Oil exploration leader, ONGC, led the decliners, plunging 3.5% to Rs 875.6 on news that the Directorate General of Hydrocarbons had disallowed gas discovery to proceed in the Krishna-Godavari basin. ONGC may contest Directorate General of Hydrocarbons views. Cement stocks declined on concerns that the government could impose a ban on cement exports in the budget to control cement prices. Grasim shed 3% to Rs 2,570.9, and Gujarat Ambuja Cements lost 1.8% to Rs 130.1.

The State Bank of India plunged 2.2% to Rs 1,106.3. The State Bank of India on Tuesday joined other state-run banks in lifting the benchmark prime lending rate, which is linked to interest rates on working capital loans. Thus, borrowing cost of working capital loans for corporates is increased. ICICI Bank fell with SBI and dipped 0.7% to Rs 971, while HDFC Bank dropped 0.7% to Rs 1,025.35. Housing finance large-cap HDFC declined 2.3% to Rs 1,652.9, as investors were worried that rising interest rates may impact demand for housing loans.

Telecom stocks also dipped. Reliance Communications lost 2.3% to Rs 452.15, and Bharti Airtel shed 1.1% to Rs 788.10. Hindustan Lever lost 2.7% to Rs 199.65. Index heavy Reliance Industries shed 0.3% to Rs 1,412.85. Reportedly, Chevron Corporation may help Reliance in developing an exploration block in the fertile Krishna-Godavari basin. Auto stocks declined as well. Maruti Udyog shed 2% to Rs 895.20 and Bajaj Auto slipped 1.1% to Rs 2,991.


8:00 AM Sirius Satellite Radio and XM Satellite Radio Holdings agreed to merge.
Rivals in the satellite radio industry Sirius Satellite Radio Inc. (SIRI: chart) and XM Satellite Radio Holdings Inc. (XMSR: chart) announced an agreement to create a $13 billion combined company led by Sirius'''' CEO. The $13-billion merger deal, including a debt of about $1.6 billion, is subject to regulatory and shareholders’ approval. Winning shareholder approval is seen as the easy part for the struggling satellite radio companies, whereas winning approval from the Federal Communications Commission and the U.S. Department of Justice''''s antitrust division will be the challenging part. FCC Chairman Kevin Martin said that the companies have to prove that the deal would be in the public interest, with consumers having more choice and affordable prices.

On condition that the deal is approved by shareholders and regulators, shareholders of both companies will own 50% of the combined entity. However, Sirius will give $4.57 billion of its stock to XM shareholders, a substantial premium to the value of their shares. Investors in XM will get 4.6 shares of Sirius common stock for each XM share they own.The companies believe that the merger will boost the long-term financial success of satellite radio. Analyst estimates of the present value of cost synergies range from $3 billion to $7 billion.


7:30AM Japan finished flat on Tuesday while South Korea advanced.
Asian markets ended mixed on Tuesday. Japanese benchmark index Nikkei 225 closed almost flat, down 0.01% at 17,939.12. Trading was wary ahead of a closely watched decision on interest rates by the Bank of Japan, expected Wednesday. Mitsubishi UFJ Financial Group led decliners in banking shares on concerns the Bank of Japan may hold off on making any changes to its key interest rate at this time. Shares of Mitsubishi UFJ shed 1.3%, while Mizuho Financial Group dipped 0.2%.

Nippon Steel advanced 2.4%, however, on hopes of additional consolidation within the sector after the company announced on Monday it had raised its stake in a smaller steel maker. Sapporo Holding declined 1.6%. The third-biggest beer maker in Japan is facing a $1.3 billion takeover approach from U.S. equity fund Steel Partners.

South Korean Kospi index rose 0.29% to 1,452.96. Steel maker Posco finished up 2.4% on a share buyback and reports late in the session that Standard & Poor''''s lifted its credit rating on the company. Australian benchmark index S&P/ASX 200 fell 0.01% to 5,989.70.


6:30AM European markets were lower on Tuesday on weak real estate stocks.
European equity markets declined on Tuesday. By mid morning, Frankfurt Xetra Dax shed 0.1% to 6,978.84, the CAC 40 in Paris lost 0.3% to 5,723.81, while London FTSE 100 was flat at 6,444.3.

Advancers

EMI added 7.3%. EMI announced it received an approach from Warner. EMI said there was no certainty the approach would lead to a takeover offer. Some auto makers gained. Volkswagen, the German carmaker, gained 3.5% as expectations were raised that the company would lift its dividend when it posts its full-year numbers later in the session. Volvo added 1.8% after it agreed to buy Nissan Diesel to add production in Asia, the world fastest- growing economic region. Shareholders in Nissan Diesel, fourth-largest truck maker in Japan will receive 540 yen a share. That is 22% higher than the closing price yesterday. Volvo already owns 19% of Nissan Diesel.

Decliners

Real Estate companies dipped after Land Securities of the UK posted a 2.2% increase in its net asset value per share, but said higher interest rates were beginning to have a cooling effect on the property market. Shares in Land Securities shed 2.3%, while Unibail of France lost 1.7% and Rodamco Europe, listed in Amsterdam, dropped 0.5%. Oil companies retreated after crude prices fell by around 1% overnight. Total of France was down 0.5%, while Norwegian Statoil lost 0.6%.

Crude oil and gold

Oil prices gained on Tuesday after shedding 1% a day earlier as traders were torn between supply anxieties in Nigeria and the nearing end of winter oil demand in top consumer the United States. Crude oil also recovered some of the losses on Monday, trading at $58.67 a barrel on the Globex electronic platform. London Brent crude rose 31 cents to $58.45 a barrel. The New York Mercantile Exchange did not issue a settlement price on Monday as its trading floor was closed for the Presidents Day holiday. Gold for immediate delivery fell $1.90, or 0.3%, to $668.85 an ounce in early trade in London.

Currencies

The euro bought $1.3141 in morning European trading, slightly up from its level of $1.3135 in New York late Monday, hitting six-week highs on worries about nuclear issues and Iran. The British pound rose to $1.9489 from $1.9453. The dollar bought 119.94 yen, compared with 119.56 yen Monday.