Markets may open lower on weak global cues

Overnight, the US stocks suffered significant losses on concerns about Italy’s next auction of government debt. The global markets initially rose after a Euro 9 billion (USD 11.8 billion) auction of Italian six-month bills, which sold at an average yield that was around half that seen at the November auction. However, the session turned choppy and volatile soon after that with German and French shares coming under added pressure after the European Central Bank showed it had significantly boosted lending to banks. The Asian shares have also edged back into the negative zone, tracking the weak global cues as the investor risk appetite abates.

The Indian companies’ ADRs traded in the American markets have closed largely on a negative note, indicating a weak day ahead for them in the Indian markets. In the IT space, Wipro was down by 0.59 per cent, Infosys was down by 0.66 per cent and Patni was down by 1.02 per cent. In the telecom space, MTNL was down by 0.61 per cent and Tata Communications was down by 1.37 per cent. In the banking space, HDFC Bank was down by 1.67 per cent and ICICI Bank was down by 3.28 per cent. In the other space, Tata Motors was down by 2.01 per cent, Sterlite was down by 2.75 per cent and Dr Reddy’s Laboratories was down by 0.88 per cent.

Back home, the inflation internal number for the week ended December 17 is expected to be announced today. As a reminder to our readers, we have seen a sharp cool-off in inflation over the past couple of months with the latest food inflation data for week ended December 10 coming in at 1.81 per cent.

In other developments, one may expect crude oil futures to be in some action over the coming days as Iran has issued a strong warning that they will close the Strait of Hormuz to oil shipping traffic if the western nations move to impose sanctions on Iran’s oil industry. The US and several of its western allies have said they are prepared to impose such sanctions over concerns that Iran is actively developing nuclear weapons, which it denies. Oil industry watchers have said that closing the strait would force shippers to take longer routes, further driving up the oil prices. About one-sixth of the world’s oil is shipped through the strait.

In conclusion, we expect the markets to remain volatile as investors, traders and institutions start preparing and building up strategies and positions ahead of the expiry of the December series today. We advise our readers to stay cautious.

Stocks In Action

According to a filing with the BSE, DLF, along with its joint venture partner Hubtown, have sold 100 per cent of their respective shareholding in DLF Ackruti Info Parks (Pune) for an aggregate consideration of Rs 810 crore to an entity controlled by a real estate fund affiliated with The Blackstone Group, BRE/Mauritius Investments II, after obtaining all the necessary approvals. Prior to the sale of their respective shareholding, the company and Hubtown held 67 per cent and 33 per cent equity shares in DLF Ackruti respectively. DLF Ackruti owns a notified IT/ITES SEZ located in Pune, Maharashtra. This sale was part of the company’s plan to divest in its non-strategic assets in order to reduce its debt which currently stands at a whopping Rs 22,500 crore as on September 30, 2011. This is a positive development for the company and one may expect some action in this scrip today.

According to Business Standard, TVS Motor Company plans to launch automatic transmission scooters and motorcycles from 2013 with 20 per cent better fuel efficiency in a bid to strengthen its foothold in the fast growing two-wheeler market. The Chennai-based auto major showcased its latest such engines for a 110 cc scooter and motorcycle, both likely to hit the market in the second half of 2013. It is believed that the acceleration and initial performance would improve with this new technology and the engine weight would be reduced by 15 per cent. However, the prices of the various models have not yet been revealed. Overall one may expect some action in the stock today.  

According to press release from SEBI, the watchdog regulator has banned RDB Rasayans, One Life Capital, PG Electroplast, Brooks Lab, Taksheel Solutions, Tijaria Polypipes and Bharatiya Global Infomedia from raising any further capital and has prohibited the directors from participating in the capital markets due to certain irregularities found in their recent IPOs.

According to Business Standard, Godrej Properties, the realty arm of Godrej Group, plans to raise up to Rs 750 crore through the capital markets. The company is exploring ways such as public issue, rights issue, private placement or a qualified institutional placement.