Views on markets today
- Indian markets fall third day in a row on Friday as world stocks fell amid ongoing euro-zone debt worries and after weak US economic data released on Thursday. Lenders such as ICICI bank also led the markets fall after a central bank panel recommended tightening regulations on loan restructuring, including setting aside higher provisions. BSE Sensex shed 120.41 points or 0.7%, off 116.76 points from the day’s high and up 28.75 points from the day’s low.
- IT stocks were mostly lower on weak economic data in the US while shares of organised retailers rose on renewed buying. Power equipment makers such as Bharat Heavy Electricals were hit by profit-taking, despite the government’s proposal to impose duties on some imports as the action was widely expected. Banking shares declined after a panel appointed by the Reserve Bank of India recommended higher loan-loss provisions by banks and greater “sacrifice” by founders of controlling shareholders of troubled companies. Shares of iron ore miners declined as a key iron-price benchmark hit its lowest level in eight months due to high inventories from Chinese steel makers.
- Dr Reddy’s Laboratories declined for the second day in a row after the company’s first quarter results fell short of market expectations. Hindustan Zinc logged small gain after reporting a tepid rise in net profit in Q1 June 2012 over Q1 June 2011. Asian Paints rose after the paints major said at the time of announcing Q1 June 2012 results its raw material costs are falling.
- Market breadth was weak at ~0.70x as investors sold large cap stocks. On provisional basis, FIIs bought equity of ’1.78bn while domestic institutions sold equity of ’0.64bn in the cash segment.
- Asian stocks dropped after a sharp fall in the US markets, on account of renewed concerns in Spain and Greece. According to a German press report, the International Monetary Fund is set to stop aid payments to Greece, raising the odds that the nation will become insolvent as early as September.
- We expect a weak opening for the Indian markets, following the concerns in the global stocks.
Economic and Corporate Developments
- Samajwadi Party, Left Parties and Janta Dal opposed FDI in retail, writes to PM.
- Pranab Mukherjee elected India’s 13th President.
Buzzing Stocks
- TCS, Cognizant join Infosys in race to buy Zurich based technology firm, Lodestone Management Consultants.
- Videocon slaps legal notice on Huawei, seeking $180mn in damages for providing faulty equipment & poor network services.
- Proposed SAIL, Neelachal Ispat merger scrapped.
- Tata Power signs coal supply agreement with Pt Antang to buy up to 26% stake.
- Tata Group holding negotiations with the government of Vietnam to set up a steel factory, with an investment of $5bn.
- L&T and Pipavav ink 2 separate defence JVs with Mazgaon dock reports.
- Dr Reddy’s has resolved issues related to manufacturing at its Mexican facility with the US regulator.
- Tata Chem plans Singapore holding co to park all its natural resources’ assets in US, UK and Africa.
- Reliance Mediaworks board to meet on July 25 to consider raising funds via rights issue.
- CLSA acquires 94.94 lakh shares (9.15% stake) in SKS Micro at ’75.40 per share via QIP.
US markets
US markets saw strong selling pressure on Friday, European concerns resurfaced again. Following headlines that have focused on U.S. earnings all week, a rise in Spanish bond yields showed that investors remain wary of Spain’s ability to control its debt problems.