Friday, April 13, 2012
Get set for a hike in diesel prices soon. The government will raise prices of subsidized fuels such as diesel when the Finance Bill is approved by the Parliament in early May, reports said. Reports said Finance Minister Pranab Mukherjee has promised to raise prices soon to tackle a rising subsidy burden and large deficits. However, it would not be an easy task for the government which is already riddled by inflation worries and under fire for its weak fiscal deficit condition. Moreover, India imports 80% of its energy requirements and rising crude oil prices and a depreciating rupee has only added to the government’s woes. Diesel is a subsided fuel used in transport etc. and raising its prices would only add to inflationary worries. While the government has deregulated the prices of petrol whereby oil marketing companies can raise prices after an informal nod from it, the same has not been the case for diesel in order to check inflation and protect the weaker sections of society. Diesel prices were last raised in July. Also, petrol prices have not been raised since December, keeping in mind the crucial State Assembly elections that followed soon. Reports said gasoline prices could be raised around the same time as diesel.
The roller-coaster ride continues on Dalal Street, with the main indices falling ~2% each after rising modestly in the past couple of weeks. While the dismal IIP numbers and shocking revision lifted hope of a repo rate cut on April 17, worries about slowdown in China and fiscal woes in Europe dampened the mood on Friday. IT shares were hit hard after Infosys announced disappointing Q4 earnings and muted guidance.
Concerns persist over economic growth in key regions like the US, China and the eurozone. Back home too, the macro-economic conditions are not conducive. While the Government continues to dither on important policy reforms, some of the announcements like GAAR have spooked foreign investors. Data quality and reliability are also in doubt following the IIP fiasco. Therefore, there is an urgent need for the Centre to prevent the situation from spiraling out of control.
The RBI could help by cutting the repo rate by at least 25 bps. But, given the high fiscal deficit, elevated crude oil prices and sticky inflation it will be a tough call for Governor D. Subbarao.
The Indian markets broke its two week gaining trend and ended the week with losses. The Sensex shut shop falling 2.24% and the Nifty dropped 2.17%.
Major news for the week:
IGL gets Rs1K cr hit from regulator
RIL falls after kotak cuts its price target
KFA pays 2nd installment to IT dept
Jhunjhunwala ups stake in Viceroy Hotels
Feb IIP at 4.1% vs 6.8% in Jan
Disappointing FY13 guidance drags Infosys
The focus of investors next week will be on January-March 2012 quarterly earnings and the Reserve Bank of India's monetary policy. The major near-term trigger for the market is Q4 March 2012 and year ending March 2012 (FY 2012) earnings. Investors will focus on the guidance provided by the management for the year ending March 2013 (FY 2013) to gauge the earnings outlook.
CRISIL, Castrol India and MindTree unveil their quarterly results on Monday, 16 April 2012. VST Industries, SKF India and IFCI unveil their quarterly results on Tuesday, 17 April 2012. HDFC Bank, HCL Technologies and CMC unveil their quarterly results on Wednesday, 18 April 2012. Ambuja Cements, ACC, IndusInd Bank, Tourism Finance Corporation of India and Hindustan Zinc unveil their quarterly results on Thursday, 19 April 2012. Cairn India, Honeywell Automation India, Mastek, Fag Bearings India, Merck and State Bank of Bikaner and Jaipur unveil their quarterly results on Friday, 20 April 2012.
The market fell last week after a dip in India's industrial growth, weak global markets and a massive earthquake in Indonesia that triggered tsunami fears in the Asian region, including India, dampened investor sentiment. Trading was volatile throughout the week.
The Sensex fell 391.51 points or 2.24% to 17,094.51 in the week ended Friday, 13 April 2012. The S&P CNX Nifty fell 115.45 points or 2.17% to 5,207.45.
The BSE Mid-Cap index fell 2.10% and the BSE Small-Cap index fell 0.67%. Both these indices outperformed the Sensex.
Key benchmark indices declined to hit lowest level in two weeks as weak Q4 earnings by IT bellwether Infosys and subdued European stocks dampened sentiment. Intraday volatility was high. The barometer index, BSE Sensex, was down 238.11 points or 1.37%, off about 305 points from the day's high and up close to 65 points from the day's low. The market breadth was negative. Infosys tumbled nearly 13% on disappointing Q4 results. Other IT stocks fell across the board.
The Sensex has fallen 309.69 points or 1.77% so far in April 2012 (till 13 April 2012). The index has surged 1,639.59 points or 10.6% in calendar 2012 so far (till 13 April 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1958.65 points or 12.94%. From a 52-week high of 19,700.96 on 15 April 2011, the Sensex has lost 2606.45 points or 13.23%.
Japan’s Mitsui Sumitomo will buy 26% stake in Max New York Life for Rs27.31bn. (BS)
Glaxosmithkline and generic player Teva Pharma, are in separate discussions to acquire the domestic business of Micro Labs. (BS)
ABB has won a contract worth Rs750mn from Delhi Metro Rail Corporation to provide power solutions for a planned metro rail network for Jaipur. (BS)
Adani Ports and Essar Ports are in the race to build the Rs36.83bn mega container terminal at Chennai Port. (BS)
Maruti Suzuki India said it will hire 500 workers in this financial year for the second unit at Manesar facility. (BS)
For the first time this week the main Indian stock indices showed some strength, with the NSE Nifty ending above the 5250 mark on optimism that the RBI will cut its key lending rate next week to revive growth. A weaker-than-forecast IIP print for February, coupled with a shocking downward revision in January's data sparked expectations of a rate cut by the RBI. A positive trend across global markets added fuel to the fire.
The main indices witnessed a higher opening on the back of overnight rally in the US and European markets. The Indian market remained firm throughout the session but the frontline indices were more or less rangebound. It was a buy on dip market today.
The BSE Sensex ended at 17,332, up 133 points or ~0.8% over the previous close. It had earlier touched a day’s low of 17,276 and a day’s high of 17,395. It opened at 17,276.
Don't listen to their words, fix your attention on their deeds.- Albert Einstein.
The thought of Friday the 13th need not worry you. The start today is likely to be a good one, thanks in part to the continuation of the global rally. Infosys will be in the spotlight. More than the Q4 results, market and analysts will focus on its FY13 guidance.
IIP data has been pretty erratic over the past few months, raising doubts about the accuracy of the numbers. Even the RBI governor had expressed his exasperation about the wild fluctuations in IIP data. But, the sharp downward revision in January IIP numbers has stunned most people. Some time ago, the Government had revised its exports figures as well. The reliability of economic statistics is under serious threat. Still, the downbeat IIP numbers have increased the odds of a rate cut on April 17.
IT bellwether Infosys' Q4 March 2012 results today, 13 April 2012 will set the tone for the market. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 46.50 points at the opening bell. Asian stocks gained.
The government will unveil data on inflation based on the wholesale price index (WPI) for March 2012 today, 13 April 2012. Inflation based on the wholesale price index (WPI) is estimated at 6.7% in March 2012, according to median estimate of a poll of economists carried out by Capital Market. WPI inflation stood at 6.95% (provisional) for the month of February 2012.
Infosys unveils its earning today, 13 April 2012. The IT major is likely to report a fall in net profit in Q4 March 2012 over Q3 December 2011 as demand remains soft in a seasonally weak quarter, made worse by an appreciating local currency. At the time of announcing Q3 December 2011 results on 12 January 2012, IT major Infosys had projected a marginal 1.25% growth in non-annualised earnings per American Depositary Share at $0.81 in Q4 March 2012 over Q3 December 2011. The company had projected a flat to 0.22% growth in consolidated revenue in dollar terms at $1.806 billion to $1.81 billion in Q4 March 2012 over Q3 December 2011.
Markets may open on a positive note tracking positive global cues. Volatality may remain amid Infosys results and monthly inflation
Headlines for the day
ABB bags Rs 75 cr project from Delhi Metro
NLC plans to generate 6,500 Mw power
Maruti to hire 500 for Manesar plant
Moody's downgrades ratings of ONGC, GAIL
IDBI Bank may hike fund raising via MTN to $2.5 bn
In light of high volatility and price movement observed on first day of trading, market regulator Securities & Exchange Board of India (Sebi) had vide its circular dated 20 January 2012 put in place a framework of trade controls for IPO and re-listed scrips. Price bands for issue size up to Rs 250 crore for the first day in the normal trading session will be 5% of the equilibrium price. Additionally, the trading shall take place in trade to trade segment for first 10 days from commencement of trading. For issue size greater than Rs 250 crore, the applicable price bands for the first day are fixed at 20% of the equilibrium price.