Markets Extend Yesterday's Gains

As expected in our morning update, the Indian markets opened in the positive territory, extending yesterday’s gains. At present, both the indices are trading higher, with the Sensex up 44 points at 15992 and Nifty up 10 points at 4845. Among the sectoral indices, Auto, Realty, IT and Power are trading on a weaker note, while Oil & Gas, Bankex and Capital Goods are trading marginally in the green zone.

One of the major news overnight in our economy is that petrol prices have been raised by Rs 7.50 per litre with effect from midnight. This is around 11.5% higher than the previous price. A Rs 7.50 per litre hike was much higher than the street's expectations of around Rs 3-4.

The other Asian markets are also trading lower, with the Nikkei, Hang Seng and Shanghai down in the range of 0.3%-0.7%. According to media reports, China’s manufacturing activity has witnessed some contraction in the month of May 2012, as the conditions for exports have worsened.

Back home, ONGC is the leading index gainer, up 3.13% at Rs 250.60. Other stocks like HDFC, GAIL India and HDFC Bank are also trading higher in the range of 1%-3%. Bharti Airtel witnessed some buying after being beaten down in the past trading sessions. The stock is trading higher 1.12% at Rs 285.10. Other stocks like Reliance Industries, Cipla, ITC and Hindalco are trading marginally higher in the green zone.

On the other hand, Auto stocks have slid down after the hike in petrol prices last night. Maruti Suzuki, Bajaj Auto, Mahindra & Mahindra are trading lower in the range of 1.40%-2.57%. Tata Power is continuing its losing trend, and is down 1.86% to Rs 87. Other stocks like HUL, L&T, Sterlite Industries, Jindal Steel, etc. are trading marginally in the green zone.

Man Industries is trading higher by 2.01% at Rs 98.85 after news that the company has repaid FCCBs worth USD 64 million that it had raised in the year 2007. Tech Mahindra is trading 3.87% higher at Rs 635.60 after the company reported robust Mar 2012 quarter numbers. On a YoY basis, its net profit increased by 229% to Rs 303 crore.

The market breadth, which indicates the overall health of the market, is strong. On the BSE, 880 shares have advanced, 861 shares have declined and 90 shares are unchanged.

We expect the markets to remain volatile for the day.