Cues: Sensex to dip at open, all eyes on SKS as Cabinet clears MFI bill

Today, the Indian markets are likely to open lower as there is no positive cue to support the markets; even the global cues are sluggish.

Meanwhile, Bank Nifty contracts have reportedly fallen to record lows and their discount to the Bank Nifty spot has widened, reflecting the mounting concerns about the sector’s outlook.

The sentiments are likely to weigh down on ministerial panel’s further deferral of long overdue legislations related to insurance, coal and competition law.

Provisional exchange data showed that foreign investors were net buyers of Indian stocks worth Rs 317 crore ($59.38 million) on Thursday, after selling in the three prior sessions.

However, the government cleared the Microfinance Bill. It has made the Reserve Bank of India as the regulator for all micro finance companies (MFIs). The impact of the decision will be seen on the microfinance stocks.

SKS Microfinance will be in focus as the Cabinet has cleared the MFI Bill. SKS has also announced steep job cuts and shuttering of branches in Andhra Pradesh. Future Capital Holdings may be in the spotlight amid reports of a large PE firm showing interest in

The power stocks too are likely to remain buzzing as the government has ordered Coal India to supply coal to all power plants getting commissioned within this fiscal even if they have not signed legally binding fuel supply agreements.

In the telecom space, the presidential reference to Supreme Court in 2G case will come up for hearing in Supreme Court today. A five-judge bench headed by CJI has been constituted to hear the matter

The IIP data for March 2012 will be important after the Government shockingly slashed January’s figures. Latest inflation report is due on Monday. The Nifty sustained below the psychological support of 5000 for the second consecutive trading session on Thursday. There was no respite from volatility despite the main indices trading in oversold terrain. The current downtrend could worsen if the Nifty breaks below 4925.

The rupee trimmed some of its earlier gains against the dollar on Thursday, though it remained well above the session lows after the RBI said it would require exporters to convert 50% of their existing foreign currency holdings into rupees. It appreciated by 22 paise to 53.60 a dollar after hitting a high around 53.20.

Global Cues

Asian shares retreated on Friday, spooked by JPMorgan’s $2 billion huge loss from a failed hedging strategy, with investors warily watching political turmoil in the eurozone as they await new Chinese data for clues on its growth outlook.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3 percent, after falling to its lowest in nearly four months on Thursday while Japan’s Nikkei share average opened up 0.1 percent.

USstock index futures fell sharply on Thursday evening as JPMorgan Chase & Co stunned investors with news that its chief investment office had incurred “significant mark-to-market losses” that it said could “easily get worse,” sending the stock down nearly 7 percent to $38.05 in after-hours trading.

Prior to the JPMorgan’s announcement, European and US.stocks rose after data showed U.S. claims for unemployment benefits edged lower last week, soothing concerns that dismal employment growth in April pointed to worsening labour conditions.

Risk appetite will remain muted largely due to heightening political and policy uncertainty in the euro zone.

“We expect the EUR to remain under pressure as a result, especially as the market debate regarding the use of the EUR as a policy tool gains momentum,” suggesting that a rate cut aimed at weakening the euro is likely, Morgan Stanley said in a note.

As central banks focus more on growth than inflation, real yield differentials will be more significant in dictating forex market direction, especially for the euro/dollar, it said.

Uncertainty may drive currency market volatility, pegged at historically low levels by aggressive central bank liquidity injections globally, to pick up and prompt an unwinding of carry trades, with the dollar and the yen gaining, it added.

The euro was steady around $1.2931, still within sight of $1.29115 hit on Wednesday, its lowest since January 23.

Investors will also be cautious ahead of data due from China later in the session, seeking clues over the extent of growth slowdown after it posted weaker-than-forecast April trade figures the day before.

Chinese inflation data are due at 0130 GMT while industrial output and retail sales are due for release at 0530 GMT.

The Australian dollar, which is highly sensitive to growth prospects in China, its single biggest export market, also steadied around $1.0060 but near $1.0021 touched on Wednesday, its lowest since December 20.

“Chinese trade data yesterday suggested slowdown in trade. So this time around the focus will be more on growth-related data such as output and investment rather than CPI,” said Masayuki Doshida, senior market analyst at Rakuten Securities.

Friday’s data are likely to show inflation moderating while output revives, but an uneven recovery could mean contradictory data and more evidence for the China bears.

Oil eased, with Brent crude retreating 0.7 percent below $112 a barrel, while U.S. crude fell 0.9 percent to $96.20 a barrel.

Asian credit markets were subdued, with the spread on the iTraxx Asia ex-Japan investment-grade index barely changed early on Friday.

Greece struggled to form a government after a majority of voters rejected austerity measures in exchange for a bailout, putting the country at risk of bankruptcy and leaving the euro.

But euro zone officials on Thursday said euro zone countries were prepared to keep financing Greece until Athens forms a new government, whether one emerges from Sunday’s election or if new elections have to be held next month.

Greece has also been saved from an imminent insolvency after the euro zone’s temporary bailout fund, the European Financial Stability Facility (EFSF), agreed on Wednesday to immediately disburse 4.2 billion out of a 5.2 billion sub-tranche of the bailout to Athens.

Stakes are critically high for the European Union to keep Greece afloat as the EU is now Greece’s biggest creditor and a Greek default means euro zone taxpayers will take a hit.

Spain, facing pressure on its fragile banking sector, is expected to present new reforms to complete the clean-up of its banks on Friday, with the government seen approving a plan to force banks to park their toxic real estate assets in holding companies that would later sell them off.