Markets May Snap Back And Open Negative
DSIJ Intelligence / 15 Mar 2012
Indian markets may snap back its gains and open negative ahead of the all crucial RBI Monetary Policy Review today. The SGX Nifty is trading down by 8 points at 5505 indicating a flattish gap down opening to markets today.
Opening Bias
The Indian markets may snap back its gains and open negative ahead of the crucial RBI Monetary Policy Review today. The SGX Nifty is trading down by 8 points at 5,505, indicating a flattish gap down opening to the markets today.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 17919.30 | 0.59 |
| NIFTY | 5463.90 | 0.63 |
| Dow Jones | 13194.1 | 0.12 |
| S&P 500 | 1394.28 | -0.12 |
| NASDAQ | 3040.73 | 0.03 |
| Bovespa | 68257.22 | -0.20 |
| FTSE | 5945.43 | -0.18 |
| DAX | 7079.42 | 1.19 |
| CAC | 3564.51 | 0.40 |
| LIVE | ||
| Hang Seng | 21218.27 | -0.42 |
| Nikkei | 10095.41 | 0.45 |
| Shanghai | 2385.73 | -0.23 |
Yesterday the markets witnessed two key events in the form of the Union Railway Budget which was termed as ‘forward looking’ by Prime Minister Manmohan Singh and the announcement of the WPI inflation figure for February which has, to some extent, confirmed the fact that one may have to wait a bit longer for any sort of rate cuts by the RBI.
| Key Global Indicators | ||
|---|---|---|
|
| Gold (Rs/10gm) | Crude ($/bbl) |
| Spot | 27150 | 124.85 |
| % change | - | -0.17 |
| Future | 27425 | 105.68 |
| % change | -1.46 | 0.24 |
The WPI inflation came in higher at 6.95 per cent as compared to 6.55 per cent in January and stands threateningly close to the RBI’s comfort zone of 7 per cent for headline inflation. At this juncture, keeping in mind the central bank’s key objective to control inflation even at the cost of growth, the RBI may pause a while longer to initiate a reversal in the rate cycle. For today we expect the RBI to maintain a dovish tone in its policy review and also push the government to speed up the reforms process for getting the country back on the path of economic growth.
As for the railway budget, it was good to see Railway Minister Dinesh Trivedi announce a string of reformist measures like setting up a dedicated railway tariff regulator, increasing the rail network, providing modern sanitation systems on trains, introduce faster EMUs to facilitate better transportation, upgrade the AC compartments and finally improve infrastructure by setting up real time satellite surveillance systems which could give passengers information via SMS and the internet. However, the budget wasn’t short of the usual drama as his decision to hike the tariff did not go down well with the top brass of the Trinamool Congress who have demanded the minister’s resignation over the fare hike proposal and called for an immediate roll-back of the hikes. From the market’s point of view, the rail stocks crashed yesterday as investors were disappointed over the fact that there were not many new orders expected in 2012-13.
| Currency Rates | ||||
|---|---|---|---|---|
|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP |
| RBI Rate | 49.9030 | 65.0885 | 78.1481 | 59.9700 |
| Future | 50.0750 | 65.5175 | 78.7550 | 59.9950 |
In conclusion, we expect the markets to remain volatile as we approach the RBI policy review by noon today. Our advice to readers is to adopt a ‘wait and watch’ strategy ahead of the policy review and the announcement of the Union Budget 2012-13 tomorrow. 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 CNBC TV-18, Bharti Shipyard could land up as a non-performing asset (NPA) on the books of the banks this quarter if the lenders fail to finalise the restructuring package by the end of this month. This will not only be negative for the company but also for major banks like SBI, Punjab National Bank, Syndicate Bank and Allahabad Bank who account for 70 per cent of the total debt of Bharti Shipyard.
According to sources, the Bombay High Court yesterday ruled in favour of MCX-SX in its case against market watchdog SEBI, giving the company some much-needed respite. Last September SEBI had rejected MCX-SX’s application seeking permission to start a stock exchange, saying that the bourse had not complied with the norms of shareholding structure. The SEBI norms restrict the promoters’ stake in the exchange and the regulator had alleged that in the case of MCX-SX the shareholding was higher than the stipulated level. In the last hearing held in November 2011, it was agreed that Multi Commodity Exchange (MCX) and Financial Technologies India (FTIL) - promoters of the exchange - will reduce their holdings in the exchange from 10 per cent to 5 per cent. MCX and FTIL previously held 51 per cent and 49 per cent respectively. They later brought their holdings down by divesting to financial institutions and issuing convertible warrants with an option to buy them back in the future.
According to a regulatory filing on the BSE, Jaiprakash Power Ventures, a part of the Jaypee Group, said that its board has approved plans to raise up to Rs 3,500 crore through issue of securities as also a proposal to enter the cement business by putting up cement grinding units at Nigrie and Bina. This is aimed at optimally utilising fly ash to be generated by the firm’s thermal power plants at Nigrie and Bina, the filing said. Jaiprakash Power Ventures is into power generation as well as transmission activities.
According to Business Standard, certain investments and transactions of Adani Enterprises are being investigated by the Enforcement Directorate (ED) which suspects violation of foreign exchange rules. The company maintained today that all its business transactions were within the ‘legal framework’. According to the ED, the company had been asked to furnish a number of business documents relating to the development of its ambitious Mundra port project and a special economic zone (SEZ), including the clearances obtained to incorporate a subsidiary in Australia. The economic credentials of some of its shareholders are also being ascertained.
According to press release on the BSE, Japan’s Kobe Steel will buy a small stake in steel pipe maker Man Industries and will jointly explore opportunities in the global steel pipe market. As part of the agreement, Japan’s fourth biggest steel maker will buy 3.25 per cent stake in Man Industries to invest about USD 6 million (approximately Rs 30 crore) at Rs 165 per share. This will be at a premium of nearly 40 per cent to the current market price.
As per a decision taken by the India Index Services & Products, a joint venture of NSE and Crisil, Reliance Communications and Reliance Power will move out of the National Stock Exchange’s 50-share Nifty index with effect from April 27. They would be replaced by Asian Paints and Bank of Baroda. Consequently, we expect positive action in the scrips of BoB and Asian Paints. As a reminder to our readers, last year RCOM and Reliance Infra, another company from ADAG, were excluded from the BSE’s Sensex index with effect from August 8. In the same month, NSE also announced Reliance Capital’s exit from its Nifty index with effect from October 10, 2011. However, the exit of these companies from the two benchmark indices does not seem to have had any negative impact on their share prices. On the contrary, the stocks have rallied smartly since then.
Corporate Action
| Stocks Paying Dividend (Ex-Date) | ||
|---|---|---|
| Scrip Name | Action | Rs |
| Coal India | Interim Dividend | 9.50 |
| Kewal Kiran | 2nd Interim Dividend | 6 |
| BSE Institutional Turnover | ||||||
|---|---|---|---|---|---|---|
|
| FII | DII | ||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 14-Mar-12 | 3,813.19 | 2,153.91 | 1,659.28 | 1,285.06 | 2,142.17 | -857.11 |
| 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 |
| Mar , 12 | 26,267.24 | 21,329.67 | 4,937.57 | 9,504.99 | 10,899.07 | -1,394.08 |
| FII DERIVATIVES STATISTICS FOR 14-Mar-2012 | |||||
|---|---|---|---|---|---|
|
| Buy | Sell | OI (End of day) | Net Position | |
|
| Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) |
| Index Futures | 2227.36 | 1357.19 | 521175 | 14328.03 | 870.17 |
| Index Options | 14240.43 | 13679.07 | 1820985 | 49747.97 | 561.35 |
| Stock Futures | 1737.55 | 2034.23 | 1017818 | 30651.16 | -296.68 |
| Stock Options | 659.65 | 688.26 | 59910 | 1773.95 | -28.61 |
| Total | 18864.99 | 17758.75 | 3419888 | 96501.10 | 1106.24 |
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