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Wednesday, July 24, 2013

Weak open; rupee could strengthen

Do the difficult things while they are easy and do the great things while they are small - Lao Tzu

While the equity market has managed to flirt with Jan ’11 highs, the RBI continues with its measures to keep the rupee under grips. The central bank imposed new restrictions on commercial banks’ access to cash. Expect call rates and bond yields to see a perk up.

The outlook for the equity market is a weak start. Global cues are not really healthy. Attention will remain on result counters like Hero Motocorp Cairn India and Yes Bank. The banking counters which have been gaining strength could see some weakness again. Banks would be permitted to borrow under the liquidity adjustment facility (LAF) only up to 0.5%of their net deposits and time liabilities at the benchmark interest rate of 7.25 per cent. Starting July 27, 2013, banks will be required to maintain a minimum daily CRR balance of 99% of the requirement, compared with 70% earlier.

The government could rejoice at this development. The number of India's poor fell to less than a quarter of its population in 2011-12, according to a Planning Commission estimate.

IT sector too has some news to cheer. The National Association of Software and Services Companies has maintained its growth forecast for the industry, at 12-14% for fiscal 2014.

Maruti could be in action as there is a threat to shut down the Manesar plant.

China's manufacturing sector slowed to an 11-month low in July. The flash HSBC/Markit Purchasing Managers' Index fell to 47.7 this month from June's final reading of 48.2.

The Dow rose 0.14% while Standard & Poor's 500 Index fell 0.19%. Nasdaq fell 0.59%. An index of June manufacturing activity from the Federal Reserve Bank of Richmond plunged 11 points.

Asian stock markets are weak. Japan's Nikkei was 0.5% lower while Hong Kong's Hang Seng index and South Korea's Kospi index is flat. China's Shanghai index is marginally lower.

Results watch: Cairn India, Dabur India, Indiabulls Real Est, Indiabulls Infra, Yes Bank, Hero MotoCorp, Central Bank, Century Enka, Ador Welding, Atul, DIAMONPOWER, Gujarat Lease, Century Enka, Indiabulls Wholesale, ION Exchange, Kalyani Steel, Kewal Kiran, KIRL INDUS, Mahindra Lifespace,Ponni Sugar Erod, Novartis India, Orient Refractories, Rane Brake, Phil Corp, Sagar Cements, SKF India, Shanthi Gears, STORE ONE, Uniphos Enter, United Phos, TCPL Pack.

Trends in FII flows: The FIIs were net buyers of Rs2.11bn in the cash segment on Tuesday, while the domestic institutional investors (DIIs) were net buyers of Rs608.6mn, as per the provisional figures released by the NSE.

The foreign funds were net sellers of Rs4.92bn in the cash segment on Monday, according to the SEBI figures.

Global Data Watch: Consumer Price Index (YoY) (Q2) AUD, Consumer Price Index (QoQ) (Q2) AUD, RBA trimmed mean CPI (QoQ) (Q2) AUD, RBA trimmed mean CPI (YoY) (Q2) AUD, HSBC Manufacturing PMI (Jul)Preliminar CNY, Markit Manufacturing PMI (Jul)Preliminar EUR, Markit Services PMI (Jul)Preliminar EUR, Markit Manufacturing PMI (Jul)Preliminar EUR, Markit Services PMI (Jul)Preliminar EUR, Markit Manufacturing PMI (Jul)Preliminar EUR, Markit PMI Composite (Jul)Preliminar EUR, Markit Services PMI (Jul)Preliminar EUR, Retail Sales s.a. (MoM) (May) EUR, Retail Sales n.s.a (YoY) (May) EUR, Trade Balance non-EU (Jun) EUR, CBI Industrial Trends Survey - Orders (MoM) (Jul) GBP, MBA Mortgage Applications (Jul 19) USD, M3 Money Supply INR, Markit Manufacturing PMI (Jul)Preliminar USD, New Home Sales (MoM) (Jun) USD, New Home Sales Change (MoM) (Jun) USD, EIA Crude Oil Stocks change (Jul 19) USD, RBNZ Interest Rate Decision (Jul 25) NZD, Corporate Service Price (YoY) (Jun) JPY, Foreign bond investment (Jul 19) JPY, Foreign investment in Japan stocks (Jul 19) JPY

In other news in the media:

Tata Motors will re-enter Australia with LCVs. The company will introduce its 4x2, 4x4, single and crew-cab variants, with Euro V Turbo diesel engines in Australia. (BL)

SpiceJet CEO Neil Mills has quit. The sources said Mills put in his papers after a recent meeting with senior airline management. (BL)

Tata Power announced that it had generated 43.386mn units of solar power from its 25 MW facility at Mithapur in Gujarat in 2012-13. (BL)

Reliance Infrastructure has completed four laning of a 52-km stretch on NH-11, from Jaipur to Reengus in Rajasthan. Collection has begun on the toll road built at a cost of about Rs5.55bn. (BL)

ONGC and its partners — Tata Petrodyne and Hindustan Oil Exploration Co will invest Rs11bn in developing an offshore block in the Gulf of Cambay, off the west coast of India. (BS)

Jindal Steel and Power will consume 25-30mn tons of iron ore a year by 2015, three times current volumes, and source most of the raw material from abroad. (BS)

Larsen and Toubro has sought shareholders nod to raise up to US$600mn through issuing securities. (BS)

JSW Steel may buy the local assets of Stemcor Holdings to gain iron ore mines. (BS)

DLF has sought shareholders’ approval to modify the company's memorandum of association for providing specific retirement benefits to directors who have made outstanding contribution to the growth of the company. (ET)

With the dynamics of the gas market changing, Petronet LNG feels that the price at which it inked a contract to buy gas from Exxon’s Gorgon project in Australia could be re-visited, for it may end up being the most expensive gas the country has ever imported. (BL)

Ticket pricing by airlines is set to come under scrutiny, with the civil aviation ministry roping in anti- trust watchdog Competition Commission of India to keep in check indiscriminate airfare increases in domestic aviation. (BS)