Wednesday, June 22, 2011

Morning Note By Mansukh - Wednesday 22 June 2011

FIRST LIGHT HEADINGS

ING Vysya Bank increases lending rate by 25 basis points Oil Ministry once again under storm over KG-D6 block Govt likely to allow FDI in multi-brand retail; initiate with six metro cities Govt likely to give go-ahead to 25 new textile parks across the country in 2011 Direct tax collection increases by 23% to Rs 101,600 crore in first quarter CARE reaffirms the rating assigned to the bank facilities of Nila Infrastructure L&T bags order worth Rs 1,366 crore from GCC countries

MARKET INSIGHT

On Tuesday 21 June 2011, What started as a smart day of recovery, turned out to be an ordinary day of trade for the Indian markets, with markets losing most of their gains by the end of the session, managing just a positive close. In the beginning it seemed that the domestic markets in sync with the other global markets will be able to present a good show after suffering a sharp selloff in previous session, as US markets closed with modest gains overnight, while the other Asian markets made a good bounce back, and on the domestic front government tried to calm down the storm that brought the markets considerably lower, by clarifying that India ‘cannot impose arbitrarily’ capital gains tax on investment routed through Mauritius. However, the two nations are likely to hold discussions on revision of the double tax avoidance treaty, which has been used for routing third country investment into India for availing of tax exemptions. But despite all these, profit booking appeared in the very first hour, taking the markets momentarily below the neutral line and it seemed that choppiness will persist for some more time. However, it was the strength in the heavyweights like Reliance Industries, Bharti Airtel, TCS and HDFC etc that led the markets back on the recovery path. All the stocks and sectors that were butchered in the last sessions’ massacre showed recovery in the early trading, helping the markets for a pull back.

The BSE Sensex gained 54.75 points or 0.31% and settled at 17,561.38 The index touched a high and a low of 17,714.88 and 17,504.27 respectively. 14 stocks advanced against 16 declining ones on the index. The BSE Mid-cap index lost 0.21% while Small-cap index shed 0.55%. On the BSE Sectoral front, IT up 1.08%, Oil & Gas up 0.87%, Teck up 0.84%, Health Care up 0.75% and Consumer Durables up 0.52% were the top gainers. On the flip side, Realty down 1.96%, Capital Goods down 0.60%, PSU down 0.56%, FMCG down 0.52% and Power down by 0.44% were the losers.

India VIX, a gauge for market’s short term expectation of volatility los 3.92% at 21.31 from its previous close of 22.18 on Monday. The S&P CNX Nifty gained 16.85 points or 0.32% to settle at 5,274.75. The index touched high and low of 5,322.45 and 5,257.00 respectively. 24 stocks advanced against 26 declining ones on the index. (Provisional)

All the Asian equity indices finished the day’s trade in the positive terrain on Tuesday concerns about a potential Greek debt default eased. The sentiment in the region got a fillip after Luxembourg’s Jean-Claude Juncker, who leads the group of euro zone finance ministers, said that a solution to the Greek’s fiscal crisis will be found. Japanese Nikkei rose more than a percent in the trade led by auto stocks climbing on bullish comments from a brokerage but volume was thin and most players were on the sidelines ahead of a Federal Reserve policy meeting. .

Read more about Indian Equity Research morning report by Mansukh

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