"Expect nothing. Live frugally on surprise."
The RBI never fails to surprise. Just when the markets feared an all-out assault on inflation comes an unexpectedly dovish policy action. However, the policy document itself points to several pressure points – like the spike in non-food inflation, volatile crude oil prices and fiscal deficit. That means there is a chance of some inter-meeting action if the need arises. Monsoon of course remains the joker in the pack along with the global factors.
The immediate concern is some tapering off in FII inflows. In addition, we have a long road ahead as far as earnings are concerned. Technically too, the key indices are facing some resistance. So, it makes sense to stay a little guarded in the near term although the medium-to long-term looks promising. Today we expect a follow-through rally at the start. Things might turn choppy and rangebound depending on the results and other newsflow. Stick to stock centric action and do proper due diligence to avoid any major heartburn.
Unitech will be in action as its board has approved a demerger.
Results Today: HCL Tech, Hindustan Zinc, Infotech Enterprises, Polaris Software, TVS Motor, United Spirits and Zee News.
FIIs were net buyers of Rs1.56bn on Tuesday on a provisional basis. Local funds were net buyers of Rs1bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs560.8mn. On Monday, FIIs were net sellers of Rs4.75bn in the cash segment, as per the SEBI web site.
Indian markets ended with modest gains, closing higher for the first time in five trading sessions after the RBI announced a moderate hike in policy rates. In the run-up to the RBI policy, there were some apprehensions of a more aggressive central action as inflation is hovering around 10%.
The RBI hiked the policy rates and the CRR by 25bps each. "FY11 GDP forecast at 8% with an upward bias and moderation in inflation target to 5.5% helped ease some tension owing to global factors. Also, given the front-loading of the government borrowing programme and abundant liquidity in the system interest rates are unlikely to spike sharply in the short term," says Amar Ambani, Vice President – Research, IIFL.
The BSE Sensex gained 60 points to end at 17,461 and NSE Nifty gained 26 points to close at 5,230. Among the 30 components of Sensex, 20 ended in the positive terrain and 10 were in the red.
Markets in Asia ended in the green; Hang Seng index in Hong Kong was up 1%, Australia's S&P/ASX was up by 0.21%. However, the Nikkei in Japan was down 0.2% and Shanghai SE Composite ended flat.
On the other hand, European indices were also trading with positive bias, the DAX in Germany was up 1.2%, the CAC 40 index in France was up 1% and the FTSE in the UK was up 0.8%.
Coming back to India, among the BSE sectoral indices, the BSE Realty index was top gainer, the index gained 3%, followed by BSE Banking index up 1.5% and PSU index up 1.5%.
Even the Mid-Cap and the Small-cap index ended in the green, both the indices added 1.3% and 1.5% respectively.
Outside the frontline indices, the big gainers in the broader market were P&G, Nagarjuna Const, Adani Ent and Piramal Health. On the other hand, losers included Godrej Cons, Jain Irrigation, Castrol and EIH.
TCS slipped sharply after opening with smart gains, the stock erased all its early gains and ended lower by 2.8% at Rs790. The company reported its consolidated financial results according to Indian GAAP for the quarter and financial year ended March 2010.
For the fourth quarter ended 31st March 2010, net profit stood at Rs20.01bn up 50.1% YoY and 9.7% QoQ. The revenue stood at Rs77.38bn up 7.9% YoY and 1.17% QoQ. The operating profit stood at Rs21.65bn up by 29.1% YoY. For the financial year ended 31st March 2010, net profit stood at Rs70.01bn up 33% and operating profit stood at Rs80.18bn up by 21.91%.
Shares of Sesa Goa also pared their intra-day gains and ended lower by 0.6%% at Rs456 after the company posted a net profit of Rs9.6bn for the quarter ended March 31, 2010 where as the same was at Rs5.2bn for the quarter ended March 31, 2009. Total Income is Rs19.8bn for the quarter ended March 31, 2010 where as the same was at Rs14.08bn for the quarter ended March 31, 2010.
The Company posted a net profit of Rs21.18bn for the year ended March 31, 2010 where as the same was at Rs19.42bn for the year ended March 31, 2009. Total Income is Rs50.6bn for the year ended March 31, 2010 where as the same was at Rs49.96bn for the year ended March 31, 2010.
Shares of Shree Renuka Sugars gained by 1.7% to end at Rs68 after reports stated that the company is seeking to buy an additional 8% of Equipav SA Acucar e Alcool, the sugar and alcohol assets of Brazil’s Equipav Group.
Shares of GAIL India shot up by over 5% to end at Rs425 after reports stated that the petroleum and natural gas regulator proposed pipeline tariff revisions. The scrip opened at Rs412 it touched an intra-day high of Rs459 and a low of Rs412 and recorded volumes of over 1.5mn shares on BSE.
Shares of Strides Arcolab advanced by 6.5% to end at Rs363 after the company announced that it has redeemed US$34mn FCCBs, on due date. The Company had originally raised US$40mn FCCBs in the year 2005 and has bought back US$6mn during the year 2009. The total payout for redeeming the bonds was US$46.5mn as the Bonds were redeemable at a premium of 136.78%.
Post redemption of these FCCBs, the Company now has outstanding FCCBs worth US$80mn FCCBs out of the US$100mn raised In the year 2007. The 80 US$mn FCCB has an initial conversion price of Rs461.553 per share, and if not converted before June 27, 2012, are redeemable at a premium of 145.058%.
Commenting on the development, Mr. T.S. Rangan, Group CFO stated "The Company has diligently planned the redemption thereby reiterating its commitment in securing the interest of the Investors. We take this opportunity to thank the bond holders for the confidence reposed on us".
JK Tyre is reportedly planning to increase tyre prices by 3% to 5% from May 1, 2010. "I can tell you that from May 1 I am increasing the prices. We will have to think again in June," A.S. Mehta, director-marketing, was quoted as saying.
The scrip gained 2% to Rs199, it opened at Rs196 it touched an intra-day high of Rs202 and a low of Rs194 and recorded volumes of over 0.16mn shares on BSE.
Shares of Hanung Toys erased early gains and ended lower by 0.2% at Rs239. The stock hit an intra-day high of Rs245 after the company signed export order tie-up with a leading US buyer, for exporting Value Added Home Furnishing to the extent of US$90mn to be completed by December 2012. This agreement will bring greater strength and better margins to the Company.