India Market Wrap

Ø  INDICES: Sensex -157 at 16026 (-0.97%), NIFTY -46 at 4861 (-0.93%), CNXMIDCAP -46 at 6857 (-0.66%)

Ø  SECTORAL PERFORMANCE: BANKEX -1.51%, AUTO -0.79%, CAPITAL GOODS -1.21%, HEALTHCARE -0.51%, Metal -1.83%, OIL & GAS -0.56%, IT 0.15%, FMCG -0.89%, PSU -1.01%, REALTY -1.23%, Consumer Durables 0.11%, POWER -1.45%

Ø  MARKET BREADTH: 146 Advances, 343 Declines (BSE 500)

Ø  VOLUMES: BSE $0.33bn (17.05%), NSE $1.63bn (15.29%), F&O $22.33bn (25.45%)

Ø  TODAY'S GAINERS: HCLT 1.71%, TTMT 1.24%, TCS 1.23%, SAIL 0.99%, BHEL 0.87%

Ø  TODAY'S LOSERS: TPWR -5.49%, SESA -5.23%, MSIL -4.54%, STLT -4.01%, RPWR -3.68%

MARKET COMMENTARY:

Indian equities came under pressure for a second consecutive trading session of the week, as continued weakness in the rupee raised fears of more outflows from FIIs.  Domestic markets failed soar in tandem with the rally in global markets as domestic concerns marred investors’ appetite for riskier asset classes like equities. Though, the beaten down sectoral gauges of last session IT and technology have moved higher but the rate sensitive that were the top gainers are suffering sharp profit taking. Power sector too has given up its last session gains. On the global front, though the European markets made a bit hesitant start but have gathered momentum on speculation that China and the euro area will do more to bolster economic growth. Sentiments in Asian markets remained sanguine since the start of trade tracking overnight rally in US markets as investors resorted to bargain hunting amid some supportive developments from the meeting of group of eight (G8) nations and hopes that world’s second largest economy China would employ further stimulus measures to spur growth of the global growth machine. Back home, the beleaguered the rupee slipped below the 55.25 per dollar mark, hitting a four-month low against the greenback, as the widening trade and current account deficits weighed on the Indian currency. which started on a positive note went ahead to touch fresh historical lows in the session and weighed down investors’ morale. On the sectoral space, buying was evident in the Healthcare and Consumer Durables supported the benchmark indices. On the flipside, the falls in high beta Realty, Banking and Power sectors by more than a percent each exerted pressure on the bourses. Moreover, the market breadth was in favor of declines.

NEWS ON TODAYS MOVERS:

Ø  ABB rose 1.99%, after the company said it won an order worth around Rs 175 crore from NTPC to build two substations in Maharashtra.

Ø  National Aluminium Company fell 1.89% after net profit fell 7.6% to Rs 282.10 crore on 1.9% decline in net sales to Rs 1753.41 crore in Q4 March 2012 over Q4 March 2011.

Ø  Gitanjali Gems rose 0.34% after consolidated net profit rose 37.32% to Rs 487.25 crore on 33% growth in net sales to Rs 12498.30 crore in the year ended 31 March 2012 over the year ended 31 March 2011.

Ø  State-run oil marketing companies rose 0.3% on reports the government will provide Rs 38500 crore as cash subsidy to state-run oil companies for January-March 2012 quarter. .

Ø  Reliance Industries declined 0.63% after the company said to seeks loan of $1 bn to fund expansion

Ø  Thomas Cook (India) rose 2.54% after the company said its parent Thomas Cook Group plc has reached an agreement with a subsidiary of Fairfax Financial Holdings to sell its 77% stake in the company to the latter.

Ø  Sun Pharmaceutical Industries fell 3.48% on profit booking after the stock rose 2.21% in the preceding two sessions to Rs 593.05 on 21 May 2012 from a recent low of Rs 580.25 on 17 May 2012.

Ø  Power Finance Corporation rose 0.51% after net profit rose 34.69% to Rs 818.30 crore on 40.44% increase in total income to Rs 3,684.29 crore in Q4 March 2012 over Q4 March 2011.

Ø  Bhel rose 0.87%, extending Monday's 2.51% rise triggered by the company bagging a contract from NTPC.

Ø  Tata Communications fell 0.45% after the company reported consolidated net loss of Rs 260.94 crore for Q4 March 2012, higher than net loss of Rs 156.51 crore in Q4 March 2011.

CORPORATE NEWS:

Ø  Suven Life Sciences gets four patent approvals

Ø  RIL ropes in Phillips 66 technology for Jamnagar plants

Ø  Genpact inks finance, accounting deal with Dr Reddy's

Ø  PFC Q4 net up 35% at Rs 820 cr

Ø  Venus Remedies gets patent in South Africa for antibiotic

Ø  Nalco's net profit Rs 849 cr in 2011-12

Ø  Tata Comm Q4 net loss widens to Rs 261 cr

Ø  The Coal India-ICVL story: Missed opportunitie

Ø  Apollo Tyres expands capacity of S Africa units by 20-30%

Ø  Thomas Cook India sells stake to Fairbridge for Rs 817 cr

Ø  Swiss Re may buy 26% in L&T's proposed health insurance JV

Ø  Wockhardt cons Q4 net loss at Rs191.64

Ø  PFC cons Q4 net profit surges by 16%

Ø  Dr Reddy's launch Lansoprazole capsules in US market

Ø  Bajaj Auto to boost capacity by 25% to match up with competition

Ø  PSU OMCs in demand on likely oil subsidy

Ø  M&M to infuse Rs500 cr, aims to recapture 2wheeler mkt

Ø  RBI will continue take steps to stabilise rupee: Gokarn |

Ø  ABB bags Rs175 cr order from NTPC

Ø  RIL seeks loan of $1 bn to fund expansion

Ø  Tata Motors to raise funds via bonds: Source

Ø  RINL files draft prospectus for IPO

ECONOMIC NEWS:

Ø  Presidential polls: Sangma appeals to political parties

Mid Market Wrap

Market Commentary:

Ø  Asian stocks rose for a second day and metals advanced on speculation China and Europe will take steps to bolster economic growth. The euro weakened.

Ø  Backhome, a bout of volatility was witnessed as key benchmark indices trimmed gains after a firm opening.The BSE Sensex and NSE Nifty stayed up 0.6% each led by buying interest in oil & gas, technology, private banks and metals stocks. Nifty was trying to regain 4950 mark.

Ø  Stocks in Focus:

v  Tata Power: stock was down by more than 2% ahead of its FY 2012 results today.

v  Thomas Cook was the most active stock on the BSE after the parent company sold 77% stake in Indian unit to Fairbridge Capital at Rs 50 a share and announced open offer at Rs 65.48 a share. The stock gained 2%.

Ø  The rupee recovered by four paise to 54.99 after touching an all-time low in late morning trade due to mild selling of dollars by banks following measures taken by RBI to curb the local currency's fall.

Ø  Nifty May Futs may take further direction after EU opening. We expect it trade in the range of 4890-4950.

Ø  INDICES: Sensex +83 at 16267 (0.51%), NIFTY +23 at 4929 (0.47%), CNXMIDCAP +28 at 6931 (0.4%)

Ø  SECTORAL PERFORMANCE: BANKEX 0.47%, AUTO 0.52%, CAPITAL GOODS 0.35%, HEALTHCARE -0.24%, Metal 0.62%, OIL & GAS 0.99%, IT 0.73%, FMCG 0.55%, PSU 0.97%, REALTY -0.13%, Consumer Durables 0.39%, POWER 0.53%

Ø  MARKET BREADTH: 322 Advances, 162 Declines (BSE 500)

Ø  TODAY'S GAINERS: BHEL 3.02%, TTMT 2.62%, SAIL 2.53%, CAIR 1.95%, RCOM 1.67%

Ø  TODAY'S LOSERS: SUNP -2.5%, TPWR -2.4%, MSIL -1.67%, SESA -1.44%, RPWR -1.07%

Forex: More Pain Ahead!!!

Forex: More Pain Ahead!!!

Ø  The Indian rupee tumbled to its all-time low as jittery global investors pulled out funds amid fast deteriorating economic health and higher than reported trade deficit .

Ø  Given the magnitude of the crisis, it is obvious that there are no quick-fix solutions; revival process will be a long-drawn struggle, thus causing severe damage to the investor and consumer confidence. The impact of this on the global economies and market will be very negative.

Ø  We feel if Rupee continues to depreciate we may continue to see more outflows from FIIs. India may not be able to reap benefits of softer commodities price because of the sharper depreciation of rupee. Overall the weakened macro-economic fundamentals are also reflecting in the large twin deficits, which in turn are hurting the rupee and increasing fears of more downgrade by global rating agencies .

Ø  Market dynamics continues to remain bearish. There is severe pressure on trade/current account; flows into debt capital market is down and not expected to revive soon; FII flows into equity capital market will be down not ruling out reverse flow.

Ø  On the flip side ailing rupee and high inflation would make it difficult for India to achieve 7.5 per cent economic growth during the current financial year.

Ø  In short, there is more pain ahead. We See Rupee sliding to 56-57 levels soon. The rupee has been the worst performing unit amongst its Asian peers this year.

Ø  While weak trade data and choppy domestic shares added to the downward pressure, we feel the Forex situation is in grave and it will make equity market vulnerable and hence we may witness further sell-offs from foreign investors.

Pre Open Thoughts: Currency Crumble!!!

Pre Open Thoughts: Currency Crumble!!!

Ø  A weak currency is the sign of a weak economy, and a weak economy leads to a weak nation.  A steep fall in the rupee since February to an extent reflects the rapid deterioration in India’s economic fortunes. A big problem is that policymakers have little room to arrest the economic slowdown. The Government is also hamstrung due to a swelling fiscal deficit. The eurozone credit crisis and anemic US economy have made matters worse. Downside risks for the Indian and global economy still persist. Therefore, one cannot rule out further drop in equities and currencies. There is only one option: endure the pain and avoid misadventures.

Ø  The start is likely to be positive owing to overseas markets but it’s likely to be volatile. Whether the early pop will sustain remains to be seen.

Ø  Traders will be eyeing the rupee movement as it has touched a fresh all time low, though finance minister Pranab Mukherjee has expressed concern over the sharp fall in rupee and said it was linked to the Eurozone uncertainty and Centre was keeping a close watch on the situation.

Ø  Meanwhile, the somberness may continue as Planning Commission deputy chairman Montek Singh Ahluwalia has said that ailing rupee and high inflation would make it difficult for India to achieve 7.5 per cent economic growth during the current financial year.

Ø  However, amidst all these dark clouds there emerged one silver lining –that oil has come off a bit.

Ø  Softer global conditions, weak investor and business confidence, government paralysis, and tight monetary conditions are all weighing on demand back home.

Ø  The Nifty has violated a key trough of 4900. We remain cautious in the near term as long as the Nifty trades below 4900, which corresponds to a bearish range.

Results Today:

Tata Power Co. group, Power Finance Corp, Wockhardt, Container Corp. of India, Opto Circuits, Opto Circuits ,GTL, Talwalkars Better Value Fitness.

Global Data Watch:

Bank of Japan Monetary Policy Meeting Minutes (May 22), China Conference Board Leading Economic Index, UK Consumer Price Index (Apr), UK Core Consumer Price Index (Apr), UK DCLG House Price Index (Mar), UK Public Sector Net Borrowing (Apr), UK Retail Price Index (Apr), US Fed’s Lockhart speech, EU Consumer Confidence (May), US Existing Home Sales (Apr), US Existing Home Sales Change (Apr), US Richmond Fed Manufacturing Index (May), Japan Merchandise Trade Balance Total (Apr), Japan Adjusted Merchandise Trade Balance (Apr), Japan Imports and Exports (Apr).