Markets may open in the red

Morning Update 17thNov 2011

Opening Bias

The markets may witness a negative opening in line with weak global cues. The SGX Nifty is trading down by 77 points at 5002 indicating a gap down opening to markets.

Overnight, U.S. stocks fell hard after Fitch Ratings signaled trouble for U.S. banks should Europe’s debt trouble worsen, with the crisis overseas continuing to dominate on Wall Street. Asian stocks have also declined in early morning trades, as worries about Europe’s debt troubles further depressed sentiment across the region.

The Indian companies ADR’s traded in the American markets have closed on a negative note indicating a weak day ahead for them in Indian markets. In the IT space, Wipro was down 3.16%, Infosys was down over 2.16% but Patni was up by a massive 7.8% on the back of its de-listing offer made by iGATE. In the Telecom space, MTNL was down 2.28% and Tata Communication was down 1.82%. In the banking space, HDFC Bank was down 0.37% and ICICI Bank was down 2.02%. In the other space, Tata Motors was down 1.57%, Sterlite was down 2.74% and Dr Reddy’s Laboratories was down 1.39%.

Back home, global risk aversion and India’s widening CAD have dragged the rupee close to all-time low levels against the dollar. Yesterday the rupee fell by seven paisa to close at 50.87 against the dollar, inching closer to the all-time low of 51.97 seen in March 2009. The Indian currency has lost around 15% against the dollar in the past three months.

The Reserve Bank of India (RBI) intervened in the foreign exchange market to contain volatility and was seen active in the three-month and six-month forward segment when the rupee was trading around 50.95. After that, the rupee cooled off towards the end of the day’s trade.

Going forward, we believe that any fresh trigger from the troubled euro zone may push the Indian currency to the level of 52 against the dollar.

In conclusion, we at DSIJ expect the markets to witness yet another negative day as investors are very jittery to invest in such markets which fail to provide and concrete direction. We advise our readers to stay cautious.

Stocks in Action

Ultratech Cement will invest Rs 11,000 cr to jack up its production capacity by 10 MTPA to 62 MTPA by the first quarter of 2013-14 fiscal.The company will use the proposed fund on clinkerisation plants through brownfield expansions at Chhattisgarh and Karnataka, installing waste-heat recovery systems, instituting bulk packaging terminal and setting up of ready-mix concrete plants.

State-owned Oil and Natural Gas Corp (ONGC) may see 4.7% rise in crude oil output at over 25 million tonne in 2012-13 but natural gas output is projected to fall 1.4per cent.The company estimates, submitted to the oil ministry, put crude oil output at 25.046 million tonne in 2012-13, up 4.74% from revised estimate of 23.912 million tonne for the current fiscal.Gas production (excluding JVs) has been revised downwards from a budget estimate of 23.536 billion cubic meters to 23.192 bcm in 2011-12.

FMCG player Marico is betting big on its food business, as it looks to build the category and scale up its presence across India in the coming months.The company, which had entered into the breakfast cereal category last year under the brand 'Saffola', said it is feeling the pinch of the high input cost though it ruled out any price increase in the near future.

US listed software company iGATE has said it plans to delist shares of its unit Patni Computer Systems from the stock exchanges and will offer shareholders a minimum price of Rs 356.74 a share. The delisting will be done through a reverse book building process, it said in a statement. iGATE plans to arrange a debt facility of around USD 215 million, to fund the acquisition of shares, it said, adding the delisting is expected to be completed by mid-2012.

Glenmark Pharmaceuticals plans to launch anti-ageing products from the stable of Canadian firm Immanence-IDC as it forays in to the cosmeceuticals segment in India.A new division- Glenmark Cosmo-Care has been formed to pursue opportunities in the cosmeceutical segment in the country. Cosmeceutical products are a combination of cosmetics and pharmaceuticals with biologically active ingredients purporting to have medical or drug-like benefits.The company's foray into cosmeceuticals will significantly enhance the firm's dermatology product offerings and will further consolidate its leadership position in the segment.

Education support services firm Edserv today announced a partnership with Aircel, under which subscribers of the telecom operator will be able to access educational content on their mobiles. The company is eyeing revenues of Rs 40 cr in the next year through this agreement and expects 2 million students to access educational content. Further, the company is aiming to have one cr subscribers from the mobile segment over the next 2-3 years and achieve revenues of Rs 170-180 cr by the end of next financial year.

Madhucon Projects is poised to commission first-phase 300 MW of the 1,920-MW Simhapuri thermal power project by the end of this year and 300 MW of phase II by August 2012. The company is making arrangements for coal supplies from its subsidiary, PT Madhucon Malaysia, after it secured in-principle clearance for jetty construction. The coal production is expected to begin in January 2012. The power project, being executed through Simhapuri Energy, a company arm, is coming up at Thamminapatnam in Nellore district, close to the Krishnapatnam port. The thermal plant is under execution over three phases of 2x150, 2x150 and 2x660 MW supercritical units.

New Listing (Gold ETF)

IDBI Gold ETF (IDBI Mutual Fund)

Listing Date: Thursday, 17th November, 2011
BSE Scrip Code: 533719
Listing In: 'F' Group of Securities
ISIN: INF397L01554
Issue Price: Rs. 2901.56 per unit
Face Value: Rs. 100 per unit

Corporate Action