Love without reason lasts the longest.
The euphoria of Wednesday may have been forgotten on Thursday. Main indices may be down by it continues to be earning season for bulls on specific counters. Imagine the dream run refinery stocks had. Reasons are hard to find and we hate to speculate on what would have happened. But the action is hot outside the main indices, with small-cap and mid-cap indices on the BSE notching up gains of 1.9% and 1.6%, respectively.
Among the sectors, FMCG, Real Estate, Oil & Gas and PSU pack were in the limelight yesterday. The key indices finished in the red thanks largely to weakness in banking, IT and power stocks. Looks like the trend may continue in the near term with stock centric action dominating the scene. All we can say is be careful with quite a few stocks having witnessed a huge run-up without any significant change in fundamentals.
Plus, one has to bear in mind the mounting losses linked to the US housing sector and its fallout on the American economy and the world at large. Liquidity is drying up (though Wednesday's data shows a big improvement). Most of the positive factors are already reflected in the stock prices. The market has rallied sharply from end August. Hence, there is a likelihood that the current consolidation phase may continue for a while.
The direction of the market will hinge on a few key issues - the bad news coming from the US economy, trend in FII inflows, political developments in New Delhi and of course on local economic data. Today, we foresee a weak opening following a steep fall in US and Asian markets. At the same time, earnings will continue for some bulls somewhere.
Prajay Engineers says its wholly-owned subsidiary Prajay Holdings has received a commitment of FDI worth $36mn for one of its prime projects at Hyderabad.
Vishal Retail says it has opened four new showrooms. The Bombay High Court has approved the merger of Lok Shelters with Lok Housing.
Southern Online has decided to raise up to Rs500mn for setting up a second Biodiesel unit at Vizag with a capacity of 250 tons a day.
US stocks tumbled on Thursday, with financial, commodity and technology shares among the biggest losers on the back of lingering worries about the credit market crisis and weakening consumer confidence.
The Dow Jones Industrial Average fell 121 points, or 0.9%, to 13,110.05. The S&P 500 Index lost 19 points, or 1.3%, to 1,451.15. The Nasdaq Composite Index slipped 26 points, or 1%, to 2,618.51.
More than three stocks dropped for every one that rose on the New York Stock Exchange.
The fall in US stocks came after Wells Fargo said that the housing market is the worst since the Great Depression and investors speculated that Fannie Mae masked credit-market losses in its latest earnings report.
JC Penney led losses among the retailers after the third-biggest department-store chain reported a smaller profit and cut its earnings forecast. Citigroup shares slipped 4.1% after the biggest US bank sold $4bn of 10-year notes at the highest yield relative to benchmarks in its history.
The Federal Reserve injected roughly $6bn into the US banking system yesterday. The Fed accepted more than $20bn of mortgage-backed securities as collateral in the moves.
Barclays Capital, a unit of Barclays Group, said it took $2.7bn in writedowns related to the credit market. The figure was smaller than some analysts had been looking for a week ago. Additionally, the British bank said that 2007 profits are running ahead of last year's performance.
Swiss financial major UBS could take up to $7.1bn in writedowns related to the deteriorating mortgage market in the US, according to the Wall Street Journal. GE confirmed reports that a short-term bond fund it manages has suffered big losses in mortgage-backed securities.
US light crude oil for December delivery fell 66 cents to settle at $93.43 a barrel on the New York Mercantile Exchange after the weekly oil inventories report showed a surprise gain in crude supplies last week.
Treasury prices rose, lowering the yield on the 10-year note to 4.15% from 4.25% late on Wednesday. In currency trading, the dollar rebounded a bit against the euro and declined versus the yen. COMEX gold for December delivery fell $27.40 to $787.30 an ounce.
European shares closed sharply lower. The pan-European Dow Jones Stoxx 600 index slipped 1.3% to 365.82. The German DAX 30 lost 1.5% to 7,667.03, the French CAC-40 fell 0.9% to 5,561.13. The UK's FTSE 100 closed down 1.1% at 6,359.60.
In the emerging markets, the Bovespa in Brazil surged by 2.7% to 64,430 while the IPC index in Mexico dropped 1.6% to 29,170. The RTS index in Russia was down nearly 1.2% at 2217 and the ISE National-30 index in Turkey slid 1.9% to 69,494.
Asian markets were down anywhere between 1.5% to 3.5%, with Hang Seng in Hong Kong falling by over 1,000 points and the Nikkei in Tokyo down over 300 points. Regional exporters led the fall after the yen strengthened against the dollar.
Mizuho Financial Group and National Australia Bank dropped on concern that banks may report widening losses linked to US sub-prime mortgages. BHP Billiton climbed after its mines in Chile resumed production following an earthquake and the Wall Street Journal said Rio Tinto was considering a counter bid.
The Morgan Stanley Capital International Asia Pacific Index fell 1.6% to 158.74 as of 11:04 a.m. in Tokyo. All 10 industry groups dropped, with a group of financial stocks as the biggest contributor to the decline.
Stock benchmarks in other Asian markets open for trading fell, except in New Zealand.
Choppiness to prevail!
Markets ended weak ahead of the weekend as traders preferred booking some profits after yesterday’s 800 points rally. The focus was more upon the Mid-Cap and the Small-Cap stocks as they outperformed the major indices by gaining over 1.5% each.
Selling pressure was witnessed in the Banking, IT and select Power stocks. Among the heavyweights ICICI Bank, Infosys, HDFC Bank and Reliance Industries were the major losers. While, telecom major Bharti Airtel, ITC and L&T held the benchmark Sensex form a huge fall.
Finally, benchmark Sensex lost 144 points to close at 19,784. NSE Nifty closed 25 points lower at 5,912.
Refinery stocks were the star performers of the day. Post the sharp run up in the stock price of Reliance Petroleum, the valuation gap between the public sector refining companies (BPCL, HPCL. IOC, MRPL, BRPL and CPCL) had increased considerably. Rally in stock prices of the PSU refining companies, today could be an attempt to bridge the gap.
Bongaigaon Refinery sky rocketed by over 30% to close at Rs105, MRPL jumped over 22% to Rs128, BPCL was up 17% to Rs426 and Hindustan Petroleum surged 15% to Rs299.
Essar Oil
Fertilizer stocks were also in the limelight as the government announced its plans to issue Rs75bn worth of bonds to pay for compensation to be awarded to fertilizer makers after officials agreed to sell farmers growing agents at below- market prices. Nagarjuna Fertilizer rose over 8.5% to Rs71, RCF surged over 9% to Rs78 and Deepak Fertilizer was up 2.5% to Rs150.
Sugar stocks were on the receiving end after the
ACC gained 1% to Rs1055. According to reports the company decided to transfer the ready mix concrete business to its wholly owned subsidiary ACC Concrete for a consideration of ~Rs1bn. The scrip touched an intra-day high of Rs1087 and a low of Rs1036 and recorded volumes of over 2,00,000 shares on NSE.
Reliance Industries marginally slipped 0.5% to Rs2875. Reports stated that the company would buy two helicopters in December for its offshore work. The scrip touched an intra-day high of Rs2910 and a low of Rs2850 and recorded volumes of over 26,00,000 shares on NSE.
Bharti Airtel
DLF advanced 2% to Rs949 after reports stated that the Malaysia’s Columbia Asia Group of Hospitals to construct 100-bed multi-spatiality hospitals in DLF townships. The scrip has touched an intra-day high of Rs957 and a low of Rs927 and has recorded volumes of over 19,00,000 shares on NSE.
Stocks in News:
TCS wins a US$200mn four-year outsourcing deal from Social Security Institute of Mexico (IMSS).
Ranbaxy recalls 75mn tablets of 600mg and 800mg dosages of Gabapentin from the US.
RIL likely to face ban on future E&P contracts in Iraq due to signing of contracts with the Kurdish regional government.
Cairn India has submitted a declaration of commerciality for three discoveries in the northern appraisal area of Rajasthan block.
REL has been allocated two coal blocks in Orissa which would enable it to set up a pit-head 1,000MW power plant.
PTC India is likely to sell 40% of its financial services arm for Rs1.2bn to leading PE majors.
CESC to shortly initiate talks with the Jharkhand Govt for acquiring 1,000 acres in Dumka district for a 1,000MW thermal power station.
Lanco Infratech, GMR and Sterlite have bagged coal blocks in Orissa.
Dr Reddy’s anti-diabetes molecule Balaglitazone is expected to hit the world market by 2011.
ICICI Ventures is in discussion with Shalimar Paints for a likely buyout of the latter at around Rs4.5bn.
Icon Hospitality, a subsidiary of Royal Orchid Hotels has acquired Hotel Royal Orchid Central for Rs820mn.
SKF India aims to more than double its revenues over the next four years to Rs30bn. It has earmarked Rs4.2bn for building two new units.
Ashok Leyland has entered the 49-ton category with the launch of its new 4910TT truck.
Air India and Jet Airways lose market share in October on qoq basis to 17.6% and 21.5% respectively.
Kingfisher increases market share to 12.7%. SpiceJet, Indigo and GoAir have gained share over the previous month.
Pantaloon Retail plans to hive-off its sports business into a new entity, Planet Sports Retail.
Provogue India has picked up 51% in Pronet Interactive which is into developing social networking web sites.
Info Edge plans to expand in Middle East to hedge a likely slowdown in US clients' IT spending.
L&T launches tipper trucks in association with Swedish truck major Scania.
DLF Emporio, the country's first upcoming luxury mall in New Delhi will house 130 brands including 70 international brands.
Telecom Minister A Raja rules out the possibility of selling or auctioning 2G spectrum. He has reiterated the allotment of new telecom licenses based on first-come-first-serve policy.
DoT has allowed re-sale on international bandwidth which will lead to significant drop in bandwidth prices.
Peak power deficit hit 10-year high of 14.6% in April-October 2007.
The Government is planning to lay down standards for power equipment sets in an effort to facilitate faster execution of projects.
FII Investment Trend:
FIIs were net sellers of Rs1.53bn (provisional) in the cash segment on Thursday while the local institutions pumped in Rs5.86bn.
In the F&O segment, FIIs were net sellers of Rs30.87bn.
Foreign funds were net buyers of Rs9.52bn in the cash segment on Wednesday.
Mutual Funds were net buyers of Rs4.83bn on the same day.