Indian Markets May Open Sideways

Opening Bias

Indian equity markets may open sideways with a negative bias. The SGX Nifty is trading down by 10 points at 5242 indicating a gap down opening to markets today.

Yesterday, the Indian equity markets were rocked by fears of an eminent tsunami attack on the east coast of India following a massive earthquake off the coast of Indonesia measuring 8.6 on the Richter scale. This triggered a sell-off of sorts in the markets as traders and investors fretted over the re-occurrence of the mayhem that was caused in 2004 by a tsunami that hit the coast of India. The power stocks like Reliance Infra, Tata Power, Adani Power, JSW Energy etc. tumbled on the bourses as investors feared that the shortage of coal supply from Indonesia may impact their business viability.

However, later on as weather agencies played down the threat of a tsunami the other global markets like US and Europe opened positive and notched up significant gains. Markets there were also buoyed by the surprising profits posted by Alcoa Inc. and the cooling off seen in Spanish and Italian bond yields.

Back home, the govt. is expected to announce the Industrial Production (IIP) numbers for Feb 2012 by noon today. According to Reuter’s poll, India's February industrial output probably slowed a tad from January's surge, as growth in the manufacturing and consumer non-durables sectors likely moderated. A survey of 26 economists showed they expect industrial production (IIP) to grow 6.6 percent in February from a year ago, slightly lower on a sequential basis when compared with January's 6.8 percent.

In other major developments, the shares of education major MT Educare and govt. owned National Building Construction Corporation (NBCC) are slated to be listed on the bourses today for public trading. We at DSIJ had recommended investors to subscribe to the shares of these companies as we expected good listing day gains. Rightly so we expect significant gains on listing today.

In conclusion, for today we see markets to remain volatile with a negative bias. We reiterate our stance that with the March quarter results season approaching soon it is better to stick to individual stocks rather than go bullish on any particulars sector.

Stocks In Action

According to Business Standard, the government is likely to approve state-run Neyveli Lignite Corporation's proposed joint venture to set up Rs 10,000 crore thermal power project in Uttar Pradesh. The Cabinet may consider granting approval to Neyveli Lignite Corporation for formation of a joint venture to set up a 1,980 MW coal-based thermal power project at Ghatmapur in Kanpur district of Uttar Pradesh. The company has initiated the process for entering into a MoU with Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL) for setting up the plant with 50:50 equity participation. The UP government has given its in-principle approval to allocate 2,500 acres of land and also 80 cusecs of water.

According to a press release on the BSE, chemicals producer BASF India plans to invest Rs 1,000 crore to set up a new production facility at Dahej in Gujarat. The site will employ more than 250 people at full capacity, primarily in operations. The facility will start production in 2014. Bucking the general weak trend, shares of the company were trading 1.87% higher at Rs 517 apiece on the BSE in afternoon trade. With this new production plant, BASF aims to ensure local supply for growing markets and industries such as appliances, footwear, automotive, construction, adhesives, architectural coatings, paper and personal care. The new facility will be an integrated hub for polyurethane manufacturing and will also house production facilities for care chemicals and polymer dispersions for coatings and paper. BASF India manufactures tanning agents, crop protection chemicals, textile chemicals and automotive and coil coatings, construction chemicals, among others.

Expect some positive action in the Indian Aviation stocks as govt. is likely to  to consider a proposal to have foreign direct investment (FDI) limit in the aviation sector to 49%, which can act as a saving grace for the struggling airlines industry in India. The cabinet is expected to meet today and take up the issue of raising FDI in the sector , a long standing industry demand that can bring in the much needed cash for these and also some other companies including the government-owned Air India.

Corporate Action