Markets May Turn Volatile Ahead Of UP Poll Results
DSIJ Intelligence / 05 Mar 2012
Indian markets may open negative amidst much volatility as we await the election poll results from Uttar Pradesh. The SGX Nifty is trading down by 8 points at 5383 indicating a gap down opening to markets today.
Opening Bias
The Indian markets may open negative amidst much volatility as we await the election poll results from Uttar Pradesh. The SGX Nifty is trading down by 8 points at 5,383, indicating a gap down opening to the markets today.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 17636.99 | 0.00 |
| NIFTY | 5359.40 | 0.00 |
| Dow Jones | 12977.57 | -0.02 |
| S&P 500 | 1369.63 | -0.32 |
| NASDAQ | 2976.19 | -0.43 |
| Bovespa | 67781.60 | 1.45 |
| FTSE | 5911.13 | -0.34 |
| DAX | 6921.37 | -0.29 |
| CAC | 3501.17 | 0.04 |
| LIVE | ||
| Hang Seng | 21365.1 | -0.91 |
| Nikkei | 9755.81 | -0.22 |
| Shanghai | 2463.99 | 0.13 |
The outcome of the UP elections, which is widely speculated to be a key to the UPA government pushing ahead its stalled economic reforms, will be closely watched by investors and traders on the street today. Market participants, already wary of regional parties exerting pressure at the centre, are hoping that the UP elections will not dilute the power of national parties such as the Congress and Bharatiya Janata Party (BJP).
| Key Global Indicators | ||
|---|---|---|
|
| Gold (Rs/10gm) | Crude ($/bbl) |
| Spot | 27130 | 124.6 |
| % change | - | 0.18 |
| Future | 28020 | 107.5 |
| % change | 0.13 | 0.33 |
The broad-based mood on the streets suggests that the Samajwadi Party would emerge as the single-largest party and may join hands with the Congress. This will not only strengthen the UPA government’s alliance at the centre, but also help rout out the currently ruling Bahujan Samaj Party (BSP). However, a recent CLSA report has suggested that the BSP may emerge as the largest party with SP and BJP trailing closely behind.
Looking at all sorts of expectations and speculations looming on the streets, our advice to readers and investors is to apply a ‘wait and watch’ approach ahead of the results. Rather than taking any bold moves, it would be best to let the dust settle down. In case an investor wants to play this volatility, it would be better to do so with an F&O strategy.
| Currency Rates | ||||
|---|---|---|---|---|
|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP |
| RBI Rate | 49.3525 | 65.6263 | 78.6827 | 60.6100 |
| Future | 49.8150 | 65.9900 | 79.2850 | 61.1500 |
On the global front, the US markets fell marginally last Friday as investors and traders took to booking profits on their investments while the shares of energy firms fell among the S&P 500 Index’s in the wake of oil sliding below USD 107 a barrel. Among other major global developments, Moody's Investor Service downgraded Greek bond ratings to a C from Ca because of massive losses to bond-holders expected under a debt restructuring exercise. Consequently, the Asian markets have opened on a flat and negative note today.
However, the order of the domestic markets today would primarily be led by the uncertainty over the election poll results and as the markets would turn volatile thereon towards the budget dates. We shall keep updating readers on a timely basis.
Stocks In Action
According to Business Standard, after the IT Department froze Kingfisher’s bank accounts last month, the Service Tax Department has followed suit and frozen as many as 40 bank accounts for non-payment of dues to the tune of Rs 40 crore. Expect some negative action in the scrip.
According to a BSE press release, Dr Reddy’s Laboratories has launched a generic version of Pfizer’s Geodon capsules in the US market, used in treating mental disorders, following approval from the USFDA. The company launched Ziprasidone Hydrochloride capsules, a bioequivalent generic version of Geodon in the US market on March 2, 2012. The Hyderabad-based firm has launched these capsules in strengths of 20 mg, 40 mg, 60 mg and 80 mg, available in 60 count bottle sizes, it added. According to IMS Health data, the Geodon brand had sales of nearly USD 1.34 billion for the 12 months ended December 2011 in the US market.
According to Economic Times, the private equity arm of the world’s biggest luxury products group, LVMH, is negotiating to invest about USD 150 million (Rs 750 crore) in Raymond Apparel. The deal between L Capital Asia and the Raymond Group arm for a minority stake, if it goes through, will be the largest private equity investment in an Indian apparel company. The exact quantum of the stake under negotiation could not be ascertained but is believed to be between 10 and 20 per cent. While the funds could help Raymond expand into international markets and spur its expansion plans, LVHM would benefit as it can strengthen its portfolio. We expect Raymond to witness some positive action and advise readers to enter the counter from an intraday point of view.
Expect some positive action in the ADAG stocks (Rel Infra, RCom, RPower, Rel Cap, etc) as the UP poll results are expected today. The markets’ speculation of Samajwadi Party emerging as the single-largest party would help fuel the momentum in these stocks during the initial trading hours.
Corporate Action
| BSE Institutional Turnover | ||||||
|---|---|---|---|---|---|---|
|
| FII | DII | ||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 3-Mar-12 | 13.87 | 23.37 | -9.50 | 5.46 | 10.33 | -4.86 |
| 2-Mar-12 | 2,395.00 | 1,816.35 | 578.65 | 994.28 | 1,064.76 | -70.48 |
| 1-Mar-12 | 2,133.21 | 2,259.73 | -126.52 | 998.54 | 1,008.51 | -9.97 |
| Mar , 12 | 4,542.08 | 4,099.45 | 442.63 | 1,998.28 | 2,083.60 | -85.32 |
| FII DERIVATIVES STATISTICS FOR 03-Mar-2012 | |||||
|---|---|---|---|---|---|
|
| Buy | Sell | OI (End of day) | Net Position | |
|
| Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) |
| Index Futures | 43.42 | 22.76 | 479283 | 12859.75 | 20.66 |
| Index Options | 109.87 | 89.57 | 1557265 | 41727.07 | 20.30 |
| Stock Futures | 48.98 | 38.97 | 974409 | 28576.03 | 10.02 |
| Stock Options | 0.00 | 0.00 | 47084 | 1360.40 | 0.00 |
| Total | 202.28 | 151.30 | 3058041 | 84523.25 | 50.98 |
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