Markets May Open Negative

The Indian markets may open negative ahead in line with the global cues. The SGX Nifty is trading down by 34.5 points at 5,167, indicating a gap down opening to the markets today.

Yesterday, Nifty closed the day lower down by almost 1 per cent and breached the psychological mark of 5,200. It seems that negative sentiments have again been fuelled in the markets as investors speculate about the macro-economic situation, particularly the current and the fiscal account deficit that may worsen going ahead.

Overnight, the European markets also closed in a narrow range after the European central bank did not lead a discussion on cutting the interest rate which would have further led to growth in the euro zone. The US markets too closed in the negative territory as the disappointing service data led to speculation that its jobless claim would also come below the street expectation, thus leading to concerns about the slowing down of the economy. The other Asian markets have opened marginally in the negative zone while the Japanese market is closed for the day.

The rupee has once again deprecated against the dollar, adding more worries for the economy. It is currently trading at 53.2395 against a dollar and has created a fresh low in CY2012. Brent crude has come down from the level of USD 125 to 116 per barrel, but is still above the comfort zone of the economy. Along with this, the result season has made the market more volatile. One could keep a track of stocks like Bank of Baroda, Corporation Bank, Gillette India, NIIT Tech, Tata Teleservices, DB Corp, etc.

In conclusion, for today we expect the markets to be volatile with a negative bias and investors should watch out for companies which are going to declare their March quarter results. Hence one has to take a cautious approach while investing in the markets.

Stocks In Action

According to Business Standard, drug maker Cipla has slashed the prices of its generic drugs by up to 76 per cent. These generic drugs are used in treating brain, lung and kidney cancer. The move comes after the government permitted domestic firm Natco Pharma to manufacture and sell drugs at a price 30 times lower than charged by its patent holder Bayer Corporation. Cipla may see a downward move in today’s trading day as the price reduction may have an impact on its bottomline.

VIP Industries yesterday plunged by almost 7 per cent after the management provided weak guidance for FY13. The management scaled down the growth to 15 per cent from the previous 17 to 20 per cent growth in FY13 on the back of a subdued international market, competitive pressure, impact of price hikes on volumes, etc. The stock may continue to see some pressure in the near term.

According to Economic Times, Reliance Industries has been fined Rs 6,600 crore (USD 1.235 billion) for the steep fall in the gas output from the KG-D6 block. RIL, since the last two years, has lowered the output as against the expectation of the oil ministry’s Amended Initial Development Plan (AIDP). The oil ministry is of the view that the output fell sharply because RIL did not drill wells as per the AIDP while RIL is of the opinion that drilling more wells would not yield more output due to unexpected geological complexities. Nonetheless, RIL will face some pressure which could further move the scrip southwards in today’s trading session.

Pantaloon Retail has issued 81.63 lakh shares which are around 3.6 per cent of the company’s stake to Bennett Coleman and Co at an approximate price of Rs 245 per share. The move will result in Bennett’s stake rising from the current 2.12 per cent to 5.18 per cent of the total capital. On the other hand, the promoters’ stake will decline from 44.6 per cent to 46 per cent. Pantaloon’s shares yesterday closed a per cent higher and one may see good movement in the stock in today’s trading session.

Pipavav Defence & Offshore Engineering has entered into a 50:50 joint venture with Mazagon Docks to look after the building of warships and submarines for the Indian Navy. Mazagon Docks is India’s biggest defense shipyard and accounts for more than 85 per cent of the defense vessels built in the country. The JV is named as Mazagon Dock Pipavav and will include part of the existing orders of the dock worth Rs 1 lakh crore and will also bid for future defense contracts in India. One may witness some volatility in Pipavav’s stock price.

The fuel supply agreement (FSA) has once again made it to the headlines because the Central Electricity Authority (CEA) has scheduled a meeting next week with the officials of Coal India along with management representatives of power companies and bureaucrats from the coal and power ministries to break the deadlock over the FSA. About 50 FSAs are to be signed but only about 10 have been inked in the two weeks after Coal India invited power companies to sign these agreements. One may see movement in the power stocks as well as that of Coal India as investors and traders may speculate the outcome of the meeting.

The shares of Marico plunged by almost more than 4 per cent yesterday but recovered and ended the day with a downslide of 0.44 per cent at Rs 179.05. The volatile movement was on the back of the March quarter numbers of the company in which it reported a fall in net profit of 4 per cent to Rs 69 crore. However, the management clarified that last year the company had made exceptional gain through the asset sale of ‘Sweekar’, an oil brand and also due to some other adjustments. Hence, if we don’t consider these aspects, it has seen a rise of 9 per cent in its bottomline. One may see movement in the stock in today’s trading session.