Nothing Concrete...bulls hope to cement gains
For sleep, riches, and health to be truly enjoyed, they must first be interrupted.
The interruption for the bulls has taken its toll and the hope is that the worst is behind them. Short-covering lifted key indices following the crash on Wednesday. But, we still can't say that the bulls are in somewhat safe zone. FII inflows have turned negative. Concerns remain on inflation and interest rates. Watch out for the inflation data to be released at noon. A financial daily says the WPI-based inflation for the latest week is down to 6.05% from 6.63%. Also, there has been some slowdown in manufacturing (PMI) as well as the overall economic activity (Q3 GDP numbers). Exports in January were also down sharply. We have to see how the economy behaves in the ensuing months.
Global markets have not been doing well of late. Oil is holding on to the $61 per barrel mark. Fund flows to emerging markets have not been encouraging in he past 2-3 weeks. This trend will have to reverse going ahead to improve the sentiment across the globe, including India.
Separately, the dust has still not settled on the budget and we will continue to see specific action in sectors like IT, Cement, Retail and Construction among others. Those who have enough patience can be ready to make an entry in fundamentally sound companies.
As for today, we expect a cautious opening and another choppy day. Chances are bulls will try and chart their own territory and to some extent ignore the global cues for a day. Don't plunge in till some stability is seen. Be geared for some sideways movement in the coming weeks.
FIIs were net sellers to the tune of Rs4.83bn (provisional) in the cash segment yesterday even as the Sensex rose by more than 200 points. In the F&O segment, they offloaded stocks worth Rs8.67bn. On the Budget day the foreign funds pulled out a whopping Rs16.44bn from the cash segment. On the other hand, Mutual Funds pumped in Rs2.43bn on the same day.
Hindalco will be in focus as its Board meets today to consider a preferential issue to the promoters for funding the big-ticket acquisition of Novelis.
Zensar Technologies could gain after the company said that Japan's Fujitsu will sell its entire stake in the company to the RPG Group, the promoter of the company.
LT Overseas is another stock to keep an eye on as its Board will decide on acquiring/investing in Dawat Foods Pvt. Ltd.
Nitco Tiles' Board will consider merging Shark Properties Pvt Ltd into the company and Nitco Realties into Motivation Properties. It will also discuss a plan to increase the investment ceiling for FIIs, up to 49% of the paid-up capital.
Jaiprakash Associates' Board has increased the limit of investment by FIIs in the company to 45% of the paid-up capital. Heritage Foods India has commissioned three more Retail Stores in Andhra Pradesh.
US stocks closed in the red yet again, in the wake of a rise in jobless claims and a lower forecast for semiconductor sales. The Dow Jones Industrial Average was down as much as 209.09 points, or 1.7%, before recovering to close 34.29 points lower. The S&P 500 Index retreated for a sixth time in seven days, while the Nasdaq Composite Index slumped to a two-month low.
The Dow slipped 0.3% to 12,234.34. The S&P 500 fell 3.65, or 0.3%, to 1403.17. The Nasdaq decreased 11.94, or 0.5%, to 2404.21, its lowest since Dec. 22.
Former Federal Reserve Chairman Alan Greenspan says that a recession in the US is possible, though not probable, this year as excess inventory is being reduced quickly. Earlier this week, he had said he couldn't rule out a recession this year.
After the close Dell reported quarterly earnings that topped estimates on lower quarterly revenue that missed estimates. Shares declined in extended-hours trading.
US light crude oil for April delivery rose 21 cents to settle at $62 a barrel on the New York Mercantile Exchange. The front-month contract was 18 cents lower at $61.82 a barrel in extended trading in Asia.
Treasury prices edged higher, lowering the yield on the benchmark 10-year note to 4.55% from 4.56% late on Wednesday. In currency trading, the dollar gained against the euro and slumped versus the yen, with the Japanese currency surging as traders rushed to pay back yen loans following comments from Japan's finance official. COMEX gold for April delivery fell $7.40 to settle at $665.10 an ounce.
Stocks across Europe dropped for a third day amid growing concerns over the US economy and the unwinding of the yen carry trade. The UK's FTSE 100 closed down 0.9% at 6116.00. The index is down 5% since Monday's close. The French CAC 40 fell 1.1% to 5,458.40 and the German DAX 30 gave up 1.1% to 6,640.24. The pan-European Dow Jones Stoxx 600 index finished down 0.8% at 361.96.
In Asia this morning, the Nikkei was down 168 points to 17,285 while the Hang Seng in Hong Kong was up 151 points at 19,497. The Kospi in Seoul was up 3 points at 1420.
The Morgan Stanley Capital International Asia-Pacific Index slid 0.6% to 142.63 at 12:16 p.m. in Tokyo. It is down 3.6% in the past five days, the most since the week ended July 14. Other regional markets declined, except in China, New Zealand, Indonesia and Thailand.
South Korea's Posco gained after Warren Buffett, the world's second-richest man, said that Berkshire Hathaway Inc. owns 4% of the company.
In emerging markets, the Bovespa in Brazil fell by 0.9% to 43,516 while the IPC index in Mexico was flat at 26,647 and the RTS index in Russia plunged 3.3% to 1797.