Indices Flat, Realty Stocks Gain

The Indian markets have opened flat this morning over concerns on corporate earnings and the health of the global financial system. Both the benchmark indices are showing a pendular movement between the red and green.

The Asian markets are trading flat-to-negative. Nikkei is down 0.5% and the Shanghai markets are lower by 0.2%. Hang Seng is trading in gains of 0.2%.

Yesterday, S&P had issued another warning to India saying that there is a one in three chance of the country's credit rating being cut. The ratings agency has cut Spain's credit rating by two notches to 'BBB-'.

In the Indian markets, the Realty index is the top gainer, up by 1.27%. Index heavyweight DLF has gained 2.2% despite reports of the alleged links with Robert Vadra. The shares of Indiabulls Real Estate and Unitech Infra have also surged over 2% each. The Pharma index is up again this week as the falling markets have seen investors taking shelter in defensive stocks. The Power and Oil & Gas indices are trading flat at this time, while all the rest are in the red. Auto is down 0.5% over falling volumes.

Among the Sensex stocks, BHEL is top gainer, up by 1.2%. Bharti Airtel and and HDFC Bank are also higher by around 1%. Dr. Reddy’s Labs and Cipla are in the green this week. PSUs like Coal India, ONGC and NTPC are trading positive. The shares of TCS and Wipro are in the gainers list, while those of Infosys are in the red. Infosys is expected to come with its Sept 2012 quarter results by Friday.

The top lender SBI is down 1.5%. Metals major Sterlite is also trading lower by 1% this morning. All the Auto stocks are in the red after SIAM lowered its growth forecasts for FY13 to 1%-3% for cars and 5%-7% for two-wheelers.

In other stocks, Suzlon Energy has lost over 4% as its bondholders denied an extention to its USD 220 million FCCBs that are maturing this month. The company has also in its press release said that it will not be in a position to redeem these FCCBs in Oct. Its financial position is very fragile and it may have entered a very difficult phase of its business.

The shares of Tulip Telecom have also tanked 4% on the issue of its FCCB redemption. On Wednesday, Oct 10, Religare Finvest sold 8.9 lakh shares of Tulip. Currently, its stocks are trading at their 52-week low.

IndusInd Bank has gained 0.8% after it reported earnings growth in its Sept quarter results. However, its NPAs have recorded an increase.

Cera Sanitaryware, which reported a robust set of Q2 results, has surged by 2.8%. The company reported handsome growth in its topline and bottomline.

With the kickstarting of the earnings season, we advise investors to pay attention to the management interviews and trhe growth projections, which will keep them well informed about the stocks. Infosys and HDFC's results are due this week and are expected to set the tone for the Q2 results and guide the further progress of the market. Globally, the markets are reflecting grave concerns on the corporate earnings. Also due this week is the IIP data.

The S&P warning yesterday has pulled the markets down. Besides, yesterday, RINL's IPO was also postponed on valuation issues. The RBI meet this month in this background will be very important, as the government is also required to divest its stake and meet its target.

The current market breadth is negative, with 50% stocks showing a decline. Ahead today, we expect the markets to remain volatile.