Markets may witness a positive opening

The markets may witness a positive opening in line with the strong global cues. The SGX Nifty is trading up by 30 points at 5,341, thus indicating a strong gap up opening to markets today.

Overnight the US stocks overcame a choppy session to end decisively higher on reports that Silvio Berlusconi would resign as prime minister of Italy as the country works to rein in its debt. Berlusconi offered to step down as soon as Italy’s parliament approves austerity measures in a vote expected to take place next week. Italy’s surging borrowing costs have added to investor concerns about Europe, where the chance of a messy default in Greece recently sent shockwaves through the global markets.

The Asian markets are also seen trading on a firm note in early morning trades as the investors of this region cheered the announcement of Berlusconi to resign as a step toward resolving the crippling debt problems in Europe. The Chinese inflation data which showed signs of cooling down has also been positively accepted by the investor community.

The Indian companies’ ADRs traded in the American markets have majorly closed in the green zone indicating a positive day ahead for them in the Indian markets.

In the IT space, Wipro was up by 0.29%, Infosys was up by 0.79% and Patni was up by a massive 2.7%. In the telecom space, MTNL was down by 1.63% and Tata Communications was up by 0.51%. In the banking space, ICICI Bank was up by 1.42% and HDFC Bank was up by 1.5%. In the other space, Sterlite was up by 0.29%, Dr Reddy’s was up by 0.4% and Tata Motors was up by 1.46%.

Back home, the economic slowdown in the US and the Euro zone seems to have hit India’s merchandise trade sector severely. The country’s merchandise exports fell to a 12-month low of USD 19.9 billion in October. As a result, the trade deficit rose to a four-year-high of USD 19.6 billion in the month.

Export growth came down to 10.8%, even as import growth remained steady at 21.7%. That has raised the spectre of the trade deficit breaching even the USD 150 billion dollar mark this fiscal, a little more than 8% of India’s estimated GDP this fiscal (based on the budget estimates of economic growth). We have observed that the rate of growth in exports has been plummeting continuously since July, when it was 81.8%. For imports, the monthly growth rates have been highly volatile. However, this is not expected to widen the current account deficit (CAD) much. The CAD is currently pegged at 2.7% of GDP, at USD 54 billion, as invisibles such as the services trade balance are expected to show up.

However, if the services trade balance also slows down, the CAD could become a problem. So far, FII and FDI inflows have been good and therefore the financing of CAD has not become a problem. But if they dry up, given the external shocks, there will be more complications. In conclusion, we expect the markets to remain positive for the day tracking strong cues from the global markets. Nevertheless we shall update our readers on a timely basis on the expected direction of the markets.

KEC International has bagged three new orders worth Rs 400 cr, including a contract of Rs 306 cr from Saudi Arabia Electricity Company to set up 380 kV double circuit overhead transmission lines. The contract is expected to be completed in 24 months. With this contract, the company’s order book is about Rs 8,450 cr.

State-owned steel maker RINL and power equipment manufacturer BHEL will soon sign an agreement to form a joint venture for putting up a high-end seamless tube mill at Vishakhapatnam, entailing investments of over Rs 2,000 cr. The shareholding pattern of the joint venture is yet to be finalised but since the mill would be located inside RINL’s Vishakhapatnam facility, RINL would have a majority stake in the venture. High-end seamless tubes find application in the energy, oil & gas and water sectors, among others.

The Competition Appellate Tribunal will hear today an appeal by realty major DLF against a competition commission order, wherein the company has been asked to pay a penalty of Rs 630 cr for the abuse of its dominant market position.

IDFC has reported a jump of 54.93% in net profit to Rs 524.27 cr for the quarter ended September 30, 2011 as against Rs 338.39 reported in the previous year on the back of higher income from operations. The company’s income from operations during the quarter rose to Rs 1,714.93 cr from Rs 1,216.75 cr in the same period last fiscal.

J Kumar Infra has received orders worth Rs 600 cr for the widening of the Sion-Panvel special highway project in Maharashtra. The project is under a build, operate and transfer (BOT) model and will cover the stretch between the Uran flyover and the BARC junction.

Mukesh Ambani-owned Infotel has acquired 38.5% stake in digital learning solutions firm Extramarks Education, a move that will help RIL to strengthen its content pipeline as it looks to launch its broadband services soon. The investment has been made through an affiliate company, Reliance Strategic Investments, for an undisclosed amount. According to sources, there will be no dilution of equity in Extramarks and RIL will infuse fresh capital. The investment by Infotel will enable Extramarks to pursue its aggressive growth plans in further developing services and deepening its market penetration. The funds will be used for executing computer-aided learning projects and new technologies.