Markets likely to open in the negative

Overnight, much in line with the positive global cues, the US stock markets bounced back into the green zone, posting their best day in at least a month, as Wall Street embraced moves by European leaders to join the Euro zone members in a fiscal union, and on this evidence the US holiday sales got off to a record start. The Asian shares too have kicked off to a positive start in the early morning trades, extending the sharp gains they posted yesterday.

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 2.84 per cent, Infosys was up by over 2.06 per cent and Patni was up by 1.12 per cent. In the telecom space, MTNL was up by 4.9 per cent and Tata Communications was up by 3.73 per cent. In the banking space, HDFC Bank was up by 3.02 per cent and ICICI Bank was up by 4.1 per cent. In the other space, Tata Motors was up by 6.23 per cent, Sterlite was up by 4.69 per cent and Dr Reddy’s Laboratories was up by 2.4 per cent.

Back home, the market witnessed a stellar performance yesterday as it rose by more than 3 per cent. However, we strongly advise investors and readers not to blindly buy into this rally, because what we saw yesterday was merely a bounce-back from the traders covering their short positions. It was an expiry date for most of the stock indices globally and hence our markets followed a positive cue in tune with them.

If one closely looks at the BSE turnover, it clocked Rs 1,902 crore as against Rs 2,161 crore on Friday, November 25. On an average the BSE turnover for such strong rallies is usually very strong - over the Rs 2,000 crore mark. A turnover of Rs 1,902 crore yesterday indicates that the markets rose with very little volumes and the overall sentiment is still subdued if not bullish.

On the macro front, the government is expected to announce the Q2 GDP growth of our economy on Wednesday, November 30. The market consensus expects the GDP growth to further contract downwards below 7.7 per cent that it clocked in Q1. Expectations are also high towards a below 7 per cent mark. Whatever the expectations may be, the one thing that is sure is that the economy is going to post a growth figure at one of its lowest points in recent years on Wednesday. This surely fortifies the fact that India Inc. is still not out of its bad times.

All the hype about the retail FDI has also witnessed a lot of opposition which has cast a shadow over the possibility of it ever seeing the daylight.

In conclusion, despite a positive session witnessed yesterday by the markets, we still continue to maintain our stance that the markets are highly volatile as of now. The larger concerns of a weak rupee, an unstable Euro zone crisis and the expectations of a muted Q3 earnings’ report by India Inc. still hangs over us. Also, the FII flows have become a huge cause of concern as they have sold equities worth Rs 6,221.95 crore in the month of November alone. In fact, yesterday, on a day that the markets rose by over 3 per cent, the FIIs grabbed this opportunity to off-load further equities worth Rs 302 crore, reflecting their bearish stand in the markets.

In a filing with the BSE, Bangalore-based Value Mart Retail Solutions Limited today announced that it will raise Rs 10 crore through a preferential issue of shares to promoters and other strategic investors. Commenting on the same, C K Vasudevan, MD, Value Mart Retail Solutions, said that 20 lakh equity shares would be issued and allotted at a price of Rs 50 per share (comprising nominal value of Rs 10 and a premium of Rs 40 per share) under the exercise. The funds raised via the preferential issue would be used extend the company’s footprint in the country’s travel and hospitality sectors by setting up offices and travel lounges. This will enable the company to increase its turnover and profitability.

Agri machinery products maker Escorts has announced its FY11 results showing that the company’s annual net profit has declined by 5.47 per cent to Rs 120.01 crore for the fiscal ended September 30, 2011 as against a net profit of Rs 137.5 crore in the previous fiscal, on the back of an increase in the raw material costs.

In a press release filed with the BSE, Thomas Cook Plc has confirmed that they have reached an agreement with their bankers in the UK in a bid to amend their banking facilities and provide them with better banking facilities that will help improve the robustness of their business. This has also come as a positive development for the India-listed entity, which witnessed a good rally yesterday on the back of this announcement.

Kale Consultants Ltd has informed the BSE that Etihad Airways, the national carrier of the United Arab Emirates, has announced that it would outsource the accounting of passenger and cargo revenues to them from April 2012. Kale Consultants Ltd, an Accelya Group company, employs over 1,400 people and has more than 100 aviation industry clients across 30+ countries. Etihad Airways began operations in 2003 and in 2010 carried more than seven million passengers. From its hub at Abu Dhabi International Airport, Etihad serves 86 cities in the Middle East, Africa, Europe, Asia, Australia and North America, with a fleet of 61 Airbus and Boeing aircrafts.

As per a BSE filing, Glenmark Generics USA, a subsidiary of Glenmark Generics, announced that the US FDA has granted tentative approval for the Montelukast Sodium 10 mg tablets.Based on the tentative approval for these tablets, Glenmark Generics should be able to launch the product upon its patent expiry in August 2012. Glenmark’s current portfolio consists of 73 products authorised for distribution in the US marketplace. The company has over 40 ANDAs pending approval with the US FDA. In addition to these internal filings, GGI continues to identify and explore external development partnerships to supplement and accelerate the growth of the existing pipeline and portfolio.

In two separate individual filings with the BSE, Videocon and BPCL have announced that the successful Barquentine-3 appraisal well encountered more than 662 net feet (202 metres) of natural gas, significantly expanding the estimated recoverable resource range to 15 to 30+ trillion cubic feet (TCF) of natural gas, with an estimated 30 to 50+ TCF of natural gas in place.

Aurobindo Pharma Ltd has informed the BSE that there was a fire incident in its powder processing area during the early hours on November 28, 2011 at Unit 11, which is located at Pydibhimavaram, Srikakulam near Vizag, AP. Three persons were injured and they were taken to the hospital. The powder processing area is isolated from the intermediate block. There was no impact on the operations and the assets.

Redington (India) has informed the BSE that Cadensworth (India), one of the company’s wholly owned subsidiary, has entered into a strategic relationship with EMC Data Storage Systems (India), a leading provider of information infrastructure solutions with a view to sell the latter’s infrastructure technology solutions and may also sell complementary and non-competing product lines, solutions and services. Through this focused relationship, Cadensworth aims to leverage EMC’s technology in the fast growing mid-size and SMB segments in India.

A leading global provider of IT, BPO and consulting services, Hexaware Technologies Ltd, has informed the BSE that the company has recently entered into a strategic alliance with banking business intelligence (BI) specialist, iCreate Software, to build a centre of excellence (CoE) to enhance iCreate’s flagship banking BI product, Biz$core. This strategic partnership will allow iCreate to leverage Hexaware’s banking micro-vertical and BI capabilities, its global reach and its impressive client roster to jointly address the market for pre-built BI and analytics solutions for the banking sector.

Punj Lloyd Group, an EPC company, has bagged an order worth Rs 469 crore from the state-run ONGC for laying a submarine pipeline in the Mumbai High oil and gas field in the western offshore. The scope of work involves survey, design, engineering, procurement, fabrication and installation of 122 km of submarine pipeline, among other objectives.

Subex Ltd has informed the BSE that the company has obtained board approval to raise up to USD 135 million for funding its foreign currency convertible bonds (FCCBs) with a total redemption value of USD 131 million to be redeemed in March 2012.

Hyderabad-based GVK Biosciences has entered into a drug discovery alliance with Philadelphia-based Moulder Center for drug discovery research at Temple University. As part of the multi-year integrated drug discovery collaboration, GVK Bio will be responsible for target validation, lead identification and lead optimisation of small molecules in selected therapeutic areas, including cardiovascular, metabolic and central nervous system disorders.