Weak Global Cues And Rising Uncertainty May Drag Markets Lower

DSIJ Intelligence / 29 Mar 2012

Indian markets may open negative in line with weak global cues amid rising uncertainty on D-street. The SGX Nifty is trading down by 66 points at 5136 indicating a gap down opening to markets today.

Opening Bias

Indian markets may open negative in line with weak global cues amid rising uncertainty on D-street. The SGX Nifty is trading down by 66 points at 5136 indicating a gap down opening to markets today.

Benchmark Indices

Index

Closing

% Change

SENSEX

17121.62

-0.79

NIFTY

5194.75

-0.92

Dow Jones

13126.21

-0.54

S&P 500

1405.54

-0.49

NASDAQ

3104.96

-0.49

Bovespa

65079.34

-1.45

FTSE

5808.99

-1.03

DAX

6998.80

-1.13

CAC

3430.15

-1.14

LIVE

Hang Seng

20623.7

-1.25

Nikkei

10097.93

-0.83

Shanghai

2266.47

-0.81


Overnight, U.S. stocks fell for a second straight session as investor’s dumped energy and other stocks closely tied to global growth after a disappointing report on durable-goods orders dampened sentiments there. In another report released by Ernst & Young, global IPO activity has slumped in the first quarter, falling 69 per cent to USD 14.3 billion in terms of raised capital compared to the same period last year. The uncertainty stemming from the euro-zone sovereign debt crisis, combined with a smaller number of large listings from state-owned firms, has created unfavorable conditions for initial public offerings, E&Y reckons. Asian shares have also slumped in early trades in line with weak global cues.

Currency Rates

Particulars

Rs/$

Rs/Euro

Rs/GBP

Rs100/JYP

RBI Rate

50.9175

67.8500

81.2134

61.5200

Future

50.9150

67.8500

81.1550

61.5300


On the domestic front, there is rising uncertainty on the streets. Faced with lack of clarity on policy making front, RBI’s monetary stance in the upcoming review and March quarter results, investors and traders are left grappling for any concrete direction in the markets.

The FM’s latest proposal to introduce General Anti Avoidance Rule (GAAR) during the budget speech on March 16th, empowering the IT-Dept to deny double taxation treaty benefits to foreign institutions routing their money through Mauritius has led to a massive sell-off as shares of two-thirds of the companies in which these funds have sizeable stakes have declined more than the benchmark indices. It is feared that many Mauritius-based investors will not be in a position to gain from this exemption as per GAAR and this may prompt them to dump Indian shares.

Moreover, owing to the government’s borrowing program the benchmark 10-year govt. bond yields have spiked-up massively, which coupled with the latest disappointment on the inflation front (CPI for Feb at 8.83%) could put further pressure on RBI to maintain status quo in its upcoming policy review meet in April 2012.

Key Global Indicators

Particulars

Gold (Rs/10gm)

Crude ($/bbl)

Spot

27577

124.88

% change

-

-0.12

Future

28149

105.27

% change

-0.46

-0.13


Moving on to the corporate results front, Crisil Research expects corporate India to report a 200-250 bps decline in aggregate EBITDA margins in January-March 2012 (Q4 FY12). According to their latest report, revenue growth is projected to be around 15.0 per cent, down appreciably from a far healthier 25.5 per cent in Q4 FY11, reflecting the slowdown in consumption and investment growth, and an uncertain global environment. The pressure on revenue growth and margins will be broad-based and felt across industries. However, the cement companies, IT, and telecom service providers are expected to outperform.

In conclusion, for today we expect markets volatile with a negative bias as traders and investors fret over the possible direction that markets might hold.

Stocks In Action

According to reports on CNBC TV-18 the new urea investment policy that the empowered group of ministers (EGoM) cleared last month may be up for some minor tinkering following the announcements in the Budget. Reports suggest that owing to proposals to remove customs duty on urea equipment’s and reduction of interest rate paid by manufacturers to government on foreign loans to 5%, the fertilizer department may have overestimated the cost assumptions in the urea policy. This is a welcome sign because it means that subsidy burden for fertilizer could see some reduction. The department will rework certain portions of the policy which is likely to be tabled in the cabinet by mid-April.

According to Reuters, Danish telecoms operator TDC has entered into a deal with TCS to replace US Company CSC as its IT services provider. TDC is expected to begin its IT cooperation with Tata next week. The contract will run for four years with a two-year extension option. The exact value of the deal has not yet been revealed.

According to Reuters, Indian Oil Corp (IOC) is in talks with BG Group, Qatar and Gazprom to secure long-term liquefied natural gas supplies for an import terminal it is building to feed its rising energy demand. But while it talks to potential suppliers, the company is also keeping its options open to initially import LNG through spot or shorter-term contracts on expectations that India may lift price controls on the power and fertiliser sectors and allow them to pass on feedstock costs to consumers. Indian oil is building a 5 million tonne per year LNG terminal at Ennore in southern India, which is expected to come online by 2014.

According to a filing on the BSE, Force Motors has exited from its joint venture with Germany's MAN Truck & Bus AG to make commercial vehicles in India by selling its stake for 150 million euro (over Rs 1,000 crore). In 2006, Force Motors and MAN had formed a JV -- MAN FORCE Trucks Pvt (MFTPL) -- to produce heavy commercial vehicles. During the formation of the JV, the Indian firm was the majority partner with 80% stake, which later became a 50:50 partnership in 2008. Force Motors had initially planned to manufacture heavy commercial vehicles for the Indian market by sourcing technology under licence agreement. It had procured engines, cabs and axles from MAN, while gearboxes were sourced from ZF. Later, the domestic firm formed the joint venture company with MAN.

According to a press release on the BSE, Oberoi group firm EIH Associated Hotels board has approved raising of up to Rs 110 crore through a rights issue. The terms and conditions of the issue, including the rights entitlement ratio, the issue price, issue size, record date and other matters shall be decided by a committee of board constituted for this purpose in consultation with the lead manager. In its meeting the board also approved amalgamation of EIH Associated's wholly-owned subsidiary Island Hotel Maharaj with the company. The amalgamation is subject to subject to statutory and regulatory approvals, and subject to the scheme of amalgamation being sanctioned by the High Court of Madras. EIH Associated Hotels, an associate company of Oberoi Group's EIH Ltd, manages and operates five star hotels in major tourist destinations in India.

According to Business Standard, cement manufacturer ACC has announced an investment of Rs 3,300 crore by 2015 to set up three grinding units and a clinker facility, on the sidelines of the company's 76th Annual General Meeting. The Holcim Group Company said one grinding unit each will come up at Sindri in Jharkhand and Kharagpur in West Bengal. The third grinding plant and the clinker facility will be set up at Jamul in Chhattisgarh. The existing clinker and grinding facilities at Jamul will be phased out and the new clinker unit will have a capacity of 2.79 million tonnes per annum (mtpa).

According to Economic Times, in a move that is expected to hit Indian IT companies majorly, the US government has decided to hike H-1B visa fee from the next fiscal. In a statement, USCIS listed out the details of the fees to be filed by the applicants for H-1B visas, which start from a base fee of USD 325 to USD 2,000 by the petitioner who employs 50 or more employees in the US --where more than 50% of its workers in the US are in H-1B or L-1 non-immigrant status. 

Corporate Action

Corp Action

Scrip Name

Action

Ratio

OIL INDIA

Bonus

3:2

Opto Circuits

Bonus

3:10


Stocks Paying Dividend (Ex-Date)

Scrip Name

Action

Rs

Crompton Greav

3rd Interim Dividend

0.40

FAG Bearings

Dividend

5.00

FAG Bearings

Special Dividend

5.00

Glaxosmithkl Phar

Dividend

45.00

Hexaware Tech

Final Dividend

1.50

State Bank Trav

Interim Dividend

16.00

Steelcast

Interim Dividend

2.00


BSE Institutional Turnover

 

 FII

 DII

Trade Date

 Buy

 Sales

 Net

 Buy

 Sales

 Net

26-Mar-12

3,998.36

4,133.65

-135.30

775.03

975.97

-200.94

27-Mar-12

3,009.32

2,966.33

42.99

1,039.42

1,329.47

-290.05

28-Mar-12

2,863.56

3,011.62

-148.06

895.94

822.91

73.02

Mar , 12

52,302.74

45,661.87

6,640.87

17,977.98

21,472.80

-3,494.82


FII DERIVATIVES STATISTICS FOR 28-Mar-2012

 

Buy

Sell

OI (End of day)

Net Position

Particulars

Rs (crore)

Rs (crore)

No. of contracts

Rs (crore)

Rs (crore)

Index Futures

3971.40

3798.04

800990

20747.27

173.36

Index Options

17103.24

17167.16

2004475

52059.44

-63.92

Stock Futures

6509.62

6227.41

1052244

29329.60

282.21

Stock Options

230.73

229.67

51210

1380.48

1.06

Total

27814.99

27422.28

3908919

103516.78

392.71


 

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