Market may witness positive opening

Much to our delight, it seems that the market may witness a positive opening today. The SGX Nifty is trading up by 67 points at 4,774.5, thus indicating a gap up opening to the markets today.

Last week the US stocks ended on a very weak note with the Dow Jones shedding a hefty 4.8 per cent of its value during the week on the back of the rising Euro zone bond yields which kept traders on the edge about Europe’s debt crisis and its adverse implications on US economy. However, stock markets in the strained-out Euro zone did manage a bounce-back, though they also ended their respective trading week on a negative note.

The Asian shares are seen trading in the green in the early morning trades after witnessing a huge sell-off last week in line with the other global markets. Even the US stock futures are trading in the green zone as France and Germany, in tandem with the IMF, have decided to take more stringent and dedicated approaches towards battling out the Euro debt crisis.

The Indian companies’ ADRs traded in the American markets managed to close on a positive note on Friday, indicating a positive day ahead for them in the Indian markets. In the IT space, Wipro was up by 0.33 per cent, Infosys was up by over 0.69 per cent and Patni was up by 2.42 per cent. In the telecom space, MTNL was up by 5.15 per cent and Tata Communications was up by 3.41 per cent. In the banking space, HDFC Bank was up by 2.42 per cent and ICICI Bank was up by 0.44 per cent. In the other space, Tata Motors was up by 3.58 per cent, Sterlite was down by 0.65 per cent and Dr Reddy’s Laboratories was up by 0.24 per cent.

Back home, it may seem that after witnessing a huge sell-off over the past few weeks, the markets may spring back in line to post some positive gains. Most of the large-cap stocks also look very much attractive at cheap valuations. But our advice to investors is to be cautious and not go all out in buying the cheap stocks.

For this week, expect some action in auto and cement stocks as the companies in this sector start revealing their monthly sales numbers for November 2011.

In conclusion, despite a few positive news flows that are cheering the markets forward we still expect the markets to remain largely volatile as the larger concerns of a weak rupee and an unstable Euro zone crisis still hang over us. Also the FII flows have become a huge cause of concern as they have sold equities worth Rs 5,919 crore in the month of November alone. We advise our readers to maintain a careful watch over the developments.

Stocks In Action

In a bid to achieve its disinvestment target of Rs 40,000 crore for this fiscal, the government is said to be planning to utilise the buy-back route to disinvest a part of its stake in the PSU steel giant SAIL. Under this route the government would raise money by selling its stake back to the PSU itself.

Expect some action in the aviation industry stocks as the top bosses of the Indian air carriers met Prime Minister Manmohan Singh to seek the government’s help for the cash-strapped airline industry, including rationalisation of taxes on jet fuel. More clarity on the outcome of the hour-long meeting is expected to come out during the day.

According to a statement filed with the BSE, both RIL and its associate company RIIL have decided to jointly terminate their negotiations for acquiring Bharti’s 74 per cent stake in Bharti AXA Life Insurance and Bharti AXA General Insurance. The reasons cited were that both the parties were unable to reach an agreement on the long-term vision and joint governance of the ventures. This latest announcement of scrapping the deal has now put a shadow over RIL’s proposed plan to enter into the financial services’ business. With its oil & gas business already in doldrums, this latest announcement will further hurt the investors’ sentiments, which are already believed to be bearish on this counter.