When it rains, most birds fly for shelter. But the eagle alone avoids the rain by flying above the clouds.
The challenge now is to identify stocks which will survive the drizzle, heavy rain and of course the thunder of concerns. The main indices are yo-yoing a lot more given the concerns on lofty valuations, high open interest in the F&O segment and anxiety over quarterly earnings. Another bit of worry is the spike in crude oil prices though the Government has not made its intention clear on whether it will go for a price hike in fuel prices. Looks like the Centre is banking on the stronger rupee to help it tide over the crises. How long will the Government defer a decision on the contentious issue is tough to call.
The market is facing resistance with both the Sensex and the Nifty trading near their all-time peaks. Investors are not prepared to resort to aggressive buying at these levels. Though a major correction like the one seen in February-March this year or in May last year may not materialise, there is a debate underway on current valuations and the upside from here. (Let us remind you, the long term story remains intact.) The bulls appear to be in a stronger position at the moment due to strong FII inflows, but the bears are lurking to get back in action.
Today, we see a positive opening given yesterday's smart recovery and largely positive cues coming from Asian markets. US stocks slipped overnight and oil prices have inched higher. A slew of big companies are slated to announce their results today, which could have a bearing on the sentiment. We expect the intra-day volatility to continue as the market goes through a consolidation phase after the recent rally.
US stocks suffered its worst day in a week on the back of a few disappointing results and nagging worries over the slump in the housing sector. The decline pulled down the Dow Jones Industrial Average from its fourth consecutive record and marked the third straight drop for the S&P 500 index.
Intel sparked the biggest tumble in semiconductor shares in almost five months after saying competition forced it to cut prices. Citigroup and JPMorgan Chase led 86 of 92 financial firms in the S&P 500 Index lower following Bear Stearns said investors in two hedge funds were wiped out by bad bets on subprime mortgages.
The S&P 500 lost 3.2, or 0.2%, to 1546.17. The Dow dropped 53.33, or 0.4%, to 13,918.22. The Nasdaq Composite Index slid 12.8, or 0.5%, to 2699.49.
The dollar dropped against the yen and traded near a record low versus the euro after the Federal Reserve lowered its forecasts for US economic growth as home building is weaker than anticipated.
Investors also pushed the dollar close to a 26-year low against the pound after Fed Chairman Ben S. Bernanke said in testimony to Congress that inflation will edge lower and a slump in construction will continue to weigh on growth.
US light crude for August delivery jumped $1.02 to $75.02 a barrel on the New York Mercantile Exchange. COMEX gold for August gained $7.80 to $673.70.
European shares closed broadly lower. The pan-European Dow Jones Stoxx 600 index declined 0.9% to 394.05. The UK's FTSE 100 closed down 1.4% at 6,567.10, the German DAX declined 1.8% to 7,893.61, and the French CAC-40 slipped back below the 6,000 level, down 1.7% at 5,995.97.
Most Asian markets were up this morning, led by BHP Billiton and Zijin Mining Group after copper, gold and oil prices gained. JFE Holdings, Japan's second-biggest steelmaker, and Posco climbed after UBS said slowing global production is supportive of prices.
China, the world's biggest consumer of steel, today reported that its economy grew in the second quarter at the fastest pace in 12 years. Inflation accelerated the most in almost three years, adding pressure on the government to raise interest rates. The CSI 300 Index swung between gains and losses.
The Morgan Stanley Capital International Asia-Pacific Index rose 0.2% to 158.02 at 12.28 p.m. in Tokyo. Nine of its 10 industry groups advanced. Japan's Nikkei 225 Stock Average rose 0.2% to 18,042.50.
The Philippines and Thailand were the only markets to fall in the region. Technology-related shares including Canon advanced after IBM reported profits that beat analyst estimates. Korea Electric Power Corp. fell on concern higher oil prices will raise fuel costs.
Bulls made a strong come back from days low as benchmark Sensex managed to close above the 15300mark. After opening on a weak note markets gradually lost ground. However, buying momentum in the index heavy weights like Bharti Airtel, ICICI Bank, Hindalco and Infosys lifted the key indices in green. However, L&T, ONGC and ITC were among the top laggards.
BSE Capital Good and the FMCG index were top losers, even the Mid-Cap and the Small Cap indexes lost ground. Finally, BSE 30-share Sensex gained 11 points to close at 15301. NSE-50 Nifty closed flat at 4499.
DLF surged by over 5% to Rs643 after the company secured order worth Rs60bn from Delhi Development Authority. The scrip touched intra-day high of Rs649 and a low of Rs615 and recorded volumes of over 1,00,00,000 shares on NSE.
Nagarjuna Construction slipped by 0.6% to Rs194. The company announced that it has secured two orders worth Rs2.36bn. The scrip touched intra-day high of Rs201 and a low of Rs192 and recorded volumes of over 8,00,000 shares on NSE.
HPCL edged higher by 0.7% to Rs260 after the company announced its plans that they would shut refineries in 1st Quarter 2008. The scrip touched intra-day high of Rs261 and a low of Rs257 and recorded volumes of over 2,00,000 shares on NSE.
IDBI declined by over 3% to Rs115. The company announced its Q1 result with net profit little changed at Rs1.53bn, interest and non-interest income rose to 21.93bn (up 31%). The scrip touched intra-day high of Rs122 and a low of Rs114 and has recorded volumes of over 1,00,00,000 shares on NSE.
Uttam Sugar surged by over 3% to Rs102 after the company announced that it would consider raising funds. The scrip touched intra-day high of Rs106 and a low of Rs99 and recorded volumes of over 3,00,000 shares on NSE.
Auto stocks were in reverse gear as US light crude for August delivery traded at $74.05 per barrel on the New York Mercantile Exchange. Tata Motors was down by 1% to Rs743, Maruti slipped by 0.7% to Rs743 and TVS Motors slipped 1.1% to Rs62. However, Bajaj Auto surged by 2.5% to Rs2281, M&M added 1% to Rs806.
Realty stocks recorded smart gains on hopes that RBI would not tinker with interest rates. Akruti surged by over 4% to Rs539, Sobha Developers gained by 2.7% to Rs929 and Parsvnath added 0.8%t o Rs367.
Profit booking dragged the Capital Good stocks lower. L&T declined by over 2.5% to Rs2330, Siemens was down 1.5% to Rs1325, ABB declined 1.5% to Rs1071 and Punj Lloyd dropped 2% to Rs267.
Select metal stocks also were on the receiving end on back of selling pressure. Hindustan Zinc fell 1.5% to Rs770; JSW Steel was down by 1.1% to Rs691, Jindal Steel dropped 1%t o Rs3826. However, Sterlite industries gained 2% to Rs645 and Tata Steel added 0.3% to Rs682.
Results Today:
Aban Offshore, ACC, Ashok Leyland, DLF, Essel Propac, Great Offshore, ICI India, L&T, Lupin, Mastek, Novartis India, Orchid Chemical, Ranbaxy, Shree Cement, SKF India, Tech Mahindra, Trent, Unichem Labs, Vakranjee, Welspun Gujarat and Wipro.
Fund Activity:
FIIs were net buyers of Rs1.98bn (provisional) in the cash segment on Wednesday. On the other hand, local institutions were net sellers at Rs574.9mn. From the F&O segment, FIIs pulled out Rs10.66bn.
On Tuesday, FIIs poured in Rs9.46bn in the cash segment. Mutual Funds were net sellers of Rs1.06bn.
Major bulk Deals:
HSBC has bought Balasore Alloys; Goldman Sachs has picked up EID Parry; Macquarie Bank has purchased Euro Ceramics; Sundaram BNP Paribas MF has bought GEI Industries; Morgan Stanley has picked up Gitanjali Gems; HSBC has bought JRG Securities and HDFC MF has picked up Zee News.
Insider Trades:
Ranbaxy Laboratories Ltd: Life Insurance Corporation of India has purchased from open market 8094753 equity shares of the company on 9th July, 2007.
Mastek Ltd: Acquirer: HSBC Global Investment Funds - A/C HSBC Global Investment Funds (Mauritius) Limited; PAC: HSBC Investments (Singapore) Limited has sold in open market 156250 equity shares of the company on 16th July, 2007.
Lower Circuit:
Bilcare and DGP Securities.
Upper Circuit:
Zee News, Agro Tech, Goldstone Tech, Ganesh Forgings, Hindustan Dorr, IID Forgings, Kalindi Rail, BF Utilities and Jaybharat Textiles.
Delivery Delight (Rising Price & Rising Delivery):
ACC, BASF India, Crompton Greaves, Hero Honda, Lupin and VSNL.
Abnormal Delivery:
Avaya Global, BEML, Dena Bank, Dr Reddys Lab, GDL, HDFC, India Cements, ONGC, Thermax and UTI Bank.
Major News & Announcements:
Unitech to invest $720mn building 28 hotels in India
HEG to hive off Steel operations for Rs885mn
Renuka Sugar to consider selling securities abroad
Biocon Q1 Group profit at Rs528.3mn (up 35.7%) and sales at Rs2.71 (up 27.8%)
Alembic Q1 profit at Rs174 (up 22.7%) and revenue at Rs1.78 (up 17.1%)
Polaris Q1 profit at Rs130.7mn (down 25%), net sales at Rs2.32bn (up 22%)
REL Q1 profit at Rs2.2bn (up 25%), net sales at Rs16.24bn (up 40%)
IDBI Q1 profit flat at Rs1.53bn, interest and non-interest income rose to 21.93bn (up 31%)
HPCL plans to shut refineries in 1st Quarter 2008
Accentia Tech Board approves GDR issue of $4.5 per share
DLF gets Rs60bn order
Nagarjuna Construction secures two order worth Rs2.36bn
Lupin secures approval from DCGI to conduct combined Phase IIB/III Psoriasis Trail.