Quiet mkt session today; RIL may post tepid results: Udayan

Moneycontrol Bureau

It’s been a quiet session for the market these last couple of days. Global markets overnight were listless as well. It appears that the Nifty will once again grind around 5,300 level as it did for the most of the day yesterday barring the last half an hour where it picked up a little bit.. With no major cues expected, we are looking at quiet days ahead of the April expiry, says CNBC-TV18’s managing editor Udayan Mukherjee. Spain A Pain
Eurozone is back in the limelight and has become a bone to contend with. Spain’s long-term fiscal sustainability is being discussed everyday. The debt laden country sold its 10-year government bonds yesterday, even while nervousness settles in that the government has no scope to tackle its deficit.
The eurozone went out of the news for awhile after it received a brief respite fuelled by a trillion euro of cash, from the European Central Bank (ECB). This money was lent to Europe's banks in December and February but markets are becoming nervous again about the debt loads of Spain which appears to be following in the footsteps of Greece, Ireland and Portugal in needing a bailout from international lenders.
It is a strange kind of global market situation where you just look at the number of alternate days when we have gone up and gone down in the last ten days. At the same time you would have to certainly recognise the fact that there is not too much downward momentum in global markets. After all the volatility and newsflow of the last ten days, the S&P has corrected all about 40-45 points from its recent high of 1,420 odd, it is standing just below 1,380. That is not a very meaningful correction, 3-3.5% from its recent high.
Mukherjee doesn’t think it is true that there is a lot of momentum down-drift in global markets but we have got into a fairly volatile kind of phase out here. “That maybe a phase of consolidation after which we re-emerge on the stronger side but from now, it is just creating some degree of confusion for most markets that are waiting for cues globally,” he adds. Reliance Q4 Results
Gearing up to report its fourth quarterly numbers today is Reliance Industries. Doubts about how much natural gas can be extracted from Reliance’s KG-D6 blocks, a slump in operating profits and worries over its refining margins, as well as its usage of cash, have led to a string of analyst downgrades in recent weeks.
RIL is coming out of a very challenging quarter and is widely expected to report a profit after tax (PAT) of Rs 4,300 crore in the January-March quarter of FY12, plunging 3.2% as compared to Rs 4,440 crore (YoY), according to a CNBC-TV18 poll.
Adverse global and domestic factors pushed third quarter gross refining margins below Singapore gross refining margins and in the fourth quarter, there's been no relief.
Singapore GRMs have fallen 4% quarter-on-quarter to 7.6 dollars per barrel, and light heavy crude spread has fallen nearly 20%.
Mukherjee says a lacklustre result is expected. “If it clocks numbers which are close to last quarters figures then we might not see the stock collapse.” He says that for the stock to break below Rs 700 odd it will have to declare exceptionally bad results. Will Nifty Bandy in a Range?
The index continues to float in this range with no reason to breakdown or breakout at this point in time. We have had a better than expected 50 basis point rate cut from the RBI, earnings have not been a complete washout so far barring that Infosys disappointment and therefore the market does not need to breakdown 5,150-5,200 on the way down immediately.
On the way up, the list of headwinds is very large - global confusion and volatility, flows which are not with us any longer, the rupee going down to 52, the transmission of the rate cut which has been incomplete and almost reluctant and our domestic macros that are still a mess.
“So, there is no justification for a runaway in the Nifty right now neither does a breakdown seem imminent so we are trapped in a bit of a trading range, which makes for the kind of listless session that we saw yesterday, reluctantly or slowly inching towards that 5,400 level, 20-30 points at a time with breadth, which is not very encouraging,” says Mukherjee.
This is a market which has sapped off a lot of energy and something will need to see something big happen either globally or on the earnings front to shake it out of its stupor. Chelsea Saldanha
chelsea.saldanha@network18online.com