Markets May Open On Flat Positive Note

The Indian markets may open on a Positive note ahead in line with the global cues. The SGX Nifty is up by 16 points at 5,137, indicating a positive gap up opening to the markets today.

The Indian markets witnessed a positive trading session yesterday as the broader indices closed higher nearly by 1 per cent. Nifty closed at just above the 5,100 level mark while the Sensex closed near to the 16,859 level. Yesterday the Indian markets remained a bit volatile. However, in the later trading sessions there was some heavy buying at low levels in the state-run oil marketing companies after the crude oil futures fell in the global markets and closed higher in the positive zone. The oil prices have been falling on concerns that the rising economic instability in the euro zone would start to hurt the demand.

The Asian markets yesterday closed on a negative note on the back of renewed concerns from the Spanish rising bond yields. After the positive election results in Greece, the focus has now shifted to the other euro countries like Spain and Italy which saw their bond yields rising to 7.51 per cent, thus making borrowings costlier. The polls in Greece turned in favour of the pro-bailout party which had a majority of the votes. However, it will need coalition to form a government. Meanwhile, Greece, late Tuesday, was found on the verge of forming a three-party coalition government that would help the country’s European-led bailout program.

Overnight, the U.S. stock markets closed on a strong positive note on account of the upbeat U.S. housing data and the possibility of more monetary easing by the Federal Reserve-led Wall Street stocks to touch its five-week highs. The European stocks too ended on a strong positive note though investors seemed concerned in the initial trading session. Later, the disappointing German economic data rekindled expectations of more monetary stimulus. That prospect triggered a broad-based rally in the stocks yesterday.

Investors are now expecting some action from the European Central Bank but they will have to wait at least until July 5 when the meeting of the governing council will take place. The European central bankers will meet on Wednesday but no interest rate announcement is scheduled for that day.

On the Indian turf the rupee has again crossed the Rs 56 per USD level, thus raising worries over the increasing fiscal deficit since this will increase the import cost of the oil companies. However, the London Brent crude oil price is at a lower level, which marginally fell by 0.20 per cent on Monday to USD 95.71 per barrel. The lower crude oil prices are providing some relief to the Indian oil companies but the high dollar is negating much of the benefits.

For the rest of the week the market will remain volatile and negative on the back of the weakening economic conditions, though we will see some short-term rally on the back of some positive global cues. The RBI’s stance to keep the rates unchanged will keep the market sentiments very weak. On the global front, especially from the U.S. region, there have been some positive indicators about the housing data numbers. Investors are also expecting the U.S. Federal Reserve to pitch for some stimulus measures.

In conclusion, for today we expect the markets to operate in a volatile mood with some positive bias on the back of global cues. Also, the Asian markets have opened today on a positive note based on the growing speculation that the U.S. Federal Reserve will announce a new round of stimulus measures to help combat slower growth and the impact of the euro zone sovereign debt crisis.

Stocks In Action

GVK Power and Infrastructure, the developer of airports, power projects, roads and mines, is in talks to raise funds of about USD 500 to 600 million by selling a stake in its Singapore arm. The ongoing discussion is with the Government of Singapore Investment Corporation for a potential deal. If this deal is finalised, it will dilute a significant minority holding in GVK Coal Developers (Singapore) Pte Ltd. After this news the stock showed some volatility yesterday and we expect the same for today as well.

The state-run National Aluminum Co Ltd has issued a tender to export 8,000 tonnes of aluminum ingots. According to Economic Times, the metal will be shipped in eight batches of 1,000 tonnes each from July to February. NALCO, whose tenders serve as a global benchmark, had last sold 4,500 tonnes of aluminum ingots at about USD 180 per tonne premium over the average LME cash price on a cost, insurance and freight basis to European buyers earlier this month. On the back of this news the stock will show some volatility today.

The shares of Ambuja Cements, which surged by about 3 per cent on Tuesday, may see further gains on hopes of higher sales due to the pick-up in demand in the semi-urban and rural regions. The shares may show some gains today as well.

HCL Infosystems has said that it will launch a third generation (3G) tablet PC in August this year for around Rs 18,000. The code name for the product is Y2. The company enjoys 15 per cent market share in the overall tablet market while in the sub-Rs 10,000 category it is around 50 per cent. Expect some positive movement in the scrip.

Auto stocks may see some pressure today over the news that some auto companies have stopped production since the demand for vehicles has slumped.

The shares of Coal India may show some gains due to a report in Business Line that the government has allocated 116 mines to Coal India for expansion and to help boost its production capacity.