Indian stocks to see gap-down opening: Tuesday Market Preview

IIP for May and Infosys results will be the key focus today

Indian stock are likely to witness a gap-down opening as the debt crisis sweeping Europe is now likely to pull in Italy into its hold. Also, the impasse over the US budget deficit with president Obama and Republican leaders disagreeing on ways to raise the debt ceiling weighed on investors there with the key US indices closing 1.2% to 2% lower in overnight trade. Markets in Asia resumed trade on a soft note on Tuesday on speculations that debt issues across the world, coupled with its own regional problems, will dent the recovery process. The SGX Nifty was trading 64.50 points down at 5,556 compared to its previous close of 5,620.50.

Back home, the government will announce the industrial output numbers for May later today. The fall in growth in the auto and textiles sectors is likely to result in a fall in the data. IIP (Index of Industrial Production) for April stood at 6.3%. Also, IT bellwether Infosys will announce its earnings for the first quarter of the current fiscal, which is expected to give direction to the market.

Weak global cues, nervousness ahead of the earnings season and an institutional sell-off were seen as the major reasons for the market decline yesterday, the second consecutive day that it has declined.  Earlier, a slowdown in jobs growth in the US and a steep rise in Chinese inflation to 6.4% for the month of June pulled markets across Asia lower on Monday. The Nifty opened 13 points lower at 5,648 and the Sensex fell by 35 points from its previous close to resume at 18,828. Sectors like metals, banking, auto and realty were under selling pressure in early trade.

Trading in negative terrain, the indices touched their day's highs in the initial session with the Nifty rising to 5,653 and the Sensex up at 18,844. The market continued to move sideways as caution ahead of the quarterly earnings season prevailed.

A half-hearted recovery attempt in noon trade was met by resistance from sellers, which pushed the market to its intra-day low in the last half hour. At the day's low, the Nifty fell 59 points to 5,602 and the Sensex erased 179 points at 18,679. However, the market finished above the day's low. The Nifty ended down 45 points at 5,616 and the Sensex closed trade at 18,721, down 137 points from its previous close.

Yesterday the market washed out all the gains made on 7th July, when the market touched a two-month high. But the Nifty's intra-day high was above the level of first resistance of 5,600.

US stocks settled sharply lower on Monday on fears of the European debt crisis now pulling in Italy in its hold. Besides, US’ own debt issues also continue to weigh on investors. While investors consider it unlikely there will be no deal on the debt, the lack of resolution at a time of growing international concerns weighed on sentiment.

Metals manufacturer Alcoa announced its second quarter results after the US markets closed for the day. The company’s revenue jumped 27% to $6.59 billion from $5.19 billion a year ago on higher metal prices. Net income for the quarter was $322 million, or 28 cents a share. Alcoa shares fell more than 2% in regular trading.

Overall, the Dow tanked 151.44 points (1.20%) at 12,505.76. The S&P 500 fell 24.31 points (1.81%) at 1,319.49 and the Nasdaq Composite Index .IXIC declined 57.19 points (2%) at 2,802.62.

Debt issues around the world pushed markets in Asia lower in early trade on Tuesday. Banking stocks—HSBC Holdings and Mitsubishi UFJ—fell nearly 2% each and electronics major Sony Corporation fell nearly 3% in Tokyo.

The Shanghai Composite tanked 1.24%, the Hang Seng tumbled 2.06%, the Jakarta Composite declined 0.90%, the KLSE Composite fell 0.42%, the Nikkei 225 skidded 1.53%, the Straits Times declined 0.98%, the Seoul Composite fell 1.94% and the Taiwan Weighted was down 1.51% in early trade.

Back home, capital market watchdog Securities and Exchange Board of India (SEBI) on Monday directed Bajaj Consultants and its group entities to ‘cease and desist from bidding in an objectionable manner’ while scrutinising its role in the Vaswani industries share case.

The order directed Bajaj Consultants and its group entities, along with two individuals Rajkamal Ramniwas Bajaj and Vinodkumar Ramniwas Bajaj, to cease and desist from bidding in an objectionable manner till further directions.

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Reshuffle of Union Cabinet to take place tomorrow

The reshuffle exercise, second in six months, was finalised at a meeting the prime minister and Congress president Sonia Gandhi this morning. The rejig, which is expected to place at 5pm on Tuesday, may leave untouched the 'big four'-finance, home, defence and external affairs

New Delhi: Prime minister Manmohan Singh will undertake a reshuffle of the Union council of ministers on Tuesday inducting some new faces and elevating some in the exercise that may also see a few being dropped, reports PTI.

Trinamool Congress chief whip in the Lok Sabha Sudip Bandhopadhyay is set to be inducted as a minister of state while his party colleague and minister of state for health Dinesh Trivedi is tipped to be promoted to cabinet rank and shifted to the railway ministry.
The railway portfolio became vacant after Trinamool Congress chief Mamata Banerjee resigned and took over as chief minister of West Bengal after the assembly elections in May.

The reshuffle exercise, second in six months, was finalised at a meeting the prime minister and Congress president Sonia Gandhi this morning. This was their fourth meeting in recent days.

The reshuffle, which is expected to place at 5pm, may leave untouched the 'big four'-finance, home, defence and external affairs.

With Uttar Pradesh set to go to assembly polls next year, minister of state for steel with independent charge Beni Prasad Verma is likely to be promoted as a cabinet minister while Raj Babbar, MP from Agra, may find a berth.

Those speculated for promotions include Jyotiraditya Scindia (MoS telecom) and Gurudas Kamat (MoS home) and shifted to some other ministries with independent charge.

The resignation of textiles minister Dayanidhi Maran in the wake of his being named in the 2G (second generation) spectrum scam and the resignation offer by corporate affairs minister Murli Deora has lent urgency to the reshuffle.

Another DMK representative A Raja quit as telecom minister in connection with the 2G scam in November and the party appears to be in no mood to fill these vacancies with its candidates, at least for the time being.

Among others being talked about for promotion is minister of state for chemicals and fertilisers Srikant Jena, who was a cabinet minister in the United Front government in the mid-1990s.

Those who may make the exit include minister for development of the north east region BK Handique whose place may be taken by Pabansingh Ghatowar, MP from Dibrugarh in Assam.

Tribal affairs minister Kanti Lal Bhuria, who has been made Madhya Pradesh Congress president, may be asked to take up party work full time.

There is expectation that Andhra Pradesh, which has only one representative in the Cabinet, could see more MPs getting into the ministry. Chhattisgarh, Goa and Manipur, which have no representation, may also get some ministerial berths.

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Share prices headed down: Monday Closing Report

Nifty may get support at 5,525

Weak global cues, nervousness ahead of the earnings season and an institutional sell-off were seen as the major reasons for the market decline today, the second consecutive day that it has declined.

The market opened lower this morning as worries over global growth resurfaced today. A slowdown in jobs growth in the US and a steep rise in Chinese inflation to 6.4% for the month of June pulled markets across Asia lower on Monday. The Nifty opened 13 points lower at 5,648 and the Sensex fell by 35 points from its previous close to resume at 18,828. Sectors like metals, banking, auto and realty were under selling pressure in early trade.

Trading in negative terrain, the indices touched their day's highs in the initial session with the Nifty rising to 5,653 and the Sensex up at 18,844. The market continued to move sideways as caution ahead of the quarterly earnings season prevailed.

A half-hearted recovery attempt in noon trade, was met by resistance from sellers, which pushed the market to its intra-day low in the last half hour. At the day's low, the Nifty fell 59 points to 5,602 and the Sensex erased 179 points at 18,679. However, the market finished above the day's low. The Nifty ended down 45 points at 5,616 and the Sensex closed trade at 18,721, down 137 points from its previous close.

This is the second straight day that the market has fallen, washing out all the gains made on 7th July, when the market touched a two-month high. But the Nifty's intra-day high was above the level of first resistance of 5,600.

The advance-decline ratio on the National Stock Exchange (NSE) was a poor 534:847.

Among the broader indices, the BSE Mid-cap index declined 0.31% and the BSE Small-cap index fell by 0.42%.

BSE Fast Moving Consumer Goods (up 0.52%), BSE Consumer Durables (up 0.50%) and BSE Oil & Gas (up 0.13%) were the sectoral gainers today. The rest ended lower with the BSE Realty (down 2.54%) leading the losers. It was followed by BSE IT (down 1.73%), BSE TECk (down 1.58%), BSE Metal (down 1.54%) and BSE Bankex (down 1.39%).

ONGC (up 1.59%), Mahindra & Mahindra (up 1.13%), ITC (up 1.12%), Reliance Communications (up 0.72%) and Sterlite Industries (up 0.28%) were the top Sensex gainers. The major losers on the index were Hindalco Industries (down 4.41%), DLF (down 3.25%), Wipro (down 2.28%), Infosys (down 1.98%) and Jaiprakash Associates (down 1.95%).

The main Nifty gainers were ONGC (up 1.57%), M&M (up 1.31%), ITC (up 1.17%), Grasim (up 1.07%) and Sesa Goa (up 0.73%). The top laggards on the index were Hindalco (down 4.17%), DLF (down 3.52%), Axis Bank (down 3.24%), Wipro (down 3.12%) and SAIL (down 3.11%).

Markets across Asia, with the exception of the Shanghai Composite, settled lower on concerns over the slowdown in global economic growth. The fears were fuelled on weak US employment numbers and a steep rise in China's inflation data for June. While Chinese stocks were marginally up today, premier Wen Jiabao reiterated that curbing inflation remained the government's top priority.

The Hang Seng tanked 1.67%, the Jakarta Composite fell 0.20%, the KLSE Composite declined 0.39%, the Nikkei 225 settled 0.67% lower, the Straits Times slipped 1.08%, the Seoul Composite skidded 1.06% and the Taiwan Weighted was down 0.96%, On the other hand, the Shanghai Composite added 0.18%.

Back home, foreign institutional investors were net buyers of stocks worth Rs517.33 crore on Friday. On the other hand, domestic institutional investors were net sellers of stocks worth Rs389.71 crore.

Glenmark Pharmaceuticals today said it has received Rs110 crore from Sanofi, as the second tranche of outlicensing fees for a deal with the French drug major, taking the total upfront receipts to about Rs220 crore.

In May, Glenmark Pharmaceuticals SA, a wholly-owned subsidiary of the Indian pharma major had outlicensed to Sanofi its monoclonal antibody, GBR 500, which is used for treatment of digestive disorders. The deal has a potential to generate revenue of as much as $613 million (around Rs2,720 crore). Glenmark fell 1.27% to close trade at Rs306 on the NSE today.

The Tamil Nadu Pollution Control Board (TNPCB) has issued a closure notice to Orchid Chemicals & Pharmaceuticals' Chennai-based manufacturing facility for non-compliance on the disposal of solid waste. However, the company informed the stock exchanges that it is in active dialogue with the state pollution board officials to resolve the issues and bring the plant to a fully operational stage at the earliest. Orchid Chemicals ended 0.10% lower at Rs248.40 on the NSE.

Public sector lender Bank of Baroda (BoB) is planning to open 10 to 12 overseas branches in the current fiscal. This will take its branches and office network abroad to around 100 by March 2012. The bank plans to open new branches in countries like Kenya, Uganda, Tanzania and Botswana. Among other international plans, it will be opening a joint venture company in Malaysia and is set to bag a licence in Australia. The Bank of Baroda stock was down 2.20% at Rs876 on the NSE today.

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