Morning Relief in store for the Nifty :: HDFC Sec

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Our markets are likely to open higher on the back of positive international cues. The fall in the crude has been arrested, for the time being, on reports of lower inventory in the U.S. 

The U.S. markets bounced back with crude. The minutes of the last FOMC released yesterday were hawkish, but the markets were seemingly unperturbed by the minutes that said that  the Federal Reserve will consider a rate hike increase even if core inflation remains below the target rate of 2%.

Some economists gave it a positive spin. They say that it implies that the economy is strong enough to raise rates. Others say the Fed has merely given itself the flexibility to raise rates, even if the inflation does not rise.

All said and done, the markets were higher, probably because of that Crude had risen and not so much because of the minutes.

Defence stocks were brought to the fore yesterday, rising against the general trend. We believe the sector could outperform the markets in the days to come. The trend could change for the positive if the Nifty rises above the 8450 mark. But for today, they will do well if they can hold on to the opening gains.

Crude: Is the bounce back for real ?

Though crude bounced back on Wednesday, it was largely because of the drop in the inventories tracking the refinery demand.  For a meaningful rebound in Crude, it is necessary that
?    OPEC should cut production

?    The Non-OPEC  producers such as Russia should also cut  consumption

?    Demand should rise

?    The short sellers should cut their shorts

All of these seem to be unlikely in the near future. So while the crude can rise, bottom may still be a far cry. 

Fertiliser Ministry removes 35% cap on Neem-coated urea

The Ministry of Chemicals and Fertilizers has decided to remove the cap of 35% on Neem-coated urea to give impetus to the agri sector. Coating urea with Neem has many advantages. The release of nitrogen will become slow and it will also help in reducing the risk of disease in crops. 

Moreover, the move will increase the yield by 10% on an average. The minister plans to revive 6-7 fertilizer plants, including the one in Gorakhpur and wants to see the country becoming self-sufficient in fertilizer production in 5 years. He also announced the continuation of naptha subsidy to the plants of Mangalore Chemicals, Madras Fertilizers and Tuticorin Fertilizer.

Telecom Commission returns Trai recommendation on 3G spectrum base price

The Telecom Commission on Wednesday sent back the Telecom Regulatory Authority of India?s (Trai?s) recommendations on pricing of 2,100-MHz spectrum to the regulator.

At an hour-long meeting, the Commission deliberated on the suggestions of an internal committee of the department of telecommunications that had said the pricing proposed by Trai was on the lower side.

Trai had recommended a base price of Rs 2,720 crore for each MHz of 2,100-MHz spectrum, while the internal committee was of the view that it should be about Rs 3,800 crore, on the basis of prices in the previous round of 3G spectrum auction in 2010.

ING Vysya employees protest over merger with Kotak

Employees unions of ING Vysya Bank today staged a protest here with demands for 'job security' in the wake of its merger with Kotak Mahindra Bank. The protest was held on a day when ING Vysya Bank has called a shareholders' meeting here for their approval for the proposed merger. Separately, Kotak Mahindra Bank has also called its shareholders' meeting in Mumbai today the Rs 15,000-crore merger plan.

About 100 employees took part in the protest, jointly organised by the All India ING Vysya Bank Employees' Union and All India ING Vysya Bank Officers' Association, which claimed their concerns over the proposed merger remain unresolved.
 
Kotak Mahindra Bank has to come forward and sign a tripartite agreement along with the ING Vysya Bank," All India ING Vysya Bank Employees Union General Secretary K J Ramakrishna Reddy said.

Government plans to divest 5% each in PFC, REC; share sale expected to raise Rs 3,000 crore

The government plans to sell shares in state-owned Power Finance Corp (PFC) and Rural Electrification Corp (REC) in the third week of January to raise about Rs 3,000 crore, two people familiar with the development said

Department of disinvestment officials have asked investment bankers to hold road shows for both the companies next week and complete the two transactions by the third week,"
The government holds 72.8% in PFC and 65.64% in REC.

Wipro wins $400 million contract from ABB

Wipro has won a $400 million, multi-year IT infrastructure management contract from Swiss engineering giant ABB, making it the largest deal for the technology company since the $1.2-billion contract it received from Canadian utility ATCO last July.

The deal win underlines the nation's third-largest IT company's prowess in strengthening its cloud offerings, because it will move a lot of business applications to cloud in addition to maintaining the back-end technology of ABB.

Coal India unions call off strike

Coal India unions, protesting against a move to open up the industry to private firms, called off a five-day strike on its second day-Yesterday, after a meeting with the coal and power minister, staving off a looming power crisis.

The company accounts for about 80 percent of India's total output and strikes have previously crippled power plants, hampering government efforts to reform the coal industry. Coal fuels 60 percent of the country's power production.

Still. Coal India is likely to miss its annual production target of 507 million tonnes.
Till December, the shortfall in production was 3%. This means that if the company is to meet its target of 507 million tonnes, production will have to increase by 15% in the January-March period. Production in the nine months has grown by 7.3% so far.
 
Wall Street Rebounds  with Oil

Key U.S. Indices rebounded Wednesday with the  S&P 500 tasting its first day of gains in 2015 and breaking a five day losing streak. The rebound came amidst calmer oil price and currency markets.

The Dow Jones Industrial Average  surged 213 points or 1.23% to 17,585.  27 of the Dow 30 constituents closed in the green.  The S&P 500 added 23 points or 1.17% to close at 2026. Healthcare and Consumer Staples  sector stocks buoyed the S&P 500 while Telecom was a drag.

The Nasdaq Composite rose the most in percentage terms - 1.25% or 57 points to 4,650.
WTI Crude rose 1.4% to $48.58 a barrel on Wednesday on lower inventories.  Domestic crude oil inventories in the U.S.  posted a surprise drop of 3.1 million barrels last week compared to a decline of 1.8 million a week earlier. Economists had expected inventories to tick up 0.9 million barrels.

Brent briefly dipped below $50 a barrel for the first time since May 2005, but recovered to close just  9 cents, or 0.2%, lower  to $50.97 a barrel. Also on Wednesday, the markets took the relatively hawkish minutes of the FOMC in its stride. The markets were seemingly unperturbed by the minutes that said that  the Federal Reserve will consider a rate hike increase even if core inflation remains below its 2% target rate.

Some economists gave it a positive spin. They say that  it implies economy is strong enough to raise rates. Others say the Fed has merely given itself the flexibility to raise rates, even if the inflation does not rise. All said and done, the markets were higher, probably because of that Crude had risen and not  so much because of the minutes.

Another piece of economic data to arrive Wednesday was the ADP National Employment Report that said the private sector added 241,000 jobs to payrolls in December.
Economists had expected 235,000 jobs to have been added over the month. The latest figures further underline recent strength in a tightening job market.

The Bureau of Labor Statistics will release the nonfarm payrolls report for December on Friday.
U.S. trade deficit  shrank in November to an 11-month low of $39 billion, mainly because of cheaper oil prices and the smallest amount of crude imports since 1994.

Most sector stocks rallied on Wednesday barring telecom. Retail was looking particularly bouncy. 

J.C. Penney shares surged more than 20% after the retailer reported a 3.7% increase in holiday sales over November and December. Fellow retailers Macy's , Nordstrom , Kohl's, and Target  also basked in the  glory.

On the earnings front, Monsanto beat first-quarter earnings estimates, sending shares 1.3% higher, though a warning of an expected 5% to 10% fall in second-quarter earnings limited upside potential.

American Express shares climbed on an upgrade to "buy" from Goldman Sachs.
Keurig Green Mountain was up 4.5% after partnering with Dr Pepper Snapple to sell soda capsules in its cold-drink machines in development. Keurig has plans to branch out from its traditional coffee-pod machines into the domain of SodaStream's at-home carbonated beverage market.

PepsiCo and Campbell Soup shares rallied after the Wall Street Journal reported Brazilian investment firm 3G Capital Partners' interest in potentially acquiring one of the companies. The firm has reportedly hived off $5 billion to form a new takeover fund.

Intel Corp rose 2.1% after chief executive Brian Krzanich showed off new wearable-technology products at the Consumer Electronics Show in Las Vegas on Tuesday.
 
In the Eurozone, inflation data for December showed consumer prices fell 0.2%, marking the first negative reading since late 2009. European stock markets rallied after the data, as the weaker-than-expected number ramped up pressure on the European Central Bank to launch quantitative easing at its Jan. 22 meeting.
 
Metals prices were mainly lower, while the dollar continued its climb against most major currencies. The euro traded around a nine-year low.