Indian markets may open positive ahead of RBI monetary policy review

Morning Update 24th Jan12

Opening Bias

The Indian markets may open positive ahead of the RBI’s monetary policy review which is expected to be announced today noon. The SGX Nifty is trading up by a healthy 12 points at 5,064, indicating a gap up opening to the markets today.

The trading bias for today will largely revolve around the central bank’s expected stance and any positive outcome from ‘Mint Road’ in Mumbai will surely provide a fillip to investor sentiments and help lift the markets.

Moving on, the global markets overnight have painted a very mixed picture. While Europe ended on a strong and positive note thanks to some optimism emanating from debt-ridden Greece’s successful dialogue with its private lenders, the US stocks ended their day on a marginally negative note as investors there booked some profits after witnessing a good rally in the month of January 2012. The Asian shares have advanced in the early morning trades, with energy shares leading the gains after Europe agreed on an embargo of Iranian crude oil.

According to a BSE press release, Maruti Suzuki reported a bigger-than-expected 63.6 per cent fall in its quarterly net profit as high interest rates and rising fuel costs hit the demand for cars. The company’s net profit fell to Rs 205.6 crore for the quarter from Rs 565.17 crore for the corresponding period last financial year. Its net sales declined by 17.4 per cent to Rs 7,663.6 crore during the quarter under review from Rs 9,276.73 crore in the year-ago period. Maruti owed this dismal quarterly performance to a slowdown in small car sales - its key product - while recovering from labour unrest last summer. The company said that it lost production of 40,000 units in the quarter under review due to the workers’ strike at the Manesar plant.

According to a BSE press release, Idea Cellular reported nearly a 18 per cent dip in consolidated net profit to Rs 200.9 crore for the quarter ended December 31, 2011 from Rs 243 crore in the October-December quarter last year on account of higher depreciation and financing costs with respect to 3G investments. The company’s 3G investment plans are on track and its high-speed broadband services are now available across 2,300 towns in 20 service areas (including roaming arrangements) in India, the release added. The company’s total income increased to Rs 5,030.8 crore during the quarter under review - a 27 per cent rise from Rs 3,955.6 crore for the quarter ended December 31, 2010.

According to a BSE press release, construction and engineering major Larsen and Toubro (L&T) today posted net profit for the third quarter ended December 2011 at Rs 991.55 crore as compared to Rs 840.53 crore in the corresponding quarter last fiscal, thereby beating the street estimates. The net sales for the quarter stood at Rs 13,999 crore, up by 23 per cent from Rs 11,396 crore in the same quarter last year. During the period, the order inflow was at Rs 17,129 crore. The nine-month order inflow from April to December was at Rs 49,415 crore. The company needs an order inflow of Rs 34,593 crore to meet its fourth quarter (Q4) guidance. It seems quite difficult for the company to meet its guided order inflow targets but the management has maintained that it is working very hard to keep it in line.

According to a BSE press release, Gas Authority of India Ltd (GAIL) announced an increase of 13 per cent in net profit for the third quarter ended December 2011 at Rs 1,091.42 crore as compared to Rs 967.63 crore in the corresponding quarter last year. The net sales for the quarter under review rose by 35 per cent to Rs 11,260 crore from Rs 8,365 crore in the same quarter last year. The PSU oil company’s subsidy burden reduced to Rs 536 crore from Rs 566.7 crore year-over-year.

According to a BSE press release, Coromandel International has posted consolidated net profit of Rs 131 crore for the quarter ended December 31 2011 as compared to Rs 150 crore for the quarter ended December 31 2010, representing a decrease of 13.17 per cent. The total consolidated income has increased from Rs 2,057 crore for the quarter ended December 31, 2010 to Rs 2,561 crore for the quarter ended December 31, 2011, representing an increase of 24.52 per cent. The fall in bottomline can be attributed to a rise in input cost and an increase in interest outgo for the December quarter.

Expect some negative action in the stock of Cairn India ahead of its results’ announcement today as media reports have suggested that its proposed deal with Vedanta Plc seems to have run into rough waters again after the oil ministry approached the cabinet to discuss certain issues connected with this deal. The reports at present seem very unclear but it is believed that the issue was initially raised by the home ministry which has been pointing to the alleged global and domestic ‘transgressions’ by the Vedanta Group. Some of the wrongdoings include instances of human rights violations, defaulting on payments and environmental concerns.

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