Af-raid...Fear may vanish later
Fear is a question: What are you afraid of, and why?
The start could be bit of a dampener. Reports of raids on stock-brokers and builders among others could give the bears some more space to roam about at open. Reports say that the Income-Tax (I-T) department has conducted raids on 40 entities in Mumbai. These include builders, stock brokers and medical professionals. Things may settle down after a while though, as most Asian markets are up sharply this morning. US stocks closed mixed overnight and oil is trading close to the $60 per barrel mark.
We expect the market to remain choppy. The F&O expiry will keep the market volatile. We could see the key indices ending higher for the day on some short covering by the end. Expect stock centric action to continue. Coming to the broader market, there seems to be some confusion on the immediate direction given that general budget is just round the corner. We maintain that the budget is unlikely to have a big influence on the market, though historically the market has softened post the event.
FIIs were net sellers to the tune of Rs1.98bn (provisional) in the cash segment yesterday, according to the NSE. In the F&O segment, they offloaded stocks worth Rs5.81bn. However, SEBI data shows that on Tuesday, foreign funds pumped in Rs4.74bn ($107mn) in the cash segment. Mutual Funds were net buyers of Rs29.5mn on the same day.
Keep an eye on Firstsource Solutions, whose shares will make their debut on the bourses today. Maruti is likely to be in the limelight as the Government has called bids to sell its entire 10.27% stake in the car major. Wockhardt should also remain in action as the pharma major announces its results today. Clariant Chemicals India will also declare its audited financial results for the nine months ended December 2006. Max India's Board will meet today to approve the proposal to raise money through a QIP issue.
US market ended mixed on Wednesday as worries about inflation sent blue chips lower. The Dow Jones Industrial Average declined after closing at a record high. Shares fell after the consumer price index increased 0.2% in January, fueling worries that the Federal Reserve will not cut interest rates soon. Minutes of the Fed's Open Market Committee's January meeting showed that policy makers thought inflation remained the predominant concern.
The January Consumer Price Index (CPI) rose 0.2% versus forecasts for a rise of 0.1%, while the so-called core CPI, which excludes food and energy prices, rose 0.3%, above forecasts for a 0.2% gain.
Treasury prices slipped on the CPI report as traders bet interest rates are unlikely to come down any time soon. The decline lifted the yield on the benchmark 10-year note to 4.70% from 4.68% late Tuesday. In currency trading, the dollar gained versus the euro and the yen.
US light crude oil for April delivery jumped $1.22 or over 2% to settle at $60.07 a barrel in New York. The front-month contract was quoting very close to the $60 per barrel mark in extended trading in Asia. COMEX gold for April delivery rose $23 to settle at $684 an ounce.
Shares in Europe fell overnight. London's FTSE 100 declined 0.9% to close at 6,357.10. The French CAC 40 eased 0.3% to 5,694.56 and the German DAX Xetra 30 lost 0.6% to 6,941.66 after earlier touching a high of 7,005.34 - a level not seen since November 2000. The pan-European Dow Jones Stoxx 600 dropped 0.7% to 378.46.
Asian stocks rose this morning. Canon and Samsung led gains after the Japanese yen weakened against the dollar and the Korean won slid to its lowest this month.
The Morgan Stanley Capital International Asia-Pacific Index added 0.7% to 147.40 as of 10:19 a.m. in Tokyo. Stock markets are closed in China and Taiwan for the Lunar New Year holiday.
Japan's Nikkei 225 Stock Average climbed 1.1% to 18,104.30, poised to close above 18,000 for the first time since May 8, 2000. South Korea's Kospi index climbed 1%. The Hang Seng in Hong Kong was up 88 points at 20,740.
Other Asian markets open for trading rose, except in Malaysia, the Philippines and New Zealand.
In the emerging markets, the Bovespa in Brazil was up 0.5% at 46,090 while the IPC index in Mexico rose 0.4% to 28,715 and the RTS index in Russia gained 0.6% to 1905.