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Tuesday, June 05, 2012
Greece has 1-in-3 chance of leaving eurozone: S&P
However, Standard & Poor's notes that the potential impact on other peripheral sovereigns in the eurozone would be less clear cut. Standard & Poor's Ratings Services on Monday published a report that examines the likelihood of Greece leaving the eurozone and the potential impact of this on the creditworthiness of other sovereigns in the region. The report is titled "Sovereign Rating Implications Of A Possible Greek Withdrawal From The Eurozone." "We believe there is at least a one-in-three chance of Greece exiting the eurozone in the coming months, following national elections on June 17. This could be brought about by Greece rejecting the reforms demanded by the troika - the European Commission, International Monetary Fund (IMF), and European Central Bank (ECB) - and a consequent suspension of external financial support," Standard & Poor's said in a statement. "Such an outcome would, in our view, seriously damage Greece's economy and fiscal position in the medium term and most likely lead to another Greek sovereign default," the credit rating agency said. However, Standard & Poor's notes that the potential impact on other peripheral sovereigns in the eurozone would be less clear cut. It believes that other sovereigns would be unlikely to follow any Greek exit, having witnessed the resulting economic hardships and long delay in harnessing benefits from national currency devaluation, and that in the meantime their European partners would provide additional support to discourage further departures. The Standard & Poor's report says that European policymakers would be keen to demonstrate that Greece is a special case. "We would expect growing financial support and leniency in the face of slipping targets for other sovereigns embroiled in the debt crisis," Standard & Poor's said. Accordingly, the ratings firm currently does not consider that a Greek withdrawal would automatically have any permanently negative consequences for other peripheral sovereigns' prospects of continuing eurozone membership. For the same reasons, it is Standard & Poor's base-case assumption that a Greek exit by itself would not automatically trigger further downward sovereign rating actions elsewhere. Subsequently, much would depend on the robustness of the response from European policymakers, the ECB, and the IMF. S&P expects that a Greek exit would likely strengthen the resolve of other countries receiving external support to pursue reforms and avoid the economic consequences of an exit, and it considers it likely that the ECB would respond vigorously to any sustained rise in borrowing costs for other sovereigns. However, S&P believes the response of core eurozone member states is less predictable. Without appropriately sized and flexible financial mechanisms, the likelihood of a lasting restoration of confidence in major eurozone financial institutions over the near term is doubtful, especially at the periphery. "Although such a reluctant policy response is not our base-case assumption, it could lead to further sovereign debt restructurings in countries other than Greece and downward pressure on our ratings on affected sovereigns," says S&P. The S&P report also examines the potential losses that official creditors might face, including the IMF, European Financial Stability Facility (European Financial Stability Facility, and European Investment Bank European Investment Bank, in the event of a Greek exit.
Precious metals turn pale on the first trading day of the week
Prices fail to find support from lower dollar and weak data Bullion metal prices ended lower on Monday, 04 June 2012 at Comex. A lower dollar and weak economic data failed to provide the impetus to the bullions and make them attractive on their safe-haven investment appeal. The market consolidated and saw a downside price correction following big and impressive price gains scored on Friday. Gold for August delivery ended lower by $8.2 or 0.5%, to end at $1,613.9 an ounce on the Comex division of the New York Mercantile Exchange on Monday. During the session, it traded between a high of $1,629.70 and a low of $1,610.
Markets may see a flat opening
The Indian markets may begin the trade on a flat note on the back of mixed Asian cues. SGX Nifty is trading 2.50 points higher Events for the day: Ex-date for 1st interim dividend of Page Industries. Headlines for the day: Hero MotoCorp to merge with investment arm. Pranab writes to CMs for cut in taxes on petrol. Three striking AI pilots appear before DGCA. BJP to launch country-wide movement against petrol price hike. Indian Indices: The Indian markets are likely to open the trade on a flat to positive note on account of positive Asian cues. The markets are likely to trade rangebound. SGX Nifty is trading 8.50 points higher. On Monday (June 04, 2012), the Sensex closed at 15988, up by 23 points while Nifty settled at 4848, rising by 6 points. Global Indices: Asian shares staged a mild recovery on Tuesday (June 5, 2012), as investors looked towards European policymakers and the wider G7 to take decisive action to address the worsening euro zone crisis. European shares were mixed on Monday (June 04, 2012), after grim economic data from across the globe spurred some investors to bet on a greater likelihood of the central bank policy action to stimulate growth. US stocks were flat on Monday after a steep drop in the previous session that erased the Dow industrials' gains for the year. Daily trend of FII/MF investment in equities: The FIIs have been the net sellers Indian stocks to the tune of Rs138.40 crore on June 03, 2012. The domestic investors sold Indian shares worth a net of Rs457.30 crore on May 31, 2012. The data is as per the SEBI website. Commodity Cues: Oil prices edged higher on Monday, snapping a string of four lower closes, as a drop to multi-month lows attracted bargain hunters and as the euro rose against the dollar on hopes that Europe's leaders can keep the euro zone intact.
Market ends higher on rate cut hopes
In a dramatic turn around, key benchmark indices wiped off intraday losses to hit the day's high in late trade as hopes for further rate cuts triggered bargain hunting in stocks. Subir Gokarn, Reserve Bank of India (RBI) deputy governor, has hinted at a rate cut in the upcoming policy review of the central bank, saying below trend growth and falling crude oil prices offer RBI a window to ease policy stance. The barometer index, BSE Sensex, settled a tad below the psychological 16,000 mark. The Sensex rose 23.24 points or 0.15%, up close to 239 points from the day's low and off about 24 points from the day's high. From a recent high of 16,438.58 on 29 May 2012, the Sensex declined 473.42 points or 2.87% in three trading sessions to 15,965.16 on Friday, 1 June 2012. The barometer index has gained 533.48 points or 3.45% in calendar 2012 so far (till 4 June 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 852.54 points or 5.63%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 3143.30 points or 16.43%.
Monday, June 04, 2012
Daily News Roundup - June 4 2012
NHPC has obtained the concurrence of Central Electricity Authority for 600-MW Tawang-I and 800-MW Tawang-II projects in Arunachal Pradesh. (BL) Lanco Infratech Ltd has finalised a capital expenditure of about Rs 5,000 crore for the financial year 2012-13. (BL) Maruti Suzuki India Limited signed a state support agreement with the Gujarat government for the purchase of land near Mehsana to set up its third manufacturing facility. (BS) PowerGrid Corporation has firmed up plans to spend ~Rs100bn in the next three financial years on the setting up of intrastate transmission lines. (BS) The Ministry of Home Affairs has asked Department of Telecommunications to take action against Bharti Airtel and Hughes Communications for failing to provide data for specific user location and thereby not complying with conditions in their licence agreement. (BS)
Sensex slides below 16k...Nifty ends under 4850
Indian markets started off June on a terrible note on Friday as investors continued to fret about grim prospects for the domestic economy amid no sign of relief from policy inaction. A raft of disappointing global economic statistics added to the gloom. The bloodbath today was an extension of May's mayhem, which was sparked off by political turmoil in Greece, banking woes for Spain, slowdown in China, sluggish growth in USA and further deceleration in the Indian economy. It was a complete sea of red on Dalal Street today, as the BSE Sensex and NSE Nifty closed below crucial levels of 16,000 and 4850, respectively. After opening nearly at day’s high, markets seemed to behave like a falling knife; every upswing or consolidation was used to short the market, dragging the main indices to session lows in the last few minutes of trade. The Indian bourses witnessed relentless selling, with heavy offloading in Capital Goods, Power, Oil & Gas and Auto stocks. Only the FMCG index ended with smart gains, thanks to sustained strength in industry titan ITC.
Falling all over!
Sometimes it takes a good fall to really know where you stand. – H Williams. Red ticks are set to invade your trading screen, as concerns about the US economy and slowdown in China add to ongoing problems in Europe. Domestic problems have only got compounded with the dismal GDP report. The much weaker-than-expected US jobs data has raised fresh doubt about the health of the world’s largest economy. The S&P 500 index is below 200-DMA while the Dow has erased its gain for 2012. The S&P 500 and the Nasdaq are down over 10% from the year's highs. The CBOE VIX was up ~11%.
Markets may see a terrible start on global meltdown
Today’s start is excepted to be scary looking at a drastic fall across the globe. Panic selling will lead to a weak trade. SGX Nifty is trading 63.50 points lower. Events for the day: Ex-date for 2nd interim dividend of TVS Motor Company. Ex-date for stock split of Shubham Granites. Headlines for the day: RIL relents, signs gas supply pacts with Pragati Power, NTPC. Bharati Shipyard promoters to infuse Rs118 cr for CDR. Telecom Minister to continue to finalise new licence norms. DoT to finalise auctioneer on July 10 for spectrum auction.
Market may extend recent losses on weak Asian stocks
The market may extend recent losses on weak Asian stocks. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a fall of 41 points at the opening bell. Asian stocks fell on Monday after a U.S. payrolls report showed fewer jobs were added to the world's largest economy than the most pessimistic forecast, adding to concern the global economy is slowing. Key benchmark indices fell for the third straight day on Friday, 1 June 2012 to hit their lowest closing level in over a week as global stocks faltered as investors dumped risky assets after data showing downbeat manufacturing activity from China to Europe raised doubts about global economic recovery. The BSE Sensex was down 253.37 points or 1.56% to 15,965.16, its lowest closing level since 23 May 2012. Foreign institutional investors (FIIs) sold shares worth a net Rs 220.37 crore on Friday, 1 June 2012, as per provisional figures from the stock exchange.
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