Bandh blues may fade away

"Politics is for the present, but an equation is for eternity." Albert Einstein.

The nationwide ‘Bharat Bandh’ is not expected to change the political equation. In the worst case scenario, it may paralyse normal life. So, expect lower turnouts in offices, schools and other institutions. As far as markets are concerned, trading volume may take some hit and lead to some volatility. Given the uncertain global scenario we expect the overall mood to be cautious ahead of the corporate earnings.



The start may be a bit sluggish as the markets digest Friday’s rate hike by the RBI. But, we do not see any major fall in the key indices, as the markets had already discounted an inter-meeting move by the central bank. The RBI next meets on July 27 and experts are divided on whether another rate hike is in the offing.

US markets are shut today. Stocks on Wall Street fell on Friday after a mixed jobs report. European markets ended nearly flat. In Asia, markets in Japan and Australia have opened higher but stocks in China and Hong Kong are in the red. Near-term triggers include the IIP data, monthly inflation report and of course quarterly results.

Shares of Reliance Power and RNRL will be in focus after their boards met over the weekend and approved a merger. The swap ratio has been fixed as One share of Reliance Power for Four shares of RNRL.

In spite of the 12-hour Bharat Bandh, the UPA is unlikely to roll back the hike in fuel prices. In fact, it appears to be determined in carrying out more reforms going ahead. That should be good news for the economy, markets and investors. FIIs had poured in over $17bn last year into Indian stocks and the figure has already touched $6.7bn this year.

On Friday though, they were net sellers at Rs3.05bn in the cash segment on a provisional basis, according to the NSE web site. Local institutions were net buyers at Rs262.6mn. In the F&O segment, they were net sellers of Rs5.15bn.

Though a few results might start trickling this week the real action will kick off with the Infosys earnings on July 13. Overall, India Inc's report card should not hold any major shocks though there is always a chance of some disappointment.

The key to watch out for this month is whether the key indices break out of the current range, which is 5200-5350, and head towards 5400-5500.

US stocks fell on Friday on the back of a poor economic data. It was the seventh successive decline for the Dow Jones Industrial Average. Major indexes ended at new 2010 lows.

The Dow lost 46.05 points or 0.5% to close at 9,686.48 on Friday. For the week, the blue chip index fell 4.5%. The Nasdaq Composite Index dropped 9.57 points or 0.5% to close at 2,091.79 on the day and lost 5.9% for the week.

The benchmark Standard & Poor's 500 Index fell 4.79 points or 0.5% on Friday to close at 1,022.58. For the week the index declined 5%.

The Dow and Nasdaq ended at fresh 8-month lows and the S&P 500 at a 9-month lows.

US light crude oil for August delivery fell 81 cents to $72.14 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery rose $1 to $1,207.70 an ounce.

The euro gained versus the dollar but remained above the four-year low of $1.188 hit earlier in the month. The dollar was up slightly versus the yen.

Treasury prices fell, raising the yield on the 10-year note to 2.96% from 2.93% late on Thursday.

US stocks slid through most of Friday as investors digested the jobs report ahead of a long holiday weekend. All US financial markets are closed Monday in observance of Independence Day.

The S&P 500 is down more than 15% since the April highs on worries about the European debt crisis and US economy. Wall Street lost ground on Thursday following worse-than-expected economic readings on manufacturing and housing.

US employers cut 125,000 jobs from their payrolls last month, more than the 100,000 job cuts expected by economists. Most of the decline was a result of the 225,000 temporary Census employees that lost their jobs after the conclusion of the survey.

On the upside, the private sector added 83,000 jobs, the report showed. However, that was shy of the 112,000 economists had been expecting. The unemployment rate, generated by a separate survey, dropped to 9.5% from 9.7% in May. Economists thought it would rise to 9.8%.

In the day's other economic report, the Commerce Department said that factory orders fell 1.4% in May after rising 1% in April. Economists thought orders would drop 0.6%.

Bank stocks were hit hard, with the KBW bank sector index sliding 2%. Truckers, railroads and airlines were hit by worries about the economic slowdown, sending the Dow Jones transportation average lower.

European shares ended virtually flat on Friday as a rebound by automakers and miners was offset by weakness in the health care and technology sectors.

The Stoxx Europe 600 index closed at 237.20, slightly extending the five-and-a-half week low set on Thursday on worries about the global economic recovery. The index ended the week 4.5% lower.

The U.K. FTSE 100 index rose 0.7% to settle at 4,838.09, the German DAX index fell 0.4% to 5,834.15 and the French CAC-40 index advanced 0.3% to 3,348.37.

The dollar traded lower against the euro.