MORNING CAPSULE - APR 8

Global markets are in a bad shape with the US and European markets posting steep declines last week. Back home, the Nifty struggled a lot to stay above the crucial 5550 mark on Friday. It ended at 5553.25 down 21.50 points and the Sensex fell 59.47 points to close at 18450.23.

Data to watch out for this week

Trade balance data will be announced on the April 10 and that assumes importance after the horrific Q3 CAD data.

The IIP data is due on April 12. It assumes importance because the core sector data saw a de-growth of 2.5% in February an indication of another decline in the IIP data this time.

Meanwhile, Asian markets were mixed in morning trade. The Japanese index mounted another rally after the stellar move on Friday post the BoJ policy announcement and investors are very encouraged about BoJ plans to buy longer dated bonds immediately to beat deflation.

In the US, while major indices closed off of their worst levels on Friday, the S&P 500 and Nasdaq still logged their worst one week declines this year. Markets were pressured by a disappointing march unemployment report in addition to ongoing jitters over North Korea. The Dow recovered from the 170 point drop intra-day, but still posted its worst week since February.

On the economic data front, US non farm payrolls for March came in at 268,000, up 88,000 versus consensus estimates of 193,000, the unemployment rate stood at 7.6% versus expectations of 7.7%.

Meanwhile, February trade deficit has come in at USD 42.96 billion versus consensus estimates of a deficit of USD 44.8 billion.

European stock markets on Friday dropped the most since late October, extending losses after US. Nonfarm payrolls saw a much weaker-than-expected rise.

The CAC lost 1.68%, the Dax dropped 2% and the FTSE ended 1.45% lower, a month low for that index. The peripheral markets were also mostly weak with Athex standing out for the maximum punishment, down 2.35% for the session. The only exception was Italy which gained 0.64%.

Currency

The euro is firm above 1.29 to the dollar. The dollar index continues to stay below the 83 mark. The yen's slide continues and it slips to a four-and-a-half year low against the dollar.

Commodities

Brent crude slumps to an eight-month low of USD 104 a barrel.  In precious metals gold held on close to USD 1580 an ounce after rallying to its biggest one-day gain since November on Friday.

Stocks to watch

Today is a big day for the telecom sector. The Supreme Court will hear on 3G roaming and Bharti chief Sunil Mittal's plea in the 2G allocation case.

Bharti Airtel , Idea and Vodafone will jointly argue in the Supreme Court against the telecom department to defend the 3G ICR pacts. This, even as the telecom department pushes to invoke Bharti Airtel's 350 crore bank guarantee. It may also invoke bank guarantees of Idea and Vodafone if needed.

Meanwhile, Aditya Birla Group companies are served tax notices totaling to Rs 3,900 crore. The taxman has sent a Rs 2,400 crore notice to Aditya Birla Telecom for the demerger of its Bihar licence to idea cellular in 2009-10.

Posted in: MARKET MORNING VIEW