Global cues indicate gap-down opening for Indian stocks: Tuesday Market Preview

Rising costs is seen as the major reason for corporates reporting a decline in their earnings

Negative cues from the global markets point out to a gap-down opening for the domestic market. The US markets settled mixed on Monday on concerns that rising costs will hurt corporate earnings, going forward while lower-than-expected earnings led to a negative opening for the Asian markets on Tuesday and the SGX Nifty was down 15 points to 5,862 compared to its previous close of 5,877 on Monday.

ACC, Ambuja Cements, Gateway Distriparks, Patni Computers, Petronet LNG, Tata Teleservices, UltraTech Cement and Wipro are among the corporates that will announce their earnings figures today.

The market opened sideways yesterday, weighed down by lacklustre quarterly results from Reliance Industries. The Sensex opened 63 points lower at 19,539 and the Nifty was at 5,860, down 25 points from its previous close. Gaining some strength in subsequent trade, the market touched the day's high at around 10am. The Sensex rose by 95 points to touch 19,697 and the Nifty added 22 points at 5,907 at the day's high.

The market erased most of its gains and was range-bound with the indices hovering on both sides of the neutral line till noon trade. Fluctuations continued in the post-noon trade with the market slipping to the day's low towards the end of the session, as passenger car maker Maruti Suzuki reported a marginal rise in fourth quarter earnings. At the day's low, the Sensex fell to 19,531 and the Nifty eased to 5,857. The benchmarks ended near those levels as lacklustre earnings hurt sentiment. The Sensex fell by 18 points to 19,584 and the Nifty closed the session 10 points lower at 5,875.

The market is showing signs of tiredness and unable to cross the previous high made in January. There are signs that we will get a short decline to 5,800 on the Nifty. If that level holds, the market may make an effort to move higher again. If no support comes, Nifty may fall to 5,660 and below.

Wall Street closed mixed overnight on concerns that rising costs will impact corporate earnings, going ahead. Auto equipment major Johnson Controls Inc fell 2.8% after the company said its fiscal third-quarter results would be hit by a drop in car production following Japan's massive earthquake last month. Post market hours, Netflix Inc declined 4.5% after the video rental company reported good profit and revenue, but issued an outlook for the second quarter that disappointed investors. Kimberly-Clark shed 2.7% after the consumer-products company missed analysts’ first-quarter earnings expectations.

In economic news, new home sales rose 11.1% in March to a seasonally adjusted 300,000 unit annual rate, after an upwardly revised 270,000 unit pace in February. The Federal Reserve, which is conducting its two-day policy meeting on Tuesday and Wednesday, will reveal its plan as its $600 billion bond buying programme is nearing its end.

The Dow fell by 26.11 points (0.21%) to settle at 12,479.88. The S&P 500 shed 2.13 points (0.16%) to 1,335.25 while the Nasdaq rose 5.72 points (0.20%) to close at 2,825.88.

Muted earnings reports were also the cause for Asian markets opening lower on Tuesday. Nintendo tumbled 4.8% in Tokyo, Nidec declined 3.4% and Mitsubishi Corp lost 1.5% after copper and oil prices fell. Besides, Hyundai Merchant Marine Co tanked 4.7% in Seoul after posting an operating loss in the first quarter.

In commodity news, oil prices fell along with the dollar in choppy trade. London Brent crude fell marginally to below $124 a barrel, while US light crude shed 0.01% to close at $112.28. Gold continued to trade at record highs, settling up 0.36% at $1,508.60 while silver hit a historic high of $49.79 an ounce before paring gains to settle at $47.15.

The Shanghai Composite fell 0.32%, the Hang Seng declined 0.50%, the Jakarta Composite was down 0.14%, the KLSE Composite shed 0.04%, the Nikkei 225 tanked 0.98%, the Straits Times fell by 0.36% and the Seoul Composite shed 0.08%. On the other hand, the Taiwan Weighted was up 0.06% in early trade.

Back home, a high power committee comprising heads of various probe agencies and specialised departments has been constituted to monitor the investigation and steps taken to bring back black money stashed in foreign banks, the government informed the Supreme Court on Monday.

The government said the multi-disciplinary committee for the investigations and other steps likely to be taken, can co-opt members not below the rank of joint secretary for effective implementation of the work in consultation with the secretaries in home, foreign and defence ministries.


SEBI seeks more time from SC to give views on IPO scam report

Earlier on 28th March, the court had asked SEBI to reply within four weeks whether it would revisit its decision to give a clean chit to NSDL in the scam, which related to share allotment irregularities in various IPOs between 2003 and 2006

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) today sought more time from the Supreme Court to give its views on the report of a high-powered committee that probed the initial public offer (IPO) scam of 2006 and National Securities Depository's (NSDL) role in it, reports PTI.

Attorney General Goolam E Vahanvati, appearing for the market regulator, informed the apex court that the SEBI board is meeting tomorrow and sought more time to present its view on the report.

He further informed the court that the report on the IPO scam is on the agenda of the board meeting.

A bench comprising justices RV Raveendran and AK Patnaik adjourned the matter for two weeks.

Earlier on 28th March, the court had asked SEBI to reply within four weeks whether it would revisit its decision to give a clean chit to NSDL in the scam, which related to share allotment irregularities in various IPOs between 2003 and 2006.

It had further asked SEBI "to consider whether its board will reconsider the special committee's 4th December order in respect of NSDL and DSQ Securities and to pass an appropriate resolution and place it before this court."

NSDL was given clean chit last year by SEBI when CB Bhave was its chairman. Mr Bhave had recused himself from the SEBI board meeting in February 2010 when NSDL matter was discussed as he had previously headed the depository.

The court had also pulled up the Attorney General for not taking any stand in this matter. It was not satisfied with his reply that the SEBI board has already taken a decision on the report of the committee, which had declared it as "non-est (does not exist)."

The ministry of finance had set up a committee consisting of two SEBI members G Mohan Gopal, now director of National Judicial Academy, and V Leeladhar to look into the scam.

The committee had passed three orders and found that NSDL had failed in its duty. It had also passed remarks against the manner in which SEBI had functioned in the IPO scam.

Earlier, the apex court had expressed concern over SEBI's outright rejection of the report, and had asked the market regulator to give its stand.

It had remarked that as the committee comprised of senior SEBI officials, the report should have been considered by the regulator.

The apex court was also not convinced by the submissions of SEBI that the committee exceeded its limit.


IOC may raise petrol prices soon

In his first interaction with media after taking over as the chairman of the nation's largest fuel marketing firm, Ranbir Singh Butola said IOC and other state firms had consciously decided not to revise rates of petrol to keep "the environment happy"

New Delhi: State-owned Indian Oil Corporation (IOC), the nation's largest oil firm, today hinted at an imminent hike in petrol prices, whose rates have not been revised since January in view of elections in states like West Bengal, reports PTI.

"We would do it (increase rate) at the earliest possible," IOC chairman Ranbir Singh Butola told reporters here.

In his first interaction with media after taking over as the chairman of the nation's largest fuel marketing firm, Mr Butola said IOC and other state firms had consciously decided not to revise rates of petrol to keep "the environment happy".

The government had in June last year freed petrol pricing from its control and state-run firms had on as many as seven occasions changed rates in line with international prices before deciding in the second half of January to freeze rates.

"We live in an environment (comprising of the people and the government). If we take certain action, the environment is going to turn against us," he said.

IOC is losing a tad less than Rs7 per litre on petrol currently. After including the local sales tax or VAT, the desired increase in price comes to about Rs7.50 a litre in Delhi.

"In our consideration, we decided to take these losses for sometime," Mr Butola said.

Asked if the petrol price will be revised soon after assembly elections are completed on 10th May, he said a review "will take place soon."

He, however, deflected questions on state firms acting at the behest of the government in not revising petrol prices.

IOC was losing Rs297 crore per day on selling diesel, domestic LPG and kerosene at government-controlled rates, he said.

"We are losing Rs18.11 per litre on diesel, Rs28.33 a litre on kerosene and Rs315.86 per 14.2-kg domestic LPG cylinder," he said.

The company, whose debt is growing at Rs5,000-Rs6,000 crore every month on unchanged fuel prices, expects government to compensate it for the losses.

Its debt stood at about Rs53,000 crore at the end of March.

While retail price of petrol is benchmarked at $98 per barrel of international rates, the same for diesel is at $72-$73 equivalent.

The basket of crude oil that India buys averages $120 per barrel currently.

The government had in June last year allowed state-run oil firms to fix the price of petrol but continued to control the prices of diesel, kerosene and cooking gas with a view to control inflation.


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