Market may have a good day on strong global cues

Overnight the US markets rallied high, with the Dow chalking up its best day in more than two years, as the Federal Reserve and five other central banks moved to help banks hit by Europe’s debt crisis. The Federal Reserve and the central banks of the Euro area i.e. Canada, the UK, Japan and Switzerland agreed to reduce the cost of offering dollar financing through swap arrangements. The markets were also buoyed by positive news flow from Asia as China cut the reserve requirement for Chinese banks by 50 bps.

Both the above actions send out an indication that the zest for speculation will re-emerge with a vengeance. One can also expect liquidity to make a return to the equity markets for a while. The risk-taking capacities of the investors will improve and confidence in the money markets will now surge. The Indian companies’ ADRs traded in the American markets have closed on a very positive note indicating a strong day ahead for them in the Indian markets.

In the IT space, Wipro was up by 1.69 per cent, Patni was up by 2.14 and Infosys was up by over 2.1 per cent. In the telecom space, MTNL was down by 0.93 per cent and Tata Communications was up by 1.51 per cent. In the banking space, HDFC Bank was up by 4.18 per cent and ICICI Bank was up by 4.08 per cent. In the other space, Tata Motors was up by 2.81 per cent and Sterlite was up by 2.94 per cent. However, Dr Reddy’s Laboratories was down by 0.83 per cent.

Back home, the GDP growth for Q2FY12 has clocked in at 6.9 per cent, much below the 7.7 per cent we had seen in Q1, indicating that the economy is rather slowing down. The main reason for such a dismal posting was on account of the negative growth seen in the mining sector. Excessive rains and a strike by Coal India’s workers’ union led to a shortfall in coal production by 17.95 million tonnes in the last two months. Against the target of 87.68 million tonnes, the production of coal was only 69.73 million tonnes in the months of September and October.

Keeping in mind the gloomy future of the mining sector in the near term and coupled with the slowdown witnessed in the eight core industries, one may expect the full year GDP growth to come somewhere near the 7-7.5 per cent mark. However, for today we expect a strong rally and a bounce-back on the bourses. We advise our readers to stick to cheaply available large-cap bets as they are more likely to see some positive action today. Having said that the overall outlook still remains bearish and we advise caution in the long term.  

Stocks In Action

Anil Ambani-promoted Reliance Infrastructure expects to start toll collection at its ten road projects, which are being implemented at an estimated investment of Rs 10,000 crore, by the end of this fiscal. The company is executing these projects of the National Highways Authority of India under the public-private-partnership (PPP) model and would earn revenue from toll collected from traffic. These projects include the six-laning of NH 4 between Pune and Satara of length 140 km in Maharashtra, six-laning of NH 7 between Hosur and Krishnagiri of length 60 km in Tamil Nadu and the six-laning of NH 2 between Delhi and Agra of length 180 km in Haryana and Uttar Pradesh. Once these projects are completed, they are likely to generate revenue of Rs 1,200-1,400 crore per annum.

IT firm Cognizant has inked a multi-year agreement with pharmaceutical company AstraZeneca to deliver comprehensive biostatistics and medical reporting services for generating clinical study reports. Under the agreement, the IT firm will provide centralised statistical programming, statistical analysis, medical writing, and document publishing services across the entire chain of clinical data from case report forms to clinical study reports. This will enable AstraZeneca to increase operational efficiency, reduce cycle times and optimize the costs. No financial details, however, were disclosed.

Bharti Airtel, India’s top mobile phone carrier, stated on Wednesday that it has crossed 50 million customers in Africa, where it acquired mobile operations in a USD 9 billion deal in June last year. Bharti currently operates in a total of 19 countries across Asia and Africa and is the world’s fifth-largest mobile operator by subscribers. The company has an internal target to have 100 million customers in Africa by the end of March 2013.

According to unconfirmed sources, the OMCs have decided cut back petrol prices by Rs 0.65 and hike the aviation turbine fuel (ATF) prices by 3.7 per cent, which would take the price for petrol and ATF in Mumbai to Rs 70.65 per litre and Rs 65,599.47 per kilo litre respectively, effective from today. One may expect some action in the stocks of BPCL, IOC and HPCL today.

Enterprise data services company Tulip Telecom has bagged four large network and data centre orders in the public and private sector worth nearly Rs 200 crore. Tulip secured a three-year order worth Rs 48.88 crore from the Rajasthan government under the central government-funded Rajasthan State Crime and Criminal Tracking Network and Systems (CCTNS) project. It also bagged a Restructured Accelerated Power Development Reforms Programme (R-APDRP) project in Bihar worth Rs 24.78 crore over a period of five years, besides a connectivity order from Sahara para-banking worth Rs 50 crore. Furthermore, Tulip has been awarded a five-year, Rs 75 crore data centre order for the new Bangalore facility of a large global telecom major.

JSL Stainless has received an enabling resolution from shareholders to raise up to Rs 750 crore, which could be used to part-fund its Rs 6,000 crore greenfield stainless steel manufacturing plant in Orissa, through qualified institutional placement.