Pre Open Thoughts: Worries fuel weakness
Ø Acknowledging a person for the good that they do is good, but not as
good as committing to do that same good yourself. For India, the problems have
been compounded by a Government that is happy with status quo following a spate
of controversies over GAAR. The RBI has done its bit to shore up sentiment, but
the same has been offset by Centre’s fiscal profligacy and lack of reforms.
Ø The question now is whether the government will complement the central
bank's action in reviving investor confidence? Markets have lost momentum for
sure, not just in India but across the globe. At least we don’t have to fear a
freeze on the indices which happened in this month many years ago.
Ø The weakness in rupee below 53.50 levels has also lead intensifying
selling pressure in Nifty and is touch away distance from all time low of
54.30. We expect cautious outlook to prevail in near term with negative bias.
Ø Indian markets could have lost an estimated $ 10 billion worth
investments from the overseas funds and ultra-rich foreign individuals over a
period of little more than one month on taxation worries.
Ø The start today is
expected to be lower. Asian markets are down after the US and European markets
took it on the chin. On global front French voters sent President Nicolas
Sarkozy marching out, choosing Socialist challenger François Hollande instead.
Ø Meanwhile The Reserve Bank of India raised interest rates on foreign
currency deposits as the rupee headed toward a record low. The cap on foreign
currency non-resident deposits with a maturity period of one to three years was
raised to 200 basis points above the corresponding London interbank offered
rate, or Libor, from 125 basis points. The rate ceiling is 300 basis points
above Libor for deposits of three to five years.
Ø Market was relieved from choppy trading range of 5150-5350, after
breakdown below the key make or break levels of 200 DMA of 5120
levels. This trading range had prevailed since last three months and
move below 5150 should aggravate selling pressure towards 4950 levels.
Results
Today: Advanta India, Andhra Bank, Aptech,
Bank of India, Bosch, Brigade, GSK Consumer Healthcare, GSK Pharma, HDFC,
Jubilant Life Sciences, Onmobile Global, Piramal Glass, Rolta India, SKS
Microfinance, South Indian Bank, Tata Elxsi, Triveni Turbine and Welspun India.
Global Data Watch: Australia Building Permits (Mar),
Australia Retail Sales (Mar), National Australia Bank’s Business Confidence (Apr),
BOJ Monetary Policy Meeting Minutes, Australia building permits, UK Early May
(bank holiday), EU Sentix Investor Confidence (May), Germany Factory Orders
(Mar), UK BRC Retail Sales Monitor - All (Apr), UK RICS Housing Price Balance
(Apr), US Consumer Credit Change (Mar) and US Fed’s Lacker speech.
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