Markets may open sideways with a negative bias

Back home, in what may seem as yet another blow for the government’s disinvestment plan, the Union Cabinet has decided to defer its decision to raise the projected Rs 40,000 cr via PSU buy-backs and other modes, citing inter-ministerial differences as the main glitch. The Department of Disinvestment (DoD), which had identified about two dozen cash-rich PSUs with a total balance of nearly Rs 2 lakh cr, had earlier sought the opinion of the respective ministries on disinvestment through the buy-back mode. However, several ministries, including those of petroleum and coal, have clearly showed their dissent over the proposal as the move would have impacted the cash balance of PSUs under them.

In other developments, the country’s annual growth in net direct tax collections slowed to 8.3% in the period April-December 2011-12, deepening concerns that the government will miss its revenue targets. The net direct tax collections had grown at 9% between April and November. Data released by the Central Board of Direct Taxes showed a mop-up of Rs 3,23,955 cr between April-December 2011-12, up from Rs 2,98,957 cr in the year-ago period.

Experts believe that a slowing growth rate in direct taxes’ collection implies that the government could miss its budget target of Rs 5.33 lakh cr by about Rs 20,000 cr. If one may observe closer, in view of the same, the government has already planned to borrow Rs 40,000 cr, anticipating a shortfall in both tax and non-tax receipts. The government’s non-tax receipts from divestment and sale of spectrum have suffered in the current fiscal due to a volatile stock market and economic slowdown.

In conclusion, we expect the markets to remain volatile as investors are still jittery to enter the fray and would prefer to wait and watch the Q3 numbers before taking an investment call. 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

According to Business Standard, BM Munjal-led Hero Moto Corp has unveiled three new models that will hit the Indian market over the next few months. The company which has already launched the first Hero branded bike in the market last year unveiled two new bikes - 100cc Passion XPro and 125cc Bike Ignitor along with an 110cc scooter named Maestro. However, the company has not announced the price of the three models and this will be done at the time of the market launch. While the Maestro will be launched in the market during this month, the two new motorcycle models will hit the market later this year. Having already achieved a sales target of over 6 million units of two-wheelers – the highest achieved by any manufacturer in the world – these new entrants will only help the company to scale new heights.

According to a press release with the BSE, state-run upstream major ONGC has unearthed four new discoveries, taking its total for the financial year to 15. These four new wells are located in the states of Assam and Gujarat. The company board has also gone on to announce an interim dividend of Rs 6.25 per share. The record date for the same has been fixed as January 9, 2011. It has been noted that out of the total dividend payout, the government shall receive Rs 4,832 cr as its share.

According to Economic Times, Apollo Hospitals is in talks with Parkway Holdings, a Singapore-based hospital operator, for a prospective tie-up to expand in the Indian sub-continent, Middle East and Africa. However, the company declined to elaborate further about the venture, saying the discussions would hopefully be concluded in the next few weeks and the future roadmap ironed out.

According to Bloomberg, the Government of India has lifted a 6.5% anti-dumping duty imposed on polypropylene imported from Saudi Arabian suppliers, including Saudi Basic Industries Corp, the world’s biggest petrochemical maker. The announcement came just before the visit of the country’s minister of commerce and industry, Tawfiq Al-Rabiah, to New Delhi. India had earlier imposed an anti-dumping duty in 2010 on polypropylene imports from Saudi Arabia, Oman and Singapore because it feared the shipments were valued at less than normal prices and would hurt domestic manufacturers. Among our domestic manufacturers, it is seen that RIL enjoys 70% share of the polypropylene market here and is expected to get heavily impacted by this development. Expect negative action in RIL’s scrip today.

According to Business Standard, ONGC plans to buy out British energy major BG Group’s stake in three of its eastern offshore oil and gas exploration blocks. ONGC will buy BG Group’s 45% participating interest in the Krishna-Godavari Basin block KG-OSN-2004/1, 25% interest in the exploration block MN-DWN-2002/02 in the Mahanadi Basin and 30% stake in deep water block KG-DWN-98/4. While it is ONGC which is buying BG’s stake in the three blocks, no cash will be transferred from its side. Instead, it will get cash in lieu of past liabilities of the British group in the blocks. BG Group will pay about USD 50 million to ONGC toward settlement of past costs that the state-owned firm incurred on its behalf in the three blocks.