Make your own recovery the first priority in your life.
Over the weekend, hopes were that the bulls would fight back the way Indian cricket team has done Down Under. But any expectations of a quick bounce back on Monday morning have more or less been laid to rest thanks to the weakness in most Asian markets. Technically, the market looks pretty weak. Further stop losses could get triggered as key support levels are being broken. The short-term trend appears lower with lots of volatility.
Today, we expect another weak opening on the back of last week's super selloff. Bulls have got their backs against the wall. There may be some recovery on an intra-day basis or even on a closing basis. Avoid getting trapped in temporary rallies, unless you are a long-term investor.
Sona Koyo group is set to announce an acquisition later in the day. In the coming days, Patel Engineering is also expected to announce a placement. Core Projects is another company where some activity is expected in the coming weeks.
FIIs have been selling heavily over the past few sessions. This trend has to change for the sentiment to turn around. Domestic institutions may not be able to support the market in the face of mounting global concerns, especially with regard to the US economy.
Further weakness is on the cards given the lingering fears about an impending recession in the US and its implications for the global economy. One should stay on the sidelines and wait for the undertone to improve. Global trends will continue to determine market direction here. What could re-invigorate world equity markets is an immediate stimulus package from Bush government and a possible 100-basis-point cut from the Fed.
Reduction in local interest rates, which is likely to pan out over the next few months, would also act as a catalyst for the bulls' come back. One should brace for a really bumpy ride over the next few days (exactly how many is difficult to predict). Having said that, those who like the 'buy-and-hold' strategy, should see this as a golden opportunity to pick up quality stocks for the long term.
FIIs were net sellers of Rs21.47bn (provisional) in the cash segment on Friday while the local institutions were net buyers of Rs6.96bn.
In the F&O segment, FIIs were net sellers to the tune of Rs29.83bn.
On Thursday, FIIs were net sellers of Rs21.86bn in the cash segment.
US stocks slipped on Friday. The Dow Jones industrial average lost 0.5%, according to early tallies, and ended at a fresh 10-month low. The broader S&P 500 index lost 0.6% and ended at a 15-month low. The Nasdaq Composite lost 0.3% and ended at a 14-month low.
The Russell 2000 small-cap index fell 1.1% and closed at an 18-month low. The Russell is now down more than 20% from its all-time high hit last July, the technical definition of a bear market.
Treasury prices were little changed and the dollar was mixed versus other major currencies. US light crude oil for February delivery rose 44 cents to settle at $90.57 a barrel on the New York Mercantile Exchange. COMEX gold for February delivery rose $1.20 to settle at $881.70 an ounce.
The S &P 500 declined 5.4% last week to 1,325.19, the lowest level since September 2006. The benchmark for US equities has tumbled 9.8% this year, its worst-ever start. The Dow dropped 4% to 12,099.30, extending its 2008 slump to 8.8%. The Nasdaq lost 4.1% to 2,340.02.
The Russell 2000 Index dropped 4.5% to 673.18. The small-company index's 21% retreat from a July record puts it in a bear market for the first time since 2002.
US stocks initially bounced back on Friday morning. But the gains proved short-lived as the financial sector again tumbled and investors shrugged off the Bush Administration's proposed fiscal stimulus plan.
President Bush acknowledged that there are areas of real concern in the US economy and urged Congress to pass a fiscal stimulus package quickly. He said it should be quick and temporary, include tax incentives for small businesses and tax relief for Americans which should be equivalent to about 1% of GDP, or about $140bn to $150bn.
Speaking after Bush, Treasury Secretary Henry Paulson said the Bush administration estimates that the stimulus package would mean around half a million new jobs being created.
While relief in the form of both fiscal and monetary policy would be a positive, the details of any package and the extent of future rate cuts remain unknown, and therefore Bush's speech did not seem to reassure markets on Friday.
Shares in London finished flat. The FTSE 100 in London closed nearly unchanged at 5,901.70. But, other European markets lost ground. The pan-European Dow Jones Stoxx 600 index lost 1.1% to 327.53. The French CAC-40 dropped 1.3% to 5,092.40 while the German DAX 30 fell 1.3% to 7,314.17.
Most Asian stock markets are down sharply this morning. The MSCI Asia Pacific Index lost slid 2.2% to 143.52 at 11:16 a.m. in Tokyo, adding to a 7% decline this year. All 10 industry groups fell and all Asian benchmarks retreated.
Japan's Nikkei 225 Stock Average dropped 3.4% to 13,395.28, while the broader Topix slid 3%.
Bulls hope to recoil!
Last trading session of the week turned out to be the nastiest one as bears looked to be in absolute control. Bulls were unable to show up on the bourse even for a moment on Friday as weakness in the US markets on back of a possible recession setting in the economy in combination with panic selling all over dragged the benchmark Sensex nearly 800 points intra-day.
A swift recovery in the Asian markets was overlooked as retail investors which were active in the previous round of up run faced margin calls. Markets further slid during last hour as the psychological Nifty 5,800 mark was breached as a lot of delivery based selling was witnessed in the index heavyweights like Reliance Industries, ICICI Bank and L&T.
Finally, 30-share Sensex closed at 19,013 plunging 687 points and Nifty lost 207 points to close at 5,705.
Wipro slipped 2% to Rs454. The company reported a consolidated net profit of Rs8.54bn for the fiscal third quarter ended December 31, 2007 as against Rs8.14bn in the previous quarter. This translates into a sequential growth of almost 5% and posted net sales of Rs53.4bn versus Rs47.85bn in the second quarter, representing a QoQ growth of 11.6%. The scrip touched an intra-day high of Rs464 and a low of Rs442 and recorded volumes of over 7,00,000 shares on NSE.
ITC was down 2.3% to Rs212. The company declared its Q3 profit at Rs8.31bn (up 15.8%) and net sales at Rs34.58bn (up 9.2%). The scrip touched an intra-day high of Rs220 and a low of Rs208 and recorded volumes of over 88,00,000 shares on NSE.
HDFC slipped 1.5% to Rs2810. The company announced its Q3 net profit at Rs6.49bn (up 82%) and revenue at Rs21.55 (up 47.8%). The scrip touched an intra-day high of Rs2879 and a low of Rs2780 and recorded volumes of over 6,00,000 shares on NSE.
HCC plunged by over 8% to Rs1695. The company announced its Q3 result with net profit at Rs250.5mn (up 13.9%) and net sales at Rs7.5bn (up 39.9%). The scrip touched an intra-day high of Rs216 and a low of Rs190 and recorded volumes of over 26,00,000 shares on NSE.
NDTV slipped 3.5% to Rs445. The company’s profit after tax on a like-to-like comparison with same quarter last year was Rs105.7mn compared to Rs70.6mn last year for the same period, a growth of 50%. The company’s standalone revenue was up 33% yoy. Revenues for Q3, FY08 touched Rs895mn compared to Rs675mn in the same quarter last year. The scrip touched an intra-day high of Rs469 and a low of Rs441 and recorded volumes of over 78,000 shares on NSE.
KPIT Cummins declined 6% to Rs107. The company announced its Q3 result registering revenue of Rs1.51bn during Q3FY08 a 29.09% growth over the corresponding period in the last financial year. The company earned a net profit of Rs141.30mn. The scrip touched an intra-day high of Rs117 and a low of Rs105 and recorded volumes of over 1,00,000 shares on NSE.
ONGC slipped 3% to Rs1211. According to reports the company’s unit may sign a deal with Iran's Petropars Ltd. to buy a stake in the Kish oil block. The scrip touched an intra-day high of Rs1259 and a low of Rs1198 and recorded volumes of over 19,00,000 shares on NSE.
Essar Shipping was locked at 5% upper circuit to Rs232.45 after reports stated that the company may merge its oilfield services arm. The scrip touched an intra-day high of Rs232. 45 and a low of Rs216 and recorded volumes of over 49,00,000 shares on NSE.
Unity Infraprojects surged by over 4% to Rs910 after the company announced that they secured order from Magarpatta Retail Pvt Ltd for civil construction works of the proposed building for Magarpatta Retail Mall Project at Magarpatta City, Hadapsar, Pune. The contract value is Rs1.02bn and the project is to be completed with 9.5 months from commencement of work. The scrip touched an intra-day high of Rs955 and a low of Rs880 and recorded volumes of over 71,000 shares on NSE.
With markets being takeover by the bear storm, bulls would look to spring back. But for that, some stability should return in the global markets. This month all eyes would be on the quarterly results announcement in the coming weeks. It is advisable for traders & investors to avoid day trading on back of wild intra-day gyrations (volatility) and should look to pick fundamentally strong stocks as most of the frontrunners have corrected considerably.
News Snippets:
The Government has issued bonds worth Rs112.5bn to three public sector oil marketing companies - HPCL-Rs23.5bn, IOC-Rs63.6bn, BPCL-Rs25.4bn. (ET)
Reliance Industries plans to produce 30-40mn cubic meters of gas a day from six finds in the Mahanadi block with an investment of US$1.14bn. The company acquires 1,000 hectares for Mumbai SEZ. (BS)
In a PE deal, SBI has picked up 7.8% equity in the Orissa-based ARSS Infrastructure Projects Limited. (BS)
ICICI Venture to pick up stake in Nariman Point Building & Services, the holding company for the Indian Express Newspapers (Bombay). (BS)
SEBI has asked Heidelberg Cement AG to acquire shares of Mysore Cements from the SK Birla group, at the same price at which it bought shares from public shareholders by open offer.
The merger between SBI and seven of its associates is expected to take time, as it requires the SBI (Subsidiary Banks) Act to be repealed by the Parliament. (FE)
Reliance Power, Jindal Steel & Power and L&T are among nine companies that have qualified for 2000-MW Talwandi Sabo coal-based thermal power plant at Mansa in Punjab. (ET)
Hero Honda says it is considering using excess capacity at its existing factories to make components and export motorcycle kits after a new factory at Haridwar, Uttarakhand starts production in April. (Mint)
To support its huge expansion plans, BSNL might have to resort to an IPO in three years’ time, says its CMD. (BS)
L&T is being promoted as the Bhel-II for manufacturing power equipment required for large super critical thermal power plants. (ET)
Wipro Consumer Care & Lighting, in an attempt to widen its product portfolio, is entering the Rs27bn skincare market. (Mint)
Container Corporation of India may tie up with Bharti-Wal-Mart to procure and supply fruit to the retailer. (ET)
LIC Housing Finance to make preferential offer of 8.4mn shares to two institutions. (BL)
Five Bidders, including American Tower and Essar have been shortlisted by Tata Teleservices for selling stake in its tower business. (ET)
HDIL plans to invest Rs40bn in the cyber city in Kochi, Kerala. (BS)
L&T expects revenues of US$140mn from the switchgear business of Malasia’s Tamco, which it plans to acquire. (BS)
M&M Financial Services to raise Rs4.1bn through preferential allotment of 11.2% to TPG-Axon and Standard Chartered Private Equity. (ET)
Parsvnath Developers has announced an investment of Rs600bn in next five years in SEZs, airports, express ways and retails business. (BS)
Gayatri Projects plans to foray into the power generation sector and is scouting for a partner for the JV. (BS)
Essar Steel to bid for Millennium Iron Ore Range, one of the largest known undeveloped magnetite iron ore deposits in the world, owned by Canadian company New Millennium Capital Corp (NML). (BS)
Honda Motor will introduce its 20% ethanol compatible cars in India in 2008. (BL)
Wockhardt plans to list its R&D arm on January 1, 2009. (BS)
HPCL plans to enter the petrochemicals business by acquiring a strategic stake in Andhra Petrochemicals (APL). (Mint)
Emaar MGF to announce an IPO of US$1.6-1.8bn. The issue will begin on Feb. 1 and will close on Feb. 6. The price band is Rs610-690.
Emaar MGF and Fortis Healthcare plan to form a JV to set up 25 hospitals across major cities in India, with an investment of Rs12bn.
Ispat Industries and JSW Steel plan to cash in carbon credits incentives, by recycling waste gases into energy fuels. (TOI)
Roche files a patent infringement suit against Cipla over lung cancer drug Tarceva. (BL)
An arm of the Government of Singapore Investment Corporation (GIC) has picked up a stake in ECL Finance, NBFC subsidiary of Edelweiss Capital. (BS)
Mayawati has announced that private sector firms executing projects for the state government will have job quotas. (BS)
Bankers expect interest rates to remain stable as liquidity is at comfortable levels. (BS)
Over 300 life-saving medicines may become cheaper by at least 25%, if the finance ministry considers a proposal to provide customs and excise duty waivers on all drugs that are part of the National List of Essential Medicines (NLEM). (BS)
The investment advisory committee of the IRDA has suggested some changes to make investment norms more flexible for insurance companies. (BS)
The DoT has come out with a revised subscriber-linked policy for spectrum allocation to GSM operator which is in line with the recommendations made by the Trai. (BS)
The Centre has asked states to cut sales tax on aviation turbine fuel. (BL)
Pension Fund Regulatory and Development Authority will allow investment of money under the New Pension Scheme in stock markets only through index funds in the initial years. (BS)
The finance ministry has cut customs duty on 539 items under the CECA with Singapore. (BL)
Peak Customs duty, which stands at 10%, is unlikely to be cut following slowdown in the manufacturing sector. (ET)
Coal mining may get infrastructure status in Budget 2008. (ET)
The Railway Board hikes demurrage, stabling and wharfage charges. (BL)
Paper manufacturers have demanded rationalization of customs and excise duties on paper and paperboard, (BL)
Bhutan may allow 100% FDI investment by Indian companies in Hydel Power space. (BL)
Maharashtra government has invited global tenders for developing terminal markets in Mumbai, Nashik and Nagpur. (BL)
The SC has stayed an order of the Allahabad HC, quashing the advisory price for the FY07 season fixed by the UP government. (FE)