Markets May Open On Negative Note
DSIJ Intelligence / 13 Jul 2012
The Indian markets may continue to open on a negative note ahead in line with the global cues and weak corporate earnings. The SGX Nifty is down by 23.50 points at 5,229, indicating a negative gap down opening to the markets today.
The Indian markets may continue to open on a negative note ahead in line with the global cues and weak corporate earnings. The SGX Nifty is down by 23.50 points at 5,229, indicating a negative gap down opening to the markets today.
| Benchmark Indices | ||
|---|---|---|
| Index | Closing | % Change |
| SENSEX | 17232 | -1.47 |
| NIFTY | 5235 | -1.34 |
| Dow Jones | 12,573 | -0.25 |
| S&P 500 | 1335 | -0.5 |
| NASDAQ | 2866 | -0.75 |
| Bovespa | 53420 | -0.28 |
| FTSE | 5,608 | -1 |
| DAX | 6419 | -0.54 |
| CAC | 3135 | -0.7 |
| .. | ||
| Hang Seng | 19077 | 0.28 |
| Nikkei | 8717 | -0.02 |
| Shanghai | 2197 | 0.55 |
The Indian markets witnessed a weak trading session yesterday on the back of a poor show reported by the IT bellwether Infosys. The company not only reported a decline in the net profit sequentially but also reduced its dollar revenue guidance from around 8-10 per cent to 5 per cent for FY13. The sentiments were so negative that investors overlooked the positive IIP numbers for May 2012, which came in better than the market’s expectations, growing by 2.4 per cent on a YoY basis. There was no respite from the overseas market as well as they were trading in the red over weak corporate earnings and a slowdown in the economies. Nifty closed at the 5,235 level mark while the Sensex closed near the 17,232 mark.
The Asian markets, for the sixth consecutive day, closed on a negative note yesterday. This was on the back of growth concerns in China and the U.S. which are showing signs of slowdown. The weak corporate earnings in the U.S. and no major announcement from Japan on stimulus measures led to a downfall in the markets yesterday. Investors are majorly concerned with the slowing down of growth across the major economies.
Overnight, the U.S. stocks continued their longest losing streak this year on Thursday, with losses driven by downbeat corporate forecasts and worries about the global economy. No further stimulus measures by the Federal Reserve failed to offer any hope about the growth prospects of the region and dented investors’ sentiments. Further, weak corporate earnings continued the downfall as investors traded cautiously over poor corporate numbers. The European markets, after posting a choppy performance in the opening session on Thursday, slipped into the red for the week as investors positioned for more gloomy economic data from China and scaled down their hopes of pending monetary stimulus from the Federal Reserve.
On the Indian turf the rupee continues to hover around Rs 55.69 per USD. It has eased a little but continues to cause concern over the rising fiscal deficit since this will increase the import bill of the oil companies. The import cost will rise further as London Brent crude has again moved northwards from the lower level of USD 89 to USD 100 per barrel. This is after the global central banks have taken a dovish stance in order to boost their economies. If crude continues its upward trend and again reaches the USD 125 levels, it would push inflation to a higher level and worsen our balance of payments, thereby affecting the economy.
| Currency Rates | ||||
|---|---|---|---|---|
| Rs/$ | Rs/Euro | Rs/GBP | Rs100/JYP | |
| RBI Rate | 55.69 | 68.14 | 86.28 | 70.11 |
| Future | 56.02 | 68.17 | 86.43 | 70.55 |
| Key Global Indicators | ||
|---|---|---|
| Gold (Rs/10gm) | Crude ($/bbl) | |
| Spot | 29146 | 100.7 |
| % change | - | -0.06 |
| Future | 29220 | 85.83 |
| % change | -0.15 | -0.23 |
This week the markets were in the negative territory as the earnings’ season kick-started on a weaker note with Infosys not only reporting weak numbers but also reducing its revenue guidance for FY13. Corporate earnings, as expected, have shown weakness which will keep the market sentiments negative going ahead as well. We continue to believe that the earnings’ season for the June quarter will remain muted on the back of various negative factors such as a weakening domestic and global economy, depreciated rupee value and higher raw material prices.
In conclusion, for today we expect the markets to open on a negative note and remain so for the day, also because of weak global cues, especially from the Asian and European regions. Also, China will today announce its GDP growth numbers for the second quarter, it being quite an event with a high level of anticipation. It is hoped that these numbers will provide some relief to investors. The Asian markets today are struggling for direction after a weak lead from Wall Street with most of the investors waiting for China’s growth figures.
Meanwhile, keep a watch on stocks like HDFC Bank, Kajaria Ceramics, Hindustan Fluro, etc which are going to post their June 2012 quarter results. These stocks may see some price movement.
| FII | DII | |||||
|---|---|---|---|---|---|---|
| Trade Date | Buy | Sales | Net | Buy | Sales | Net |
| 12-Jul-12 | 2,470.46 | 2,201.92 | 268.54 | 841.76 | 1,379.74 | -537.99 |
| 11-Jul-12 | 2,365.00 | 2,280.62 | 84.42 | 759.44 | 1,116.29 | -356.86 |
| 10-Jul-12 | 2,170.30 | 1,563.70 | 606.5 | 830.2 | 1,318.50 | -488.3 |
| July , 12 | 2,470.46 | 2,201.92 | 268.54 | 841.76 | 1,379.74 | -537.99 |
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