Rupee weakens to 1-week high

Rupee trades at 55.81/82 versus its previous close of 55.65/66, after hitting 55.8375, its weakest since August 28, tracking weakness in the domestic share market and a risk averse sentiment regionally.


The Sensex trades down 0.3 percent, with most other Asian currencies also trading weaker versus the dollar.

Euro also trading down but losses capped ahead of a European Central Bank meeting on Thursday.

Traders say the pair can rise to 56 levels if dollar demand from oil companies continues through the day, but exporters are expected to come in and sell dollars around those levels, resisting any further upside.

SC/ST Quota Bill in Rajya Sabha, BJP may disrupt House

The Bharatiya Janata Party (BJP) is expected to continue to protest in Parliament on the coal scam, putting a question mark on the passage of the bill for quota-based promotions for SCs and STs in government jobs. The government is planning to introduce it in the Rajya Sabha after the cabinet gave it a go-ahead on Tuesday.


The BJP, though, will not say whether they support or oppose the bill, their stand will remain ambiguous. Party sources say they do not want to be seen diluting their protest on corruption for an issue which is purely a BSP agenda.

BJP leaders had met on Tuesday evening and the party decided to ignore BSP chief Mayawati's overtures. Mayawati had met senior BJP leaders Sushma Swaraj and Arun Jaitely on Tuesday requesting them to allow Parliament to run to pass the bill.

The Quota Bill being a Constitutional amendment bill needs a two-third majority of the members present in the House. Without the BJP, the bill has slim chances of being passed as the Samajwadi Party is also against the bill.

Aviation ministry official named new chairman

State-run Air India said the government has appointed Rohit Nandan, a joint secretary in the ministry of civil aviation, as the ailing carrier's new chairman and managing director.

Nandan, who assumed charge on Friday, will replace incumbent Arvind Jadhav and will oversee the airline's turnaround and debt restructuring plan.

Loss making Air India is in talks with banks to restructure USD 4 billion of working capital debt and is in the midst of implementing a turnaround plan with a hub-and-spoke route model focus, cut costs by redeploying staff and unload non-core real estate.

A financial restructuring plan for Air India will take about three months to complete, the civil aviation minister said on Friday. The airline is estimated to report a loss before tax of Rs 6,994 crore (USD 1.5 billion) for the year ended March.

Inflation, interest rate concerns to keep mkt volatile

Apart from concerns over a slowdown of the US economy and the euro zone debt crisis, high domestic inflation and fears of an interest rate hike will keep the stock market volatile this week, say experts.

The 30-share Bombay Stock Exchange Sensex index lost 2.69% to close at 16,839.63 last week amid persistent selling pressure on worries over the global economic crisis after ratings firm S&P downgraded the US creditworthiness.

An unprecedented downgrade of the US credit rating by Standard & Poor's on August 5 led to a sharp fall in the market, with investors resorting to panic selling.

On Tuesday, when the markets will open for trade this week, the overall inflation numbers for July will be released.

Headline inflation stood at 9.44% in June, while weekly food inflation shot up to 9.9% at the end of July, sparking fears of a further round of interest rate hikes to tame prices.

The market was surprised by the higher-than-expected rate hike of 50 basis points by the Reserve Bank last month. Now, the sharp spurt in food inflation has raised concerns that the central bank will stick to its monetary tightening policy.

"People are expecting interest rates to go up. Worries over the US and euro zone crisis are still high and fresh in the minds of investors. There is a possibility of a pullback from current levels, but we should be bracing for some more volatility in the short term," said Geojit BNP Paribas Research Head Alex Mathews.

Analysts said that given the tricky situation in overseas markets and local macro-economic headwinds, it would be wise to remain cautious and stay stock-specific.

The global environment will play a pivotal role in directing the investor sentiment, they added.

Domestically, it will be inflation and macro-economic concerns that will guide the investor mood.

"Fund flows in the Indian markets have not been that bad, considering the intensity of the sell-off. The government, too, is trying its best to address the governance deficit. But inflation continues to be a big headache, with food inflation flaring in end-July," IIFL Head of Research Amar Ambani said.

On the macroeconomic front, exports continue to be robust, but might moderate in the coming months owing to the slowdown in the US and Europe, he added.

BHEL Jun qtr PAT seen up 17.6% at Rs 785cr

Angel Broking has come out with its earning estimates on capital goods for the quarter ended June 2011. According to the research firm, BHEL June quarter sales are expected to go up by 25% at Rs 8251crore, year-on-year, (YoY) basis.

The company's net profit is expected to go up 17.6% at Rs 785crore on YoY basis.

Gold price may hit Rs 25,000 by Diwali

Gold prices are likely to hit Rs 25,000 per 10 grams by this Diwali due to rise in demand for the yellow metal as a better investment alternative, analysts said.

The European Union's economic crisis and sluggish market recovery in US is leading to increased investments in silver also, which could see the prices of the metal touching Rs 65,000 per kg by Diwali season in October, they said.

Gold prices are currently ruling around Rs 22,450 per 10 gram, while silver is selling at around Rs 54,700 per kg.

"The recovery in US markets is not on expected grounds as the country's unemployment rate was higher in June compared to May this year adding to the uncertainty over the pace of the economic recovery," Emkay Global Financial Services, a commodity brokerage firm said.

According to Emkay Commodities Head Atul Shah, the European Union debt crisis involving Portugal, Ireland and Spain has also shaken investors confidence who are increasingly using gold and silver to hedge against losses.

The Libyan crisis that is far from over is also putting pressure on crude prices leading to volatility in the oil markets, Shah pointed out.

"With uncertainty in world economy and no clear solution in the coming months, the gold prices could climb to Rs 25,000 per 10 grams and silver can touch Rs 65,000 per kg by Diwali," Shah said.

According to WellIndia, another commodity brokerage firm, it is expected that gold and silver may trade upside in the next few weeks because of uncertainty in global economy and safe heaven demand by investors.

According to World Gold Council data, investment demand in Gold from US continues growing. China and India accounted for 51% of the world gold consumer demand and this year it can increase up to 58%, WellIndia said.

"Demand for silver is increasing day by day in China and India. Industrial and jewellery demand is not only increasing but also investors are using gold and silver hedge against inflation," it added.

Higher crude realisation to scale up oil cos Q1 earnings

Despite teething problems like slower gas production at Reliance Industries (RIL) and royalty and cess disputes between ONGC and Cairn India , the oil and gas is not on slippery ground.

Numbers for the April-June quarter for the sector are likely to be good q-o-q, essentially led by higher crude realisation and higher refining and petchem margins.

Crude oil continued its upward journey during the quarter by averaging at around USD 117/bbl Continued unrest in Libya coupled with expectations of tightening of the global oil markets has led to highest crude oil prices since 2008. Petroleum product crack spreads further improved during the quarter, aiding refining margins. Gasoline-crude spreads witnessed an expansion during the quarter from USD 12.7/bbl to USD 15/bbl., q-o-q.

Following are what investors can expect from the first quarter results of RIL, ONGC and Oil India

On the back of strong macro environment, RIL is likely to report a better set of numbers during the quarter. Its net sales will grow 35.5% y-o-y at Rs 78,899.2 crore. Its EBITDA margin will decline by 315 basis points to 13%. Its net profit will grow 17% to Rs 5,895 crore. Analysts have an 'accumulate' rating on RIL stock with a target of Rs 1,036 despite its KG-D6  block’s output slipping due to technical problems to about 52 mcmd from 60 mcmd in y-o-y.

ONGC will also see a muted growth in its sales on the back of the provisional estimate of 33% subsidy share for upstream companies. Its sales will yet grow 10% at Rs 15,017.9 crore. Its net profit will also grow 10%. Marketmen have a ‘buy’ rating on the stock with a target price of Rs 345.

Oil India is likely to report good set of numbers on account of expansion in net realisation during the quarter with higher volumes from its Namaligarh refinery. It will see a huge jump in its sales and profits as the refinery was shut during the corresponding quarter of previous year. Industry experts expect Indian Oil’s net realisation during the quarter to stand at USD 59.5/bbls, up from USD 50/bbls y-o-y.

Following are views of some brokerages on oil and gas earnings expectations in April-June quarter.

IIFL: "Refining margins have been higher on a sequential basis on account of improvement in gasoline spreads, which will result in better performance of RIL’s refining segment. Crude oil production from MA-1 field and gas production from KG-D6 field are likely to be tad lower on a sequential basis. Sharp y-o-y jump in production from Rajasthan field would lead to robust results for Cairn India and will translate into higher total production for ONGC. APM gas price hike will further improve ONGC’s performance.