Wal-mart…Monday effective, Tuesday affective
High expectations are the key to everything. – Sam Walton
Wal-Mart’s Sam Walton’s words hold true especially for the market and today it could be the key for a downfall. Call it the Wal-Mart effect. The long-awaited entry of the retail giant in India was greeted favorably by the bulls, with the key indices making new highs. However, in an ironic twist, the US market tumbled overnight, thanks partly to Wal-Mart's weaker than expected sales forecast for the month, including the Thanksgiving holiday shopping weekend. The dollar's weakness against major currencies was another major factor that led to the steep fall in US stocks. Not surprisingly, the world markets have reacted to the slump on Wall Street. India too looks all set for a weak opening in line with the global trend.
However, with FIIs pumping up the volume in November (they have poured in close to $2bn this month so far), the local bulls will hope to bounce back if not today at least before the expiry, on Thursday. The F&O rollover is also said to be going smooth, and is unlikely to face major hiccups. The only threat in the future could come in the form of a possible slowdown in foreign capital inflows. Till then, the bulls will continue to hold sway over the bears though the latter may muster up some courage to show its mettle occasionally. Avoid your shopping spree, keep cash in hand and by no means use your credit card to shop for now.
FIIs were net buyers of just Rs9.1mn (provisional) in the cash segment yesterday. In the F&O segment, they pulled out Rs1.51bn. On Friday, foreign funds pumped in Rs9.95bn in the cash segment. With this, their net investment in November so far stands at $1.95bn. For the year, their net inflows are $8.79bn. Mutual Funds were net sellers of Rs 2.13bn on Friday.
Torrent Power is going to be re-listed today post a restructuring. Godfrey Phillips could gain amid market grapevine that the KK Modi and Philip Morris joint venture may be looking at a bonus and possibly a split. Artson Engineering has been buzzing of late. Tata Projects has reportedly completed the due diligence and is likely to be taking a final view on the proposal of acquiring the controlling stake in Artson.
NTPC is likely to pick up a 49% stake in the state-owned Transformers and Electricals Kerala Ltd. (TELK). This will mean the Kerala Government will retain the controlling stake in the company. Chennai based Surana Industries Ltd. is reportedly setting up a new integrated steel complex to manufacture special steels mainly to cater to the needs of the automobile sector with an estimated investment of around Rs4.73bn.
Shares of US retailers sank after Wal-Mart said that monthly sales declined for the first time in 10 years. Nokia retreated as a lower US currency threatened the value of its dollar-denominated sales. Higher oil prices also hurt US stocks.
The S&P 500 lost 19.05, or 1.4%, to 1381.90. The Nasdaq dropped 54.34, or 2.2%, to 2405.92. Both indexes had their biggest declines since June 5. The Dow Jones slid 158.46, or 1.3%, to 12,121.71, its steepest fall since July 13. A 2.7% fall in Boeing and a 2% decline in IBM weighed on the blue chip benchmark.
US light crude oil for January delivery rose $1.08 to settle at $60.32 a barrel on the New York Stock Exchange. The font-month contract was quoting 17 cents higher at $60.49 a barrel in extended trading in Asia this morning.
Treasury bond prices inched higher, lowering the yield on the 10-year note to 4.53% from 4.55% late on Friday. In currency trading, the dollar slumped to a 20-month low versus the euro and rose modestly versus the yen. COMEX gold rose $11.70 to settle at $647.10 an ounce.
Among the Indian ADRs, Infy was down close to 3%, Wipro lost 1.9%, Satyam slumped 3.3%, Tata Motors shed 1.9%, Dr. Reddy's declined 3.6%, HDFC Bank dropped 2.2%, ICICI Bank dived 2.4% and MTNL gave up 3.4%.
European shares dropped sharply, with continued weakness in dollar-sensitive stocks such as SAP offsetting better-than-forecast results from Bayer. The German DAX Xetra 30 lost 1.8% to 6,298.17, pressured by major exporters to America. The pan-European Dow Jones Stoxx 600 index declined 1.5% at 350.60. The French CAC-40 shed 1.5% to 5,308.65. London's FTSE 100 lost 1.2% to 6,050.10.
In the emerging markets, the Bovespa in Brazil slumped by 2% to 40,914 while the IPC Index in Mexico shed 1.4% to 24,442 and the RTS index in Russia gained 0.3% to 1727.
Asian markets plunged Tuesday morning on the back of the weak closing in the US market. Toyota and Samsung Electronics led declines among exporters amid worries that the region's biggest overseas market is slowing down. The OECD yesterday cut its forecast on US economic growth and retail sales in Japan fell for a second month.
The Morgan Stanley Capital International Asia-Pacific Index dropped 0.9% to 132.07 as of 10:51 a.m. in Tokyo. Japan's Nikkei 225 Stock Average slid 180 points to 15,705 while the Hang Seng in Hong Kong was down 306 points at 18,897.
Major Bulk Deals:
ABN AMRO Bank bought Eveready Industries and HSBC Financial sold it; Deutsche Securities sold IOL Broadband; Macquarie Bank has picked up K Sera Sera; HSBC Financial has purchased Lok Housing; Reliance Capital has bought Rasand Engineering; Blackstone has sold Shiv-vani Oil; HSBC MF has bought Viceroy Hotels while Kotak Mahindra MF has sold it; CLSA has picked up HDFC Bank from Crown Capital; BNP Paribas has bought Hindustan Motors; Morgan Stanley has purchased S Kumars Nationwide.
Market Volumes:
The turnover on NSE down by 2.7% to Rs79.73bn. BSE Consumer Durable index was the major gainer and gained 2%. BSE Bank index (up 0.83%), BSE Technology index (up 0.62%), BSE Metal index (0.60%) and BSE PSU index (up 0.43%) were among the other major gainers. However, BSE Pharma index lost 0.26%.
Volume Toppers:
IFCI, NTPC, Zee Telefilms, Hindalco, ITC, SAIL, Hanung Toys, Gujarat Ambuja, India Cements, Hindustan Motors, Nagarjuna Construction, Ashok Leyland, Info Edge, Voltas, Gitanjali Gems, MTNL and IFCI.
Delivery Delight:
Apollo Tyres, Arvind Mills, ACC, Century Textiles, Colgate, Crompton Greaves, D S Kulkarni, Gammon, Godrej Industries, Gujarat Ambuja Cements, Havells India, Hindalco, Hindustan Zinc, ICICI Bank, Indian Hotels, Maharashtra Seamless, Mangalam Cement, Nagarjuna Construction, NIIT Ltd, Punj Lloyd, Reliance Capital, Sintex Industries, Strides Arcolab, Sun Pharmaceuticals, TCS, VSNL and Wipro.
Brokers Recommendations:
NIIT Tech - Buy from Man Financial
ICICI Bank - Hold from Angel Broking
Long Term Investment:
HDFC Bank
Major News Headlines:
Tata Power Q2 net at Rs2.02bn (up 61%), income at Rs12.79bn (up 16.5%)
BHEL gets captive power plant order for Rs1.29bn
Mukesh Ambani expects to continue finding gas in KG Basin
Biocon expects Phase-3 trials of Arthritis drug in 18 months
Hindustan Constructions plans to raise money
Sun TV approves merger of Gemini TV, Udaya TV with itself
TV Today promoters plan English daily in Delhi
Mcleod Russel Board to consider absorbing Doom Dooma Tea Co.
Unity Infrastructure gets 75% share of Amritsar Airport Project
Lok Housing to raise funds up to $200mn
UTV form JV with Astro Multimedia
Goa Carbon to enter power generation business
NTPC to submit proposal to Sri Lanka Govt for setting up power plant