Monday, April 30, 2012

MARKETS FIRM

After making cautious start, key domestic bourses have turned firm as investors got some support from Confederation of Indian Industry's survey which showed that India's business confidence has bettered from the previous quarter, though it also pointed that concerns over stagnancy in reforms and rising cost of finance and raw materials still remain. The CII Business Confidence Index for the first quarter of the current fiscal (April-June) was pegged at 55, as against 52.9 in the last quarter of 2011-12.On global front, on Friday, stocks closed higher on the Wall Street on hopes that the Fed would continue with its bond buying programme to boost the economy while, Asian counters are exhibiting mixed trend at this point of time. Back home, Sensex and Nifty headed towards their crucial 17,300 and 5,250 level respectively supported by most of the key heavyweights along with broader indices. Moreover, except Auto, all other BSE sectoral indices were trading in the green, with Realty, software, PSU and technology each up by about a percentage point. Realty stocks edged higher on bargain hunting after recent losses. DLF, HDIL and Unitech rose between 1.50 to 2.00 percent. The broader indices too were going neck- in-neck with benchmarks. The market breadth on the BSE was positive; there were 1,009 shares on the gaining side against 495 shares on the losing side while 67 shares remained unchanged.
The BSE Sensex opened at 17,195.51; about 8 points higher compared to its previous closing of 17,187.34, and has touched a high of 17,324.13 while low remained its opening.
The index is currently trading at 17,297.45, up by 110.11 points or 0.64%. There were 24 stocks advancing against 6 declines on the index.
The overall market breadth has made a strong start with 64.23% stocks advancing against 31.51% declines. The broader indices were trading inline with benchmarks; the BSE Mid cap and Small cap indices rose 0.45% and 0.62% respectively.
The top gaining sectoral indices on the BSE were, Realty up by 1.32%, IT up by 1.08%, PSU up by 0.98%, TECk up by 0.98% and Bankex was up by 0.89%. While, Auto down by 0.16% remained the lone loser on the index.
The top gainers on the Sensex were DLF up by 2.09%, TCS up by 1.83%, Tata Power up by 1.45%, Sterlite Industries up by 1.28% and Infosys was up by 1.15%.
On the flip side, Maruti Suzuki down by 2.19%, BHEL down by 2.03%, M&M down by 0.62%, Jindal Steel down by 0.43% and Bajaj Auto down by 0.20% remained the top losers on the Sensex.
Meanwhile, the International Monetary Fund (IMF) has stated that apart from cyclical factors such as global uncertainty and policy tightening, domestic factors like sluggish governance and slow pace of project approvals have weakened business sentiment in India. IMF happens to be the second international institution after S&P that has raised a red flag against the sluggish governance in the country.
In its Asia-Pacific Regional Economic Outlook, IMF has called for renewed efforts to revive the deteriorating structural reform agenda in the country. It has also stated that to improve business sentiment and therefore the investment climate, the government should remove infrastructure bottlenecks and expand education opportunities.
The report has devoted a special section on the possible demographics dividend for India due to a young population, but has urged the nation to step up efforts on education, facilitating trade and easing labour laws to maximize possible gains. It further goes on to say that it is important for India to make progress in reducing barriers to trade, in order to maximise the potential of its continuing demographic dividend.
As per IMF, fiscal consolidation is the key to contain inflationary pressures and create space for priority development needs. The corrective measures suggested are a reduction in fuel subsidy, fiscal consolidation, boosting infrastructure and spurring investment.
It observed that headline inflation has declined to 6.89% in March, from 6.95% in February. However IMF has warned that it is still above the historical average. More importantly IMF has lowered India's economic growth forecast to 6.9% in 2012, marginally lower than the earlier estimate of 7%. It however expects the growth to pick up to 7.3% in 2013.
The S&P CNX Nifty opened at 5,201.45; about 8 points lower compared to its previous closing of 5,209.00, and has touched a high of 5,251.25 and low remained its opening.
The index is currently trading at 5,243.40, higher by 34.40 points or 0.66%. There were 41 stocks advancing against 9 declines on the index.
The top gainers of the Nifty were RInfra up by 2.69%, TCS up by 2.18%, DLF up by 2.17%, Ambuja Cement up by 1.81% and PNB up by 1.55%.
On the flip side, Maruti Suzuki down by 2.03%, BHEL down by 1.87%, M&M down by 0.70%, Asian Paints down by 0.52% and Jindal Steel down by 0.51% remained the top losers on the index.
All the Asian equity indices were trading in the red; Shanghai Composite was down 27.71 points or 1.13% to 2,417.29, Hang Seng was down 320.77 points or 1.51% to 20,944.54, Jakarta Composite was down 25.20 points or 0.63% to 3,959.70, KLSE Composite was down 8.34 points or 0.52% to 1,580.88, Nikkei 225 was down 81.89 points or 0.84% to 9,616.70, Straits Times was down 34.00 points or 1.14% to 2,957.80, Seoul Composite was down 25.73 points or 1.28% to 1,990.33 and Taiwan Weighted was down by 134.05 points or 1.67% to 7,870.69. 
Asian markets were exhibiting mixed trade; Hang Seng was up 233.01 points or 1.12% to 20,974.46, KLSE Composite was up 4.01 points or 0.26% to 1,571.81 and Seoul Composite was up 2.59 points or 0.13% to 1,977.94.
On the flip side, Taiwan Weighted was down 0.20 points to 7,480.30, Straits Times was down 7.13 points or 0.24% to 2,974.45 and Jakarta Composite was down 13.69 points or 0.33% to 4,150.29.
Meanwhile, stock markets in Japan remained closed on Monday on account of Bridge Public Holiday while the Chinese bourses were shut owing to May Day holidays and will re-open directly on Wednesday. 

Friday, April 27, 2012

THIN BAND

Indian equity markets gaining momentum after two days of lackluster trade are again trading listless as benchmarks virtually gyrating in thin band and are almost stand-still. Consolidation seems to be gripping the markets post two previous sessions' drubbing, which has led the benchmarks to find support near the lower levels. The markets are also seen in fine fettle ahead of the results of two banking major-ICICI Bank and Axis Bank, today.
Meanwhile, subdued global cues are relatively keeping the undertone cautious. Asian counterparts are exhibiting mixed trend following an uneven set of data from the United States, while news that Spain's credit rating had been slashed, mainly marred the sentiment. The US National Association of Realtors that reported on Thursday that pending home sales rose in March provided a lift to investors amid hopes of a recovery in the crucial sector. The pending home sales index -- which represents contracts signed but not closed -- rose 4.1 percent in March to 101.4, its highest level since April 2010 when it hit 111.3. On a 12-month basis, pending sales were up 12.8 percent. On the flip side, however, the Commerce Department said new jobless claims remained at high levels after edging up in recent weeks. It said 388,000 people made claims in the week to April 21, compared to a revised 389,000 the previous week and a four-week moving average of 381,750, adding to concerns about Washington's battle against unemployment. However, a two-notch downgrade of Spain's credit rating was mainly the factor that ambushed the markets.
Back on the home turf, stocks from Power counter was leading the pack of gainers, while stocks from Capital Good and Bankex too were plodding to occupy the second and third spot respectively. However, stocks from Oil & Gas space were acting as the sole spoil sport. The 30 share barometer index of Bombay Stock Exchange, Sensex, after fetching above 50 points was trading at a striking distance of 17200 mark. Similarly, the widely followed index of National Stock Exchange , Nifty, clawing above 20 points was oscillating above the 5200 mark.  Optimism was also seen across broader space, as both Midcap and SmallCap index were trading above 0.50%. The overall market breadth on BSE was in the favour of advances which thumped declines in the ratio of 1390:736, while 86 shares remained unchanged.
The BSE Sensex is currently trading at 17,195.94, up by 65.27 points or 0.38%. The index has touched a high and low of 17,242.15 and 17,134.85 respectively.   There were 22 stocks advancing against 8 declines on the index.
The broader indices too were trading firm; the BSE Mid cap and Small cap indices surged by 0.77% and 0.66% respectively.
The top gaining sectoral indices on the BSE were, Power up by 1.00%, CG up by 0.85%, Bankex and CD up by 0.71% and Auto up by 0.67%. While, Oil & Gas down by 0.27% was the sole loser on the index.
The top gainers on the Sensex were M&M up by 1.85%, ICICI Bank up by 1.60%, Hindalco Industries up by 1.46%, BHEL up by 1.45% and ITC up by 1.34%. While, Coal India down by 1.53%, Tata Steel down by 0.34%, RIL down by 0.65%, SBI down by 0.57%, Tata Steel down by 0.56% and Bharti Airtel down by 0.55% remained the lone loser on the Sensex.
Meanwhile, India could cut its trade deficit by a good 19% this year, as per Commerce Secretary Rahul Khullar. The trade deficit could come down provided oil prices stabilize, which have been the major drag on the import bill last year, and India too makes an effort to curb the imports of commodities like coal and fertilizers, which form a significant part of its imports. Exports on the other hand are not expected to rise by considerable amounts due to the ongoing recession abroad.
The main challenge that will face the Indian economy shall be capital inflows. Even after reducing the import bills, India will need capital inflows to the tune of $50 billion to $60 billion from overseas. This funding was traditionally provided by the European banks, which is now not possible given its economic troubles.  India will have to find other alternatives, such as accelerating foreign direct investment in key sectors to fund its capital flows.
India's trade deficit stood at $185 billion in FY'12. As per Khullar, this can be brought down to $150 billion in FY'13. The current account deficit, which was about 4% of gross domestic product in the last fiscal year, could be narrowed to 3.5% this year.
FY'12 has been a relatively difficult year for India where trade deficit has jumped by a whopping 56% due to a steep rise in the prices of oil. As a result the rupee has gone down by a good 18% against the dollar. However it is hoped that this year will see a stabilization in the oil prices. Also imports of gold, which comprised of significant amount of imports last year, are expected to come down given the increase in the import duty of gold in the Budget and a relative stabilization of the economy.
Also, like stated earlier, efforts will have to be made to reduce coal imports, fertilizers and other commodities that from a significant part of the import bill. Coal imports have jumped by a whopping 80% in the last fiscal. 
As per Khullar, exports are expected to remain subdued in the next fiscal due to the ongoing recession. Infact export markets are looking even bleaker this year than last year. Hence given the situation, if lucky, India can expect a 15% export growth at max.
The S&P CNX Nifty is currently trading at 5,213.85, higher by 24.85 points or 0.48%. The index has touched a high and low of 5223.05 and 5188.90 respectively. There were 39 stocks advancing against 11 declining one's on the index.
The top gainers of the Nifty were JP Associates up by 2.02%, M&M up by 1.88%, Axis Bank up by 1.78%, Power Grid Corporation up by 1.57% and Hindalco Industries up by 1.55%. On the flip side, Ranbaxy down by 1.80%, Coal India down by 1.49%, SBI down by 0.75%, Tata Steel down by 0.67% and Sun Pharmaceuticals down by 0.50% remained the only losers on the index.
Asian market were trading mostly in the positive terrain; Hang Seng gained 0.27%, Nikkei 225 inched up by 0.08%, Straits Times added 0.35% and Seoul Composite expanded by 0.42% .
Shanghai Composite and Jakarta Composite declined by 0.20%, and KLSE Composite slid 0.51% to 1,571.68 and Taiwan Weighted lost 0.55%. 

GAINING STRENGTH

After two days' of lackluster trade, key domestic benchmarks have made a flat opening on first day of May F&O series but, immediately gained momentum gaining over half a percent in early trade tracking supportive global cues. Overnight, the US markets went for a late hour rally with all the major indices gaining above half a percent, mainly pushed up by a batch of bright earnings reports and encouraging news about home sales while, most of the Asian equity indices were trading in the green at this point of time. Back home, sustained buying in most of the key heavyweights along with broader indices supported BSE's -- Sensex -- and NSE's -- Nifty -- to regain their crucial 17,200 and 5,200 mark respectively. Consumer durables witnessed the maximum gain in trade followed by power and realty while, there were no losers on the BSE sectoral space. Meanwhile, the investors will be comforted with Indian Meteorological Department stating that rains during the June-September season are likely to be 99 percent of the long-term average. Monsoon rains are vital for agricultural output and economic growth, irrigating about 60 percent of country's farmland. The broader indices too were trading on a firm note. The market breadth on the BSE was positive; there were 953 shares on the gaining side against 522 shares on the losing side while 49 shares remained unchanged.
Meanwhile, banking and financial shares like ICICI Bank, HDFC Bank and HDFC have surged by nearly 1 percent each. Private banking shares are trading firm on reports that the Cabinet has approved a proposal to cap shareholders' voting rights in private banks at 26 percent irrespective of their total holding.
The BSE Sensex opened at 17,145.39; about 15 points higher compared to its previous closing of 17,130.67, and has touched a high and a low of 17,242.15 and 17,134.85 respectively.
The index is currently trading at 17,204.75, up by 74.08 points or 0.43%. There were 22 stocks advancing against 8 declines on the index.
The overall market breadth has made a strong start with 62.53% stocks advancing against 34.25% declines. The broader indices too were trading firm ; the BSE Mid cap and Small cap indices rose 0.62% and 0.50% respectively.
The top gaining sectoral indices on the BSE were, CD up by 0.95%, Power up by 0.91%, Realty up by 0.77%, Auto up by 0.64% and Bankex was up by 0.64%. While, there were no losers on the index.
The top gainers on the Sensex were M&M up by 2.09%, BHEL up by 1.73%, Hindalco up by 1.72%, ICICI Bank up by 1.59% and Sterlite Industries was up by 1.57%. While, Coal India down by 1.68%, Tata Steel down by 0.34%, RIL down by 0.33%, HUL down by 0.25% and SBI down by 0.19% remained the lone loser on the Sensex.
Meanwhile, the Civil Aviation Ministry is not in favour of the proposed service tax hike on air travel. The Ministry is of the opinion that such steep hike in taxes will not only cause discomfort to the passengers but will also affect business  of airline companies that are already reeling under losses.
As per the budget proposal, the airline service tax is being made ad valorem implying that the tax would go up as the gross ticket price rises. Also service tax shall be hiked from the current 10% to 40%. At present, the tax has a cap of Rs 100 per journey for domestic sector in any class and Rs 500 for international.
As per the Civil Aviation Minister, Ajit Singh the step is a 'retrograde step' and has come in at a time when his Ministry is advocating specific duty rate for Value Added Tax on jet fuel instead of the varied rates of sales tax imposed by different state governments. By adding further he said, the service tax, along with the education cess on all airport and aviation services, would add to the already high tax burden on the sector.
Further, the hike is unwarranted as taxes on air transport are already disproportionately high. A further tax hike will only have a negative impact on economic growth and overall government's revenue basis.  The proposed tax hike is part of the Finance Bill, which is to be passed in the next session of Parliament.  
The S&P CNX Nifty opened at 5,189.00; absolutely flat compared to its previous closing of 5,189.00, and has touched a high and a low of 5,223.05 and 5,188.90 respectively.
The index is currently trading at 5,215.65, higher by 26.65 points or 0.51%. There were 41 stocks advancing against 9 declines on the index.
The top gainers of the Nifty were JP Associates up by 2.51%, M&M up by 2.17%, Hindalco up by 1.94%, Sterlite Industries up by 1.57% and Power Grid up by 1.57%.
On the flip side, Coal India down by 1.73%, Grasim down by 0.67%, Ranbaxy down by 0.60%, Tata Steel down by 0.49% and SBI down by 0.42% remained the only losers on the index.
Asian market were trading mostly in the positive terrain; Hang Seng was up 104.90 points or 0.50% to 20,914.61, Nikkei 225 was up 61.38 points or 0.64% to 9,623.21, Straits Times was up 11.69 points or 0.39% to 2,993.16, Seoul Composite was up 9.94 points or 0.51% to 1,973.98  and Taiwan Weighted was marginally up by 0.27 points to 7,521.62.
Shanghai Composite was down 4.76 points or 0.20% to 2,399.94, Jakarta Composite was down 8.51 points or 0.20% to 4,171.79 and KLSE Composite was down by 8.01 points or 0.51% to 1,571.68. 

Thursday, April 26, 2012

DIRECTIONLESS

Markets have made a positive start and are trading flat, a day after ratings agency S&P revised its growth outlook on India to negative. After opening in the green buoyed by supportive global cues, domestic bourses turned flat as investors remained cautious ahead of April F&O series expiry. On the global front, US stocks rallied on Wednesday, with Apple's surge giving the Nasdaq its biggest gain of the year, while the Fed chairman reassured markets that the central bank would do more if necessary to lift the economy. Back home, covering-up of pending short positions by market participants as today being the last session of monthly expiry in the derivatives segment and selective buying by funds, helped Sensex inching towards its crucial 17,200 mark. On the sectoral front, consumer durables, realty and metal remained the top gainers while, fast moving consumer goods, PSU and software stocks were reeling under pressure. Moreover, the broader indices were going neck to neck with benchmarks. The market breadth on the BSE was positive; there were 817 shares on the gaining side against 632 shares on the losing side while 73 shares remained unchanged.
The BSE Sensex opened at 17,191.02; about 40 points higher compared to its previous closing of 17,151.29, and has touched a high and a low of 17,193.25 and 17,136.71 respectively.
The index is currently trading at 17,167.97, up by 16.68 points or 0.10%. There were 17 stocks advancing against 13 declines on the index.
The overall market breadth has made a positive start with 53.68% stocks advancing against 41.52% declines. The broader indices were trading in-line with benchmarks; the BSE Mid cap and Small cap indices rose 0.16% and 0.24% respectively.
The top gaining sectoral indices on the BSE were, CD up by 0.81%, Realty up by 0.34%, Metal up by 0.28%, HC up by 0.13% and Auto up by 0.12%. While, FMCG down by 0.31%, PSU down by 0.18%, IT down by 0.09%, Oil and Gas down by 0.06% and Power down by 0.02% were the top losers on the index.
The top gainers on the Sensex were M&M up by 1.09%, Cipla up by 0.95%, Tata Power up by 0.80%, ICICI Bank up by 0.58% and Bajaj Auto up by 0.54%.
On the flip side, BHEL was down by 1.38%, Maruti Suzuki was down by 1.10%, GAIL was down by 0.86%, HUL was down by 0.82% and Wipro was down by 0.52% were the top losers on the Sensex.
Meanwhile, credit ratings agency, Standard & Poor (S&P) has revised India's economic outlook to negative. The reason cited for the downgrade is the large fiscal deficit, low expectations of economic reforms and a slowing down of GDP growth. The ratings agency has slashed its outlook on India's long-term rating to negative from stable and affirmed its lowest investment grade rating of BBB (-). However, India was earlier rated at BBB levels by the agency.
S&P has further gone ahead and said that there is at least one-in-three likelihood of a ratings downgrade if the external position continues to deteriorate, growth prospects diminish, or progress on fiscal reforms remains slow in a weakened political setting (in the next two years). The reforms that the credit ratings agency is referring to is reducing fuel and fertiliser subsidies, introducing a nationwide goods and services tax, and easing of restrictions on foreign ownership of various sectors such as banking, insurance, and retail sectors.
S&P has also warned that government's policy reversals may diminish FIIs confidence. The rating agency has pegged India's GDP growth at 5.3% in 2012-13 as compared to the Indian government's expectation of over 7%. The agency is also not confident about the government achieving control over fiscal deficit. The fiscal deficit is targeted at 5.1% of GDP for the FY'13 and stood at 5.9% of GDP in FY'12, which is one of the highest amongst emerging economies.
On a slightly more positive note it has stated that India's favorable long-term growth prospects and high level of foreign exchange reserves support the ratings, but they are restrained by large fiscal deficits and debt, as well as its lower middle-income economy.
The government is of the opinion that the rating outlook change was not unanticipated and the good thing is that India's rating has not been downgraded. Moody's has a Baa3 rating on India, while Fitch rates India BBB (-). Both are also the minimum investment grade ratings, one step above so-called junk status. Moody's in December issued a stable outlook for India. 
The S&P CNX Nifty opened at 5,214.75; about 12 points higher compared to its previous closing of 5202.00, and has touched a high and a low of 5,215.60 and 5,196.65 respectively.
The index is currently trading at 5,203.45, up by 1.45 points or 0.03%. There were 26 stocks advancing against 24 declines on the index.
The top gainers of the Nifty were ACC up by 1.28%, M&M up by 1.21%, Grasim up by 1.19%, Ambuja Cement up by 1.13% and Cipla up by 0.91%.
On the flip side, BPCL down by 1.32%, IDFC down by 1.30%, BHEL down by 1.27%, Axis Bank down by 1.16% and Maruti Suzuki down by 1.15%, were the major losers on the index.
Most of the Asian equity indices were trading in the red; Shanghai Composite was down 4.98 points or 0.21% to 2,401.83, KLSE Composite was down 0.69 points or 0.04% to 1,578.66, Nikkei 225 was down 6.30 points or 0.07% to 9,554.71, Straits Times was down 5.57 points or 0.19% to 2,974.21 and Taiwan Weighted was down by 11.13 points or 0.15% to 7,552.05.
On the flip side, Hang Seng was up 105.93 points or 0.51% to 20,752.22, Seoul Composite was up 3.12 points or 0.16% to 1,965.10 and Jakarta Composite was up by 29.67 points or 0.71% to 4,193.31. 

Wednesday, April 25, 2012

TRYING TO RECOVER

After showing signs of consolidation for most part of the morning trades, despite the over seven percent collapse in IT bellwether Wipro post its disappointing quarterly earnings numbers, stock markets in India took a turn for the worse in late morning trades. The frontline equity indices suffered a sharp kneejerk reaction and plummeted over a percentage points to touch the session's lows in early noon trades around the psychological 17,000 (Sensex) and 5,150 (Nifty) levels. The wave of selling pressure hit the shores of domestic markets after global credit rating agency S&P threatened to downgrade the sovereign bond rating of India by slashing its economic outlook to negative from stable, citing slow progress on its fiscal situation, as well as deteriorating economic indicators. Sentiments went awry after the reports surfaced as investors took to across the board position squaring as the lowered outlook jeopardizes India's long-term rating of BBB-, which is the lowest investment grade rating. However, the markets soon recovered after finance ministry officials reacted to the reports saying that the rating outlook change was not unanticipated and the revision will not impact capital inflows and India continues to remain an attractive investment destination. On the other hand, the European markets got off to a positive opening providing the much needed support to local bourses, while the Asian markets exhibited mixed trends. European markets extended the gaining momentum after encouraging quarterly earnings by majors raised expectations of a better than expected earnings season while the upside was capped as investors remained cautious ahead of the outcome of US Fed meeting. However, the downside in frontline gauges was capped by the gains in defensive - FMCG and rate sensitive - Auto counters which provided the much needed support to the indices. However, the high beta Realty index remained the top laggard in the space with over one and half a percent cut while the beaten down IT counters too got pounded post of the quarterly result announcement by bellwether Wipro.
Moreover, the broader markets too succumbed to the selling pressure that was being exerted on their larger peers, but are gradually paring losses and are trading with around half a percent loss. The bourses sank on good volumes of over Rs 0.60 lakh core, on the penultimate day of April series F&O contract expiry. While the market breadth on BSE was in favor of declines in the ratio of 1585:876 while 108 scrips remained unchanged.
The BSE Sensex is currently trading at 17,111.28 down by 96.01 points or 0.56% after trading as high as 17,249.61 and as low as 17,019.24. There were 10 stocks advancing against 20 declines on the index.
The broader indices were trading on a negative note; the BSE Mid cap index sank 0.72% and Small cap shed 0.53%.
On the BSE sectoral space, FMCG up 0.28% and Auto up 0.07% were the only gainers, while Realty down 1.65%, Consumer Durables down 1.54%, Power down 1.41%, Capital Goods down 1.30% and IT down 1.26% were the major laggards in the space.
Bharti Airtel up 1.58%, Maruti Suzuki up 1.24%, Sterlite up 1.04%, Hero Moto up 0.95% and HDFC Bank up 0.42% were the major gainers on the Sensex, while Wipro down 7.35%, GAIL down 3.19%, BHEL down 1.90%, ICICI Bank down 1.83% and NTPC down 1.73% were the major losers in the index.
Meanwhile, rural India has transitioned from thatched roof houses and muddy roads to factories and cell phones, as per a study done by Credit Suisse. The findings of the study are not only interesting but also successfully change the perception of 'rural' in India.
'Rural India, in our view, is no longer an agrarian economy exposed to the vicissitudes of an erratic monsoon. All agriculture is rural by definition, but the converse is no longer true,' says the report. It also states that agriculture in India is now much less dependent on the erratic Indian monsoon and has been linked to the national economic cycles to which it was more or less immune so far. Agriculture is now only about one-fourth of rural GDP - from being close to half a decade back.
The major change has been the increasing share of manufacturing and services in the rural GDP. Manufacturing GDP in rural India witnessed an 18 percent CAGR during 1999-09, and is now 55 percent of India's manufacturing GDP.
 In 1978, around 81 percent of rural males considered agriculture as their primary job. This ratio fell to 67 percent in FY05 and 55 percent in FY10. The trend is similar for female rural employment as well. Growth in services employment is equally robust.
Indian villages themselves are increasingly being classified as 'towns' based on their population density and employment characteristics, even though they do not have a municipal body. In the coming times it is expected that India's urbanization is likely to take a different path as compared to other emerging economies.
Consumption will continue to skew towards lower price points and 'rural urbanization' themes. The 'new urban' consumption categories like two-wheelers, building materials/paints, media, tobacco, footwear, healthcare, personal products with low price points (like toothpaste) are thus expected to see sustained growth due to the rapid development of the rural area.
The S&P CNX Nifty is currently trading at 5,194.15, lower by 28.50 points or 0.55% after trading as high as 5,236.10 and as low as 5,160.65. There were 15 stocks advancing against 35 declines on the index.
The top gainers on the Nifty were Seas Goa up 1.81%, Maruti up 1.56%, Bharti Airtel up 1.40%, Hero Moto up 1.37% and Cairn up 1.36%.
Wipro down 7.09%, R Power down 3.35%, GAIL down 3.15%, Siemens down 2.32% and ICICI Bank down 1.75% were the major losers on the index.
In the Asian space, Shanghai Composite climbed 0.61%, Nikkei 225 surged 0.98% and Taiwan Weighted climbed 0.86%.
On the other hand, Hang Seng eased 0.11%, Jakarta Composite fell 0.21%, KLSE Composite shed 0.11%, Straits Times dropped 0.09% and Seoul Composite lost 0.07%.
The European markets got off to a positive start as France's CAC 40 added 0.20%, Germany's DAX gained  0.50% and Britain's FTSE 100 rose 0.18%. 

RANGE BOUND TRADE

Indian equity markets have steadied in the mid-morning session though trading in a tight range with Sensex and Nifty not showing any impulse to breach the major support levels of 17250 and 5250 respectively, lacking any supportive cues. The high flier of last session IT sector is suffering profit booking and is under pressure since morning after one of the gauge heavyweight Wipro came up with slightly lower than expected numbers coupled with forecast of muted revenue growth for its key IT services unit due to a fragile global economy.  The company's IT services unit reported sales of $1.54 billion in January-March, rising 2 per cent from the December quarter. The telecom space that has suffered major drubbing in last session was showing sign of recovery as the telecom regulator has estimated that its recommendations for a steep hike in the pricing of 2G spectrum translates into a mere 1.5 to 2 paise per minute jump in call tariffs annually. The OMC's too have continued their gaining momentum after government agreed to make the diesel prices market determined.
The BSE Sensex is currently trading at 17,223.16, up by 15.87 points or 0.09%. The index has touched a high and low of 17,249.61 and 17,174.73 respectively. There were 20 stocks advancing against 10 declines on the index.
The broader indices recovering from their last session's decline were showing some smart moves outperforming the benchmarks; the BSE Mid cap and Small cap indices were up by 0.37% and 0.51% respectively.
The top gaining sectoral indices on the BSE were, Auto up by 0.73%, HC up by 0.46%, Bankex up by 0.44%, FMCG up by 0.39% and Metal was up by 0.38%. While, IT down by 1.75%, TECk down by 1.04%, Realty down by 0.47%, CD down by 0.42% and Power down by 0.08% were the losers.
The top gainers on the Sensex were Bharti Airtel up by 2.33%, Bajaj Auto up by 2.01%, Hero MotoCorp up by 1.92%, Sterlite Industries up by 1.37% and Maruti Suzuki was up by 1.36%.
On the flip side, Wipro down by 7.19%, Gail India down by 3.17%, TCS down by 1.33%, Infosys down by 0.92% and NTPC down by 0.78% were the top losers on the Sensex.
Meanwhile, the amount of loans to be restructured in 2012-13 is likely to go up to Rs 2 lakh crore, as per the rating agency CRISIL. What is more disturbing is the fact that unlike earlier when the restructured loans majorly represented small and medium enterprise (SME) accounts, this time around they consist of large corporate houses, and over two-thirds of the loans restructured till December 2011 had a ticket size of over Rs 1,000 crore.
Total restructured loans will account for 3.5% of the total advances as on March 2013 and the total amount of loans  likely to be restructured over the two year period of 2011-12 and 2012-13 is estimated at nearly Rs 2 lakh crore.
The large quantum of restructuring reflects the prevailing stress on corporate India's credit quality because of lower profitability, weak demand and tight liquidity. The sectors with large debt are particularly vulnerable to restructuring, and nearly 30% of the restructuring is expected in the power sector. The other susceptible sectors include aviation, construction, engineering, steel, textiles and telecom infrastructure.
CRISIL expects the pressure on banks' asset quality to continue in 2012-13, as indicated by the increased loan restructuring and non-performing assets (NPAs) in the sector. The large quantum of restructuring will help restrict the increase in banks' reported NPAs.
Furthermore, banks' gross NPAs (non-performing assets) are set to increase to 3.2% by March 2013, from 2.9% as on December 2011. The increase in NPAs reflects the expectation of slippages in the agriculture and SME portfolios.
The S&P CNX Nifty is currently trading at 5,228.95, up by 6.30 points or 0.12%. The index has touched a high and low of 5,236.10 and 5,211.45 respectively.  There were 31 stocks advancing against 18 declines while one stock remain unchanged on the index.
The top gainers of the Nifty were Hero MotoCorp up by 2.18%, Bharti Airtel up by 2.08%, Bajaj Auto up by 1.98%, Ambuja cements up by 1.96% and Sesa Goa was up by 1.81%.
On the flip side, Wipro was down by 7.33%, GAIL down by 3.23%, RPower down by 2.07%, TCS down by 1.21% and Infosys down by 1.06%, were the major losers on the index.
At this point of time most of the Asian equity indices were trading in the green; Shanghai Composite was up by 0.40%, Nikkei 225 surged by 0.96%, Straits Times was up by 0.06%, Seoul Composite gained 0.37% to 1,957.53 and Taiwan Weighted added 0.85%.
On the flip side, Hang Seng declined marginally by 0.03%, Jakarta Composite slipped by 0.14% and KLSE Composite was down by 0.05% 

FLAT OPENING

Domestic bourses have made an absolutely flat opening with investors reacting negatively to the Wipro's Q4 numbers and muted FY13 guidance, while global cues remained supportive, providing some strength to local benchmarks. On the global front, Asian shares were exhibiting firm trade at this point of time as firm US corporate earnings, signs of an improving US housing market, and healthy demand for euro zone sovereign debt stoked investors' risk appetite, while focus shifted to the Federal Reserve's meeting. Back home, technology stocks dropped on the back of some unwinding of long positions after yesterday's sharp rally. Wipro tanked 7 percent as its fourth quarter numbers were not too great and its guidance for the first quarter of FY13 is muted. It forecasted IT services revenue at $1.52-1.55 billion for the April-June quarter, a growth of just 0.6 percent sequentially.
On the sectoral front, metal, auto and healthcare remained the top gainers while, software, technology and realty remained the only losers on the index. The broader indices were outperforming benchmarks. The market breadth on the BSE was positive; there were 937 shares on the gaining side against 528 shares on the losing side while 71 shares remained unchanged.
The BSE Sensex opened at 17,225.54; about 18 points higher compared to its previous closing of 17,207.29, and has touched a high and a low of 17,249.61 and 17,174.73 respectively.
The index is currently trading at 17,233.44, up by 26.15 points or 0.15%. There were 21 stocks advancing against 9 declines on the index.
The overall market breadth has made a positive start with 61.00% stocks advancing against 34.38% declines. The broader indices were outperforming benchmarks; the BSE Mid cap and Small cap indices surged 0.39% and 0.50% respectively.
The top gaining sectoral indices on the BSE were, Metal up by 0.74%, Auto up by 0.63%, HC up by 0.59%, Bankex up by 0.37% and Oil and Gas up by 0.33%. While, IT down by 1.45%, TECk down by 0.78% and Realty down by 0.28% were the only losers on the index.
The top gainers on the Sensex were Bharti Airtel up by 2.35%, Bajaj Auto up by 1.79%, Sterlite Industries up by 1.61%, Tata Power up by 1.43% and Jindal Steel up by 1.19%.
On the flip side, Wipro was down by 6.58%, GAIL was down by 2.05%, TCS was down by 1.41%, Infosys was down by 0.71% and Coal India was down by 0.63% were the top losers on the Sensex.
Meanwhile, the government has in principle agreed to deregulate diesel prices. However no details have been given about the time frame and extent of the deregulation.
In a written reply told the Rajya Sabha the government has stated that the decision to decontrol diesel prices has been taken in principle. However, the government added that retail selling prices would be moderated to insulate the common people.
The government has been under increasing pressure to cut its subsidies on fuel, food and fertilizers that are straining its finances.
In June 2010, it lifted control over petroleum prices and said that it will eventually free diesel prices too. But the government has been reluctant to do so as it could drive up inflation as well as result in severe political repercussions.
The S&P CNX Nifty opened at 5,222.20; flat compared to its previous closing of 5,222.65, and has touched a high and a low of 5,236.10 and 5,211.45 respectively.
The index is currently trading at 5,229.95, higher by 7.30 points or 0.14%. There were 36 stocks advancing against 14 declines on the index.
The top gainers of the Nifty were Bharti Airtel up by 2.26%, Sterlite Industries up by 1.80%, Sesa Goa up by 1.78%, Bajaj Auto up by 1.51% and Tata Power up by 1.43%.
Wipro down by 6.49%, TCS down by 2.07%, RPower down by 1.39%, GAIL by 1.34% and Coal India down by 0.69%, were the major losers on the index.
Most of the Asian equity indices were trading in the green; Shanghai Composite was up 7.84 points or 0.33% to 2,396.68, Hang Seng was up 15.95 points or 0.08% to 20,693.11, Nikkei 225 was up 95.42 points or 1.01% to 9,563.46, Straits Times was up 2.79 points or 0.09% to 2,977.16, Seoul Composite was up 4.95 points or 0.25% to 1,968.37 and Taiwan Weighted was up 64.44 points or 0.86% to 7,563.28.
On the flip side, Jakarta Composite was down 7.33 points or 0.18% to 4,163.02 and KLSE Composite was down by 0.81 points or 0.05% to 1,581.47. 

Tuesday, April 24, 2012

GAINING STRENGTH

The Indian markets are gaining strength-to-strength, trading near the high points of the day in the afternoon trade. The sector that can be called pulling the markets higher is IT after the better than expected numbers of sector heavyweight TCS which was trading up by over 12%, the company's profit were reported higher by 19% for the quarter, while the full year standalone profit surged by 45%. The numbers have encouraged the other majors of the sector and HCL Technology too was trading higher by over 4% at this point of time. However, there was heavy selling pressure seen in the telecom stocks as the TRAI has proposed a near tenfold increase in the price of 2G spectrum as compared to the 3G. But, justifying the prices set for spectrum allocation, TRAI Chairman J S Sarma said that the recommendations are aimed at liberalising spectrum and enabling operators to take up any technology. Power, consumer durables, and metals too have moved higher, while capital goods sector, down by about half a percent was the laggard. Though the Asian markets showed a mixed trend but the European markets have made a positive start despite all the concerns and have supported the domestic markets to move higher.
However, the broader markets are not showing much enthusiasm and are trading flat. The BSE Mid-cap and Small-cap indices both were up by less than a point. While the market breadth on BSE was partially in favor of declines in the ratio of 1161:1195 while 123 scrips remained unchanged.
The BSE Sensex is currently trading at 17,202.61 up by 105.93 points or 0.62% after trading in a range of 17,231.74 and 17,046.72 respectively. There were 18 stocks advancing against 12 declines on the index.
On the BSE sectoral space, IT up by 4.48%, TECk up by 2.95%, Power up by 0.87%, Metal up by 0.68% and PSU up by 0.58% were the major gainers, while CG down by 0.62%, HC down by 0.29%, Oil & gas down by 0.24%, Auto down by 0.17% and FMCG down by 0.16% were the laggards in the space.
TCS up by 12.17%, Wipro up by 2.95%, Hindalco Inds up by 2.35%, Tata Power up by 1.86% and Coal India up by 1.78% were the major gainers on the Sensex, while Bharti Airtel down by 3.09%, L&T down by 1.81%, M&M was up by 1.59%, Jindal Steel down by 1.52% and Maruti Suzuki down by 1.26% were the major losers in the index.
Meanwhile, the global executives are still wary of under taking any merger and acquisition (M&A) activities, as per the survey by Ernst and Young (E&Y). Even though the global environment is improving with better access to credit and cash, caution rather than confidence is driving global M&A sentiment.
According to E&Y's Capital Confidence Barometer, which covered over 1,500 senior executives in 50 countries, a more favorable deal making environment is not yet convincing large corporates to engage in M&As. A change, if at all is expected only when there comes a point when shareholders exert pressure or governments incentivise companies to do something with excess cash. Until then the business sentiment is expected to be cautious.
Mirroring the findings of survey, the first quarter of this calendar year, M&A volumes globally were down 22% compared to the same period last year. The survey further noted that companies headquartered in India, UK, US and Germany were among the most bullish, while their counterparts in Japan and Russia are less so. In fact China, India, US, Brazil and Indonesia are the top five target markets.
Corporates are now more focused on creating value by organic growth, portfolio optimisation and divestment. The proportion of companies planning to sell assets over the next 12 months has risen from 26% in October 2011 to 31% till date. Divestment is especially pronounced in North America; and is likely to grow across Europe and Japan in the coming months as companies look to re-position themselves as a result of Euro-zone crisis, the survey added.
In terms of global economic situation, 52% of respondents thought that it is improving as against 26% in October 2011, while only 20% remain pessimistic about the economy compared with 37% six months ago.
The S&P CNX Nifty is currently trading at 5,220.95, up by 20.35 points or 0.39% after trading in a range of 5,232.35 and 5,180.35. There were 30 stocks advancing against 20 declines on the index.
The top gainers on the Nifty were TCS up by 11.79%, HCL Tech up by 4.60%, Wipro up by 2.88%, Tata Power up by 2.26% and Hindalco was up by 2.19%.
On the other hand, Bharti Airtel down by 3.15%, Ambuja Cements down by 3.01%, Kotak Bank down by 1.99%, L&T down by 1.88% and ACC down by 1.77% were the major losers on the index.
The Asian markets were showing mixed trend, Shanghai Composite was marginally up by 0.01%, Hang Seng gained 0.19%, Jakarta Composite was up by 0.07%, Straits Times added 0.38% and Taiwan Weighted gained 0.24%.
On the flip side, KLSE Composite shed 0.20%, Nikkei 225 was down by 0.78% and Seoul Composite lost 0.47%.
The European markets have made a positive start, France's CAC 40 was up by 0.60%, Germany's DAX gained 0.55% and Britain's FTSE 100 rose by 0.25%.