Markets likely to open on a subdued note

Last Friday, the US stocks finished on a very flattish note as a drop in the US jobless rate and the easing from the Euro zone couldn’t help boost investors’ sentiments much. However, the Standard & Poor’s 500 Index scored its biggest weekly rally since March 2009, after central banks took action to ease Europe’s debt crisis and American Thanksgiving retail sales set a record.

The payroll gains in the US improved last month, while an increase in the number of Americans leaving the workforce helped push the jobless rate down to 8.6%, the lowest level since March 2009. There also have been some reports that the service industry in the US probably expanded in November at the fastest pace in six months - a sign that the economy is accelerating in the final months of 2011. The European stocks also closed on a positive note last week as comments from the German and French leaders reinforced expectations that a credible plan to tackle the Euro zone debt crisis may be announced soon.

The Indian companies’ ADRs traded in the American markets have closed on a positive note, indicating a good day ahead for them in the Indian markets. In the IT space, Wipro was up by 4.87%, Patni was up by 0.94% and Infosys was up by over 0.76%. In the telecom space, MTNL was down by 0.92% and Tata Communications was up by 1.87%. In the banking space, HDFC Bank was up by 4.89% and ICICI Bank was up by 3.23%. In the other space, Tata Motors was up by 3.84%, Sterlite was up by 2.45% and Dr Reddy’s Laboratories was up by 1.47per cent.

The Asian stocks have flagged off this week on a very mixed note as investors globally are currently trading on a very cautious note, closely tracking developments from the Euro zone.

Back home, with the market expecting a pause in the RBI’s hawkish monetary stance post signals of slowdown and retracting inflation, there are also talks on the street that the central bank might also consider cutting back the cash reserve requirement (CRR) by at least 25 bps to improve liquidity in the system.

With the last date of advance tax payments drawing closer on December 15, 2011, the likelihood of such an intervention by the RBI may be expected any time soon. Market experts believe that cutting back on the CRR, which currently remains unchanged at 6%, may lead to liquidity infusion of around Rs 15,000 cr into the system. In conclusion, we expect the markets to remain volatile for the day as there are possibilities of profit booking by investors. We advise our readers to stay cautious and stick to cheaply available large-cap bets as they are more likely to see some positive movements.

Stocks In Action

State-owned SAIL is likely to finalise within a month a joint venture with Japan’s Kobe Steel for around Rs 2,000 cr, 0.5 million tonne (MT) mill in West Bengal to manufacture special grade steel. The JV will help SAIL acquire the Japanese company’s patented technology, used for value-added applications. The new unit will put into use Kobe Steel’s iron-making technology to make nuggets.

State-run Bank of India (BoI) will pick up a majority stake of 51% in Bharti Axa Mutual Fund for an undisclosed amount to run the latter’s asset management business. As per a joint statement, Bank of India and Axa Investment Managers Asia Holdings (a subsidiary of Axa Investment Managers, part of the Axa Group) have agreed to enter into a joint venture in the asset management business carried on by Bharti Axa Investment Managers.

Ashok Leyland reported a jump of 53.36% in commercial vehicle sales at 7,878 units in November 2011 as against 5,137 units in the same month of 2010. While domestic sales grew by a whopping 66.72% to 6,477 units from 3,885 units in the same month of the previous year, exports increased by 11.90% to 1,401 units last month from 1,252 units in the year-ago period.

Handing out yet another blow, the oil ministry and its technical arm DGH have refused approval to Reliance Industries’ (RIL) USD 1.529 billion investment plans to develop satellite fields to offset the fall in gas output at its flagging KG-D6 block. According to media reports, the ministry and the DGH blocked the investment saying that RIL and its partners, BP Plc of the UK and Niko Resources of Canada, need to rework the financials as the original proposal was submitted in 2009 and now the dynamics have changed.

According to a BSE press release, ONGC, India’s largest oil exploration company, has notified two new discoveries to the DGH at B-127E in Panna formation and North Kadi-472 in the Mandhali formation, taking the total number of discoveries this year to 11. ONGC’s board has also approved an investment of Rs 2,060 cr in the B-127 oil and gas field in the western offshore. The B-127 cluster comprises three marginal fields namely B-127, B-157 and B-59. The cluster is located east of Mumbai High with significant hydrocarbon accumulations in multi-layered reservoirs within the Bassein and Panna formations.

Iomega, an EMC company and an innovator in data storage solutions for small and medium businesses (SMBs), has announced the launch of video surveillance storage management solutions in partnership with Tulip Telecom and MindTree. The partnership looks to provide India’s first video surveillance services based on cloud technology. The cloud solution involves Iomega StorCenter network storage devices, Tulip’s national broadband network with cloud data centers and MindTree’s video management software. The solution provides superior yet economical local cloud video surveillance solutions for SMBs and distributed enterprises. The solution will be made available on all Iomega StorCenter IX and PX series in India.

The country’s second-largest two-wheeler maker Bajaj Auto today reported a 25% increase in its motorcycle sales at 3,31,967 units in November as against 2,65,036 units in the corresponding month last year. Exports during the month stood at 1,29,256 units compared to 90,869 units in November 2010 - a growth of 42%.