Sunset or passing cloud
Restlessness and discontent are the first necessities of progress.
As we have been saying for some time, the sun outage period is often a frustrating time to be in the markets for traders. We are in for another choppy day of trade as trend across global equity markets is quite unclear this morning. US stocks ended slightly lower amid lingering concerns about the state of the economy, particularly the weakening housing sector. Asian markets are all on a firm footing. The Nikkei, which was earlier in the red has rebounded sharply. Oil prices have inched closer to the $62 per barrel mark. Against this backdrop, we expect a cautious to higher opening and plenty of uncertainty.
FIIs were net buyers of just Rs280.3mn (provisional) in the cash segment yesterday. But, on the F&O side, they poured in Rs10.42bn. Foreign funds pulled out Rs5.7bn from the cash segment on Tuesday. Mutual Funds were net sellers of Rs166.2mn on the same day.
RIL and IPCL will be in action post the announcement of the Board meeting on Saturday for a merger. The swap ratio is likely to be in favour of RIL. So, be careful before rushing to buy IPCL.
Shares of Indus Fila will get listed today. Going by the mood of the market, the stock is more likely to fall than rise.
Stunned by the electoral defeats in Punjab and Uttarakhand and with the UP polls looming large, the Government has stepped up its in fire-fighting efforts against inflation. But, in doing so, it has rattled India Inc. and therefore the markets a great deal. The budget too had its fair share of unfavourable tax measures for the corporate sector. All this has made matters worse for the market. This showdown is going to continue for a while. As a result, we may witness some more pain in the market, especially for the "targeted" sectors. The RBI too is continuously taking steps to curb run-away credit growth. Reports say the central bank has asked banks to furnish details of borrowers who have taken multiple housing loans besides the default rates.
Globally too, things have turned bad, with talk of an engineered slowdown in China and a housing-led downturn in the US. To go with this we have the unwinding of the so-called carry trades with the strengthening of the yen. Former Fed chief Alan Greenspan says yen carry trade cannot last longer. Expect some more pain on this front as well, especially if the Bank of Japan raises rates further. Easy money has been one of the main drivers of the global rally. With liquidity getting squeezed, markets have started bleeding. Risky players like hedge funds seem to be pressing the eject button. This could go on for some more time. So, one should be ready for a tough time, at least in the next 2-3 months or even longer than that. Only long-term investors should dare to venture into this kind of a market.
US stocks fell on Wednesday after the second-largest homebuilder said that a year-long housing slump will continue in 2007 and the Federal Reserve cited slowing growth in several local economies. Treasuries rose, pushing yields near the lowest in three months. Crude oil surged the most in two weeks.
The S&P 500 declined 3.44 points, or 0.3%, to 1391.97. The Dow Jones decreased 15.14 points, or 0.1%, to 12,192.45. The Nasdaq slipped 10.50 points, or 0.4%, to 2374.64.
DR Horton Inc. CEO Donald Tomnitz said the company's home closings will likely fall below last year's levels, adding to concern that a slowing housing market could hurt the world's largest economy.
Chicago Federal Reserve Bank President Michael Moskow reiterated Fed's concern that a rise in inflation is a greater risk to the US economy than a slowdown in growth. Separately, Greenspan said that a bottom has been hit in the decline of US home sales.
US light crude oil for April delivery jumped $1.13 to settle at $61.82 a barrel on the New York Mercantile Exchange. Prices rose after a morning report showed a bigger-than-expected dip in weekly crude oil inventories.
In currency trading, the dollar slipped versus the yen and the euro. Treasury prices rose, lowering the yield on the 10-year note to 4.48% from around 4.53% late on Tuesday. COMEX gold for April delivery rose $6.70 to settle at $652.90 an ounce.
Among the Indian ADRs, Patni shed 3.7%, VSNL dropped 1.3%, Infy slid 2.1%, Wipro fell by 1.7%, Satyam declined 1.2%, Tata Motors was gave up 1.1%, Dr. Reddy's rose 0.3%, HDFC Bank and ICICI Bank lost 1.2% each and MTNL added 0.3%.
WNS was up 0.2% after the Indian BPO major announced that it had acquired Marketics Technologies for about $65 million in cash. EXL Service gained 1.2%, Rediff was unchanged and Sify jumped nearly 2%.
European stocks posted modest gains. The German DAX 30 closed up 0.3% at 6,617.75 and the French CAC 40 rose 0.3% to 5,455.07. The UK's FTSE 100, in which a number of companies traded without dividend rights, also added 0.3% to 6,156.50.
The pan-European Stoxx 600 index climbed 0.5% to 361.65, after it closed higher on Tuesday for the first time in five sessions.
Majority of Asian markets rose this morning. The Morgan Stanley Capital International Asia-Pacific Index added 0.2% to 141.03 at 11:59 a.m. in Tokyo.
Japan's Nikkei 225 Stock Average was up 156 points at 16,921, while the Hang Seng in Hong Kong advanced 125 points to 19,044. The Kospi in Seoul climbed 11 points to 1422 and the Straits Times in Singapore gained 32 points to 3091.
Key indexes in Taiwan, Malaysia and Indonesia also climbed. However, Australia's S&P/ASX 200 Index slid 0.7%, the region's biggest loser.
In the emerging markets, the Bovespa in Brazil was down 1.3% to 42,667 while the IPC index in Mexico lost 0.65% to 26,184 and the RTS index in Russia added 0.2% to 1767.