Market Cues: Greece polls, RBI policy to dominate sentiment

Moneycontrol Bureau

Greece's pro-bailout, pro-euro New Democracy Party emerged victorious on Sunday, indicating the Greeks will to stay anchored with the euro and remain an integral part of the euro zone.

Along with the socialist party Pasok, the New Democracy is likely to form a coalition soon.  This means that there is near term certainty about Greece staying within the euro zone. However, far left party Syriza came very close in the polls and could be a strong opposition to the austerity measures.

US futures gain on the back of a pro-bailout victory, and even Asian markets open on a strong note with the Nikkei and Kospi up nearly 2%. Experts however feel that the market euphoria won't last as fear turns to other European economies.

With the risk of a Greek exit from the euro zone fading, most other assets have got a leg up overnight. The euro rallied to 1.27, while crude futures rose in early trade. Gold was trading flat in Asian trade around USD 1620 levels.

Global leaders have been quick to respond to the Greek elections. The International Monetary Fund says that it is ready to work with the new government, and the relief can be seen coming out of Mexico, where the leaders are gathered for the G20 summit. Europe will at the top the menu, and speculation is rampant that there will be some form of coordinated response to the crisis by the central banks.

But back home too it's a big day, as all eyes on the Reserve Bank of India’s credit policy meet today. A CNBC-TV18 poll indicates that a whopping 90% of those polled expect the RBI to cut the repo rate by 25 basis points, while 10% believe it will remain unchanged. On the CRR front, 30% expect a more than 25 basis point cut and 10% see only 25 basis point cut.

Stocks in News

Coming to some stocks in news, India’s largest public sector lender of Friday cut lending rates by 50 to 350 basis points across categories. The lending rate cuts will be effective from June 1.

Pratip Chaudhuri, the chairman of SBI, said that further rate cuts can be expected if the RBI cuts CRR. He was, however, non-committal on cutting the base rate.

Reports today indicate that the government has ruled out foreign direct investment in aviation. This may be negative for the space, so keep an eye out or aviation stocks.

Tata Steel makes open offer for up to 17.34 lakh shares (11.26%) of Tata Sponge at Rs Rs 375 per share. Tata Steel currently holds 39.74% in Tata Sponge. The company is also auctioning 1.46 crore shares, or 14%, of Tinplate at Rs 60 per share. Tata Steel holds 59.44% in Tinplate.
 
The Mint reports that Lanco is looking to exit the hydro power business, and is in talks with Norway’s SN Power for the same.
 
Coming to the divestment program, the government has flagged off the process for a 10% stake sale in NALCO.
 
The Saint Gobain delisting has been rejected by shareholders. Most shares were tendered at Rs 90 per share, where as the indicate price was Rs 31 per share.
 
From the auto space, Volkswagen and Fiat plan to buy into US based Navistar, reports the Business Standard. This brings M&M into focus today.
 
The Business Standard reports that Piramal Healthcare is in talks to buy US based healthcare company Cambridge Major Labs for USD 200 million.
 
Petrol prices down by 92 paise at Rs 70.24 per litre, while diesel prices gained 37 paise to Rs 41.28 per litre in New Delhi. Meanwhile, jet furl prices were slashed by a steep 5% in Delhi applicable June 16.

Anisha Mappat
anisha.mappat@network18online.com