Indian Markets May Continue Losing Streak, Open Negative

DSIJ Intelligence / 07 May 2012

Indian equity markets may continue its losing streak and open negative in line with weak global cues. The SGX Nifty is trading down by 72 points at 5006 indicating a gap down opening to markets today.

Opening Bias

Indian equity markets may continue its losing streak and open negative in line with weak global cues. The SGX Nifty is trading down by 72 points at 5006 indicating a gap down opening to markets today.

Benchmark Indices

Index

Closing

% Change

SENSEX

16831.08

-1.87

NIFTY

5086.85

-1.96

Dow Jones

13038.27

-1.27

S&P 500

1369.10

-1.61

NASDAQ

2956.34

-2.25

Bovespa

60820.93

-2.07

FTSE

5655.06

-1.93

DAX

6561.47

-1.99

CAC

3161.97

-1.90

LIVE

Hang Seng

20635.42

-2.14

Nikkei

9157.00

-2.38

Shanghai

2444.31

-0.32

Last week, the Indian equity markets tanked by nearly 2 per cent all thanks to the sharp depreciation of the Indian rupee in comparison to the US dollar. After nearly touching the Rs 54 per dollar mark, the rupee on Friday closed at Rs 53.77 per dollar prompting the Reserve Bank of India (RBI) to take some stringent measures and aggressively sell dollars to cap this fall in rupee value. While doing so the RBI also announced a string of measures to bolster foreign currency inflows into the country. 

Currency Rates

Particulars

Rs/$

Rs/Euro

Rs/GBP

Rs100/JYP

RBI Rate

53.7225

70.6465

86.9821

67.0100

Future

53.7800

70.5600

86.9425

67.0050

The RBI relaxed the interest rate ceiling on foreign currency non-resident (FCNR) deposits of banks with maturities of 1 year to less than 3 years to 200 basis points above the LIBOR or swap rate, from 125 basis points now. On 3 to 5-year maturity FCNR deposits, the rate ceiling will be relaxed to 300 basis points above LIBOR. The RBI also allowed banks to freely determine the interest rates on export credit in foreign currency.

Going forward, we at DSIJ believe that over the coming week the Indian equity markets would be largely driven by the movements of the Indian rupee against the dollar. This means that traders and investors on the street would closely track all developments related to the GAAR and other such tax laws which could have a serious effect on FII inflows into the country. 

Key Global Indicators

Particulars

Gold (Rs/10gm)

Crude ($/bbl)

Spot

28070

111.11

% change

-

-1.81

Future

29169

96.27

% change

-0.07

-2.25

An interesting point to be noted here is that after seeing an outflow of Rs 1700 crore in the month of April, the FII’s have surprisingly infused Rs 750 crores into the equity markets during the first three days of May 2012. This raises hopes that the government may review the GAAR provisions in coming days to address most of the concerns of FIIs. Some clarity on the government’s tax law front coupled with the RBI’s recent move to cap the fall in rupee and increase the inflow of dollar into the county would really help in stopping this weakness in the Indian rupee which has lost more than 10 per cent of its value in CY2012. 

In conclusion, for today we see markets to remain volatile with a negative bias. However, some clarity from govt. on its reforms front could see markets turning positive. With the March quarter results’ season picking up pace, one has keep a close track of stocks which are going to announce their March quarter results since the management guidance will provide cues for the stock as well as for the sector. We advise investors to remain cautious while making investment decisions. 

Stocks In Action

According to press release on the BSE, state-run lender Allahabad Bank today posted an increase of 55.36% in net profit at Rs 400.22 crore for the fourth quarter ended March 31. The bank had posted net profit of Rs 257.60 crore in the January-March quarter of 2010-11. During the quarter, operating profit of the bank rose by 15.52% at Rs 901 crore as compared to Rs 780 crore in the year-ago period. Net interest margin of the bank during the quarter stood at 3.23%. During the full year ended March, 2012, the bank's total business stood at Rs 2.71 lakh crore.

According to press release on the BSE, Syndicate Bank registered a growth of 25.33% in net profit at Rs 1,313 crore during FY12 compared to Rs 1,048 crore earned last fiscal. The operating profit for the fiscal rose by 22% at Rs 3,347 crore as against Rs 2,750 crore during FY11. The bank's interest income rose by 33% at Rs 15,268 crore as against Rs 11,451 crore during the previous fiscal. Global business improved from Rs 2,43,946 crore in FY11 to Rs 2,83,558 crore in FY12 showing a growth rate of 16% and its lone overseas branch in London has witnessed business growth by 26.93% from Rs 19,615 crore to Rs 24,898 crore as on March 31, 2012. Net NPA has declined to 0.96% in FY12 from 0.97% in the last financial year.

According to sources, the govt. faced with criticism over the proposed amendments to tax laws with retrospective effect, may dilute the provisions to allow waiver of penalties on tax demands to be raised on Vodafone-like acquisitions involving domestic assets. 

According to Economic Times, Germany’s RHI, a leading refractory manufacturer, may acquire Delhi-based Orient Refractories in a transaction valued at about Rs 600 crore. Orient Abrasives split its refractory division into Orient Refractories with the intention of selling a stake. The valuation of Orient Refractories is at a 66% premium to its current stock market capitalization. According to people close to the negotiations, RHI has agreed to buy 48.6% of the stake held by the promoters Rajendra Kumar Rafgarhia and family for Rs 300 crore. RHI will also make a mandatory open offer for a 26% stake as per takeover regulations.

Corporate Action

Results Today

Scrip Name

Action

Scrip Name

Action

Scrip Name

Action

Advanta India

Mar-12

Infomedia 18

Mar-12

South Indian Bank

Mar-12

Andhra Bank

Mar-12

ITDC

Mar-12

Tata Elxsi

Mar-12

Aptech

Mar-12

JUBILANT

Mar-12

Welspun Global

Mar-12

Bank of India

Mar-12

Onmobile Global

Mar-12

Welspun India

Mar-12

Bosch

Mar-12

Piramal Glass

Mar-12

Glaxosmithkl Cons

Mar-12

Rolta India

Mar-12

Glaxosmithkl Phar

Mar-12

Shalimar Paint-$

Mar-12

HDFC

Mar-12

SKS Microfinance

Mar-12

BSE Institutional Turnover

 

 FII

 DII

Trade Date

 Buy

 Sales

 Net

 Buy

 Sales

 Net

2-May-12

2,241.70

2,004.23

237.47

939.25

868.13

71.12

3-May-12

2,361.49

2,287.75

73.73

791.09

1,138.09

-347.00

4-May-12

3,419.72

2,991.80

427.92

1,118.42

1,398.53

-280.11

May , 12

8,022.91

7,283.78

739.12

2,848.76

3,404.75

-555.99

FII DERIVATIVES STATISTICS FOR 04-May-2012

 

Buy

Sell

OI (End of day)

Net Position

Particulars

Rs (crore)

Rs (crore)

No. of contracts

Rs (crore)

Rs (crore)

Index Futures

1578.48

2616.61

359890

8961.48

-1038.13

Index Options

15959.61

15214.36

1149255

29224.98

745.25

Stock Futures

1263.03

1440.88

822093

20194.69

-177.85

Stock Options

633.50

616.82

29388

740.28

16.68

Total

19434.62

19888.67

2360626

59121.43

-454.04

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