Global markets were slightly nervous overnight as the health of European banks weighed on investor risk appetite after S&P downgraded Spain's rating. How will our market open on the back of all these cues? Read on for more.
European markets ended flat, easing back near their three-month lows following news that eurozone confidence weakened in April, with the business sentiment index plunging to a 14-month low.
Europe Closing: CAC -0.1%; DAX +0.5%; FTSE +0.5%; Italy -0.7%; Spain (ahead of S&P) -1.3%
The S&P has downgraded Spain's long-term sovereign credit rating to BBB+ from A. The ratings agency says it sees mounting risks to government debt as a share of GDP in light of its economic slowdown and says that it sees deterioration in Madrid's budget deficit trajectory until 2015. In response to this downgrade, the Spanish government said the S&P has not taken into consideration the reforms announced since December to reactivate the economy.
The Dutch Deal
There is some better news coming out of the Netherlands where the caretaker government and most opposition parties have approved austerity plans for next year. The agreement comes just ahead on the Monday deadline set by the ECB to the Netherlands to outline just how it can reduce its budget deficit to 3% of GDP by 2013. Some analysts are still cautious saying that the austerity deal may unravel before parliamentary election in September.
The US markets closed near their best level in thin trading, with the S&P rallying to 1,400, as hopes for further stimulus from the Fed seemed to overshadow worries over the jobs market and some tepid earnings reports. The CBOE volatility index fell to end near 16.
New claims for unemployment benefits declined last week by 1,000 to a seasonally adjusted 388,000. Meanwhile, pending home sales rose 4.1% in March, hitting its highest level in almost two years.
US Closing: S&P +0.7% at 1399.98; Dow +0.9% at 13204.6; Nasdaq +0.7%
Data to Watch
- US Q1 GDP
Asian markets opened in the green as they await Bank of Japan’s rate decision move. The Hang Seng, Kospi and Straits are up 0.4%; Taiwan and Nikkei are flat while Shanghai is down 0.2%.
Commodity & Currency Check
In the currency space, the euro weakened after S&P hit Spain with a two-notch credit rating downgrade. However, it is still holding above 1.32 to the dollar.
Crude prices remained soft in trade following the news of the Spanish downgrade.
Gold regained a percent yesterday on options-related buying as investors' risk appetite rose broadly after the Fed's comments.
Stock Specific Action
The cabinet clears the Banking Laws Amendment Bill 2011 which gives the RBI the power to supersede the entire board of a bank. Bill is now scheduled to be introduced in the current session of Parliament. The Cabinet also cleared the ceiling on voting rights for private banks to be capped at 26%
In result impact, it was another good financial performance by Idea . Volume growth positively surprised at 9% while their revenues saw a nearly 7% growth at Rs 5,369 crore.
TDSAT has asked the Department of Telecom not to act against Airtel on the penalty issue.
IMD says a normal monsoon is expected for the third consecutive year.
The Economic Times reports that the Oil Ministry has demanded a tax cut of Rs 6 a litre on petrol.
Emami is in discussions to buy out the oral care business of Anchor Healthcare, reports the Economic Times.
SEBI is against relaxing the 2013 deadline on public holding norms, reports Mint.
Lodha, Runwal and Sheth Developers are in talks to buy DLF’S 17 acre land in Mumbai, reports the Business Standard.
Samvardhana Motherson Finance fixes the price band for its IPO at Rs 113-118 a share.
Essar Oil renews pact with BPCL for sale and purchase of oil products. The renewed four year agreement will run up to 2016.
Strides Arcolab buys S India’s sterile formulations unit for Rs 125 crore.
Orbit Exports to allot 2.25 lakh equity shares at Rs 38/ps to promoters upon conversion of optionally convertible warrants.
Nifty changes effective today
Inclusion: Asian Paints and Bank of Baroda
Earnings to Watch
In earnings action, from banking space ICICI & Axis Bank will declare their numbers today. According to a CNBC-TV18 poll, ICICI bank's net interest income may see a 14% surge at Rs 2,876 crore and while margins are expected to be maintained, their restructured assets are likely to increase.
Other results are: HCC, JSPL, Lanco Ind, Siemens, Hexaware Tech, IBull Fin, Kalindee Rail, Kajaria Ceramics, Mahindra Lifespaces, RPG Life, Delta Corp, State Bank of Travancore, Thomas Cook India.
READ MORE ON US markets, Global markets, European Markets, Asian Markets, Gold, Banking Laws Amendment Bill 2011, Chelsea Saldanha
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