The domestic markets are expected to open in green following positive opening across most of the Asian markets. The domestic bourses snapped three day rally yesterday and ended with modest losses as delays over Greece bailout added mild concerns for investors. Selling pressure remained subdued, however capped the downside for the markets.
Globally, European markets remained jittery in absence of resolution to the Greek sovereign debt crisis. Traders also digested the news of possible downgrade of 17 global financial institutions by Moody’s. US bourses ended on a positive note, thanks to upbeat U.S. job data which offset the negative sentiment generated over Greece’s bailout delay and Moody’s possible downgrade. The U.S labor department reported fall in initial jobless claims to 348,000 for week ended February 11th from the previous week's revised figure of 361,000.
On the domestic front, soothing of inflationary pressures and hopefulness of monetary easing has helped the markets to hold strong breadth. On the global front, positive economic data in US and China’s pledge to support the eurozone is expected to renew the sentiments in the markets. Markets will closely track the developments in the domestic as well as global markets.
Markets Today
The trend deciding level for the day is 18,127 / 5,512 levels. If NIFTY trades above this level during the first half-an-hour of trade then we may witness a further rally up to 18,210 – 18,266 / 5,541 – 5,560 levels. However, if NIFTY trades below 18,127 / 5,512 levels for the first half-an-hour of trade then it may correct up to 18,071 – 17,987 / 5,493 – 5,465 levels.
Spain’s borrowing costs climb, while yields drop for France
Spain sold EUR4.07bn (US$5.29bn) of debt maturing in 2015 and 2019. Average yield on the bills maturing October 2019 increased to 4.83%, compared to 4.54% when securities were last offered on January 19, 2012. Further, the average yield of notes maturing in July 2015 increased to 3.33%, from 2.86% at the previous auction on February 2, 2012. While a bond maturing in January 2015 was sold to yield 2.96%. After the sale, even the yield on Spain’s 10-year benchmark bond climbed 9 basis points to 5.53%, increasing the spread over German bunds by 13 basis points to 371 basis points. Spain’s rising borrowing costs indicate that investors’ concern towards solvency of the country’s US$807bn public debt has increased. Spain’s debt to GDP ratio at 74% is better than that of Greece (198%) and Portugal (111%), but the problem with the country’s economy is that unemployment (as a percentage of working population) at 21% is alarmingly the highest among eurozone countries. Further, the country’s economy has contracted by 0.3% qoq in the last three months of 2011, as per Madridbased National Statistics Institute. Government of Spain has a very tough task in hand, to strike a proper balance between austerity and growth measures so as to bring back the country’s economy out of this debt crisis.
France also sold a total of EUR8.45bn of notes maturing in 2014, 2015 and 2019. Average yields on two-year notes maturing in 2014 fell to 0.89% from 1.05% at a previous auction on January 19, 2012.
Both the sales came three days after Moody’s cut the ratings of six European nations, including Spain, and revised its credit outlook on France to ‘negative’.
RCom gets RBI nod for FCCBs redemption
RCom has received approval from the RBI to refinance redemption of its outstanding FCCBs worth US$1.2bn (~`5,825cr), the due date of which is March 1, 2012. The company said that RCom will benefit from extended loan maturity of seven years and attractive interest cost of ~5%. The refinancing is being funded by the Industrial and Commercial Bank of China (ICBC), China Development Bank (CDB) and Export Import Bank of China (EXIM). We maintain our Neutral view on the stock.
Economic and Political News
- Government hopes to achieve road project target for FY12
- Par panel to discuss report on DTC, may suggest hiking IT exemption limit
- EGoM okays 5% stake sale in ONGC
Corporate News
- Panel to take up Sasan coal diversion issue next week
- ONGC to expedite work on major oil, gas project in KG Basin
- ITC buys 4.62% in Hotel Leela from Russell Credit
- Magma Fincorp plans to start gold finance biz in H1 of FY13
- Supreme Court quashes Ansaldo venture bid For NTPC contract
- Promoters stake up to 48.53% in Reliance Infra after buyback
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