Markets Would Remain Volatile

The Indian markets may remain volatile, continuing last week’s uncertain environment. Markets would remain nervous considering the domestic and world’s bleak economic outlook. 

Last week markets disappointed the Investors with losing almost 2 per cent. This was after the dismal GDP numbers for the March quarter of 2012, which came in at meager 5.3 per cent against the streets expectations of 6.1 per cent. The GDP numbers clearly indicated that there is more pain going ahead, and we are going to face tough challenges in terms of growth in FY13. 

While U.S. and European markets too closed with the negative Investors sentiments on Friday. According to the media reports, U.S. labour market stumbled in May as employers added the fewest workers in a year. Also the US markets moved southwards breaching the physiological 200 day moving average further creating more down side going ahead. European markets also lead to sell off, on Investors speculation that the sovereign debt crisis may worsen further. Also there are reports that the European Union is targeting 9th July, as its start date for its permanent euro-area rescue fund of around 500 billion euro. Now the eyes would be on the development out from Europe and Federal Reserve going ahead, as Investors would probably react as to how the things pan-out from this area.     

Rupee continues its free fall and has further deprecated against the dollar adding serious worries for the economy. Last week it made a new low of Rs 56.52 against dollar. Brent crude has come down drastically in two digits i.e. lower than 100 mark. From the levels of USD 125 in the past couple of months it is now trading at USD 98.82 per barrel, this is on the back of weak demand from the developed markets like US and Europe. The crude prices coming below 100 mark is good for our economy, but this to some extent has been offset by the Rupee which has depreciated around 7 per cent in the month of May itself. 

The result season is also almost over for the March quarter of 2012, and there has been no surprise as the performance of the India Inc has remained subdued. We believe this trend would probably be seen in the June quarter numbers of the companies. Hence broader markets would continue to remain weak and therefore one has to really take a stock specific approach while playing in the markets.
   
In conclusion we expect the markets to remain volatile as investors are jittery in this uncertain environment. We advise investors to play with caution.

Stocks In Action

According to media reports, India’s top carmaker Maruti Suzuki, is planning to invest Rs 4000 crore to set up new manufacturing plant in Gujarat with a capacity of up to 2 million units by 2015-16. It has signed an agreement with the Gujarat state to buy land to set up a new manufacturing facility. Company plans to employee more than 2000 people. On the back of this news the stock may see some movement in today’s trading session.

Petrol price is slashed by Rs 2, on Saturday after the much awaited drama in the economy. There was a Bharat Bandh, on 31st May 2012 and after the media reports that a day before the Anna- Ramdev fast. One should recollect that earlier in the month of May (effective from 24th May 2012) fuel price were hiked by Rs 7.5 per litre and after 10 days it has roll backed some of them, again proving that our governments seems to be policy paralyzed. On the back of this rollback one may see volatility in the share price with a negative bias on the oil marketing companies’ like BPCL, HPCL and IOC in today’s trading session. 

According to the media reports, U.S. private equity firm Warburg Pincus LLC is set to buy a majority holding in Indian financial services firm Future Capital Holdings (FCH) for $100-$125 million. Warburg Pincus will pay Rs 165 to 170 per share, which represents a premium of around 18 to 24 per cent of its Friday’s closing price of Rs 138 per share. FCH is currently controlled by Indian retailer Pantaloon Retail India which provides consumer and mortgage loans. On the back of this news, the stock may see volatility with a positive bias in today’s trading session.

According to the media reports, Jindal stainless seeks to rescheduled Rs 9000 crore debt, after been the company hit by rising interest rate cost and the company seeks to maintain cash till new 8,00,000 tones Odisha facility works at optimum. Debt-equity ratio of the company, which is already under Corporate Debt Restructuring (CDR) programme, has increased to 5.17 in the last fiscal from 4.04 in FY'11. The stock may see volatility in today’s trading session on the back of this news.

ACC reported its Cement production and dispatch number for the month of May 2012.  Production for the month of May 2012 stood at 2.02 million tonnes against 2.01 million tonnes in the similar month last year. While the cement dispatch for the May 2012, came in at 2.05 million tonnes against 1.99 million tonnes in the similar month last year. On the back of this Monthly numbers, Stock may see some volatility in today’s trading session.