Indian Markets To Open Positive Post RBI's Giant Repo Rate Cut
DSIJ Intelligence / 18 Apr 2012
Indian equity markets may open positive as traders and investors rejoice the RBI’s surprising move of slashing key repo rate by 50 bps to boost economic growth. The SGX Nifty is trading up by 22 points at 5346 indicating a gap up opening to markets today.
Opening Bias
The Indian equity markets may open positive as traders and investors rejoice the RBI’s surprising move of slashing key repo rate by 50 bps to boost economic growth. The SGX Nifty is trading up by 22 points at 5,346, indicating a gap up opening to the markets today.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 17357.94 | 1.21 |
| NIFTY | 5289.70 | 1.22 |
| Dow Jones | 13115.54 | 1.50 |
| S&P 500 | 1390.78 | 1.55 |
| NASDAQ | 3042.82 | 1.82 |
| Bovespa | 62698.87 | 1.20 |
| FTSE | 5766.95 | 1.78 |
| DAX | 6801.00 | 2.65 |
| CAC | 3292.51 | 2.72 |
| LIVE | ||
| Hang Seng | 20755.84 | 0.94 |
| Nikkei | 9622.39 | 1.67 |
| Shanghai | 2346.32 | 0.49 |
Overnight, the US markets also traded in the positive zone, notching up some healthy gains as investors there and across the EU hailed the International Monetary Fund’s (IMF) comments that global growth was back on the growth trajectory, improving slowly but steadily. This was followed by an upward revision in the world growth forecasts for 2013 at 3.5 per cent and 4.1 per cent in 2014 as against 3.3 per cent and 3.9 per cent for 2013 and 2014 respectively forecasted in January 2012. The IMF has however cautioned that another flare-up of the euro zone sovereign debt crisis or sharp escalation in oil prices on geopolitical uncertainty could easily undermine confidence and disrupt the improving growth path for the world economy.
| Currency Rates | ||||
|---|---|---|---|---|
| Particulars | Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP |
| RBI Rate | 51.6265 | 67.6546 | 81.9390 | 64.1900 |
| Future | 51.6050 | 67.8550 | 82.3850 | 63.9000 |
All in all, the RBI’s monetary policy aimed at further easing the liquidity pressure of the banks and fuel growth in the economy which decelerated significantly to 6.1 per cent in the December quarter of 2011 and is expected to moderate in the March quarter. However, while the move is slated to be a positive one for interest rate-sensitive sectors like banking, auto and realty, the surprising steep reduction in key rates does pose a threat. We at DSIJ continue to believe that the reversal in interest rates was initiated way too soon and the quantum was steep too.
With a hike in the prices of petrol and diesel yet to take effect, any shock on this front would only spike inflation further. Moreover, this spike in inflation would be not only felt in fuel articles but all across the board as one may see an increase in transportation costs and consequently an increase in the prices of fruits and vegetables. India being an import-oriented economy, any uptick in demand could worsen the external trade position and make the rupee vulnerable. Let’s just hope that the RBI is right in its economic expectations as always, because it would be a huge disappointment to see the economy suffer another round of interest rate hike in the near future.
| Key Global Indicators | ||
|---|---|---|
| Particulars | Gold (Rs/10gm) | Crude ($/bbl) |
| Spot | 28376 | 118.61 |
| % change | - | 0.14 |
| Future | 28478 | 104.2 |
| % change | -0.29 | 0.00 |
Moving on to the corporate results, banking major HDFC Bank is expected to announce its March quarter results today. As per the market estimates, its net profit is expected to rise by 30 per cent year-on-year to around Rs 1,500 crore. The bank’s loan book (net) is likely to expand a little more than 22 per cent YoY to around Rs 1.95 lakh crore. The net interest income or the difference between interest earned and paid out may grow in the range of 13-14 per cent. Experts believe that the bank’s corporate exposure being mainly in the form of working capital loans, this would reduce any possibility of NPAs arising out of that.
In conclusion, for today we see the markets remaining positive. We reiterate our stance that with the ongoing March quarter results’ season it is better to stick to individual stocks rather than go bullish on any particular sector.
Stocks In Action
According to Business Standard, the board of directors of government-owned Coal India Ltd (CIL) has decided to send draft fuel supply agreements (FSAs) to power companies before April 20, though with a negligible penalty clause if it is unable after three years to meet an 80 per cent supply commitment. The board has decided on a penalty of 0.01 per cent of the value of shortfall if the firm fails to deliver 80 per cent of the committed coal. It will also go soft on the earlier decision on not to import or enter into the business of imports and may chart an import policy.
According to Economic Times, Mexican multiplex operator Cinepolis is in talks to pick up a significant stake in Reliance ADA Group’s Big Cinemas and later combine its Indian operations with that of Anil Ambani’s multiplex chain. Expect positive action in the shares of Reliance Mediaworks today.
Corporate Action
| Corp Action | ||
|---|---|---|
| Scrip Name | Action | Ratio |
| Indianivesh | Stock Split | Rs 10/- to Rs 1/- |
| BSE Institutional Turnover | ||||||
|---|---|---|---|---|---|---|
|
| FII | DII | ||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 17-Apr-12 | 2,403.64 | 1,962.49 | 441.14 | 964.09 | 1,177.30 | -213.21 |
| 16-Apr-12 | 1,341.24 | 1,850.67 | -509.43 | 932.45 | 714.22 | 218.23 |
| 13-Apr-12 | 2,634.23 | 2,496.98 | 137.25 | 1,329.61 | 1,809.29 | -479.68 |
| April , 12 | 18,426.67 | 18,641.36 | -214.69 | 9,341.35 | 9,702.68 | -361.33 |
| FII DERIVATIVES STATISTICS FOR 17-April-2012 | |||||
|---|---|---|---|---|---|
|
| Buy | Sell | OI (End of day) | Net Position | |
| Particulars | Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) |
| Index Futures | 3228.86 | 2725.45 | 392172 | 10314.48 | 503.41 |
| Index Options | 25806.85 | 26004.30 | 1425729 | 37707.58 | -197.46 |
| Stock Futures | 2154.19 | 2197.84 | 831861 | 23662.16 | -43.65 |
| Stock Options | 1496.29 | 1460.98 | 45688 | 1298.09 | 35.31 |
| Total | 32686.18 | 32388.57 | 2695450 | 72982.32 | 297.61 |
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