Equities flat in early volatile trade

In volatile trading, the Bombay Stock Exchange benchmark Sensex on Wednesday recovered by over 40 points in early trade on emergence of funds buying at existing lower levels.

The 30-share index, which had plunged 126.51 points at the outset, bounced back to quote 40.05 points higher at 16,792.91 in the first five minutes of trading. It had lost 108.04 points on Tuesday.

Similarly, the wide-based National Stock Exchange index’s Nifty moved up by 12.35 points at 4,970.15.

Marketmen said the initial sell-off by funds was influenced by the serial blasts in Jaipur last evening.

Major gainers which supported the Sensex were Grasim Industries, Infosys Technologies, Tata Consultancy, Wipro, HDFC, Bharti Airtel, DLF Ltd and Tata Steel.

However, stocks such as HDFC Bank, ONGC and Reliance Energy were in the negative zone on some selling.

Oil spikes to record high near $127

Oil surged to a record peak near $127 on Tuesday after OPEC producer Iran said it was studying a plan to cut output despite signs record-high prices are hurting consumer nations.

US crude settled up $1.57 to $125.80 a barrel, after striking a record $126.98 earlier. London Brent crude rose $1.19 to $124.10 a barrel. President Mahmoud Ahmadinejad said a proposal to reduce Iran’s crude output was being reviewed by experts, the semi-official Fars News Agency reported.

"There has been such a proposal and it is under expert review," Fars quoted Ahmadinejad as saying when asked about the possibility of the world’s No. 4 producer reducing output. Iranian Oil Minister Gholamhossein Nozari earlier said Iran was reviewing how much oil it pumps, but no decision had been taken on any changes.

"We’re in a market where anything bullish is going to be able to push the price higher," said Peter Beutel, president of Cameron Hanover. Oil prices have already surged sixfold since 2002 as supply has struggled to keep pace with booming demand from emerging economies.

Further support came from tight global supplies of distillate fuels such as diesel after a snag at the Grangemouth refinery in Scotland. European middle distillate stocks fell sharply in April, down 1.4 percent from March and 7.2 percent lower than a year ago, data from industry monitors Euroilstock showed.

Demand Revisions

Oil had closed lower on Monday after data showed a decline in oil imports by No. 2 consumer China in April, the first year-on-year drop in 18 months, raising further questions about demand growth forecasts.

The International Energy Agency on Tuesday said record-high oil prices will slow global oil demand growth this year to 1.03 million barrels per day (bpd), 230,000 bpd less than its previous forecast. Demand from emerging countries remained strong, however.

The US Senate voted to suspend deliveries to the Strategic Petroleum Reserve until crude prices fall below $75 a barrel, repudiating the Bush administration’s policy of boosting the stockpile despite high prices.

Consumer nations have called on OPEC to ramp up production to help ease the sting of high fuel prices, but officials from the cartel insist that speculators -- not a lack of supply -- are responsible for surging prices.

Investors have piled into oil and other commodities as a hedge against the falling dollar and rising inflation following a series of interest rate cuts by the US Federal Reserve.

San Francisco Federal Reserve Bank President Janet Yellen said that she would be happy if futures Markets were right in forecasting a Fed rate increase by year end, which analysts have said could weaken commodity prices.

Traders also were awaiting weekly US inventory data due on Wednesday, which are expected to show a build in US crude and distillate inventories with gasoline stocks unchanged, according to a Reuters poll of analysts.

Rupee falls to fresh 13-mth low

The rupee fell to a fresh 13-month low on Wednesday as record oil prices and growing worries about a slowdown in the Economy spurred demand for US dollars.

India’s rupee fell for a third day on speculation near-record crude oil price will widen the South Asian nation’s trade deficit.

At 9:02 a.m., the partially convertible rupee was at 42.26/27 per dollar, a level it last traded on April 16, 2007, according to Reuters data. It had closed at 42.10/11 on Tuesday

The rupee weakened 0.4 percent to 42.27 per dollar as of 9:05 a.m. in Mumbai, according to data compiled by Bloomberg. The currency, headed for a fourth weekly decline, is the second- worst performer among the most-traded Asian currencies this year with a 6.8 percent loss.

India May Remove Tax on Steel-Product Exports, Official Says

India’s government may scrap levies on steel-product exports after the companies agreed to lower prices last week to help rein in inflation.

``Inter-ministerial committees are involved but we are trying to expedite a decision,’’ Steel Secretary R.S. Pandey said in a telephone interview from New Delhi today.

India notified the taxes on May 10 on shipments of products including hot-rolled and cold-rolled coil to bolster supplies and help curb the fastest inflation since 2005. The levy was first announced on April 29.

Steelmakers last week agreed to lower prices by as much as 10 percent on the assurance by the government that it would not impose the tax, J. Mehra, chief executive officer at Essar Steel Holdings Ltd., which controls India’s third-biggest steelmaker, said yesterday.

``We are expecting the government to rethink about the tax and scrap it,’’ Mehra said.

India's Rupee Falls to 13-Month Low as Companies Sell Currency

India’s rupee fell to a 13-month low on speculation importers sold the currency to limit losses following its biggest slide since August.

The rupee’s 1 percent decline yesterday added to last week’s 2.3 percent drop, the most in a decade, as near-record energy prices increased demand for dollars needed to buy crude oil. A falling rupee makes imports costlier. The currency also fell as exporters held back sales of dollars earned overseas, expecting to profit from further currency declines.

``The rupee is under pressure as there’s widespread demand for the dollar, from oil companies and all sorts of importers,’’ said Rohan Lasrado, a foreign-exchange dealer at HDFC Bank Ltd. in Mumbai. ``The market is clearly nervous because there’s just no supply of dollars. Exporters are canceling contracts to sell the dollar because they want to wait for better rates.’’

The rupee weakened as much as 0.4 percent to 42.2125 per dollar, the lowest since April 19, 2007, before trading at 42.135 as of 11:21 a.m. in Mumbai, according to data compiled by Bloomberg. The currency, which declined in five of the past six weeks, is Asia’s second-worst performer this year after the South Korean won.

The Indian currency may fall as low as 42.50 in a week amid concern costlier oil is inflating India’s import bill, Lasrado said. Crude oil in New York more than doubled to reach an all- time high of $126.40 a barrel yesterday.

Oil Imports

The value of India’s oil imports rose to a record $8.6 billion in March as the commodity became more expensive, government data show. The nation’s trade deficit widened to a record $25.4 billion in the three months through December, according to the central bank. Asia’s third-largest economy depends on imports to meet three-quarters of its energy needs.

The rupee also fell as the flow of overseas funds into the local equity market declined, HDFC’s Lasrado said. Such inflows helped the rupee rally 12.3 percent in 2007, the most in more than three decades.

Overseas investors sold $2.8 billion more Indian shares than they bought this year, after making record net purchases of $17.2 billion in 2007, according to the Securities and Exchange Board of India.

A government report showed yesterday India’s industrial production expanded at the slowest pace in six years in March, adding to concern overseas investors will scale back stock purchases.

The rupee weakened past 42 a dollar yesterday for the first time since April 2007 after the government said the annual pace of increase in output at factories, utilities and mines more than halved to 3 percent in March from 8.6 percent in the previous month.

``The industrial output report definitely remains at the back of traders’ minds,’’ HDFC’s Lasrado said. ``Especially since the market is receiving no capital flows.’’

Sensex regains 17K level; IT leads

The Bombay Stock Exchange benchmark Sensex on Tuesday regained the 17K level by rising over 170 points in early trade on buying by funds in heavy-weight stocks, tracking firm global Markets.

The 30-share index shot up by 170.18 points to 17,031.08 in the first five minutes of trade. It had gained 123.83 points on Monday.

Similarly, the National Stock Exchange index Nifty surged by 46.15 points to quote higher at 5,058.80.

Marketmen said a firming trend in the global Markets mainly boosted the trading sentiments.

The major gainers which supported the Sensex were Reliance Industries, Reliance Petroleum, Reliance Communications, Reliance Energy, ACC, Larsen and Toubro, BHEL, State Bank of India, HDFC Bank, ICICI Bank and Grasim Industries.

Among technology stocks, Infosys Technologies, Satyam Computers, TCS and Wipro were also in positive zone with gains on funds buying.

Rupee stays at 1-yr low; stocks eyed

Rupee was mostly steady at one-year lows on Tuesday as investors wait for the stock market opening to determine whether foreign investors are still keen to invest after weak factory data a day earlier.

At 9:20 am, the partially convertible rupee was at 42.06/42.07 per dollar, barely moved from Monday’s close of 42.05/06.

Oil prices eased on Tuesday as some investors saw a recent rally to record highs as excessive, while Asian shares gained as banks were bolstered by further signals the worst of the credit crisis may now be over.

Industrial output grew 3.0 per cent in March from a year earlier, its weakest growth in six years as high interest rates squeezed demand for consumer goods.

The stock market has fallen almost 17 per cent in 2008 due to foreign fund selling of more than $2.9 billion.

Capital inflows are a key driver for the local unit. The rupee has lost 6.3 per cent against the dollar so far in 2008 to be Asia’s weakest currency behind the Korean won.

The rupee rose more than 12 per cent in 2007.