The only thing that overcomes hard luck is hard work.
After a bad start to the week, when the Sensex fell by over 700 points, the market has been quite dull amid lower volume. No amount of hard work can bring the bulls back unless there is hard cash which flows into the market. Anxiety ahead of corporate results coupled with the seemingly unfriendly STT regime and the imposition of margins on FIIs' cash trades have hurt sentiment. To add to the woes, inflation has shot up to a 13-month high, prompting a desperate government to press the panic button.
Today, we expect the key indices to open on a cautious to flat note given the mixed global cues. Later on, the sentiment will hinge on weekly inflation numbers which will be released at noon. In the US, the event to watch out for is the release of the monthly jobs report today.
The Congress-led coalition government has unleashed a string of steps (not the most prudent ones though) to check inflation. The fight against spiraling prices is starting to hurt India Inc, with the Government calling for steel companies to roll back recent price hikes. According to a latest newspaper report, it is now contemplating price controls if the recently announced measures do not bear fruit. A further tightening of monetary policy is also on the cards.
The Finance Minister has signaled that the Government is prepared to sacrifice a little bit of growth to moderate inflation. These developments do not auger well for the Indian economy and corporates, which are already grappling with economic slowdown, global uncertainties and turmoil in financial markets. FII flows too have been quite unpredictable. Against this backdrop, we see the market remaining rangebound and choppy over the next few weeks.
FIIs were net sellers of Rs3.9bn (provisional) in the cash segment yesterday while local institutions poured in Rs2.65bn. In the F&O segment, foreign funds were net buyers of Rs1.32bn yesterday. On Wednesday, they were net sellers of Rs202mn in the cash segment. Mutual Funds were net buyers of Rs1.28bn in the cash segment on the same day.
Asian markets are trading mostly down this morning, falling for the first time in three days, led by technology companies and automakers. The Nikkei in Tokyo was down 80 points at 13,298 while the Kospi in Seoul was flat at 1760 and the Straits Times in Singapore shed 13 points to 3158.
The MSCI Asia Pacific Index fell 0.6% to 144.45 as of 9:52 a.m. in Tokyo, ending a two-day, 4.8% rally. The benchmark gained 1.9% this week and is on course for its first back-to-back weekly advance since the period ended Dec. 7.
Markets in China, Hong Kong and Taiwan are shut for holidays today.
US stocks closed almost unchanged on Thursday as investors absorbed mixed economic data and congressional testimony on the Bear Stearns bailout. However, gains were tempered by nervousness ahead of Friday's monthly jobs report.
A rally in commodity producers and Merrill Lynch's assurance that it has enough capital to combat the ongoing credit crunch overshadowed growing jobless claims and loan delinquencies.
Merrill Lynch, the third-largest securities firm, helped financial shares rebound from a 1.4% drop after CEO John Thain told Japan's Nikkei newspaper that the company won't need to raise capital.
Monsanto, the biggest seed producer, advanced the most in a week as corn prices climbed to a record. Retail shares posted the biggest decline among 24 industries in the Standard & Poor's 500 Index, led by Amazon.com and Best Buy.
The S&P 500 ended virtually flat at 1,369.31. The Dow Jones Industrial Average gained 20 points, or 0.2%, to 12,626.03. The Nasdaq Composite Index too finished nearly static at 2,363.3.
Market breadth was mixed. On the New York Stock Exchange, 998 stocks advanced and 859 retreated.
US stocks slipped in early afternoon after a jump in weekly jobless claims sparked worries about rising unemployment. However, stocks recovered later after the release of a stronger-than-expected reading on the services sector and the senate testimony on Bear Stearns.
Although gains on the day were limited, the fact that stocks have managed to hold on to most of Tuesday's advance - when the Dow jumped 391 points - is a positive sign, according to some Wall Street watchers.
US light crude oil for May delivery fell US$1 to settle at US$103.83 a barrel on the New York Mercantile Exchange. Gas prices rose to a new record high of US$3.289 a gallon, the AAA reported. COMEX gold for April delivery rose US$9.80 to settle at US$905 an ounce.
The dollar rose versus the euro and the yen. Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.58% from 3.6% late on Wednesday.
CEOs of both JP Morgan and Bear Stearns, Fed chief Ben Bernanke and other regulators told Senate lawmakers that the Bear Stearns rescue prevented what could have been a disaster for the US financial system and the US economy.
US indices had slumped on Wednesday after Bernanke told Congress that the US economy might be in recession for the first half of the year. Investors remained nervous as Bernanke and regulators answered questions on why the Fed intervened to prevent the collapse of Bear Stearns.
In the day's economic news, the number of Americans filing new claims for unemployment surged last week to the highest level since September 2005. The Institute for Supply Management (ISM) services sector index rose to 49.6 in March from 49.3 in February, beating forecasts for a decline to 48.5. Earlier this week, the ISM manufacturing index also beat estimates.
UBS downgraded Cisco Systems to "neutral" from "buy," saying the company's orders are set to slow in its fiscal fourth-quarter that ends in July. Cisco shares fell nearly 3%.
Research in Motion (RIM) reported earnings that more than doubled from a year ago and topped estimates. The BlackBerry maker also said current-quarter profit will top previous estimates. Its shares climbed almost 6%.
Micron Technology jumped 6.3% after Goldman Sachs upgraded it to "buy" from "neutral," saying its a good value relative to earnings. The company reported a wider quarterly loss late on Wednesday.
Schering-Plough said it will cut 10% of its workforce as part of its plan to reduce overall costs by about $1.5bn a year. The stock has been hit hard in recent days after US regulators questioned the effectiveness of the company's top cholesterol drugs. Schering-Plough shares jumped 11%.
Financial-services firms and automakers pulled European shares down. The pan-European Dow Jones Stoxx 600 index lost 0.5% to trade at 317.97, as banks broke their two-session winning streak and autos declined for the second straight session.
The UK's FTSE 100 was down 0.4% at 5,891.30, while Germany's DAX 30 dropped 0.5% to 6,741.72 and the French CAC-40 fell 0.5% to 4,887.87.
In the emerging markets, the Bovespa in Brazil rose 1.3% to 64,175 while the IPC index in Mexico was up 0.7% at 31,689. The RTS index in Russia shed 0.8% to 2052 and the ISE National 30 index in Turkey slumped 2.4% to 49,945.
Market may remain lackluster
It was third straight day of gains on the Indian bourses however gains were a bit modest. After almost a flat start to the session markets gained momentum as benchmark Sensex hit an intra-day high of 16,002 after government announced that India's production at 6 key Industries grew 8.7% in February from a year earlier.
However, weak cues from the European markets coupled with profit booking in the index Power & Capital Good stocks dragged the benchmark Sensex to close almost flat at 15,805 modestly adding 82 points and Nifty index added 14 points to close at 4,771. Among the 50-Nifty 26 stocks ended in positive territory and 24 stocks ended in red.
Overall about 1,215 stocks advanced; 1,409 stocks declined while 63 stocks remained unchanged. Among the BSE Sectoral indices, the BSE IT index (up 3.3%), BSE Oil & Gas index (up 2%) and BSE FMCG index (up 1.1%). Among the losers, BSE Power index (down 2.6%) and BSE Capital Good index (down 2.1%).
TCS surged by over a 4 percent to Rs885. According to media reports, TCS is going to invest Rs9bn in Pune, thus, creating a capacity for 20,000 seats over the next three years. The scrip touched an intra-day high of Rs866 and a low of Rs831 and recorded volumes of over 1,00,000 shares on BSE.
Moser Baer surged by over 2% to Rs161 after the company's subsidiary Moser Baer Photo Voltaic Ltd (MBPV) signed an agreement with China based LDK Solar for sale and delivery of high quality multicrystalline silicon wafers to MBPV over a ten-year period commencing in mid-2008 through 2017. The scrip touched an intra-day high of Rs167 and a low of Rs158 and recorded volumes of over 2,00,000 shares on BSE.
Zensar Technologies reached Rs117 with an increase of over a percent following reports stating that the company is targeting over 10% of revenues from West Asia and South Africa. The scrip touched an intra-day high of Rs117 and a low of Rs115 and recorded volumes of over 5,000 shares on BSE.
Reliance Industries gained by 2.1% to Rs2393 as according to media reports the company would spend Rs300bn on semiconductor facilities. The company said that it would make the investment over 10 years. The scrip touched an intra-day high of Rs2415 and a low of Rs2344 and recorded volumes of over 8,00,000 shares on BSE.
NTPC was directionless at Rs194. According to reports, the company plans to enter into captive power generation and retail distribution in the upcoming SEZs. It has signed a JV with a state entity in Uttar Pradesh to set-up a 1,320 MW power plant. The scrip touched an intra-day high of Rs197 and a low of Rs192 and recorded volumes of over 10, 00, 000 shares on BSE.
Suzlon Energy fallen by a huge 5 percent to Rs271 as reports stated on Thursday morning that the company's January-March results may see a hit due to company's forex exposure. The scrip touched an intra-day high of Rs286 and a low of Rs267 and recorded volumes of over 41, 00, 000 shares on BSE.
GMR Infra dropped by over 3% to Rs143. The company plans to raise US$3bn over the next 4-5 years to fund expansion of power projects, reports stated. The scrip touched an intra-day high of Rs148 and a low of Rs142 and recorded volumes of over 10,00,000 shares on BSE.
BHEL declined by over 5% to Rs1754 after the company reported the smallest quarterly profit growth in six years. Net income fell 7.4% to Rs10.65bn in the fiscal fourth quarter ended March 31, from Rs11.5bn a year earlier. The company later in the day announced that it would raise research spend to Rs9bn by 2011-12. The scrip touched an intra-day high of Rs1888 and a low of Rs1701 and recorded volumes of over 12,00,000 shares on BSE.
Dr Reddy's Lab advanced by 2.6% to Rs618 after the company announced that it acquired Jet Generici Sri, a Company engaged in the sale of generic finished dosages in Italy. The deal has been completed via Dr Reddy's Italian subsidiary, Reddy Pharma Italia SpA, which has been engaged in building a pipeline of registrations since its incorporation.
The scrip touched an intra-day high of Rs630 and a low of Rs595 and recorded volumes of over 48,000 shares on BSE.
Ranbaxy edged higher by 0.3% to Rs446. The company said that it launched world's first Bio-generic recombinant. The scrip touched an intra-day high of Rs451 and a low of Rs441 and recorded volumes of over 81,00,000 shares on BSE.
Orchid Chemical surged by over 10% to Rs175 on back of huge volumes. The scrip touched an intra-day high of Rs179 and a low of Rs156 and recorded volumes of over 73,00,000 shares on BSE.
With constantly drying volumes and credit crisis still hovering around markets may continue to remain dull on Friday. No major breakout is expected till things start to stabilise, both locally as well as globally. Stick to the large caps as you build your portfolio.
Corporate News
The Reserve Bank of India (RBI) has allowed FIIs to undertake fresh buying in equity shares of Vijaya Bank. The central bank says that the overseas investment limit for Vijaya Bank has gone below the trigger limit of 20% of their paid up capital.
Steel producers, including Tata Steel and Rashtriya Ispat Nigam agree to cut prices by Rs2,000/MT on long products. (BS)
Reliance Industries submits Rs300bn proposal to government for setting up two semi conductor units. (FE)
Cummins India to invest Rs2bn in current fiscal to expand capacities for producing automotive and industrial engines. (BS)
Reliance Industries on the look out to buy global oil terminals. (DNA)
Jet Airways to sell 5-10% stake through a private placement. (FE)
Videocon Telecom arm is in talks with Deutsche Telekom, Orascom and AT&T to form a Joint Venture. (ET)
Cairn India may foray into city gas distribution in collaboration with GAIL. (BL)
Apollo Hospitals plans to increase capacity to 10,000 beds in the next two years; to invest Rs3.8bn. (BS)
Aditya Birla group cement sales increase 2.8% in March to 3mn tons. (BL)
GSPC may raise US$1.5bn via IPO to fund its KG gas basin plan. (ET)
Tata Motors gets Thailand government approval to manufacture 'eco cars' at an investment of Rs10bn. (Mint)
BHEL plans to supply 1,000 railway locomotives for Dedicated Freight Corridor project in partnership with global firms. (Mint)
Dr Reddy's buys Italian generics firm Jet Generici. (BL)
AV Birla Retail plans to roll out 10 hypermarts this year. (FE)
Ranbaxy Laboratories announces launch of BONISTA– Teriparadite an injection for treatment of osteoporosis. (FE)
Adani Power plans to expand capacity by 10,000MW. (DNA)
M&M decides to set up its own plant in Chennai. (BS)
Shyam Telelink-Sistema JV get start up spectrum in seven states to rollout CDMA services. (DNA)
Garware Offshore plans to buy five new vessels over the next one year. (BL)
NHPC plans an IPO in the second quarter of current fiscal; plans to add 4,000MW capacity by 2012. (BS)
AV Birla is planning to foray into financial services through a separate holding company. (ET)
Kingfisher-Deccan has been asked by aviation ministry to prune there international flight list. (TOI)
Economy News
The index of six core infrastructure industries grew by 8.7% in February against 7.6% a year ago. (BS)
Insurance regulator IRDA allows insurance companies to lend shares to foreign and domestic institutions. (Mint)
Steel companies are likely to cut prices to spare curbs on current export commitment of the company. (FE)
The Government may ban futures trading on food items like edible oil and potato to lower inflation. (FE)
The Reserve Bank of India hikes cap on abroad investment by mutual fund to US$7bn. (FE)
Direct tax collection crosses Rs3,000bn for 2007-08. (FE)
SEBI allows direct market access to institutional investor. (FE)
Petroleum minister seeks zero custom duty on crude oil. (FE)
The Government weighs price cap on key items to curb inflation. (ET)
The MRTPC has ordered an inquiry to find cartelization by GSM players to distort competition. (ET)
The Government surplus with RBI rises to Rs820bn. (ET)
