Morning relief for bulls
There is certain relief in change, even though it be from bad to worse! As I have often found in traveling in a stagecoach, that it is often a comfort to shift one's position, and be bruised in a new place”
After a turbulent week, the bulls would surely want some relief from the heat generated by the sudden bear onslaught. Thankfully, global signs are looking a lot more encouraging this morning, buoyed by a bounce on Wall Street on Friday and firm Asian markets. Going by that trend, we also should open higher. Having said that, there is no certainty over the durability of the rebound.
Don’t get lured in if the market manages to have a better day today. In the near term, the market will remain volatile with a negative bias. FII inflows have slowed this month. Though inflation has started softening, there are concerns about a possible slowdown in economic growth and hence corporate earnings.
Plus, globally there are a lot more issues that are creeping up, ranging from US slowdown to over-heated Chinese economy and hardening of interest rates.
Another factor that could have a bearing in the local market over the next few weeks is some large public issues. One of them, from real estate giant DLF opens today, amid some concerns about the outlook on the sector and the impact the issue will have on the secondary market.
Maruti will be the stock to watch out for. The company is facing capacity constraints on two of its models - the newly launched SX4 sedan and the Swift. Also, the company is offering discounts up to June 15 across models and will go for maintenance from June 17 to June 24. Glenmark could gain amid reports that is very close to signing a out-licensing deal on its molecule targeted at pain management. The deal is potentially worth more than €190mn in upfront and milestone payments, says a financial daily. RNRL and RIL will be in action as the former has sent a notice to the Petroleum Ministry, seeking to restraint the latter from selling gas from its KG basin finds to third parties. Carborundum Universal is likely to rise as the Murugappa group company is all set to buy a majority stake in a Russian company. Keep an eye on Satra Properties and Autolite India. These stocks are expected to gain amid improving business outlook.
FIIs were net sellers to the tune of Rs9.75bn (provisional) in the cash segment on Friday while the local institutions poured in Rs7.39bn. In the F&O segment, foreign funds were net sellers at Rs6.25bn. FIIs were net sellers of Rs2.22bn in the cash segment on Thursday. Mutual Funds offloaded stocks worth Rs870mn on the same day.
US stocks rallied on Friday at the end of a tough week on Wall Street in which worries about inflation and rising interest rates sent the major gauges tumbling for three straight sessions.
The Dow Jones Industrial Average rose by 157.66 points or 1.2% to 13,424.39 while the broader S&P 500 index was up 16.95 points at 1,507.67, and the Nasdaq Composite index advanced 32.16 points to 2,573.54.
For the week, the Dow lost 1.8%, the S&P 500 lost 1.9% and the Nasdaq lost 1.5%.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 5.10% from 5.13% late on Thursday. In currency trading, the dollar rose versus the euro and the yen.
US light crude oil for July delivery settled down $2.17 to $64.76 a barrel on the New York Mercantile Exchange. Gold prices slipped $14.90 to settle at $650.30.
European shares fell on Friday owing to continued worries about the impact of higher interest rates. The pan-European Dow Jones Stoxx 600 index slipped 0.4% to 385.12. The UK's FTSE 100 closed virtually unchanged at 6,505.10, the German DAX Xetra 30 shed 0.4% to 7,590.50 and the French CAC-40 dropped 0.1% at 5,883.29.
Asian stocks rose for the first time in three days this morning, led by the better than expected GDP data from Japan and a fall in US bond yields. The Morgan Stanley Capital International Asia-Pacific Index climbed 0.5% to 151.23 as of 10:15 a.m. in Tokyo, ending a two-day, 1.8% loss.
Japan's Nikkei 225 Stock Average climbed 0.6% to 17,881.53. Shares also gained after the yen weakened the most in six weeks against the dollar on June 8. Benchmarks in markets open for trading elsewhere gained, except for New Zealand and South Korea. Australia and the Philippines are closed today for holidays.
Japan's economy grew at a much higher rate in the first quarter than what the government had initially reported. The world's second-largest economy grew at an annual 3.3% rate in the three months ended March 31. The reading was faster than the 2.4% preliminary estimate. The average projection was for a gain of 3.2%.
In the emerging markets, the Ibovespa in Brazil was up 0.5% at 52,329 while the IPC index in Mexico rose 0.9% to 31,466 and the RTS index in Russia advanced 0.5% to 1789.
Volatile session ended lower as global cues and heavy sell off in Auto, FMCG and Capital Good and Metal stocks dragged the key indices ended in deep red. The index heavy weights like ACC, Tata Steel, Tata Motors, ITC, BHEL and HLL were among the major losers. All the key indices closed in red except for the IT index which gained 0.60%, Infosys, Satyam Computer and Wipro hogged the limelight as Dollar strengthens against the Indian rupee. Finally, the 30-share Sensex dropped 122 points to close at 14063. NSE-50 Nifty was down 34 points to close at 4154.
ONGC gained by 1.3% to Rs864 after the company said that it has made five new oil & gas discoveries. The scrip touched intra-day high of Rs879 and a low of Rs842 and recorded volumes of over 16,00,000 shares on NSE.
SCI edged lower by 0.2% to Rs195. Reports stated that the company would buy 12 ships for $960mn. The scrip touched intra-day high of Rs202 and a low of Rs190 and recorded volumes of over 5,00,000 shares on NSE.
HCC marginally slipped 2.5% to Rs96. The company announced that it has received a Letter of Intent from The Superintending Engineer, Dummugudem Project Circle, Tekulapally, Dist: Khammam, Irrigation & CAD Department. The scrip touched intra-day high of Rs99 and a low of Rs95 and recorded volumes of over 33,00,000 shares on NSE.
Wipro edged higher by 0.4% to Rs547. The company announced that it decided to merge six subsidiaries with itself. The scrip touched intra-day high of Rs554 and a low of Rs535 and recorded volumes of over 17,00,000 shares on NSE.
Technology stocks ended higher as Dollar strengthens against the Indian rupee. Frontline stock Satyam Computer surged by over 2.5% to Rs493, Wipro was up by 0.4% to Rs547, Moser Baer spurred by over 5% to Rs454 and Polaris added 2% to Rs168.
Metal stocks declined lower as an index of six metals traded on the London Metal Exchange (LME) dropped 1.2% yesterday. Nickel slumped 5.7% and zinc fell 0.8%. Tata Steel dropped by 4.7% to Rs585, SAIL was down by 4% to Rs124, Sterlite Industries edged lower 0.2% to Rs535 and Hindustan Zinc was down 1% to Rs656.
Auto stocks were in reverse gear. Hero Honda slipped by 2.4% to Rs684, Maruti was down by 3% to Rs737, M&M declined by 3% to Rs717 and Tata Motors dropped by 3.7% to Rs652.
It’s going to be a week of endless debates and analysis as mega IPOs become the talk of the town. While DLF will hope for a big bang opening of the issue, expect loud voices from ICICI Bank and BEML regarding the dates of their issue. Retail money will also flow into the newly announced issues like Vishal Retail and Roman Tarmat.
Insider Trades:
Gujarat Ambuja Cement Ltd: Shri P B Kulkarni, Director has purchased from open market 11000 equity shares of
Gujarat Ambuja Cement Ltd on 1st and 2nd June, 2007.
Prime Securities: N Jayakumar, President has purchased from open market 25000 equity shares of Prime Securities on 5th June, 2007.
UFLEX Limited: A.R. Leasing Pvt. Ltd. (part of the promoters' group) has purchased from open market 20196 equity shares of UFLEX Limited on 5th June, 2007.
Lower Circuit:
UTV Software, Tanla and Tripex overseas
Upper Circuit:
Amara Raja, Tips Industries, Yashraj Securities, Flawless Diamond, Dawn Mills, Swan mills and Goldiam International.
Delivery Delight (Rising Price & Rising Delivery):
Amtek India, Balrampur Chini , BASF India, Century Textiles, Financial Technologies, Finolex Industries, Hindalco, Infotech Enterprises, KPIT Cummins, Max India, ONGC, Pantaloon Retail, Rolta and TCS.
Abnormal Delivery:
Union Bank of India, Sun TV, Bank of Rajasthan, HMT, Nagarjuna Construction, Unitech, Siemens, J K Cements, NDTV, Infotech Enterprises and Matrix Laboratories.
Major News Headlines:
Wipro decides to merge six subsidiaries with itself
RPG Life Sciences plans to separate Pharma Biz, investment
Inflation was 4.85% for week ended May 26 against expectations of 5.05%
Petron Engineering gets 2 LOIs from Wartsila
Hindustan Construction bags Rs3.28bn order
SCI to buy 12 ships for $960mn - Reports