Markets may witness a negative opening

Morning Update 21thNov 2011

Opening Bias

The markets may witness a negative opening in line with weak global cues. The SGX Nifty is trading down by 47 points at 4875 indicating a gap down opening to markets.

Asian shares have also weakened in early morning trades, as Europe’s debt problems remained firmly in focus for the region’s investors and as Japan swung back to a trade deficit in October, with a trade gap of 273.8 billion yen (USD 3.56 billion).

Back home, as manufacturing growth slowed in the first six months of this financial year, a recent survey shows that India Inc expects further moderation in the third quarter. The number of sectors recording excellent and high growth is expected to decline and shift to the moderate growth category in October-December of 2011-12. The reason for further moderation in manufacturing growth is a result of RBI’s successive monetary tightening measures.

The various factors affecting growth in the manufacturing industry are a rise in cost of raw material, high cost of credit, infrastructure bottlenecks, land acquisition issues, increasing oil prices, environmental regulations and procedures, competitiveness between India and China, import of second-hand machinery, duplication and sale of spurious products in the unorganized market, delay in implementation of the goods and services tax and non-uniformity of the tax structure.

In conclusion, we expect the markets to remain volatile for the day as investors are very jittery to invest in such markets, which fail to provide any concrete direction. We advise our readers to stay cautious.

Stocks in Action

According to undisclosed sources, the follow-on share sale in state-run explorer Oil and Natural Gas Corp is unlikely to take place this financial year ending March 31, 2012.The government has decided to delay the share sale, valued at around Rs 12,820 crore (USD 2.5 billion), due to poor market conditions.

Disinvestment Ministry today said it has received in-principle clearance from Petroleum Ministry and is going ahead with the sale of government equity in Oil India Ltd (OIL).The total shares that the government will sell in OIL is yet to be decided and the process of inter- ministerial consultation is on.Under the buyback mode, the government can raise money by selling its equity in the company to the concerned PSU itself. The ministry is also considering asking cash rich PSUs to buy-back shares.

Reliance Industries (RIL) and UK's BP today announced incorporation of India Gas Solutions, a 50:50 joint venture company for sourcing and marketing of natural gas in India.The joint venture is part of the agreement reached in February where BP picked up 30% stake in 23 oil and gas blocks of RIL, including the showpiece KG-D6 gas fields.

In an unprecedented move, the Oil Ministry has sanctioned taking "scrupulous" action against Reliance Industries for natural gas output from its KG-D6 fields falling below the target. Contrary to the Production Sharing Contract (PSC), the ministry has decided to disallow expenditure incurred in constructing production/processing facilities at Dhirubhai-1 and 3 gas fields in KG-D6 block that are currently underutilised/have excess capacity because of falling output.

Reliance Infrastructure on Sunday said it had commissioned a new 400-kv transmission line in Gujarat, making this the company’s fifth functional line. The 140km double circuit line between Ranchodpura (Vadavi) and Zerda (Kansari) is a part of the Western regional system strengthening (WRSS) project and connects key business centers in the region.

Publishing company Arshiya International posted 74 per cent rise in net profit at Rs 31.85 crore for the second quarter ended September 30 as compared to Rs 18.28 crore in the corresponding quarter last year. Net sales of the company jumped 26 per cent to Rs 245.39 crore in the quarter under consideration from Rs195.05 crore in the same period of the previous year.

Mumbai-based infrastructure developer Atlanta Infrastructure has bagged a Rs 1350-crore order from various government and private sector companies. The company bagged the Mohania-Ara road project worth around Rs 1,100 crore with a project order worth Rs 250 crore in Punjab. These projects are scheduled for completion in 30 months. It also won the 126-km Lucknow-Sultanpur highway construction order with the Essar Group.

Corporate Action