Indian Markets May Open Negative Ahead Of Poll Results
DSIJ Intelligence / 06 Mar 2012
The Indian markets may open negative ahead of the election poll results in five states with Uttar Pradesh being touted as the most important of the lot. The SGX Nifty is trading down by 28 points at 5,287, indicating a gap down opening to the markets today.
Opening Bias
The Indian markets may open negative ahead of the election poll results in five states with Uttar Pradesh being touted as the most important of the lot. The SGX Nifty is trading down by 28 points at 5,287, indicating a gap down opening to the markets today.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 17362.87 | -1.55 |
| NIFTY | 5280.35 | -1.47 |
| Dow Jones | 12962.81 | -0.11 |
| S&P 500 | 1364.33 | -0.39 |
| NASDAQ | 2950.48 | -0.86 |
| Bovespa | 66964.03 | -1.21 |
| FTSE | 5874.82 | -0.61 |
| DAX | 6866.46 | -0.79 |
| CAC | 3487.54 | -0.39 |
| LIVE | ||
| Hang Seng | 21033.49 | -1.09 |
| Nikkei | 9656.95 | -0.43 |
| Shanghai | 2431.1 | -0.57 |
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 watched with interest by investors and traders on the street today. The broad-based mood on the street 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.
| Key Global Indicators | ||
|---|---|---|
|
| Gold (Rs/10gm) | Crude ($/bbl) |
| Spot | 27130 | 124.06 |
| % change | - | -0.18 |
| Future | 27973 | 106.88 |
| % change | -0.18 | 0.15 |
Looking at all sorts of expectations and speculations looming on the streets, our advice to readers and investors is to apply a ‘wait and watch’ approach ahead of the results. Rather than taking any bold moves, it would be best to let the dust settle down. In case an investor wants to play this volatility it would be better to take help of the F&O strategy.
Another major negative development which is likely to hamper the market sentiments is the weakening of the rupee which slid to Rs 50.14 per dollar yesterday, weighed by dollar demand from oil importers. The negative equity markets and subdued risk appetite in the global financial markets due to a slowing down in the Chinese economy and the risks surrounding Greece’s debt crisis also weighed on the rupee.
| Currency Rates | ||||
|---|---|---|---|---|
|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP |
| RBI Rate | 49.7958 | 65.7392 | 78.7919 | 61.2700 |
| Future | 50.1625 | 66.1500 | 79.1950 | 61.8000 |
On the global front, the US markets fell as investors saw reason for concern in some of the components of the US service sector gauge. The Institute for Supply Management’s non-manufacturing index rose to 57.3 per cent in February from 56.8 per cent in January, which was better than expected. Its employment index, however, slipped to 55.7 per cent from 57.4 per cent and its price index, which measures inflation, jumped to 68.4 per cent from 63.5 per cent in the prior month, thus causing some concern.
However, the order of the domestic markets today would primarily be led by the election poll results. The markets would turn volatile thereon as we approach the budget dates too. We shall keep updating readers on a timely basis.
Stocks In Action
After proving to be right on our call yesterday, we expect some further positive action in the ADAG stocks (Rel Infra, RCom, RPower, Rel Cap, etc) and also the sugar packs (Shree Renuka, EID Parry, Balrampur Chini, Bajaj Hindustan, 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.
We expect some positive action in the shares of the domestic oil refiners BPCL, HPCL and IOC as traders and investors on the street start discounting and factoring in the possibility of a fuel price hike with the completion of assembly elections removing all the political obstacles for these companies. It is believed that the OMCs are drawing plans to raise petrol prices by about Rs 5 per litre and are pushing the government to increase the diesel rates to cut their losses. At present, the price of compressed natural gas (CNG) for automobiles in Delhi has been raised by 5 per cent. Indraprastha Gas (IGL), the sole supplier of CNG in Delhi and the neighbouring National Capital Region (NCR), on Monday raised gas prices by Rs 1.70 per kg in Delhi and Rs 1.90 per kg in neighboring areas such as Noida, Greater Noida and Ghaziabad. Expect positive action in IGL stocks too.
According to Reuters, Iran’s biggest Indian oil client, MRPL, plans to cut its annual import deal with Tehran by as much as 44 per cent to 80,000 barrels per day (bpd) in 2012-13 as western sanctions make trade more difficult. The cuts in oil imports from Iran by Mangalore Refinery and Petrochemicals Ltd (MRPL) would imply a reduction of more than 20 per cent in India’s total purchases of Iranian oil in the next fiscal year, according to Reuters’ estimates. This is an unwelcome development for the company as it already faces supply disruptions from the Arab nation due to difficulties in payment. We expect the scrip to get impacted negatively.
According to a BSE press release, drug firm Lupin has received approval from the USFDA for its generic Ziprasidone Hydrochloride capsules, used for treating mental disorders, in the American market. The company’s subsidiary, Lupin Pharmaceuticals Inc, has received final approval for its Ziprasidone Hydrochloride capsules in the strengths of 20 mg, 40 mg, 60 mg and 80 mg from the USFDA. The capsules are generic equivalent of Pfizer’s Geodon capsules in the same strengths and the firm has already commenced shipping them. Pfizer’s Geodon capsules had sales of USD 1.3 billion as per IMS Health (December 2011), Lupin said. Geodon capsules are prescribed for schizophrenia.
According to The Economic Times, Tata Power, Reliance Power, Jindal Steel & Power and Monnet Ispat & Energy are among 60 companies that face risk of cancellation of mining licenses for being slow in the exploration of coal blocks. A review committee headed by the coal ministry’s additional secretary Zohra Chatterjee has recommended issuing show-cause notices for 58 blocks asking for reasons why the mining licenses should not be revoked. A coal ministry official said that appropriate action would be initiated against companies that are not able to justify the delay. The companies also include Hindalco Industries, Tata Sponge, Electro Steel Casting, MMTC, National Aluminum Co and the power and mining utilities of Jharkhand, Orissa, Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Tamil Nadu. Expect negative action in the above mentioned companies.
According to The Economic Times, AstraZeneca, the world’s seventh-largest drug maker by sales, is planning to delist its Indian subsidiary. The UK-based company, which was in talks with top investment banks, including Morgan Stanley and JM Financial, is reported to have appointed Merrill Lynch as the manager for the delisting. The stock is currently at Rs 2,087 per piece and the delisting price is seen at Rs 3,200 a share, add market sources. We expect some positive action in the stock today.
Corporate Action
| Stocks Paying Dividend (Ex-Date) | ||
|---|---|---|
| Scrip Name | Action | Rs |
| BHEL | Interim Dividend | 2.72 |
| Orbit Exports | Interim Dividend | 2.50 |
| BSE Institutional Turnover | ||||||
|---|---|---|---|---|---|---|
|
| FII | DII | ||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 5-Mar-12 | 1,867.04 | 1,741.54 | 125.50 | 827.42 | 1,085.75 | -258.33 |
| 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 |
| Mar , 12 | 6,409.12 | 5,840.99 | 568.13 | 2,825.70 | 3,169.35 | -343.65 |
| FII DERIVATIVES STATISTICS FOR 05-Mar-2012 | |||||
|---|---|---|---|---|---|
|
| Buy | Sell | OI (End of day) | Net Position | |
|
| Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) |
| Index Futures | 1750.12 | 1617.63 | 482036 | 12743.86 | 132.49 |
| Index Options | 12803.78 | 13486.29 | 1635512 | 43175.91 | -682.51 |
| Stock Futures | 1516.74 | 1551.14 | 978596 | 28151.65 | -34.40 |
| Stock Options | 460.67 | 474.05 | 48839 | 1387.46 | -13.38 |
| Total | 16531.31 | 17129.11 | 3144983 | 85458.89 | -597.80 |
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