Indian Markets May Open Sideways

DSIJ Intelligence / 30 Mar 2012

Indian markets may open marginally negative as streets fear a tepid March quarter earnings. The SGX Nifty is trading down by 2 points at 5229 indicating a gap down opening to markets today.

Opening Bias

Indian markets may open marginally negative as streets fear a tepid March quarter earnings. The SGX Nifty is trading down by 2 points at 5229 indicating a gap down opening to markets today.

Overnight, U.S. stocks finished mostly lower Thursday, but not before the Dow Jones Industrial Average staged a late-session turnaround to end slightly higher. Among the two economic data’s that were expected to be widely watched by investor’s world over were the US Q4 GDP and US jobless claim for last week. While the U.S. economy expanded as expected in the fourth quarter at 3 per cent with personal income growing at a much faster pace, the number of Americans who filed requests for jobless benefits fell by 5,000 last week to a seasonally adjusted 359,000, said the data released by US Labor Dept. However, Asian shares have opened lower this morning as markets there continue to grapple under the pressure of a slowing Chinese economy.

Back home, data for the April F&O series suggests that many investors and traders on D-street have either carried forward (rolled over) their bearish positions from the March series or have booked losses in their last month’s long positions and refrained from initiating any fresh positions in the current series. The reason can be attributed to the growing pessimism about a tepid March quarter earnings coupled with the Central Bank’s reluctance to cut rates in its forthcoming policy meet. 

The market-wide rollover in December futures to January was 79%, almost in line with the previous expiry, according to provisional data. Rollover in the most-actively-traded Nifty March futures to April was at 58%, as against 65% in the previous expiry. Bank Nifty futures witnessed 65% rollover, declining from about 71% last expiry.

Another shocking report that highlighted the dampened sentiments in lurking in the markets is a latest paper the Bank of America, which explains that the Indian stock market may continue to drift lower even if the Reserve Bank of India cuts interest rates in April, as uncertainty on taxation of foreign portfolio investment from some destinations would weigh on the rupee as well as equities.  

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

Stocks In Action

HPCL-Mittal Energy (HMEL), a joint venture of state-owned Hindustan Petroleum Corporation and steel czar Lakshmi Mittal, announced commissioning of USD 4 billion refinery at Bathinda in Punjab. The 180000 barrels per day refinery at Phullokari, Bathinda is fully operational and has started commercial production of fuel. HPCL and Mittal Energy Investment Pte Ltd, Singapore - a Lakshmi N Mittal Group company, hold 49% stake each in HEML while the remaining 2% interest is held by financial institutions.

According to Business Standard, Tata Motors has hiked the prices of its entire range of commercial vehicles by up to Rs 60,000 following excise duty hike in the Budget. The price hike will vary between Rs 5,000 and Rs 60,000 depending upon different models. The company is expecting a growth of 18-19% in its commercial vehicle sales in 2011-12, he said. The company has recently also increased prices of its passenger vehicles, including the Nano, by up to Rs 35,000 with immediate effect due to hike in excise duty.

Expect some negative action in the scrip’s of Hind Dorr Oliver as according to an article in The Economic Times, its parent group IVRCL which has called for a shareholders meeting to get approval for the Hind Dorr proposed de-merger has not conducted any independent valuation on the company’s assets. This has not gone down well with certain The Institutional Investor Advisory Services, (IIAS) who have recommended voting against the resolution.

Expect some negative action in the shares of Pioneer Investcorp as the company has decided to shut down its institutional stock-broking arm as higher costs, stiff competition and shrinking trading volumes have made the business unviable. The firm will retain its investment banking business.

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