Friday, July 01, 2011
After enjoying a pleasant rebound over the past six trading sessions, the Indian markets finally took a breather on Friday. The six-day rally came to a halt after traders and investors preferred to book some profits at higher levels. Data showing deceleration in manufacturing sector activity from Australia to Europe also partly contributed to the selling today. Back home, trade deficit widened in May as well as in April-May period. Monthly auto sales also came in mixed, with Maruti's volumes sliding on a 10-day strike.
Reliance Industries was the main culprit behind today’s downtrend, which dragged the Indian markets lower after six-day uninterrupted rally.
RIL slips after CBI search at premises of ex-DGH head V K Sibal
Exports surge 56.9% in May
M&M auto sales up 29% in June
The market soon enters the crucial period of corporate earnings. Investors will closely watch the post-Q1 June 2011 result management commentary to gauge the future earnings outlook at a time when firms are witnessing cost pressures amid rising interest rates and staff costs. A hike in transportation costs will add to cost pressure of India Inc. As per reports, freight rates have gone up by 8% to 9% on all routes across India following the latest hike in diesel prices.
Housing finance major HDFC unveils Q1 June 2011 results on Friday, 8 July 2011. On the same day, private sector bank IndusInd Bank also reports Q1 June 2011 results. IT bellwether Infosys Technologies will unveil Q1 results on 12 July 2011.
Key benchmarks indices registered losses on the first day of the month and the quarter as investors resorted to profit taking after recent sharp surge in share prices. Index heavyweights Reliance Industries (RIL), Bharti Airtel and Larsen & Toubro led the decline. The BSE Sensex fell 83.07 points or 0.44%, up close to 50 points from the day's low and off close to 269 points from the day's high. The Small-Cap and Mid-Cap indices on BSE rose, extending their recent rally. The market breadth was positive.
RIL fell almost 4% on reports the Central Bureau of Investigation (CBI) today, 1 July 2011, searched the house V.K. Sibal, the former chief of the Directorate General of Hydrocarbons, the upstream regulator, after the state auditor said in a report there may have been inflated costs for some of RIL's exploration activities.
The market may extend recent strong gains, tracking higher Asian stocks. Data showing heavy buying by foreign funds on Thursday, 30 June 2011, is likely to boost sentiment. Trading of S&P CNX Nifty on the Singapore stock exchange indicates a gain of 40 points at the opening bell. Auto and cement stocks will be focus as companies from these two sectors start unveiling monthly sales volume data for the month just gone by.
Foreign institutional investors (FIIs) bought shares worth a massive Rs 1591.34 crore on Thursday, 30 June 2011, as per the provisional data released by the stock exchanges. FII inflow totaled Rs 2662.74 crore in June 2011, as per the data from the stock exchanges.
The opening is expected to be on a strong note on receding worries over Greece debt crisis.
Headlines for the day:
Cairn deal gets conditional okay
Core sector growth slows to 5.3% in May
Cox & Kings eyes global buys to raise Rs1,500 crore via FIIs
After a good 10 months of its announcement, the Cairn Energy-Vedanta Resources stake-sale deal has got the nod of the Cabinet Committee of Economic Affairs, but with riders. (BL)
Tata TeleServices, which had ushered in a tariff war with its per-second billing-based GSM offering two years back, has revised the rates for all new subscribers of Tata DoCoMo in every circle it operates. (BL)
Cipla would appeal the order of a United States District Court that has ruled against the sale of a product for pets, on the grounds that it infringed a patent held by Merial Ltd, a Sanofi company. (BL)
The Indian market continues to be on a roll, with the main stock indices extending their winning streak to a sixth consecutive trading session. The F&O expiry went off smoothly, with the NSE Nifty witnessing a late spurt owing to some short covering. With this, the Nifty has surged by nearly 370 points in the last six trading days.
Today’s upswing was led by positive global cues after the Greek parliament approved new budget cuts needed to secure international aid and avoid a default. Renewed optimism over FII inflows also partly powered the advance. A steep drop in food inflation in the middle of June also boosted the sentiment slightly.
A pleasant illusion is better than a harsh reality - Christian Bovee.
Markets always tend to surprise. The six-day uptick is a case in point. Just when most players were bracing for challenging times we got a pleasant bounce. And, going by the strong momentum, it looks like the party could last a bit longer before we see some cooling.
So, no prizes for guessing the start. It will be good once again, as world equity markets have extended this week’s solid gains.