If you want the rainbow, you gotta put up with the rain.
A sudden change in weather can make people sick. The bulls may start coughing and sneezing and lose taste for things otherwise tempting. The unseasonal showers seem to have blown away and the Mumbai sky looks brighter than yesterday. However, one cannot say the same for the stock market today. The euphoria post the much expected 25bps rate cut by the Federal Reserve appears to have vanished in a jiffy. Suddenly fresh dark clouds have gathered on Wall Street over the subprime contagion and its wider fallout for the US financial sector.
US financial stocks had the steepest drop in five years after analysts said Citigroup may be short of capital and advised investors to sell the shares. Citigroup, the biggest US bank by assets slid the most since 2002 after CIBC World Markets said its dividend may be cut and Credit Suisse reduced its rating. Bank of America had its biggest decline in four years. In addition, retailers fell, led by Target, after consumer spending slowed more than economists forecast.
Taking the cues from Wall Street, stock markets across Asia are down sharply (1-3%) this morning though some markets have recovered some what. We expect a gap-down opening in our market given the weak trend across global equity markets. Also, as mentioned yesterday, FII inflows have tapered off in the past few days, and not much help is coming from local institutions either.
Having lifted the Sensex past the 20,000 mark and Nifty above 6,000, the market could well go through some consolidation (or correction). The volatility will be high. Day traders will have a tough time, while long-term bulls can buy the India story to stock up for a long journey. Don't be surprised if the bulls manage to pull back into the positive territory by the end of the day. Lighten your short-term portfolio and enjoy your weekend. Besides, you have a lot of Diwali shopping to do outside the stock market this weekend. Take some cash home.
The S&P 500 lost 41 points, or 2.6%, to 1,508.44. Financial shares, this year's worst-performing industry, led the slide with a 4.6% drop, the most since September 2002. The Dow Jones Industrial Average slumped 362 points, or 2.6%, to 13,567.87. The Nasdaq slipped 64 points, or 2.3%, to 2,794.83. More than 13 stocks fell for every one that rose.
Adding to the negative sentiment, Credit Suisse reported a 31% drop in profits on Thursday hurt by the US housing market and lower demand for buyout loans. Also pressuring stock were disappointing results from oil major Exxon Mobil.
The biggest US economic data - the monthly employment report for October - for the week will be announced on Friday before the opening bell. Both economists and Wall Street will be closely looking for signs whether the subprime mortgage crisis has spilled over to the broader economy.
Unitech could be in focus as the company has won a major land deal at Visakhapatnam. The real estate major will develop a total built-up area of 100mn sq. ft. Bharti and Idea might add to their losses as the Government seems to have accepted the tighter norms for fresh spectrum allocation to the existing players. On the other hand, RCOM could gain following upbeat comments made by Anil Ambani and due to the fact that it will gain from the new spectrum allocation rules.
Reliance Energy is another stock that might advance amid reports that it has bagged its first ever transmission order for the western grid. The company is also believed to have formed a transmission JV with Power Grid Corp. Another realty firm Omaxe could also be in the limelight as it has also won a bid to acquire a 19.5-acre land at Visakhaptanam. Shares of Circuit Systems India Ltd. and Net 4 India Ltd. will get listed on the bourses today.
Oil prices eased after hitting a new record high of $96.24 a barrel earlier in the day. Light, sweet crude for December settled 42 cents lower to $93.07 a barrel in afternoon trade on the New York Mercantile Exchange.
Market breadth was negative. Losers beat winners by 7 to 1 on the New York Stock Exchange on volume of 1.74 billion shares. Decliners topped advancers by nearly 5 to 1 on the Nasdaq as 2.58 billion shares traded hands.
Treasury prices gained, lowering the yield on the benchmark 10-year note to 4.35% from 4.47% a session earlier. The dollar, which hit yet another record low against the euro Wednesday after the Fed rate cut, recovered slightly on the European currency but was lower versus the yen.
Gold prices, which Wednesday topped $800 for the second straight session, retreated $1.60 to $793.70 an ounce.
European shares posted sharp losses as well, led by financial shares. The pan-European Dow Jones Stoxx 600 index started November in the red, falling 1.5% to 382.57. The French CAC-40 fell 2% to 5,730.92, the UK's FTSE 100 closed down 2% at 6,586.10 and the German DAX 30 slumped 1.7% to 7,880.85.
In the emerging markets, the Bovespa in Brazil tumbled by nearly 2% to 64,050 while the IPC index in Mexico was down over 2% to 30,806. The RTS index in Russia was flat at 2220 and the ISE National-30 index in Turkey dropped 0.3% at 73,161.
Asian stocks fell the most in almost two weeks, led by Mitsubishi UFJ Financial after analysts said Citigroup may be short of capital, renewing concerns that losses from US subprime loans will reduce profitability.
Samsung and Toyota paced exporters lower after US consumer spending rose less than forecast and manufacturing activity slowed more than estimated.
The Morgan Stanley Capital International Asia-Pacific Index lost 1.3% to 170.10 as of 9:30 a.m. in Tokyo, falling from a record. The Nikkei 225 Stock Average declined 1.9% to 16,554.02. The Hang Seng was down 767 points at 30,724. All regional markets open for trading declined.
Fed’s decision to cut its key short-term rate by a quarter percentage point lifted the Nifty index to breach the 6,000 mark in the opening trades. However, as the session progressed bulls were unable to hold on to their gains as selling pressure in the index heavyweights like Reliance Industries, Bharti Airtel, ITC and HDFC. The benchmark index fell from an intra-day high of 20,204 finally ending 113 points lower to close at 19,742 and Nifty lost 34 points to close at 5,866.
Tata Steel slipped 2.2% to Rs885. The company announced that it has signed a MoU with Vietnam Steel Corporation for a cold rolling mill complex. The scrip touched an intra-day high of Rs928 and a low of Rs873 and recorded volumes of over 21,00,000 shares on NSE.
IOC ended flat at Rs482. The company announced its plans to retail CNG via its chain of petrol pumps. The scrip touched an intra-day high of Rs495 and a low of Rs466 and recorded volumes of over 8,00,000 shares on NSE.
Wipro slipped 1.6% to Rs499. The company announced that they have formed a Joint Venture with CISCO to develop IT solutions across the globe. The scrip touched an intra-day high of Rs513 and a low of Rs493 and recorded volumes of over 5,00,000 shares on NSE.
Bharti Airtel India's largest mobile-phone operator, fell by over 6.5% to Rs940 posting its biggest drop in eight days after reports stated that India would increase fees for airwaves used to offer wireless services. The scrip touched an intra-day high of Rs1074 and a low of Rs113 and recorded volumes of over 63,00,000 shares on NSE.
Bajaj Auto slipped 1.8% to Rs2429. The company declared its October sales figures at 2,78,176 units (down 0.50%). The scrip touched an intra-day high of Rs2538 and a low of Rs2402 and recorded volumes of over 1,00,000 shares on NSE.
M&M gained 1.5% to Rs765 after the company registered a 45.8% growth in October ’07 with total domestic sales of 23,578 units as against 16,173 units in October ‘06. Cumulative sales including exports grew by 37.3% in October ’07 with total sales of 1,30,772 vehicles as against 95,253 vehicles for the corresponding period last year. Excluding
Maruti Suzuki has slipped 1% to Rs1064. The company announced that it sold 69,415 vehicles in October, 15% up from 60,163 units in the same month last year. Maruti, 54.2% owned by
Patni lost by over 6% to Rs377 after the stake sale was called off over differences over management control. The scrip touched an intra-day high of Rs409 and a low of Rs365 and recorded volumes of over 11,00,000 shares on NSE.
Pantaloon Retail was down 3% to Rs592. The company declared its unaudited financial results for the quarter ended September 30, 2007, wherein the gross turnover (Rs1176.27) for the quarter increased by 78.5%; net sales/ income from operations (Rs10.87bn) increased by 79.6%; PBIT (excluding extraordinary income) (Rs963.4mn) increased by 126.6%; and net profit (excluding extraordinary income) (Rs296.7mn) increased by 87%. The scrip touched an intra-day high of Rs627 and a low of Rs585 and recorded volumes of over 76,000 shares on NSE.
L&T bags Rs55.5bn order to build new integrated passenger terminal at Mumbai airport.
Unitech acquires 1,750 acre land in Vishakhapatnam for Rs33.3bn.
RCOM has earmarked more than Rs50bn to roll out GSM
services across the country.
The Hero Group is in talks with German auto major Daimler for a commercial vehicle (CV) venture.
HCL Tech plans to set up three technology hubs with investments of Rs27.5bn.
Reliance Energy Transmission (RET), Reliance Energy’s transmission arm, is set
to be awarded the first wholly owned private transmission project in the western region.
Ranbaxy has received tentative approval from the USFDA to make and sell the hypertension tablets, Valsartan.
The international port operator DP World of Dubai has approached SEBI with
string of complaints against Mundra Port and SEZ IPO.
The Board of Directors of Patni Computer has decided to search for a new CEO.
RCom is in the process of making its DTH arm ‘Reliance
BlueMagic’ a 100% subsidiary.
HTMT is in final stage of negotiations for acquiring two BPO companies in US
and one in the UK for US$300mn.
Hindustan Copper raises copper prices by 2.5% across all
categories to match international prices.
Suzlon plans to export products to 40 countries from the present 14 over the next five years.
Gitanjali Gems is close to acquiring a US-based jewellery retail chain.
Suven Life Sciences has secured two patents in Australia and New Zealand for its
New Chemical Entities.
Oil India and HPCL may jointly bid for exploration licensing in both upstream and downstream activities as well as CNG marketing and city gas distribution.
Eveready Industries plans acquisitions in the packet tea segment in Gujarat,
Maharashtra and UP.
Aptech is in the process of winding up its Bangladesh subsidiary, Aptech (WOS)
Bangladesh.
Maxis (Aircel) withdraws from the ongoing litigation between GSM operators and the DoT and TDSAT.
FII Investment Trend:
FIIs were net buyers of just Rs742.5mn (provisional) in the cash segment yesterday while the local institutions pumped in Rs562.2mn.
In the F&O segment, FIIs were net buyers of Rs11.61bn.
On Wednesday, FIIs were net buyers of Rs2.28bn in the cash segment.
Major Bulk Deals:
Merrill Lynch has sold Diamond Cables and Dynamic Tech; Morgan Stanley has bought Genus Power while Merrill Lynch has sold the stock; UBS has purchased Jyoti; JP Morgan has sold M&M; UTI has sold Marksans; Merrill Lynch has sold Prime Focus.
Upper Circuit:
Zandu Pharma, Lanco Global, Goldstone Tele, ABG Heavy, Marksans, Ferro Alloys, Alphageo and TCI Industries.
Lower Circuit:
RIIL, HFCL, Jai Corp, Assam Company, Marathon Nextgen and BF Utilities.