Monday, June 18, 2012
The Indian markets undermined after the RBI left key rates unchanged and ended the session on a negative note. The Sensex fell by 244 points while the Nifty was down by 75 points. Major Headlines of the day: RBI leaves key rates unchanged India’s May CPI inflation remains unchanged at 10.36% SBI will raise up to $2 bln in next 3 months Inflation weighed on RBI’s mind: FM RBI does the delicate balancing act again; Road ahead?
Key benchmark indices tumbled on the first trading session of the week as the market sentiment was hit adversely after the Reserve Bank of India (RBI) kept its key policy rate viz. the repo rate unchanged at 8% after a mid-quarter monetary policy review today, 18 June 2012, contrary to market expectations of a 25 basis points reduction. The barometer index, BSE Sensex, fell below the psychological 17,000 mark, having regained that level earlier in the day. The Sensex lost 244 points or 1.44%, up about 70 points from the day's low and off close to 405 points from the day's high. The market breadth was weak. The Sensex has risen 487.30 points or 3% so far in this month (till 18 June 2012). The barometer index has gained 1,250.91 points or 8.09% in calendar 2012 so far (till 18 June 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,569.97 points or 10.37%. From a 52-week high of 19,131.70 on 8 July 2011, the Sensex has lost 2,425.87 points or 12.67%.
Prices settle almost unchanged for the week Crude-oil futures at Nymex rose on Friday, 15 June 2012 lifted by expectations for global stimulus, which could boost prospects for oil demand. But prices still ended the week nearly unchanged, with gloomy U.S. economic data capping strength as traders awaited the outcome of this week's Greek elections. Light and sweet crude for July delivery tacked on 12 cents, or 0.1%, to settle at $84.03 a barrel on the New York Mercantile Exchange on Friday. A week ago, it settled at $84.10.
The market is poised for a positive opening on Monday tracking positive global cues after elections in Greece eased fears of global financial turmoil. Trading of S&P CNX Nifty futures on the Singapore stock exchange indicates a gain of 45 points at the opening bell. The Reserve Bank of India (RBI) mid-quarter policy review today, 18 June 2012 will be closely watched. Market men expect a 25 basis points reduction in its key policy rate viz. the repo rate by RBI at its mid-quarter policy review on Monday, 18 June 2012 to counter slowing economic growth. State Bank of India (SBI) has reportedly slashed interest rates on term loans, agriculture loans and loans to small and medium enterprises (SMEs) by 50-350 basis points (bps), effective 1 June 2012 to provide some relief to customers in these categories at a time of slowdown
The opening on the Dalal Street is expected to be in the green zone tracking positive global cues. RBI’s monetary policy will remain in focus. Events for the day: RBI mid-quarter monetary policy review. Headlines for the day: Govt starts 10% stake sale process in Nalco. Sesa Goa, Sterlite shareholders to meet this week on merger. All eyes on RBI Governor as rate cut expectations rise.
Infosys has delayed bringing on board some of the 28,000 engineers hired from campuses to as late as July 2013, a visible sign of the growth engine slowing down. (ET) The Union Government may ask Coal India Ltd to import 45mn tonnes of thermal coal in 2012-13 to meet the projected demand of 393mn tonnes from the power sector during the year. (BL) To meet competition head on from the likes of Bharat Benz, VE Commercial, Mahindra Navistar, Tata Motors has lined up 50 new products and variants right from its sub-one tonne trucks to its heavy duty Prima truck range. The company will invest Rs15-20bn in the new line of products. (ET)
The Indian markets left the disappointment over May inflation data behind and braced for the significant upcoming events by notching solid gains. With this, the BSE Sensex and the NSE Nifty erased Thursday’s losses. Rate sensitive sectors like Banking, Auto and Realty paced the rally today, unlike Thursday when they had fallen sharply. Despite cautious comments from the RBI Governor, the markets still expect the central bank to opt for some monetary easing on June 18. The undercurrent was also buoyed by positive global cues across the board. Risky assets rallied globally on growing speculation that leading central banks are prepared to intervene if the outcome of Sunday’s Greek elections is unfavourable. The Bank of Japan left its monetary policy unchanged but the Bank of England announced measures to deal with the uncertainty over the worsening eurozone credit crisis. The ECB also pledged its support for the credit markets.
Our happiness or unhappiness depends far more on the way we meet the events of life, than on the nature of those events themselves. - Humboldt. A happy start on a Monday morning is in store, as a favourable outcome of the Greek elections has spurred hopes of stability in the debt-stricken eurozone. Pro-austerity parties have won enough votes to form a coalition government in Greece. This increases the probability that Greece will remain in the eurozone. Prior to the election, investors feared that the vote could potentially force Greece out of the common currency area. World markets have reacted positively, with stocks in Asia, crude oil and the euro all rising while the dollar declined. However, doubts persist over the prospects for the eurozone amid soaring borrowing costs for Spain and Italy. Also, the pro-euro parties are reportedly seeking renegotiation of the bailout terms. This might lead to uncertainty for some more time.