Views on markets today

- The Sensex could not sustain the strong positive opening yesterday and declined by 1.6% at close, on huge selling in real estate stocks. Consumer durables stocks too witnessed profit taking while capital goods and power stocks were weak.

- The market breadth was fairly negative at 0.6x led mainly by large cap stocks. Lackluster volumes were witnessed from both FIIs and domestic institutions indicating a cautious approach ahead of the election results. FIIs bought equities worth Rs80Cr while domestic institutions sold equities of Rs17Cr.

- Deliverable volumes in top 10 traded stocks on NSE improved from 11% to 20% on strong deliverable volumes in Reliance Industries and SBI. Reliance Capital, JSW Steel and HDIL traded on weak deliverable volumes.
- Asian markets are subdued today after the weak overnight close of the US markets. Japan Airlines reported larger-than-expected loss for the fiscal which impacted the Japanese markets. Financial stocks witnessed huge selling pressure. The Hang Seng is volatile and moderately positive today, however with a downward bias.

- We expect a weak opening for the Indian markets. The markets have become highly volatile but cautious ahead of the election results this weekend. In our view, the volatility will continue till the next government is formed.

Economic and Corporate Developments

- The rupee (INR) has opened weak this morning at 49.56/57 per USD, compared with yesterday's close of 49.52/53.

- NYMEX Crude Oil (CL) is currently trading at $58.27 per barrel.

- The prospect of a midmonth price increase in cold rolled (CR) and galvanised steel used by automobile and consumer durables makers has abated with the Government deferring a decision to impose a safeguard duty on the intermediate product, hot rolled coils (HRC). Last month, the Director General Safeguard had recommended the imposition of a 25% safeguard duty on imported HRC below $600/ tonne to protect the domestic industry from cheap imports.

Key event today

IIP data for March 2009: IIP growth expected at -0.25%.

Buzzing Stocks

- Bhel has decided to shelve plans to manufacture deep sea offshore oil rigs due to huge investment requirement.

- JSW Steel plans to sell its plants in the US at a price lower than its acquisition price to cut rising losses, after a sharp fall in demand triggered by the global economic slump devastated the country’s steel industry.

- GMR Infrastructure will raise up to Rs 50bn through private placement of shares in domestic and international markets.

- Dewan Housing plans to raise Rs 34bn to meet disbursement requirements during the current fiscal.

US markets

Profit taking from a 4 month stock highs and surprisingly strong valuations also worked to depress the market. The US markets ended down 1.8% from a four month high as banking stocks slipped. Microsoft announced its first ever debt offering and bank stocks heading lower across the board due to value dilution caused by capital raising efforts of issuing additional shares. Several major banks announced large common stock offerings to repay government bailout funds. Tech stocks traded higher after Citigroup upgraded its rating on the software and services sector to "overweight" from "market weight".

In the auto sector, GM was the biggest decliner in trade, down 11% on CEO's comments that GM may move its headquarters out of Detroit. He also said GM would start notifying US dealers about closures this week and that automaker has an "urgent" need for funding for its European operations. There weren't any major earnings announcements or economic reports to act as positive catalysts for the stock market Monday. Bank of America was told last week that it needs more Tier 1 capital, but the company didn't offer any immediate plans to satisfy the measure during a conference call today.

Key economic event
- March trade balance is expected to show continued contraction as countries contend with ongoing economic headwinds.
- The Treasury's budget statement for April is expected to be released.