Markets May Open Positive

The Indian markets may open positive in line with the global cues. The SGX Nifty is trading up by 9 points at 5,138.5, indicating a gap up opening to the markets today.

The Indian markets yesterday closed almost flat after there were no major news or event flows. Yesterday was the last day of Pranab Mukherhee as the finance minster of India. He now has moved to the Rastrapati Bhavan as a probable candidate for the post of the president and the prime minister has temporarily taken over the additional responsibility of managing the finance portfolio. With Dr Manmohan Singh back in the FM seat, D-Street fondly recollected the bold reformist moves he made two decades ago i.e. in 1991 and expect the same thing this time too. The much-awaited reforms include the implementation of GST, DTC and allowing FDI in multi-brand retail as well as in aviation, etc. However, a finance minister would be chosen soon though we would like Dr Singh to handle this portfolio.

According to Business Standard, Coca-Cola’s chairman and CEO, Muhtar Kent, on Tuesday announced that the world’s largest beverage company and its partners would invest USD 5 billion (about Rs 28,000 crore) in India over eight years to set up new bottling plants and enhance operations across its value chain. The company hopes the investment would help India scale up from being the seventh-largest market for the beverages’ giant to number five in a few years. Since it re-entered the country in 1993, Coca-Cola has already invested USD 2 billion and has come a long way from being ranked number 16 in the global pecking order in volumes in 2005-06. One should note that the move has come in at a time when most of the companies are postponing their expansion plans in an uncertain macro environment. This will be good for the economy as other MNCs and FIIs might also now reconsider India as an investment destination.The world markets are keenly keeping sights on the European summit which will provide direction for the markets.

Overnight, the U.S. markets closed higher with major indices like Dow Jones, Nasdaq and S&P 500 closing higher in the range of 0.26 to 0.7 per cent. The U.S. yesterday had released two major economic data which came in the form of a mixed bag. The housing data saw a rise while consumer confidence remained disappointed on Wall Street.

The European markets closed almost flat with FTSE and CAC closing marginally in the negative territory while DAX closed marginally higher in the green zone. Investors were nervous in anticipation of the European summit. One should note that after the European sovereign debt crisis was reveled in 2010, this is the 20th time that the European leaders are meeting to solve the issue. German chancellor A Merkel yesterday retained her view and said that the European liability should not be shared by the European countries, which further created more speculation among traders that the summit may not come out with any concrete solutions.

Reacting to the U.S. and European markets’ cues overnight, the Asian markets have opened flat with Hang Seng trading lower while Nikkei and Shanghai are trading higher in the green zone. 

The depreciating rupee continues to be a major headwind above our economy. It is currently trading at 57.03 against the USD. The RBI’s measures have not been very effective in helping the rupee regain strength against the dollar and hence some bold moves are called for to stop the rupee from depreciating any further.Brent crude has come down from the level of USD 125 in the past couple of months to USD 91 per barrel which is good for our economy. Further, Nymex Crude has gone below the USD 80 per barrel level. However, the depreciating rupee has offset some of these benefits.

In conclusion we expect the markets to remain volatile as investors and traders will await cues from the European summit as also the June expiry tomorrow that could see some kind of movement in the markets. Our advice to investors is to play with caution.

Stocks In Action

Redington India informed the BSE that Easyaccess Financial Services Limited, a wholly-owned subsidiary of the company, has purchased a building called ‘Sterling Technopolis’ admeasuring 2,30,000 sq feet on Old Mahabalipuram Road, Chennai. The new property purchased by the subsidiary company is to be let out on lease and could be utilised to meet the company’s plans to house the employees of the Redington Group under a single roof in the long run. On the back of this news one may see volatility in the company’s share price in today’s trading session.

According to media reports, cash-starved private carrier Kingfisher Airlines’ defaulting on lease rentals of around Rs 1,000 crore has had the lessors taking back 34 aircrafts. Besides, another 15 aircrafts of the company are also aground due to want of spares and the airline is now left with only 15 planes to carry out its operations. On the back of this news one may see further downside in today’s trading session.

Reliance Power has synchronised 300 MW capacity from its 600 MW Butibori Power Project near Nagpur with the electricity grid. The commissioning of the second unit of the power project is expected to be completed by the end of this calendar year. After the synchronisation, the company is now ready to generate power. On this news the shares of Reliance Power jumped by 2 per cent and the positive momentum may continue today as well.

State Bank of India has said that it will recruit about 10,500 employees during the current fiscal to manage the growing business of the bank. The shares of the bank may show some positive momentum today.

According to Business Line, the use of glass is increasing in the country due to the growing number of green buildings and additional use of solar power. The share of the glass companies like Piramal Glass, HSIL may show some positive gains today.

Many newspapers have also reported that the power ministry may surprise the markets by amending the bidding guidelines for new power generation projects in this week. This move is to expedite the process of approval of new thermal power projects. We may see some positive trades in the power stocks.