June Expiry Stokes Volatility

The Indian markets remained volatile throughout the day on the back of the June series expiry, which kept the market a bit nervous. They began on a positive note, gave up all their gains by noon, and later recovered from the day's low to close marginally in positive. Among the sectoral indices, FMCG, Power and IT closed the day higher, while Bankex, Oil & Gas and Capital Goods finished negative.

The other Asian markets, Hang Seng and Nikkei, closed with gains, while Shanghai ended lower by almost 1%. The Chinese market erased most of the 2012 gains on concerns regarding a manufacturing slump and the shrinking of world economic growth. Further, according to Bloomberg's reports, Japan’s retail sales rose more than what was forecast for May 2012.

European stocks are trading lower ahead of the outcome of the EU summit. The FTSE, CAC and DAX are trading lower in the range of 0.7%-1.5%. Further, there is news that JP Morgan Chase has suffered a major derivatives loss. According to the reports, the credit-derivatives trading loss for the company, initially estimated at USD 2 billion, may have ballooned to as much as USD 9 billion.

Dow Jones Futures is currently trading down by 67 points or 0.53% at 12486, indicating a negative sentiment in the US markets.

Back home, Tata Steel was the leading index gainer, up 1.83% at Rs 428.40. FMCG heavyweight ITC also closed the day higher by 1.47% at Rs 251.45, which is very close to its 52-week high. Other stocks like Infosys, Dr Reddys Labs, Tata Motors and ICICI Bank also closed positive.

On the other hand, GAIL India was the leading index loser, closing lower by 2.93% at Rs 344. The Metals stocks lost their sheen, with stocks like Sterlite Industries and Hindalco closing lower by 1.65% and 1.24% respectively. Auto stocks like Mahindra & Mahindra, Bajaj Auto and Maruti Suzuki also wrapped up trades in the red zone.

Axis Bank and YES bank closed the day lower by 3% and 0.73% respectively after media reports that HSBC is on course to offload its entire 4.8% stake in Axis Bank and is also planning to sell its 4.8% stake in YES Bank.

Gati closed with 1.55% losses at Rs 41.35. The scrip made an intraday high of Rs 44.95 after the company made an announcement that Japanese firm KWE has invested Rs 267.7 crore in its subsidiary, Gati-Kintetsu Express.

Rolta India and JSW Steel have closed higher in the green zone. Rolta redeemed FCCBs worth USD 134.7 million that were due in June 2012 through ECBs which the company had tied up in March. JSW Steel redeemed its FCCBs due today (June 28, 2012) at 142.801% of the outstanding principal amount of USD 274.40 million.

The market breadth, which indicates the overall health of the market, remained positive for today. Out of the 3230 stocks traded on the BSE, 1606 advanced, 1494 declined and 130 remained unchanged.

We expect the markets to persist with their volatile trends. They could move in either direction, and all eyes are on the European summit and its outcome. We advise our readers to exercise caution.