Indian Markets May Open On A Positive Note

The Indian markets may open positive ahead in line with the global cues. The SGX Nifty is trading up by 30 points at 4,836, indicating a gap up opening to the markets today.

The Indian markets yesterday closed the day lower down by almost 0.50 per cent and the Sensex breached the psychological mark of 16,000. Negative sentiments have again fueled the markets, as investors speculate that India is facing headwinds from both the macro and micro-economic environment. On the macro front there are fears from the euro zone of the debt crisis getting worsened while on the micro front we are faced with various headwinds like deprecating rupee and high inflation which would further increase our current and fiscal account deficit.

Overnight the European markets closed with deep cuts on the back of the Bloomberg reports which stated that European leaders clashed over joint debt sales as they called on Greece to stick with the budget cuts needed to stay in the euro and offered no immediate relief for recession-wracked Spain. While the US markets like NASDAQ and S&P closed in the green zone, Dow closed marginally in the red zone after the housing data came in better than the street estimates, creating further hope that the world’s largest economy is on the recovery path.  

The rupee continues its free fall and has further deprecated against the dollar adding serious worries for the economy. It is currently trading at 55.93 against a dollar and has created a fresh low in CY2012. Yesterday the future contract breached the 56 mark which further created a sense of uncertainty in the economy. Brent crude has come down from the level of USD 125 to 107 per barrel, but is still above the comfort zone of the economy. Along with this the result season has made the markets more volatile.

One should watch out for stocks like Gujarat State Petronet, Jai Corp, Jet Air India, Madras Cement, Max India, Reliance Power, Pidilite Industries, TVS Motors and Voltas that are going to post their Q4FY12 results next week. These stocks may see a price movement.

Further, one of the major news overnight in our economy is that the petrol prices have been raised with effect from midnight by Rs 7.5 per litre which is around 11.5 per cent higher than the previous price. A hike in Rs 7.5 per litre was much higher than the streets expectation of around Rs 3 to Rs 4. The oil marketing companies (OMCs) which were going to hike prices since February have finally made the move. The petrol prices were not hiked in the past on the back of a series of events like the elections, budget, parliamentary sessions, etc.The hike in the petrol prices will surely benefit the OMCs but this will pinch the common man very badly. The move would take the OMCs’ stocks to trade higher in today’s trading session while one may witness a selling pressure on the auto stocks. We at DSIJ, through our Mindshare and Market Commentary columns, had informed investors earlier that the fuel prices would be hiked soon. Nevertheless, more hike is on the cards. The Empowered Group of Ministers (EGOM) meeting is scheduled tomorrow which would probably hike the prices of diesel and LPG too.

In conclusion we expect the markets to remain volatile as investors are jittery in this uncertain environment. We advise investors to play with caution.

Stocks In Action

According to media reports, PwC consultancy firm came out with reports that if the government accepts the TRAI’s recommendation on spectrum pricing then mobile tariff would go up by 90 paise in the metros. This hike would again affect the common man as the plan charges would also be revised. Based on this news one can see a stock price movement in the telecom players like Airtel, R Comm and Idea.

Tech Mahindra yesterday post-market reported its March quarter numbers. For the quarter its revenue was up by 13 per cent to Rs 1,419 crore while the net profit increased by 229 per cent to Rs 303 crore. The stock might see a volatile price movement in today’s trading session.

Man Industries repaid FCCBs worth USD 64 million which were raised by the company in the year 2007. The company further added that after redeeming this bond it does not have outstanding FCCBs from here on. The stock yesterday closed 0.36 per cent lower to Rs 96.9, and one may see further volatility in today’s trading session.

According to Business Standard, Hotel Leela Venture has planned to open its sea-facing, 14-storied hotel in Chennai, also first in Tamil Nadu, by March this year. According to the market expert HVS India, of the total 1,02,000 rooms under construction, only 75 per cent may come up in the next five years. Further, the company is suffering from heavy debt and interest burden affecting the bottomline. One may see movement in the stock price in today’s trading session.

NMDC has informed BSE that the company has signed a contract agreement for a steel melting shop (SMS) package for the upcoming 3.0 mtpa integrated steel plant at Nagarnar, Chhattisgarh. The stock may see volatile moves in today’s trading session.

According to media reports, NTPC, India’s biggest power producer, has plans to spend around Rs 82,000 crore over a decade to secure overseas coal supplies as prices of the fuel tumbled to a 19-month low. The company may sign a five to ten year contract for the first time to import as much as 150 million metric tonnes of coal. This would result in a cost of around USD 15 billion, assuming a rate of USD 100 per tonne. One may see a price movement in the scrip in today’s trading session.