Markets To Open On Negative Note Following Weak Global Cues and F&O Expiry

The Indian markets may open on a negative note ahead in line with the global cues. The SGX Nifty is down by 41 points at 4,892, indicating a negative gap down opening to the markets today.

Overnight, the US stock markets tumbled on account of weak housing data in the US and European markets which added more concerns across the globe as the euro zone crisis is now spreading to other major European countries like Spain. Spain’s economic and banking crisis has been deepening on account of the rising debt concerns of the banks and it is likely that Greece may fall out of the euro zone. The concerns reached a higher level when the ECB stated that it won’t be helping the struggling banks after which the German government yields declined as the yield on ten-year Spanish sovereign debt rose to about 7 per cent - a six-month high on concerns over how the Spanish banks will obtain capital to stay afloat. The high yield pushed the benchmark US treasury yield to a 60-year low as investors sought safer havens.

The rupee this week recovered strongly against the dollar but yesterday it slipped back to its lowest level level at 56.06 against a dollar, raising worries over the increasing fiscal deficit as this will increase the import cost of the oil companies. However, the London Brent crude oil price has declined significantly by 3 per cent on Wednesday from USD 107 to USD 103 per barrel, thereby providing some relief.

Also individual stocks, HDIL, BGR Energy, GMR Infra and Gail India are some of the stocks that will see some momentum after the March quarter results declared on Wednesday

For the rest of the week the market will remain volatile and negative on the back of weak global cues, especially from the European region which is not in good shape. However, on Friday the government will announce the GDP numbers for the March quarter which will help the investors to decide about the market direction. This will also provide cues to the RBI’s next course of action on the monetary policy front in the aftermath of rising inflation.

In conclusion, for today we expect the markets to operate with a negative bias on the back of weak global cues from the European region. Also, the Asian markets will see a further downfall as Japan’s industrial production data has come below the expectation and there is a rising level of concern over Greece’s future in the euro zone. Today we have the May month expiry and traders will look to roll over positions from the near-month May 2012 series to June 2012.

Stocks In Action

According to media reports, Power Grid is planning to raise around Rs 10,000 crore in FY13 through issuance of bonds of Rs 8,500 crore last year. The bonds would probably be issued in two or more tranches and the first tranche is likely to hit the market in the month of June. The coupon rate for the bond would be about 9 per cent. However, the company has not yet appointed an investment banker and the things would be finalised after having met them. The news could have some impact on the share price movement in today’s trading session.

According to media reports, the Port of Antwerp International (PAI) has invested approximately Rs 175 crore in Essar Ports at a price of Rs 100 per equity share of the company through the global depository receipt (GDR) route as part of strategic alliance. The partnership is aimed at technical assistance for planning, process improvement and quality and productivity improvement. On the back of this news one can see a volatile movement in the Essar Ports’ share price in today’s trading session. 

Mahindra and Mahindra (M&M) yesterday posted its March quarter numbers that came in beyond street expectations. The revenue of the company increased by 39 per cent to Rs 9,387 crore while the net profit jumped by 44 per cent Rs 874 crore. Analysts on the street were expecting revenue of Rs 8,270 crore with net profit of Rs 600 crore. The company’s bottomline increased significantly after the company reported an exceptional gain of Rs 108 crore on tax saving in the fourth quarter. The shares of M&M yesterday closed marginally higher by 0.14 per cent at Rs 657.2. However, one may see volatility in today’s trading session.

According to media reports, ABG Shipyard yesterday reported net profit growth of 11 per cent to Rs 45 crore for the March 2012 quarter. The total income of the company stood at Rs 663 crore as against Rs 532 crore reported in the same period last year. However, the consolidated net profit of the company was down by 4 per cent to Rs 186 crore. The result announcement could see some price volatility in today’s trading session.

Tata Motors’ shares yesterday tumbled by 11.8 per cent to Rs 243.35 after a fall in the operating margin of its Jaguar Land Rover (JLR) unit as its key earning driver was on a slow growth track. In addition to that, Morgan Stanley and UBS further downgraded the stock which created negative sentiments among the investors. The volatility could continue in today’s trading movement of the scrip.

Essar Ports will also remian in focus on reports that Port of Antwerp International has invested Rs 175 crore in the company as part of a strategic alliance.

Telecom stocks could see some momentum on reports that the Cabinet is likely to take a decision on the National Telecom Policy today. If approved, the policy would pave the way to free national roaming.