Housing starts increased 9% in February.
Tuesday morning, the Department of Commerce released its report on housing starts and building permits in the month of February, showing that housing starts rose much more than economists had been expecting. The report showed that housing starts rose 9.0 percent to a seasonally adjusted annual rate of 1.525 million units in February from a revised 1.399 million unit rate in January. Economists had expected starts to rise to a 1.445 million unit rate. The increase in housing starts was due in large part to a notable increase in housing starts in the West, which rose 26.4 percent compared to the previous month. Housing starts in the South rose 18.0 percent, while housing starts in the Northeast and Midwest fell 29.7 percent and 14.4 percent, respectively. The report also showed that single-family housing starts rose 10.3 percent to a 1.220 million unit rate in February, more than offsetting a 2.2 percent decline in the rate for units in buildings with five units or more. At the same time, the Commerce Department also said that building permits fell 2.5 percent to a seasonally adjusted annual rate of 1.532 million units in February from a 1.571 million unit rate in January. Building permits are seen as an indication of the outlook for housing demand.


9:00AM NY-7:00PM Mumbai Sensex gains in volatile trade, Ranbaxy rallies.
The Sensex on BSE finished 60.95 points, or 0.48%, higher at 12,705.94. The market-breadth was positive although it weakened at the end of the session. For 1,367 stocks that advanced, 1,201 declined and 67 remained unchanged. Of the 30 stocks in the Sensex 17 advanced, while the rest declined. The turnover on BSE was Rs 2,910.12 crore, higher than Rs 2,675.95 crore on Friday, but unusually low for the second day in a row. The turnover on NSE was Rs 6,056.26 crore, also much lower than Rs 4,965.07 crore.

Economic news

Heavy capital inflows drove the Indian rupee to an 18-month high against the dollar on Tuesday. At noon, the rupee stood at 43.98/99 per dollar, having struck a high of 43.9225 per dollar, its strongest since late-September 2005.

The Prime Minister Dr Manmohan Singh will preside over a meeting of the Planning Commission to work out state-wise strategies for achieving the annual farm growth to beyond 4%.

The entertainment and media industry in India is likely to grow at 18% compound annual growth rate and reach a projected size of Rs 1,00,000 crore by 2011 from its present size of Rs 43,700 crore.

Trading highlights

MindTree was the most-active stock with a turnover of Rs 157.70 crore followed by Reliance Communications and AMD Metplast.

Advancers

Ranbaxy led the advancers, soaring over 6% to Rs 336.4 as reports circulate that the company has withdrawn its bid for Merck generics business. The company exited the race on concerns that the acquisition would not add to earnings.

Reliance Energy surged 4.1% to Rs 476.1 and index heavy Reliance Industries gained 0.5% to, Rs 1,321.05 on market rumors it may sign a joint venture with US-based Dow Chemical Co. Bank shares added on short-covering in the derivatives segment. HDFC Bank gained 3% to Rs 954 and State Bank of India rose 2.6% to Rs 953.

Cement shares advanced on reports that the government may offer a five-year tax break to cement plants set up after April 1 2007. Grasim gained 4% to Rs 2,124, Gujarat Ambuja Cements gained 3.4% to Rs 110.9 and ACC was up 0.3% to Rs 742. Hindustan Lever added 2.1% to Rs 184 and Cipla gained 2.5% to Rs 230

Decliners

BHEL dropped 1.7% to Rs 2,044. Infosys slipped 1.5% to Rs 2,054. The increase of the rupee pushed down IT shares as their derive their revenue mostly in dollar terms. Wipro shed 1.4% to Rs 571.25 and TCS shed 0.6% to Rs 1252.3. TCS and Wipro gyrated between positive and negative territory during the day.

Tata Steel was down 1.3% to Rs 424 and Hero Honda lost 0.8% to Rs 635.30. Reportedly, Honda Motorcycle & Scooters India, a wholly-owned subsidiary of Japanese company Honda, proposes to entry-level 100-cc motorcycle segment and will be tough competition.


8:00AM European shares were lower Tuesday despite gains in banking stocks.
European markets were lower on Tuesday. By mid morning, Frankfurt Xetra Dax fell 0.2% to 6,659.09, the CAC 40 in Paris was off 0.4% at 5,437.67 and London FTSE 100 edged 0.1% higher to 6,196.2.

Advancers

Dutch bank ABN Amro gained 3.5% after confirmation of the merger talks with Barclays. The two companies said they were in exclusive primary discussions over a merger that could value the combined bank at 80 billion or 117 billion euros. Shares in Barclays rose 4.4%.