Wednesday’s Market Preview: Cautious opening expected

The local market is likely to see a cautious opening today on lacklustre global cues. Wall Street closed mostly lower overnight on the strengthening dollar. Markets in Asia were trading with modest cuts in early trade on Wednesday as commodity stocks were hit by lower prices of gold and crude. The SGX Nifty was down 13.50 points at 6,145.50 over its previous close of 6,159.

As indicated in Monday's market closing report, the market fell 62.33 points yesterday. The Sensex opened 56.33 points above its previous close, hitting a high of 20,651.21, which was lower compared to the high of Monday, despite an overnight rally of almost 100 points in the Dow, on improving economic data. Buying in select stocks lifted the key benchmarks into the green in noon trade, but volatility soon pushed them lower again. The market ended its four-day winning streak, ending about a quarter of a per cent lower.

The Sensex declined 0.30% to end at 20,498.72. The Nifty shed 11.25 points (0.18%) at 6,146.35 after touching the day's high-low of 6,181.05 and 6,124.40.

US markets closed mostly lower on Tuesday as the dollar gained strength and as prices of gold and crude declined. Gold declined 3.1% while crude futures shed 2% in trade. The indices pared their losses after the Federal Reserve announced that it would continue with its bond buying programme.

Announcing the minutes of its 14th December meeting, the Fed said a stronger US economy is among the reasons behind the rise in government-bond yields, which may undermine its efforts to keep the recovery going through low interest rates. In economic news, the Commerce Department reported that US factory-goods orders rose 0.7% in November, against analysts’ forecasts of a 0.1% decline.

The Dow gained 20.43 points (0.18%) 11,691.18. The S&P 500 shed 1.67 points (0.13%) to 1,270.20 and the Nasdaq fell 10.27 points (0.38%) to 2,681.25.

Markets in Asia were mostly in the red in early trade today as the strengthening dollar pushed gold and crude lower. Investor sentiment was also hit as they were wary that the US Fed’s plan to continue with bond buying would not be sufficient to boost the economy.

The Shanghai Composite declined 0.48%, the Hang Seng fell 0.34%, the Jakarta Composite lost 0.16%, the Nikkei 225 was down 0.12%, the Straits Times fell 0.13%, the Seoul Composite shed 0.09% and the Taiwan Weighted was down 0.20%. On the other hand, the KLSE Composite gained 0.44% in early trade. The SGX Nifty was down 13.50 points at 6,145.50 over its previous close of 6,159.

Back home, corporate affairs minister Salman Khurshid on Tuesday said the April 2011 deadline for the transition of Indian accounting standards to the International Financial Reporting Standard (IFRS) will be met and all issues, especially those related to tax implications, have been resolved.

Mr Khurshid’s statement comes days after industry body Ficci sought delay in the implementation of the IFRS beyond April 2011, saying the deadline was “highly unworkable” and “unfair”.

The convergence would require minor amendment in the Companies Act, 1956 and some changes in the governing Acts of the three professional institutes—ICAI, ICWAI, and ICSI.




6 years ago

How about the banking sector? Will it perform well today?

GDP will grow 8.4% but constraints remain: Crisil

New Delhi: Strong domestic demand will enable the Indian economy to register an average annual growth of 8.4% during next five fiscals, reports PTI quoting ratings firm Crisil.

Crisil said the Indian economy faced five key constraints which if addressed would accelerate growth to 10% annually on a sustained basis.

These involved quantity and quality of physical infrastructure, skill shortages among the workforce, faltering agriculture and high food inflation, less spending on health, education and physical infrastructure, and a governance deficit.

"The inherent strength of India's domestic demand will enable it to maintain 8.4% annual growth over the next five years (2011-12 to 2015-16)," Crisil said in its report 'India-Raising the Growth Bar'.

The report comes at a time when the Indian economy clocked 8.9% growth during the first half of the current fiscal.

Spurred by better-than-expected growth, the government had in its mid-year economic review in December revised upward its forecast for economic expansion in 2010-11 to 8.75%, plus or minus 0.35%, from the earlier estimate of 8.5%.

The Indian economy grew by 7.4% in the last fiscal, showing recovery from the global economic downturn.

It had grown by an average of above 9% for three fiscals before global recession plunged the growth rate to 6.7% in 2008-09.

The report said an increase in discretionary spending by middle class households will boost demand for durables like automobiles and white goods, and services like hotels, restaurants, and tourism.

Financial services such as consumer finance, asset management and insurance will grow briskly to cater to the needs of a growing middle class with increasing disposable income, it added.

The growing income of the middle class segment, which already numbers over 30 crore, will also propel demand for healthcare and education services, particularly in the private sector.

"Domestic demand, spurred by a large growing young population, and robust consumption and investment rates, will support 8.4% economic growth over the next five years," Crisil managing director and CEO Roopa Kudva said.

"The Indian economy is not demand-constrained. Rather, it is the supply-side issues that limit the growth prospects," Crisil said.


Telecom industry tops M&A chart in Apr-Dec 2010

New Delhi: The telecom industry topped the charts in terms of mergers and acquisitions (M&As) that took place in India in the April-December 2010 period, valued at $58 billion across all sectors, reports PTI quoting an industry body study.

The number of M&As rose to 222 in the first nine months of the current fiscal compared to 149 in the same period last fiscal, an Associated Chambers of Commerce and Industry (Assocham) study said.

“The rise in these deals provides clear evidence that the Indian industry is consolidating and at the same time aggressively working on global expansion,” it said.

Of the total valuation of M&As, the telecom sector had the highest share of 28%. The sector saw 10 deals valued at $16.5 billion, the study said.

Among the major outbound deals during the period, India’s telecom major Bharti Airtel completed a deal to buy Kuwait-based Zain Telecom’s African business for about $10.7 billion, the study said.

In another deal, Bharti acquired 100% stake of Telecom Seychelles for $62 million. Also, Reliance Industries bought 95% stake in Infotel Broadband for $1.03 billion, the survey said.

Besides this, other sectors like IT/ITeS, auto, steel, consumer durables and real estate witnessed 146 deals for an amount totalling $6.48 billion.

Total 98 outbound M&As took place during April-December 2010-11 against 32 in the same period of the last financial year. Of the 222 deals, 103 were domestic deals and 21 inbound, the study said.


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