Markets May Open Negative On Weak Global Cues

Indian markets may open negative ahead in line with global cues. The SGX Nifty is down by 27 points at 4942 indicating a Negative gap up opening to the markets today.

The Indian markets had a flat positive trading session yesterday as the broader indices closed marginally higher by 0.03 per cent. Nifty went above the 5,000 mark level but was unable to hold the gains and closed at 4,980 while the Sensex was sailing near the sub 16,438 levels. This was due to no major triggers for the market which has been waiting for positive news ahead of the May expiry on Thursday. Also, an uncertain global environment, especially due to events in the European region, has kept the investors cautious.

Overnight, the US stock markets rebounded and the European markets rose on hopes of fresh measures to be taken by the ECB to support the region’s banks. As per Bloomberg reports, the European Central Bank will infuse liquidity to support the region’s banks. Also, there were rumors that China would take fresh measures to cushion a slowdown in growth.

In the US the consumer confidence data fell for May to the lowest level in four months as optimism about employment prospects washed out. As per Bloomberg data, the US consumer confidence data fell to 64.9 this month from its revised 68.7 in April. Home values in 20 U.S. cities fell in the 12 months ended March at the slowest pace in more than a year.

The rupee has strongly recovered this week against the dollar, thus providing some relief to the economy and is currently hovering around 55.85 a dollar after creating a fresh low in CY12. However, the Brent crude oil price declined marginally on Tuesday from USD 107 to USD 106 per barrel. The crude oil prices are still above the comfort zone of the economy

Investors should watch out for stocks like Colgate, DLF, FT, GAIL, GSFC, Godrej Industries, HDIL, Jaiprakash Associates, Mahindra & Mahindra, Page Industries, etc which are going to post their results tomorrow. These stocks may witness volatility in their prices.

For the week ahead the market will remain volatile as the May derivatives contracts expire on Thursday, May 31. However, on Friday the government will announce the GDP numbers for the March quarter which will help the investors to decide on market direction for the coming days. This will also provide cues to the RBI on its next course of action on the monetary policy front in the aftermath of rising inflation.

In conclusion, for today we expect the markets to remain volatile with a negative bias on the back of weak global cues. Chinese officials have declined any fiscal stimulus measures to boost growth in their economy, thereby dampening market sentiments across Asia. Also, this week we have the May month expiry and traders roll-over positions from the near-month May 2012 series to June 2012. 

Stocks In Action

According to reports, GVK Power & Infra Ltd has cleared a key hurdle towards developing its USD 6.3 billion Alpha coal project, winning state environmental approval for what would be one of Australia’s biggest coal mines. On the back of this news one may see some movement in its share price in today’s trading session.

According to a report, Ashok Leyland, the NBFC arm of the Hinduja Group, is in talks to sell a small stake to private equity funds such as Temasek, Everstone Capital, etc. The scrip may react to this news today.

According to a Money Control, Alstom T&D India expects to bag a major chunk of state-run Power Grid Corporation in the form of proposed transmission network contracts in the next five years. According to their sources, Power Grid has plans to add 80 more sub-stations in the 12^th Plan and typically a sub-station accounts for 40 per cent of the total transmission network’s investment. The news would probably result in pushing the share price on the higher side.    

Hindustan Petroleum Corporation (HPCL) yesterday reported robust March quarter numbers. The company’s topline increased by 32 per cent to Rs 52,390 crore while the bottomline jumped by 312 per cent to Rs 4,630 crore on a YoY basis. The company has recommended a final dividend of Rs 8.50 per share. On the back of the result announcement, the stock price may see an upward shift in today’s trading session.   

Hotel Leela Venture posted its March quarter numbers yesterday. The news came in when the market was about to close and the huge chunk of profit made the scrip rally by 4.4 per cent to Rs 33.25. Its net sales were up at Rs 139 crore against Rs 99 crore while the net profit stood at Rs 210 crore versus Rs 11 crore on a YoY basis. However, one should note that the bottomline has expanded heavily on the back of exceptional gain of Rs 417 crore due to the sale of assets. Therefore we believe that even in today’s trading session the stock may see good volatility.

IRB Infrastructure Developers informed the BSE prior to the closing of the markets yesterday that the company has emerged as a preferred bidder for the project of four-laning from the Goa-Karnataka border to the Kundapur section of NH-17 from 93.700 km to 283.300 km in Karnataka under the fourth phase of the NHDP on a design, build, finance, operate and transfer (toll) basis (DBFOT pattern). Some of the key highlights of the project include the estimated project cost of the company to be approximately Rs 2,400 crore, concession period of 28 years, construction period of 910 days, etc. The IRB has sought Rs 536 crore as viability gap funding from NHAI. The news may result in some share price movement in today’s trading session. 

Tanishq, the retail jewellery arm of Titan Industries, is in an expansion mode. According to media reports, Tanishq plans to set up 40 stores in 2012-13 of which half of them would in Tier II cities. This is because the competition intensity is much lesser in the Tier II cities, which would further benefit the company. On the back of this news one may see some stock price movement in today’s trading session.

The debt-trapped Kingfisher Airlines is back in the news. The Income Tax Department has frozen Kingfisher’s bank accounts over part payments of IT dues. The accounts of the airline company had been frozen because the IT department had an outstanding TDS claim of Rs 342 crore. These accounts were de-frozen after the airline paid the first installment of Rs 44 crore and then assured the department that it would pay Rs 9 crore every week. However, in the past couple of weeks the airline has been making only part payment of Rs 4.5 crore and hence they have again frozen the accounts.