The key benchmark indices were off the day's highs on investor fears surging industrial production may force the central bank to hike key interest rates. Those concerns prompted investors to book profits after the market struck its highest level in a month and half in early trade. The BSE 30-share Sensex was currently flat at 17,168.28, off close to 76.26 points from the day's high. Nine of out of 13 sectoral indices on the BSE were in negative zone.

The market witnessed bouts of intraday volatility. Stocks pared gains soon after hitting 1-1/2 month highs at the onset of the trading session. The market regained strength in morning trade. The market once again trimmed gains in mid-morning trade. It further trimmed gains to in early afternoon trade after the industrial production data. The market moved between positive and negative zone in early afternoon trade. The market cut losses after hitting a fresh intraday low in afternoon trade.

Industrial output rose a robust 16.7% in January 2010 from a year earlier, slightly stronger than market expectations, aided by stimulus measures that boosted domestic demand, data released by the government today showed. Manufacturing output jumped 17.9%. The government revised upwards industrial production growth for December 2009 to a record level of 17.6% from earlier 16.8%

India is well-set to go back to 8.5% growth in the next fiscal year, Deputy chairman of the Planning Commission Montek Singh Ahluwalia said on Friday. He also said he expects foreign fund inflows to continue to be good.

The market has witnessed a good post-Budget rally driven by sustained buying by foreign funds since the presentation of the Union Budget 2010-2011 on 26 February 2010. As per data from the stock exchanges, foreign institutional investors (FIIs) bought stocks worth a net Rs 7815.98 crore this month, till 11 March 2010.

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.

Investors will eye figures of advance tax payment by top Indian firms which will give an indication of fourth quarter March 2010 earnings. The fourth and the last installment of advance tax is due on 15 March 2010.

Food prices moderated slightly while fuel price inflation accelerated in late February adding pressure on the Reserve Bank of India (RBI) to raise rates at its April policy review. The wholesale price inflation (WPI) was at 8.56% in January, just above the Reserve Bank of India's (RBI) end-March projection of 8.5%.

The food price index rose 17.81% in the 12 months to 27 February 2010, marginally lower than an annual rise of 17.87% in the previous week. The recent government decision to raise fuel prices has also stoked inflation. The fuel price index rose 11.38% in the 12 months to 27 February 2010, shooting up from an annual rise of 9.59% in the previous week.

Market expectations of a rate hike remain unchanged as traders expect the RBI's next move will be to raise its benchmark lending and borrowing rates by at least 25 bps each to 5% and 3.5% respectively.

Policymakers including the deputy chairman of the planning commission have said earlier this week that food prices will moderate over the next few months.

The government needs to improve its food grain management system and modify the way it releases grain stocks, the finance ministry's chief economic adviser Kaushik Basu said on Friday.

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.

Meanwhile, the follow-on public offer (FPO) of iron ore miner NMDC was subscribed 83% by 13:00 IST on the last day of the issue today, 12 March 2010. 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 price band has been fixed between Rs 300 and 350.

The latest data from global fund tracker EPFR Global showed that inflows into Asia ex-Japan equity funds reached their highest since November 2009 in the week ended 10 March 2010. China stock funds attracted $31 million in the week ended 10 March 2010, taking in funds for only the second week this year.

Most Asian stock markets edged lower on Friday with investors worried about inflationary pressures in China. The key benchmark indices in China, Hong Kong, Indonesia, and Taiwan fell by between 0.02% to 1.24%. The key benchmark indices in Japan, Singapore and South Korea rose by between 0.13% to 0.81%.

Investors are wary China may start raising interest rates to keep a lid on mounting inflationary pressures. The data released Thursday showed that China's inflation rate jumped to 2.7% in February from 1.5% in January

Meanwhile, Japan's industrial output rose 2.7% in January, revised data showed on Friday, boosted by a sharp rise in production of cars and chemical products. The figure compared with an initial reading of a 2.5% rise and a 1.9% increase in December 2009, the trade ministry said.

Global investors are awaiting further insight into the state of the US economic recovery on Friday, 12 March 2010 when data on US retail sales and consumer sentiment figures will be out. The numbers are expected to indicate how big an appetite Americans have for spending.

Trading in US index futures indicated that the Dow could fall 10 points at the opening bell on Friday, 12 March, 2010

On Wall Street on Thursday, 11 March 2010, stocks were confined to a narrow trading range for most of the session, but a late bounce in financials pushed the S&P 500 to a 17-month high above the 1,150 mark. The Dow Jones industrial average finished up 44.51 points or 0.4%, to 10,611.84. The S&P 500 index rose 4.63, or 0.4% to 1,150.24. It now stands at its highest level since 1 October 2008. The Nasdaq Composite index rose 9.51 points or 0.4% at 2,368.46.

Initial jobless claims in the US fell 6,000 last week to 462,000. Meanwhile, continuing claims totaled 4.56 million, which was greater than what was expected. The trade gap shrank 6.6% as oil imports dropped to their lowest level since February 1999. The trade balance for January came in with a 37.3 billion dollars deficit. In other data, and mortgage rates dropped for a second straight week, remaining below 5%.

The chances of a broad overhaul of US financial regulation dimmed on Thursday after bipartisan Senate talks collapsed, jeopardizing a top Obama administration priority

The Greek economy is set to shrink by more than expected this year, the government said on Wednesday, as it braced for nationwide strikes protesting its plans for bringing the country's budget deficit under control.

Close home, at 13:15 IST, the BSE 30-share Sensex was flat at 17,168.28. The barometer index jumped 76.58 points at the day's high of 17,244.54 at the onset of the trading session, which is its highest level since 21 January 2010. The Sensex fell 22.27 points at the day's low of 17,145.69 in afternoon trade.

The S&P CNX Nifty was up 1.25 points or 0.02% to 5134.65. It hit a high of 5158.10, its highest level since 21 January 2010.

The market breadth turned negative. The breadth was strong at the onset of the trading session. On BSE, 1170 shares advanced as compared with 1547 that declined. A total of 107 shares remained unchanged.

The BSE Mid-Cap index fell 0.09%, while the BSE Small-Cap index rose 0.05%.

Among the 30-member Sensex pack, 17 rose while the rest fell.

Hindalco Industries (up 2.69%), ITC (up 1.65%), Mahindra & Mahindra (up 1.65%), Tata Power Company (up 1.22%) and Bharti Airtel (up 0.99%), were the top Sensex gainers.

Index heavyweight Reliance Industries (RIL) rose 0.74% to Rs 1024.10, extending last two days' gains. But the stock was off the day's high of Rs 1032.60. 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.

Hindustan Unilever (down 3.37%), HDFC Bank (down 1.81%), Bharat Heavy Electricals (down 1.25%), NTPC (down 1.18%) and Jaiprakash Associates (down 0.96%), were the top Sensex losers.

Top gainers from the BSE's 'A' group were, Cairn India (up 3.61%), Fortis Healthcare (up 3.45%), Ackruti City (up 3.17%), Allahabad Bank (up 2.81%) and Mphasis (up 2.01%).

Top losers from the BSE's 'A' group were, Shree Renuka Sugars (down 5.70%), Balrampur Chini Industries (down 2.80%), Oriental Bank of Commerce (down 2.50%), Mahindra & Mahindra Financial Services (down 2.25%) and KSK Energy (down 2.19%).