What's Happening, and Where, on Jun 3

MOMENTUM TO CONTINUE ON SUSTAINED FIIS BUYING.

         We expect Indian markets to open on positive note on the back of stable set of global cues. Sustained buying by FIIs is providing comfort to the markets. Yesterday they bought Rs 234 crs in cash market, Rs 318 crs in index futures and Rs 24 crs in stock futures. Short covering in 7200/7300 calls also triggered the rally. Today market will focus on RBI policy (due today at 11.am) which is expected to be largely status quo as RBI Gov would like to wait for budget next month and retail inflation in the backdrop of El Nino looming.

MOVERS & SHAKERS

        Reliance Capital: Shares of insurance companies were on buyers’ radar as the finance ministry is considering to hike FDI in insurance sector without voting rights. According to media sources, the ministry may increase FDI limit in insurance sector to 49% from current 26%.Stocks like Reliance Capital (up 11.19% to Rs 685.25), Max India (up 11.02% to Rs 293.70) and Bajaj Finserv ( up 2.63% to Rs 875.30) gained strongly on Monday, hoping for a hike in FDI limit. 

Larsen and Turbro: Shares in Larsen and Turbro (L&T) gained 6.23% at 1,645.40 on reporting robust Q4 numbers post market hours on Friday.The country’s largest engineering and construction company, has won back the Street’s confidence, with its robust execution and diversification into other regions. For the past few quarters, even though it has shown it can drive growth in a difficult environment without compromising on profitability, the Street has remained sceptical.L&T reported 69% growth in net profit for the quarter ended March on the back of improved operational performance, higher sales and an exceptional income of Rs 484 crore from dilution of its stake in L&T Finance. Net profit on a standalone basis stood at Rs 2,723 crore in the fourth quarter against Rs 1,609 crore in the same period last year.

DATA ALERT

   > UK NATIONWIDE HOUSE PRICE INDEX for May; 1130 IST

  > EU EUROZONE MANUFACTURING PMI for May; 1330 IST

  > UK CIPS/MARKIT CONSTRUCTION PURCHASING MANAGERS' INDEX for May; 1400 IST

  > EU UNEMPLOYMENT DATA for Apr; 1400 IST

  > EU EURO AREA INFLATION FLASH ESTIMATE for May; 1430 IST

  > US ICSC-GOLDMAN SACHS CHAIN STORE SALES INDEX for wk to May 31; 1715 IST

  > US JOHNSON REDBOOK RETAIL SALES INDEX for week ended May 31; 1825 IST

  > US ISM-NY REPORT ON BUSINESS for May; 1915 IST

  > US MANUFACTURERS' SHIPMENTS, INVENTORIES AND ORDERS DATA for Apr; 1930 IST

  > US IBD/TIPP ECONOMIC OPTIMISM INDEX in Jun; 1930 IST.

RBI COUNTER

* DAILY LAF TENDERS: One set of 1-day reverse repo (at 7.00%) and 1-day repo

  (at 8.00%). Bids for repo tender may be submitted between 0930 IST and

  1030 IST, and reverse repo between 1900 IST and 1930 IST.

MARKETS

Call  : Seen opening above repo rate on likely demand from banks early in session to meet reserve needs. 1-day call: 8.10% vs 7.05-7.10% Mon.

Bonds : Seen slightly down Tue ahead of RBI's policy review. Value buys to support. 10-year yield: 8.60-8.70% vs 8.66% Monday.

Rupee : May open steady before RBI policy. To take cues from policy statement, local shares. Range: 58.90-59.40/$1 Tue vs 59.1525/$1 Mon.

Stocks: Seen opening up; RBI's monetary policy to lend direction. Nifty range 7300-7450; Monday-end 7362.50, up 132.55 points.

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