Sensex recovers; Greek elections, rate cut key triggers
The undertone is positive amid hope of some sort of monetary easing by the RBI at its policy meeting on June 18.
The Indian markets open in the green and indices are seen recovering in initial trades after their steep fall in the last session as global sentiment has improved on talk of coordinated central bank action in case of an adverse result of the weekend Greek election.
The Sensex is currently trading 120 points higher at 16798.28, while the Nifty is up 37 points at 5091 levels.All BSE sectoral indices in green in opening trade. Maruti and Tata Motors top Sensex gainers; both stocks have gained more than one percent, while the top traded counters on CNS include JP Associated and HDIL.
Infosys, Wipro, Ranbaxy, Tata Power, ICICI Bank, Coal India, Hero MotoCorp, Tata Motors, Tata Steel, Maruti, ONGC, L&T, SBI, were among the notable leaders in the Sensex and the Nifty. TCS, HDFC, Bharti Airtel,Bajaj Auto,Dr Reddys Lab is only notable loser in the Sensex and the Nifty
However, Rashesh Shah, chairman and CEO, Edelweiss Group told CNBC-TV18 that sentiment has slightly improved, but liquidity is bad and fundamentals do not support a sustainable upmove at this point.
"Markets can remain overbought and oversold for a long period even if valuations indicate otherwise," said Shah who says his foreign clients are waiting signs of some improvement in the policy and macro-environment before turning bullish on India. He, however, sees a short term rally in emerging markets including India, if there is another round of monetary easing in the US.
The race for the Rashtrapati Bhavan has turned into a tussle between the Congress and TMC. Both camps have dug in their heels. The outcome may not have a bearing on political stability but it will definitely add to the credibility deficit of UPA II.
In the near term, markets will swing to the beat of important events like Greek elections, RBI policy meet, FOMC meet and the G-20 Summit.
The rise in inflation numbers bolstered hopes of rate cuts by the RBI, but continuous decline in core inflation numbers made the investors cautious that apex bank may wait for a while before taking any decision in its upcoming policy review. Moreover, the sharp increase in MSP of Kharif crops is a cause for concern so is the suppressed inflation in petroleum products. Fiscal deficit also remains quite high and the Government continues to dither over measures like hiking urea and diesel prices. So, the RBI has a tough choice to make on June 18. Markets still expect some sort of easing from the RBI..
Traders will be eying the advance tax numbers for the first quarter to gauge the health of India Inc, while the manufacturing sector is likely to report weak numbers, good number is expected from oil companies and the private banking companies.
Meanwhile, the commodities stocks are likely to gain some strength in tandem with their global counterparts, while export oriented stocks may remain in subdued mood after India's exports contracted by 4.16% year-on-year to $25.68 billion in May, for a second time this year. Imports too dropped, by a sharper pace of 7.36% y-o-y, to $41.9 billion, signalling a weaker domestic economy.
Oil companies too may remain buzzing as there is expectation of another rate cut in petrol prices today. Owing to falling international crude prices, state-owned oil marketing companies Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) will meet today to decide on the quantum of reduction in petrol prices.
Stocks in news
Pantaloon Retail (India) rises 2.15 percent after the company said it has raised Rs. 800 crore by allotting optionally fully convertible debentures to Peter England Fashions and Retail on a preferential basis.
JP Associates shot up 2.5% after The Economic Times reported that Birla and Lafarge are eyeing its cement business that could fetch JP group Rs 9000 crore
HDFC has rejected a research report that alleged overstating of profits by the mortgage lender. Macquarie Bank also said in a report that HDFC shares are overvalued as there are risks over the long-term that the stock market seems to ignore.
Bharti Airtel, Idea: Banking Secretary DK Mittal has written to the Department of Telecom suggesting steps that should be taken to restart the lending process to telecom companies.
Meanwhile, Business Line reports Bharti Airtel has been asked to pay over Rs700 crore for customs duty evasion under a Customs, Excise and Service Tax Appellate Tribunal order.
The boards of Jyothi labs and Henkel will meet today to consider the merger. Jyothy Labs had acquired a majority stake in Henkel last year. It currently holds 83.66% stake in Henkel.
Tata Communications is in talks to buy big stake in Chennai based company Prizm Payments.
SpiceJet is planning to raise funds from PE companies such as The Blackstone Group and Bain Capital, and other potential investors including foreign airlines, reported CNBC-TV18 yesterday.
Concerns have risen among investors as COVID-19 cases continue to surge in China
Globally risk aversion and volatility gripped markets after the US Federal Reserve hiked interest rate