Another day of volatility expected for the markets

Opening Bias

The markets may open sideways in line with global cues. The SGX Nifty is trading down by 23.5 points at 4844 indicating a flat gap down opening. Overnight U.S. stocks tumbled, sending the S&P 500 Index to a one-year low, as concern over Greece’s debt crisis and Bank of America Corp. (BAC)’s slump outweighed a rebound in manufacturing and construction spending. Asian stocks also dropped for the third day on concern Europe’s debt crisis will worsen.

Back home, we believe cement shares will be in focus as companies start unveiling monthly sales data for September 2011. Cement sales is likely to pick up as monsoon withdraws. Also prices have been hiked by major manufacturers in western region by Rs 5 per 50-kg bag due to supply limitations. Gold rose on concern that Greece will default on its debt, spurring demand for the metal as a haven.

With the Q2FY11 earning season coming close we recommend our readers to closely watch the management commentary at the time of announcement of Q2 September 2011 results, which will provide cues on futures earnings outlook. A poor set of advance tax payment by top 100 companies in Q1FY12 suggest corporate profit growth is likely to be muted in the second quarter.

In conclusion, we expect another day of volatility and our technical analyst has provided us with some key support and resistance levels for the nifty to help you trade better.

 
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Corporate News

Reliance Power is set to earn Rs 2,000 crore by trading carbon credits from its ultra mega power plant (UMPP) in Tilaiya, Jharkhand, during the first 10 years of its operations. The 3,960-Mw Tilaiya UMPP to be commissioned in April 2012 would generate 21.3 million carbon credits during the first 10 years.

MOIL is in talk with SAIL and RINL to set up two plants of manganese alloy products, through joint venture route, for about Rs 600 crore. The unit with SAIL will be established near the Bhilai steel plant in Chhattisgarh for Rs 400 crore and produce about 106000 tonnes of the manganese alloys per annum and the one with RINL will come up at Bobli, near Vishakhapattnam in Andhra Pradesh for Rs 200 crore and would have a production capacity of 57,000 tonnes in a year.

RIL has sought approval to sell gas it plans to produce from coal-bed methane at about $13 per million British thermal unit (mmBtu), more than double the rate at which domestically produced gas is sold at present.

Drug firm Strides Arcolab has received the USFDA approval to market injectable Clindamycin USP, used in the treatment of bacterial infections, in the American market. The product will be available in three single-dose vial sizes and in pharmacy bulk packaging. According to IMS data, the size of the US market for injectable Clindamycin stood at USD 65 million (including bags) in 2011.

The Asian Development Bank plans to sell its 5.2% stake in Petronet LNG, which GAIL India is keen to acquire and may have to pay over Rs 600 crore for it. ADB has offered to sell its 39 million shares valued at over Rs 614 crore on yesterday’s closing price of Rs 157.85 per share on the BSE, sources privy to the development said.

Prism Cement has awarded Perth based India Resources a Rs 1200 crore contract to develop a captive coal mine. India Resources will develop and operate the first phase of coal deposit in Madhya Pradesh's Chhindwara district for 30 years The mine, which is expected to produce some 9.06 million tonnes of coal, was awarded to Prism for its cement plant at Satna. Since demand for coal far exceeds supply in India, it has led to local companies with large energy needs to develop and own captive sources of coal.

Corporate Actions