RIL's lower than expected Q4 result may weigh on investor sentiment

Index heavyweight Reliance Industries' (RIL) lower than expected Q4 result may drag the market lower. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 5 points at the opening bell. Asian markets were mixed.

Global markets including Indian bourses remained shut on Friday, 22 April 2011, on account of Good Friday.

Foreign institutional investors (FIIs) bought shares worth Rs 307.79 crore and domestic institutional investors (DIIs) sold shares worth Rs 269.61 crore on Thursday, 21 April 2011 as per provisional data. FIIs bought shares worth a Rs 402.30 crore from the secondary equity markets on Wednesday, 20 April 2011. FIIs had bought shares worth a net Rs 1836 crore from the secondary equity markets on Tuesday, 19 April 2011.



Volatility may remain high in the near term as traders rollover positions in the futures & options (F&O) segment ahead of the expiry of the near-month April 2011 contracts on Thursday, 28 April 2011.

Among corporate news, Reliance Industries (RIL) reported lower than expected numbers for Q4 March 2011 with a 14.14% rise in net profit to Rs 5376 crroe on 26.47% rise in total income to Rs 73591 crore in Q4 March 2011 over Q4 March 2010. Net profit of the company was below expectations due to gross refining margin (GRMs) being at $9.2 per barrel, lower than expected, for Q4 March 2011 due to impact of FCCU [fluidized catalytic cracking unit] shutdown at RIL for 46 days. The Q4 result was announced after market hours on Thursday, 21 April 2011

RIL also announced on Thursday that it has made a gas and condensate discovery in the deepwater Cauvery-Palar basin. The discovery was made in the very first well drilled in a block of about 8,600 sq km (square kilometer) that was awarded to RIL under the bidding round of NELP-III, the company said. RIL currently holds 100% participating interest in this block. This is one of the 23 exploration blocks where BP Exploration (Alpha) would have a 30% participating interest subject to Government approval. RIL is also planning to carry out further appraisal activity to assess the extent of these reservoirs, said a statement from the company. Last year, RIL and BP announced a strategic partnership between the two companies.

Jindal Steel Power's consolidated net profit rose 3.97% to Rs 1001.70 crore on 22.12% rise in total income to Rs 3915.15 crore in Q4 March 2011 over Q4 March 2010. The Q4 result was announced after market hours on Thursday, 21 April 2011.

Axis Bank's net profit rose 33.37% to Rs 1020.11 crore on 48.31% rise in total income to Rs 5817.06 crore in Q4 March 2011 over Q4 March 2010. The Q4 result was announced on Friday, 22 April 2011.

Sesa Goa, Maruti Suzuki India and Sterlite Industries are due to report Q4 results today.

The near term major trigger for the market is Q4 March 2011 results of India Inc. Investors will scrutinize post-result management commentary to gauge outlook on earnings at a time when rising salaries, raw materials prices and interest rates are pressurizing profit margins of India Inc. High global commodity prices will add to pressure on profit margins of Indian firms.

The combined net profit of a total of 132 companies rose 27% to Rs 18690 crore on 27.4% rise in sales to Rs 155830 crore in Q4 March 2011 over Q4 March 2010.

The food price index rose 8.74% and the fuel price index climbed 13.05% in the year to 9 April 2011 government data on Thursday showed. In the previous week, annual food and fuel inflation stood at 8.28% and 12.97% respectively. The primary articles price index was up 11.96% compared with an annual rise of 11.40% a week earlier.

India Meteorological Department (IMD) has predicted the southwest monsoon 2011 to be 98% (normal) of the long period average (LPA) with a model error of plus/minus 5%. IMD has indicated that there is very low probability for the season rainfall to be deficient (below 90% of LPA) or excess (above 110% of LPA). The IMD released its initial forecast for the June to September monsoon on Tuesday 19 April 2011. The forecast is made in two stages in April and in June. The forecast for the season as a whole (June-September) is issued in the first stage.

Normal monsoon this year could help ease food inflation and boost rural income. The quantity and geographical spread of rainfall during the monsoon season is crucial for India's agriculture sector as the country lacks irrigation facilities on more than half of its farm land. The South Asia Climate Outlook Forum predicted that South Asia is likely to receive normal monsoon rains in 2011. It said the La Nina weather phenomenon, which aids monsoon in the region, would continue until June.

With inflation remaining above its comfort level, the Reserve Bank of India (RBI) is seen raising key short term policy rates by 25 basis points at its annual 2011-2012 monetary policy review on 3 May 2011.

A sharp surge in global crude oil prices over the past few months has raised macroeconomic worries. India imports majority of its crude oil requirements and high oil prices had raised concerns about widening current account deficit. High oil prices had also raised concerns about higher oil subsidy bill for the government and its negative impact on the government's fiscal position. US crude futures were up 49 cents or 0.44% at 112.78 a barrel.

The key benchmark indices edged higher for the third straight day to their best closing level in more than a week on Thursday, 21 April 2011 buoyed by firm global stocks, data showing resumption of buying by foreign funds, strong response from foreign institutional investors to the initial public offer of gold financing firm Muthoot Finance and Indian Meteorological Department's (IMD) recent forecast of normal monsoon this year. The BSE 30-share Sensex was up 131.25 points or 0.67% to 19,602.23, its highest closing level since 13 April 2011 on Thursday.

Most Asian stocks were mixed on Monday 25 April 2011. The key benchmark indices in China, Indonesia and Taiwan fell by between 0.02% to 1.16%. The key benchmark indices in Japan, Singapore and South Korea rose by between 0.01% to 0.31%.

U.S. stocks posted their first positive week in three as more healthy earnings news lifted Wall Street on Thursday, though gains were limited with another 180 S&P names due to report this week. Factory activity in the U.S. Mid-Atlantic region slowed sharply in April and the number of claims for unemployment insurance fell less than expected last week, implying the economy was struggling to regain momentum.