hit by the global economic slowdown. Volumes at Tata Steel and JSW Energy will get additional boost from expansion in capacity.

Non-ferrous metal manufacturers, too, are seen reporting strong Q4 results due to low base effect and substantially higher realizations. However, increase in input costs could weigh on bottom line growth on a sequential basis.

Improving macro-economic environment and buoyancy in advertisement spends is expected to drive earnings growth for the media sector. Telecom, FMCG and automobiles continue to lead spending on advertisement.

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CRUDE OIL AND METALS REVIEW

Crude oil rallies to a 17-month high of 84.7 in NY session as economic data show that the world economy is recovering. The front-month WTI contract extends gains on the first day of the second quarter after surging +5.5% in 1Q10.

PMIs in China, India and Europe beat market expectations. In China, manufacturing PMI advanced to a seasonally adjusted 55.1 in March from 52 a month ago. The stronger-than-expected reading indicates the manufacturing sector in the world's third economy continues expansion. In India, PMI fell to 57.8 from 58.5 in February. However, a reading above 50 indicates expansions and the index suggests India's manufacturing activities have been growing for 12 months.

In the 16-nation Eurozone, similar reading improved to 56.6 in March from 54.2 in February. The market had anticipated an increase to 56.3.

The market focus today is US' ISM manufacturing index which probably expanded to 57 in March from 56.5 in the prior month.

Gold price advances in tandem with energies. The benchmark contract surged for a second day to 1125. Other members in the precious metal complex rise more strongly as they have more applications in industrial activities.

Silver jumps +1.85% to 17.86. For PGMS, platinum soars +1.28% to 1667.9 while palladium rallies +2.82% to 493.5.

The chart below shows that gold is mainly used in jewelry and for investment. Industrial application only takes up around 10%. On the contrary, industrial use represents over 70% in silver while investment only takes up around 5%.

In PGM, industrial applications, mainly as autocatalytic converters, take up over 50% in both platinum and palladium. Shares in investment demand were only single digit although this should increase this year

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INDIAN STOCK MARKET THE WEEK THAT WAS

The key benchmark indices edged higher in a truncated week helped by sustained buying by the foreign investors and strong global markets. The stock market remains closed on Friday, 2 April 2010, on account of Good Friday. Foreign institutional investors (FIIs) made a beeline for Indian equities, helping stocks register strong gains. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 14,792.31 crore in March 2010. Finance secretary Ashok Chawla said on 23 March 2010, that foreign capital flows into India are currently not posing any concern.

The domestic bourses scaled two-year closing high on 29 March 2010. The market gained in two out of the four trading sessions in the week.

Encouraging Q4 March 2010 advance tax figures of top Indian firms, indicating good Q4 March 2010 results also boosted Indian equities. The market also witnessed a strong post-Budget rally driven by sustained buying by foreign funds since the presentation of the Union Budget 2010-2011 on 26 February 2010. Global credit rating agency Standard & Poor's recently revised the outlook on India to stable from negative due to improved government finances.

In February 2009, the rating agency had cut the outlook on India's credit rating from stable to negative, amid concerns of rising fiscal deficit. Two other rating agencies, Moody's and Fitch, already have a stable rating on India. S&P has pegged India's projected economic growth rate at 8% for the year ending March 2011.

The BSE Sensex rose 47.86 points or 0.27% to 17,692.62 in the week ended Thursday, 1 April 2010. The Sensex rose 62.96 points or 0.36% in the quarter ended March 2010, gaining for the fifth quarter in a row. The barometer index vaulted 7,819.27 points or 80.5% in the year ended March 2010 (FY 2010).

The S&P CNX Nifty gained 8.50 points, or 0.16% to 5290.50 in the week.

The BSE Mid-Cap index rose 1.52% and the BSE Small-Cap index gained 3,28% in th week. Both these indices outperformed Sensex.

Food price index rose 16.35% in the year to 20 March 2010, higher than an annual rise of 16.22% in the previous week, government data showed on Thursday. The fuel price index rose 12.75%, higher than an annual rise of 12.68% in the previous week. Fuel costs have risen following a hike in domestic fuel prices and an upswing in world crude prices. The primary articles index was up 13.86% in the year to 20 March 2010.

The manufacturing growth slowed down in March 2010, dropping from a 20-month-record in February 2010, as mounting cost pressures took a toll on expansion in output, a survey released on 1 April 2010 showed. The HSBC Markit Purchasing Managers' Index , based on a survey of 500 companies, fell to 57.8 in March 2010 from 58.5 in February 2010, which was the strongest since June 2008. A reading above 50 means activity is expanding. The new orders index fell to 62.7 in March from 64 in February

Industrial output in February is expected to have grown 16% year-on-year, Industry Secretary said on Wednesday. The output in January grew an annual 16.7%.

Foreign direct investment rose 15.4% to $1.72 billion in February 2010 over February 2009, government said Wednesday.

Exports in February grew 34.8% on year to $16.09 billion, Trade Minister Anand Sharma said on Wednesday. Exports are expected to grow 15-20% in the year that starts on 1 April 2010, Sharma said. Imports, too, maintained momentum growing by 66% to $25 billion underscoring the strong revival in the domestic economy.

The government will sell 63% of its bond issuance for the new fiscal year in the first half, slightly less than expected, giving a near-term respite to satiated bondholders and helping send yields sharply lower. The government on Monday said it will sell Rs 2.87 lakh crore ($64 billion) of bonds in the first half of 2010/11, which starts on 1 April 2010. The bulk of the government's first-half borrowing, or Rs 2 lakh crore, will be in the 10-year and longer segment.

The key benchmark indices closed at their highest level in more than two years on Monday, 29 March 2010, supported by strong global markets. Stocks rose for the fourth day in a row. The BSE 30-share Sensex rose 66.59 points or 0.38% to 17,711.35, its highest closing since 28 February 2008. The S&P CNX Nifty rose 20.85 points or 0.39% to 5302.85, its highest closing since 15 February 2008.

The key benchmarks edged lower on Tuesday, 30 March 2010 as profit taking emerged after the market scaled two-year high on Monday, 29 March 2010. The BSE 30-share Sensex fell 121.18 points or 0.68% to 17,590.17 on Tuesday.

The key benchmark indices edged lower on the last day of the financial year 2010, extending losses for the second straight day as Asian stocks and US index futures fell. The BSE 30-share Sensex fell 62.40 points or 0.35% to 17,527.77 on Wednesday, 31 March 2010.

The key benchmark indices surged on the first day of the new financial year on Thursday, 1 April 2010, snapping a two-day slide, on broad-based buying. Asian, European stocks and US index futures rose. The BSE 30-share Sensex rose 164.85 points or 0.94% to 17,692.62

Index heavyweight Reliance Industries (RIL) fell 0.48% on profit taking after recent strong gains. The stock was volatile. As per the market buzz, RIL's Q4 advance tax surged to Rs 770 crore in Q4 March 2010 from Rs 365 crore a year ago. Reliance Industries on 14 March 2010 announced a sports and entertainment joint venture with IMG Worldwide, a global leader in sports marketing and management. The equal venture, IMG Reliance, will set up modern infrastructure and coaching facilities for sports and create and operate sports and entertainment assets including celebrity management.

Most auto stocks fell on profit taking after recent gains. India's largest tractor maker by sales Mahindra & Mahindra (M&M) fell 0.93%. The company's total vehicle sales rose 20% to 31698 units in March 2010 over March 2009. The sales figures were released during market hours on 1 April 2010.

India's largest car maker by sales Maruti Suzuki India declined 0.39%. The company on 1 April 2010 said total sales rose 11% to 95,123 units in March 2010 over March 2009. The company's total sales rose 29% to 10.18 lakh vehicles in the year ended March 2010 over the year ended March 2009.

India's largest bike maker by sales Hero Honda Motors fell 2.9%. But, India's largest commercial vehicle maker by sales Tata Motors shot up 3.5%

India's largest mobile services provider by sales Bharti Airtel slumped 2.57%. Bharti cinched a deal on Tuesday to buy most of the African operations of Kuwait's Zain for $9 billion, making it the No.2 cellular company on the African continent and setting India's biggest carrier a tough financial and management challenge. The two companies, which entered exclusive talks in mid-February, signed a legally binding definitive agreement in Amsterdam, where Zain's Africa subsidiary is based

India's largest mortgage lender, Housing Development Finance Corporation (HDFC) rose 6.57%. As per recent reports the company plans to rejig its investments in unlisted companies to capture their value. It will transfer shares of select securities to a special purpose vehicle (SPV) and bring in strategic investors in the SPV. HDFC has investments in companies such as Lafarge, Chalet Hotels, IL&FS, IL&FS Education, National Stock Exchange (NSE), L&T Urban Infrastructure and Maruti Countrywide, which it does not consider as strategic to its business.

India's largest engineering and construction firm by sales, L&T, rose 0.87%. The company announced on Wednesday it bagged orders worth Rs 1017 crore. The company said on Tuesday it bagged orders worth Rs 1126 crore for metallurgical, material handling & water sector projects.

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OPENING SESSION OF INDIAN STOCK MARKET

DLF is reportedly looking to launch two housing projects in Mumbai at a price range of between Rs 15,000 and Rs 25,000 per square feet, as it expects the residential segment in the region to outpace the retail and commercial markets.
Media baron Kalanithi Maran has reportedly hiked his bid for a 51% stake in budget carrier SpiceJet by 14% to Rs 800 crore from Rs 700 crore. An entity belonging to the Anil Dhirubhai Ambani Group is also reported to be carrying out due diligence at present and Religare Enterprises is also keen on investing.

Cement prices are reportedly likely to increase by up to Rs 7 on Thursday, 1 April 2010, the third successive rise this year by companies looking to undo the rise in input costs.

State-run NMDC reportedly plans an increase in iron ore prices for both domestic and export markets by 70%.

Omaxe reportedly plans to raise Rs 800 crore through qualified institutional placement in 2010-11 to part-pay debt and infuse funds into ongoing projects.

3i Infotech has opened a share sale to institutional investors on Tuesday, 30 March 2010, to raise up to Rs 182 crore, it said in a BSE filing. The firm has set a floor price for the share sale at Rs 78.60 per share as per the rules, it said.

Max India's board has approved allotting about 4% stake of Max New York Life Insurance Co to Axis Bank. Max New York Life Insurance Co is a joint venture between Max India and New York Life International LLC. The tie-up, which will last for 10 years, will allow Axis Bank to distribute Max India Life's insurance products across the country from 1 May 2010, the firm said in a statement to the exchange.

Walchandnagar Industries proposes to form a joint venture with DCNS of France for manufacturing mechanical components for submarine and other naval applications. A Memorandum of Understanding to this effect has been signed and the details of the intended joint venture are being worked out, it said in a statement.

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CRUDE OIL REVIEW

Crude oil strengthens to 81 in European session as the dollar weakens and market sentiment improves after European leaders have agreed on a plan to help Greece. Moreover, speculations for growth in emerging market demand also boost oil prices. A survey shows that OPEC will increase shipments, by +1.7%, in the month ending April 10 because demand from Asia is resilient.

Despite strong Asian consumption, the overall oil fundamentals remain weak. US, the world's largest oil consumer, reported huge increase in crude inventory. Although fuel demand rose modestly, it stayed below last years' level.

In March, front-month crude oil price has been trading within a new range of around 80 and 84. While volatility will be strong, it's not likely that price will break below the upper range unless the market sees sustainable recovery in US oil demand.

Natural gas storage surprisingly increased +11 bcf to 1626 bcf in the week ended March 19, +8% above 5-year average. The front-month contract for natural gas broke below 4 dollar to close at 3.981 Thursday. Price remains weak today. According to the US Energy Department, 'moderate demand' and 'strong domestic production' were reasons for recent price decline.

Precious metals are firm on Friday as the dollar retreats against the euro and other currencies. Gold soars for the second day and is currently trading at 1097. Price continues hovering below 1110. Silver rises to 16.8 and 16.5 seems to be a temporary support for price.

In PGMs, palladium rallies to 458.3, up +1.2%, in European session. Although price has dropped in tandem with others in the complex, palladium managed to close above 450. This suggests underlying strength in the metal. Platinum slides after rising +1.15% yesterday.

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FOREX REPORT 25TH MARCH

Dollar remains broadly firm today and breaches 1.33 level against Euro while dollar yen continues to press 92.14 resistance. Fed's Vice Chairman Kohn said that he's confident that Fed "can and will tighten policy well in advance of any threat to price stability" while he also expects a "gradual recovery" for the U.S. economy following fourth- quarter growth "importantly driven by inventory corrections." Nevertheless, San Francisco Fed Yellen, who might take the Vice Chairman Role after Kohn retires in June, said it's not time to tightening monetary policy yet. Yellen believes the current accommodative policy is appropriate as "the economy is operating well below its potential and inflation is subdued." Fed Chairman Bernanke is scheduled to testify before the House Financial Services Committee today in Washington on the strategy for withdrawing stimulus and will receive much focus from the markets.

Euro remains under tremendous pressure on concern of fiscal health in PIIGS countries ahead of two days EU summit today and hit new record low against Aussie. Investors remain deeply concerned of the development in Greece situation as well as in other countries in particular after yesterday's Portugal downgrade. German Chancellor Merkel has ruled out earlier this week a decision on the financial package for Greece in the EU summit and pushed for IMF to take central role in the rescue. Any comments from EU will trigger further volatility in the common currency.

Australia dollar get a lift in Asia by hawkish comments from RBA Assistant Governor Lowe. Lowe who said that rates are set to continue rising toward more normal levels as he predicted a terms of trade boom.He also expects Australian dollar to be higher than the average of the past decade. The semi annual financial stability review also said that Australian households and businesses are well placed to pay for higher interest rates. While Aussie is so far resilient against dollar, note that AUD/USD has broken a near term trend support and is possibly vulnerable to deeper fall. But after all, we'd expect cross buying to limit downside in AUD/USD.

Looking ahead, any development in EU Summit today would rock the markets. Focus will also be on Bernanke's testimony. Data to be watched include Eurozone M3 money supply, UK retail sales and US jobless claims.

Dollar index's rally extends further as expected as reaches as high as 82.06 so far today. Intraday bias remains on the upside and the medium term rise from 74.19 is expected to continue to 61.8% projection of 76.60 to 81.34 from 79.51 at 82.43 next. Below 81.56 will turn intraday bias neutral and bring consolidations but downside should be contained above 80.55 support and bring rally resumption.

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METALS AND CRUDE OIL REPORT

Commodities regain grounds Thursday but upsides are likely limited as near-term outlook in the dollar remains strong and the result of the EU summit is uncertain. Crude oil price recovers to 80.97 in European session after sliding to 80.2. Natural gas changes little these few days and price has been hovering above 4 dollar. The market awaits the EIA's report on last week's gas storage change. The euro recovers as the ECB announced to keep the emergency collateral rules into 2011.

Gold price rebounds to 1094 but stays below both 50-day and 100-day average. Buying seems to have improved today but volume remains thin. Investors are expecting price to correct more.

The CFTC is considering regulating trading in precious metals and industrial metals after proposing limits to the energy market. Regulators hope position limits will expel speculators from the futures markets. However, the CME opposed the plan as it deemed it as not necessary and not useful. According to Tom LaSala, CME Managing Director, 'any effort to constrain trading on a U.S. exchange by the major firms that are large enough to hold positions near limits will simply push those firms from regulated and transparent market into the cash market or to a market beyond the regulatory jurisdiction of the CFTC'.

The weekly ECB statement showed that asset value of gold and gold receivables increased +1M euro in the week ended March 19, reflecting purchase of gold coin by one Eurosystem central bank. If the official sector turns into a net gold buyer from a net seller this year, it would strongly lift the sentiment and attract further funds flowing into the yellow metal.

In Asia, Bombay Bullion Association (BBA) said that India, the world's largest gold buyer, may import 23-28 metric tons of gold, compared with 4.8 tons in 2009. This indicates recovery in the country's gold demand. However, overall demand/supply outlook is not going to deviate significantly from last year. Gold's movement will hinge on the dollar's direction as well as investment flows.

Some updates on the Greek issue. German Chancellor Angela Merkel said she would recommend at the EU summit that a combination of IMF bilateral EU aid is offered to Greece as a measure of 'last resort'.

On the other hand, the ECB President Trichet announced to keep the emergency collateral rules into 2011. Under the current rule, the minimum credit threshold in the collateral framework has been lowered to investment grade level (BBB-). This is a kind of the ECB's contributing to the Greek crisis and indicates that policymakers have softened stance. In previous ECB meetings, Trichet had stressed that the central bank should not grant 'special treatment' to Greece and the ECB would not change its collateral rules for Greece.

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TECHNICAL OUTLOOK FOR METALS AND CRUDE OIL

GOLD
Gold recovers further to 1116 so far and is now pressing 4 hours 55 EMA. But still, another fall cannot ruled out with 1119.5 resistance intact. Nevertheless, note that as long as 1088.4 support holds, rise from 1044.5 is still expected to continue. Above 1119.5 minor resistance will flip intraday back to the upside for retesting 1145.8. Break will target 1163 resistance next. However, sustained break of 1088.5 will indicate that whole rise from 1044.5 is completed and will turn outlook bearish for another fall towards this low.

In the bigger picture, price actions from 1227.5 are treated as correction to rise from 931.3 only and might have completed at 1044.5 already after being supported by 61.8% retracement of 931.3 to 1227.5 at 1044.4. Strong break of 1163 resistance will further affirm this case. On rally resumption, next medium term target will be 100% projection of 931.3 to 1227.5 from 1044.5 at 1340.7. On the downside, break of 1088.5 support will in turn argue that correction from 1227.5 would extend further before completion

SILVER
No change in silver's outlook as it's bounded in tight range below 1.7665. Intraday bias remains neutral and another fall could be seen to trend line support (now at 16.42) as correction from 17.665 continues. Note that rise from 14.65 is still expected to continue as long as 15.61 support holds. Above 17.665 will target 161.8% projection of 14.65 to 16.56 from 15.61 at 18.708. However, note that firm break of 15.61 support will indicate that rise from 14.65 has completed. The three wave structure will revive that case that recent fall from 19.50 is still in progress for another low below 14.65.

In the bigger picture, as silver is still trading well above medium term rising trend line, rally from 8.4 might not be over yet. Fall from 19.50 might be just a correction that's completed with three waves down to 14.65. Hence, above high above 19.50 could be seen. Nevertheless, there is no change in the broader view that medium term rise from 8.4 is merely part of the whole consolidation pattern that started at 21.44 (2008 high). Hence, even in case of a new high above 19.50, we'd continue to look for reversal signal as silver enters into 19.55/21.44 resistance zone. On the downside, break of 15.61 support though, will revive the bearish case that silver has already topped out and will turn focus back to medium term trend line support instead.

CRUDE OIL
Crude oil's break of 80.61 support indicates that a short term top is already formed at 83.16 on bearish divergence condition in 4 hours MACD. Deeper decline should be seen to 38.2% retracement of 69.50 to 83.16 at 77.94 next and break will target 6.18% retracement at 74.72. On the upside, in case of recovery, break of 83.16 is needed to confirm rally resumption. Otherwise, we'd expect another fall as correction from 83.16 extends.

In the bigger picture, crude oil is still trading well inside medium term rising channel and the rise from 33.2 might still be in progress. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish.

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REPORT ON METALS

Precious metals remain firm in European session as USD weakens and interest rates should stay low in advanced economies for some more time. Benchmark contracts for gold and silver rise for the third consecutive day, the longest winning streak in a month, to 1133 and 17.55, respectively.

The Fed's statement sent the market a signal that interest rates will stay low in the medium-term. The 10-year Treasury yield fell to 3.64%, the lowest level in a week. Lower bond yield benefits gold and it reduces the opportunity cost to invest in the yellow metal. In Japan, the BOJ voted unanimously to keep the unsecured overnight rate at near 0.1% and decided at the split 5:2-vote to double the size of the funding operations, launched last December, to 20 trillion yen. While market reaction was not too vigorous, the reinforced low-rate environment supports gold.

Platinum stays steadily in the uptrend and current price at 1639 is the highest level since January 20, while palladium extends gains to 478, just a few dollars below the decade-high. Further price hikes are likely given strong fundamentals and robust investment demands. In the fundamentals news, Eskom, the state-owned power and utility company in South Africa, said that power supply could become a major concern from 2011. Power shortage issue will be worsened by the World Cup which begins in June. South Africa is responsible for around 80% of platinum production and 35% of palladium production in the world. Supply constraints should exacerbate the PGM market which is expected to tighten as demand from automakers rebounds.

Crude oil advances to 82.5 with OPEC's decision to keep production quotas unchanged priced in. Oil ministers seemed to be satisfied with current price level. Ali al-Naimi, Saudi Arabia's oil minister, said that the market is having 'good demand, reliable supply and beautiful prices'. Other member countries including Iran and Venezuela also believed there's no need to adjust output.

The dollar's weakness is broadly based except against the yen. What's eye-catching today is the GDPUSD which rallies to 1.538, the highest level in a month, after stunning employment data. Claimant count surprisingly dropped -32.3K in February, translating into a lower rate of 4.9%. The market had anticipated the Claimant rate to stay flat at 5%. The 3-month average ILO unemployment rate was flat in January, compared with forecast of a rise to 7.9%.

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FOREX WEEKLY OUTLOOK AND REVIEW

Risk appetite was given a boost last week on generally positive economic data, which in turn translated in to broad based reversal in the Japanese yen. DOW managed to extend recent rally to close at 10566.2, 213 pts up. Nasdaq even managed to rose to new high of 2327 before closing at 2326. Commodity currencies were impressively strong with Canadian dollar and Australian dollar broadly up against other major currencies. Crude oil rode on strength in stocks and climbed to as high as 82.07 before closing at 81.50. Dollar was mixed and remained in range against Euro even though it did rebound strongly against the Japanese yen. Current development suggested that more upside would be seen in stocks and commodities, which might give some pressure to the greenback and yen in near term.

Highlighting economic data released from US last week, Non-farm payroll showed less than expected contraction of -36k in February. More importantly, unemployment rate was unchanged at 9.7% versus consensus of 9.8%. Initial jobless claims dropped to 469k. Factory orders rose 1.7% in January. ISM non-manufacturing index rose to 53 in February but ISM manufacturing index dropped to 56.5. Pending home sales dropped -7.6% mom in January. Personal spending rose more than expected by 0.5% in January but income growth missed expectation.

ECB left the main refinancing rate unchanged at 1% while fine-tuning the funding operation frameworks. The ECB staff's forecast on 2011 GDP was modestly revised upward. Focus of the press conference was on the gradual phasing-out of our non-standard operational measures. ECB announced LTROs will return to variable rate starting April 28, 2010. 'Allotment amounts in these operations will be set with the aim of ensuring smooth conditions in money markets and avoiding any significant spreads between bid rates and the prevailing MRO rate'. Moreover, the 6-month LTRO to be allotted on 31 March 2010 will be fixed at the average minimum bid rate of the MROs over the life of this operation - same case as the 12-month LTRO of December 16, 2009. The return to variable rate was as what we expected. Greece announced a EUR 4.8b austerity plan last week. The measures are split with EUR 2.4b in new revenues from tax hike and EUR 2.4b in spending cuts. After all, Euro was bounded in range against dollar and underperform commodity currencies in last week's trading.

Bank of England left rates unchanged at historical low of 0.5% today. The GBP 200b asset purchase program was also on hold for a second month. No detail was revealed in today's short statement and markets will look forward to the minutes to be published on March 17 instead. UK nationwide consumer confidence hit a two year high of 80 in February, much better than expectation a fall to 71. PMI services rose strongly to a two year high of 58.4 in February. Sterling was also under much pressure on speculation more quantitative easing from BoE down the road, as well as political uncertainty in UK. Investors worried that inconclusive result in this year's general election, would result in a hung government which would not be able to implement measures needed to cut UK debt, nor revive the economy.

Japanese yen was sharply lower on improved risk appetite. There were additional pressure from speculation that BoJ might discuss more monetary easing measures in the coming meeting on March 15, which aims at lowering short term interest rates. Also, LIBOR for three month yen loans dropped below dollar for the first time since August, which made yen the most attractively priced currency for carry trades than dollar.

Commodity currencies were generally strong as boosted by risk appetite. Canadian dollar received additional support from stronger than expected GDP growth of 0.6% mom in December as well as an upbeat BoC statement. Bank of Canada left rates unchanged at 0.25% as widely expected and reiterated the conditional commitment to be on hold until end of Q2. Nevertheless, the bank did acknowledged that "level of economic activity in Canada has been slightly higher than the Bank had projected" in the latest MPR. Also core inflation "has been slightly firmer than projected" too.

RBA restarted the tightening cycle today by raising key interest rate by 25bps to 4.00%. In the accompanying statement, Governor Stevens said that the decision was a "further step" in the process of bringing interest rate "closer to average". The bank expects growth to be "close to trend" and inflation "close to target" over the coming year. Retail sales released today show stronger than expected growth by 1.2% mom in January.

Looking at the charts, DOW extended the rebound from 9835.09 and closed strongly at 10566.20. The development kept the medium term rising channel intact and indicates that whole rally from last year's low of 6469.9 is still in force. Rise from 9835.09 could be the fifth wave of the rally and would likely make a new high above 10729.89 before topping in medium term.

Crude oil also extended to rebound from 69.50 and closed strongly at 81.50 last week. The development also kept the medium term rising channel intact and argues that another high above 83.95 would be seen before topping.

Dollar index continued to stay in established range below 81.34 high last week as consolidations continued. Such sideway trading might extend for a while as the greenback would remain mixed, with strength against yen, weakness against commodity currencies and steadiness against Europeans. We'd expect downside of the consolidation to be contained by 79.56 cluster support (38.2% retracement of 76.60 to 81.34 at 79.52) and finally bring rally resumption to next cluster region at 82.35/83.72 (161.8% projection of 71.49 to 78.45 from 76.60 at 82.35, 61.8% retracement of 89.62 to 74.19 at 83.72).
The Week Ahead

Commodity currencies would probably remain the center of focus this week as stocks could strengthen further. As mentioned during the week, New Zealand dollar was the relatively weak commodity currency and is the last one to consider for risk appetite trades. Market's focus will be on whether this week's RBNZ rate decision as well as retail sales data would change such outlook.

Outlook for Canadian dollar is a bit tricky. The technical picture in AUD/CAD does suggest more upside in Canadian dollar. However, we're slightly preferring 1.0205 to hold in USD/CAD while AUD/USD is expected to make a new high. So, at least one of these expectations is wrong. The key would probably lie in this week's job reports from Australia and Canada. We'd likely know whether AUD or CAD would be the strongest commodity going forward.

Monday: Swiss unemployment, retail sales; Canadian housing starts
Tuesday: UK RICS house price balance, trade balance; Swiss CPI
Wednesday: UK industrial and manufacturing production; US wholesale inventories; RBNZ rate decision
Thursday: Japan GDP final; Australian job report; SNB rate decision; Canada trade balance; US trade balance; New Zealand retails sales
Friday: Canadian job report; US retail sales, U of Michigan consumer sentiment

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GOLD AND SILVER TECHNICAL REPORT

Gold
Gold is still moving mildly downwards after the breakout below the uptrend which controlled the movements from 1044.00 as we discussed in the morning report. We still believe that areas of 1114.00 might be retested before resuming the downside move for the rest of the day, supported by our captured bearish harmonic formation 'AB=CD'.

The trading range for today is among the key support at 1075.00 and key resistance now at 1137.00.

The general trend is to the upside as far as 865.00 remains intact with targets at 1249.00.

Support: 1102.00, 1098.00, 1095.00, 1092.00, 1088.00
Resistance: 1111.00, 1114.00, 1117.00, 1122.00, 1125.00
Recommendation: Based on the charts and explanations above our opinion is, selling gold from 1114.00 targeting 1095.00 and stop loss above 1128.00 might be appropriate

Silver
Silver is presently trading around 16.95 zones, where we believe that the negative pressure of the bearish harmonic AB=CD pattern might continue, supported by the negative candlesticks formation that we discussed this morning. Therefore, we hold on our expectations for the rest of the day.

The trading range for today is among the key support at 16.25 and key resistance now at 17.60.

The general trend is to the upside as far as 12.45 remains intact with targets at 20.15.

Support: 16.85, 16.77, 16.72, 16.65, 16.55
Resistance: 17.00, 17.05, 17.18, 17.25, 17.35
Recommendation: Our morning expectations remain valid

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CRUDE OIL AND GOLD REPORT

Crude oil price recovers after falling to 81.5 earlier in Asia. The benchmark contract rises to 82.2 in European morning despite lack of upbeat data. The OPEC revised slightly upward its forecasts on global oil demand. While supplies for OPEC NGLs and non-conventional oils were revised down, 'call on OPEC' will probably be modestly higher.

In its March report, the OPEC said that global oil demand will increase +0.9% y/y to 85.2M bpd in 2010, compared with previous forecast of 85.12M bpd. The main driving force is rapid growth in emerging markets. The organization revised up economic growth in China to +9.3% while that for the US was down to +2.4%.

The International Energy Agency will release its monthly report tomorrow but we do not expect much change from previous forecasts.

Precious metals remain under pressure as USD slides against major currencies. While gold has been dropping for 4 consecutive days, we believe downside will be contained around 1100 as increase physical demand will provide support. While China pledged to stay cautions towards investing in gold, central banks under the euro-systems remain confident in the metal. The latest ECB statement indicates gold holdings remain unchanged in the week ended March 5. Since the 3rd CBGA has been announced, gold sales among European central banks have been less than 2 metric tons, compared with the annual quota of 400 metric tons, so far.

Concerning the stock market, Asian equities demonstrated resilience while European stocks are mixed. The MSCI Asian Pacific Index added +0.3% with benchmark indices in most countries edged higher. In Japan, the Nikkei 225 Stock Average gained almost +1% to a 2-month high at 10664.95 amid growth speculations. China and Hong Kong Indices managed to close flat despite worries over tightening in China. Strength in stock market helps support oil prices.

In Europe, stocks fluctuate between gains and losses as Greece is paralyzed by strikes and demonstrations. Greek citizens protest against the government's austerity measures to reduce budget deficits.

The market focus has turned to Switzerland as the SNB will announce its monetary stance. The central bank will likely leave the 3-month LIBOR range unchanged at 0-0.75%, targeting to keep the rate at 0.25%. Since the previous meeting in December, economic developments, both domestically and overseas, have been positive and modestly exceeded SNB's estimates. We anticipate the central bank will deliver a more hawkish statement in March than previous meetings. It's possible for upgrades in GDP and inflation outlooks, too.

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INDIAN STOCK MARKET END SESSION

The key benchmark indices eked out small gains mimicking mild gains in global stocks. US index futures were flat. The BSE 30-share Sensex rose 45.79 points or 0.27%, off close to 70 points from the day's high and up 64.24 from the day's low. The market breadth was weak after a strong start. Auto stocks edged higher on fresh buying. Banking shares were mixed. Telecom pivotals saw divergent trend. IT stocks declined on profit taking after recent gains triggered by upbeat US jobs data.

India VIX, a volatility index based on the S&P CNX Nifty index option prices, lost 3.41% to 20.09. The index has witnessed a steep fall in the last few trading sessions after the government tabled the Union Budget for 2010-2011 in the parliament on 26 February 2010. India VIX is a measure of the market's expectation of volatility over the next 30 calendar days. Typically, volatility surges ahead of a major event such as the Budget. It falls after the event.

Index heavyweight Reliance Industries advanced close to 2%, moving past the Rs 1000 mark on reports the firm is close to striking hydrocarbon at its Palar deepwater block in the Cauvery basin. Hero Honda Motors struck a record high to Rs 1940 on BSE in intra-day trade today, 10 March 2010.

The market edged higher in early trade. It surged to hit the day's high in mid-morning trade. The market pared gains in early afternoon trade. The market slipped into the red in afternoon trade. It moved between positive and negative zone near the flat line later.

The follow-on public offer (FPO) of iron ore miner NMDC was subscribed 14% by 16:00 IST on the first day of the issue today, NSE data showed. The government is divesting 8.38% stake in NMDC through the FPO as a part of its aggressive divestment drive to raise funds in a bid to bring fiscal deficit down. The company's FPO will close on Friday, 12 March 2010. The price band has been fixed between Rs 300 and 350.

European markets turned positive, reversing early losses. Key benchmark indices in Germany and France were up by between 0.1% to 0.32%. UK's FTSE 100 index was flat.

Asian stocks fluctuated as shipping lines and oil companies declined, while Australia's largest telephone company rose on speculation it will avoid a breakup. The key benchmark indices in South Korea, Japan, Indonesia, Taiwan and Singapore were up by between 0.08% to 0.80%. However indices in China and Japan declined 0.66% and 0.04% respectively. Hong Kong's Hang Seng index was unchanged.

Chinese stocks snapped a three-day advance amid concerns about policy tightening. China's trade surplus narrowed further to $7.6 billion in February from $14.2 billion in January on surging imports even as the nation's exports continued to rise rapidly, according to reports. February exports jumped 45.7% from the same month of 2009, while imports expanded by 44.7%.

Japan's machinery orders slipped in January 2010 after the biggest jump since 2000, indicating a subdued appetite among the nation's companies to ramp up capital spending even as manufacturing passed its worst. Orders, a signal of business investment in three to six months, dropped 3.7% from December, when they climbed 20.1%, the Cabinet Office said today.

A separate report showed Japan remains plagued by deflation. Producer prices fell 1.5% in February 2010 from a year earlier, the 14th consecutive drop, the central bank said.

US equities ended slightly higher on Tuesday as falling commodity prices pressured materials stocks, offsetting gains in the telecom and industrial sectors. The Dow Jones Industrial Average gained 11.86 points, or 0.11%, to 10,564.38. The Standard & Poor's 500 Index edged up 1.95 points, or 0.17%, to 1,140.45 and the Nasdaq Composite index rose 8.47 points, or 0.36%, to 2,340.68.

Trading in US index futures showed that the US markets could see a flat opening on Wednesday, 10 March 2010. US index futures Futures moved between the positive and negative territory earlier in the day.

Investors will monitor US retail sales for February 2010 and Reuters/University Of Michigan Consumer Sentiment Survey for March 2010, both due on Friday, 12 March 2010, for any hints on the health of the global economy.

Closer home, the government is likely to maintain the distinction between short term and long-term capital gains to encourage long-term savings, as it deliberates the draft direct taxes code (DTC). The finance minister said in his Budget speech that the new direct taxes law could be rolled out from 1 April 2011.

The DTC has proposed to tax capital assets irrespective of the period of holding. The entire capital gains of the assessee is proposed to be added to his income and taxed at the marginal rate.

Currently, any stock market asset held for more 12 months is considered long-term capital assets but for all other assets have to be held for more than 36 months to be considered a long-term asset. Moreover, there is zero capital gains tax on shares held for the long-term while others assets are levied a long-term capital gains tax of 10%.

Meanwhile, Russian Prime Minister Vladimir Putin heads to India Thursday for a visit aimed at tightening the close arms and energy partnerships that Moscow and New Delhi have enjoyed since the Soviet era.

The highlight of the two-day visit is expected to be the signing of several military agreements, including a deal on a Soviet-era aircraft carrier whose troubled history has raised fears over the future strength of relations. Russia supplies 70% of India's military hardware but New Delhi has in recent years also looked towards other military suppliers including Israel and the United States.

Meanwhile, India and China on Tuesday decided to formally back the Copenhagen Accord worked out at the climate summit in December last year. While neither India nor China have said that they would 'associate' with the accord, both countries have agreed to have their names listed in the preamble. The move would come as boost to the accord. With this the four BASIC countries - Brazil, South Africa, Indian and China - which were key players in formulating the accord have agreed to be listed in the chapeau.

On the political front, the Rajya Sabha on Tuesday took a historic and giant step by voting to amend the Constitution, providing one-third reservation of seats in Parliament and State Assemblies for women. The Bill has to be passed by the Lok Sabha and ratified by 50 per cent of the States before it comes into effect.

Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.

The government will announce the industrial output data for the month of January 2010 on Friday, 12 March 2010. Industrial output grew 16.8% in December 2009.

Meanwhile, the fourth and the last installment of advance tax by India Inc due on 15 March 2010 will give a broad indication of fourth quarter earnings.

The government said on Friday it will seek parliamentary approval to spend an extra Rs 31780 crore for the fiscal year to end-March 2010, which it plans to fund through savings.

There is no risk that the government will borrow more than planned to fund supplementary spending, Revenue Secretary Sunil Mitra said on Friday. Of the additional spending, Rs 12000 crore would be spent on oil subsidy, Rs 8000 crore on fertiliser subsidy and Rs 2459 crore on food subsidy, among others.

Prime Minister Manmohan Singh said late last week that the economy would grow by at least 8% in the year through March 2011. Asia's third largest economy would expand 7.2-7.5% in 2009-10, he told parliament. Singh said prospects for the winter-sown crop are 'very encouraging'. He also said the government must pay good prices to farmers to ensure higher farm production. The prime minister said the government will take all practical measures to bring down food prices.

He said the government will continue commitment to pubic and private investment in agriculture. The prime minster said there is need to find ways and means to stabilise the sugar economy.

A good harvest is likely to bring down food inflation, which accelerated to nearly 18% in late February. The government, facing mounting criticism for rising food prices, is struggling to meet conflicting aims of controlling food inflation and trying to please farmers by paying them attractive prices.

Chief Economic Advisor Kaushik Basu on Tuesday, 9 March 2010, said inflation would ease by April 2010, with low fiscal deficit and a good rabi (winter) crop improving food supplies. In a couple of months, the slightly lower fiscal deficit will begin to counter inflation, he added. Speaking on the sidelines of a conference in New Delhi Basu said inflation is likely to average 4% in the current financial year.

The newly elected president of industry body FICCI Rajan Bharti Mittal said on Monday there's no room for hardening of interest rates and the Reserve Bank of India should maintain status quo on the rates to allow the industry to make fresh investments. He added that fresh investment announcement have begun across sectors and further increase in interest rates will only hamper economic growth.

Food prices will be keenly watched in coming weeks for the second and third round impacts of the recent fuel price rise. Market men see a 25 basis points hike in the repo and reverse repo rates each by the RBI at the April 2010 policy review.

Prime Minister Manmohan Singh has ruled out rolling back a price hike in fuel prices despite pressure from his main allies, saying populist policies would hurt the economy in the long-term. Petrol prices rose about 6% and diesel prices by 7.75% after the government increased factory-gate taxes and import duties on the fuels as part of last week's 2010-11 union budget 2010-11, which stressed fiscal prudence to cut a wide deficit

Reserve Bank of India (RBI) Governor D Subbarao on Monday, 8 March 2010, said inflation should moderate in the coming months. He said the central bank will ensure that interest rate levels do not have a negative impact on the competitiveness of the economy. Should India need to manage inflationary expectations, the central bank could turn to its traditional mix of policy tools including use of both liquidity and cash reserve requirements, he said.

Subbarao said the government's plans to reduce the fiscal deficit this year and in 2011 would help to manage inflationary expectations and facilitate demand for private credit. The government's borrowing program is likely to proceed smoothly over the next financial year, he said. The government has set its gross market borrowing target for 2010/11 at a record Rs 4.57 lakh crore, up by 1.3% percent from the previous year, a move that has pushed bond prices lower as investors have anticipated a flood of fresh debt supply.

The heavy borrowing plans of the government, needed to fund the estimated 5.5% fiscal deficit for the year, has had analysts concerned it would make funding costlier and scarcer for industry. Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday said the government will raise more than half of its borrowing for the next year by September 2010, allowing more space for private borrowing as the economic growth picks up steam. Ahluwalia also said the government would have to raise state-set retail fuel prices if crude oil prices continued to rise.

Finance minister Pranab Mukherjee's budgetary proposals late last month offered a progressive cut in fiscal deficit over the next three fiscal years, changed personal tax rates lifting disposable incomes in the hand of individuals and reduced surcharge on corporate tax for domestic companies to 7.5% from 10%.

The Finance Minister in his budget speech on Friday, 26 February 2010 said the government aims to introduce the Goods and Services Tax (GST) and implement the direct tax code from 1 April 2011.

The fiscal deficit is pegged at 5.5% of GDP for 2010-2011, lower than an estimated 6.8% for the current fiscal year. The finance minister said the government also aimed to reduce the deficit further to 4.8% of GDP in the year starting 1 April 2011, and to 4.1% in the year from 1 April 2012. He said there is a need to review stimulus and move towards fiscal consolidation and review public spending.

A thrust on the infrastructure sector augurs well from a long-term growth perspective. The Finance Minister has provided Rs 1.73 lakh crore for infrastructure development in 2010-2011, which accounts for over 46% of the total plan expenditure for the year.

The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.

Finance Minister Pranab Mukherjee on Wednesday, 3 March 2010 said India's economic recovery is still being driven by public spending and is not yet broad-based, further clouding the debate on the timing of rate hikes by the central bank.

Foreign funds bought shares worth Rs 2173.09 crore and domestic funds sold shares worth Rs 171.66 crore on Tuesday, 9 March 2010, as per provisional data.

The BSE 30-share Sensex rose 45.79 points or 0.27% to 17,098.33. The index rose 130.97 points at the day's high of 17,183.51 in morning trade. The Sensex lost 24.62 points at the day's low of 17,027.92 in early trade.

The S&P CNX Nifty rose 14.75 points or 0.29% to 5116.25.

The market breadth, indicating the overall health of the market was weak. On BSE, 1660 shares declined as compared with 1178 that advanced. A total of 74 shares remained unchanged. The breadth was much stronger in opening trade.

Among the 30-member Sensex pack, 18 advanced while the rest slipped.

BSE clocked a turnover of Rs 4179 crore, lower than Rs 7506.04 crore on Tuesday, 9 March 2010.

The BSE Mid-Cap index fell 0.13% and the BSE Small-Cap index fell 0.21%. Both the indices underperformed the Sensex.

The BSE Oil & Gas index (up 0.93%), the BSE FMCG index (up 0.81%), the BSE Realty index (up 0.59%), the BSE Auto index (up 0.33%), outperformed the Sensex.

The BSE Teck index (down 0.41%), the BSE IT index (down 0.37%), the BSE HealthCare index (down 0.33%), the BSE Metal index (down 0.32%), the BSE PSU index (down 0.2%), the BSE Bankex (down 0.17%), the BSE Capital goods index (down 0.15%), the BSE Power index (down 0.12%), the BSE Consumer Durables index (up 0.19%), underperformed the Sensex.

Auto stocks gained on fresh buying. India's largest bike maker by sales Hero Honda Motors surged 2.94% to Rs 1929.40. It hit a all time high of Rs 1940 today, 10 March 2010. It was the top gainer from the Sensex pack. Hero Honda has shortlisted Karnataka as one of the states for setting up its fourth manufacturing plant. Hero Honda Motors has reportedly proposed an investment of Rs 2,000 crore for the upcoming plant.

India's largest truck maker by sales Tata Motors gained 0.98%. The stock made a comeback on bargain hunting after sliding 3.24% on Tuesday following Germany's Daimler AG offloading its entire stake in Tata Motors in bulk deals. Daimler AG sold its entire about 2.56 crore shares at an average price of Rs 751.67 in Tata Motors through various bulk deals on Tuesday, 9 March 2010.

Tata Sons, the holding entity for Tata Group firms, and Citigroup have acquired a total of 86.5 lakh shares of Tata Motors from Germany's Daimler AG. Tata Sons bought 40 lakh Tata Motors shares at Rs 750 each, while Citi bought 46.5 lakh shares at Rs 752.41 each

India's largest tractor maker by sales Mahindra & Mahindra (M&M) advanced 0.58%, reversing early losses.

However, India's largest car maker by sales Maruti Suzuki India fell 1.34% on fears of rise in competition after rival firm Ford on Tuesday entered the small car market with 'Figo'. It was the top loser from the Sensex pack. Also, two more global auto giants, Nissan and Toyota, have announced their plans to launch cars in India priced in the Rs 4-lakh range.

Index heavyweight Reliance Industries (RIL) advanced 1.8% to Rs 1008.05, moving past the Rs 1000 mark. As per reports, RIL is close to striking hydrocarbon at its Palar deepwater block in the Cauvery basin. In the Palar block, RIL is said to be testing a well. The hydrocarbon success would be known only after testing is completed.

India's largest bank by net profit and branch network State Bank of India (SBI) fell 0.38%, extending Tuesday's 1.28% fall. A bill seeking to reduce Centre's shareholding in the SBI from 55% now to 51% and to allow the bank to raise more capital from the market through preference shares, was introduced in the Lok Sabha on Monday.

The amendment bill seeks to provide for enhancement of the capital of SBI by issue of preference shares, to enable it to raise resources from the market by public issue or preferential allotment or private placement. The bill also aims to provide for flexibility in the management of the bank

Other banking shares saw mixed trend. India's largest private sector bank by net profit HDFC Bank rose 0.18% India's largest private sector bank by net profit ICICI Bank declined 0.76%.

IT stocks declined on profit taking after recent gains triggered by upbeat US jobs data. US is the biggest market for Indian IT firms. India's third largest software services exporter by sales Wipro fell 0.4%. India's second largest software services exporter by sales Infosys slipped 0.9%

But, India's largest software services exporter by sales Tata Consultancy Services (TCS) gained 1.49%. Reports citing Girja Pande, TCS's Asia-Pacific chairman indicated that the company hopes to quadruple its market share in Asia outside India within five to seven years.

Telecom pivotals saw divergent trend. India's largest cellular services provider by sales Bharti Airtel lost 1.1%. As per reports, Bharti Airtel has completed about 60% of its due-diligence of Zain's African assets.

Zain, Kuwait's biggest phone company, and Bharti Airtel said on 15 February 2010 that they had entered into exclusive talks under which the Bharti would buy most of Zain's African assets for $10.7 billion. The exclusive talks will continue until 25 March 2010.

India's second largest cellular services provider by sales Reliance Communications gained 0.06%. The company has announced a new mobile application named Socially. With this application, a user can follow his friends' activities on social networks such as Facebook, Twitter and LinkedIn through a single platform.

Cement stocks gained on recent reports that prices are likely to rise by Rs 5-25 per 50-kg bag. The impeding price hike comes after the finance minister increased the excise duty on cement in the budget to 10% from the earlier 8%, imposed a cess of Rs 50 per tonne on domestic and imported coal and hiked fuel prices, pushing up freight rates for cement companies. ACC, Ambuja Cements, UltraTech Cement rose by between 1.33% to 2.21%.

Metal stocks fell on profit taking, reversing early gains. Tata Steel, Steel Authority of India, Hindustan Zinc, Sesa Goa, Sterlite Industries, JSW Steel and Jindal Steel & Power fell by between 0.01% to 1.95%.

State-run miner NMDC rose 1.12% to Rs 379.85. The company's follow-on offering (FPO) opened for bidding today, 10 March 2010 and will close on Friday, 12 March 2010.

Consumer durables stocks gained on hopes rise in disposable income following widening of tax slabs in the Union Budget 2010-11 may boost sales. Asian Star Company, Blue Star and Rajesh Exports rose by between 0.82% to 6.53%.

FMCG stocks rose after government's thrust on rural spending and social schemes in the budget announced late last month. Rural sector constitutes a major chunk of the sales of FMCG firms. Hindustan Unilever, ITC, Marico rose by between 0.33% to 1.4%.

Oil & Natural Gas Corporation (ONGC) was down 0.49% and Indian Oil Corporation (IOC) rose 0.11% after Oil Secretary S. Sundareshan said on Wednesday that the government has no immediate plans to sell stake in these two state-run firms.

Sugar shares declined after sugar futures sank to 7-month low in the US on Tuesday, 9 March 2010, continuing to retreat from last month's 29-year high, as traders braced for additional supplies from a new harvest season. Bajaj Hindusthan, Balrampur Cihni Mills, Shree Renuka Sugars, Triveni Engineering fell by between 5.29% to 8.88%.

World raw sugar for May 2010 delivery fell 1.25 cents, or 6%, to settle at 20.32 cents a pound on ICE Futures exchange in the US on Tuesday. It was the contract's lowest settlement price since 6 August 2009.

Realty shares gained after sector bellwether DLF hinted that properties would turn dearer as developers would have to pass on the service tax burden to end-users. Indiabulls Real Estate, HDIL and DLF rose by between 0.03% to 2.79%.

The Budget proposed to impose service tax on the realty sector both on commercial rentals as well as on sale of under-construction housing units. The service tax would come to be about 3.5% of the cost of the apartment that includes the value of the land and also the cost of construction, realty body Credai said recently.

Some infrastructure stocks gained following the government's on the infrastructure sector in the latest Budget. The Finance Minister provided Rs 1.73 lakh crore for infrastructure development in 2010-2011, which accounts for over 46% of the total plan expenditure for the year. Bharat Heavy Electricals , Jaiprakash Associates, Punj Lloyd Gayatri Projects rose by between 0.02% to 1.75%.

Texmo Pipes & Products closed at Rs 137.25 on the BSE, at a premium of 52.5% over the initial public offer price of Rs 90. The stock debuted at Rs 101.50, a 12.80% premium over the initial public offer (IPO) price.

Cals Refineries clocked the highest volume of 4.81 crore shares on BSE. Texmo Pipes (3.36 crore shares), Unitech (1.06 crore shares), Shree Ashtavinayak Cine Vision (0.74 crore shares) and Birla Power Solutions (0.67 crore shares) were the other volume toppers in that order.

Texmo Pipes clocked the highest turnover of Rs 462.48 crore on BSE. Reliance Industries (Rs116.13 crore), Tata Motors Rs 90.15 crore), Tata Consultancy Services (Rs 84.87 crore) and Unitech (Rs 79.66 crore) were the other turnover toppers in that order.

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MID SESSION OF INDIAN STOCK MARKET

A bout of volatility was witnessed as the market lost ground after hitting day's high in mid-afternoon trade. The BSE 30-share Sensex was down 33.19 points or 0.19% to 17,069.41, off 61.42 points from the day's high and up 23.09 points from the day's low. Most Asian markets were trading firm after initial losses. European markets moved in a narrow range.

The market breadth was weak in contrast to a positive breadth earlier in the day. Auto and banking stocks saw mixed trend. IT stocks extended Monday's gains triggered by strong US job data.

The market moved in a narrow range in the first two hours or so of trade. The market recovered from lower level in afternoon trade after junior finance minister Namo Narain Meena said the government will continue with economic reforms to strengthen the economy. But the intraday recovered proved short-lived. The market once again slipped into the red in mid-afternoon trade.

On the political front, both the houses of parliament were adjourned till 14:00 IST following uproar over the Women's Reservation Bill. Vice President Hamid Ansari on Tuesday suspended seven member of parliament (MPs) for disrupting proceedings in the Rajya Sabha over the Women's Reservation Bill. The seven members belong to SP, RJD and LJP.

Earlier, Vice President Hamid Ansari had adjourned the Rajya Sabha within minutes of reconvening as members began to shout slogans against the Women's Reservation Bill when the House opened at 11:00 IST. RJD chief Lalu Prasad Yadav led the protests in the Lok Sabha against the Women's Reservation Bill forcing the Speaker to adjourn the House for 15 minutes. Later the house was adjourned till 14:00 IST

Earlier in the morning, Janata Dal-United's Sharad Yadav, Rashtriya Janata Dal (RJD) chief Lalu Prasad and Samajwadi Party (SP) leader Mulayam Singh Yadav, who are opposing the Women's Reservation Bill, met Prime Minister Manmohan Singh and informed the PM of their differences towards the bill.

The Women's Reservation Bill, which was blocked in the Rajya Sabha on Monday, seeks to reserve a third of the seats in parliament and state legislatures for women. The government is wary of a confrontation because while SP and RJD are bent on disrupting Parliament, getting a constitutional amendment bill passed without discussion could make it vulnerable to a legal challenge

The government is already facing heat from the opposition parties over fuel price hike. As per reports, BJP will vote for cut-motions moved by the other Opposition parties in an effort to ensure the government comes under pressure of numbers. The entire Opposition, including ideological foes BJP and the Left, have been accusing the government of being anti-poor and pro-rich and had even gone to the extent of staging a walkout in Parliament during the budget presentation.

The Opposition's plans to bring in cut motions on increase in fuel prices are also expected to create uneasiness for Congress allies Trinamool Congress and DMK, which after initial resistance have gone along with the government.

European markets were trading with small gains today as lackluster trading on Wall Street and in Asia offered little direction. Key benchmark indices in UK, Germany and France were up by between 0.11% to 0.24%.

Investors were cautious ahead of a meeting of Greek Prime Minister George Papandreou with US President Barack Obama and Treasury Secretary Timothy later in the global day. Papandreou has said he is seeking support from the Obama administration to rein in the type of market speculation he blames for driving up Greece's borrowing costs, while traders are also watching whether the Greek prime minister says anything new about his nation's debt troubles.

Meanwhile, the Portugal government launched its own budget cuts to shore up its public finances. The plan includes slashing the budget shortfall to 2.8% of gross domestic product in 2013 from 9.3% of GDP last year.

Most Asian stocks were trading higher on Tuesday, reversing initial decline. The key benchmark indices in Singapore, Hong Kong, South Korea, Taiwan, China, and Indonesia, were up by between 0.05% to 0.52%. However, Japan's Nikkei 225 index ended 0.17% lower

US markets ended slightly lower on Monday, 8 March 2010. American International Group Inc inked a deal to sell its unit American Life Insurance Company, better known as Alico, to MetLife Inc for about $15.5 billion. The Dow Jones Industrial Average shed 11.79 points, or 0.11%, to 10,554.41. The Standard & Poor's 500 Index dipped 0.14 point, or 0.01%, to 1,138.56. But, the Nasdaq Composite Index gained 5.39 points, or 0.23%, to 2,331.74.

Trading in US index futures indicated that the Dow could fall 16 points at the opening bell on Tuesday, 9 March 2010.

Back home, Rajan Bharti Mittal, the newly elected president of industry body FICCI said on Monday there's no room for hardening of interest rates and the Reserve Bank of India should maintain status quo on the rates to allow the industry to make fresh investments. He added that fresh investment announcement have begun across sectors and further increase in interest rates will only hamper economic growth.

The government will announce the industrial output data for the month of January 2010 on Friday, 12 March 2010. Industrial output grew 16.8% in December 2009.

Meanwhile, the fourth and the last installment of advance tax by India Inc due on 15 March 2010 will give a broad indication of fourth quarter earnings.

Going ahead, the key triggers for the stock market are structural reforms such as decontrol of petrol and diesel prices, targeting of food subsidies, and financial sector reforms such as increase in foreign direct investment in insurance sector.

The government said on Friday it will seek parliamentary approval to spend an extra Rs 31780 crore for the fiscal year to end-March 2010, which it plans to fund through savings.

There is no risk that the government will borrow more than planned to fund supplementary spending, Revenue Secretary Sunil Mitra said on Friday. Of the additional spending, Rs 12000 crore would be spent on oil subsidy, Rs 8000 crore on fertiliser subsidy and Rs 2459 crore on food subsidy, among others.

Prime Minister Manmohan Singh said on Friday the economy would grow by at least 8% in the year through March 2011. Asia's third largest economy would expand 7.2-7.5% in 2009-10, he told parliament. Singh said prospects for the winter-sown crop are 'very encouraging'. He also said the government must pay good prices to farmers to ensure higher farm production. The prime minister said the government will take all practical measures to bring down food prices.

He said the government will continue commitment to pubic and private investment in agriculture. The prime minster said there is need to find ways and means to stabilise the sugar economy.

A good harvest is likely to bring down food inflation, which accelerated to nearly 18% in late February. The government, facing mounting criticism for rising food prices, is struggling to meet conflicting aims of controlling food inflation and trying to please farmers by paying them attractive prices.

Food prices will be keenly watched in coming weeks for the second and third round impacts of the recent fuel price rise. Market men see a 25 basis points hike in the repo and reverse repo rates each by the RBI at the April 2010 policy review.

Prime Minister Manmohan Singh had earlier ruled out rolling back a price hike in fuel prices despite pressure from his main allies, saying populist policies would hurt the economy in the long-term. Petrol prices rose about 6% and diesel prices by 7.75% after the government increased factory-gate taxes and import duties on the fuels as part of last week's 2010-11 union budget 2010-11, which stressed fiscal prudence to cut a wide deficit

Reserve Bank of India (RBI) Governor D Subbarao on Monday, 8 March 2010, said inflation should moderate in the coming months. He said the central bank will ensure that interest rate levels do not have a negative impact on the competitiveness of the economy. Should India need to manage inflationary expectations, the central bank could turn to its traditional mix of policy tools including use of both liquidity and cash reserve requirements, he said.

Subbarao said the government's plans to reduce the fiscal deficit this year and in 2011 would help to manage inflationary expectations and facilitate demand for private credit. The government's borrowing program is likely to proceed smoothly over the next financial year, he said. The government has set its gross market borrowing target for 2010/11 at a record Rs 4.57 lakh crore, up by 1.3% percent from the previous year, a move that has pushed bond prices lower as investors have anticipated a flood of fresh debt supply. Asked if he anticipated a sharp rise in levels of yields in 10-year government bonds, he said that yields had risen slightly this year but would be managed over the coming 12 months.

Finance minister Pranab Mukherjee's budgetary proposals last week offered a progressive cut in fiscal deficit over the next three fiscal years, changed personal tax rates lifting disposable incomes in the hand of individuals and reduced surcharge on corporate tax for domestic companies to 7.5% from 10%.

The Finance Minister in his budget speech on Friday, 26 February 2010 said the government aims to introduce the Goods and Services Tax (GST) and implement the direct tax code from 1 April 2011.

The fiscal deficit is pegged at 5.5% of GDP for 2010-2011, lower than an estimated 6.8% for the current fiscal year. The finance minister said the government also aimed to reduce the deficit further to 4.8% of GDP in the year starting 1 April 2011, and to 4.1% in the year from 1 April 2012. He said there is a need to review stimulus and move towards fiscal consolidation and review public spending.

A thrust on the infrastructure sector augurs well from a long-term growth perspective. The Finance Minister has provided Rs 1.73 lakh crore for infrastructure development in 2010-2011, which accounts for over 46% of the total plan expenditure for the year.

The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.

Finance Minister Pranab Mukherjee on Wednesday, 3 March 2010 said India's economic recovery is still being driven by public spending and is not yet broad-based, further clouding the debate on the timing of rate hikes by the central bank.

At 14:21 IST, the BSE 30-share Sensex was down 33.19 points or 0.19% to 17,069.41. The index rose 28.23 points at the day's high of 17,130.83 in mid-afternoon trade. The Sensex lost 56.28 points at the day's low of 17,046.32 in mid-morning trade.

The S&P CNX Nifty was down 17.30 points or 0.34% to 5106.70

The market breadth, indicating the overall health of the market, was weak after a positive start. On BSE, 1630 shares declined as compared with 1159 that advanced. A total of 79 shares remained unchanged.

The total turnover on BSE amounted to Rs 6222 crore by 14:25 IST. The turnover was boosted by a huge block deal in Tata Motors in opening trade.

Among the 30-member Sensex pack, 18 declined while the rest gained. Jaiprakash Associates (down 2.19%), Hindalco (down 1.77%), and Hindustan Unilever (down 1.38%), edged lower from the Sensex pack

HDFC (up 1.92%), HDFC Bank (up 1.71%), and Sun Pharma (up 1.16%), edged higher from the Sensex pack

IT stocks extended Monday's gains triggered by upbeat US jobs data. US is the biggest market for Indian IT firms.

India's largest software services exporter by sales Tata Consultancy Services gained 1.98% to Rs 776.50 and was the top gainer from the Sensex pack.

India's third largest software services exporter by sales Wipro rose 1.59% after the company secured an order from Financial Intelligence Unit, a unit of ministry of finance to develop an information technology network to track all irregular financial transactions. The company announced the new order win after market hours on Monday, 8 March 2010.

India's second largest software services exporter by sales Infosys was up 1.13%

Other software stocks were also in demand. Polaris Software (up 0.62%), MphasiS (up 1.15%), HCL Technologies (up 0.67%), Zylog Systems (up 12.31%), Financial Technologies (up 3.59%), and KPIT Cummins (up 2.97%), gained.

Kale Consultants galloped 10.53% after the company secured an order for one of its airline software products for an undisclosed sum. The company announced the new order win during trading hours today, 9 March 2010.

Economic data released on 7 March 2010 showed US employers cut a net total of 36,000 jobs in February 2010, after jobs fell by 26,000 in January 2010. That was short of the expected 68,000 jobs lost, according to a consensus of economists. Also the unemployment rate, generated by a separate survey, held steady at 9.7%, versus forecasts for a rise to 9.8%.

Index heavyweight Reliance Industries (RIL) declined 0.87% to Rs 996.50. As per reports, global petrochemicals major LyondellBasell has reportedly rejected a multi-billion dollar takeover offer from Indian giant RIL, preferring its own restructuring plan to exit bankruptcy. RIL had reportedly made a $12.5 billion bid to acquire controlling stake in the global major and later raised the bid to over $14 billion.

India's largest bank by net profit and branch network State Bank of India (SBI) slipped 1.12%. A bill seeking to reduce Centre's shareholding in the SBI from 55% now to 51% and to allow the bank to raise more capital from the market through preference shares, was introduced in the Lok Sabha on Monday.

The amendment bill seeks to provide for enhancement of the capital of SBI by issue of preference shares, to enable it to raise resources from the market by public issue or preferential allotment or private placement. The bill also aims to provide for flexibility in the management of the bank

Auto stocks saw mixed trend. India's largest truck maker by sales Tata Motors slumped 2.75% to Rs 774.50 and was the top loser from the Sensex pack. Reportedly, more than 2.4 crore shares or over 5% of the company's equity changed hands on the counter in various deals at BSE in opening trade. German carmaker Daimler is tipped to be the seller in this deal worth close to Rs 2,000 crore.

India's largest bike maker by sales Hero Honda Motors fell 1.91% to Rs 1876.95. The stock declined on profit booking after striking an all-time high of Rs 1,921 on 8 March 2010.

India's largest tractor maker by sales Mahindra & Mahindra rose 0.33%.

India's largest car maker by sales Maruti Suzuki India gained 1.29%. As per reports, Suzuki Motor Corporation has raised its stake in Maruti Suzuki to 55%, triggering speculation about the Japanese firm's intentions for its Indian subsidiary. Suzuki raised its stake in Maruti by 0.8% through secondary market purchases recently and is set to increase its stake further, reports indicated.

Nissan Copper fell 1.20% after Danial Investment, a promoter group company, pledged seven lakh shares representing 4.81% stake of the firm. The company made this announcement during trading hours today, 9 March 2010.

Tata Motors was the top traded counter on the BSE with turnover of Rs 3157.75 crore followed by Jubilant Foodworks (Rs 162.23 crore), ARRS Infrastructure (Rs 85.44 crore), State Bank of India (Rs 66.19 crore), and Reliance Industries (Rs 60.78 crore).

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INDIAN STOCK MARKET THE WEEK THAT PASSED

Investors gave a thumbs to Union Budget 2010-2011 as the market witnessed a strong post-budget rally. Data showing a surge manufacturing and services activity in the month of February and rise in exports for the third consecutive month in January 2010, also aided the rally. Finance Minister Pranab Mukherjee's budget proposals which offered to progressively cut fiscal deficit over the next three fiscal years, changed personal tax rates which will lift disposable incomes in the hand of individuals and reduced surcharge on corporate tax for domestic companies to 7.5% from 10% in Union Budget 2010-2011 boosted sentiment. The market gained in three out of four trading sessions in the week.

The BSE 30-share Sensex rose 564.94 points or 3.44% to 16994.49 in the week ended 5 March 2010. The 50-unit Nifty rose 166.40 points or 3.38% to 5,088.70.

The BSE Mid-Cap index rose 5.28% and The BSE Small-Cap index rose 5.36%. Both theses indices outperformed Sensex.

Prime Minister Manmohan Singh said on Friday the economy would grow by at least 8% in the year through March 2011. Asia's third largest economy would expand 7.2-7.5% in 2009/10. Singh said prospects for the winter-sown crop are 'very encouraging'. He also said the government must pay good prices to farmers to ensure higher farm production. The prime minister said the government will take all practical measures to bring down food prices.

He said the government will continue commitment to pubic and private investment in agriculture. The prime minster said there is need to find ways and means to stabilise the sugar economy.

A good harvest is likely to bring down food inflation, which accelerated to nearly 18% in late February. The government, facing mounting criticism for rising food prices, is struggling to meet conflicting aims of controlling food inflation and trying to please farmers by paying them attractive prices.

The economy is likely to do better in the quarter to March than the three preceding quarters, Finance Secretary Ashok Chawla said on Friday, 26 February 2010. The economy grew a slower than expected 6% annually in the December quarter.

Food price index rose 17.87% in the 12 months to 20 February 2010, faster than the annual rise of 17.58% in the previous week, government data released on Thursday, 4 March 2010 showed. The fuel price index was up 9.59%. The primary articles index rose 15%. Higher inflation is likely to add pressure on the central bank to raise interest rates in April 2010.

Meanwhile, business activity among Indian service companies grew at its fastest pace in 17 months in February 2010, climbing for the third straight month as both output and new orders increased, a survey showed on Wednesday, 3 March 2010. The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 60.9 in February 2010, its highest since September 2008, and compared with 59 in January 2010. The business expectations sub-index rose for the second straight month to 73.1 in February 2010, its highest in four months. It stood at 66.6 in January 2010.

The manufacturing industry in February 2010 grew at its fastest pace in 20 months, expanding for the third month thanks to expanding output and new orders, a survey showed. The HSBC Markit Purchasing Managers' Index, based on a survey of 500 companies, rose to 58.5 in February, its strongest reading since June 2008, from 57.7 in January. A reading above 50 means activity is expanding.

Exports rose an annual 11.5% in January 2010 to $14.3 billion, the third consecutive rise after 13 straight months of decline, the government said on Tuesday. Imports rose 35.5% from a year earlier to $24.7 billion. The trade deficit stood at $10.4 billion in January compared with $5.4 billion a year earlier. Exports for April-January, the first 10 months of the 2009/10 fiscal year, were down 17.8% at $131.9 billion from the same period in the previous year.

Finance Minister in his budget speech on Friday, 26 February 2010 said the government aims to introduce the Goods and Services Tax (GST) and implement the direct tax code from 1 April 2011. The peak rate of excise duties has been raised to 10% from 8% as a first step towards the winding down of fiscal stimulus measures. However, the service tax was retained at 10%.The government has estimated Rs 40000 crore from disinvestment for FY 2010-11. Revenue secretary Sunil Mitra on Friday said he does not see any difficulty in achieving divestment target of Rs 40000 crore for FY 2011.The government has estimated Rs 35000 crore from sale of third generation telecom auctions in FY 2011.

The finance minister has raised personal income tax slabs which will result in increase in disposable incomes which in turn may boost consumption. The minimum alternate tax (MAT) has been raised to 18% from 15% of book profits. The fiscal deficit is pegged at 5.5% of GDP for 2010-2011, lower than an estimated 6.8% for the current fiscal year. The planned expenditure will rise 15% in 2010-2011. The increase in non-plan expenditure is only 6% for 2010-2011.

The finance minister said the government also aimed to reduce the deficit further to 4.8% of GDP in the year starting 1 April 2011, and to 4.1% in the year from 1 April 2012. He said there is a need to review stimulus and move towards fiscal consolidation and review public spending.

A thrust on the infrastructure sector augurs well from a long-term growth perspective. The Finance Minister has provided Rs 1.73 lakh crore for infrastructure development in 2010-2011, which accounts for over 46% of the total plan expenditure for the year.

The stock market has applauded the Union Budget 2010-2011 due to its thrust on infrastructure development, government's pledge to reduce fiscal deficit over the next three years, a smaller-than-expected 2% hike in excise duties, and reduction in taxes for individuals which will boost disposable income. The Finance Minister has assumed a modest GDP of about 8% and inflation of about 4.5% for 2010-2011.

The Finance Minister plans to tighten his belt on non-plan expenditure that includes heads like subsidies and administrative costs etc. He has forecast a small 6% growth in non-plan expenditure. The budget projects an 11% reduction in the government's subsidy bill for 2010-11, driven essentially by a massive drop in petroleum subsidies and some decline in fertiliser subsidies.

Though the Finance Minister said that the government will implement the Direct Tax Code from 1 April 2011, there is no clarity on actual changes in direct taxes from 1 April 2011. Further, there is also uncertainty with regards to rates under the new GST. One really does not know what the Central GST rate will be in April 2011. States also will charge State GST on the same base as that of Central GST. So the States will have a big say in fixing the rate. It has also to be a revenue neutral rate (RNR) which therefore will involve a lot of arithmetical exercise involving all the taxes which will be subsumed in the GST. It is most uncertain what it will be.

The government will introduce legislation for a direct tax code in the monsoon session of parliament, revenue secretary Sunil Mitra said on Friday.

The key benchmark indices surged for the second straight day on Tuesday, 2 March 2010, extending post-budget gains after finance minister Pranab Mukherjee on Friday 26 February 2010 offered to progressively cut fiscal deficit over the next three fiscal years. The BSE 30-share Sensex rose 343.01 points or 2.09% to 16,772.56 on Tuesday.

The key benchmark indices extended gains for the third straight day on Wednesday, 3 March 2010 on higher Asian stocks. The BSE 30-share Sensex rose 227.45 points or 1.36% to 17,000.01 on Wednesday.

Key benchmark indices ended slightly lower after witnessing intraday volatility, ending three-day winning streak on Thursday, 4 March 2010. Fears of rise in interest rates following rise in food inflation weighed on the sentiment. The BSE 30-share Sensex was down 28.31 points or 0.17% to 16,971.70 on that day.

The key benchmark indices eked out marginal gains in what was a volatile trading session on Friday, 5 March 2010. The BSE 30-share Sensex rose 22.79 points or 0.13% to 16,994.49 on that day.

Realty shares rose after the Finance Minister while presenting the Union Budget 2010-11 on 26 February 2010 said pending projects will be allowed to be completed within a period of five years instead of four years for claiming a deduction on profits. The norms for built-up area of shops and other commercial establishments in housing projects is also proposed to be relaxed to enable basic facilities for their residents. DLF (up 6.53%), Indiabulls Real Estate (up 8.96%), Unitech (up 8.15%) gained.

Index heavyweight Reliance Industries (RIL) rose 3.29%. As per recent reports, RIL has no plans to increase its bid for bankrupt chemicals maker LyondellBasell Industries after creditors rejected a $14.5 billion offer.

India's largest private sector housing firm by net profit ICICI Bank rose 3.44%. The bank has raised auto loans by 25-50 basis points for different tenors and segments, effective from 5 March 2010. The bank has also discontinued its special home loan rate of 8.25% for two years. The bank will now charge 8.75% for loans up to Rs 30 lakh, 9% for loans of Rs 30 to Rs 50 lakh and 9.5% for loans over Rs 50 lakh.

Auto stocks rose as the government hiked the excise duty by 2% to 10% from 8% earlier. This came as a relief as the industry feared a 4% hike. A thrust on infrastructure and higher rural spending also augur well for the auto sector. A spurt in February vehicle sales also supported auto stocks.

India's largest two-wheeler maker Hero Honda Motors rose 4.74%. The company on Tuesday reported a 16.13% increase in its sales at 3,82,096 units in February 2010 over February 2009, the best-ever reported by the company for the month of February.

India's largest tractor maker by sales Mahindra & Mahindra rose 6.8%. The company's total vehicle sales surged 39.51% to 27,894 units in February 2010 over February 2009.

India's largest commercial vehicle maker by sales Tata Motors rose 11.85%. The company's total vehicle sales rose 58.46% to 69,427 units in February 2010 over February 2009.

Bajaj Auto gained 4.66%. The total vehicle sales surged 75% to 2.68 lakh units in February 2010 over February 2009.

TVS Motor Company rose 7.18%. TVS Motor Company has reportedly increased the prices of its vehicles by Rs 350 to Rs 1,500 across various models effective 1 March 2010. The hike follows an increase in excise duty by 2% in the union budget announced on Friday, 26 February 2010.The company's total two wheeler sales rose 31% to 1,40,544 units in February 2010 over February 2009.

But, India's largest car maker by sales Maruti Suzuki India fell 0.44%. The total vehicle sales rose 22% to 96,650 units in February 2010 over February 2009. The company has raised vehicle prices by Rs 3,000-Rs 13,000 following increase in excise duty in the Budget

Another minor positive for auto companies was higher slabs for personal income tax that would leave more finance in hands of individuals.

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METALS AND CRUDE OIL REVIEW

Crude oil continues trading sideways around 79 in European session. Firmness in USD and lack of upside surprises in economic data hinder investors from adding long positions in commodities today. Supply disruption caused by an earthquake in Chile might tighten oil fundamentals but the actual impact will likely be limited.

USD remains firm against several major currencies. EURUSD continues trading at 9-month low around 1.35 as the market is skeptical about Greece's ability to solver the deficit challenge. Inflationary pressure in the Eurozone remains benign. Released earlier today, CPI rose +0.9% y/y in February, moderated from +1% in the prior month. PPI rose +0.7% in January on monthly basis but contracted -1% from a year ago. It's unlikely for the ECB to adjust it monetary policy outlook at Thursday's meeting.

The pound remains under pressure after slumping Monday. GBPUSD extends weakness below 1.5 even though the pair is deep in oversold condition. Construction PMI missed market expectation and fell to 48.5 in February from 48.6 a month ago.

2 oil refineries were closed after the earthquake hit Chile last Saturday. The 2 refineries amount to 220K bpd of capacity, representing around 0.25% of global oil demand. High distillate inventory and huge excessive refinery capacity can easily cover such amount. Therefore, price rally driven by the news was short-lived.

Gold trades narrowly for a second day. Price lacks direction as strong dollar limits upside while subdued inflationary pressure reduces the precious metal's appeal as storage of value. Gold refuses to decline decisively as low interest rate environment is positive for gold. At the same time, deficit problems in Greece, the UK and the US have driven investors to precious metals as they lost confidence in holding currencies.

The Bank of Canada will likely leave its policy rate unchanged at 0.25% today while keeping the statement that 'conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target'.

Canada's GDP expanded +5% q/q (annualized) in 4Q09 from +0.9% in the prior quarter. The reading exceeded market expectation of a +4% growth and signaled the central bank's ultra low-rate policy has delivered its effect. Policymakers should acknowledge stronger-than-expected economic improvement in recent months and shed some light on tightening later in the year.


GOLD:
Intraday bias in gold remains neutral for the moment and focus is on 1131.5 resistance. Break there will indicate that rise from 1044.5 is resuming and will also strongly suggest that whole correction from 1227.5 is finished with three waves down to 1044.5 already. In such case, stronger rally should be seen to 1163 resistance for confirmation. On the downside, however, below 1088.5 support will shift favors back to the case that another low below 1044.5 would be seen before correction from 1227.5 concludes.

In the bigger picture, price actions from 1227.5 are treated as correction to rise fro 931.3 only. The question now is on whether such correction is finished after meeting 61.8% retracement of 931.3 to 1227.5 at 1044.4. Strong break of 1163 resistance will indicate that the long term up trend is likely resuming for another high above 1227.5. On the downside, even in case of another fall, we'd expect strong support at 1000 psychological level to conclude the correction and bring up trend resumption.

SILVER:
Silver's rise from 15.60 extends further today and at this point, intraday bias remains on the upside. Nevertheless, note that we're still treating price actions from 14.65 as a correction to fall from 18.925 only. Hence, even in case of further rise, upside should be limited by 16.95 resistance and bring fall resumption. Below 15.60 will flip intraday bias back to the downside for a retest of 14.65 low first. However, strong break of 16.95 resistance will indicate that fall from 18.925, as well as that from 19.50, has completed and will turn outlook bullish for retesting 18.925/19.50 resistance zone.

In the bigger picture, silver's medium term rise from 8.4 has possibly completed at 19.50 already, after just missing mentioned 19.55/21.44 resistance zone. As noted before, such rise is viewed as part of the long term, wide range, consolidation pattern that started at 21.44 back in Mar 08. Fall from 19.50 is possibly the third leg of such consolidation pattern. We'd expect such fall to extend beyond 12.435 support to confirm this case and target a new low below 8.4 eventually. On the upside, however, note that decisive break of 16.95 resistance will argue that whole fall from 19.50 has completed with three waves down to 14.65, after missing 161.8% projection of 19.50 to 16.765 from 18.925 at 14.50. The corrective structure will in turn argue that another rise to 19.55/21.44 resistance zone would be seen before silver tops out in medium term

CRUDE OIL:
Crude oil's break of 80.51 suggests that rise from 69.50 has resumed and intraday bias is on the upside for 83.95 high next. On the downside, however, below 77.05 support will argue that rebound from 69.50 is completed, possibly with bearish divergence conditions. In such case, focus will be shifted back to 69.50 support instead.

In the bigger picture, crude oil was supported above mentioned 68.59 key support and thus, there was no confirmation of medium term reversal. The strong rebound from 72.43 dampened our bearish view and argue that medium term rise from 33.2 might not be over yet. Nevertheless, as such rise from 33.2 is treated as a correction to whole decline from 147.27 only, even in case of another high above 83.95, we'd continue to expect strong resistance near to 50% retracement of 147.27 to 33.2 at 90.24 to bring reversal. On the downside, though, break of 69.50 support will now indicate that crude oil has topped out in medium term already and turn outlook bearish

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