Blame it on Reddy
Things that are done, it is needless to speak about...things that are past, it is needless to blame.
The bulls and bears will have one man to 'blame.' As we mentioned yesterday RBI Governor Dr. Y.V. Reddy will hold sway over the markets this week, particularly today . That may have sounded alarm bells ringing for some on the street. But, the good news is that Dr. Reddy is most likely to hold key short-term rates steady having already unleashed a slew of tightening steps in the past few months. The central bank is expected to examine its latest set of measures - the hike in repo rate as well as the CRR in March - to take full effect before deciding on its next move. In any case, Dr. Reddy has announced rate hikes and CRR increases in between the scheduled meetings. So, the RBI is likely to treat the scheduled policy meetings more for its communication to the markets and the banks rather than unveiling any revision in rates.
Though the RBI may decided to take a breather for a while, there is one certainty that the tone of its remarks will remain hawkish. There will be no let up in the efforts by the Government and the central bank in curbing prices even if it comes about at the cost of lower GDP growth. One of the offshoots of this strategy has been the recent spike in the rupee, which touched a nine-year peak against the dollar on Monday. There is a growing view that the Government and the RBI are working in tandem to let the currency appreciate to take some of the pressure off in containing inflation and the high credit growth. Exporters like the IT and Textile firms may not be happy, but that won't deter the 'powers that be' from adopting a pro-rupee stance.
In news just coming in Vedanta is to buy Mitsui's 51% stake in Sesa Goa at a 17% premium to the current market price.
Coming to today's session, things are looking a bit weak, with markets in the US and Asia in the red and crude oil crossing the $65 per barrel mark. But, the bulls need not despair as the quarterly results have been pretty strong, barring an odd surprise like Siemens yesterday. FII inflows have been strong as well. FIIs poured in Rs7.49bn on Friday, taking their net investment this month close to the billion dollar mark. Overall fund flows into the emerging markets too have been good over the past four weeks. In the third week of April, emerging markets equity funds saw net inflows to the tune of $1.1bn, according to the Emerging Portfolio Funds Research (EPFR). The F&O expiry on Thursday is also likely to pass off smoothly.
On Wall Street overnight, the Dow Jones Industrial Average slipped on Monday after closing at record highs the last three sessions, as remained cautious amid higher oil prices, weakness in GM and anxiety over this week's economic and earnings news. Stocks also declined after Moody's increased its loss estimates on sub-prime mortgages.
The Dow posted its first drop in eight days, slipping 42.58 points, or 0.3%, to 12,919.40. The blue chip benchmark had earlier risen within 17 points of reaching 13,000 for the first time. The S&P 500 fell by 3.42 points, or 0.2%, to 1480.93. The Nasdaq Composite Index dropped 2.72 points, or 0.1%, to 2523.67.
Barclays said it will buy ABN Amro for $91bn. As part of the deal, ABN would sell its US unit LaSalle Bank to Bank of America for $21bn in cash. However, ABN said it will hear a counter bid from a group led by Royal Bank of Scotland.
Separately, AstraZeneca said it will buy US biotech firm MedImmune for $15.6bn all-cash deal.
US light crude oil for June delivery rose $1.78 to settle at $65.89 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 15 cents lower at $65.74 a barrel.
COMEX gold for June delivery fell $1.60 to $694.20 an ounce on reports of violence in oil-exporting Nigeria. Treasury prices rose, lowering the yield on the 10-year note to 4.65% from 4.67% late on Friday. In currency trading, the dollar rose versus the euro and inched lower versus the yen.
European shares hovered near six-and-a-half-year highs. The pan-European Dow Jones Stoxx 600 index fell 0.1% to 389.00, after hitting a high not seen since November 2000 of 390.18 early in the session. The German DAX Xetra 30 shed 0.1% to 7,335.62, while the UK's FTSE 100 dipped 0.1% to 6,479.70.
Asian stocks fell for the first time in three days on Tuesday. The Nikkei in Tokyo was down 140 points at 17,315 while the Hang Seng in Hong Kong was down 69 points at 20,486. The Kospi in Seoul was flat at 1544 and the Straits Times in Singapore declined 18 points to 3369.
RBI holds the key
Markets witnessed a flattish end as announcement of the Credit Policy tomorrow kept the bulls on guard. BSE Benchmark Sensex after breaching the 14kmark and NSE Nifty crossing the 4100 mark the key indices pared its early gains as profit booking emerged on the bourses in the later half of the trading session dragging the key indices from its days high. The mid-Cap and the small cap stocks also ended on the receiving end on back of selling pressure. Finally, the 30-share benchmark Sensex gained 31 points to close at 13928. NSE Nifty was flat at 4085.
Era Construction dropped by over 3% to Rs352. The Company secured orders worth Rs1.89bn from NTPC. The scrip touched an intra-day high of Rs375 and a low of Rs349 and recorded volumes of over 4,00,000 shares on NSE.
Bharati Shipyard slipped 1% to Rs403. The Company announced that they have has signed a contract with UP OFFSHORE (BAHAMAS) LTD, for construction and supply of two Platform Supply Vessels. The Contract is value approximately at Rs.1.8bn. The scrip touched an intra-day high of Rs425 and a low of Rs396 and recorded volumes of over 24,000 shares on NSE.
Wockhardt Pharma edged lower by 0.4% to Rs419. The company announced that they have signed its first in-licensing agreement in the anti-wrinkle arena with Milan-based Syrio Pharma S.P.A. to market their B-Lift range of dermatology products. The scrip touched an intra-day high of Rs422 and a low of Rs399 and recorded volumes of over 54,000 shares on NSE.
Sun Pharmaceutical declined by over 11% to Rs1047. The company announced that it has separated its research division. The scrip touched an intra-day high of Rs1111 and a low of Rs985 and recorded volumes of over 9,00,000 shares on NSE.
Bank of India fell 2.3% to Rs183. The company announced its Q4 result with net profit at Rs4.47bn (up 75.9%) and declared to pay Rs1.5 per share as Final Dividend. The scrip touched an intra-day high of Rs191 and a low of Rs182 and recorded volumes of over 33,00,000 shares on NSE.
Auto stocks were on the receiving end. Bajaj Auto fell 1.5% to Rs2402, Maruti was down 1.6% to Rs766, M&M dropped 1.7% to Rs731 and Tata Motors edged lower 0.7% to Rs718. However, Hero Honda gained by 1% to Rs655.
FMCG stocks slipped the most as the stocks witnessed profit booking. Index heavy weight ITC dropped by 3% to Rs156, HLL was down by 1.7% to Rs202 and Colgate slipped 0.9% to Rs342 and Dabur edged lower 0.6% to Rs96.
Pharma stocks were in bad health. Cipla edged lower by 0.5% to Rs234, Ranbaxy was down by 0.2% to Rs343 and Cadila dropped 1% to Rs327.
Technology stocks were a mixed bag. Mid-Cap stocks were the major losers, Mphasis BFL fell over 4% to Rs306, i-Flex was down by 2.1% to Rs2362 and Polaris dropped 2.2% to Rs198. However, heavy weight Infosys and Satyam Computer gained over 0.5% each
Market Volumes:
The turnover on NSE was down by 13% to Rs76.95bn. BSE Capital Good index was the major loser and lost 2.36%. BSE FMCG index (down 1.62%), BSE Pharma index (down 1.40%) and BSE auto index (down 0.59%) were among the other major losers. However, BSE Metal index gained 2.01%.
Volume Toppers:
RNRL, TTML, SAIL, FSL, Tata Steel, PFC, R Com, Ashok Leyland, Unitech, Satyam Computer, IDFC, GTL, Bank of India, Hanung Toys, Dish TV and Voltas.
Upper Circuit:
Sujana Metal, Shree Precoated, Ansal Infrastructure, Tele data Informatics, Atlanta, Tanla, Nirlon and BF Utilities.
Results Today:
All Cargo, Bajaj Hindusthan, Essar Oil, HDFC Bank, Hexaware, MTNL, Maruti and Sun TV.
Delivery Delight:
Century Textiles, CESC, EXIDE Industries, Hero Honda Motors, HCC, Nagarjuna Construction, Reliance Industries, Tata Power, TVS Motor and VSNL.
Abnormal Delivery:
Balrampur Chini Mills Ltd, India Cements, Gujarat Ambuja Cements, Raymond, Corporation Bank, Tata Chemicals, Bharat Forge and Ranbaxy Laboratories.
Stock Futures with Largest Increases in OI:
M&M, Crompton Greaves, IDFC, Jindal Stainless, J&K Bank, Indian Bank, Tata Chem, Hero Honda and Patni.
Stock Futures with Largest Decreases in OI:
Sun Pharma, Aban Offshore, Alok Industries, Indian Hotels, IFCI, Amtek Auto, ACC, Nagarjuna Const and Triveni Eng & Ind.
Results Corner:
Rolta Q3 profit at Rs469.4mn (up 42%), total income at Rs1.53bn (up 29%)
PFC Q4 profit at Rs3.68bn (up 71%), revenue at Rs11.32bn (up 44.9%)
Indian Bank Q4 profit at Rs2.35bn (up 69%) and total income at Rs15.64bn (up 43%)
Bank of India Q4 profit at Rs4.47bn (up 75.9%) and to pay Rs1.5 per share as Final Dividend
Brokers Recommendation:
REL – Overweight from Morgan Stanley with target 609
Zee Telefilms – Buy from CLSA with target of Rs309.
Long Term investment:
M&M
Major News
FIPB refuses to take call on Vodafone-Hutch deal
Siemens to acquire 77% stake in iMetrex Technologies
CEAT board approves plan to separate Finance Business and to pay Rs1.8 per share as dividend
Punj Lloyd gets Contract by Reliance Gas Transportation Infra Ltd
Era Const gets Rs1.89bn from NTPC
JSW Steel to consider expansion, Fund raising plan on 30th April
OrbitCorp buys land from Ambuja Cements for Rs3.33bn
Tata Power buys Coastal Gujarat Power Ltd
Kale Consultants gets contract from SAS Group
ACC to buy 14.5mn shares of Shiva Cement at Rs11 apiece
IB Real Estate board to consider dividend on 30th April.