Markets may open positive in line with strong global cues

DSIJ Intelligence / 26 Dec 2011

In the previous trading session, U.S stocks rallied after Congress approved a tax-cut extension and orders for durable goods climbed the most in 4 months.

Morning Update 26th Dec 2011

Opening Bias

The markets may open positive in line with the strong global cues. The SGX Nifty is trading up by 17 points at 4,741, indicating a gap up opening to the markets today.

Benchmark Indices

Index Closing % Change
SENSEX 15738.7 -0.47
NIFTY 4714 -0.42
Dow Jones 12294 1.02
S&P 500 1265.33 0.90
NASDAQ 2618.64 0.74
Bovespa 57701.1 0.62
FTSE 5512.7 1.02
DAX 5878.93 0.46
CAC 3102.9 1.01
LIVE
Hang Seng 18629.17 0.00
Nikkei 8500.74 1.26
Shanghai 2193.66 -0.50

Last Friday the US stocks rallied to their third weekly gain after the Congress approved a tax cut extension while the orders for durable goods in November climbed the most in four months. The European stocks also gained last week as reports showed a decline in the US jobless claims and increase in consumer confidence. The Asian markets have also opened on a positive note in early morning trades, acknowledging the global cues.

The Indian companies’ ADRs traded in the American markets have closed largely on a mixed note, indicating a choppy day ahead for them in the Indian markets. In the IT space, Wipro was up by 1.62 per cent, Infosys was up by 0.16 per cent and Patni was down by 0.39 per cent. In the telecom space, MTNL was down by 1.33 per cent but Tata Communications was up by 0.13 per cent. In the banking space, HDFC Bank was up by 0.34 per cent and ICICI Bank was up by 0.04 per cent. In the other space, Tata Motors was down by 0.11 per cent, Sterlite was down by 0.42 per cent and Dr Reddy’s Laboratories was up by 1.11 per cent.

Currency Rates

  Rs/$ Rs/Euro Rs/GBP Rs100/JYP
RBI Rate 52.7220 68.9048 82.7050 67.5300
Future 52.9800 69.1900 82.9500 67.8475

Back home, according to sources, the finance minister and officials from the Ministry of Finance will soon be holding some brainstorming sessions and discussions with various stakeholders in light of the pre-budget meetings to be held in the build-up to next year’s Union Budget, expected in March. The first meeting would be held with agriculturalists, followed by a series of interactions with sectoral experts, representatives, industry captains, trade union leaders and economists over the next few days to get their feedback and inputs for incorporating them in the budget for 2012-13.

Key Global Indicators

  Gold (Rs/10gm) Crude ($/bbl)
Spot 27223 107.35
% change - 0.15
Future 27793 99.86
% change 0.05 0.33

The government will have its task cut out in front of them and is expected to arrest the economic slowdown and combat the impact of the global problems. The current fiscal has been a difficult year for the country’s economy with growth slipping to 6.9 per cent in the second quarter this fiscal. Besides, industrial output in October saw a sharp de-growth of 5.1 per cent as the stock markets remained volatile driven by the negative investor sentiment in India and abroad. Issues like bank recapitalization, access to affordable financial services - especially credit and insurance - and interest rates are also high on the agenda. Moreover, impending tax reforms like direct taxes code and goods and services tax may also figure in the discussions.

In conclusion, we expect the markets to remain positive today with some volatility towards the day’s end as investors, traders and institutions start preparing and building up final strategies and positions as the expiry date nears. We advise our readers to stay cautious.

Stocks In Action

According to our sources, the domestic fuel retailers might next week undertake the much anticipated petrol price hike of Rs 1 per litre as the US dollar has pretty much stayed stubborn above the Rs 52 levels despite the RBI’s measures. However, with a number of assembly elections coming up in the next one year, the OMCs might need that informal nod from the government to go through with their move. For now we expect some positive action in the shares of IOC, BPCL and HPCL today.

According to press statement from the BSE, IRB Infrastructure Developers has notified that the National Highways Authority of India (NHAI) has cancelled a contract awarded to it for the four-laning of a road in Goa. The NHAI had awarded the project to IRB in January last year for the four-laning of the Goa-Karnataka border to Panaji-Goa stretch on a BOT toll basis. However, NHAI failed to provide the necessary land for implementing the project. With these delays in procuring land, the IRB in September this year removed the project from its order book. Though this is negative news for the company, it may not find too much reaction from the markets today.

According to Business Standard, Bharti Airtel has slammed the government’s decision to disallow 3G services’ roaming agreements among carriers and said it would impact the much-needed investments in the sector. The decision is a blow to Bharti Airtel, Vodafone’s India unit and Idea Cellular, three of the country’s top four carriers, which currently provide 3G services beyond their licensed zones through roaming pacts. The move adds to uncertainties in the once-booming sector, which is being hurt by fierce competition as well as a probe into a massive telecom licensing scandal.

According to a filing with the BSE, steel maker Monnet Ispat will buy back shares worth up to Rs 100 crore from the open market at a price not exceeding Rs 500 per share. Monnet Ispat’s board cleared the buy-back proposal at a meeting on December 22. Last Friday, the scrip of the company closed at Rs 364.65 a piece on the BSE, up by 1.5 per cent. This buy-back presents a good opportunity to investors to ride the tide as one may expect the prices to go up to Rs 500 in the near term.

According to Business Standard, Bharti Shipyard’s proposal to foray into the production of defence vessels and ships is believed to have been rejected by the FIPB, a government body for FDI clearance. The Foreign Investment Promotion Board (FIPB) has rejected the proposal based on objections raised by the Department of Industrial Policy and Promotion (DIPP). Expect some negative action today.

According to the Economic Times, the oil ministry has told a parliamentary committee that the production sharing contract (PSC) for the KG-D6 block does not provide for penalty in case of any shortfall in the production targets. However, irrespective of the submission made to the committee, the ministry wants to limit the amount of expenditure that RIL can recoup in proportion to the gas production from KG-D6, as it feels that the 40 per cent drop in output was because the company did not drill the committed number of wells. This comes as a reprieve for RIL which has found itself in the midst of negative developments this year.  

According to Economic Times, Coal India Limited (CIL) has drawn fresh action plans to meet the revised production target of 440 MT for this fiscal. The production target of the public sector firm, which was initially fixed at 452 MT at the beginning of the financial year, was scaled down to 440 MT about a month back. Various reasons were cited, including heavy rainfall, strikes and delays in the grant of forestry and environmental clearances to coal projects for the downward revision in the production target. What remains to be seen is whether the Maharatna company manages to meet its revised plan given the rising demand and staunch supply shortage scenario in the country. Even last fiscal the company was not able to keep up to its revised targets

Corporate Action

Stocks Paying Dividend (Ex-Date)

Scrip Name Action Rs
Ahmednagar Forg Dividend 2
Alfa Laval Interim Dividend 30
Amtek Auto-$ Dividend 1
Amtek India-$ Dividend 0.4
JHS Svendgaard Final Dividend 0.75
Shri Lakshmi Dividend 3

 

BSE Institutional Turnover

 

 FII

 DII

Trade Date  Buy  Sales  Net  Buy  Sales  Net
23-Dec-11 1,281.10 1,196.83 84.27 651.02 729.57 -78.55
22-Dec-11 1,852.18 2,088.57 -236.39 1,045.80 816.06 229.74
21-Dec-11 2,208.25 2,352.48 -144.23 1,019.65 1,152.91 -133.26
Dec , 11 33,414.23 35,016.58 -1,602.35 15,584.67 14,935.55 649.12

 

FII DERIVATIVES STATISTICS FOR 23-Dec-2011

 

Buy

Sell

OI (End of day)

Net Position

  Rs (crore) Rs (crore) No. of contracts Rs (crore) Rs (crore)
Index Futures 1633.20 1554.24 503959 11700.92 78.96
Index Options 20624.26 20620.51 2031309 47833.87 3.74
Stock Futures 4254.43 4355.67 1236777 27105.83 -101.23
Stock Options 452.52 458.54 50947 1102.98 -6.02
Total 26964.41 26988.97 3822992 87743.61 -24.55

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