Markets May Open Negative, Snapping Two Days Gains
DSIJ Intelligence / 08 Jun 2012
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 16649.05 | 1.18 |
| NIFTY | 5049.65 | 1.05 |
| Dow Jones | 12461 | 0.37 |
| S&P 500 | 1315 | -0.01 |
| NASDAQ | 2831 | -0.48 |
| Bovespa | 54156.04 | 0 |
| FTSE | 5448 | 1.18 |
| DAX | 6144 | 0.82 |
| CAC | 3071 | 0.42 |
| .. | ||
| Hang Seng | 18726 | 0.26 |
| Nikkei | 8519 | -1.40 |
| Shanghai | 2292.05 | -0.04 |
The Indian markets yesterday had continued the winning momentum which resulted in the broader markets to close above 1 per cent. In the last two trading sessions the broader market was up by almost 4 per cent which will now take the market into a consolidated mode or might give off some of the gains which it made in the past couple of trading sessions.
Overnight, the US markets closed with a mixed bag with Dow closing its session in the green while Nasdaq and S&P closed the day in the red zone. One of the most awaited events for the investors was the Ben Bernanke speech on economy and his guidance going ahead. Ben remained silent on the third round of quantitative easing (QE) and said that at present things are not in favour of QE and that he might consider going ahead if the economic environment gets worse from here on.
The European markets yesterday closed their day trading higher in the green zone with major indices like CAC, DAX and FTSE closing higher in the range of 0.4 to 1.2 per cent. According to media reports, Spain sold Euro 2.1 billion government bonds in a well-bid auction, paying just over 6 per cent to sell a ten-year debt, which was up from 5.75 per cent in the last month. This had put an end to the buzz that Spain was being shut out from the market given the headwinds it was facing from the sovereign debt crisis.
On the other hand, the Asian markets are currently trading with a mixed bag with Hang Seng trading marginally in the green zone while Nikkei and Shanghai are trading lower in the red. One of the major announcements which the Chinese central bank made yesterday was the cut in the benchmark interest rate by 25 basis points on the hopes of reviving the second-largest economy. The slashing of the rate was the first time in a long period of four years which signifies that China is facing a serious slowdown in its current environment. The Japanese market Nikkei is trading lower by 1.4 per cent, despite revising its March quarter GDP higher by 60 basis points to 4.7 per cent. However, one of the crucial reasons for Nikkei trading lower today is the widening of the trade deficit by 12.6 per cent on a YoY basis.
| Key Global Indicators | ||
|---|---|---|
| Gold (Rs/10gm) | Crude ($/bbl) | |
| Spot | 29732 | 98.62 |
| % change | - | -1.31 |
| Future | 29344 | 82.91 |
| % change | -2.4 | -2.25 |
| Currency Rates | ||||
|---|---|---|---|---|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP | |
| RBI Rate | 55.1455 | 69.2433 | 85.2219 | 69.51 |
| Future | 55.0775 | 69.28 | 85.6525 | 69.3375 |
The depreciating rupee continues to be a major headwind above our economy. However, it has shown signs of appreciation but then to at present it is not in the comfort zone. The rupee is currently trading at 55.1455 against a dollar. Brent crude has come down from the level of USD 125 in the past couple of months to less than USD 100 per barrel which is good for our economy. But the depreciating rupee has offset some of this benefit.
From here on one should note that with China slashing its rates and after the Fed Chairman Ben Bernanke’ speech stating that it may go for QE going ahead, this would push the crude prices northwards. There is a possibility that the Brent crude prices may again surge to USD 115 to USD 125 per barrel. And therefore with the uncomfortable level at which the rupee is trading coupled with the fear of crude prices surging upwards, this would dampen the Indian economy’s growth prospects.
In conclusion, we expect the markets to open negative and remain volatile for the day with a negative bias on the back of domestic and global cues. However, we would advise investors to play with caution.
Stocks In Action
As per media reports, Aurobindo Pharma is expecting the USFDA to inspect its antibiotics production plant in Hyderabad between July and September this year as it seeks lifting a ban imposed by the American health regulator. The drug firm’s exports to the US market have been affected due to the import alert issued by the US Food and Drug Administration (USFDA) for its Unit-VI facility since last year following manufacturing norms’ violation. If the antibiotics get the nod from the American health regulator, the company will see decent revenue growth in the fiscal year 2013. One may see volatility in the share price movement of Aurobindo Pharma on the back of this news.
According to Business Standard, Reliance Industries, which has a pan-India spectrum for broadband services, today said that it is finalising plans to offer internet services in key areas of education, security, financial services and entertainment. The company, however, did not give a launch date of its much-anticipated service. The company plans to provide digital services in key domains such as education, healthcare, security, financial services, government-citizen interfaces and entertainment. Infotel Broadband, a subsidiary of Reliance Industries, had won a 20 Mhz slot pan-India broadband wireless spectrum (BWA) spectrum for Rs 12,847.71 crore in 2,300 Mhz spectrum band and the company is conducting technology trials for rolling out these services. The group is present in energy and retail sectors, while it has big plans for the telecom and finance sectors.
Dr Reddy’s Laboratories yesterday announced that it has launched its generic Ropinirole Hydrochloride XR tablets used for treating Parkinson’s disease in the American market after receiving approval from the US health regulator. The company has launched Ropinirole Hydrochloride XR (extended-release) tablets in the strengths of 2 mg, 4 mg, 6 mg, 8 mg, and 12 mg in the US market. The tablets are a bio-equivalent generic version of GlaxoSmithKline's Requip XL tablets. The scrip may see some positive momentum today.
State Bank of India yesterday announced that it has revised its retail term deposit interest rates with a reduction by 0.25 per cent in tenures of up to 240 days with effect from June 8, 2012. The rates for tenures of above 240 days remain unchanged. SBI is the largest bank in India, and its move hints that there might be a rate cut in the RBI monetary meet which is scheduled for June 18, 2012. The stock may see some volatility on the back of this announcement in today’s trading session.
According to Business Standard, Tata Teleservices, which offers both GSM and CDMA-based mobile services, has said that a proposed telecom policy will favour early incumbent GSM operators. It said that the policy discriminated against dual-technology operators, making it unviable for them to do business. Tata Teleservices’ managing director, N Srinath, said, “With such a policy, dual-technology operators will have no choice but to terminate their CDMA services and take huge write-offs on all their past investments.” The stock may see some volatility on the back of this announcement in today’s trading session.
According to Business Standard, multiplex chain Fame India Ltd and three of its subsidiaries are set to merge with parent firm Inox Leisure Ltd, with the company’s board expected to clear the deal in its next meeting on June 15. After the merger, Fame will likely be rebranded as Inox, said a person familiar with the matter on condition of anonymity. The merger will create the country’s largest multiplex chain with 257 screens. At present, the Anil Ambani-led Reliance Group’s Big Cinemas leads the pack in the country with 252 screens. PVR Ltd has around 162 screens while Cinemax has 141 screens. The stock may see some volatility on the back of this announcement in today’s trading session.
| BSE Institutional Turnover | ||||||
|---|---|---|---|---|---|---|
| FII | DII | |||||
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 7-Jun-12 | 2737.99 | 2062.51 | 675.48 | 939.25 | 972.99 | -33.74 |
| 6-Jun-12 | 3310.26 | 3041.05 | 269.21 | 1411.75 | 922.61 | 489.14 |
| 5-Jun-12 | 1791.48 | 2011.86 | -220.38 | 865.54 | 660.04 | 205.5 |
| June, 2012 | 11,124 | 11,257 | -133 | 5,185 | 3,872 | 1,313 |
| FII DERIVATIVES STATISTICS FOR 7-June-2012 | |||||
|---|---|---|---|---|---|
| BUY | SELL | OI (End of the day) | Net Position | ||
| Rs (crore) | Rs (crore) | No. of contracts | Rs (crore) | Rs (crore) | |
| INDEX FUTURES | 2165.35 | 1033.84 | 346146 | 8543.52 | 1131.51 |
| INDEX OPTIONS | 13032.55 | 12786.09 | 1507125 | 38044.09 | 246.46 |
| STOCK FUTURES | 1640.05 | 998.94 | 918645 | 22150.14 | 641.12 |
| STOCK OPTIONS | 870.62 | 834.80 | 37672 | 938.79 | 35.83 |
| Total | 17708.58 | 15653.67 | 2809588.00 | 69676.54 | 2054.91 |
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