A new truth marries old opinion to new fact so as ever to show a minimum of jolt, a maximum of continuity.
Bulls will hope that the jolt is less and their winning ways continue. Just when the Indian bulls thought they could manage hoisting the indices at a new peak, comes another jolt from the global markets, especially from the US. Wall Street was stunned on Friday by an unexpectedly weak jobs report, sending the main indices into a tailspin amid concerns about the health of the world's largest economy. Markets around the world slumped following the grim payroll data and the subsequent declines on Wall Street.
There are serious concerns that the mess in the US housing sector is hurting the broader economy there. This could lead to another round of selloff across world markets, at least in the next couple of days (sometimes its just for a day) amid fears of a slowdown in global economic growth. Expectations are the Federal Reserve will come to the rescue and cut rates. The speculation now is by how much it will cut rates at its Sept. 18 meeting (or perhaps before that) and at its following meetings. Alas.
The trend in the local market will largely hinge on the global sentiment and the fund flows (inward or outward). Avoid any leverage and continue picking up your favorite counters expecting to sell them after a couple of years. Buy less but buy quality. No clear trend is expected for months to come. Open your ears to all and your purse to a few select stocks.
Vakrangee Software could gain as it has increased the investment limit for FIIs, from 24% to 49%. Also, Goldman Sachs Investments and Merrill Lynch have crossed the significant 5% holding mark in the company. Taneja Aerospace might rise amid market grapevine that it has struck a deal with GMR for its property in Bangalore.
Kesoram and Century Enka could advance amid reports that the promoters are hiking stake in the two BK Birla group companies. Oil PSUs may gain amid reports that the Government will go for a marginal fuel price hike shortly. Bajaj Auto and other two-wheelers will be in focus as the former is all set to launch its much-hyped 125cc bike, Exceed to take on rivals Hero Honda and TVS.
US stocks tumbled on Friday as a surprise drop in August payrolls raised worries that the contagion in the housing and financial markets were spreading to the rest of the economy. Treasury prices jumped as investors sought safety, while the dollar plunged. Gold prices jumped as well. Oil prices rose.
The Dow Jones Industrial Average was down 249.97 points or 1.9% to 13,113.38 while the broader S&P 500 index shed 25 points or 1.7% to 1,453.55. The tech-fueled Nasdaq Composite index was down 48.62 points or 1.9% to 2,565.70.
For the week, the Dow lost around 1.8%, the S&P 500 eased around 1.4% and the Nasdaq gave up 1.2%.
And, there could be more trouble ahead. After the close of trade, Countrywide Financial, the biggest US mortgage company, said it will cut between 10,000 and 12,000 jobs, or 20% of its work force, over the next three months.
The surprisingly weak jobs report added to optimism that the Fed will cut its benchmark fed funds rate, a key short-term interest rate, when it meets on Sept. 18.
Meanwhile, former Fed Chairman Alan Greenspan, speaking at an economics conference, said that the current market turmoil is similar to what happened in 1998, 1987 and other times in history when there were economic bubbles.
Treasury prices surged in a classic "flight to quality" move. The rally lowered the yield on the 10-year note to 4.37% from 4.5% late on Thursday. Gold prices also jumped in response to the report. COMEX gold for December delivery rose $5.10 to settle at $709.70 an ounce.
In currency trading, the dollar slumped versus the euro and the yen.
US light crude oil for October delivery rose 58 cents to $76.88 a barrel on the New York Mercantile Exchange.
OPEC will probably maintain its oil production targets at its Tuesday meeting, resisting calls for more supply because of concerns demand may falter as US economic growth slows.
European shares fell sharply on Friday. The pan-European Stoxx 600 index declined 2.2% to 365.58. The French CAC-40 closed down 2.6% at 5,430.10, while the German DAX 30 gave up 2.4% to end at 7,436.63 and the UK's FTSE 100 slipped 1.9% to 6,191.20.
In emerging markets, the Bovespa in Brazil was up 0.3% at 54,569 while the IPC index in Mexico was down 1.8% at 30,252. The RTS index in Russia shed 1.2% at 1898 and the ISE National-30 index in Turkey fell 1% to 61,690.
Asian stocks were down sharply this morning after the number of jobs in the US unexpectedly fell for the first time in four years and Japan's economy shrank at almost twice the pace forecast in the second quarter.
Mitsubishi UFJ Financial Group paced declines in Tokyo while Toyota dropped as the yen gained against the dollar.
South Korea's Samsung Electronics slid on concern that demand will cool in the world's two biggest economies. BHP Billiton slipped along with the price of metals.
The Morgan Stanley Capital International Asia-Pacific Index fell 1.8% to 149.71 at 10:35 a.m. in Tokyo, set for its biggest loss since Aug. 17. Japan's Nikkei 225 Stock Average dropped 2.3% while the Hang Seng in Hong Kong was down. All markets open for trading declined.
Japan's economy contracted for the first time in more than two years after companies cut spending last quarter.
The world's second-largest economy shrank at a 1.2% annual pace in the three months ended June 30, compared with the government's initial estimate for 0.5% growth. The average forecast was pegged at a deceleration of 0.7%.
Bulls slipped on to back foot as a volatile trading session ended in red. After carrying on the momentum in early trades key indices witnessed seesaw trades as alternate bouts of buying and selling pushed the key indices from positive to negative terrain. FMCG and Small-Cap stocks were in demand on the other hand shares of Auto, Realty and Oil & Gas stocks were offloaded. Finally, the BSE 30-share Sensex closed at 15,590 losing 25 points. NSE Nifty slipped 10 points to close at 4509.
Karuturi Networks surged by over 4.5% to Rs238 after investors approved $100mn fund raising plan. The scrip touched an intra-day high of Rs240 and a low of R227 and recorded volumes of over 8,00,000 shares on NSE.
ICRA advanced by 1.6% to Rs989 after reports stated that the company has signed MoU with SBI. The scrip touched an intra-day high of Rs1013 and a low of Rs968 and recorded volumes of over 1,00,000 shares on NSE.
ICICI Bank ended flat at Rs920. Reports stated that they are setting up a $2bn fund to invest in roads, ports, utilities, bridges and telecommunications. The scrip touched an intra-day high of Rs930 and a low of Rs915 and recorded volumes of over 28,00,000 shares on NSE.
Sadbhav Engineering slipped by 2.4% to Rs690. The company announced that they have secured Rs1.9bn orders. The scrip touched an intra-day high of Rs720 and a low of Rs685 and recorded volumes of over 10,000 shares on NSE.
Mastek surged by 3% to Rs289 after the company announced that they would raise Rs1.5bn selling securities overseas. The scrip touched an intra-day high of Rs291 and a low of Rs281 and recorded volumes of over 37,000 shares on NSE.
Ashok Leyland slipped 2.6% to Rs38 after the company yesterday announced its August dropped 6.6% to 6055 units. The scrip touched an intra-day high of Rs40 and a low of Rs38 and recorded volumes of over 37,00,000 shares on NSE.
Realty stocks were under selling pressure. DLF slipped by 2% to Rs622, Akruti was down by 1.7% to Rs594 and Ansal Infrastructure declined by 2.6% to Rs251.
FMCG stocks ended higher led by gains in McDowell surged by over 1.5% to Rs1540, Marico was up by 2.4% to Rs60, ITC gained by 1.6% to Rs177 and Tata Tea added 0.8% to Rs761
Auto stocks were on the receiving end. Tata Motors slipped by 2.3% to Rs695, Bajaj Auto slipped by 0.6% to Rs2324 and TVS Motor dropped 1.7% to Rs64.
Stocks In News
Petrol and diesel prices are likely to be increased by Rs2 and Re1 per litre respectively after monsoon session of parliament ends this week.
Domestic air travel to cost more as Jet Airways and Indian plans to increase fares shortly.
Ranbaxy Laboratories, India’s largest drug maker, may hive off its R&D activity into a separate company and raise resources by selling equity in the new entity.
TCS plans setting up third development centre in China by the end of current fiscal, to hire 4,000 more.
NTPC and BHEL may float a new JV company for executing power sector projects in India and abroad.
BPL Mobile Communications, which offers GSM services in Mumbai and run by the Essar group, has applied for licenses in the remaining 21 circles in the country.
Axis Bank sets up $500mn private equity fund to invest in domestic infrastructure sector.
AV Birla group to plans to invest $600mn in increasing carbon black capacities in India and abroad in the next four years.
Moser Baer plans Rs10bn investment in manufacturing facilities in a SEZ near Chennai .
Mahindra Gesco plans strong thrust in solid waste management and water treatment business.
Gammon India considering foraying into logistics sector in a move to expand its presence in infrastructure sector.
JSW Steel’s coal block plan suffers as its JV partner walks out.
Fund Activity:
FIIs were net buyers of Rs3.85bn (provisional) in the cash segment on Friday and the local institutions pulled out Rs994.3mn. In the F&O segment, foreign funds were net buyers of Rs4.15bn.
On Thursday, FIIs were net buyers to the tune of Rs6.23bn in the cash segment. Mutual Funds were net buyers of Rs452mn on the same day.
Major Bulk Deals:
Merrill Lynch has bought Amtek Auto; ILFS Investsmart has purchased Goldstone Tech; Crown Capital has sold IVRCL Infrastructures; Merrill Lynch has picked up; HDFC Core has sold Rico Auto; Merrill Lynch has bought Shree Precoated Steels; Bear Stearns has picked up Unity Infra Projects; A slew of deals on both sides took place in Proto Infosys.
Insider Trades:
Ambuja Cements Ltd: P.B. Kulkarni, Director of the company has sold 3000 equity shares of Ambuja Cements Ltd on 30th August 2007.
Lower Circuit:
Raj Tele
Upper Circuit:
Lotus Global has sold Gremac Infrastructure and Kashyap Tec; Macquarie Bank has sold Hexaware; Pricipal PNB Long Term MF has bought Madhucon Projects while Bear Stearns has sold the scrip; Morgan Stanley MF has picked up Welspun Gujarat.
Delivery Delight (Rising Price & Rising Delivery):
Bharti Airtel, Crompton Greaves, Mangalam Cement and Praj Industries.
Abnormal Delivery:
Bombay Rayon Fashions, Bank of Baroda, Sadbhav Engineering and Lupin.
Major News & Announcements:
Inflation for the week ended 25th August was 3.79% against expectation of 3.89%
Fortis Healthcare to buy Chennai-based Malar
Karuturi Networks shareholders approve $100mn fund raising plan
Gitanjali Gems enters into software, telecom business
NDTV, Astro launch news channel in Malaysia
Aurobindo gets UK-MHRA clearance for Unit VIII
Maruti receives 12,000 units export order from Indonesia.