Bulls may float around
Float like a butterfly, sting like a bee – Muhammad Ali.
The words seem to hold true not just in a boxing ring but also on the bourses. The little time the bulls get they are floating around like a butterfly, causing damage to no one but themselves. The bears on the other hand are able to sting and literally suck the blood out of counters at one go aided by a host of negative factors.
After a weak Wednesday things are once again looking up globally. Markets in the US and Asia have rallied. As a result, we should have a better opening and a much improved trading session.
There is always a chance of some cooling as the undertone still remains nervous owing to the current volatility in global markets. In the domestic market, we have lingering worries about high inflation rate and a possible tightening by the central bank going ahead. Earnings will start trickling in from the first week of April. The flash lines of advance tax numbers in the media shortly will also move sentiment though they are not the most accurate indicators of corporate earnings.
And of course despite some correction from the top, the Indian market still looks expensive vis-a-vis other emerging markets. Much of the positive news on earnings is already reflected in stock prices. At best, we should have a range bound and choppy market in the near term. Citigroup sees the Sensex between 14700-16000 by the end of the year. But again, these projections should be taken with a pinch of salt. The best strategy right now is to use every rally to sell and stay in cash for better times ahead. For long-term investors, another opportunity to enter for the long haul.
FIIs were net sellers to the tune of Rs5.41bn (provisional) in the cash segment yesterday. In the F&O segment, they pumped in Rs12.82bn. On Tuesday, foreign funds offloaded stocks worth Rs840mn. Mutual Funds were net sellers at Rs134.8mn on the same day.
US stocks rebounded on Wednesday, paced by banks and homebuilders, amid renewed belief that the sub-prime mortgage trouble may not be as large as previously thought.
Countrywide Financial, the biggest US mortgage lender, posted its first advance in five days. Energy and technology companies helped the Dow and S&P 500 recover from earlier declines of more than 1% after oil prices climbed.
The Dow Jones rose 57.44, or 0.5%, to 12,133.40. The Nasdaq Composite Index increased 21.17, or 0.9%, to 2371.74. The S&P 500 added 9.22, or 0.7%, to 1387.17 after earlier dropping to 1363.98, a four-month low.
All three major benchmarks were highly volatile moving back and forth throughout the session. Stocks were hit the hardest in the early afternoon, with the Dow losing more than 130 points before clawing back and turning higher late in the session.
US light crude oil for April delivery rose 23 cents to settle at $58.16 a barrel on the New York Stock Exchange, seesawing after a mixed weekly oil inventories report. The front-month contract was up 16 cents at $58.32 a barrel in extended trading in Asia.
COMEX gold for April delivery fell $6.90 to settle at $642.50 an ounce. Treasury prices slipped, raising the yield on the 10-year note to 4.53% from 4.49% late Tuesday. In currency trading, the dollar fell versus the euro and rose versus the yen.
European shares suffered heavy losses. The French CAC 40 closed down 2.5% at 5,296.22, the German DAX 30 gave up 2.7% to 6,447.70 and the UK's FTSE 100 fell 2.6% to 6,000.70. The pan-European Dow Jones Stoxx 600 index dropped 2.5% to 352.53.
In the emerging markets, the Bovespa in Brazil gained 1.2% to 43,280 while the IPC index in Mexico rose 0.5% to 26,719 and the RTS index in Russia tumbled 2% to 1779.
Asian stocks rebounded from the biggest drop in more than a week on speculation that rising US mortgage delinquencies won't hurt demand in the region's biggest export market. Canon and Hyundai led the gains in regional exporters.
Toyota led a rally in Japan's Nikkei after the yen weakened against the dollar, boosting the value of exporters' overseas sales. BHP Billiton advanced as nickel prices rose to a record for a third day and crude-oil prices snapped a four-day decline.
The Morgan Stanley Capital International Asia-Pacific Index added 1% to 141.78 at 11:59 a.m. in Tokyo. The benchmark yesterday dropped 2.5%, the biggest loss since March 5. Indices in markets open for trading climbed by at least 1%, except in New Zealand and the Philippines.