Indian Markets May Cut Back Losses, Open Positive Ahead Of Expiry

DSIJ Intelligence / 26 Apr 2012

Indian equity markets may cut back on yesterday’s losses and open positive. The SGX Nifty is trading up by 20 points at 5217 indicating a gap up opening to markets today.

Opening Bias

The Indian equity markets may cut back on yesterday’s losses and open positive. The SGX Nifty is trading up by 20 points at 5,217, indicating a gap up opening to the markets today.

Benchmark Indices

Index

Closing

% Change

SENSEX

17151.29

-0.33

NIFTY

5202.00

-0.40

Dow Jones

13090.72

0.69

S&P 500

1390.69

1.36

NASDAQ

3029.63

2.30

Bovespa

61750.38

-0.36

FTSE

5718.89

0.17

DAX

6704.50

1.74

CAC

3233.46

2.03

LIVE

Hang Seng

20765.41

0.58

Nikkei

9578.37

0.18

Shanghai

2404.41

-0.10

Yesterday, the markets tanked and ended lower as rating agency Standard & Poor’s (S&P) downgraded India’s credit rating to negative (BBB-) from stable. The report said that India’s investment and economic growth have slowed, and its current account deficit has widened, resulting in a weaker medium-term credit outlook. S&P also expects the government to face headwinds in implementing policy measures to improve its fiscal and macro-economic parameters in the near future, given the current unfavourable political environment.

This downgraded rating, which has come in the wake of the Reserve Bank of India’s cut in key interest rates last week to spur growth in the economy, is a real shocker. The FIIs, who have already been jittery with their investments in the Indian equity markets ever since the government tightened its screws on certain tax norms like the GAAR, would feel further pressured as they would be compelled to pull out their investments. This would in turn not only pull down the gains that the markets have seen in 2012 but would also burden the Indian rupee, which will consequently lead to current account imbalance in the economy.

Key Global Indicators

Particulars

Gold (Rs/10gm)

Crude ($/bbl)

Spot

28281

118.99

% change

-

-0.16

Future

28831

103.96

% change

-0.15

-0.15

Well, no sooner did S&P issue its downgrade notice, the Indian government sprang into an action mode and the finance ministry initiated damage control by saying that the S&P has only waved a red flag and not downgraded India. According to the ministry, this would not impact the ability of the corporates to borrow abroad. However, we at DSIJ believe that unless the government delivers on reforms, a downgrade is imminent.

On the global front, the US stocks rallied yesterday and so did their European counterparts as investors applauded Apple Inc’s earnings and offered muted reaction to the Federal Reserve’s decision to leave its monetary policy unchanged. Federal Reserve Chairman Ben Bernanke said that he is comfortable with the current stance of interest rate policy given the forecast that economic growth will remain moderate over the coming quarters and then only pick up gradually. 

Currency Rates

Particulars

Rs/$

Rs/Euro

Rs/GBP

Rs100/JYP

RBI Rate

52.4850

69.2520

84.6583

64.5000

Future

52.5800

69.4300

84.6500

64.7300


However, amidst all these cheers there has been a red flag raised in the UK as it is believed that Britain’s economy is in its second recession since the financial crisis of 2008. Data released by The Office for National Statistics on Wednesday said that Britain’s gross domestic product fell by 0.2 per cent in the first quarter of 2012 after contracting by 0.3 per cent at the end of 2011. This GDP figure is far less than analyst forecasts of 0.1 per cent growth. The government desperately needs growth to achieve its overriding goal of eliminating Britain’s large budget deficit over the next five years. But this will be a challenge as many of Britain’s euro zones’ trading partners are already in recession. Though this latest fear of double-dip recession in the UK has not had any rigorous impact on the global economy yet, we remain cautious about any negative implications that may follow in its footsteps.

In conclusion, for today we see the markets recovering from yesterday’s fall but would like to advise investors to remain cautious going ahead. Our sources on the streets have indicated that with the April F&O series expiring today, the mood for the upcoming May series isn’t very upbeat as there has been a drastic fall in open interest (OI) on Nifty Futures. This indicates that fewer numbers of traders are willing to participate in the market at present, citing volatile times ahead. 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 street estimates, Idea Cellular, the country’s second-largest telecom services provider by market cap is expected to report growth of 26.8 per cent quarter-on-quarter in its profit after tax of Rs 255 crore in the March quarter of FY12. The revenues are seen going up by 5.35 per cent to Rs 5,300 crore from Rs 5,030.8 crore during the same period. Its EBITDA is likely to go up to Rs 1,416.9 crore in the January-March quarter of FY12 versus Rs 1,344.6 crore in the previous quarter. On the operational parameters’ front, its revenue per minute (RPM) is expected to be flat at 43.3 paisa and the average revenue per user (ARPU) is seen to be flat too at Rs 159 minutes of usage (MOU), which is likely to be Rs 368.

It has come to notice that private sector lender ICICI Bank has sharply cut down its stake in the beleaguered airline company Kingfisher Airlines (KFA) to 2.9 per cent from 5 per cent earlier. As per the latest shareholding pattern filed by KFA with the stock exchanges today, ICICI Bank held about 16.7 million shares, accounting for a 2.9 per cent stake, in the airline as on March 31, 2012. 

According to a press release on the BSE, Mahindra Holidays reported a marginal decrease in net profit at Rs 37 crore for the quarter ended March 2012. It was Rs 40 crore in the same period a year ago. However, the total income rose by 12.6 per cent to Rs 173.5 crore from Rs 154 crore in March 2011.

According to a filing to the exchanges, LIC Housing Finance posted a 19.4 per cent dip in net profit for the quarter ended March 2012 at Rs 253.6 crore as against Rs 314.7 crore in March 2011. However, its total income jumped by 21.3 per cent to Rs 1,689 crore from Rs 1,392 crore in March 2011. The consolidated net profit for the financial year ended March 2012 declined by 3.3 per cent to Rs 919.8 crore from Rs 951.8 crore in March 2011. However, a 28.1 per cent increase was seen in its total income at Rs 6,244.5 crore as against Rs 4,874.6 crore in the previous financial year ended March 2011.

According to a press release on the BSE, Sterlite Industries reported a 27.25 per cent decline in its consolidated net profit at Rs 1,987 crore in the fourth quarter ended March 31, 2012. The company had a net profit of Rs 2,730 crore in the same period last fiscal. The net sales were up by 7.6 per cent at Rs 10,763 crore in the quarter under review as compared to Rs 10,000 crore. The company announced the highest ever dividend at Rs 2 per share for FY12, including an interim dividend of Re 1 per share.

According to a press filing on both the stock exchanges, YES Bank registered a 33 per cent jump in net profit at Rs 272 crore for the quarter ended March 2012 as against Rs 204 crore last year. The total income also sprang up by 45.5 per cent to Rs 2,051.4 crore from Rs 1,409.3 crore in March 2011. Its other income increased by 42.2 per cent to Rs 266 crore as against Rs 187 crore in March 2011. The net interest income grew by 30 per cent to Rs 448 crore. On a quarterly basis, the gross non-performing assets increased to 0.22 per cent from 0.2 per cent in December 2011. For the financial year ended March 2012, the bank posted a 34.3 per cent jump in net profit at Rs 977 crore as compared to Rs 727 crore in March 2011. The total income also increased by 53.5 per cent to Rs 7,164.4 crore as against Rs 4,665 crore in the previous financial year. The board approved fundraising of USD 500 million through equity and announced a final dividend of Rs 4 per share.

According to a press release on the BSE, India Cements has reported 17.4 per cent rise in net profit to Rs 64.92 crore for the fourth quarter ending March 31, 2012 as against Rs 55.28 crore during the same period of the previous year. For the year ending March 31, 2012, its net profit soared three-fold to Rs 271.46 crore as against Rs 65.30 crore during the same period of the previous year. The total income for the fourth quarter ending March 31, 2012 stood at Rs 1,122.95 crore as against Rs 1,000.37 crore registered during the same period of last year. For the year ending March 2012, the total income rose to Rs 4,222.69 crore from Rs 3,540.33 crore during the same period of the previous year.

According to Business Standard, state-run gas utility GAIL India has suspended cargo operations at the nation’s third liquefied natural gas (LNG) terminal at Dabhol after rough seas damaged the marine fenders at the port. A ship carrying maiden or the so-called commissioning cargo, which will be used to prepare the site for commercial operations, had to move to high seas after the fenders lining the jetty got damaged. The LNG carrier, called Excelerate, at the end of March brought a cargo from Statoil ASA Snohvit LNG plant in the Barents Sea off Norway. It had offloaded barely 5-10 per cent of the cargo when operations had to be suspended last week and the vessel shifted to anchor. Sources said the repair work may be completed in the next couple of days after which the LNG vessel would again be brought to the jetty for offloading.

According to Economic Times, German auto component maker Robert Bosch is expanding the manufacturing capacity of critical components for diesel vehicles by 30-50 per cent to cash in on the growing demand for diesel vehicles in India. The group said a significant part of the Rs 1,000 crore of investment lined up for 2012 will go into creating diesel engine component capacity. The company has expanded production capacity of its classical nozzle holder from 17,000 a day to 26,500, common rail injectors from 6,000 to 9,000 and DSLA nozzles from 18,000 to 30,500 a day. All these are key components of diesel vehicles produced in India. 

According to Economic Times, Hindustan Zinc (HZL), the world’s largest producer of zinc, is set to emerge as one of the top 10 silver producers globally by 2013-14. The company, which is India’s only major producer of the metal, is ramping up production to 500 tonnes from the current level of 150-200 tonnes by expanding its captive mines. This will also catapult India into the global league of top 10 silver producing countries. HZL will be joining the ranks of BHP Billiton (Australia), Fresnillo (Mexico), KGHM Polska Meidz (Poland), Pan American Silver (Canada) and Goldcorp.

Corporate Action

Stocks Paying Dividend (Ex-Date)

Scrip Name

Action

Rs

MCX

Interim Dividend

18.00

Sundaram Clayton

Interim Dividend

5.75

Results Today

Scrip Name

Action

Scrip Name

Action

Scrip Name

Action

Ador Welding

Mar-12

Gujarat Gas

Mar-12

Oil Country Tub

Mar-12

Ajanta Pharma

Mar-12

Idea Cellular

Mar-12

Sasken Comm

Mar-12

Astra Micro

Mar-12

Kirloskar Oil Engines

Mar-12

Sterlite Tech

Mar-12

Bata India

Mar-12

L&T Finance Holdings

Mar-12

Strides Arco

Mar-12

Biocon

Mar-12

Magma Fin

Mar-12

Tamilnadu Petro

Mar-12

CHOLAFIN

Mar-12

Mahindra Compo-$

Mar-12

Wendt India

Mar-12

Clariant Chem

Mar-12

MidValley Entertainment

Mar-12

Everest Inds

Mar-12

MRF

Mar-12

BSE Institutional Turnover

 

 FII

 DII

Trade Date

 Buy

 Sales

 Net

 Buy

 Sales

 Net

25-Apr-12

2,176.64

2,517.48

-340.84

911.18

870.48

40.70

24-Apr-12

2,158.43

3,019.21

-860.77

1,462.54

1,043.46

419.08

23-Apr-12

1,351.70

1,759.19

-407.49

1,206.48

754.78

451.70

April , 12

30,188.02

31,578.61

-1,390.59

15,906.43

15,082.66

823.75

FII DERIVATIVES STATISTICS FOR 25-April-2012

 

Buy

Sell

OI (End of day)

Net Position

Particulars

Rs (crore)

Rs (crore)

No. of contracts

Rs (crore)

Rs (crore)

Index Futures

6022.63

6337.46

542909

13745.77

-314.83

Index Options

23177.73

22808.62

1525699

39680.47

369.11

Stock Futures

7757.97

7539.44

883008

24191.88

218.53

Stock Options

458.41

440.59

41314

1146.46

17.82

Total

37416.74

37126.11

2992930

78764.57

290.63

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