Markets may play the volatility game

Overnight the US stocks ended on a mixed note with the S&P and Dow posting marginal gains and NASDAQ shifting into the reds as Wall Street looked to a gathering of European finance ministers for signs of progress in stemming the region’s debt crisis. The Asian shares are also seen trading on a very volatile note with a negative bias as uncertainty lurks over what will transpire from the Euro zone meet. Let’s not forget that in the past such similar meetings and discussions of Euro zone finance ministers haven’t managed to yield much results to bring about any sort of stability.

The Indian companies’ ADRs traded in the American markets have mostly closed on a negative note with the exception of a few, indicating a weak day ahead for them in the Indian markets. In the IT space, Wipro and Patni were up by 0.43 and 1.23 per cent but Infosys was down by over 0.86 per cent. In the telecom space, MTNL was up by 0.93 per cent and Tata Communications was down by 0.69 per cent. In the banking space, HDFC Bank was down by 0.08 per cent and ICICI Bank was down by 2.51 per cent. In the other space, Tata Motors was down by 1.82 per cent and Sterlite was down by 2.61 per cent. However, Dr Reddy’s Laboratories was up by 1.51 per cent.

However one may also look at this in a positive light - that with recent inflation internals reflecting signs of easing off, a below expectation GDP growth would give the RBI enough room to take a pause in its policy stance expected in December 2011. In conclusion, we expect the markets to trade on a volatile note as investors and traders will adopt a wait and watch policy ahead of the GDP growth announcement.

Stocks In Action

According to our sources, state-run steel maker RINL and the Indian Railways are set to sign an agreement for setting up a Rs 350 crore axle plant in West Bengal. The required 50 acres of land for the proposed plant will be provided by the Indian Railways and it will manufacture up to 50,000 axles a year. It is believed that the plant, likely to be operational by the end of 2013, would eliminate the Indian Railways’ reliance on imports and help the country to achieve self-sufficiency in axle making.

According to media reports, it has emerged that RIL has shut four wells in its flagship KG-D6 gas fields off the east coast due to high water ingress, leading to output dipping to 41 million standard cubic metres per day (mmscmd). This latest development has come as another blow for India’s most valuable company in terms of market cap. After shedding around 2.3 per cent yesterday as a result of the arbitration development, the stock may face further selling pressure today.

Tyre major MRF has reported a jump of 73 per cent in consolidated net profit to Rs 618.77 crore for the year ended September 30, 2011 as against Rs 357.50 crore in the year-ago period. The consolidated net sales of the company for the year ending September 30, 2011 stood at Rs 9,743.98 crore, as against Rs 7,458.73 crore in the corresponding period a year ago.

Bakery and dairy products maker Britannia Industries is expanding its wellness food portfolio with the objective of tapping the growing number of health conscious consumers in India. Currently its health and wellness portfolio is about 50 per cent of the company’s entire product range and sales, and is set to become bigger. Though the company does not plan to get into any new category, it is primarily looking to consolidate and expand offerings in the existing ones.

Sugar major Triveni Engineering and Industries has declared consolidated net profit at Rs 22.22 crore in the period under review, down by 68 per cent from Rs 69.75 crore in the year-ago period. The consolidated net sales declined to Rs 1,707.15 crore for the fiscal ended September, 2011 as against Rs 2,260.86 crore in the previous fiscal.

In a filing with the BSE, Thomas Cook India has entered into a tie-up with Bajaj Allianz General Insurance Company to distribute and offer travel insurance and general insurance products from Bajaj Allianz to its vast customer base.