Bulls n bears do Bhagam Bhaag
This world is a comedy for those who think and a tragedy for those who feel.
It's a riot out there in the markets. And, it's not funny if you are in it. The appearance and disappearance of bulls may appear funny if you are on the sidelines. The current swings cannot be taken by the faint hearted. It would suit most people to stay out and watch the show like a comedy instead of fully investing and risking a tragedy. The market now a days appears more like a cat on a hot tin roof, with wild intra-day swings being the order of the day. Uncertain times call for extra caution. The key indices are unlikely to witness any unidirectional moves till the first batch of latest quarterly results start rolling in next month.
Indications from the derivative segment are also not particularly encouraging, with short positions getting created in January Nifty futures and longs getting cut in December Nifty futures. FII inflows have also slowed. In fact, foreign funds have been net sellers in the past few days. Activity from the overseas investors is expected to slow till the budget is out. Most foreign funds start taking a call on the Indian market only after the government's most-anticipated economic policy document is unveiled in February. As a result, we see the market being rangebound and choppy in the next couple of months.
Having said that, the October-December quarter results could change the scenario. The advance tax numbers, (though not a true indication) of some the major companies could prop up sentiment and expectations. There is bound to be a few negative surprises, but on the whole India Inc's report card will exhibit continuing strength in the Indian economy.
For today, we expect a cautious opening given the mixed trend in global markets. But, things could improve later on. The latest data on the economy i.e. November exports figures, October FDI numbers and the tax revenues are all pointing towards a robust economy. This again proves that the surprising fall in October industrial production was just an aberration. Still, volatility will be high with the year coming to an end. And of course the F&O expiry next week will only add to the swing.
Shares of Great Offshore, the demerged entity of GE Shipping will get listed on the exchanges today. Analysts expect Great Offshore to debut between Rs600-700. Tech Mahindra will surely get a gap-up opening, as the company has secured a $1bn five-year contract for BT, the company's joint venture partner. Ranbaxy could be under pressure as it has lost a patent suit against Pfizer in Australia over the latter's blockbuster cholesterol-lowering drug, Lipitor. Welspun-Gujarat might gain as it has entered into a definitive agreement to form a JV with Lone Star Technologies Inc. of USA. Marico is likely to attract some attention amid reports that it has bought another hair care brand in Egypt.
FIIs were net sellers to the tune of Rs3.54bn (provisional) in the cash segment. In the F&O segment, they pumped in Rs4.31bn. On Tuesday, foreign funds pulled out a net of Rs6.73bn from the cash segment. Mutual Funds were net buyers of Rs106.9mn on the same day.
US stocks rose on Wednesday, pushing the S&P 500 Index toward a six-year high. Morgan Stanley helped boost financial stocks after UBS raised its earnings forecast. The advance was limited by a decline in transportation stocks after FedEx forecast third-quarter earnings that trailed analysts' estimates.
The 30-stock Dow was down 7.45 to 12,463.87. It scaled a new record trading high of 12,498.47 but pulled back late in the session. On Tuesday, the Dow closed at its best level ever. The S&P 500 fell by 2.02 to 1,423.53 and the tech-heavy Nasdaq dropped 1.94 to 2,427.61.
US light crude oil for February delivery rose 26 cents to settle at $63.72 a barrel on the New York Mercantile Exchange after a weekly report on fuel inventories showed a dip in crude stocks. The front-month contract was trading 48 cents lower at $63.24 a barrel in extended trading in Asia.
Treasury prices held steady, leaving the yield on the benchmark 10-year note at the 4.59% level reached late on Tuesday. The dollar edged higher against the euro and the yen. COMEX gold futures lost $1.10 to $624.30 an ounce.
Among the Indian ADRs, Infy gave up 1.5%, Satyam lost 1.9%, Tata Motors dropped close to 2% and HDFC Bank was down 1.35%.
European shares gained ground. The French CAC-40 closed up 0.5% at 5,514.42. The German DAX Xetra 30 rose 0.5% to 6,586.91, while the UK-based FTSE 100 slipped 0.1% to 6,198.60. The pan-European Dow Jones Stoxx 600 index advanced 0.3% to 364.71.
Mexico and Brazil stocks closed slightly lower. In Mexico, the benchmark IPC index of 35 most-traded shares fell 227 points, or 0.9%, to 25,394.69. Brazil's benchmark Ibovespa stocks index closed 87 points, or 0.2%, at 43,502.36.
Asian markets are mixed this morning. The Nikkei 225 Stock Average in Tokyo was up 55 points at 17,066 while the Hang Seng in Hong Kong was down 12 points at 19,228. The Kospi in Seoul was flat at 1442.
The Morgan Stanley Capital International Asia-Pacific Index climbed 0.3% to 139.10 as of 11:12 a.m. in Tokyo, set for its highest since May 12. Indexes open elsewhere rose, except in Australia, Hong Kong and South Korea.
BHP Billiton and Rio Tinto Group led mining shares lower along with prices of metals including copper. A measure of six metals traded on the London Metal Exchange (LME), including copper and zinc, dropped 1.7% yesterday.
Major Bulk Deals:
Kotak Mahindra Bank has sold Navin Fluorine International.
Insider Trades:
Surana Telecom Ltd: Shri Narender Surana, Managing Director has purchased from open market 37838 equity shares of Surana Telecom Ltd from 25th November to 15 December, 2006.
The Great Eastern Shipping Co. Limited: Bharat K. Sheth, Deputy Chairman & Managing Director has purchased from open market 120947 equity shares of The Great Eastern Shipping Co. Limited on 13th December, 2006.
Market Volumes:
The turnover on NSE was up by 10% to Rs100.1bn. BSE Bank index was the major loser and lost 1.01%. BSE Capital Good index (down 0.76%), BSE Auto index (down 0.50%) and BSE Technology index (down 0.25%) were among the other major losers. However, Consumer Durable index gained 1.15%.
Volume Toppers:
IFCI, R Com, ITC, Polaris, Ashok Leyland, SAIL, India Cements, Reliance Industries, Tata Steel, HLL, Gujarat Ambuja, TTML, Parsvnath, Tech Mahindra, Hindalco, Satyam, ONGC, Mphasis BFL and Unitech.
Delivery Delight:
ABG Shipyard, AIA Engineering, BPCL, Bharati Shipyard, Cipla, Colgate, Educomp Solutions, GAIL, Gitanjali Gems, GTL, HPCL, HDFC, Indiabulls, IPCL, Mahindra & Mahindra, Maruti, ONGC, Strides Arcolab and Tisco.
Brokers Recommendations:
Subex Azure – Buy from Man Financial
Long Term Investment:
Bharti Airtel
Major News Headlines:
HPCL to pay Rs6 per share interim dividend
HCL Tech gets $200mn deal from Skandia UK
MRF recommends final dividend of 140%
Gitanjali Gems buys Samuels Jewelers for Rs4.5bn
Union Bank to declare interim dividend on Dec 28
Peninsula Land sells 2.6mn shares at Rs600 a share
Indiabulls acquires 100% in Noble Realtors
ITC to spend Rs11bn to build paper mill in AP
Four Soft agrees to acquire Transaxiom of Denmark
KEC secures orders worth Rs1.51bn from UAE, Ghana
Torrent Power to light up Bhiwandi circle