Global cues indicate soft opening for Indian stocks: Thursday Market Preview

The domestic market is following global markets, besides the indices are still reeling from the RBI’s rate hike

Indian stocks are likely to see a gap-down opening on dismal global cues. Economic and debt issues pulled the US markets down on Wednesday, closing at its worst in eight weeks. Volumes increased as selling intensified, indicating that investors are holding back their purchases in the market. Markets in Asia were lower in early trade today on the US debt stalemate. The SGX Nifty was 58.50 points down at 5,489.50 against its previous close of 5,548.

The stock market slipped a little further on Wednesday, following the cautious outlook expressed by finance minister Pranab Mukherjee and indications of more monetary tightening to come, after the Reserve Bank of India's surprising 50 basis points rate hike on Tuesday.

The market bounced back in initial trade, ignoring concerns about the US debt crisis that capped most Asian markets. The Nifty opened at 5,589, up 14 points from its previous close, and the Sensex resumed trade 53 points higher at 18,571. The benchmarks rose to their day's high early on, with the Nifty at 5,592 and the Sensex at 18,579.

However, in choppy trading the market lost the early gains and the indices fluctuated on either side of the neutral line. Selling pressure in mid-morning trade resulted in the market going southward. Capital goods, power and realty sectors were under pressure.

The indices slipped to their intra-day lows in noon trade, the Nifty to 5,522 and the Sensex to 18,359. There was a marginal recovery in subsequent trade, but the gains were not sufficient to pull the indices out of the red.

The Nifty finally closed 28 points down at 5,547 and the Sensex closed at 18,432, a loss of 86 points. The losses were not as severe as Tuesday’s 105-point drop, but volumes were more or less the same again today. We expect the Nifty to fall up to the 5,495 level.

Wall Street closed lower overnight us lawmakers failed to reach a consensus on increasing the debt ceiling ahead of the 2nd August deadline. S&P, Moody’s Investors Service and Fitch Ratings have said they may downgrade the US’ top AAA rating if lawmakers fail to find a solution.

Stocks retreated further after the Federal Reserve said the US economy grew at a slower pace in more parts of the country since the beginning of June as shoppers restrained spending and factory production eased.

In stocks, United Technologies declined 2.83%, General Electric fell 2.42% and Caterpillar tumbled 3.67% in trade. On the other hand, Boeing gained 0.67% after it reported a 20% jump in earnings.

The Dow tumbled 198.75 points (1.59%) at 12,302.55. The S&P 500 Index declined 27.05 points (2.03%) at 1,304.89, its worst daily percentage decline since 1st June. The Nasdaq slipped 75.17 points (2.65%) at 2,764.79.

Oil prices fell on Wednesday as data showed the first release of crude from the US petroleum reserve pushed up domestic inventories last week. US crude for September delivery fell $2.19, or 2.2%, to settle at $97.40 a barrel, after sliding to an intra-day low of $97.28. In London, ICE September Brent settled at $117.43, down 85 cents, falling from the day's high of $118.50.

Tracking the decline in the US, markets in Asia opened weak on Thursday. Besides debt issues, a decline in durable goods orders in the US also weighed on investor sentiments. Among exporters Canon declined 1.4%, Sony fell 1% and Toyota Motor slipped 1.8%. Concerns over a stronger yen also weighed on Nissan Motor, which fell 1.1% despite stronger-than-expected first-quarter earnings.

The Shanghai Composite fell 0.88%, the Hang Seng declined 1.07%, the Jakarta Composite slipped 0.96%, the KLSE Composite was down 0.67%, the Nikkei 225 tanked 1.12%, the Straits Times declined 0.68%, the Seoul Composite fell 0.80% and the Taiwan Weighted shed 0.35%.

Back home, the Securities and Exchange Board of India (SEBI) board in its meeting later today is likely to accept only part of the Achuthan panel report on the new takeover code, said a senior official. The board meeting is expected to clear the guidelines for infrastructure debt fund and come out with a new company takeover code.

Besides, a uniform Know-Your-Customer (KYC) norm that would be applicable on all market players is also likely to be cleared by the board, chaired by SEBI chairman UK Sinha.

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Share prices on a slow decline: Wednesday Closing Report

Nifty to sustain fall till 5,495

The stock market slipped a little further today, following the cautious outlook expressed by finance minister Pranab Mukherjee and indications of more monetary tightening to come, after the Reserve Bank of India's surprising 50 basis points rate hike yesterday.

The Nifty lost 28 points (or 0.50%) to close at 5,547, not as severe as yesterday's 105-point drop, but volumes were more or less the same again today. We expect the Nifty to fall up to the 5,495 level.

The market bounced back in initial trade this morning. Ignoring concerns about the US debt crisis that capped most Asian markets, the Nifty opened at 5,589, up 14 points from its previous close, and the Sensex resumed trade 53 points higher at 18,571. The benchmarks rose to their day's high early on, with the Nifty at 5,592 and the Sensex at 18,579.

However, in choppy trading the market lost the early gains and the indices fluctuated on either side of the neutral line. Selling pressure in mid-morning trade resulted in the market going southward. Capital goods, power and realty sectors were under pressure.

The indices slipped to their intra-day lows in noon trade, the Nifty to 5,522 and the Sensex to 18,359. There was a marginal recovery in subsequent trade, but the gains were not sufficient to pull the indices out of the red.

The Nifty finally closed 28 points down at 5,547 and the Sensex closed at 18,432, a loss of 86 points.

The advance-decline on the National Stock Exchange (NSE) was 742:1010.

The broader indices outperformed the Sensex today as the BSE Mid-cap index closed 0.23% up and the BSE Small-cap index added 0.03%.

The noteworthy sectoral gainers were BSE Consumer Durables (up 1.46%), BSE Fast Moving Consumer Goods (up 0.28%) and BSE TECk (up 0.14%). The losers were led by BSE Capital Goods (down 1.86%), BSE Power (down 1.51%), BSE Bankex (down 1.04%), BSE Realty (down 0.98%) and BSE Oil & Gas (down 0.80%).

The major gainers in the Sensex list were Maruti Suzuki (up 2.42%), Reliance Communications (up 1.58%), HDFC (up 1.33%), Bharti Airtel (up 1.32%) and DLF (up 1.28%). The laggards on the benchmarks were BHEL (down 4.40%), Jaiprakash Associates (down 3.28%), Hindalco Industries (down 2.67%), Wipro (down 1.82%) and Reliance Infrastructure (down 1.78%).

The top performers on the Nifty were Maruti Suzuki (up 3.32%), Sesa Goa (up 3.22%), DLF (up 1.54%), RCom (up 1.28%) and Bharti Airtel (up 1.22%). The main losers on the index were BHEL (down 4.33%), PNB (down 4.09%), Jaiprakash Associates (down 3.41%), Hindalco Industries (down 3.18%) and Siemens (down 2.56%).

Markets in Asia settled mixed after a weak start, as positive earnings offset fears of a US default. Good earnings reports from Fanuc, Nippon Steel and LG Electronics supported the gains while JFE Holdings and Tokyo Electric Power disappointed investors.

The Shanghai Composite gained 0.76%, the Jakarta Composite surged 1%, the Straits Times rose 0.22%, the Seoul Composite and the Taiwan Weighted advanced 0.26% each. On the other hand, the Hang Seng lost 0.13%, the KLSE Composite fell 0.23% and the Nikkei 225 declined 0.50%.

Back home, foreign institutional investors were net sellers of stocks worth Rs177.75 crore on Tuesday. On the other hand, domestic institutional investors were net buyers of equities worth Rs31.49 crore.

State-owned Indian Oil Corporation (IOC) has successfully raised $500 million through an overseas bonds issue to fund its capital needs. The issue was oversubscribed by about four times and IOC received offers to the tune of about $2 billion. The bonds will have a tenure of 10 years and be utilised for meeting part of IOC's capital expenditure requirements. IOC closed 1.14% higher at Rs323 on the NSE.

TCS and Wipro are among three companies vying to bag the prestigious IT solutions project for Tirumala Tirupati Devasthanam (TTD) that is aimed at helping devotees. Currently TTD offers four main e-services such as e-seva, e-accommodation, e-sudarshanam and e-hundi to the devotees and the new Sri Seva project would help the administration in providing rooms, 'laddus' as well as tonsuring. TCS closed 0.07% up at Rs1,145.50, but Wipro dropped 2.06% to Rs402.

Praj Industries has bagged an order worth about $22 million for a large ethanol plant in Colombia, from Isolux Corsan of Spain, the main contractor for the project of Bioenergy SA.

As per the contract, Praj Industries will supply the main process plant for ethanol production, including concentration of vinasse for use as liquid fertiliser. Praj Industries declined 1.17% to close at Rs88.45 on the NSE.

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Nomura appoints Prabhat Awasthi as head of equities

Prabhat Awasthi will be responsible for the delivery of Nomura’s strategy for equities in India and strengthening the firm’s local presence

Nomura, the global investment bank, today, announced the appointment of Prabhat Awasthi as the head of equities, India. Mr Awasthi will be responsible for the delivery of Nomura's strategy for equities in India and strengthening the firm's local presence.
 
Mr Awasthi will report to John Adair and Paul Dolan, joint heads of equities, Asia-Pacific.   

"Prabhat's leadership and contribution to the build-out of the India franchise means  he is well qualified for this position. He has over 17 years' experience in the Indian  equity markets and brings invaluable experience and relationships to the role," says Paul Dolan, joint head of equities, Asia-Pacific.

Mr Awasthi joined Nomura in October 2008 as the head of equity research, India, which he will continue to oversee. Prabhat joined Nomura from Lehman Brothers, where he held the same position. 

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