If the facts don't fit the theory, change the facts. - Albert Einstein.
Unfortunately for the bulls, they can't ignore what has been happening in the US and other parts of the world. Though the bulls had a blast in the run up to Diwali, fresh turbulence in the global markets ensured that there were no fireworks when it mattered the most i.e. during the main Diwali week. As it turned out, the Sensex lost over 1,000 points last week (including the mahurat trading). So, Samvat 2063 ended with a whimper, though the Indian market (represented by the Sensex) after another spectacular year for the bulls. The new year has begun on a disappointing note, with the global markets deeply in the red, thanks to the resurfacing of the US sub-prime mess.
The news coming from Wall Street has not been good at all in the past couple of weeks. Top US banks have revealed more losses linked to the collapse of the housing sector. The dollar's downward spiral against major currencies has accelerated, fueling renewed concerns about the unwinding of the yen carry trade. This morning in Tokyo, the yen rose to a one-and-a-half-year high against the dollar as a slump in Asian stocks prompted investors to cut holdings of higher-yielding assets bought with money borrowed in Japan.
Asian stocks declined for a third day with the Nikkei 225 Average in Tokyo hitting a 52-week low of 15,139.26 in the morning session and the Hang Seng plunging by over a 1,000 points. Stock benchmarks slid in other Asian markets open for trading. China's CSI 300 Index slumped after the government ordered banks to increase their reserves to 13.5% of deposits, up from 13%. The move comes as the government seeks to cool an economy that expanded 11.5% in the third quarter.
In Friday's trading on Wall Street, the Standard & Poor's 500 Index slumped 1.4% after Wachovia Corp. announced losses on subprime-related investments, while Bank of America and JPMorgan Chase also said their earnings may suffer. After huge swings in either direction, the Dow Jones Industrial Average finished last week down 4%, and the S&P 500 ended down 3.7%. The Nasdaq Composite index was hit the hardest last week, finishing the week down 6.5%. Meanwhile, gold lifted further above $800 an ounce to its highest levels since 1980, and crude-oil briefly breached $98 a barrel, as the dollar plunged.
Federal Reserve Chairman Ben Bernanke said on Thursday that economic growth would slow noticeably in the US in the coming months while rising oil costs would boost inflation pressures. This week, global investors will turn to the September pending home sales index, October retail sales, and regional manufacturing surveys for November, for the latest snapshot on the ailing US economy. Bad economic data may lift market odds that the Fed will continue lowering interest rates, although Bernanke's uncertainty last week in testimony to Congress left some investors confused.
Coming to the local market, we expect a weak opening amid a global meltdown. Add to it the sharp slowdown in FII inflows and lack of new triggers, and what one can infer is that the undertone has turned bearish for the time being. One should not venture into the market in the near term as there are more chances of the key indices going down than rising to new highs. Wait for a clear direction to emerge from the ongoing volatility. Stick to a stock centric approach and buy only for the long term i.e. more than six months and above.
Redington India could be in action as the company is in the process of acquiring Delhi based NBFC called Easyaccess Financial Services. The NBFC would be focusing on meeting the financial requirements in the IT industry.
Bulls on holiday
The struggled continued for fourth straight trading session as bulls look to have gone on holiday. Weak negative cues from the US and the Asian markets dragged the key indices to open with negative bias as the session progressed key indices further lost ground as selling pressure in the index heavyweights like ICICI Bank, ONGC, SBI and Reliance Communication.
All the BSE sectoral indices ended on the receiving end with BSE Bankex and BSE Realty index being among the major losers.
Finally, benchmark Sensex lost 217 points to close at 19,072. NSE Nifty fell 72 points at 5,710.
M&M slipped 1.6% to Rs754. The company announced that they revised its interest to bid for Ford brands. The scrip has touched an intra-day high of Rs765 and a low of Rs746 and has recorded volumes of over 3,00,000 shares on NSE.
Maruti Suzuki edged lower by 0.5% to Rs994. The company yesterday announced that they secured order from multinational fleet operator Orix for 300 units of Versa. The scrip has touched an intra-day high of Rs1010 and a low of Rs961 and has recorded volumes of over 4,00,000 shares on NSE.
Bharati Shipyard marginally gained 0.4% to Rs709 after the company announced that they bagged an order worth Rs2.1bn from Germany based Opieolok Bereederungs to build two vessels. The scrip has touched an intra-day high of Rs720 and a low of Rs685 and has recorded volumes of over 14,000 shares on NSE.
IOC advanced 1.8% to Rs512 as reports stated that the company is in talks with various African countries to buy stakes in discovered oil and gas blocks. The scrip has touched an intra-day high of Rs530 and a low of Rs496 and has recorded volumes of over 11,00,000 shares on NSE.
Biocon was up by over 4% to Rs592 as the company announced that they are seeking to buy companies in US and
Amtek Auto dropped by over 6.5% to Rs436. The company declared that they purchased
Stocks in News:
Wipro seen in a Euro60 per share bid for French IT giant, CapGemini, according to international media reports.
Sterlite Energy, part of the UK listed Vedanta Resources plans to raise US$2bn from an IPO.
L&T in negotiations with global ship owners to build ships worth US$1bn in its shipyard.
Sale of 26% stake in IFCI may be delayed till March 2008 on debt conversion issue.
GAIL looking for an Indian partner for building a petrochemical and LNG terminal in Saudi Arabia.
KEC International may bag overseas contracts worth Rs9bn in the transmission and rural electrification segment.
NTPC, SAIL, amongst others, to form a SPV to acquire coal mines abroad.
Areva T&D may buy Indian manufacturers of power transmission and distribution equipment.
Reliance Power may bag its second Ultra Mega Power Project in Andhra Pradesh.
Power Grid Corporation to float Rs60bn tender for building transmission capacity to move excess power from North East.
Reliance Infrastructure may develop airports in Tier II and III towns in partnership with Jet Airways.
Adani Power to increase Mundra power plant capacity by 2,000MW; may go in for an IPO.
BSNL may award entire 23mn GSM line contract to Ericsson.
Satyam would invest Rs8bn to create IT infrastructure in Tamil Nadu in 3-4 years.
Reliance Industries seeks fourth extension for its second most prospective oil and gas block, D6, in the Mahanadi basin.
Diageo may buy 10-13% stake in United Spirits for US$500-
600mn.
Wockhardt is planning to spin off its innovative R&D business
into a separate company.
Power Grid Corporation is in talks with several telecom companies to share its infrastructure.
Unitech plans to raise US$700mn through an IPO in the Singapore Stock Exchange.
M&M has joined hands with leading American private equity, Apollo, in its race for Jaguar and Land Rover.
Money Supply (M3) increased by 22.5% in two weeks through October 26, the fastest growth in a decade
Inflation drops to five year low of 2.97% in the week ended October 27.
Government may regulate iron ore exports.
Eleventh five year plan targets GDP growth of 9%
The EPF Board may consider a proposal to invest in the stock market.
Dedicated East West Freight Corridor may take 10 years to complete instead of targeted five years
FII Investment Trend:
FIIs were net buyers of just Rs349.9mn (provisional) in the cash segment on Friday while the local institutions were net sellers of Rs5.3mn.
In the F&O segment, FIIs were net sellers of Rs2.19bn.