Indian Markets May Recoup Losses, Open Positive
DSIJ Intelligence / 28 Feb 2012
The Indian markets may snap back its losing streak and open positive. The SGX Nifty is trading up by 36 points at 5,363, indicating a gap up opening to the markets today.
Opening Bias
The Indian markets may snap back its losing streak and open positive. The SGX Nifty is trading up by 36 points at 5,363, indicating a gap up opening to the markets today.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 17445.75 | -2.67 |
| NIFTY | 5281.20 | -2.73 |
| Dow Jones | 12981.51 | -0.01 |
| S&P 500 | 1367.59 | 0.14 |
| NASDAQ | 2966.16 | 0.08 |
| Bovespa | 65241.50 | -1.06 |
| FTSE | 5915.55 | -0.33 |
| DAX | 6849.60 | -0.22 |
| CAC | 3441.45 | -0.74 |
| LIVE | ||
| Hang Seng | 21306.38 | 0.42 |
| Nikkei | 9568.75 | -0.68 |
| Shanghai | 2443.47 | -0.15 |
After a rather spectacular show during the initial seven weeks of CY2012, the markets tanked heavily yesterday as investors took the steep rise in global crude oil prices as a reason to book profits on the bourses. The sharp and sudden rise in crude prices (spot & future) coupled with the stagnancy prevailing in the rupee versus dollar rates has increased the pressure on the domestic oil marketers and in turn the government to reduce losses on the imported fuel and keep the trade balance in check.
| Currency Rates | ||||
|---|---|---|---|---|
|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP |
| RBI Rate | 49.0475 | 65.8900 | 77.7795 | 60.5400 |
| Future | 49.0475 | 65.9000 | 77.7725 | 60.4975 |
However, government sources have revealed that as soon as the last leg of the UP elections come to an end, petrol prices would be hiked by around Rs 4 per litre while diesel would see a hike of Rs 2 per litre. The sudden hike in retail fuel prices would in turn lead to a rise in fuel inflation and thereby the overall benchmark inflation. Consequently ,the RBI might be compelled to put the interest rate cuts on hold for yet another quarter.
Another shocker to the Indian economic health could emerge from Moody’s as the credit rating agency has stated that Indian banks, particularly PSU lenders, will suffer losses on loans to the telecom firms whose licenses were cancelled by the Supreme Court in the 2G spectrum allocation case. It said the difficult operating environment would continue to pressure the asset quality and ratings of banks. The lenders have an exposure of over Rs 10,000 crore to the telecom companies which were granted 2G license in 2008. However, in respite, Moody’s added that the loans relating to the cancelled licenses represent a small fraction (0.2 per cent) of the banking system's total loans. Nevertheless, we do expect negative action for today in the PSU bank pack.
| Key Global Indicators | ||
|---|---|---|
|
| Gold (Rs/10gm) | Crude ($/bbl) |
| Spot | 28022 | 125.18 |
| % change | - | 0.35 |
| Future | 28730 | 107.99 |
| % change | 0.23 | -0.53 |
In other developments, which may have no severe impact on the markets today, operations in public sector banks may be hit tomorrow as employee unions’ will observe a day-long strike opposing outsourcing of non-core activities to the private sector, among other things. The strike by bank employees is a part of the one-day all-India general strike, called by major central trade unions. Seven insurance unions, representing public sector life and general insurance sectors, have also extended support to the strike call. However, large private sector lenders like ICICI Bank, HDFC Bank and Axis Bank as also the foreign banks are expected to function normally. Private sector insurance companies will also not participate in the strike.
Finally, for today we expect the markets to remain positive with bouts of volatility throughout the day. Despite this we advise readers to tread with caution as we still expect the markets to remain highly volatile leading into the Union Budget.
Stocks In Action
According to a press release on the BSE, pharma company Strides Arcolab's consolidated net profit for the fourth quarter jumped to Rs 68.4 crore from Rs 2.3 crore a year ago, helped by strong sales growth and exceptional foreign exchange gains. While net sales for the October-December quarter were up 50 per cent from a year ago quarter to Rs 686.47 crore, Strides had forex gain of Rs 59.84 crore, compared with a forex loss of Rs 4.96 crore in the year ago quarter. For the full year (2011), its net profit surged 83 per cent from a year ago to Rs 225 crore, while revenue was up 46 per cent year-on-year to Rs 2,577 crore.
According to a press release on the BSE, Jaiprakash Associates said its shareholders and creditors have approved the hiving off of the cement business to a wholly-owned subsidiary, Jaypee Cement Corporation (JCCL). Cement is one of the major businesses of Jaiprakash Associates, the flagship company of the Jaypee group. Besides expanding capacity in North, East and Central India, it is in the process of setting up manufacturing units in Gujarat and Karnataka. Jaypee Group has an aggregate installed capacity of 26.20 million tonne per annum of cement at present and is in the midst of expanding capacity to 35.90 million tonne. Jaiprakash Associates also has interests in other areas such as infrastructure development, real estate and hospitality. The proposed demerger is expected to benefit both the transferor and the demerged firm as it would provide focused management for the respective businesses of the two companies.
According to Reuters, Gitanjali Gems is close to acquiring a jewellery retail company in China and hopes to announce a deal in the next 2-3 months. In December 2011 it acquired Hong Kong-based jewellery manufacturing company Crown Aim, but has so far not disclosed the financial details of the deal. The retailer plans to expand in China, India and the US in the coming fiscal that begins April 1. The United States accounts for 35 per cent of the total diamond jewellery market, while China, Japan, India and the West Asia each account for 10 per cent of the global demand. Gitanjali retails diamond jewellery under the brands Gili, Nakshatra, Asmi and D'Damas in India. It also manufactures and sells gold and diamond jewellery, and has signed a sourcing pact worth USD 10 million with a consortium of diamond miners.
According to a press release on the BSE, Mauritius-based Caduceus Asia Mauritius Ltd will pick up 11.93 per cent stake in Shasun Pharmaceuticals Ltd by infusing Rs 50 crore. The promoters' holding will come down to 41.15 per cent from the current 46.73 per cent. The money will be used to pay long term funds for the company and to part-finance the capex. Caduceus Asia Mauritius Ltd is a part of OrbiMed, a private equity fund focusing on healthcare. OrbiMed has earlier invested in Clinical Research firm EcronAcunova in 2009 and Bharat Serums and Vaccines Ltd in 2010, through Caduceus Asia Mauritius Ltd.
Expect some action in the United Breweries packs owned by liquor baron Vijay Mallya as according to an article that appeared in The Economic Times, Vijay Mallya-promoted United Spirits is considering to sell 49 per cent stake in its Glasgow based subsidiary Whyte & Mackay to pay off debt.
We expect negative action in scrip of Coal India as a group of ministers considering reforms in the sector has handpicked some easy steps such as expanding the number of approved coal customers, but shied away from bold moves needed to expand domestic output. Experts believe that this will aggravate the coal supply problem by widening the demand-supply gap rather than solving the problem. The negative sentiments might also cascade onto the power stocks as the viability of a large number of power plants would come into question post this disappointment.
Expect negative movement in the complex fertilizer packs of GSFC, Zuari and GNFC, etc as the government is expected to take a decision soon on slashing subsidy on phosphatic and potassic fertilisers for the next fiscal. Recently, an inter-ministerial committee had decided to reduce the subsidy on nitrogen (N), phosphate (P) and potassium (K) in the wake of strengthening rupee and bearish global price.
Corporate Action
| Stocks Paying Dividend (Ex-Date) | ||
|---|---|---|
| Scrip Name | Action | Rs |
| Sinclairs Hotel-$ | Interim Dividend | 4.00 |
| BSE Institutional Turnover | ||||||
|---|---|---|---|---|---|---|
|
| FII | DII | ||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 27-Feb-12 | 2,957.94 | 2,628.85 | 329.09 | 1,206.72 | 1,905.86 | -699.14 |
| 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 |
| Feb , 12 | 74,705.45 | 50,937.44 | 23,768.01 | 24,439.97 | 35,276.54 | -10,836.57 |
| FII DERIVATIVES STATISTICS FOR 27-Feb-2012 | |||||
|---|---|---|---|---|---|
|
| Buy | Sell | OI (End of day) | Net Position | |
|
| Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) |
| Index Futures | 2492.20 | 3255.23 | 464092 | 12326.19 | -763.03 |
| Index Options | 15664.61 | 15516.66 | 1420269 | 37500.25 | 147.95 |
| Stock Futures | 1802.05 | 2456.49 | 924096 | 26261.17 | -654.44 |
| Stock Options | 694.43 | 698.80 | 31317 | 886.08 | -4.36 |
| Total | 20653.30 | 21927.17 | 2839774 | 76973.68 | -1273.87 |
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