Everybody gets so much information all day long that they lose their common sense.
Can the equity markets in India and other developing countries continue to be resilient in the face of mounting evidence that the US is heading for a recession sooner or later? We see a slight fall at the opening bell, following the overnight crack on Wall Street and some weakness in Asian markets. However, the bulls may just rebound as Asian markets have recovered from steep falls early in the morning. The trend later in the day will be dictated by movement in global markets. Expect the intra-day gyrations to continue unabated, as investors are looking for some key results before taking a call. Lots of stock centric action is also expected. The small- and mid-cap space may remain in the limelight one way or the other.
Meanwhile, the results season is well underway and a few earnings reports are already out. This morning, IT firm iGate Global Solutions has come out with what seems to be good set of numbers. But, the company has applied to regulators for delisting and is awaiting their approval. The company has set a delisting price of Rs410 per share. The stock closed yesterday at Rs397 and hasn't moved at all in the past one month. Another software company, Mastek will announce its results later in the day. This will set the stage for the biggest IT result - that of Infosys - on Friday. The market is eagerly awaiting whether Infosys numbers will be better than the last two quarters and whether it will give a positive outlook for the year. Some experts are negative on the sector over the long-term, barring a few who might outperform, while others are not so pessimistic after all. Lehman Brothers has apparently upgraded all the top IT firms ahead of their results.
Metal stocks could be under some pressure amid reports that the Government is considering sifting to an Ad Valorem rates of royalty on all sorts of ores. Unitech, HFCL, BPL, RCOM, Idea and Shyam Tele could gain as a financial daily says that these companies will get LoIs from the DoT soon. What they will do with it remains to be seen. 3i Infotech, Aztecsoft and MindTree will attract attention amid reports of some M&A action. TVS Motor might gain as the Supreme Court has refused to stay the sales of its 125 cc bike, the Flame.
Wall Street has never had such a bad start to a new year. Year-to-date, the S&P 500 has lost about 5.3%, the Dow is down 5.1% and the Nasdaq has shed 8%. There is a school of thought that believes that India could be the least affected by a steep slowdown in the US, as its growth story is more rooted in local factors. Rising consumption coupled with the ever-increasing investments in infrastructure will continue to drive profits of India Inc. Add to this a possible rationalization in direct tax rates and a possible rate reduction later in the year and the story looks even more compelling. Having said that, a protracted recession in the US and a global economic slowdown will surely have some dampening effect on India.
Results Today: Axis Bank, iGate Global, Mastek, Sayaji Hotels, South India Bank, Dolat Investments and Compact Disc India.
Saurashtra Cement has said that the Gujarat High Court has approved the CDR Scheme for restructuring of the debt of the company's Secured Lenders. A certified copy of the order of the Gujarat High Court is awaited.
SREI Infrastructure Finance has launched the first Shariat compliant instrument, a US$50mn facility arranged and book run by HSBC. The syndication has received overwhelming response from investors in Asia and Middle East, says SREI Infrastructure Finance.
DBG Retail Holdings, a 100% subsidiary of Koutons Retail India, plans to acquire 51% or more stake in Touchwood International, the owner of 'Upper Class' brand and which has presence in the ladies and gents segment.
EMCO Board will consider a stock split on January 17.
Sarda Energy & Minerals says that due to worker unrest, the operations at its iron ore mines have been suspended temporarily. Meanwhile, the company has signed a MOU with the Government of Chhattisgarh for installing a 1100 MW Thermal Power Plant in the state.
US stocks tumbled on Tuesday, continuing the grim start to the new year, on growing concerns that the world's biggest economy could slip into a recession amid the current turmoil in housing and credit markets. The Dow Jones Industrial Average had its worst first five trading days of the year ever.
A worse-than-forecast home sales and a warning by AT&T on weaker customer spending sent the Standard & Poor's 500 Index to the lowest level since March. AT&T declined the most in almost five years after CEO Randall Stephenson said the biggest US telecom firm faces softness in its consumer business.
Countrywide Financial tumbled the most since October 1987 on concern that the largest US mortgage lender is short of cash.
The S&P 500 dropped 26 points, or 1.8%, to 1,390.19, the lowest since March 16. The Dow slumped 238 points, or 1.9%, to 12,589.07. The Nasdaq Composite Index fell 59 points, or 2.4%, to 2,440.51.
US stock indices were volatile throughout the session, but turned lower in the last hour on a slew of bad news - including AT&T's warning on its consumer business, questions about the financial health of Countrywide Financial and a report showing a spike in consumer credit.
Market breadth was negative. Nine stocks dropped for every two that rose on the New York Stock Exchange.
All the three US indexes are now down 10% from the highs hit in November, on a closing level. This is construed as a correction in technical parlance. Technical analysts say following recent losses, the Dow and the S&P 500 have dropped treacherously close to critical support. The million-dollar question is will this lead to further crack or induce fresh buying?
The National Association of Realtors said that contracts to sell existing homes fell in November by a steeper-than-expected margin. The group also pushed back its forecast for a price rebound to 2009.
Treasury Secretary Henry Paulson said that housing market problems are not easing. Boston Fed president Eric Rosengren said that the US could see the longest housing sector correction in 50 years.
Treasury prices rallied, lowering the corresponding yields, as investors sought safety in government debt, lowering the yield on the 10-year note to 3.77% from 3.83% late on Monday. In currency trading, the dollar fell versus the euro and gained against the yen.
US light crude oil for February delivery rose $1.24 to settle at $96.23 a barrel on the New York Mercantile Exchange. COMEX gold for February delivery rallied $18.30 to $880.30 an ounce.
European shares closed higher. The pan-European Dow Jones Stoxx 600 index rose 0.6% to 353.42. The French CAC-40 gained 0.8% at 5,495.67, while the UK's FTSE 100 added 0.3% to 6,356.50 and the German DAX 30 climbed 0.4% to 7,849.99.
In emerging markets, the Bovespa in Brazil was up 2.15% at 62,080 while the IPC index in Mexico gained 0.4% at 28,267 and the ISE National-30 index in Turkey advanced 1.2% to 66,941.
Asian markets were trading slightly lower, but had recovered smartly from early lows.
Bulls await key results
A historic trading session ended with positive bias amid volatile trading session. For the third consecutive day markets managed to end in green. Benchmark Sensex hit the 21,000 mark for the first time and took almost 49 trading session to cover the 1,000 points.
However, after touching the milestone key indices turned choppy and Sensex swung over 350 points and Nifty index over 130 points between their days high and low. The mid-cap and the small-cap stocks looked to be losing steam as traders preferred to book some profit. Finally, 30-share Sensex closed at 20,873 gaining 60 points and Nifty ended at 6,287 up 8 points.
IT stocks were in the limelight ahead of Infosys result on January 11. Heavyweight Satyam Computer rose over 2.6% to Rs424, Infosys was up 1.5% to Rs1662, Wipro gained 1.5% to Rs489 and i-Flex added 0.8% to Rs1466.
Suzlon Energy was up 4% to Rs2223 after its unit bagged an order for supply of 42.5MW of wind power turbine capacity to Spanish companies. The scrip touched an intra-day high of Rs2298 and a low of Rs2180 and recorded volumes of over 14,00,000 shares on NSE.
Cranes Software slipped 2% to Rs143. The company announced the acquisition of US based specialized auto consulting and product development firm, Engineering Technology Associates, through its subsidiary Cranes Software Inc reports stated. The scrip touched an intra-day high of Rs156 and a low of Rs142 and recorded volumes of over 1,00,000 shares on NSE.
Marksans Pharma was down 2% to Rs340. Reports stated that the company acquired UK based pharma company Hale Group. The scrip touched an intra-day high of Rs348 and a low of Rs317 and recorded volumes of over 4,00,000 shares on NSE.
Bilpower slipped over 7% to Rs327. Reports stated that the company dropped their plans of raising US$15mn via FCCBs. The scrip touched an intra-day high of Rs362 and a low of Rs326 and recorded volumes of over 99,000 shares on NSE.
Patel Engineering slipped 3.5% to Rs964. The company announced its Q3 results with net profit at Rs388.5mn (up 31.8%) and net sales at Rs3.78bn (up 33%). The scrip touched an intra-day high of Rs1050 and a low of Rs951 and recorded volumes of over 3,00,000 shares on NSE.
M&M advanced 2% to Rs830 after reports stated that the company acquired Italian design house GRD. The scrip touched an intra-day high of Rs843 and a low of Rs790 and recorded volumes of over 9,00,000 shares on NSE.
GAIL was up 0.7% to Rs524 amid reports that the Government’s move would allow the company to market entire PMT gas impacted gas supplies to GSPC and Gujarat Gas. The scrip touched an intra-day high of Rs535 and a low of Rs515 and recorded volumes of over 23,00,000 shares on NSE.
Reliance Energy marginally slipped 1.6% to Rs2541. According to reports GMR Ltd along with REL were the only Indian companies to be short listed for buying US$2bn Tuas Power owned by Temasek Holdings. The scrip touched an intra-day high of Rs2641 and a low of Rs2485 and recorded volumes of over 30,00,000 shares on NSE.
What the FIIs are doing
FIIs were net buyers of Rs5.71bn (provisional) in the cash segment on Tuesday while the local institutions were net buyers of just Rs920.8mn. In the F&O segment, foreign funds were net sellers of Rs1.48bn.
On Monday, FIIs were net sellers of Rs809mn in the cash segment. Mutual Funds were net buyers of Rs300mn on the same day.
News Snippets:
Bajaj Auto unveils the prototype of its small car; company to roll out its LCV by 2009. (BL)
Power Grid Corp plans to enter entertainment and telecom business. (BS)
Maruti Suzuki India has ruled out any possibilities of price cut for Maruti 800. (ET)
DoT is set to issue Letter of Intent to new players; Unitech, HFCL, Sterlite amongst those likely to get LoIs. (FE)
ABG Shipyard is raising Rs8bn through QIP to double capacity at its Surat facility. (DNA)
Reliance Industries is to invest Rs200bn to develop KG basin. (BS)
ONGC looking for an alliance with overseas players to bid for blocks offered under NELP VII round. (FE)
BHEL in tie up talks with overseas shipyards for building offshore rigs. (Mint)
Aditya Birla Nuvo will consider raising fund through preferential allotment to promoters and promoters group. (ET)
Vedanta Resources plans to invest Rs500bn over next few years in metals, mining and power generation. (BS)
NDTV may sell 25-30% in its UK based to NBC Universal; deal valued at Rs6.5-8bn. (BS)
ICICI Bank and SBI have together acquired 3% in Jaiprakash Power Venture, subsidiary of Jaiprakash Associates. (ET)
Adani Enterprises plans to raise Rs30bn through the QIP route in first quarter of current year. (BS)
Ford India is expanding its manufacturing capabilities to make a small car for India. (TOI)
Bartronics India raises US$50mn via FCCB issue. (BS)
Omaxe is in talks with Starwood Hotels & Resorts of US; to invest Rs20bn in hotel projects. (BS)
L&T may stop production of 3-4 products due to cheaper imports from China. (DNA)
SBI picks up 2% stake in Mahindra Holidays and Resorts for Rs800mn in an pre-IPO placement. (BL)
Planning Commission recommends state government should grant more licenses for distilleries, imported and country liquor and breweries. (BS)
The government is considering to raise price of petrol and diesel by Rs2 and Rs1 per liter respectively. (ET)
Passenger vehicle sales grew 8% in December as compared to last year. (BL)
Farm sector NPAs could get budget relief. (FE)
The Slum Rehabilitation Authority to call for financial bids for the Rs93.5bn Dharavi Redevelopment Project. (ET)
Government has issued notification that effectively allows only sugar mills to produce ethanol from sugarcane. (BS)
PM acknowledges rising interest rates and appreciating rupee have caused economic slowdown and job losses; constitutes group to suggest revival. (Mint)
Sluggish performance by crude oil sector leads to decline in core sector growth to 5.3% in November. (BL)
Sugar production for 2007-08 seen below projected levels due to delays in crushing and lower yields. (BL)
The Board of Approvals of the union commerce department ha cancelled the ‘in-principal SEZ’ status granted to the New Kolkata International Development, the SPV formed by Indonesia’s Salim group. (TOI)