After a strong April, the bulls are suddenly finding it tough to feel well and extend the rally this month. The flow of bad news from all fronts has moderated though crude and inflation continue to soar. The market's behaviour over the fast few days has been quite inexplicable. While on Friday, the key indices rallied despite inflation soaring to a 42-month high, this week they have struggled to advance beyond last week's closing levels. In fact, the Nifty on Tuesday slipped below the 200 Day Moving Average (DMA) after surpassing the key technical level only last week. We see the market continuing in a sideways fashion in the near term.
Neither the bulls and nor the bears will be able to hold sway over the market. In short, there will be alternative bouts of buying and selling. While local institutions and even the retail investors have been supportive, it is the FII inflows which are of some concern. Global markets too have been choppy. Commodity prices, especially that of crude oil have jumped quite sharply. So, inflation will remain a bugbear for the bulls for quite a while before it softens. A good monsoon will definitely help the bulls' cause. But that will take some time.
Today, the market may open higher following the overnight gains on Wall Street. But, the trend will turn choppy again as the day wears on.
FIIs were net sellers of Rs8.16bn (provisional) in the cash segment yesterday while the local institutions pumped in Rs2.95bn. In the F&O segment, foreign funds were net sellers of Rs2.63bn. On Monday, FIIs were net sellers of Rs3.07bn in the cash segment. Mutual Funds were net buyers of Rs1.41bn on the same day.
Shares of Aishwarya Telecom Ltd. will get listed today. The IPO was subscribed 20 times.
Results Today: Batliboi, Blue Star Infotech, MRPL, Mid-Day, Praj Industries, Punjab Tractors, Shree Cement, Swaraj Engines and Union Bank.
Asian markets were largely up this morning, led by raw material producers and car makers after commodity prices advanced and Toyota said it will raise prices of some vehicles in North America.
BHP Billiton and Inpex Holdings, Japan's biggest oil explorer, led gains after crude futures reached a record. Toyota climbed to a two-month high. IHI Corp. rallied after the Nikkei newspaper said Japan's third-largest maker of heavy machinery may report its first profit in three years.
The MSCI Asia Pacific Index added 0.6% to 153.20 as of 10:22 a.m. in Tokyo, extending a three-day, 2% advance. Commodity producers jumped 1.4%, the biggest increase among the index's 10 industry groups.
The Nikkei in Tokyo climbed 130 points or 0.9% to 14,179, following a two-day holiday. The Hang Seng in Hong Kong was down 89 points or 0.3% at 26,172 while the Kospi in Seoul and the Straits Times in Singapore were at 1858 and 3249, respectively.
The Shanghai Composite in China lost 4 points at 3729 while the Taiex in Taiwan added 97 points or 1.1% to 8954. Australia's S&P/ASX 2oo in Sydney was up 5 points at 5706. Indexes gained elsewhere in Asia, except for New Zealand.
US stocks advanced on Tuesday as growing optimism over the state of the economy and the credit crunch countered record-high oil prices and big losses at financial firms. The rally sent S &P 500 Index to a four-month high.
Fannie Mae shares gained, helping financial stocks erase a 1.9% decline, on a regulatory decision that will enable the biggest mortgage-finance company to buy more home loans. AMD gained the most since January on speculation that the No.2 chipmaker may be split up.
The S &P 500 added 10.77 points, or 0.8%, to 1,418.26. The Dow Jones Industrial Average rose 51.29 points, or 0.4%, to 13,020.83. The Nasdaq Composite Index jumped 19.19 points, or 0.8%, to 2,483.31.
Market breadth was positive. Two stocks gained for each that fell on the New York Stock Exchange.
After the close, Cisco Systems reported quarterly sales and earnings that topped forecasts, sending shares 2% higher in extended-hours trading.
No market-moving earnings reports are expected on Wednesday. Economic news on the agenda includes the March pending home sales index and the weekly oil inventories report.
US stocks fell in the morning trade as crude oil prices spiked to a record $122.35 a barrel and Fannie Mae and other financial firms reported big quarterly losses. But the market stabilised by midday, as investors looked beyond rising crude prices and opted to snap up technology and financial shares.
Wall Street has rebounded since mid-March, with stocks rising nearly 15% off the lows. Investors are hopeful that any recession will be mild and that the Federal Reserve's monetary actions are starting to work.
Yahoo added 5.5% as investors bet that the Microsoft deal might actually end up going through after all.
Fannie Mae reported a steeper-than-expected quarterly loss due to increasing mortgage defaults and ongoing problems in the credit markets. Fannie Mae also said that it's cutting its dividend and will raise $6bn in capital through a stock sale. Looking forward, the mortgage financier said it expects severe weakness in the housing market in 2008. However, the stock gained nearly 9%.
Before the trading started, Swiss bank UBS reported a steep quarterly loss amid the US subprime fallout, and said it was cutting about 7% of its workforce, or roughly 5,500 jobs. UBS also said it was selling $15bn in subprime and other mortgage-based debt from its portfolio to BlackRock. Shares lost 1.5%.
Target said it is selling almost half of its credit card receivables to JP Morgan Chase for about $3.6bn as a means of raising cash.
In other news, Federal Reserve Chairman Ben Bernanke said that the spike in foreclosures are a result of falling home prices and require a big government and private-sector response.
US light crude oil for June delivery rose $1.87 to settle at $121.84 a barrel on the New York Mercantile Exchange, a record settlement price. Earlier, oil hit a new record trading high of $122.73 a barrel.
A Goldman Sachs analyst said that oil prices could reach $150 to $200 within the next six months to two years due to supply shortages.
The national average price for a gallon of regular unleaded gas slipped to $3.610 from $3.611 the previous day, according to AAA. It was the fifth day in a row of declines after gas prices hit records for 17 straight days.
COMEX gold for June delivery rose $3.60 to $877.70 an ounce. The dollar fell versus the euro and the yen. Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.92% from 3.86% late on Monday.
Stocks in Europe lost ground. Financials dropped after UBS, Lloyds TSB and Swiss Re detailed credit-market losses, countering gains in the resource sector on the back of rising commodity prices.
The pan-European Stoxx 600 index lost 0.5% at 326.69, having gained around 12% since the middle of March. The index is still down around 11% for 2008. Germany's DAX 30 fell 0.5% to 7,017.10, while the French CAC-40 slipped 0.4% to 5,040.82. The UK's FTSE 100 finished flat at 6,215.20.
In the emerging markets, the Bovespa in Brazil ended flat at 70,195 while the IPC index in Mexico gained 0.85% to 31,223. The RTS index in Russia was up 0.6% to 2153 and the ISE National 30 index in Turkey dived 1.6% to 53,120
Market delicately poised
Indian bourses ended in red for second straight trading session tracking a fall in the Asian markets. The Asian stocks dropped for the first time in three days led by fall in financial companies.
Sentiments further dampened as European markets opened with negative bias after Swiss bank UBS AG announced that it posted a net loss of ~US$10.95bn in the first quarter of this year due largely to write-downs of US$19bn on U.S. real estate and related structured credit positions.
Finally, the BSE benchmark Sensex ended 117 points lower to close at 17,373 and the Nifty index lost 47 points to close at 5,144.
Overall about 975 stocks advanced; 1,711 stocks declined while 67 stocks remained unchanged. Among the 50-Nifty 31 stocks ended in red and 19 stocks ended in green.
SBI was down 1.2% to Rs1756. According to the reports, the company has hiked the interest rates on FCNR (B) deposits in different currencies and on NRE (rupee) term deposit across varying maturities, with effect from May 1, 2008. The scrip touched an intra-day high of Rs1783 and a low of Rs1735 and recorded volumes of over 2,00,000 shares on BSE.
After being in the limelight on Monday, IVRCL Infra slightly lost ground and slipped by 2.8% to Rs454. The company bagged orders worth Rs4.7bn from the irrigation and CAD department of Government of Andhra Pradesh. The scrip touched an intra-day high of Rs471 and a low of Rs445 and recorded volumes of over 1,00,000 shares on BSE.
Mahindra Lifespace gained by 1% to Rs568 after media reports stated that the company won 25acre residential project in Nagpur. The scrip touched an intra-day high of Rs587 and a low of Rs558 and recorded volumes of over 1,00,000 shares on BSE.
UCO Bank further gained by 2% to Rs51 following reports that the bank has received government approval for capital restructuring. The essence of restructuring, UCO Bank would be to issue non-cumulative preference shares of Rs3.25bn by June and conversion of Rs3bn of Government equity into preference shares, according to report.
With conversion, the size of equity capital UCO Bank will get reduced to Rs5bn, comprising Rs3bn of Government holdings and Rs2bn of public holdings. Banks are awaiting Cabinet approval for the conversion, report added. The scrip touched an intra-day high of Rs54 and a low of Rs50 and recorded volumes of over 92,00,000 shares on BSE.
HPCL slipped by 4% to Rs254 as reports stated that 3,500 officers have decided to go on indefinite nation wide strike from today, they were protesting against alleged fiscal mismanagement and arbitrary to its joint venutre with LN Mittal.
Strike will affect the functioning of petrol pumps, aviation refuelling and refinery operations at Mumbai and Vizag. The scrip touched an intra-day high of Rs264 and a low of Rs252 and recorded volumes of over 1,00,000 shares on BSE.
Pritish Nandy was frozen at 10% upper circuit to Rs59.40 after the company announced that they signed a three film deal with US-based Sony Pictures. The scrip touched an intra-day high of Rs59.40 and a low of Rs56 and recorded volumes of over 28,000 shares on BSE.
HCL Infosystems advanced by 1% to Rs201 after the company announced the acquisition of Natural Technologies Pvt Ltd (NTPL), a niche banking software product company.
With three decades of experience providing ICT and infrastructure solutions to the BFSI sector, the acquisition of niche products from NTPL will further consolidate HCL's leadership position in this sector. The scrip touched an intra-day high of Rs203 and a low of Rs200 and recorded volumes of over 5,000 shares on BSE.
Opto Circuits was down by 2.3% to Rs352. The wholly owned subsidiary of Opto Circuits Mediaid Inc. received approval from the United States Food and Drug Administration for key vital sign monitoring products. The Model 900 and Model 960 Vital Sign Monitors are the first Opto bed-side monitors to receive the crucial approval for marketing in the United States. The scrip touched an intra-day high of Rs365 and a low of Rs346 and recorded volumes of over 14,000 shares on BSE.
Unity Infra edged higher by 0.5% to Rs603 after the company announced that it secured two orders worth Rs2.23bn. The scrip touched an intra-day high of Rs630 and a low of Rs580 and recorded volumes of over 43,000 shares on BSE.
L&T ended lower by 2.3% to Rs3061. The company on Tuesday secured orders worth Rs3.4bn from Power Grid for construction of transmission lines in Maharashtra. The company also plans to look for orders for constructing passenger cruise ships at its proposed facility at Kattupalli in Tamil Nadu, reports stated. The scrip touched an intra-day high of Rs3154 and a low of Rs3051 and recorded volumes of over 3,00,000 shares on BSE.
Corporate News
Reliance ADAG group plans to set up Rs100bn cement plant in MP. (Mint)
Vodafone to launch iPhone in India by September. (BS)
Reliance Industries shuts down all of its 1,432 petrol pumps. (Mint)
Ansal Properties terminates MoU with UAE-based Deeyar Development PSC. (Mint)
L&T and Grasim are set to settle their long standing dispute over cross holdings out of court. (BS)
Bharti Airtel may rope in SingTel for MTN buy. (BS)
Tata Steel targets Brazil iron ore assets of London Mining. (BS)
Nalco plans Rs140bn Greenfield aluminium smelter and captive power plant in Orissa. (BS)
Suzlon arm fined US$19,000 by US body for allegedly violating air pollution control norms. (BS)
Financial fraud may be the reason for departure of senior executives including CEOs at Fortis Healthworld. (Mint)
Big Bazaar reduces food prices by 20%. (BS)
Blackstone group mulls taking Gokaldas Exports private. (BS)
Tata Power plans entry in shipping business; lines up US$500mn investment. (BS)
Haldia Petro buys L&T's 51% stake in power JV. (BS)
Sobha Developers to invest Rs2bn in Bangalore. (BS)
High Court orders status quo on RIL and RNRL dispute. (BL)
IOC is eyeing additional oil assets overseas jointly with Oil India. (BL)
BASF is setting up engineering plastic plant in Thane. (BL)
IOB mulls property sale to shore up Tier-I capital. (BL)
Reliance Infrastructure buys back shares worth Rs3,430mn. (BL)
Union Bank of India plans to issue shares on right basis (FE)
Pritish Nandy Communication signs three films with Sony Pictures. (FE)
HDFC MF picks up 5% stake in Carborundum Universal. (FE)
BEST says that REL's power distribution license in Mumbai to be suspended. (FE)
Power Grid looking for consultancy business in Nigeria and Dubai; plans capex of Rs80.4bn in current fiscal year. (FE)
Infosys and SAP enter in to global service partner agreement. (ET)
Gati launches air-freight services in association with Air India. (ET)
Vodafone, RCom likely to stay out of MTN race. (ET)
Monnet Ispat's overseas subsidiary, Monnet Global, set to acquire mining rights for 250mn ton coal reserves in Indonesia from PT Anzarara. (ET)
Heidelberg to restructure Mysore Cement operations. (ET)
The high court sends notice to GVK-L&T consortium over Uttarkhand power project. (ET)
Geojit Finance to hive off commodity broking biz. (ET)
Economic News
RBI to lend US$5bn for infrastructure projects. (Mint)
Mumbai Metro may be the first private project to get JNNURM grant. (BS)
Cement firms assure price cuts if government grants excise duty abatement. (BS)
Centre urges states to cut jet fuel tax to 12.5%. (BS)
Nelp VII deadline extended to June 30, 2008. (BS)
National Highway builders to be affected by rising input costs. (BL)
State run petroleum marketing firm losses widens to Rs4.50bn per day on selling fuel below cost. (ET)
ECBs and FCCBs rose to about US$4.5bn in March 2008 as against to US$862.12mn in February. (FE)
State government agrees to reduce central sales tax from 3% to 2%. (FE)
State government not to increase the VAT rate on the intermediate good from 4% to 5%. (FE)
Stamp duty on debentures may go down to 0.0625% from the current 0.375%. (FE)
Duty on promissory notes likely to reach 0.0083%. (FE)
Finance Minister rules out further cut in custom duty on newsprint. (ET)
Government not considering any proposals to sell its stake in PSU banks. (ET)
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