Indian Markets May Open Sideways With Negative Bias

The Indian equity markets may open sideways with a negative bias. The SGX Nifty is trading down by 6 points at 4,922, indicating a flattish gap down opening to the markets today.

Last Friday, the US stock markets fell marginally, yet managed a first-up week in four, as investors fretted over troubles in Spain where banks came under severe financial strain and the government bond yields shot upwards. In the coming week, a fresh measure of the US’ job growth will grab the spotlight in the financial markets, but that will compete for investor attention with Greece’s potential exit from the euro zone. Our sources tell us that the US economy has settled into a slower pace of job growth, and the latest employment figures for May are likely to fit the pattern.

Back home, the Indian markets last week managed to cut back on their four-week losing streak and post some modest yet satisfying gains. This was primarily possible thanks to the government’s bold decision to go ahead and give its informal nod to the domestic oil refiners to increase the retail petrol prices and recoup their losses on unsubsidized and decontrolled fuel. 

For the week ahead, we expect the markets to behave in a volatile manner as traders roll over positions from the near-month May 2012 series to June 2012 series as the May derivatives contracts expire on Thursday, May 31. The government is also expected to announce the Q4 March 2012 gross domestic product (GDP) data on Friday, May 31, which would eagerly be awaited by the investors. The GDP numbers will prove to be a key trigger for not only the markets but also provide some vital cues for the RBI’s next course of action on the monetary policy front in the aftermath of rising inflation. The rupee’s movement, which fell to record lows against the dollar in the week gone by and impacted the markets, will also keep investors cautious.

For today we see the markets remaining volatile with a negative bias. There is a lot of uncertainty looming on the streets and any bad news on the European front or further weakening of the rupee may mar the mood and send the markets spiralling downwards. We advise investors to remain cautious while taking investment decisions. 

According to a press release on the BSE, state-run Bharat Petroleum Corporation Limited (BPCL) has posted higher-than-expected earnings for the fourth quarter of 2011-12. The company’s net profit jumped over four times to Rs 3,962.83 crore in the fiscal fourth quarter against Rs 935.18 crore in the corresponding quarter last year. Higher throughput helped the company’s sales jump by nearly 43 per cent at Rs 64,642.18 crore over Rs 45,251.51 crore in the corresponding previous quarter. The company’s board has also recommended issue of bonus shares in the ratio of 1:1. The board has recommended a dividend of Rs 11 for 2011-12.

According to a press filing on the BSE, real estate developer, Ansal Properties & Infrastructure, today reported a consolidated loss of Rs 22.36 crore in the three months ended March 2012. The entity reported profit after tax (PAT) of Rs 12.35 crore in the January-March quarter of 2011. The company’s revenue stood at Rs 325.25 crore in the fourth quarter of FY12 as against Rs 334.79 crore in the year-ago period. The realty firm recorded revenue of Rs 1,160.07 crore in FY12 as against Rs 1,268.21 crore in the previous fiscal.

After a slow start, Reliance Industries Ltd (RIL)’s share buy-back program seems to have gathered pace with the company having acquired stocks worth Rs 1,481 crore since the launch of the share re-purchase offer in February. According to the information available with the bourses, Mukesh Ambani-led RIL, that began a buy-back program of Rs 10,440 crore early this year, has so far purchased shares worth Rs 1,481.66 crore. This translates to about 14 per cent of the total amount earmarked for the purchase of shares. Market experts are of opinion that the oil & gas giant is buying back shares aggressively from the open market with an aim to shore up stock valuations. However, the buy-back program appears to have provided little respite to the stock price, which has fallen by over 7 per cent in May alone, underperforming the benchmark Sensex that has declined by 6 per cent during the period.

Bharti Airtel expects to roll out 3G services in Rwanda in the next quarter and reiterate plans to invest USD 100 million in the central African country. Airtel launched its mobile services in Rwanda in March, and presently runs a 2G network. Other telecoms firms operating in Rwanda include MTN Rwanda, a unit of the South African company MTN and Tigo Rwanda owned by Millicom International Cellular. As of September, the country had 4.1 million mobile phone subscribers out of its population of 10.4 million.

According to Economic Times,  infrastructure company, Lanco Infratech, is selling its roads business and is facing headwinds in securing the right price for its power business as bankrupt state electricity boards fail to pay up and fuel remains scarce due to monopoly coal producer Coal India’s inefficiencies. The roads-to-power major, which surprised the corporate world last year by outbidding bigger global players to acquire Australia’s Griffin Coal for A$ 730 million, has fallen into a rough patch and has begun talks with private equity players for the power business. The roads business is estimated to be worth about Rs 1,500 crore and is smaller than the power portfolio, where Lanco has built a capacity worth Rs 55,000 crore.