Even as bulls were getting to believe that the worst is behind them, fresh worries seem to have set in. The bulls are likely to remain under pressure given the weak global markets and growing inflation worries. More volatility is seen ahead of Thursday's F&O expiry and the announcement of GDP numbers on Friday.
A weakening rupee and crude above $130 per barrel are major negatives for the market. Further monetary tightening is not ruled out if inflation remains stubbornly high. Political concerns following the BJP's victory in Karnataka and the Left front's repeated threats to the Government over its economic policies may also weigh down the sentiment. It's time to be cautious and selective.
Today, we expect another weak opening as most Asian markets are sharply down following the lower finish on Wall Street on Friday. The trend may turn sideways and choppy later on as the US markets are shut today and investors may remain guarded prior to the derivative settlement and announcement of inflation and GDP numbers.
Bajaj Auto and Bajaj Finserv will be listed today. Bajaj Auto was demerged into three entities - Bajaj Holdings & Investments, new Bajaj Auto and Bajaj Finserv. Bajaj Holdings, formerly Bajaj Auto, now functions as an investment company. The new Bajaj Auto focuses on the auto business, while Bajaj Finserv is engaged in wind energy generation, insurance and finance.
FIIs were net sellers of Rs6.5bn (provisional) in the cash segment on Friday while local institutions were net buyers of Rs7.5bn. In the F&O segment, foreign funds were net sellers of Rs11.19bn. On Thursday, FIIs were net sellers of Rs5.51bn in the cash segment. Mutual Funds were net sellers of Rs922mn.
Key Results Today: eClerx, Elecon Engineering, Ess Dee Aluminium, Everest Kanto, HTMT Global, JMC Projects, Kalpataru Power, Omaxe and Shriram Transport.
Asian stocks fell for a fifth day today as rising oil prices sparked concern that higher costs will hurt consumer spending and erode corporate profits. Toyota slumped the most in four days in Tokyo and Samsung had its biggest drop in a week in Seoul. Nissan retreated after Merrill Lynch cut its rating on the stock.
The MSCI Asia Pacific Index lost 0.9% to 149.18 as of 9:59 a.m. in Tokyo, extending a four-day, 2.5% decline. The benchmark's five-day retreat is its longest since March 5.
The Nikkei 225 Stock Average declined 1.8% to 13,752.98. Japanese shares also fell after the dollar retreated against the yen, renewing concerns that exporters' profits will be eroded. Stock benchmarks slipped in other markets open for trading.
US stocks tumbled on Friday, as soaring oil prices and weak housing sector reports prompted investors to cash out ahead of a three-day holiday weekend. All financial markets are closed on Monday for Memorial Day.
All the major stock indices declined on the week as well, as record-high fuel prices heightened worries over the strength of consumer spending. Thursday was an exception, with stocks moving higher as oil prices fell.
The Dow Jones Industrial Average fell 145 points, or 1.2%, to 12,479. The S&P 500 index fell 18 points, or 1.3%, to 1,375 while the Nasdaq Composite gave up 19 points, or 1%, to 2,444.
For the week, the Dow was down 4.2%, the S&P 500 lost 3.6% and the Nasdaq dropped 2.7%.
The run-up in oil prices and weak housing market reports kept investors on tenterhooks. Also, stocks continued to see a pullback in the wake of the recent rally, after a good run between mid-March and mid-May.
Stocks opened weak on Friday and then turned even lower following the mid-morning release of the April existing-home sales report from an industry trade group.
The National Association of Realtors reported that the inventory of unsold homes jumped 10.5% to 4.55mn in April, an uncomfortably high level, said Lawrence Yun, chief economist for the real estate trade group.
Trading volumes were light ahead of the three-day weekend, with 1.1bn shares exchanging hands on the NYSE and 737mn trading on the Nasdaq stock market. Declining issues topped gainers by nearly three to one on both exchanges.
US light crude oil for July delivery rose $1.38 to settle at $132.19 a barrel in New York. Oil rose nearly 5% last week from $126.04 on May 16. A day before, it briefly touched a record high of $135.09 in electronic trading.
Oil has been spiking over the last few weeks on a mix of global supply concerns and the impact of the weak dollar, which makes dollar-traded commodities less expensive for international investors.
The national average price for a gallon of regular unleaded gas rose to a record $3.875 from the previous day's record high of $3.831 per gallon, AAA reported.
COMEX gold for August delivery rose $7.60 to settle at $930.60 an ounce. The dollar fell versus the euro and yen. Treasury prices rallied, lowering the yield on the 10-year note to 3.87% from 3.91% late on Thursday.
GM shares fell 5%. The auto giant said it expects to take a $1.8bn hit and cut production by another 230,000 vehicles in the second quarter due to the now-settled strike at American Axle & Manufacturing Holdings.
Shares of Ford shed 4% after it gave a vivid indication of the extent of the challenges facing the automotive industry in the US, backing away from its oft-stated goal of turning a profit in 2009.
Yahoo shares rose 0.7% after the company pushed back its annual shareholder meeting from July 3 to the end of July as it faces a proxy campaign led by billionaire investor Carl Icahn.
Stocks in Europe ended Friday at their lowest closing level this month, as oil prices resumed their upward path after a one-day hiatus and investors closed positions before long weekends in the US and the UK. The pan-European Dow Jones Stoxx 600 dropped 1.7% to 319.03 in a broad-based retreat. Germany's DAX 30 slipped 1.8% to 6,944.05, while the French CAC 40 dived 1.9% to 4,933.77 and the UK's FTSE fell 1.5% to 6,087.30.
In the emerging markets, the Bovespa in Brazil dropped 1.2% to 71,451 while the IPC index in Mexico was down 0.6% at 31,068. The RTS index in Russia added 0.1% at 2435 while the ISE National 30 index in Turkey slid 2.3% to 48,764.
Oil, Inflation to drive sentiment
Weak global cues, accelerating inflation and declining industrial growth dampened the sentiments on Dalal-Street on Friday. After bouncing back in the early trades, the benchmark Sensex closed below the 16,700 mark and the Nifty ended below the 4950 level. Except for the Pharma index all the other major BSE Sectoral indices ended in the red.
Even the midcap and smallcap stocks lost momentum in afternoon trade. Both the Mid-Cap and the Small-Cap indices lost over a percent each. Finally, the BSE benchmark Sensex ended 257 points lower to close at 16,649 and the Nifty index slipped 78 points to close at 4,946.
Overall about 809 stocks advanced; 1,909 stocks declined while 72 stocks remained unchanged. Among the 50-Nifty 35 stocks ended down and 14 stocks ended in green.
RCom slipped by 2% to Rs572 after the company said that it added 1.62mn users in April. The scrip touched an intra-day high of Rs594 and a low of Rs570 and recorded volumes of over 11,00,000 shares on NSE.
The PSU refinery stocks gained momentum after media reports stated that the Indian oil minister wants Rs10 per liter increase in petrol and Rs5 per liter increase in diesel. Stocks like HPCL surged by over 3.5% to Rs242, BPCL spurted by over 3.5% to Rs359 and IOC added 3% to Rs420.
Hilton Metal Forging dropped by over 10% to Rs32 after in a bulk deal on Thursday Deutsche International sold 67,000 shares of the company at an average price of Rs37. The scrip touched an intra-day high of Rs35 and a low of Rs32 and recorded volumes of over 73,000 shares on BSE.
IndiaBulls Real Estate declined by over 4% to Rs490. Reports stated that the company has paid its UK listed entity Rs4.5bn more than estimated by independent valuers. The scrip touched an intra-day high of Rs522 and a low of Rs477 and has recorded volumes of over 7,00,000 shares on NSE.
After hitting an intra-day high of Rs113, Idea lost ground and ended flat at Rs107. There were reports stating that Providence Equity Partners acquired 20% in Idea Cellular unit for US$640mn. The scrip touched an intra-day high of Rs113 and a low of Rs106 and recorded volumes of over 92,00,000 shares on NSE.
Spice Tele advanced by 2% to Rs44 after the company announced that it would invest upto US$300mn in networks. The company also said that they are in talks for Infrastructure-sharing and also expects to get airwaves in Andhra Pradesh. The scrip touched an intra-day high of Rs45 and a low of Rs44 and recorded volumes of over 25,00,000 shares on NSE.
IDBI fell by over 2% to Rs95. The company said that it is looking to seal an acquisition this year and is looking at both private and public sector banks for this purpose. The scrip touched an intra-day high of Rs99 and a low of Rs94 and recorded volumes of over 5,00,000 shares on NSE.
Tata Elxsi surged by over 8% to Rs202 as reports stated that the company would triple manpower on overseas design orders. The scrip touched an intra-day high of Rs209 and a low of Rs187 and recorded volumes of over 99,000 shares on NSE.
Bank of Maharashtra gained by 1% to Rs47 following the reports that the bank opened its 1,377th branch in India. The scrip touched an intra-day high of Rs48 and a low of Rs47 and recorded volumes of over 74,000 shares on NSE.
ONGC slipped by 2 percent to Rs902. According to reports, the company refused to accept oil bonds as payment for its crude oil sales to PSU refiners. The scrip touched an intra-day high of Rs938 and a low of Rs898 and recorded volumes of over 7,00,000 shares on NSE.
Corporate News
Bharti Airtel drops talks with MTN on differences over holding structure. (FE)
RPower, GMR Infra plan to bid for Singapore power plants.(BS)
Reliance Industries may begin drilling in the KG block in the current year.(BL)
Cipla close to clinching a long term manufacturing and supply deal with Australian drug maker Sigma Pharmaceuticals for OTC products.(BS)
GMR Infrastructure may partner Petronas to jointly bid for oil blocks in India.(Mint)
Reliance Communications close to acquiring ailing London based virtual network operator Vanco.(FE)
SAIL agrees to pay 40% higher price for its coking coal procurement from Coal India in 2008-09.(BL)
Hindustan Unilever has hiked prices between 3-28% over the past one and a half months.(DNA)
Two Chinese companies along with BHEL are in race for the Rs24bn EPC contract for 600MW Haldia thermal venture of CESC.(ET)
NBC Universal acquires 26% stake in NDTV Network for US$150mn.(BL)
Videocon is studying an invitation from GE to bid for its appliances division which is up for sale.(BS)
Infosys Technologies says it is actively looking for acquisitions in Europe.(BL)
M&M appoints a team for two wheeler foray.(BS)
AV Birla group in talks with Accor of France to bring its budget hotel brand Formule-1 to India.(ET)
ICICI Bank to go slow on its retail assets expansion; to refocus on corporate loans.(Mint)
ONGC and Oil India will together save around Rs 13bn annually with the petroleum ministry allowing them to pay royalty on the final price.(BS)
Sterlite Industries on look out for partners for its proposed 5mn ton steel pant in Orissa.(FE)
Jain Irrigation Systems Rs5.5bn capacity expansion plan to be executed by 2010-11.(DNA)
Coal India will invite bids for developing 26 closed mines through JVs.(ET)
Uttar Pradesh power regulator issues notice to Lanco Infratech over Anpara project.(BS)
Honda plans to roll out a non-100 cc bike and another scooter before the end of this year.(DNA)
Apollo Tyres to invest Rs20bn in next three years on expansion.(Mint)
Vedanta Resources in talks with steel producers from Europe, Japan and India; seeks an ally for steel JV.(TOI)
Housing Development and Infrastructure to bid for 10 NELP VII blocks.(DNA)
RPG Cellucom plans to add 500 stores in India by March 2009. (ET)
Power Finance Corp bids to raise Rs2bn through sale of bonds.(DNA)
NMDC may review iron ore exports in order to increase domestic availability.(BS)
City Union Bank has proposed a JV with Sri Lanka based Hattan National Bank. (DNA)
Rolta is learnt to be close to acquiring a US-based IT firm.(ET)
Volkswagen plans to roll out its lowest priced car 'UP!' for Rs0.3mn in India by 2010-11.(ET)
Dalmia Cement is likely to invest Rs11bn more to its expansion. (DNA)
Economic News
Farm debt waiver has been enhanced to Rs717bn.(BL)
Government allocated start-up spectrum to new telecom players in AP.(ET)
Communications Minister A Raja suggests foreign telecom companies would be permitted to bid for 3G spectrum.(BS)
Relief package for PSU oil marketing companies who are facing financial crunch due to continued surge in global crude oil prices is expected sometime soon.(BL)
Uttar Pradesh government decides to sell its equity in all the sugar mills of the UP State Sugar Corporation.(FE)
DoT calls a meeting with operators on May 28th to discuss allocation and pricing of 3G spectrum bands.(BS)
Government may lift the ban on rice exports to select African nations.(ET)
Government says 3G telecom services, which enable faster data connectivity, will be rolled out before January next year.(FE)
Government unlikely to relax overseas borrowing regime.(BS)
Companies that source service from associate firms would have to pay service tax before they make adjustments for payments in their books.(ET)
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