Views on markets today
- Indian markets continued its downward trend for the fourth consecutive day with the Sensex closing below the psychological level of 17,000 for the first time in two months, as debt worries in the euro zone weighed on investor sentiment. However, a mild recovery in European markets and better weekly food inflation data helped pared some of the losses. Capital goods, metals and IT stocks were the worst hit while pharma, PSU and banks stocks witnessed some buying interest.
- Market breadth was marginally weak at around 0.92x as investors sold large cap stocks. FIIs sold equities worth Rs9.37bn, while domestic institutions bought equities worth Rs3.79bn.
- Asian markets have slumped today in response to a free fall in the US markets overnight. The Nikkei dropped by almost 4% as exporter stocks were hurt by the appreciating yen and investors remained cautious due to Greece debt woes. The Hang Seng witnessed a pull back from a steep drop in the opening trades.
- We expect a weak opening for the Indian markets this morning due to poor cues from the global markets. The markets closed below the crucial support level of 17000 yesterday. Investors may remain cautious ahead of the Supreme Court’s decision over gas-pricing dispute between Ambani brothers. A decision is scheduled at 10.30AM. We advise caution in oil and gas stocks in the opening session.
Greek debt crisis can spread to more countries in the Euro Zone
As per Moody’s, Portugal seems to be next in the line of fire after Greece with its budget deficit hovering at over 9% of its GDP. Moody’s may downgrade Portugal’s debt rating by one or two notches from its current ‘Aa2’ rating in next couple of months.
The financial crisis in the Euro Zone does appear to be pretty severe after Greece debt crisis. Portugal, which has already raised €4.5bn in 2010, is witnessing increase in borrowing cost after Greece’s crisis. Nevertheless, as of now it has not indicated of any liquidity problem but the stock markets globally are already experiencing Greece’s tremor on concern that it could spread to other countries. We can only hope that the Euro Zone disease doesn’t become a global epidemic.
Economic and Corporate Developments
- Food price index eased to 16.04% in the 12 months for the week ended April 24 as against an annual rise of 16.61% in the previous week.
- Textile Ministry has proposed to allocate Rs36bn for modernisation of the industry, which has been hit by the global slump in demand.
Buzzing Stocks
- The Supreme Court will deliver its verdict today on the gas pricing and supply dispute between energy companies RIL and RNRL.
- Gemini Communication has acquired a 100% stake in Rosy Blue Wireless, Africa, a telecom and internet service provider in Africa, which is well poised to deliver 4G wireless network infrastructure in African countries. RBW in turn holds 60% stakes in JVs in Zambia, Malawi and Mozambique.
- JSL has signed an MoU with the Orissa Government for establishment of 1320 MW Super Critical Thermal Power Plant (SCTPP) with an investment of Rs73.75bn at Luni in Dhenkanal district.
- Suzlon Energy is in advanced talks with Caparo Group to set up 3,000 mw capacity wind farms over a period of six years, which will fetch around $3bn to the company.
- PVR has earmarked Rs1bn for capital expenditure in FY11 and to add 60 to 80 new screens.
- JB Chemicals plans to invest about Rs500-600mn to set up a new unit in Gujarat by FY13.
US markets
The US market plunged nearly 9% in the last two hours of trading before clawing back some of the losses as a suspected trading glitch and fears of a new credit crunch in Europe threw markets into disarray. The Dow suffered its biggest ever intraday point drop by 998.5 points. The market’s fall may have been exacerbated by an erroneous trades that showed some shares briefly fell to nearly zero.
The sell-off comes at a time for investors when the market is hit by fraud charges against Goldman Sachs, fears of a wave of debt defaults in Europe and increasing clamor for financial regulation.
Source: SMR
Recent Comments