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Indian shares may open range-bound on mixed Asian cues: Thursday Market Preview

Benchmarks in the US made multi-year highs on Wednesday while the Asian pack was mixed in early trade on Thursday

The Indian market is likely to open sideways on mixed cues from Asia in early trade today on renewed concerns on the debt crisis in Europe while gains in the US markets overnight limited the losses. Wall Street settled higher on Wednesday with the Dow closing at its highest since June 2008. The SGX Nifty, after opening with minor gains, slipped into the red and was 6.50 points lower at 5,905.50 compared to its previous close of 5,912.

Both the Sensex and the Nifty ended in the negative yesterday. The Sensex opened slightly above Tuesday’s closing at 19,699 and the Nifty opened a touch below its previous close at 5,908. Within an hour of the opening, both the indices hit their intra-day high of 19,811 and 5,944 respectively (also the highest level since 10 January 2011). However, soon the market started losing strength and slipped below the previous closing levels. The market hit the intra-day low in the morning session itself. The Sensex dropped to 19,551 and the Nifty to 5,869. But the market recovered from the lows and the Sensex closed down at 19,612, down 75 points, and the Nifty at 5,892, 18 points down.

The indices are set for a positive journey, but with a definite pause. In the days ahead, the market will be determined by Q4 earnings and the guidance from companies.

Markets in the US closed at multi-year highs on Wednesday supported by gains in financial stocks and the buoyancy in technology stocks. President of the Atlanta Federal Reserve Bank, Dennis Lockhart’s statement that the Federal Reserve will complete its $600 billion bond-buying plan as scheduled at the end of June boosted investor sentiment.

Cisco shares rose 4.9% after its chief executive John Chambers asserted that the company had ‘lost its way’ and needed restructuring to restore credibility. Among other technology stocks, Hewlett-Packard rose 2.2% and Microsoft gained 1.4%.

High oil prices kept the markets under pressure throughout the session.  London Brent crude rose to near two and half year highs to more than $122 a barrel and US light crude retreated slightly after trading above $108 a barrel.

The Dow gained 32.85 points ( 0.27%) to close at 12,426.75, its highest since 5 June 2008. The S&P 500 added 2.91 points (0.22%) to 1,335.54 and the Nasdaq rose 8.63 points (0.31%) to 2,799.82. Both benchmarks closed at their highest levels since 18th February.

Markets in Asia were mixed in early trade on Thursday on high crude prices while optimism in the US markets overnight lifted sentiments on some regional bourses. The Bank of Japan, which is meeting today, is expected to retain its monetary policy but warn of the severe damage to the economy from last month’s devastating earthquake. The central bank is expected to show its readiness to ease policy further even as other central banks ponder raising rates.

The Jakarta Composite was up 0.05%, the KLSE Composite gained 0.26% and the Nikkei 225 rose 0.57%. On the other hand, the Shanghai Composite was down 0.13%, the Hang Seng declined 0.31%, the Straits Times fell 0.35%, the Seoul Composite fell 0.56% and the Taiwan Weighted shed 0.11%.

Back home, in a move that is set to delay and possibly scuttle the biggest acquisition in India's energy sector, the Cabinet Committee on Economic Affairs (CCEA) yesterday referred Vedanta Resources $9.6 billion buyout of Cairn India to a ministerial panel.

The move followed differences in the Cabinet panel on whether London-listed mining group with no experience in oil should be given unconditional approval for buying a company that owns the nation’s largest onland oil fields or after attaching reasonable conditions.

User

Market may go down a bit: Wednesday Closing Report

As we said yesterday, the Sensex is struggling to hit 20,000 and the Nifty 6,000

Both the Sensex and the Nifty ended in the negative today. The Sensex opened slightly above yesterday's closing at 19,699 and the Nifty opened a touch below its previous close at 5,908. Within an hour of the opening, both the indices hit their intra-day high of 19,811 and 5,944 respectively (also the highest level since 10 January 2011). However, soon the market started losing strength and slipped below yesterday's closing levels. The market hit the intra-day low in the morning session itself. The Sensex dropped to 19,551 and the Nifty to 5,869. But the market recovered from the lows and the Sensex closed down at 19,612, down 75 points, and the Nifty at 5,892, 18 points down.

The indices are set for a positive journey, but with a definite pause. In the days ahead, the market will be determined by Q4 earnings and the guidance from companies.

Despite the comment by Subir Gokarn, deputy governor of the Reserve Bank of India, hinting at the possibility of another rate hike, the rate-sensitive BSE Realty topped among the sectoral indices (up 3.18%). BSE Consumer Durables (up 1.11%), BSE Power (0.73%), BSE PSU (0.56%), BSE Auto (0.26%), BSE Oil & Gas (0.14%)and BSE Healthcare (0.04%).

The major loser was BSE Teck which fell 0.84%. The rupee jumped to a 5-1/2 month high in afternoon trade, on the back of gains by the euro against the dollar and rising dollar inflows into equities. The BSE IT was among the major losers (down 0.69%). Among the other losers were BSE FMCG (0.11%), BSE Capital Goods (0.11%), BSE Metal (0.41%) and BSE Bankex (0.43%). The advance-decline ratio of NSE stocks was 1145:689.

Auto stocks were in demand on reports that auto firms had raised vehicle prices, or are considering doing so, to partly offset a surge in the cost of raw materials such as steel, aluminium and natural rubber. This is the second price increase by auto makers since January 2011 higher cost of raw materials hurts margins. A majority of the auto stocks in the Sensex, like Hero Honda (2.22%), Tata Motors (1.19%) and Bajaj Auto ( up 0.54%) ended positive.

Other among the major gainers were NTPC (1.78%) and Reliance Infrastructure (1.21%). Reliance Infrastructure has made adequate arrangements to meet the requirement of its customers after Tata Power said it had stopped supplying electricity to the company. The two companies have been involved in a dispute about the supply of power in Mumbai city distribution area. ONGC was the fifth major gainer (0.68%).

Among the five major losers in the Sensex were Wipro (down 2.93%), Bharti Airtel (1.86%), Hindalco (1.67%), Maruti (1.40%), TCS (1.25%).

Mahindra Satyam jumped 6.09% on reports that Satyam Computers and its former auditor PricewaterhouseCoopers have agreed to pay a combined $17.5 million to settle US investigations into Satyam's accounting fraud in 2009.

The State Bank of India bought 5.68% for Rs1.8 billion on a preferential allotment basis in Kingfisher Airlines. The Kingfisher stock rose 4.57%.

Sesa Goa has gained 3.71% ever since the Supreme Court lifted a ban on iron ore exports from Karnataka. The company had curbed its iron ore mining in Karnataka post the state government's ban on iron ore exports, as iron ore realizations were significantly lower in the domestic market, compared to the international market. Sesa Goa also received yesterday an approval from market watchdog SEBI for its proposed open offer to the minority shareholders of Cairn India.

Gold rallied to a second successive record high on the back of the slide in the dollar and on ongoing investor demand, while silver hit a fresh 31-year peak.

The focus this week is on Thursday's central bank policy meetings, with the European Central Bank almost guaranteed to raise rates, thereby boosting the euro against the dollar, while the Bank of Japan and the Bank of England are expected to hold their fire.

Record-high food prices and oil prices at 2-1/2 year highs have stoked inflationary pressures around the world, adding to the case for owning gold, which can help mitigate the impact of rising price pressures on an investment portfolio.

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