Markets May Open Positive Ahead Of Key Events Today
DSIJ Intelligence / 14 Mar 2012
Indian markets may open positive ahead of the Railway Budget 2012-13 and WPI inflation announcement for month of Feb. The SGX Nifty is trading up by 72 points at 5545 indicating a gap up opening to markets today.
Opening Bias
The Indian markets may open positive ahead of the Railway Budget 2012-13 and the WPI inflation announcement for the month of February. The SGX Nifty is trading up by 72 points at 5,545, indicating a gap up opening to the markets today.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 17813.62 | 1.28 |
| NIFTY | 5429.50 | 1.31 |
| Dow Jones | 13177.68 | 1.68 |
| S&P 500 | 1395.95 | 1.81 |
| NASDAQ | 3039.88 | 1.88 |
| Bovespa | 68394.33 | 3.03 |
| FTSE | 5955.91 | 1.07 |
| DAX | 6995.91 | 1.37 |
| CAC | 3550.16 | 1.72 |
| LIVE | ||
| Hang Seng | 21570.68 | 1.08 |
| Nikkei | 10112.11 | 2.15 |
| Shanghai | 2460.72 | 0.20 |
Among major developments, the Railway Budget is expected to be presented today. As per sources, the railways may impose a safety cess but may not call it a fare hike. There is also a possibility that an additional surcharge called the Union Government Development Surcharge may be levied. Fewer new trains will be announced and the emphasis this time will be on modernization, infrastructural overhaul and the dedicated freight corridor. There is also speculation that since freight rates have already been hiked, the budget may not contain another round of such hikes.
| Key Global Indicators | ||
|---|---|---|
|
| Gold (Rs/10gm) | Crude ($/bbl) |
| Spot | 27521 | 126.14 |
| % change | - | -0.13 |
| Future | 27829 | 106.71 |
| % change | -0.51 | 0.00 |
The government is also expected to announce the WPI inflation numbers by noon today. A recent Reuters’ poll of economists has suggested that headline inflation is likely to have picked up slightly in February from January’s 26-month low as higher global oil prices fed into the country’s import costs. According to Reuters, the headline inflation for February is expected to come in at 6.8 per cent as against 6.55 per cent in January. With the inflation expected to inch back near the RBI’s comfort zone of 7 per cent and the inflation as per CPI already above the 7 per cent mark, we don’t expect the RBI to lower key policy rates in tomorrow’s monetary policy review. It had already lowered the CRR last week by 75 bps to 4.75 per cent in order to infuse liquidity into the system and we don’t expect any further easing in the coming review. The central bank may continue to maintain its dovish stance and push the government to speed up the reforms’ process.
On the global front, the US stocks leapt last night with the NASDAQ finishing above 3,000 for the first time in 11 years, after J P Morgan Chase & Co hiked its dividend, the retail sales climbed up and the Federal Reserve held the rates at record lows. The buoyancy from the US and European markets have also been carried into the Asian markets as they are seen trading on a firm note in the early trades.
| Currency Rates | ||||
|---|---|---|---|---|
|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP |
| RBI Rate | 49.8450 | 65.6151 | 77.9675 | 60.6700 |
| Future | 50.1500 | 65.7000 | 78.4750 | 60.6350 |
In conclusion, we expect the markets to open positive but turn volatile towards the mid-afternoon session. They may also give up the early gains. Our advice to readers is to adopt the wait and watch strategy ahead of some key events expected this week. These events would turn the markets highly volatile and it’s best not to take any bold positions at such times. For those who wish to play the situation, we recommend the use of F&O strategies.
Stocks In Action
According to a press release on the BSE, the Bajaj Hindusthan board has approved the proposal of the amalgamation of Bajaj Eco-Tec Products (a wholly-owned subsidiary of the company) and Bajaj Aviation (a wholly-owned subsidiary of Bajaj Eco-Tec) with the company. The merger of these two subsidiaries with the parent company is aimed at consolidating the businesses to reduce overheads and other costs. Bajaj Eco-Tec Products manufactures particle boards used in the building and construction industry while Bajaj Aviation has one aircraft that is being run on lease. Bajaj Hindusthan has 14 sugar plants in Uttar Pradesh with a daily cane crushing capacity of 1.36 lakh tonnes. It has also forayed into the power business and is setting up five new coal-based power plants in UP with total power generation capacity of 450 MW at a cost of Rs 2,300 crore. That apart, the company, through a consortium, is setting up two mega thermal power projects with a capacity of 1,980 MW each.
According to a press release on the BSE, Essar Oil commissioned a diesel hydrotreater unit-I (DHDT-I) at its Vadinar refinery in Gujarat. The unit would ensure that the diesel produced at the refinery will be capable of meeting the Euro-V specifications. The company informed that the phased commissioning of three additional units is slated for the end of this month, which will complete the first phase of expansion by March 2012. This would add nine new units, thereby expanding the capacity to 18 MTPA (3,75,000 barrels per day) and enhance the complexity to 11.8 from 6.1 currently.
According to Economic Times, the state utilities have asked Tata Power to legally contest the Indonesian government’s decree that has raised the cost of coal for its Rs 17,000-crore Mundra project instead of trying to raise the tariff the company had bid to win the project. The utilities’ resistance to any increase in charges by Tata Power is supported by the Central Electricity Authority (CEA), which has argued in a recent meeting with the utilities and the power producer that increase in input costs is a risk the company should bear. It would be difficult to change the tariff as the other companies had lost the race for the ultra mega power project (UMPP) only because they had quoted a higher tariff. This is a negative development for the company’s already distressed UMPP project in Mundra. We expect negative action on the bourses today for Tata Power.
Expect heavy action in the scrip of MCX today as the much-awaited verdict in the case between SEBI and MCX-SX is expected today by noon. Any verdict against MCX-SX would have a negative impact on MCX’s stock price and vice-versa.
According to Business Standard, Schroders, the UK-based asset management giant that manages close to USD 291 billion in assets, is set to acquire nearly 30 per cent stake in Axis Asset Management Company. The transaction will help Schroders revive its India presence and end Axis Asset Management Company’s search for a strategic partner in the mutual fund business. Axis Mutual Fund, owned by Axis Asset Management Company, closed the last calendar year with Rs 8,598 crore in assets. According to the paper, the domestic fund house is likely to get 6-8 per cent of the value of its equity assets and another 2-4 per cent of the value of its debt funds. On average, they say, the valuation of the AMC could be 4-6 per cent of the total assets or in the range Rs 350-500 crore.
Corporate Action
| Stocks Paying Dividend (Ex-Date) | ||
|---|---|---|
| Scrip Name | Action | Rs |
| Spanco-$ | Final Dividend | 1.00 |
| BSE Institutional Turnover | ||||||
|---|---|---|---|---|---|---|
|
| FII | DII | ||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 13-Mar-12 | 2,758.88 | 1,886.20 | 872.68 | 943.46 | 1,377.20 | -433.74 |
| 12-Mar-12 | 4,375.76 | 3,077.12 | 1,298.64 | 1,121.41 | 918.09 | 203.32 |
| 9-Mar-12 | 4,039.93 | 2,755.28 | 1,284.65 | 1,106.66 | 1,119.56 | -12.90 |
| Mar , 12 | 22,454.05 | 19,175.76 | 3,278.29 | 8,219.93 | 8,756.90 | -536.97 |
| FII DERIVATIVES STATISTICS FOR 13-Mar-2012 | |||||
|---|---|---|---|---|---|
|
| Buy | Sell | OI (End of day) | Net Position | |
|
| Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) |
| Index Futures | 1686.12 | 1733.45 | 508134 | 13859.24 | -47.33 |
| Index Options | 12610.55 | 12830.36 | 1782706 | 48393.80 | -219.80 |
| Stock Futures | 1405.21 | 1273.44 | 998874 | 29876.35 | 131.77 |
| Stock Options | 348.50 | 516.14 | 59651 | 1751.28 | -167.65 |
| Total | 16050.38 | 16353.40 | 3349365 | 93880.67 | -303.01 |
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