Today market view : 11-May-2012

We expect a lower start today as well owing to weak Asian markets. The US dollar is strong while crude and gold are in the red.

Most market participants appear to be miserable despite the best efforts of the Government (GAAR deferred by a year) and the RBI (to lift the rupee). Political uncertainty in the debt-stricken eurozone has added to the gloom. The result: key indices are down for three straight sessions and remain below 200-DMA. The rupee has recovered a wee bit but continues to be under pressure. FIIs too remain wary of putting fresh money given the concerns on tax laws and macro-economic issues. The only positive to have emerged in recent past is the drop in crude oil. Here too, there is no certainty that the current trend will prevail in the near-term.

US blue chip and broader indices gained overnight but the Nasdaq was flat. Sentiment on Wall Street was marred a by major credit loss at JP Morgan and Cisco’s cautious outlook. European benchmarks ended higher though.

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.Meanwhile, the Government has deferred long pending legislations related to Insurance and Coal while clearing the MFI Bill.There is no end to the ruckus in parliament as UPA and principal opposition party spar over the issue of corruption in high places.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 acquiring the NBFC promoted by retail baron Kishore Biyani.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.

India’s merchandise exports slowed in April while imports too softened. The trade gap has contracted slightly. But, car sales barely crawled in April after the March spike linked to excise duty hike.
The monsoon is likely to hit southern India on time (in the first week of June), says India’s weather office.

Key Results Today: AstraZeneca Pharma, Aditya Birla Chemicals, Balaji Telefilms, Dr. Reddy's Labs, Federal Bank, Greaves Cotton, Hathway Cables, ICRA, Indian Bank, Moser Baer, MTNL, Oracle Financial Services, Tanla Solutions, Thermax and Torrent Power.

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