Markets may witness negative opening to the week

Though its true that the country is still plagued by macro economic concerns of policy paralysis, negative return yielding equity markets, contraction in industrial output and many more factors, one must commend the central bank for its efforts and perseverance to bring under control the inflation and arrest the rupee weakening at the right time. In conclusion, we expect the markets to remain volatile today. Our advice to readers is to stay cautious.

Stocks In Action

According to our sources, the domestic fuel retailers have decided against any petrol price hikes currently in view of the correction in the rupee-dollar value. On last Friday the rupee recovered itself to Rs 52.7 after touching a low of Rs 54.3 earlier. Though this is a positive development for the people at large, it’s going to have a negative impact on the OMCs’ share price performance on the bourses.

IOC has raised over Rs 1,400 cr from the Indian bond markets after a gap of nearly two and a half years. Indian Oil’s issue of secured redeemable non-convertible bonds opened for subscription on a private placement basis on December 15, 2011. The ‘AAA’ rated bonds have a maturity of five years with put and call option at the end of the 18th month. The issue has been placed through the book-building route in a coupon range of 9.20 to 9.45% per annum, payable annually. The issue was well received by institutional investors, particularly the FIIs and the banks. The success of the issue once again acknowledges the strong confidence of investors in Indian Oil.

According to a press release filed with the BSE, JSW Steel has fortified an amount of Rs 529.3 cr as the promoter group entity could not convert warrants worth Rs 2,117.5 cr within the permitted time period. The warrants were issued to the promoter entity, Sapphire Technologies, in June 2010 and an initial payment of 25% was made to JSW Steel for the same. It is believed that Sapphire Technologies might have refrained from exercising the conversion option as the share price of JSW has nose-dived since the issue. The stock has closed at Rs 512 per share on the BSE from Rs 1,056.8 a piece on June 16, 2010, the day the JSW Steel Board had allotted the warrants.

According to Business Standard, Coal India is not in favour of the government’s buy-back proposal to meet the latter’s disinvestment target for this fiscal. This company has cited that it doesn’t stand to avail any benefits from the buy-back route as proposed by the government. Under the buy-back mode, the government mulls to raise funds directly by selling its equity in the company to the PSU itself. At present, CIL has close to Rs 49,000 cr of cash reserves which, according to estimates, are likely to reach Rs 60,000 cr by March, 2012. Though this may not have any apparent impact on the company’s share price, it comes as a huge blow to the government’s 11th hour pitches to meet the disinvestment target and stay within the fiscal deficit limits.

According to the Economic Times, Subrata Roy-led Sahara Group will give a loan of more than Rs 250 cr to cash-strapped Kingfisher Airlines to help the carrier continue operations. However, both the companies have refused to comment on this development. For Kingfisher Airlines it would be a big helping hand at the right time. Over the last few months the airline has found its wings getting clipped by almost all its constituents, including airports, lenders and fuel suppliers. Unable to cope with the mounting losses and inadequate cash flows, the airline has defaulted on payments to almost everyone and is desperately seeking a new line of credit with the bankers, even as it simultaneously courts a white knight to bail it out. The carrier has a debt of about Rs 6,500 cr and its creditors have asked the airline to raise at least USD 160 million in equity. Expect some action in the counter today.

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