Indian Markets May Open Positive Amidst Uncertainity
DSIJ Intelligence / 20 Mar 2012
Indian markets cut back its losses and open positive today however we do not expect markets to sustain its gains from the early hours. We see the markets to remain volatile due to lack of any triggers to support a rally
Opening Bias
The Indian markets cut back their losses and opened positive today. The SGX Nifty is trading up by 16 points at 5,293, indicating a flattish gap up opening to the markets today.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 17273.37 | -1.10 |
| NIFTY | 5257.05 | -1.14 |
| Dow Jones | 13239.13 | 0.05 |
| S&P 500 | 1409.75 | 0.40 |
| NASDAQ | 3078.32 | 0.75 |
| Bovespa | 67730.31 | 0.07 |
| FTSE | 5961.11 | -0.07 |
| DAX | 7154.22 | -0.05 |
| CAC | 3577.88 | -0.47 |
| LIVE | ||
| Hang Seng | 21010.58 | -0.50 |
| Nikkei | 10141.99 | 0.00 |
| Shanghai | 2391.43 | -0.78 |
With the action-packed month of March coming to an end, most traders and investors on the streets would now turn their attention to the January-March quarter earnings for corporate India. Most of the key events that played out recently have not been in favour of the market sentiments. Right from the UP election results to the Railway Budget to the RBI’s monetary stance and the recently announced insipid budget, has left a bad taste in everyone’s mouth. The markets from here on would start taking cues from fundamental factors like macro-economic issues, corporate financials and the global market sentiments.
| Key Global Indicators | ||
|---|---|---|
|
| Gold (Rs/10gm) | Crude ($/bbl) |
| Spot | 26784 | 125.1 |
| % change | - | -0.16 |
| Future | 27892 | 107.62 |
| % change | 0.08 | -0.43 |
Talking further on the macro-economic front, after the Wholesale Price Index (WPI) inflation for the month of February came seemingly close to the RBI’s comfort zone at 6.95 per cent, the recently released Consumer Price Index (CPI) inflation for February has turned out to be a major blow to any expectations of interest rates reversing any time soon. At 8.83 per cent as compared to 7.65 per cent in January 2012, the CPI numbers for February have come within an arm’s length of the nervous 9 per cent level that had threatened economic growth all through CY2011.
Going forward, the CPI inflation for February threatens to throw the country’s fiscal situation askew as inflation nears the 9 per cent level. This will make it difficult for the government to achieve its flamboyant fiscal deficit target of 5.1 per cent for FY13E.
| Currency Rates | ||||
|---|---|---|---|---|
|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP |
| RBI Rate | 50.1245 | 66.0025 | 79.3721 | 60.1200 |
| Future | 50.3625 | 66.3200 | 79.8925 | 60.5525 |
In conclusion, we do not expect the markets to sustain its gains from the early hours. In fact we see the markets continuing to remain volatile due to the lack of any triggers to support a rally. Our advice to readers is to adopt a ‘wait and watch’ strategy as there are talks that the markets would continue to give up gains for a little while more.
Stocks In Action
According to sources, the output at RIL’s prolific KG-D6 basin has dipped to an all-time low production of about 28 million standard cubic meters per day as the firm shut six wells due to water and sand ingress. This is a very negative development for the company and the shares of RIL on BSE closed lower at Rs 745.9 a piece, down by 2.2 per cent. The stock, after touching a high of Rs 864.45 a share on February 8, 2012, has plummeted heavily by 14 per cent on the back of concerns regarding not only the KG-D6 output but also the petrochemicals and refining business. Our advice to investors on the counter is a strict ‘avoid’ as even after these corrections we expect the stock to continue its underperformance on the bourses.
Tata Motors today has increased the prices of its passenger vehicles, including the Nano, by up to Rs 35,000 with immediate effect due to a hike in the excise duty in the Union Budget for FY13. In passenger cars the company is said to have increased prices varying between Rs 2,000 and Rs 8,000 depending upon the model. Under this division the company sells the small car Nano, the hatchback Indica series and the Indigo family of sedans. In case of utility vehicles like Safari, Aria and Sumo, the hike will be from Rs 8,000 to Rs 35,000. This recent hike has come on the back of Finance Minister Pranab Mukherjee’s decision to raise excise duty to 12 per cent from 10 per cent.
According to Business Standard, the ailing Kingfisher Airlines faces the prospects of its flying license being cancelled and its boss Vijay Mallya has been asked by the Directorate General of Civil Aviation (DGCA) to present a clear picture of the cash-strapped private carrier. The threat comes after the DGCA mulled cancellation of Kingfisher’s flying permit as the airline submitted to it the summer flight schedule with 15 to 16 aircraft as against 28 planes submitted last month.
According to Economic Times, running on track with its plans, Anil Ambani-owned Reliance Communications has filed the listing document for its undersea cable assets with the Singapore Stock Exchange, and plans to raise over USD 1 billion from the IPO. Reliance Communications will be listing its undersea cables as a trust, rather than as a company. Regulations for the trust require the company to divest 51-75 per cent. A person familiar with the development told ET that Reliance Communications will look at divesting the maximum amount possible as it needs funds.
According to Economic Times, The Kapil Wadhawan-promoted Dewan Housing Finance may acquire Milestone Capital after emerging as the lone bidder for the private equity firm with a price of over Rs 185 crore. Dewan is now conducting due diligence and is likely to seal the transaction by the end of May, a source said.
According to CNBC TV-18, lenders of the engineering and construction firm Hindustan Construction Company (HCC) have referred their total debt of around Rs 7,820 crore to the Corporate Debt Reconstruction (CDR) cell. ICICI Bank and Punjab National Bank are the two largest lenders with exposure of around Rs 1,255 crore and Rs 910 crore respectively. There is a consortium of 27 lenders in the CDR filing. In the private sector space, Axis Bank and HDFC Bank too are a part of it. While the former has lent around Rs 210 crore, the latter has a relatively less exposure. In anticipation of defaults (before the principal payment becomes due), the bankers have referred the loan account to the CDR cell. As per the Reserve Bank of India (RBI) norms, a bank has to make provision of 2 per cent on any restructuring of standard assets. A week ago, the company board had approved the HCC management to approach the lenders for the CDR mechanism. The absence of expected cash flow arising out of delays in outstanding payments prompted the company to file the CDR.
Corporate Action
| Corp Action | ||
|---|---|---|
| Scrip Name | Action | Ratio |
| LGB Forge | Rights Issue | 1:2 |
| Stocks Paying Dividend (Ex-Date) | ||
|---|---|---|
| Scrip Name | Action | Rs |
| TVS Motor | Interim Dividend | 0.60 |
| Wheels India | Interim Dividend | 4 |
| BSE Institutional Turnover | ||||||
|---|---|---|---|---|---|---|
|
| FII | DII | ||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 19-Mar-12 | 2,387.61 | 2,226.74 | 160.87 | 1,111.51 | 1,407.49 | -295.98 |
| 16-Mar-12 | 3,490.69 | 2,607.11 | 883.58 | 1,201.53 | 1,971.92 | -770.39 |
| 15-Mar-12 | 2,375.95 | 2,219.93 | 156.02 | 809.83 | 1,199.00 | -389.17 |
| Mar , 12 | 34,521.49 | 28,383.45 | 6,138.04 | 12,627.86 | 15,477.48 | -2,849.62 |
| FII DERIVATIVES STATISTICS FOR 19-Mar-2012 | |||||
|---|---|---|---|---|---|
|
| Buy | Sell | OI (End of day) | Net Position | |
|
| Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) |
| Index Futures | 2693.09 | 3020.27 | 619307 | 16282.43 | -327.18 |
| Index Options | 21390.39 | 21399.81 | 1874851 | 49276.94 | -9.42 |
| Stock Futures | 1822.75 | 1977.51 | 1049280 | 29971.76 | -154.76 |
| Stock Options | 550.11 | 514.89 | 58089 | 1648.17 | 35.22 |
| Total | 26456.34 | 26912.47 | 3601527 | 97179.30 | -456.13 |
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