That sinking feeling again!
The anchors now made are contrived so as to sink into the ground as soon as they reach it, and to hold a great strain before they can be loosened or dislodged from their station.
The only anchor we seem to be having is that the long term story is intact. We don't think the bulls were Reddy for this when they downed their shutters on Friday. That fresh monetary tightening measures were on the cards was a given, but what was not accounted for by the markets was the timing of it. Though this is not the first time the RBI has decided to tighten up in-between scheduled policy meetings, it is somewhat unusual in terms of its aggressive intent. The Government and the central bank are absolutely adamant on taming inflation and curbing credit growth to sensitive sectors. This is likely to have an impact on the markets, and to a certain extent on economic growth and corporate earnings too.
Without much ado, we would say that notwithstanding a firm trend in Asian markets, the bulls here will simply run for cover as the markets open. Though we expect an overall carnage, Banks, Autos, Real Estate and other rate sensitive sectors will be the worst hit.
IT shares will be in focus due to the rise in the rupee and its impact on earnings. Plus, the fourth quarter results will be out soon. Stock market darling and IT giant Infosys will be among the first one to report. It will also announce its guidance for the next fiscal year. A lot will hinge on what the Infosys management has to say on April 13th.
One thing is sure that the trend in the near term is definitely down, how much is a million dollar question. Staying in cash, if at all one is making profits, will be the most prudent thing to do at thins juncture. One should wait for at least this month before taking a call on the market. Things are not looking healthy, locally or globally.
There is more downside than upside. Earnings going forward could also slowdown due to high commodity prices and hardening interest rates. Though India Inc's report card for Q4 may turn out to be strong, inflation and interest rates will continue to cast their spell on the market. Some softening in these numbers over the next couple of months could happen and may lend support to the market.
FIIs were net buyers of Rs6.4bn (provisional) in the cash segment on Friday. In the F&O segment, they offloaded stocks worth Rs1.29bn. On Thursday, foreign funds were net sellers worth Rs3.59bn in the cash segment. Mutual Funds were net sellers to the tune of Rs600.1mn.
US shares finished mixed on Friday amid high volatility as Washington's fresh trade measures against China overshadowed positive economic news. All the three main stock indices couldn't keep the momentum going on the last day of what was a good month.
The S&P 500 index finished nearly unchanged at 1420.86. The Dow Jones Industrial Average added 5.6 points to 12,354.35. The Nasdaq Composite Index gained 3.76 points, or 0.2%, to 2421.64.
In March, the Dow gained 0.7%, the S&P 500 rose 1% and the Nasdaq added 0.2%. In the January-March quarter, the Dow lost 0.9%, the S&P 500 gained 0.2% and the Nasdaq was up 0.3%. The quarter was the most volatile for US stocks in four years. Also, the Dow posted its first quarterly decline since 2005.
The dollar weakened against the euro and yen and Treasuries ended little changed. Meanwhile, energy shares fell following oil's first decline in nine days. Crude futures slipped 16 cents to US$65.87 a barrel in New York as 15 British naval personnel captured in the Persian Gulf remained in Iranian custody for an eighth day, heightening concern that the standoff could disrupt supply. Oil rallied 6% in the past week and is up 4% for the month. Front-month crude futures was trading flat at $65.88 a barrel in extended trading in Asia.
European stocks finished the first quarter on a mixed note on Friday. The pan-European Dow Jones Stoxx 600 index closed the session down a fraction of a percentage point at 374.22. The index increased 2.4% in the first quarter. On Friday, the French CAC-40 closed 0.1% higher at 5,634.16 and the German DAX Xetra 30 advanced 0.3% at 6,917.03. The UK's FTSE 100 finished down 0.3% at 6,308.00.
Asian stocks rose this morning, led by Honda and Sony, after a survey showed that Japan's largest companies plan to increase capital spending by more than economists estimated. The Morgan Stanley Capital International Asia-Pacific Index climbed 0.5% to 145.38 as of 11:19 a.m. in Tokyo. Japan's Nikkei 225 Stock Average advanced 79 points to 17,367 while the the Hang Seng in Hong Kong jumped 142 points to 19,943. The Kospi in Seoul climbed 9 points to 1462 and the Straits Times index in Singapore was up 26 points at 3257.
Yet another Manic Monday likely
Financial year 2006-07 ended on a firm note as markets managed to close in green. However, week on week the struggle continued for the bulls as benchmark Sensex fell by 1.61% or 214 points and NSE Nifty declined 40 points or 1.02%. The markets opened on a strong and also registered strong closing led by gains in the index heavy weights like Dr Reddy’s Lab, ITC, Tata Steel, Hindalco, Tata Motors and Infosys. All the sectoral indexes ended in green with Pharma, Metal and FMCG leading the pact. The mid-Cap and the small cap indexes also participated in the rally aiding the markets to close on a strong note. Finally, the 30-share benchmark Sensex advanced 92 points to close at 13072. NSE Nifty rose 23 points to close at 3821.
Drug maker Jupiter Bioscience jumped 10% to Rs144.30, on media reports of the company planning to raise Rs100crore through private placement of shares. The scrip touched an intra-day high of Rs144.30 and a low of Rs133 and recorded volumes of over 3,00,000 shares on NSE.
Patel Engineering surged over 2.5% to Rs338 after the company’s Joint Venture won Rs8.06bn order from Rampur Hydro Electro Project. The scrip touched an intra-day high of Rs356 and a low of Rs336 and recorded volumes of over 58,000 shares on NSE.
Gitanjali Gems advanced 3.6% to Rs199 after the company announced that they would foray into Luxury retail market and to spend Rs1bn to establish luxury malls. The scrip touched an intra-day high of Rs202 and a low of Rs194 and recorded volumes of over 3,00,000 shares on NSE.
McDowell advanced 1.3% to Rs832 after government announced that high duties on wine, Spirits to be corrected. The scrip touched an intra-day high of Rs842 and a low of Rs825 and recorded volumes of over 1,00,000 shares on NSE.
Select FMCG stocks bounced back after witnessing profit booking in early trades. Dabur rose 4.8% to Rs95, ITC was up 2.8% to Rs151 and Colgate rose 1.4% to Rs332. However, Marico and Godrej Consumer marginally declined.
Pharma stocks looked to be in pink of health. Glaxo surged by over 3.5% to Rs1120, Sun Pharma was up by over 4% to Rs1056, Dr Reddy’s Lab gained 3% to Rs728 and Cadila added 3% to Rs339.
Technology stocks recorded smart gains. Heavy weight Infosys advanced 1.5% to Rs2018 and Satyam Computer gained 2% to Rs470. Moser Baer, Mastek and Polaris were the major gainer among the Mid-Cap stocks.
Oil & Gas refinery stocks were on the receiving end as crude oil for May delivery rose $1.95 to settle at $66.03 a barrel in New York. BPCL lost by 3.1% to Rs302, HPCL down by 0.7% to Rs247 and IOC declined by 1.4% to Rs399.