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Views on markets today
· Indian shares declined 1.2% on yesterday to their lowest close this month as anticipated rise in the crude oil prices sparked concerns of a possible increase in domestic auto fuel prices that could stoke inflation. Banking shares weighed down sentiment further, falling for the third successive day on worries that rising lending rates in the sector would affect demand for loans, even as a sharp increase in deposit rates is likely to squeeze margins.
· Market breadth was extremely negative at 0.26x as the FIIs sold equities worth Rs15bn. However, domestic institutions bought some shares of Rs4bn which could not helped the markets to recover.
· Driven by a rally in the US markets, the Asian markets are higher today. The Nikkei is up on weaker yen while the Hang Seng also saw a good opening.
· We expect a flat to positive opening for the Indian markets as the investors may stay cautious due to uncertain global and domestic events. Rising crude prices may create pressure on the equities due to the fear of the rising inflation and interest rates.
Key events today
· Weekly Inflation data
Economic and Corporate Developments
· Supreme Court (SC) question banks for Rs100bn loans to new licenses.
· The government is likely to increase diesel prices shortly on the back of rising crude prices.
· Vehicles sales grew at 17.8% in November.
· India exports grew fastest rate in five month at 26.8% (YoY) US$18.9bn while imports increased by only 11.2% (YoY) in to US$27.8bn.
· RBI Governor has said inflation was still above the central bank’s tolerance level.
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