Year's end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us.
As we enter the last trading day of the year and get set to welcome 2008, the Indian market can look forward to much greater things. For today, the outlook is just fine, with the bulls in command of the situation, though traded volume might take a hit due to the holiday mood. Many global markets are shut and may not provide great signals. So, expect some choppiness as well during the day. The key indices will extend their gains but could run out of gas later in the day. It’s been a wonderful year so investors will have no regrets on how it ends.
The bulls will continue to dominate in 2008, though things might remain volatile amid a fragile external environment. The biggest threats and dangers will be further slowdown in the US and elsewhere in the world. A lot has been said and written about the "decoupling" theory wherein emerging markets such as India may not be hurt by a recession in the US. This may be partly right and partly misplaced. So, one has to keep oneself abreast with the latest developments in the global arena to take a call on the local market.
A sharper than expected slowdown in the global economy, led by the US, may have some negative implications for India, though eventually we may be able to overcome any temporary blips. For that to happen, India Inc. would need to continuously deliver the goods and so will the Government. With general elections scheduled for next year (unless there is a sudden course correction), expect some populist measures in the budget. No big bang reforms are expected with the Congress firmly on the backfoot. One will also have to keep a tab on interest rates movement, both globally and locally, besides the state of the Indian economy.
All in all, we are all set for an interesting new year ahead of us. The now well articulated long-term growth story will no doubt continue. At the same time, there will be a few challenges and hurdles that we will have to deal with effectively. Traders, investors and all the other participants will continue to benefit, as the current bull run enters a new phase.
Shares of Brigade Enterprises and eClerx will get listed today. Brigade Enterprises is likely to list in the band of Rs340-360, according to the grey market. It can touch Rs400 intraday. eClerx is likely to list in the band of Rs 410-420. It can touch Rs 435 intraday.
The Board of Advanta India will meet on January 2, to consider acquisitions. Cambridge Technology's Board has approved conditionally, the acquisition of Q-Soft Systems & Solutions, a managed services company in Bangalore. NovaGold Petro Resources' Board will meet on January 1, to consider the possibilities of diversification in various other business areas and a preferential / rights issue to meet future capex requirements.
Alok Industries has deferred the decision to consider a Preferential Allotment of Warrants to the Promoter Group and a Foreign Investor in more detail. Country Club has allocated 18,80,322 shares at Rs770 per share under the Qualified Institutional Placement (QIP).
US stock benchmarks closed nearly unchanged on Friday after yet another choppy session, as lingering worries about the ongoing housing sector mess and tight credit conditions dented hopes of a Santa Clause rally.
A bleak report on new home sales reminded Wall Street that the world's biggest economy is still not out of the woods as far as the meltdown in the housing sector is concerned. Financial shares led the fall after an initial spurt.
Citigroup, Bank of America and JPMorgan Chase erased early gains after a report showed that new-home sales fell to a 12-year low in November, indicating that the correction in the housing sector will continue to hurt economic growth in 2008.
The S&P 500 index added just 2 points, or 0.1%, to 1,478.49, extending its fifth consecutive annual advance. The Dow Jones Industrial Average rose 6 points, or 0.1%, to 13,365.87. The Nasdaq Composite Index fell 2 points, or 0.1%, to 2,674.46.
The S&P 500 lost 0.4% for the week, while the Dow slipped 0.6% and the Nasdaq dropped 0.7%.
For the year, the Dow is up 7.4% versus last year's almost 15% gain. In 2005, it had risen by 3.16%. The Nasdaq, on the other hand, is up more than 9% for the year. The S&P is on track for a yearly gain of 4.2%.
Market breadth was mixed on Wall Street. About the same number of stocks rose as fell on the New York Stock Exchange. Traded volume was once again subdued, in line with the trend through the week, as many market participants chose to take a long year-end break.
Stocks rallied at the opening bell on a report that top US banks could sell off some of their non-strategic assets to shore up their balance sheets amid the current crisis in the credit markets. But those gains proved to be short lived following the release of data on new home sales.
Key indices sank to session lows by mid-day but turned mixed by the day's close.
More housing data is expected in the US today. A report on existing home sales for November will be released. US financial markets will be closed on Tuesday for the New Year's Day holiday.
Asian markets were mostly higher this morning amid thin volumes, rising by 0.2% to 1%. Markets in Japan, China, Thailand and Philippines are closed on account of New Year holidays. The Pakistani stock market was expected to re-open in Karachi after a three-day state mourning following the assassination of former Prime Minister Benazir Bhutto, on Dec. 27. The Hang Seng in Hong Kong was up 203 points at 27,573 while the Taiex in Taiwan gained 38 points at 8435 and the Straits Times in Singapore added 22 points at 3467.
European shares ended a three-session winning streak on the last full trading session of 2007, as traders failed to find inspiration after gloomy economic data on both sides of the Atlantic and thin volumes. The pan-European Dow Jones Stoxx 600 index fell 0.2% to 364.39. The UK's FTSE 100 lost 0.3% to close at 6,676.90 and the French CAC-40 finished nearly flat at 5,627.25. The German DAX 30 ended a holiday-shortened trading session - its last of the year - with a gain of 0.4% to 8,067.32. Markets in London, Paris, Amsterdam and Brussels will have a half-session on Monday, while the German and Swiss stock market will be shut.
In the emerging markets, the Bovespa in Brazil rose 0.2% at 63,886 while the IPC index in Mexico gained 0.2% at 29,700. The RTS index in Russia ended almost unchanged at 2290 and the ISE National-30 index in Turkey advanced 0.7% at 70,755.
Bulls struggle in breaking new ground
The bulls wished a good buy to last week of 2007 in style by recording its longest winning streak in 2 months. Although the day was dull and range bound both the key indices ended the week with gains of 5% each.
Markets showed resilience on Friday closing the day flat when most of the indices dropped amid renewed geo-political concerns after former Pakistani Prime Minister Benazir Bhutto was killed in a suspected suicide attack in Rawalpindi, Pakistan.
Coming to sector specific movements on Friday; the realty stocks were back in action, the index was (up 3.9%), BSE Metal index (up 2.4%) and BSE FMCG index (up 1.2%). The Small-Cap and the Mid-Cap stocks also continued to be in momentum both the index gained over 1.5%.
Among the 30-scrips of Sensex, DLF, ITC, HDFC and BHEL were among the major gainers. However, Bharti Airtel, ICICI Bank and ONGC were among the major laggards. Finally, 30-share Sensex closed flat at 20,206 and Nifty ended flat at 6,079.
Electrosteel Casting surged by over 4.5% to Rs86 after the company declared that they would sell 12.2mn warrants at Rs81 per share to Stemor Metals. The scrip touched an intra-day high of Rs86.55 and a low of Rs82 and recorded volumes of over 47, 00,000 shares on NSE.
Reliance Communication edged higher by 0.5% to Rs734. Reports stated that the company has slapped legal notice to DoT asking to freeze allocation of additional spectrum to existing GSM players. The scrip touched an intra-day high of Rs739 and a low of Rs722 and recorded volumes of over 22, 00,000 shares on NSE.
DLF gained 5.5% to Rs1065 following reports that the company plans to raise US$5bn over the next three years by listing five of its business units including DLF Homes, DLF Retail, DLF Hotels, DLF Utilities and DLF Infrastructure. The scrip touched an intra-day high of Rs1072 and a low of Rs1000 and recorded volumes of over 24, 00,000 shares on NSE.
REL advanced 1.2% to Rs2158 after reports stated that SEBI cleared deck for Reliance Power IPO by disposing complaints against the offer and asking promoters to lock-in entire 20% of their contribution for five years. The scrip touched an intra-day high of Rs2219 and a low of Rs2126 and recorded volumes of over 32, 00,000 shares on NSE.
Suven Life Science rallied by over 10% to Rs61 after reports stated that the company secured first US patent for central nervous system (CNS) compounds. The scrip touched an intra-day high of Rs64 and a low of Rs54 and recorded volumes of over 84, 00, 00,000 shares on NSE.
HPCL gained 2.2% to Rs343 after reports stated that the company may raise over Rs700cr via OIL Bonds sale next week. The scrip touched an intra-day high of Rs349 and a low of Rs328 and recorded volumes of over 21, 00,000 shares on NSE.
NTPC edged higher by 0.5% to Rs241 following reports that the company was in talks with Bharat Forge for Power Equipment Joint Venture. The scrip has touched an intra-day high of Rs245 and a low of Rs238 and has recorded volumes of over 47, 00,000 shares on NSE.
Unity Infraproject rallied by over 14% to Rs1039 after the company announced that it secured Letter of Intent for mall contract. The scrip has touched an intra-day high of Rs1080 and a low of Rs899 and has recorded volumes of over 1, 00,000 shares on NSE.
What the FIIs are doing
FIIs were net buyers of Rs6.54bn (provisional) in the cash segment on Friday while the local institutions pumped in Rs1.67bn. In the F&O segment, foreign funds were net sellers of Rs4.77bn.
On Thursday, FIIs were net buyers of Rs9.4bn in the cash segment. Mutual Funds were net buyers of Rs7.16bn on the same day.
Stocks in News:
Bharti Infratel, a wholly owned subsidiary of Bharti Airtel, has agreed to divest ~7.5-9% to a clutch of international investors for Rs40bn. (BS)
The New York State Banking Department has cleared SBI’s application for opening another branch in USA. (BS)
IOC may have to review its capital expenditure plan if fuel prices are not revised quickly. (BS)
Nalco is expected to complete its Rs50bn expansion plan by CY08. (BS)
Reliance Retail has entered into a distribution tie- up with Bata India; to retail its private labels through Bata outlets. (ET)
IOC, along with Oil India, is expected to join hands with Reliance Industries for exploration in the latter’s oil block in East Timor. (BL)
Suzlon Energy has received shareholders' approval for stock-split in the ratio of 1:5. (BL)
RCF has signed a MoU with GAIL for jointly setting up coal gasification project at Talcher in Orissa. (BL)
Fortune Park Hotels, a subsidiary of ITC will be investing ~Rs1.3bn to build 3-4 hotels in Bangalore, Coimbatore and Kolkata. (BL)
Bajaj Auto, Renault-Nissan to wrap up JV talks by the end of January. (ET)
NMDC has decided to raise long-term contract prices of iron ore fines by a steep 47.5%, bringing the price to Rs1,783 per ton. (Mint)
HDIL is planning to set up a 5,547 acre SEZ in the city. (DNA)
Bilcare Singapore, subsidiary of Bilcare has raised US$90mn through issue of 4% convertible bonds, due 2012. (BL)
Tech Mahindra is looking for growth in Scandinavia and Israel through organic and inorganic routes. (Mint)
Kinetic Engineering is setting up a new gear shop exclusively for passenger cars at its Ahmednagar facility with an investment of Rs500mn. (FE)
Sintex Industries plans to invest Rs1.5bn in its textile business and diversify into garmenting and hosiery for export market. (BL)
Starbucks, the world’s leading coffee chain, has entered into a distribution tie-up with PVR for its select products. (ToI)
GHCL has set up a subsidiary for exclusively handling procurement for the group’s textile retail business in India and overseas. (BL)
Lakshmi Mittal is seeking partnership with HPCL for expansion of refineries in Congo and Nigeria. (ET)
Time Technoplast is eyeing 2-3 acquisitions in the solar energy space. (DNA)
Mastek expects 60-70% growth in revenues from the US over the next three years, seeks buyouts. (DNA)
Infosys is trying to finalize a Rs60bn bid with Capgemini. (Mint)
The kitchen appliances unit of TTK Group, TTK Prestige, wants to triple its sales to Rs10bn by FY10. (Mint)
Posco India is hopeful of starting work on its proposed integrated steel plant near Paradip from April 1, 2008. (BS)
The Government may allow FDI in retail in three phases. (ET)
The WPI-based annual rate of inflation declined to 3.45% for the week ended December 15 against 3.65% in the previous week. (BS)
The Government is likely to finalize the price increase for oil products at a GoM meeting sometime in the second week of January. (BS)
The Government is unlikely to extend sops given to sugar mills for exporting the sweetener beyond April 2009. (ET)
The Government may raise the quantum of sugar stocks for which it pays storage costs or extend the time period for which it will pick up the tab to help ailing mills. (BS)
The Government plans to increase FDI limits in select broadcasting activities to 74% in order to align it with the telecom sector. (BL)
During January and October 2007, tea exports fell to 132mn kg from 174mn kg last year. (BL)
The minimum export price for all non-basmati rice has been hiked from US$425 (Rs17,000) a ton FOB to US$500 (Rs20,000) a ton. (BL)
Domestic steel capacity is likely to touch 60mn tons by the end of FY08 from current 84mn tons. (BL)
SEBI has decided to scrap the entry load on open-ended mutual fund schemes. (ET)
Oil explorers and refiners might get substantial tax breaks in the forthcoming budget. (ET)
The Government is planning to put further restrictions on iron export by introducing a system of royalty for minerals. (ET)
Competition Commission of India suspects cartelisation amidst Indian PSU banks. (ToI)
Competition Commission of India says that competitive bidding is the right method of allocating scarce spectrum to telecom service providers. (FE)
The Rs250bn consumer durables sector has registered a growth of 12% in 2007. (FE)