Four listings and a survival
I have survived and possibly I should not hope for more than that.
It’s survival of the fittest as four new companies make their debut on the bourses. The bulls managed to survive and hung on to their gains despite an intra-day dip, which almost saw the bourses in red. The rebound was mainly due to a rally in Asian markets and a reversal in the value of yen versus the dollar. Some short covering also helped propel the key indices higher. The script appears to be similar this morning, except that the Nikkei in Japan has slipped in the red after a positive start.
What may not help though is the negative FII figures. Provisional data from the NSE shows them as net sellers to the tune of Rs4.9bn yesterday. On Monday, they pulled out Rs3.13bn from the cash segment. However, what is heartening is that foreign funds were net buyers of Rs20.45bn in the F&O segment. Mutual Funds also pumped in Rs1.92bn on Monday.
The London Telegraph had a headline - "Goldman Sachs warns of 'dead bodies' after market turmoil." The Wall Street Journal says, "Seven years after the stock-market bubble busted, the troubles in the housing market look strikingly familiar. In fact, everything is going according to the textbook - the textbook in this case being Charles Kindleberger's 1978 classic, Manias, Panics, and Crashes."
But given the rally on Wall Street and other global markets, we expect a positive start. Having said that the bulls' stamina will be put to test today as the market breadth yesterday was negative. Also, the small-and mid-cap shares retreated after the initial spurt. We reiterate our cautious stance in the wake of the recent mayhem. But, for those who are here for the long haul, tank up by gradually buying fundamentally-strong stocks at lower levels. And again, give less weightage to seemingly better small and mid-cap stocks. Because the long road to recovery for these counters stretches a little extra.
We are going to have four listings today. MindTree, Broadcast Initiatives, Evinix Accessories and Oriental Trimex will make their stock market debut. Meanwhile, Idea Cellular will list on Friday.
Yesterday, we had recommended Infosys to our clients of SMS service pre-market. The stock was in limelight surging over 5% to close at Rs2114.
Sugar shares may be back in favour amid media reports of the Government considering decontrolling the sector from April. Sesa Goa may come under pressure as a financial daily says that the Chinese companies have threatened to boycott imports iron ore imports from India over the proposed export tax announced in the Budget. Britannia could be in focus as the Wadias and its JV partner Danone are reportedly in talks to resolve differences amicably. Also watch out for Tata Motors. At the Geneva Motor Show yesterday, Chairman Ratan Tata said that the much-hyped Rs1-lakh-car may cost more on road.
Punjab Tractors will remain in the limelight amid daily reports about the ongoing bid for the tractor maker. Now we here that the Tatas and TAFE have pulled out of the race, leaving only M&M and Ashok Leyland behind. Banks will also attract attention as the RBI has capped their inter-bank liabilities at 200% of net worth of the previous fiscal year. Punj Lloyd might gain as the company has approved a 5:1 stock split.
US stocks rallied on Tuesday as a rebound in overseas markets pushed the Dow Jones Industrial Average to their biggest gain in more than eight months. Twelve stocks rose for every one that fell on the New York Stock Exchange.
Treasury Secretary Henry Paulson eased concern that rising mortgage defaults will undermine the world's largest economy. The Treasury Secretary said the woes won't spill over to banks that make less risky loans. Countrywide Financial, Lehman Brothers and Citigroup led financial shares to their steepest advance in more than six months.
The S&P 500 Index added 21.29 points, or 1.6%, to 1395.41. All 10 of its industry groups rose. The Dow climbed 157.18 points, or 1.3%, to 12,207.59. For the S&P 500 and Dow, it was the best performance since July 24. The Nasdaq increased 44.46 points, or 1.9%, to 2385.14.
In currency trading, the dollar rallied against the yen and edged higher versus the euro. Treasury prices slipped, raising the yield on the 10-year note to 4.53% from 4.5% on Monday.
US light crude oil for April delivery rose 62 cents to settle at $60.69 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 15 cents higher at $60.84 a barrel in extended trading in Asia. COMEX gold for April delivery rose $7 to $646.20 an ounce.
A morning report showed that US labor productivity was revised downward in the fourth quarter, as expected. Unit labor costs, the report's inflation component, was revised upward.
A separate report showed that factory orders fell a steeper than expected 5.6% in January, after rising 2.6% in December.
Among the Indian ADRs, Patni was up 4.2%, VSNL surged by 5.6%, Infy rose 4.3%, Wipro rallied 5.7%, Satyam jumped 5.7%, Tata Motors was down 0.3%, Dr. Reddy's gained 1.6%, HDFC Bank soared 6.1%, ICICI Bank put on 4.2%, MTNL advanced 1.6%, EXL Service fell 0.7% despite almost doubling its earnings in the fourth quarter; rival BPO major WNS was up 0.5%, Rediff climbed 3.2% and Sify jumped 3.8%.
In Europe, the FTSE 100 in London closed up 1.3%, or 79.80 points, at 6,138.50.
In emerging markets, the Bovespa in Brazil shot up by nearly 5% to 43,218 while the IPC index in Mexico climbed 2.2% to 26,355 and the RTS index in Russia advanced 1.5% to 1763.
China's stocks rose on Wednesday for a second day, led by brokerages. The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, gained 2.2% to 2901.13. The Shenzhen Composite Index, which covers the smaller one, rose 2% to 745.76.
Most Asian stock benchmarks were up this morning. The Morgan Stanley Capital International Asia-Pacific Index advanced 0.2% to 141.06 at 12:01 p.m. in Tokyo. Stock benchmarks elsewhere in the region advanced.
The Nikkei is quite volatile and was last quoted up 73 points at 16,917 while the Hang Seng in Hong Kong gained 170 points to 19,228 and the Kospi in Seoul rose 10 points to 1413.
Australia's S&P/ASX 200 Index added 0.5%. The Philippine Stock Exchange Index jumped 3%, the region's biggest advance, while Malaysia's Kuala Lumpur Composite Index surged 2.6%, set for the biggest gain since Oct 2003. BHP Billiton rose after metals prices climbed and the Australian economy grew twice as fast as economists forecast.
Flows into EPFR-tracked funds during the final week of February again reflected the increased risk aversion evident among equity investors since the beginning of the year, a trend that is likely to gain further impetus from the rout of global stock markets going into March, says Boston, USA-based Emerging Market Funds Research.
Investors pulled money out of Emerging Market Equity Funds, amounting to $615mn, for only the second time this year after flows had slowed in recent weeks. Global Equity Funds, whose broader mandate allows them to spread their country risk over numerous markets, were again the big winners as investors parked another $1.77bn in these funds. Year-to-date flows into Global Equity Funds are already at 46% of last year’s record-setting total.
Elsewhere, Japan Equity Funds also had an outstanding week as that country’s equity markets hit a seven year high. US Equity Funds strung together their first two-week winning streak since early December while investors rotated into more defensive Global Utilities Sector Funds, moved back into Global Energy Funds and continued to pump money into Real Estate Sector Funds.