Markets May Open Sideways

The Indian markets had a strong trading session yesterday as the broader indices closed higher by almost 1.75 per cent. The Nifty closed well above the 4,900 mark while the Sensex also sailed higher, closing at sub-16,200 levels. This was on the back of the government’s bold move of raising the petrol prices substantially by Rs 7.5 per litre. However, during the latter part of the day there were rumours that the petrol price may be brought down by the government due to a lot of flak over this issue. Also, the Empowered Group of Ministers’ (EGoM) meeting is scheduled today and the general market consensus is that the government may go ahead with revising the prices of diesel and LPG.

Overnight the US and European markets closed higher in the green zone. As per Bloomberg reports, this was due to the Italian prime minister stating that Greece is likely to stay in the euro zone and that a majority of the region’s leaders have pledged their support to fight the debt crisis.

The rupee continues its free fall and has further deprecated against the dollar, thus adding serious worries for the economy. The rupee is currently trading at 56.287 against the dollar and has created a fresh low in CY12. 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 market more volatile.

One should watch out for stocks like BPCL, Crompton Greaves, Great Offshore, ITC, MIRC Electronics, NHPC, Reliance Infra, Sun TV Network, Suzlon Energy, Trident, etc that are going to post their March quarter results today. These stocks may result in a price movement.

In conclusion, we expect the markets to remain volatile as investors are jittery in this uncertain environment. Our advice is to play with caution.

Stocks In Action

According to Business Standard, Bharti Airtel, India’s largest mobile operator, yesterday announced the acquisition of 49 per cent stake in US telecom major Qualcomm Inc’s broadband wireless access (BWA) company in India for an initial investment of USD 165 million (around Rs 907 crore). With this move Bharti Airtel will become a key player in the 4G LTE market, with a presence in eight of the 22 cities in the country. The stock may see some movement in today’s trading session on the back of this major news.

Two-wheeler maker TVS Motors reported a 31 per cent increase in net profit at Rs 57.2 crore for the quarter ended March 2012. It was Rs 43.6 crore in the same period a year ago. The net sales remained almost flat at Rs 1,603 crore as against Rs 1,609 crore in March 2011. The stock may see some movement in today’s trading session.

Reliance Power yesterday posted a jump of nearly 24 per cent in consolidated net profit at Rs 231 crore for the fourth quarter ended March 31, 2012. In the year-ago period, the entity had consolidated net profit of Rs 186.62 crore. RPower’s total income in Q4 2012 climbed to Rs 653 crore from Rs 598 crore in the same period a year ago. Reliance Power’s CEO, J P Chalasani, said that the company is well on track to become a 5,000 MW operating company by the end of 2012. The stock may see some movement in today’s trading session.

Apollo Tyres has restructured its research and development team across three key geographies to create synergy and greater alignment to the company’s growth aspirations and to generate speed and relevance while entering new markets. This comes soon after a clear decision at the management level to increase Apollo’s focus on core research and a substantial increase in R&D spends over the next few years. The new structure links the entire organisation along two critical product lines of commercial and personal vehicle tyres with respective leaders reporting to the vice chairman. The stock may see some movement in today’s trading session.

Shriram Group, the Rs 50,000-crore diversified Chennai-headquartered conglomerate, is understood to be firming up a strategic plan to consolidate its presence in the cement sector. Shriram EPC, a publicly held company of the Shriram Group, recently entered the cement sector by acquiring a majority stake in Andhra Pradesh-based cement manufacturer Sree Jayajothi Cements Ltd. As a first step, Shriram EPC is raising Rs 400 crore through the private equity (PE) route for deployment in the cement firm.

The central government has moved to clear any ambiguity that could be misused by captive mine owners to sell iron ore fines in the open market. The move comes after the Jharkhand High Court in February stayed the state from banning exports, but relaxed it later to allow a one-time domestic sale of iron ore fines from the captive mines of Usha Martin Ltd and Steel Authority of India (SAIL). The centre’s recent move is seen as an attempt to reinforce the implicit ban on sale of captive resources, simultaneously pushing owners of captive iron ore mines to invest in adding value to the ores they own.  It has sought the law ministry’s approval on the same.