Central banks could hold sway over markets

Actions of two central banks could determine the direction of Indian stocks in the week ahead. While the Reserve Bank of India (RBI) decision on policy rates is likely to set the tone for domestic stocks this week, the outcome of the US Fed’s two-day meet ending Wednesday — which could give some clarity on its monetary policy outlook — could have wider implications on  global financial markets.

   Hopes of a policy-rate or repo rate-cut by RBI have diminished following the recent decline in the rupee against the dollar. So, if the Indian central bank keeps the repo rate (at which it lends to banks) intact, markets would not be disappointed, said fund managers.

 After RBI’s meeting, investors will closely watch the US Federal Open Market Committee meeting. If Fed chairman Ben Bernanke signals that the US central bank might cut down its bond buying programme known as Quantitative Easing 3 (QE3), it could weigh down sentiment in emerging market equities including India’s. The liquidity from QE3 has made its way to equity and bond markets worldwide.

       Investors, however, think RBI might cut the cash reserve ratio (CRR) — the minimum amount banks need to hold with the central bank, to ease liquidity.

“A CRR cut of 25 bps is what some quarters of the market are looking forward to,.“With the declining rupee situation, high current account deficit numbers, markets are not expecting a repo rate cut.”

Gold futures trade lower on global cues

Gold futures showed a negative trade on MCX as speculators offloaded their positions driven by weak trend in domestic market. Further, as investors sold off worrying about an early end to the Federal Reserve's massive bond-buying stimulus on the back of strong U.S. data, put pressure on the Gold futures. However, the prices found some support from weakness in the US dollar, as dollar-priced commodities became less expensive to investors holding other currencies.

The contract for August delivery was trading at Rs 27681.00/10 GRMS, down by 0.31% or Rs 85.00 from its previous closing of Rs 27766.00/10 GRMS. The open interest of the contract stood at 14347 lots

The contract for October delivery was trading at Rs 27868.00 /10 GRMS, down by 0.32% or Rs 89.00 from its previous closing of Rs 27957.00/10 GRMS. The open interest of the contract stood at 1344 lots on MCX.

Bond yields ease tracing lower than expected May inflation data

Pre WPI data Scenario:

Bond yields eased in early deals tracing a stronger rupee and higher US treasuries. However, yields will likely be biased up as the Reserve Bank of India is unlikely to cut rates as the recent sharp rupee fall has sparked renewed concern about the current account deficit. Meanwhile, the yields gyrated in range-bound for today’s trading session as dealers awaited headline inflation, which probably held near the central bank's comfort level of 5 per cent last month.

On the global front, US Treasuries were firm in Asia on Friday as traders took the view that any end to the Fed's bond buying programme will be gradual and that no rates hikes were imminent. Meanwhile, Brent futures slipped on Friday from near $105 a barrel with ample US inventories and a poor demand outlook weighing on prices, after bouncing more than 3 percent in the last two sessions off this week's low.

Back home, the yields on 10-year 7.16% - 2013 bonds were trading 1 basis point lower to 7.32% from its previous close of 7.33% on Thursday.

The benchmark five-year interest rate swaps were trading 1 basis point lower at 7.00% from its previous close of 7.01% on Thursday.

Post WPI data Scenario:

In a sharp reaction to the surprisingly lower inflation figures for May, bond yields edged lower on enlarged rate cuts hopes. Lower industrial growth and inflation data, strengthens the case for rate cut in RBI’s monetary policy slated next week.

Providing RBI the much needed room for slashing rates, India's main inflation gauge, surprisingly slowed down further to 4.7% for the month of May, as compared to 4.89% (Provisional) for the previous month of April, which was its lowest level since 2009.

The yields on 10-year 7.16% - 2013 bonds were trading 1 basis point lower to 7.32% from its previous close of 7.33% on Thursday.

May WPI softens further to 4.7% v/s 4.89% in April; March inflation revised downwards to 5.65%

In a big surprise, the annual rate of inflation, based on monthly WPI, slowed down further to 4.70% (Provisional) for the month of May, 2013 (over May, 2012) as compared to 4.89% (Provisional) for the previous month and 7.55% during the corresponding month of the previous year. Build up inflation in the financial year so far, was 0.88% compared to a build-up of 1.80% in the corresponding period of the previous year. However in a pleasant surprise, March inflation figures were revised downward to 5.65% from 5.96%.

Manufactured products, which carry weight of 64.97% in the index, rose by 0.3% to 149.1 (Provisional) from 148.7 (Provisional) for the previous month. The index for 'Food Products' group rose by 0.8% to 167.1 (Provisional) from 165.8 (Provisional) for the previous month. The index of Fuel & Power, which has weight of 14.91%, declined by 1.3% to 192.0 (Provisional) from 194.6 (Provisional) for the previous month due to higher price of electricity (13%) as price of other items such as LPG (12%), coal (10%), aviation turbine fuel (6%) and petrol (5%) declined.

The index of Primary Articles, having weight of 20.12% too rose by 0.6% to 229.3 (Provisional) from 228.0 (Provisional) for the previous month. The index for 'Non-Food Articles' group declined by 0.6% to 208.5 (Provisional) from 209.7 (Provisional) for the previous month, while the index for 'Minerals' group declined by 2.4% to 346.5 (Provisional) from 355.0 (Provisional) for the previous month.

However, it remains to be noted the widening divergence between WPI and CPI remains the matter of concern. Annual rate of inflation, based on the consumer prices index (CPI), declining for third straight month grew above the expectation of sub 9% figure at 9.31% in May, as against 9.39% in April.

Meanwhile, the sharp downtick in March inflation figures, core wholesale price index, or inflation that excludes volatile food and fuel prices, which is estimated to have risen by 2.4% from a year earlier, easing from an annual 2.77% rise in April, also provides the central bank with some room to cut policy rates by 25 basis points in its Policy review on June 17. The Reserve Bank of India (RBI), so far, has obliged the street with rate cuts for three times, with the latest being the one on May 3. Drawing comfort from 3-year low inflation, RBI, in its ‘Monetary Policy Statement 2013-14’, reduced repo rate by 25 basis points from 7.5% to 7.25% with immediate effect, its lowest since May 2011.

CAD likely to remain at 4% in Q4 FY13: Raghuram Rajan

As per the Chief Economic Advisor Raghuram Rajan, the country’s Current Account Deficit (CAD) is likely to be around 4 percent of the gross domestic product (GDP) for the fourth quarter of FY13. The CAD, which represents the difference between the export and import of goods, services and transfers, widened to a record high of 6.7 percent in the third quarter of FY13 on the back of rising oil and gold imports and is expected to be around 5 percent for the previous financial year. Meanwhile, the high CAD is impacting the rupee value, which has hit 58.50/$ level recently.

   India’s gold imports touched 162 tonnes in May, while in April, it were around 100-120 tonnes, higher than the average monthly import level of 70-80 tonnes. Further, the recently released World Gold Council (WGC) report highlighted that India’s gold imports in April-June quarter of 2013 may increase by 200 percent y-o-y to around 300-400 tonnes, which would be almost half the imports of whole of 2012. However, to curb the gold import, the government has been taking steps regularly, including raising import duty. Further, the RBI too had put in place regulations under which gold can only be imported on a consignment basis to meet the genuine demands of Jewellery exporters. It has also increased margin money to 100 Percent. 

TV18 Shines on launching a 24 hrs Television News channel 'News18 India' in UK

TV18 Broadcast India's Premier news and entertainment network has launched 'News18 India' a 24hrs television news channel is designed to give global audiences a window into the world's largest democracy.
News18 India will be distributed in the UK and other International markets bu Indiacast, a strategic joint venture bbetween TV18 and Viacom18 and one of India's largest  multi platform content aggregators,

Following the entry in the UK, News India will be launching across the globe including key diaspora markets such as the us,canada, middle east and Australia.
 The promoters holding in the company stood at 57.04% while institutions and non-institutions held 10.24% and 32.72%  
Last one week high and low stood at Rs.25.60 and Rs.24.05 respectively.the scrip is currently trading at Rs.24.65 up by 1.23% from yesterday's closing.

Mahindra Satyam gains on entering into strategic alliance agreement with CollabNet

Mahindra satyam, a leading global consulting and IT service provider, has entered into a strategic alliance agreement with collabNet, the leader for enterprises cloud development , to jointly develop and deliver Enterprise cloud development, Agile and DevOps solutions in the cloud services space. Mahindra satyam and Tech mahindra will work together with CollabNet under this agreement.
 
collabNet's Teamforge ALM platform aligns with Mahindra satyam and Tech mahindra's vision to drive value for enterprise IT organisations via cloud based approaches. Both the companies will resell collabNet's Teamforge and Cloudforge products and services, as well as its Agile training services throughout Asia.

   Satyam is currently trading at Rs.112.60 up by 0.76% fro its previous closing Rs.111.75 on the BSE. 

Jet airways flies higher on the bourses

Naresh Goyal-run Jet airways (India) low cost commercial carrier Indigo both have launched a novel sales strategy of allowing customers to buy air tickets through credit cards with payment stretched out over equated monthly installments (EMI's) of  two months.
 
   With jet fuel prices shooting through the roof and fierce competition in the aviation market, the two airlines have taken a leaf out of the book of mobile phone companies,which have tied up with banks to offer handsets on EMI's through credit card purchases.
 Both Jet Airways and IndiGo have tied up with HDFC and citibank and ICICI bank to offer their passengers an option to pay fares in two installments.
  Today the scrip opened at Rs.402.90 and made a high of  Rs.442.35  up by 6.24%

Former Coal Secretary HC Gupta resigns..

Competition commission member H C Gupta,the former coal secretary who is set to be questioned by  CBI, has submitted his resignation to the government.
 The resignation came after the corporate affairs ministry gave its nod to CBI to question Gupta in connection with the coal blocks allocation scam.

Gupta submitted his resignation yesterday and the same will be processed by the government.
During the 2006-09 period, 68 coal blocks were alloted  to 151 companies and files of some of them had gone missing.
CBI, which is probing  the coal block allocation scam, has registered 12 FIR's related to alleged irregularities in the allotment coal blocks between 2006-2009.  

Fitch upgrades India's outlook to stable

Fitch Ratings today scaled up the outlook on India's sovereign ratings from negative to stable owing to the government's efforts to contain the fiscal deficit and address structural issues to perk up investment and growth.
    The rating agency affirmed its long term foreign and local currency issuer default rating at BBB.It also affirmed the country ceiling at BBB and the short foreign currency IDR at 'F3'.

The agency said the stable outlook was a result of the governments action to boost the economic activities. It reflects the measures taken by the govenment to contain the budget deficit,including the commitments made in the FY14 budget and progress in addressing structural impedients to investment and economic growth.