Morning Cues: Stocks that will chart market's course today

Indian equities flat lined on Wednesday, as lack of global and domestic cues forced investors to stay on the sidelines.

Indian shares closed higher for the fourth consecutive session, with the 30-share BSE Sensex rising 21 points to close at 17,257. The Nifty, meanwhile, went up 11 points to 5,240.

Broader markets saw higher gains and outperformed the benchmarks. The BSE Midcap and Smallcap indices gained 1% each as about two shares advanced for every share declining on the National Stock Exchange.

Yesterday’s consolidation, after nearly 600 point rally on the Sensex in the previous three sessions, indicated that the market is still hoping for the government to move on reforms. Even the outcome of the US Federal Reserve meet and the European Central Bank meet was closely eyed by the street.

Stocks in News

India’s largest public sector lender State Bank of India cut auto loan rates to 10.75% from 11.25% effective from August 7. It also cut home loan rates up to Rs 30 lakh to 10.25% and on home loans above Rs 75 lakh to 10.4% from 11%.

Sources indicate that market regulator is looking into Deccan Chronicle’s promoter holding details, as reports emerge that the company fudged ownership details to pledge shares. The shares of Deccan are currently pledged with Future Capital. It is also said that they forged depository Karvy’s letter head.

The auto sales numbers for July have started coming in, and the first few numbers are disappointing. Hero MotoCorp’s total sales came in below estimates, down 1.5% year on year at 4.84 lakh units versus 4.91 lakh units.

From the cement space, Ambuja Cements' July production came in at 1.69 million tonne versus 1.67 million tonne year on year.

In earnings impact, Voltas yesterday reported a weak performance operationally, though both topline and bottomline came in above estimates. Margins disappointed, dipping to 5.8%, below street expectations.

The big result candidates today include Mahindra Satyam and Glenmark Pharma. A CNBC-TV18 poll sees Mahindra Satyam report flat revenues. However, profit is expected to drop 50% sequentially as last quarter was impacted by extra ordinaries like tax write back and reversal on impairment of losses.

Other results expected today are 3 I Infotech, Shasun Pharma, Berger Paints, Madras Cements and Cummins India to name a few.

Onto the latest from the violence at Maruti's Manesar plant, sources indicate that the Haryana police are hopeful of completing the probe shortly. This comes even as three more arrests were made yesterday, taking the total to 103. Sources add that the financial damage report will be in by the weekend. Infact, Maruti's chief operating officer SY Siddiqui spoke exclusively to CNBc-TV18 and said that the police is of the view that the Manesar attack may have been pre-planned. He also added that there is no timeline on when the plant will be reopened.

Keep an eye out for aviation stocks today, which may be hurt by the hike in jet fuel prices. Aviation turbine fuel prices have been hiked for second time in a month by 4.5%, effective August 1.

Global Markets

US markets closed lower in a see-saw session yesterday after the US Federal Reserve maintained its current monetary policy, but left the door open for additional stimulus should conditions warrant.

The Fed said it will continue to hold interest rates low through at least 2014 and continue Operation Twist through the end of the year.

Meanwhile, European markets edge higher ahead of the European Central Bank’s policy meeting scheduled today.

Markets in UK and France gained around 1-1.5%, while the DAX ended marginally lower.

Moving onto the currency space, the dollar held on to its gain post the US Fed statement. On the flip side, the euro dipped below 1.23 to the dollar.

In commodities, crude prices gained, taking Brent above USD 105 per barrel, following a drop in US stockpiles. Meanwhile, gold declined after the Fed held off on increasing stimulus measures, lowering demand for the precious metal.

Global Cues

All eyes now turn to Europe where the European Central Bank and Bank of England will be holding policy meetings today. Investors will be looking for concrete actions that say the ECB is prepared to act to protect the euro zone from collapse.

Analysts predict the measures on the table could include directly buying bonds of countries facing high yields on its own or in tandem with Europe's bailout funds, the European Stability Mechanism (ESM) or the European Financial Stability Facility (EFSF). To buy those funds, the ECB could also signal a willingness to take a haircut on those bonds if a country defaults. Or, it could simply cut interest rates or offer another round of cheap 3threeyear loans to the banks as it did in December and February.

The deadlock in Greece finally sees some breakthrough, as coalition government agrees on how to reduce spending by 11.5 billion euro over the next two years. Athens is now set to enter talks with its international creditors, the European Union, the ECB and the International Monetary Fund to secure those bailout funds. Greek officials say that could happen within a month.

The ADP survey showed that private employers added 163,000 jobs last month in the US, lower than June's revised total of 172,000. Meanwhile, the ISM manufacturing index came in at 49.8% for July, an indication of continued contraction.

Watch out for weekly jobless claims numbers expected today. It is seen rising to 370,000 versus 353,000 the prior week. Also, factory orders are expected to remain unchanged at 0.7%.

Anisha Mappat
anisha.mappat@network18online.com