Greece Results Out, Markets Awaits RBI Move

The Indian markets may open positive in line with the global cues. The SGX Nifty is trading up by 44 points at 5181, indicating a gap up opening to the markets today.

Last week markets closed higher despite the disappointed IIP and WPI numbers which was due to Investors and markets sentiments believes that RBI would probably slash the rates which will fuel the growth in the economy. The IIP data for April was released on Tuesday which came in at a meager 0.1 per cent against the street expectations of anywhere in the range of 1.2 to 2 per cent. Wholesale Price Index (WPI) Inflation for May came in at 7.55 per cent, higher than 7.23 per cent in April. What was more shocking was that the March inflation figure was revised to 7.69 from the previous estimate of 6.89 per cent.

While the much awaited and one of the crucial global event of the Greece election was out yesterday. According to the media reports, with almost all the votes counted the result which came out last night indicated that the New Democracy party had gained 29.7% of the vote in Greece’s second attempt to form a government in two months. The anti-austerity Syriza party was projected to finish second with 26.9% of the vote, followed by the formerly ruling Pasok party with 12.3%. So now the market expects that probably New Democracy and Pasok parties will join hands to hold the majority. Here investors should note that, markets and the streets earlier expected and hoped that new democracy policy should win which reduces the risk of Greece exiting the Euro zone area. There are reports that now there would be successful negotiation with European Union, European Central bank and International Monetary fund and with the Greece leaders. On the back of this Greece election result Asian markets are trading higher with Hang seng, Nikkei and Shanghai are trading higher in the green zone. 

Rupee continues its free fall and has further deprecated against the dollar adding serious worries for the economy. At present it is trading at Rs 55.763 per 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 97 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 depreciation. 

In conclusion we expect the Indian markets may remain volatile, as investor’s eye RBI monetary policy and CPI data which is going to be released today, which could further give direction either way to the markets.

Stocks In Action

According to business standard, Coal India has cancelled preliminary supply pacts with as many as 60 captive power plants and independent producers. As per the notice 60 CPPs whose assurances have been withdrawn include units of Bokaro Power Supply, a JV of SAIL and DVC, Bhushan Power and Steel, Essar Power, Grasim Industries, JSW Aluminum, J K Tyre and Industries and Maharashtra Energy Development Agency. On the back of this news one may see volatility in the share price of Coal India in today’s trading session.

According to business standard, Government has initiated the process of 10% stake sale in National Aluminum Company Ltd (Nalco). At present government has holds around 87.15 per cent stake in NALCO. As per the current market price of Rs 58 a share, a 10% stake divestment could help government rake in over Rs 12,000 crore from the Bhubaneswar-based aluminum major. According to the disinvestment plans, the Union Government aims to mop up Rs 30,000 crore in the current fiscal by selling some of its equity in PSUs such as RINL, SAIL, BHEL, Oil India, Hindustan Aeronautics and Hindustan Copper. On the back of this divestment news one may see volatility with a positive bias in the share price of the NALCO in today’s trading session.

According to business standard, State-run iron ore miner NMDC has started a fresh round of negotiations with global mining giant Rio Tinto to revive an equal joint venture that was mutually scrapped almost a year ago. NMDC and Rio Tinto had entered into a 50:50 joint venture agreement in August 2008, to look at mutually advantageous potential investment opportunities, primarily for iron ore and other minerals both within and outside of India. The MoU was initially for a period of two years with the option of extending it for one more year. However, it had lapsed in August 2011, as the three-year old venture, meant for scouting mining resources in different parts of the world including in India, did not bear any fruit. On the back of this news one may see volatility in the mining major in today’s trading session.  

According to economic times, Jet Airways, which has been in advanced talks to join the global airlines' grouping Star Alliance, is also holding discussions with the competing alliance SkyTeam. This will help the airlines to go to many new foreign places like Paris, Munich and Frankfrut. On the back of this news one may see volatility in the Jet share price in today’s trading session.

According to business standard, the Ministry of Chemicals and Fertilizers has sought to exempt urea fertilizer from the proposed Goods and Services Tax (GST) and to remove customs duty on import of plant and machinery for fertilizer projects. Besides, the report says taxes and duties paid by fertilizer manufacturers cannot be passed on to the consumer as the MRP of urea is fixed by the government. Thus, these taxes should form part of the concession rate for reimbursement. On the back of this news one may see volatility in the share price of various fertilizers companies.