A certain amount of danger is essential to the quality of life.
Entering the markets on Monday was like entering a discount sale. What you wanted is already sold out and the left overs may not seem attractive for the price. On the face of it, the bulls seem to be back in world markets, thanks to Bernanke & Co.'s timely help last week in the form of a cut in the discount rate. There are talks that the Bank of Japan (BOJ), in its two-day meeting that concludes on Thursday, will keep its key interest rate steady. Wall Street observers are now hoping that the Fed would also lower the benchmark lending rate at its next meeting. But, that is still a month away and the trouble in the subprime mortgages and credit market is far from over. Don't get carried away by the rebound across global markets as there could be some more bad news in the offing in the days to come.
Back home, the political situation remains quite fragile with the Government and the Left not ready to take a step back from their current positions on the Indo-US nuclear deal. There are only two options now. Either the Congress-led regime will give into the pressure from the communist allies or it will go ahead with the deal to protect the country's image and the credibility of the Prime Minister. In either case, the impact on the market will be only temporary. The larger concerns are somewhere else, particularly in the US housing market. Any further unfolding of the mess there will lead to a fresh round of global selloff.
While bulls may want to extend their shopping spree, there is a likelihood of profit booking at higher levels as the global situation is yet to stabilise completely. We have three listings today. the most important one is that of Central Bank of India. The other two are SEL Manufacturing and Sujana Towers. In stock specific news, garment major Gokaldas Exports will be in action as the promoters have decided to sell a 50.1% stake to private equity major Blackstone. Reliance Industries is another stock to keep an eye on due to reports of a big oil find in the KG basin. Patni Computer could attract some attention as the long-awaited stake sale could see the light of day soon. Be prepared to see the indices in the red today.
Pyramid Saimira is also likely to be in the limelight as a financial daily reports that Citigroup Venture Capital is in talks for investing $100mn in the theatre chain company. Sun TV could gain amid reports that it has reached an out-of-court settlement with Tata Sky. JSW Steel will hog some limelight as the Sajjan Jindal-run company announces an acquisition in the US. Oil stocks might be affected due to the indefinite strike called by Oil Sector Officers' Association. Tourism Finance Corporation is expected to be in action as well amid market talk of a private placement.
The Dow Jones Industrial Average recovered to end slightly higher, though the S&P 500 index and the Nasdaq closed nearly unchanged. Investors bet that the Federal Reserve will swing into action to ease the turmoil in credit markets and keep the economy in good shape.
The Dow rose 42.27 points, or 0.3%, to 13,121.35. The Nasdaq Composite Index added 3.56 points, or 0.1%, to 2,508.59. The S&P 500 finished flat at 1,445.55. More than seven stocks climbed for every six that fell on the New York Stock Exchange.
All three major stock indices see-sawed throughout the session, slumping in the early afternoon, rallying in the late afternoon, and then giving up some of that advance right near the close.
Many economists on Wall Street feel that the Fed will cut the federal funds rate at the Sept. 18 policy meeting. On Monday, the central bank injected another $3.5bn to the banking system. But credit worries remain and are not likely to disappear anytime soon.
Thornburg Mortgage said that it sold over 35% of its assets and reduced its borrowing to lower its risk. Shares fell 10%.
After the close, Capital One Financial said it was closing its troubled GreenPoint mortgage unit, that it will cut 1900 jobs and shutter 31 offices by the end of the year. Shares fell 2% in extended-hours trading.
Countrywide Financial has started laying off employees, in an effort to cut costs amid its ongoing credit crunch, the Wall Street Journal reported. Shares of the troubled mortgage lender fell 7.5%, erasing early gains.
In economic news, the July index of Leading Economic Indicators (LEI) rose 0.4%, in line with estimates, after falling 0.3% in June.
US light crude oil fell 86 cents to settle at $71.12 a barrel on the New York Mercantile Exchange, sliding on signs that Hurricane Dean is unlikely to disrupt refining centers in the Gulf of Mexico.
COMEX gold for December delivery fell 30 cents to $666.50 an ounce. Treasury prices gained, lowering the benchmark 10-year note yield to 4.63% from 4.67% late on Friday. In currency trading, the dollar slipped versus the euro and gained versus the yen.
European shares ended higher. The pan-European Dow Jones Stoxx 600 index advanced 0.7% to 362.33, with the gains in resources outstripping other sectors. France's CAC-40 rose 0.7% to 5,399.38, the UK's FTSE 100 gained 0.2% at 6,078.70 and the German DAX 30 added 0.4% at 7,407.53.
In emerging markets, the Bovespa in Brazil advanced 1.3% to 49,206 while the RTS index in Russia lost 0.5% at 1852. The IPC index in Mexico fell 0.2% at 28,453 while the ISE National-30 index in Turkey dropped 1.1% to 57,671.
Most Asian markets have taken off from where they left yesterday, with the Hang Seng in Hong Kong jumping by over 600 points or 3% to 22,215. The Nikkei in Tokyo was up 235 points at 15,967 while the Kospi in Seoul gained 23 points at 1754 and the Straits Times in Singapore advanced 21 points to 3344.
The Morgan Stanley Capital International Asia-Pacific Index added 0.8% to 143.89 at 10:40 a.m. in Tokyo, adding to a 4.1% gain yesterday that was the regional benchmark's best one-day performance since March 2002. Last week's 8% fall marked the worst week since September 1990.
China's CSI 300 Index rose 0.9%, headed for a record. Benchmarks also advanced in New Zealand and the Philippines, which was shut yesterday for a holiday.
Markets finally broke three days losing streak as bulls rode on global cues. Strong comeback from the Asian and the European markets aided the key indices to jump at open. The rally was ignited after the Federal Reserve' announced 50 basis-point cut in discount rate at which it lends to banks. However, the volumes dropped as turnover on NSE cash segment slipped 41.3% and in F&O segment declined 38.2%. Further selling pressure in the index heavyweights like Infosys and Satyam dragged the key indices to close off their days high. Finally, the BSE 30-share Sensex closed at 14,427 gaining 286 points. NSE Nifty added 101 points to close at 4209.
Ranbaxy surged by 4% to Rs364 after the company announced that it has secured US FDA approval to sell copy of Abbott Labs Vicodin. The scrip touched an intra-day high of Rs367 and a low of Rs355 and recorded volumes of over 6,00,000 shares on NSE.
Pantaloon Retail advanced by 3% to Rs490 after the company declared that they would sell shares atRs500 each to Private Investors. The scrip touched an intra-day high of Rs499 and a low of Rs480 and recorded volumes of over 1,00,000 shares on NSE.
Great Offshore edged lower by 0.7% to Rs771 after reports stated that the Indian oil-drilling company that was separated from Great Eastern Shipping Co. last year is close to acquiring Petrojack ASA, a Norwegian oilrig owner, for as much as $500mn. The scrip touched an intra-day high of Rs802 and a low of Rs756 and recorded volumes of over shares 37,000 on NSE.
ICICI Bank surged by over 5.8% to Rs872 as the FIPB has cleared its plan to induct foreign investors in its proposed new wholly-owned subsidiary that will house its insurance and asset management businesses. The scrip touched an intra-day high of Rs888 and a low of Rs856 and recorded volumes of over 28,00,000 shares on NSE.
Siemens marginally gained by 0.2% to Rs1199 after the company announced that it secured an order for installing a new hot-strip Mill. The scrip touched an intra-day high of Rs1229 and a low of Rs1187 and recorded volumes of over 95,000 shares on NSE.
Fertilizer stocks continued to be in the limelight after Prime Minister Dr. Manmohan Singh said that he existing subsidy system may have to be reviewed in the future. Chambal Fertilizer rallied by over 19% to Rs44, GNFC surged by over 14%to Rs135 and GNFC added 10% to Rs104.
Telecom stocks were in action amid reports that the TRAI is considering scrapping the cap on the number of players in a circle, besides the proposal to allow a company to offer both GSM and CDMA services under the same license. Bharti Airtel surged by over 4% to Rs827, R Com advanced by 3% to Rs507 and Idea added 2.3% to Rs113.
IT stocks were on the receiving end as index heavyweights like Infosys lost by 1.3% to Ras1829, Satyam Computer was down 1.7% to Rs432, TCS edged lower by 0.3% to Rs1055 and Wipro declined 1.1% to Rs469.
Metal sector which was worst hit made a strong come back led by Sterlite Industries as the scrip was up by over 9% to Rs566, Tata Steel spurred by over 5% to Rs570, SAIL added 4.4% to Rs143 and Nalco gained 3.7% to Rs259.
Banking stocks were the top gainers as the index gained 4.23% led by gains ICICI Bank as the scrip surged by over 5.5% to Rs872, HDFC Bank was up by 4% to Rs1110 and SBI added 2% to Rs1549. Bank of India, Union Bank and OBC were the major gainers among the mid-cap stocks.
Realty stocks recorded smart gains. Akruti advanced by 2% to Rs495, Sobha was up by 0.8% to Rs786 and Parsvnath added 2% to Rs295.
Fund Activity:
FIIs were net sellers of Rs6.49bn (provisional) in the cash segment on Monday and the local institutions pumped in Rs1.42bn. In the F&O segment, FIIs were net buyers at Rs42.53bn. On Friday, foreign funds pulled out Rs5.2bn from the cash segment. Mutual Funds were net buyers at Rs228mn on the same day.
Major Bulk Deals:
Principal MF has bought McDowell Holdings while HSBC Global has sold the stock; Merrill Lynch has purchased Nagarjuna Fertilizers; Kotak Mahindra has sold Pranava.
Lower Circuit:
Balasore Alloys, Rama Pulp and IOL Broadband.
Upper Circuit:
Assam Company, Goldstone Tech, Mangalore Chemical, Tourism Finance, Godavari Fertilizers, Silverline Technologies, Diana Tea and Karuturi Networks.
Delivery Delight (Rising Price & Rising Delivery):
Amtek Auto, Amtek India, Exide Industries, Gail India, GHCL and IOC.
Abnormal Delivery:
Sintex, Cholamandalam Investments, Amtek Auto, EKC, Neyveli Lignite and Centurion Bank of Punjab.
Major News & Announcements:
Reliance Industries may start Financial Services – Reports
Blackstone to buy 50.1% stake in Gokaldas Exports
Power Finance to team with NTPC, on power exchange
Rane Engine to separate Manufacturing unit
Pantaloon Retail to sell shares at Rs500 each to Private Investors
HDIL to buy property from Kilburn Eng for Rs1.25bn
Hanung Toys gets orders worth Rs6bn - Reports
Ansal Infrastructure signs two agreement with IL & FS Investment
TCS gets $16mn contract
Agriculture Minister Sharad Pawar says sugar production next year may rise 15%
JSW Steel's Board to meet on Tuesday to consider an acquisition in US.