Indian Market May Continue Its Losing Streak, Open Negative
DSIJ Intelligence / 27 Feb 2012
The Indian markets may open negative in continuation to last week’s losses. The SGX Nifty is trading down by 16 points at 5,475, indicating a gap down opening to the markets today.
Opening Bias
The Indian markets may open negative in continuation to last week’s losses. The SGX Nifty is trading down by 16 points at 5,475, indicating a gap down opening to the markets today.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 17923.57 | -0.86 |
| NIFTY | 5429.30 | -0.99 |
| Dow Jones | 12982.95 | -0.01 |
| S&P 500 | 1365.74 | 0.17 |
| NASDAQ | 2963.75 | 0.23 |
| Bovespa | 65942.70 | 0.19 |
| FTSE | 5935.13 | -0.05 |
| DAX | 6864.43 | 0.81 |
| CAC | 3467.03 | 0.57 |
| LIVE | ||
| Hang Seng | 21502.81 | 0.45 |
| Nikkei | 9692.19 | 0.46 |
| Shanghai | 2449.06 | 0.39 |
Last week the Indian markets tanked by a hefty 2 per cent on the back of some global and domestic concerns. While Greece’ inability to successfully tackle its debt woes was a major overhang on the global front, back home, the PMEAC’s pessimistic and cautious outlook on the Indian economy also impacted investor sentiments. Also, a string of disappointments from corporates like Kingfisher and Sesa Goa, who got entangled with the tax authorities showing poor governance, led to a sell-off in the market.
However, the US stocks notched up some weekly gains last Friday as most of the economic reports managed to off-set the concern about rising oil costs. In the coming days, the US as well as other major global indices may face major barriers from rising energy costs if they are to extend gains beyond the current multi-year highs.
| Currency Rates | ||||
|---|---|---|---|---|
|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP |
| RBI Rate | 49.0650 | 65.5701 | 77.1891 | 61.0000 |
| Future | 48.9625 | 65.6300 | 77.4000 | 60.7850 |
On the domestic front, after a much subdued and muted September and December 2011 quarters, the CMIE expects corporate India to post a 9.4 per cent rise in net profits in the March quarter. The basis of their optimistic expectation stems from the fact that the recent strengthening of the Indian rupee against the US dollar would help the corporate companies to cover their forex losses posted earlier in FY12. According to CMIE, the main driver of growth is expected to be the banking industry, which is likely to see a robust 42.1 per cent rise in net profits due to lower provisions and low base.
However, CMIE adds that despite improvement in the March quarter, the net profit of corporate India for the financial year 2012 as a whole will remain 9.5 per cent, lower than the year ago level. The net profit margin too will drop to a decade low of 6 per cent.
| Key Global Indicators | ||
|---|---|---|
|
| Gold (Rs/10gm) | Crude ($/bbl) |
| Spot | 28022 | 126.96 |
| % change | - | 0.24 |
| Future | 28670 | 109.54 |
| % change | 0.00 | -0.21 |
For today, we expect the markets to remain volatile. Despite the robust FII participation seen last week, we advise readers to tread with caution as on a broader level we still expect the markets to remain highly volatile leading into the budget.
Stocks In Action
According to Economic Times, in retaliation to the oil ministry’s decision to cap marketing margins charged by gas utilities, GAIL India has demanded that the government keep the marketing margin the company and other state-owned firms charge on imported liquefied natural gas (LNG) outside the regulatory purview. GAIL has argued that the dynamics of sourcing LNG from the international markets and the risks and costs associated with marketing it to domestic consumers were very different from the sale of domestic natural gas.
According to a BSE press release, Vedanta Resources, the London-listed metals and mining firm, has combined all its key investments in India into a single company called 'Sesa Sterlite', thereby creating a simple structure spanning industries from oil to iron ore. The statement further read that three shares in iron ore miner Sesa Goa would be issued for every five shares held in non-ferrous metals producer Sterlite Industries. This would thereby merge Sterlite into Sesa Goa. Unlisted unit Vedanta Aluminum, Madras Aluminum Co and Vedanta's holding in oil and gas producer Cairn India will also be transferred to the new company, Sesa Sterlite.
Expect ONGC to be in action as a ministerial panel is slated to meet today to decide on the base or reserve price to be set for the 5 per cent government stake sale through the auction route in ONGC, which could fetch the exchequer around Rs 12,000 crore.
According to The Mint, a group of ministers, headed by Finance Minister Pranab Mukherjee, on Friday cleared a new investment policy for the urea sector. It is believed that the panel has approved the urea investment policy but recommended some changes before it is implemented. The Department of Fertilizers has suggested changes in the eligibility criteria for plants to qualify for greenfield, brownfield and revamped plant categories. The new urea investment policy is aimed at building fresh capacities in the country which has not seen any investment in urea since 1999. We expect heavy action in the fertiliser pack today that includes Chambal, RCF, and National Fertilizers, etc.
According to Business Standard, Glenmark Pharmaceuticals has issued a voluntary nationwide recall in the US for seven lots of its oral contraceptive Norgestimate and Ethinyl Estradiol tablets due to a packaging error.The recall is issued by the company's US arm, Glenmark Generics Inc, for tablets in strengths of 0.18 mg/0.035 mg, 0.215 mg/0.035 mg and 0.25 mg/0.035 mg. The recall is being implemented because of a packaging error where select blisters were rotated 180 degrees within the card, reversing the weekly tablet orientation and making the lot number and expiry date visible only on the outer pouch. As a result of the error the daily regimen for these oral contraceptives could leave women consumers in the US at risk for unintended pregnancy.
Corporate Action
| BSE Institutional Turnover | ||||||
|---|---|---|---|---|---|---|
|
| FII | DII | ||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 24-Feb-12 | 11,138.59 | 2,183.29 | 8,955.30 | 1,055.99 | 1,892.70 | -836.71 |
| 23-Feb-12 | 4,069.92 | 3,965.37 | 104.55 | 1,453.70 | 2,094.63 | -640.93 |
| 22-Feb-12 | 4,033.40 | 3,203.77 | 829.63 | 1,215.07 | 2,547.97 | -1,332.90 |
| Feb , 12 | 71,747.51 | 48,308.59 | 23,438.92 | 23,233.25 | 33,370.68 | -10,137.43 |
| FII DERIVATIVES STATISTICS FOR 24-Feb-2012 | |||||
|---|---|---|---|---|---|
|
| Buy | Sell | OI (End of day) | Net Position | |
|
| Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) |
| Index Futures | 2561.35 | 2223.34 | 488933 | 13396.01 | 338.01 |
| Index Options | 13396.85 | 12294.31 | 1307418 | 35490.14 | 1102.54 |
| Stock Futures | 1782.42 | 2454.88 | 902567 | 26574.93 | -672.46 |
| Stock Options | 665.83 | 691.69 | 25495 | 758.02 | -25.86 |
| Total | 18406.45 | 17664.22 | 2724413 | 76219.11 | 742.23 |
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