Pre Open Thoughts: Worries fuel weakness

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.