Market Retreats From Two-Month High Amid Initial Volatility .

A bout of volatilty was witnessed at the onset of the trading session a the key benchmark indices pared gains after hitting 2-month highs. Global cues were mixed. The market breadth was strong. Index heavyweight Reliance Industries (RIL) rose after entering into a joint venture with D. E. Shaw group for financial services business.

At 09:25 IST, the BSE 30-share Sensex was up 4.80 points or 0.03% to 18,820.44. The Sensex gained 89.70 points at the day's high of 18,905.34 at the onset of the trading session, its highest level since 27 January 2011. The index declined 15.93 points at the day's low of 18,799.71 in early trade.

The S&P CNX Nifty was up 2.25 points or 0.04% to 5,656.50. The Nifty a high of 5,676.95, its highest level since 27 January 2011.

The market breadth, indicating the health of the market, was positive. On BSE, 817 shares advanced while 572 shares declined. A total of 81 shares remained unchanged.

The total turnover on BSE amounted to Rs. 192 crore by 09:25 IST.

Among the 30-member Sensex pack, 20 gained while the rest declined. Larsen & Toubro (up 1.21%), Hindustan Unilever (up 1.11%), and Mahindra & Mahindra (up 0.65%), edged higher from the Sensex pack.

Index heavyweight Reliance Industries (RIL) advanced 0.74% to Rs. 1033.60 after the firm on Sunday, 27 March 2011, agreed to establish a joint venture (JV) with D.E. Shaw Group to build a leading financial services business in India. The JV will incorporate the D. E. Shaw group's investment and technology expertise with RIL's operational knowledge and extensive presence across India to offer a comprehensive array of financial services to the Indian market place, the two companies said in a joint press release.

Lou Salkind, a member of the D. E. Shaw Group's executive committee said the JV venture allows the D. E. Shaw Group to apply to the Indian markets the group's historical success in investment management and market making.

India's largest bank by net profit and branch network State Bank of India rose 0.76%. Reportedly, the bank will launch its Rs. 20000 crore rights issue after the first quarter of the fiscal year beginning in April 2011. The issue will raise half the amount needed to sustain the bank's growth over the next five years.

India's top truck maker by sales Tata Motors jumped 2.04% to Rs. 1205.50 after its ADR gained 1.35% on Friday, 25 March 2011. It was the top gainer from the Sensex pack.

India's second largest software services exporter Infosys lost 1.39% to Rs. 3118 on profit booking after an 8.2% rally in previous four trading days. It was the top loser from the Sensex pack.

Indian stocks witnessed a strong rally last week on bullish comments on India from billionaire legendary investor Warren Buffett and on hopes for economic reforms with the government tabling some key reforms bills in parliament last week.

Billionaire investor and international investment icon Warren Buffett who was in his maiden visit to India last week said that he hopes to spend some money in India. His firm Berkshire Hathaway is looking to park funds in large investment destinations and India fits the bill perfectly, he said. India, according to him, is not an emerging market but a very big country with a large number of significant businesses. He said that Berkshire Hathaway would look at possible acquisitions in India as and when there were opportunities.

As per provisional figures, foreign funds bought shares worth Rs. 1446.18 crore and domestic funds sold shares worth Rs. 313.77 crore on Friday, 25 March 2011. India-dedicated funds witnessed outflow of $193 million in the week to 23 March 2011, as per the latest data from global fund tractor EPFR Global.

Expiry of the near-month March 2011 derivatives contracts on Thursday, 31 March 2011 may keep stocks choppy this week. Year-end reshuffling of positions by traders may also add to volatility this week.

The near term major trigger for the market is Q4 March 2011 results. Advance tax payments made by top 100 firms based in the country's financial capital --Mumbai reportedly rose by 25% in the Q4 March 2011 over Q4 March 2010, hinting robust earnings. Companies pay advance tax every quarter based on their projected income for the year.

Asian stocks dropped on Monday, 28 March 2011, as radiation hampered efforts to cool crippled nuclear reactors in Japan, and as company earnings missed analyst estimates. Political tensions in oil rich Middle East and North Africa regsions and renewed debt crisis in the Euro zone also kept investor sentiments cautious. The key benchmark indices in Singapore, Indonesia, Japan, South Korea, Taiwan and Hong Kong fell by between 0.21% to 0.67%. China's Shanghai Composite rose 0.72%.

US stocks rose on Friday, 25 March 2011, after upbeat results from technology giant Oracle Corp. and on data showing the economy grew more than previously estimated at the end of 2010. The Dow Jones Industrial Average finished up 50.03 points, or 0.41%, at 12220.59. The Standard & Poor's 500-stock index closed 4.14 points higher, or 0.32%, at 1313.80, and the Nasdaq Composite added 6.64 points, or 0.24%, to 2743.06.

US real gross domestic product grew at a 3.1% annualized rate in the fourth quarter, revised up from the 2.8% pace reported one month ago, according to the Commerce Department.

US crude futures were down 8 cents a barrel or 0.08% to $105.32 a barrel. Oil prices have surged in recent months amid ongoing turmoil in oil rich Middle East and North Africa regions. High global crude oil price is a cause of concern for India which imports 70% of its oil requirements. Surging oil prices have stoked concerns about higher inflation and interest rates.

Trading in US index futures indicated that the Dow could rise 6 points at the opening bell on Monday, 28 March 2011

Source : indiainfoline.com