The bamboo that bends is stronger than the oak that resists.
Is it going to be a terrible Tuesday with Indian indices bending in the face of growing worries over the extent of damage in the US housing sector? Or will our markets show resilience and chart its own course?
Ideally Indian indices should also see steep losses. But, remember, last week we saw our market being resilient and absorbing the bad news emanating from the US and other parts of the world. We suspect the same could happen even today. We may see a 1-2% fall in the Sensex and the Nifty at the start, in step with the fall across global equity markets. After that key indices may look to stabilize. But then past performance may not be repeated all the time. A little pressure at lower levels could result in a heavy sell-off. The crucial point to watch is whether indices settle after an initial fall.
Aggressive buying could be avoided for a while, as the undertone has turned a little bearish, with renewed concern on the US economy, high oil prices and slowing FII inflows. But, the trend of investors storming the side counters (small-cap and mid-caps) is likely to continue as has been the case in the past few days. Here too, be highly alert because the stocks have historically been more volatile and less liquid vis-a-vis their large cap peers.
SBI may acquire UCO Bank and Dena Bank to expand its foothold beyond immediate associate banks. Tata Motors is planning to launch six new models in the heavy commercial vehicle segment over the next two months. Baghdad has assured that oil deals of ONGC and Reliance Industries committed in the Saddam regime will not be annulled.
GTC is planning to de-merge its real estate business in Mumbai, Baroda and Hyderabad into a separate company. Marico is setting up a greenfield plant in Egypt, which will commence operations in second half of next year. PFC is planning to float an overseas financial arm for leveraging the country’s foreign exchange reserves to provide financing for purchasing machinery and equipment abroad.
GMR Infrastructure is planning to raise Rs20bn via QIP to part fund its projects. Action Construction Equipment (ACE) says that its Cyprus arm (WOS) Frested has acquired further stake in Romania-based SC Forma SA by way of a public offer.
US stocks started the holiday-shortened week on a poor note, with the Standard & Poor's 500 index falling to a three-month low after Goldman Sachs told investors to sell Citigroup and home improvement retailer Lowe's cut its earnings forecast for the second time in two months.
Citigroup slipped to its lowest level in four years after Goldman Sachs said credit-market losses may cause the biggest US bank to report $15bn in writedowns over the next two quarters. Merrill Lynch and Morgan Stanley also slumped after Goldman Sachs cut its share-price estimate on both companies. E*Trade Financial plunged 13%, the steepest decline in the S&P 500, after Goldman slashed its price estimate.
Lowe's dropped the most since 2003 after the housing slump cut profits. The report from Lowe's added to concern that retail sales growth this holiday season may be the worst in at least five years and signal a contraction in the broader economy.
The S&P 500 lost 26 points, or 1.8%, to 1,433.27, its lowest close since Aug. 28. The Dow Jones Industrial Average dived 218 points, or 1.7%, to 12,958.44, led by an 8.5% drop in General Motors. The Nasdaq Composite Index dropped 44 points, or 1.7%, to 2,593.38.
Some investors say a decline in the Dow below their August lows would signal a bear market for stocks. The Dow closed today about 113 points above the 30-stock gauge's Aug. 16 level of 12,845.78.
The Dow transportation average declined for a fourth day to the lowest level since October 2006. The Dow Jones Transportation Average slid 106 points or 2.3%, to 4,457.97.
Homebuilders fell the most in more than two years, plummeting 6.4% as a group, as confidence among builders held at a record low. The National Association of Home Builders/Wells Fargo index of builder confidence remained at 19 in November for a second month, the lowest since records began in 1985.
Federal Reserve policy makers won't cut their benchmark interest rate on Dec. 11, according to Bear Stearns. Central bankers signaled in their Oct. 31 statement that the Fed is most likely done cutting rates for the time being, Bear Stearns Chief Investment Strategist Jonathan Golub wrote in a note.
Market breadth was negative. Almost eight stocks dropped for every one that rose on the New York Stock Exchange.
US light crude oil for January delivery rose 80 cents to settle at $94.64 a barrel on the New York Mercantile Exchange, after having been on both sides of unchanged through the morning.
Treasury prices rose, lowering the yield on the 10-year note to 4.07% from 4.16% late on Friday. In currency trading, the dollar fell against the euro and the yen. COMEX gold for December delivery fell $9 to settle at $778 an ounce.
After the close, HP reported quarterly sales and revenue that topped expectations. Shares gained 1.4% in extended-hours trading.
Auto giant GM fell the most in more than two years on concerns that 2008 industry sales may slide and the US may adopt tougher fuel-economy standards for light trucks.
European stocks closed sharply lower after Swiss Re said it will take a $1.1bn hit from exposure to the US subprime mortgages. The pan-European Dow Jones Stoxx 600 index fell 2.2% to 354.70, its worst one-day decline in two months. The UK's FTSE 100 closed down 2.7% at 6,120.80, the French CAC 40 declined 1.7% to 5,432.57 and the German DAX 30 shed 1.3% to 7,511.97.
Latin American markets too ended down. Brazil's benchmark equity index, the Bovespa, fell 3.5% to 62,336.02, its lowest close since Oct. 25. Stocks rose 0.4% the previous week. Argentina's Merval fell 1.7% to 2,243.53 and Chile's IPSA lost 2% to 3,172.95. Mexican stocks were closed Monday for a national holiday.
In other emerging markets, the RTS index in Russia was down 1% at 2166 and the ISE National-30 index in Turkey slid 2.1% to 67,376.
Asian stocks fell for a fourth day. Mizuho Financial led banks lower after Goldman Sachs downgraded Citigroup to "sell" from "neutral", renewing concerns that losses tied to US sub-prime mortgages will increase.
Samsung led a decline among regional exporters after Lowe's cut its earnings forecast. Japanese exporters such as Honda also dropped after the yen strengthened against the dollar.
The Morgan Stanley Capital International Asia Pacific Index slid 1.7% to 155 as of 10:20 a.m. in Tokyo, taking its four-day drop to 4.5%. All 10 of its industry groups fell. The Nikkei in Tokyo lost 1.7% to 14,793.07. All markets open for trading in the region declined.
Market to remain sideways!
Despite posting a strong open bulls again failed to hold on to their gains as markets ended in negative terrain for third consecutive trading session. Profit booking in the index heavyweight like ICICI Bank, Reliance Industries, ITC and HDFC Bank mainly dragged the benchmark Sensex to close in red.
However, the Mid-Cap and the Small-Cap stock were in the limelight, both the indices gained over 2% each continuing their streak of outperforming the major indices. Finally, benchmark Sensex lost 65 points to close at 19,633. NSE Nifty closed flat at 5,907.
Pratibha Industries advanced 4.6% to Rs310 after the company declared that they have secured order worth Rs494.9mn. The scrip touched an intra-day high of Rs311 and a low of Rs266 and recorded volumes of over 36,000 shares on NSE.
Mukta Arts was locked at 20% upper circuit to Rs133.5 after the company announced that it secured Rs730mn distribution deal for 3 films. The scrip touched an intra-day high of Rs133.5 and a low of Rs115 and recorded volumes of over 86,000 shares on NSE.
DLF gained 1.5% to Rs948 after the company declared that they sold 49% stake in 7 residential Projects for Rs14.4bn. The scrip touched an intra-day high of Rs969 and a low of Rs940 and recorded volumes of over 18,00,000 shares on NSE.
Nicholas Piramal surged by over 5.5% to Rs309 as the company said it signed an agreement with Merck & Co. The scrip touched an intra-day high of Rs318 and a low of Rs295 and recorded volumes of over 6,00,000 shares on NSE.
Balrampur Chini surged by over 11% to Rs94 after the Board of Directors of the company announced that they would consider fund raising plan on November 27 and would consider selling bonds to founder. The scrip has touched an intra-day high of Rs97 and a low of Rs86 and has recorded volumes of over 1,00,00,000 shares on NSE.
L&T marginally lost 0.3% to Rs4368. The company’s Joint Venture secured Rs2.75bn Tunneling order for Airpot Line of DMRC. The scrip touched an intra-day high of Rs4460 and a low of Rs4345 and recorded volumes of over 8,00,000 shares on NSE.
Gitanjali Gems surged by over 3.5% to Rs386 after the Indian diamond retailer, announced it purchased Rogers Ltd., a jewelry chain with 46 stores in the
Suzlon surged by over 1.5% to Rs2095 after the company’s unit signed 2 new orders in
Stocks in News:
ONGC has sought work holiday for seven deepwater blocks due to non-availability of deepwater rigs.
ADAG is believed to be in talks with New York based Starwood Hotels to launch its upscale St Regis brand in the country.
Richard Branson’s Virgin group has entered into a branding and marketing tie-up with Tata Teleservices.
Gitanjali Gems is planning a 50:50 JV with Italian watch maker Morellato & Sector group.
IOC is planning to reduce its inventory levels from 14-15 days to 10-11 days.
BEML will take 48% stake in a three-way JV that will take over ailing Mining and Allied Machinery Corporation.
Ranbaxy may dilute 60% stake in its new research company, which will be formed by hiving off its R&D unit into a separate company by 2008.
Crompton Greaves is investing Rs2bn in India and US$55mn overseas, 60% of which is already completed.
Titan Industries is planning to launch its watches in Pakistan and jewellery in the US.
BSNL is planning to add 100mn telephone connections in the next three years.
Reliance Industries is likely to ramp up its retail network and petroleum supply chain.
Liaohe Petroleum Exploration Bureau, an arm of China National Petroleum Corporation has accused ONGC of terminating seismic survey contract on untenable and unjustified grounds.
HPCL plans to set up 100MW of wind power capacity in Maharashtra at an investment of Rs5bn.
Japan’s Yamaha Motor will introduce two high-end bikes, the YZF-R1 and MT01 priced at over Rs10lakh in December.
The world’s second largest retailer, Carrefour, may choose an Indian supermarket partner early next year and plans to launch a wholly-owned Indian cash and carry business in 2009.
Direct tax collection for the period April-November 15 has jumped by 42.9% to Rs1.4 trillion.
Power addition target of 16,335 MW for 2007-08, the first year of the 11th plan is likely to be missed by ~26%.
DoT is planning to include broadband consumer base of a service provider as a criterion for spectrum allocation.
The number of CDMA mobile users increased by 1.94mn in October to 52.99mn.
India’s steel production capacity is expected to at least quadruple by 2020.
The Government is planning to allow 74% FDI in Cable TV services and head-end in the sky (HITS) while also permitting 100% FDI in downlinking general and entertainment channels uplinked from abroad.
The Government has ruled out any sops for ethanol manufacturers.
Defence may vacate 45MHz spectrum by early next year.
The Government may revise bidding norms for ultra mega power projects.
FII Investment Trend:
FIIs were net sellers of Rs3.71bn (provisional) in the cash segment on Monday while the local institutions too pulled out Rs634.5mn.
Foreign funds were net sellers of Rs791mn in the cash segment on Friday.