Global investor George Soros has done some Quantum buying associating himself with those who are temporarily losing their Power and glory. Betting against the British pound in 1992 made him famous and richer. Will be able to extract his pound of flesh from the Indian market only time will tell.
The string of sorrows on Friday saw an overreaction. We expect a rebound at the opening bell after Friday's weak show. Some more short-covering-led rallies are not ruled out. Don't get fooled by such pull-backs as there is no dearth of perceived bad news.
The trend this week will hinge on a slew of variables, such as the global markets, crude oil, macro-economic data, FII flows, results and of course the political situation. The Dow Jones Industrial Average managed to bounce back on Friday after sliding under the 11,000 mark in early trades. Crude oil too has cooled off after hitting a new record above $147 on Friday. Asian markets are mixed, with the Nikkei is up over 1%, while the Straits Times and Taiex are down 0.2-5%.
In a rare development, the key indices actually managed to post modest gains for the week, mainly on account of short-covering in the F&O segment. The Nifty, which hit a low of 3848 on July 2 has not breached that bottom ever since. This may provide some comfort to the bulls, though there is every danger that the level will also be taken out if the current string of bad news persists.
One thing is pretty difficult to attain in stock market i.e. timing of entry and exit. Last week's resilience notwithstanding, we still can't say whether a temporary bottom was reached on July 2. It's too tough to ascertain the market's direction at this juncture.
Results Today: Axis Bank, CMC, Everonn Systems, Tanla and Tata Sponge.
Silverline Animation Technologies Ltd. and KSK Energy Ventures Ltd. will get listed today.
Ranbaxy may be under pressure as the US government has sued Ranbaxy for concealing and forging crucial data to get a favourable judgment in an ongoing investigation.
HCL Tech is another stock that will face investors' ire after announcing that it may incur forex losses of about US$65-75mn for the quarter ended June 30, owing to a weak rupee.
The US Securities and Exchange Commission (SEC) says it is examining ways to prevent stock-price manipulation by short sellers and others amid amid worries about the financial health of mortgage giants Fannie Mae and Freddie Mac as well as Lehman Brothers.
In Asian markets, the Nikkei is up 1.1% while the Hang Seng has turned flat after being up nearly 200 points. the Kospi in Seoul is up 0.2% while the Straits Times in Singapore is down 0.65%. The Shanghai Composite in China is up 1.3% and the Taiex in Taiwan was down 0.4%.
US stocks fell on Friday, but closed off their lows, as fears that Fannie Mae and Freddie Mac would collapse eased amid reports that the Bush administration will rescue the mortgage financiers and talk that the Federal Reserve would open up its discount window.
The Dow dropped below the 11,000 level for the first time since August 2006. But, the blue-chip index settled at 11,100.54, down 128.48 points, or 1.1%. For the week, the Dow lost 1.6%.
The S&P 500 Index shed 13.89 points, or 1.1%, to 1,239.50, giving it a weekly loss of 1.8%. The Nasdaq Composite Index skidded 18.77 points, or 0.8%, to 2,239.08, giving the technology-laden index a 0.3% weekly loss.
Fannie Mae and Freddie Mac both fell by close to 50% in early trading amid fears about their bankruptcy and speculation of a government bailout.
But shares trimmed losses as the day wore on, recovering after Treasury Secretary Henry Paulson and Sen. Christopher Dodd, D-Conn., made comments that sought to assuage some fears. Freddie ended 3% lower and Fannie ended 22% lower.
For the financial sector and for the stock market, there's more pain to come before a bottom is reached, according to some Wall Street analysts.
US light crude oil for August delivery gained $3.43 to settle at $145.08 a barrel on the New York Mercantile Exchange, after hitting a trading record of $147.27 earlier.
The national average price for a gallon of regular unleaded gas fell Friday to $4.096 from $4.104 Thursday, according to AAA.
In currency trading, the dollar fell versus the euro and the yen. In the bond market, Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.95% from 3.80% late on Thursday. COMEX gold for September delivery rose $18.70 to settle at $963.20 an ounce.
Lehman Brothers lost another 16.6%, amid continued uncertainty about the brokerage's financials since it reported a nearly $3bn second-quarter loss last month. Citigroup managed to close with just modest losses, after the company said it is selling its German retail banking unit to France's Credit Mutuel for $7.7bn.
GE reported weaker earnings that met forecasts on higher sales that beat estimates. The company reiterated that it would earn $2.20 to $2.30 per share for the full year versus analysts' estimates of $2.22 per share. GE also said it will sell its Japanese consumer finance business for $5.4bn. GE shares ended nearly unchanged, after rising a bit in the morning.
Over the weekend, Anheuser-Busch accepted Dutch brewer InBev's sweetened bid of $70 a share, according to media reports. Anheuser-Busch stock gained more than 8% in regular trading.
The US trade deficit narrowed in May by more than expected, as the record demand for exports - due to the weak dollar - overshadowed the record demand for imports, including crude oil.
The University of Michigan's July consumer sentiment index inched up to 56.6 from 56.4, versus forecasts for a drop to 55.5. However, the index's expectation component, which relates to consumer spending, fell to a 28-year low.
European shares ended around three-year lows on Friday due to a spike in crude oil futures and fresh concerns over the financial sector. The pan-European Dow Jones Stoxx 600 index tumbled 2.7% to 270.36, taking year-to-date losses to nearly 26%.
Germany's DAX 30 fell 2.4% to 6,153.30, while the French CAC-40 dropped 3.1% to 4,100.64 and the UK's FTSE 100 fell back into bear market territory after it lost 2.7% to 5,261.60.
Last trading session of the week ended with a sharp cut. Markets started off with a positive gap but immediately slipped into red on back of disappointing guidance from IT bellwether Infosys. Sentiments were further hit after India's industrial production tumbled in May, to 3.8% from 10.6% in the same month last year. What's even worse was that April's growth has been trimmed to 6.2% from 7%.
Inflation figures were also another dampener. India's Inflation accelerated to the fastest pace since 1995. Inflation rose to 11.89% in the week to June 28 against 11.63% in the previous week
Finally the Sensex lost 456 points to close at 13,469 and the Nifty lost 113 points from to close flat at 4,049.
Bharti Airtel gained by half a percent to Rs745 after the company announced that it adds 2.56mn subscribers in June according to industry data. The scrip touched an intra-day high of Rs798 and a low of Rs737 and recorded volumes of over 9,00,000 shares on BSE.
Sterlite Industries gained by 1.7% to Rs661 after the company along with its unions representing the workers of US based Asarco agreed to acquire all the assets of the bankrupt copper producer. The scrip touched an intra-day high of Rs680 and a low of Rs652 and recorded volumes of over 4,00,000 shares on BSE.
Shree Ashtavinayak advanced by 1% to Rs562 following reports that the company is planning to invest ~Rs9bn in its forthcoming movies. The scrip touched an intra-day high of Rs583 and a low of Rs540 and recorded volumes of over 50,000 shares on BSE.
Max India advanced by 1.6% to Rs158 after the company announced that it would spend Rs1bn along with Bupa Finance for setting up an Insurance company. The scrip touched an intra-day high of Rs167 and a low of Rs155 and recorded volumes of over 54,000 shares on BSE.
Welspun-Gujarat Stahl slipped by 2.5% to Rs304. The company announced that it won order worth Rs30bn and also said that it has total orders worth Rs77bn. The scrip touched an intra-day high of Rs315 and a low of Rs300 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Infosys Technologies plunged by over 7% at Rs1676 erasing early gains as the company didn't increase guidance for FY09 on back of continuation of challenging business outlook. The stock had hit an intra-day high of Rs1876. However, went on to hit an intra-day low of Rs1,641 recording volumes of over 20,00,000 shares on BSE.
Infosys Technologies reported a net profit of Rs13.02bn in the quarter ended June 30, 2008 as against Rs12.49bn in the previous quarter. This translates into a sequential growth of 4.2%. This is better than expectations of a slight dip Quarter on Quarter (QoQ).
Infosys Technologies hiked its revenue and earnings per share (EPS) guidance for the fiscal year 2008-09 as per Indian GAAP. The company expects net sales to be between Rs212.78-216.22bn for the year ending March 2009. The EPS for the current fiscal year is expected to be in a range of Rs99.34-101.06. The company has taken a conversion rate of 1 US$ = Rs.43.04.
Allied Digital gained by 1.2% to Rs906 after the company announced that it acquired 80.5% stake in US based EnPointe Global Services for US$30mn. The scrip touched an intra-day high of Rs932 and a low of Rs880 and recorded volumes of over 4,000 shares on BSE.
BHEL declined by 2.6% to Rs1521. The company announced that it won order worth Rs21.75bn from Tamil Nadu Electricity Board. The scrip touched an intra-day high of Rs1588 and a low of Rs1493 and recorded volumes of over 5,00,000 shares on BSEUS government files suit against Ranbaxy Laboratories for concealing and forging crucial data to get a favourable judgment in an ongoing investigation.(BS)
HCL Technologies may incur forex losses of about US$65-75mn for quarter ended June 30, owing to a weak rupee. (BS)
BHEL receives Rs22bn contract for setting up a 600MW thermal power generating unit in Tamil Nadu.(FE)
ADAG group on look out for acquisitions to start its cement business much before it completes its 4,000MW mega power project at Sasan, Madhya Pradesh.(BS)
JSW Steel looking to acquire US-based United Coal Company. (ET)
Athena Energy Venture, a JV between Power Trading Corp and IDFC to set up a 1,320MW coal-fired power plant in Andhra Pradesh. (DNA)
ONGC may offer joint operatorship of a KG block to British Gas in exchange for rig support to complete drilling in 2009.(BL)
Swan Telecom in negotiations with BSNL for a strategic alliance under which the former will utilise the network of the state-owned company to roll out its operations.(BS)
SAIL-Tata Steel JV company wants five coal blocks to cut imports.(FE)
JSW Steel will explore the possibility of importing iron ore from its mine in Chile and sell it in the local market.(BS)
Maxis Communications would not sell Aircel stake to any third party.(TOI)
Tata Steel is looking at acquiring an iron ore mine in Western Australia to supply ore to Corus' plants.(Mint)
Jindal Stainless is close to acquiring chrome ore and manganese mines in West Asia to cater to its project in Orissa.(BS)
Welspun Gujarat Stahl secures orders worth Rs30bn from Indian as well as overseas companies. (DNA)
Wipro's Asian unit looking to secure deals worth US$100mn from India and Middle-East.(FE)
Ansal API announces the launch of its hi-tech city spread over 2,500 acres adjoining Greater Noida.(Mint)
Commerce ministry examining possibilities of stripping RPL refinery of its 100% export oriented unit status. (ET)
Healthcare services provider Max India board approves its JV with UK-based Bupa Finance Plc for setting up a health insurance company.(FE)
Siemens India secures order from Tata BlueScope Steel to supply equipments to the company's new processing lines at Jamshedpur.(DNA)
Maytas Properties to develop three IT SEZs.(BL)
Drug maker Abbott India to buy back shares at Rs630 each.(BL)
Reliance Industries, Essar Oil, GAIL, Videocon may bid for five exploration blocks in Australia.(ET)
ONGC Videsh in talks to form an alliance with UK based Imperial Energy with oil producing assets in Western Siberia.(TOI)
M&M reduces ownership interest in subsidiary companies by 6-7%, brings forgings unit under Mahindra Forgings.(ET)
Spice Energy plans a GDR issue of US$300mn by August; proceeds to be used to set up 1,000MW thermal power plant in Tamil Nadu.(DNA)
ICICI, HDFC AMCs among 20 companies in race for managing Employees Provident Fund Organization's funds.(ET)
Reliance Logistics looking to acquire mid-sized logistics firm operating in third party logistics field. (DNA)
Phoenix Mills, Adlabs in pact for India's largest multiplex cinema. (ET)
Economic Front Page
Government may cut duty on major petrochemical feedstock building blocks. (ET)
Benchmark ten year bond yield rises to seven year high of 9.55% on rising inflation.(BS)
DoT dilutes the proposed pricing of excess spectrum held beyond contracted limit by mobile operators.(Mint)
Service Sector growth slips from 14.7% to 10.5% in Q4 2008. (ET)
TRAI proposes to raise the base price for operators participating in the auction for 3G and broadband wireless spectrum (BL)
Domestic airlines witnessed a 17% decline in passenger traffic in June as compared to earlier month.(FE)
Kingfisher-Deccan may be dragged to Supreme Court by government.(Mint)
Civil aviation minister directs Bangalore International Airport Limited to increase its capacity to handle passengers.(BS)
Exchange traded currency futures likely to be launched by mid August.(BL)
Government planning to raise FDI ceiling in defense production to 49% from the current 26%. (ET)
RBI eases rules governing external commercial borrowing. (ET)
National Bio-fuel policy may be unveiled by September.(DNA)
Prices of plastic products have become costlier by 35% according to its manufacturers.(BL)
Mining minister approaches Prime minister for the review of iron ore export duty. (ET)
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