Markets open higher, China may weigh later :: HDFC Sec

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If the SGX Nifty is to be believed, the Nifty is likely to open higher in the morning, on the back of a rebound in the U.S. markets on Friday. The recovery in crude, which is further up in electronic trade today may come to the support of the markets. However, Shanghai is down this morning by around 4.3%. This may prevent the markets from running up further from the open and may in fact taper the gains.

The most important event this week is the ECB meeting where a quantitative easing programme may be announced after the European Court of Justice ruled in favour of the ECB. The markets may like the ECB announcement, which essentially does nothing more than buying time for the ailing EU.

However, neither Japan nor the U.S. has been able to bring in inflation to the extent desired after their massive easing.  Ultimately the EU will also the go the same way. However, we will hold our horses for the time being on going all out bullish despite a rate cut by the Reserve Bank of India (RBI). NBFCs and Housing companies are likely to do well.

Shanghai Composite tumbles 4%  as financial, property stocks slip

Chinese shares tumbled on Monday due to sharp declines in the financial and property sectors. It was quoting down 4.3% at the time of writing. Hong Kong was also down. Other Asian markets were up.

China GDP growth data will come on Tuesday and there is a likelihood of a further slow down from 7.3% seen in the last quarter to 7.2%. However, Industrial Production for the month of December is slated to come higher at 7.4% as compared to 7.2% in November. 

Retail Sales for December are also likely to show a marginal increase to 11.8% from 11.7%.

Markets closed in the U.S.

The Bond and the Equity markets will be closed today (Monday) on account of the Martin Luther King Jr. holiday.

The Securities Industry and Financial Markets Association (Sifma) has recommended that there should be no trading in U.S.-dollar-denominated bonds in the U.S., U.K. and Japan. While the CME trading floors will be closed, Oil, gold and Treasury futures contracts, among other contracts listed on Globex, will all trade electronically during the holiday.

All eyes on ECB

The most important event this week is the ECB meeting on Thursday at which it is expected to launch a quantitative easing programme to halt deflation. If it does so, it could be in the region of EURc500 - 1000 billion.

Deutsche Bank says that the ECB will not be able to spark credit creation and rekindle inflation. Both the U.S. and Japan have failed to do so. Inflation expectations, both in Japan and the U.S. are still below the Lehman collapse levels, despite the large quantitative easing.
Besides, investors will also eye the corporate results that start streaming afresh on Tuesday.
Among the Dow Components, Johnson & Johnson is expected to report earnings on Tuesday morning. On Tuesday afternoon, IBM will offer their latest results. Other notable earnings due in the week ahead include vAmerican Express on Wednesday afternoon, Travelers on Thursday morning and General Electric and McDonalds on Friday morning.

Banks to cut rates

After the RBI lowered the repo rate in a surprise move, banks have set the ball rolling for a possible reduction in their lending rates. A host of lenders, including State Bank of India (SBI), IDBI Bank, Indian Bank and Andhra Bank, have lined up meetings of their asset-liability committees (Alco) this week, to review their lending and deposit rates.

Amid sluggish credit growth, many banks have already reduced their deposit rates for select maturities, during the October-December period, following a comfortable liquidity situation. As a result, the cost of funds has come down, albeit marginally. For instance, in the December quarter, SBI reduced its deposit rate by up to 50 basis points.

Reliance : Revenue Fall 20.8% on Lower Crude Prices

Reliance Industries suffered a setback in its sales on account of the falling crude prices. Consolidated revenue fall 20.8% to Rs.93,528 crore.

The refining business, which contributes more than 2/3 of the sales, suffered a 24% decline. The GRMs came in at $7.3 a barrel, which was decline both in terms of the Y-o-Y and Q-o-Q numbers. Ironically the Singapore GRMs, the benchmark for this part of the world, had come in better.
 
The segment?s Ebit margin improved both sequentially as well as over a year ago. The margins were aided by polymer and polyester prices not falling as much as input costs did. The company also took advantage of a planned shutdown of anorth American plant during the month of October.

The outlook for RIL remains choppy. The main issue so far with Reliance has been its inability to ramp Oil and Gas production. And now with Crude in the dog house, even a ramp up their production, it is unlikely to help.

Axis Bank Q3 profit up 18.5%, NPA stable

Axis Bank?s third quarter net profit rose 18.5% Y-o-Y to Rs 1,900 crore, same as expected, boosted by the operating income. Net interest income grew by 20 % to Rs 3,589 crore in Q3FY15 compared to Rs 2,984 crore in the same quarter, last fiscal. The asset quality of the bank remained stable with gross non-performing assets (NPA) at 1.34% and Net NPA at 0.34%, same as the previous quarter. 

In the meanwhile, the board of directors of the bank today approved issuance of long term bonds/non-convertible debentures up to Rs 15,000 Cr on a private placement basis.

Wipro Q3 profit climbs 5%, sees Q4 revenue at $1.81-1.85 bn

Wipro reported 5% sequentially jump in its Q3FY15 net profit to Rs 2,203 crore led by growth in healthcare & life sciences business and global infrastructure services. IT revenue rose 3.9% to Rs 11,344 crore and dollar revenues increased 1.3 % to USD 1.795 billion on sequential basis. Revenues beat street expectations and the poll had estimated revenues at Rs 11,070 crore and dollar revenues at USD 1.785 billion for the quarter. Earnings before interest and tax margin declined marginally to 21.8% against 22% in the previous quarter.
 
Further the company expects IT services dollar revenue in the range of USD 1.81-1.85 billion for the March quarter of current financial year 2014-15, implying 1-3% growth over third quarter. Moreover, it declared an interim dividend of Rs 5 per equity share to the members for which payment date is fixed as February 02, 2015.

HUL to report its earnings

HUL is expected to post 6% volume growth and 12% revenue growth in Q3FY15, driven by consumer demand from both rural and urban markets. EBITDA and PAT are likely to grow at 15% and 11% Y-o-Y at Rs 1410 crore and Rs 1060 crore respectively.
 
Petrol price cut by Rs 2.42 per litre, diesel by Rs 2.25 a litre

Petrol price was cut by Rs 2.42 per litre and diesel by Rs 2.25 a litre, after an excise duty hike limited the benefit of global crude prices slumping to six-year low. This is the ninth straight reduction in petrol prices since August 2014, and fifth in diesel since October 2014. Petrol and diesel prices were last cut on 16 December 2014 by Rs 2 per litre each.

The reduction would have been almost double but for the government also raised excise duty by Rs 2 per litre on both petrol and diesel on Friday. This is the fourth increase in excise duty on the two fuels since November. The four excise duty hikes will result in about Rs 20,000 crore in additional revenue this fiscal and will help the government meet its fiscal deficit target of 4.1 per cent of the GDP.
 
Punj lloyd May sell 18% in Medanta to Temasek  for Rs 700 crore

Temasek, the Singapore government's investment company that has $223 billion in assets, is set to acquire a stake of about 18% for nearly Rs 700 crore in Global Health Pvt. Ltd, which owns, manages and operates Medanta hospital in Gurgaon outside Delhi.

The Singapore-backed investor is in advanced discussions with Punj Lloyd Ltd, one of the founding promoters of Medanta. Punj Lloyd will use the raised funds, if the deal goes through, to help repay some of its debt of about Rs 6,000 crore.
 
Wall Street Rallies after a four day slide

Calmer currency markets and a rally in Crude prices helped Wall Street to end a four day losing streak. The Dow Jones Industrial Average surged 191 points or 1.10% to close at 17,512.
The S&P 500 rose 26 points or 1.32% to regain its 2000 mark and close at 2019.

The Nasdaq Composite rose the highest in percentage terms, rallying 1.38% or 63 points to 4,634. However, Fridays surge wasn?t enough to compensate for the losses of ealruer four days and the indices closed in the red for the 4th consecutive week.
The stock market has been extremely volatile over the past two months, as a slide in oil prices as well as stagnant growth in Europe and Asia has stoked fears that the U.S. economy may not withstand global deflationary pressures.

For the week the DJIA was down 1.27%, the S&P 500 1.24% and the Nasdaq was lower by 1.48%. Crude-oil futures rallied Friday, notching their first weekly gain in eight weeks as the International Energy Agency said collapsing crude prices would cut into supply growth from oil producers outside of the Organization of the Petroleum Exporting Countries. Light, sweet crude futures for delivery in February advanced $2.44, or 5.3%, to settle at $48.69 a barrel on the New York Mercantile Exchange.

Treasury yields moved higher Friday, ending five-straight sessions of declines, after the University of Michigan said consumer confidence in the U.S. rose to its highest level since 2004. The 10-year yield which moves inversely to prices, jumped 10 basis points to 1.83%.
U.S. consumer prices fell 0.4% in December, the largest drop since the end of 2008, hit by tumbling prices for gasoline and other types of energy, according to government data released Friday. However, the core inflation that strips out food and energy was unchanged, disappointing analysts who expected a slight uptick.

Meanwhile, industrial production declined 0.1% in December, marking the first drop since August, after unusually warm weather quelled demand for heating, the Federal Reserve reported Friday.

The preliminary January reading of the University of Michigan/Thomson Reuters consumer-sentiment index jumped up to 98.2 -- the highest level since 2004.

Shares of the biggest retail foreign-exchange broker in Asia and the U.S., FXCM were halted as they plunged after the company said it had suffered ?significant losses? that wiped out its equity.
Schlumberger shares rallied 6.1% after the company said Thursday it would raise its dividend by 25%, paying 50 cents a share on April 10. It also recorded a $296 million charge for 9,000 job cuts.

Goldman Sachs reported quarterly profit and revenue that topped analysts? forecasts. But shares fell 0.7% as Goldman delivered the sharpest year-over-year drop, down 41%, in fixed income, currencies and commodities trading among U.S. investment banks that have reported fourth-quarter results so far.

PNC Financial Services shares rose 2.5% topped analysts? estimates but reported that profit slipped 2.4% on revenue that was down 3.1%, compared with the same period a year ago.

Netflix jumped 4.2% after the company was upgraded to outperform from market perform by Cowen analysts, who said factors such as original programming should help boost subscriptions, according to published reports.

For more on notable movers read our Movers & Shakers column. Germany?s main stock benchmark jumped to close at an all-time high Friday, as European stocks got a lift from U.S. stocks trading in positive territory. The euro traded around an 11-year low.