Market News today

The home sales data in the US was disappointing in spite of the tax credits to incentivize home purchases. The sales fell by 2.2% after an increase in the month of April. The consensus had been a 5% increase.

The steel stock might see action on back of the export rebate in long & flat product and even cold rolls being scrapped in China. This is speculated as Chinese imports reducing into India and hence the steel prices actually moving up as the imports from "CHINA" reduce. But his might affect the iron ore producers and exporters of India such as Sesa Goa and Gujarat NRE Coke.

Larsen and toubro might come under pressure after it was rejected out of the NTPC Rs. 25000 cr. deal for super critical boilers and turbines. But the dis qualification is a technical glitch which can be resolved after L&T can shift the JV from L&T power to itself. Thus it may be assumed as a buy on dips. However the re-tendering would involve even higher competition this time. One may watch the benefits BHEL might derive out of this re-tendering.

In an effort to cut the soaring debt in Britain, the budget announced austerity measures. They have proposed increased in fuel prices and fuel duty. Some announcement on Climate Change levy were also discussed.

Stocks in News

Jai Prakash Associates

The net sales increased by 36% and the operating margins increased to 40%. E&C contributed 46$ of the revenue whereas cement contributed 34% and power & real estate contributing 12%
with infra and other contributing the rest.

The cement was the highest contributor to the profitability (44%) followed by power and construction (23% & 21%). The exceptional profit was on account of sale of treasury shares held by the trust.

But JP associates has a huge debt on its books however this debt might be due to project specific debts. The standalone net debt is 140 bn whereas overall debt is 350 bn. It is expected that its cement production would command a premium in the market and its power generation activities would start providing cash flows which would be used to repay the debt.

Nifty is expected to be range bound today between 4250 and 4330. We expect the market might not give any clear trend before the expiry.

Reliance Industries has planned to invest 1.35 bn in shale gas acquisition in texas and would further invest 3 bn USD in the development of the same in the next 5 years.

R com has been now intiating dialogue with the french telecom company vivendi for a stake sale of 26%.

The PSU Oil marketing companies and Oil exploration companies might experience some activity due to the announcement of 25th june meeting scheduled for discussing freeing up the administered price mechanism.


The max put OI for june is ar 4800 and max put OI for July is 5000. The max call OI for June is 5300 and max call OI is 5400. The roll overs have not been huge.

IMG and RIL might form Indian Basketball league.

There is talk of Hindustan motors planning to sell its Chennai plant asset to Mitsubishi.

Godrej industries has been experiencing activity as godrej properties has been doing good and its own 70% of godrej properties.

Shell India has put 20 retail outlets for sale.


In the debt market there is still an acute shortage of liquidity which we see with huge CD issuance coming by bank in a single day which was 9000 crs. I believe the impact of 3G and BWA auctions would be sharp in the short term yield curve with yields falling back to the 4% levels. However it may be remembered no impact was seen on the longer end of the yield curve after the auctions and hence it would remain in the same range even after the liquidity surplus in a months time as govt spends the money getting it back into the system.

The govt might not borrow less this year but 3g and BWA auction have made sure govt. does not exceed its borrowing plan this year. There is only a probability of it reducing the borrowing in the second half. But this has already been factored discounted in the yield curve. Now with RBI increasing the interest rates and credit picking up ( thats what the IIP numbers show) we should only see the yield curve moving up in the coming days.

People have been arguing that RBI inaction might be continued given the looming euro crisis and Inflation expected to reduce with high base affect the last year. I would look the 10 year moving to 8% by the August and might move up to 8.10-8.15 by the end of september.

The 3g money is most likely to used for paying cash subsidies to OMC which were budgeted only Rs. 14000 cr. The extra subsidies is expected to be paid by the proceeds if the crude prices continue to rise this year.

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