No lull before the storm
There are some things you learn best in calm, and some in storm.
You often hear the advice - don't time the market. But when it is time for an event risk, it is prudent to resist the temptation of budget gains (if any). If a storm is what investors expect in the market tomorrow, don't expect a lull today. It was indeed a Manic Monday after all yesterday. Lalu Prasad Yadav's budget happened to be at the right time. We really can't rule any correlation between the railway budget and bounce back.
Though the bulls managed to rebound after a highly volatile day, one should not take it to mean that things are going to be easy. In fact, yesterday's session goes to show how choppy the market has become off late. Today, we expect a flat to lower opening as markets in the US fell overnight and Asian stock indices are also in the red. Keep an eye on the Parliament as there could be further disruption on the back of the release of Ottavio Quattrocchi in Argentina. This could affect the tabling of the Economic Survey by the Finance Minister. We are also going to have the results from the assembly polls in Punjab and Uttarakhand. So, brace yourself for another rocky and topsy-turvy ride.
The uncertainty will continue to cast its shadow on the market for a while. The trend will become clear over the next few days. One should stay cautious and guarded as trading at this juncture is fraught with a lot of risks. Plus, we have the usual worries over inflation and rising interest rates. Oil prices have crossed the $61 per barrel mark. Global markets are not exhibiting any clear signs.
FIIs were net sellers to the tune of Rs5.96bn (provisional) in the cash segment yesterday. In the F&O segment, they offloaded stocks worth Rs6.46bn. On Friday, they pumped in Rs42.87bn or $967mn in the cash segment. Market regulator SEBI says the amount includes some prior adjustments, including sub-accounts from January 1.
Corporation Bank's Board will meet today to discuss the takeover of Primary Dealer Business activity by the bank from its wholly owned subsidiary - CorpBank Securities Ltd. Nirlon's Board will also meet today to consider the development of the company's IT Park at Goregaon.
CRISIL will announce audited financial results and recommend dividend, if any, for the financial year ended December 31, 2006. Thomas Cook India's Board has decided to sub-divide the face value of its shares from Rs10 to Re1.
HOV Services could be in action after the company said that its 100% subsidiary in the US will acquire Lason for $148mn. ORG Informatics might also attract some attention as it has acquired 17.94% equity stake in Six Dee Telecom Solutions for Rs26.5mn.
IT People India is proposing to make a Follow-on Public Offering (FPO) of equity shares to the tune of Rs452.5mn through 100% book building process and has filed its Draft Red Herring Prospectus (DRHP) with SEBI and Bombay Stock Exchange (BSE).
US stocks ended lower on Monday, extending their week-long decline as persistent concern about mortgage defaults overshadowed the biggest leveraged buyout in history.
The S&P 500 closed nearly flat at 1449.37 for its fourth day of losses. The Dow dropped 15.22, or 0.1%, to 12,632.26, the lowest since Feb. 12. The Nasdaq decreased 10.58, or 0.4%, to 2504.52.
Stocks initially rose after TXU agreed to a $45bn offer from Kohlberg Kravis Roberts and Texas Pacific. Dow Chemical advanced amid reports that the largest US chemical maker may receive a takeover offer worth as much as $54bn from private equity investors within the next few weeks.
Oil prices advanced for a fourth day to the highest close this year. Crude oil futures increased 0.4% to $61.39 a barrel in New York on speculation that an Energy Department report this week will show US fuel inventories declined.
Treasuries rose on expectations weakness in housing will slow the economy and the dollar fell against the yen. Gold futures climbed near $690 an ounce, sending the benchmark contract to a seven-month high.
European shares rose, with several indexes breaching new highs. The pan-European Dow Jones Stoxx 600 index rose 0.4% to 382.17. The German DAX Xetra 30 increased 0.5% to 7,027.59, after the stocks benchmark hit a fresh multiyear high of 7,040.20 in the session. The index broke through 7,000 last week for the first time since November 2000.
The French CAC-40 climbed 0.8% to 5,762.54, after hitting a high not seen since February 2001 of 5,771.69 during the session . The UK's FTSE 100 rose 0.5% to 6,434.70.
In Asia, most big markets were down sharply. The Nikkei in Tokyo was down 97 points at 18,117 while the Hang Seng in Hong Kong slumped 226 points to 20,282. The Straits Times in Singapore was down 64 points to 3243 and the Kospi in Seoul fell 8 points to 1461.
Stocks in Mexico fell nearly 2%. Meanwhile, higher crude-oil prices helped stocks in Brazil finish higher. In Mexico City, the IPC index fell 460 points, or 1.6%, to 28,046.16, extending a 0.9% decline on Friday. In Sao Paulo, the Bovespa index rose 192 points, or 0.4%, at 46,207.40.