If you don't know where you are going, any road will get you there.
The markets seem to be going nowhere. But stocks are hitting extreme ends during intra-day trade. Expected volatility is on as the results season has kicked off. Infosys will declare its results tomorrow and other software biggies will follow suit next week. The IT sector has lost its charm over the past few months, with a confluence of headwinds (a strong rupee being the topmost) weakening the outlook for the industry. Not many brokerages are gung-ho about the IT sector though some expect mid-cap IT firms to prop up. There could be some positive surprise in store that could revive interest in these stocks temporarily. We expect a cautious to slightly positive opening today and another choppy day. Counters like ITC can be picked up at lower levels for investment purpose. RNRL may see wild swings on expectations of a court verdict today.
Coming to the broader market, earnings from the old economy space will also be critical if the bulls are to retain their hold over the market. As will be the global factors and trend in money flows. Over the last couple of days a lot of small- and mid-cap shares have been hammered. Whether this is a larger trend or just a temporary blip remains to be seen. One must remain highly alert and take an honorable exit from stocks that have rallied purely on speculative activity. Among the other concern is that the market breadth was negative yesterday and the volume too was sharply down from Tuesday. As the market adjusts to swings and sideways movement, make sure you know where you and your stocks are going.
Results Today: Gallant Metal, Jaypee Hotel, Motilal Oswal, Rajesh Exports, Solar Explosives, Steel Exchange and Supreme Petro.
M&M may attract attention as a business news channel says that Goldman Sachs is eyeing a stake in the tractor and utility vehicle giant. However, there is still no official confirmation with both parties denying any such move. Kopran will issue and allot on a preferential basis 581,656 shares to IDBI Bank and 200,000 shares to LIC as a part of the settlement of their dues. Pyramid Saimira's Board will meet on January 16, to consider a proposal to raise additional funds through overseas debt issue. Ispat Industries may also gain as a financial daily says that the steel maker will sell about 25% stake in Ispat Energy to PE funds for Rs8bn.
Atlanta has received a contract of Rs629.8mn in Pune for the construction and concreting of road from Hotel Green Park to bypass at Balewadi stadium crossing. DCW's Board will meet on January 15, to consider, issue of shares or any such instruments / securities to QIBs. Surana Industries says it would acquire 49% equity shares of PT Agate Resources Indonesia, Sbn Bhd from the present holders for Rs400mn. Agate Group Indonesia is into coal mining and the acquisition will give the company assured supply of coal for the integrated steel plant being set up at Raichur at Karnataka.
The RBI has allowed FIIs to purchase fresh shares of Gujarat NRE Coke through primary markets and stock exchanges up to 74% of the paid up capital of the company. Hindustan Construction has formed a SPV i.e. HCC Singapore Enterprises Pte Ltd for promoting its business overseas. HCC Real Estate has also incorporated a SPV i.e. Charosa Wineries for undertaking wine business.
US shares reversed the weak trend of the past few days and closed higher on Wednesday after Warren Buffett's Berkshire Hathaway said it may invest in municipal bond insurers and HP said earnings will withstand an economic slowdown.
Technology stocks led the rally, with the Nasdaq registering its first positive day in nine, as bargain hunters returned to a market reeling under the weight of worries with regard to a possible recession. The Dow has seen more than 500 points taken away so far this year.
Bear Stearns, Merrill Lynch and Morgan Stanley helped financial shares rebound from a four-year low. HP led technology shares higher for the first time in seven days. Gilead Sciences and Pfizer advanced after Goldman Sachs said earnings at some drugmakers will continue to rise.
The Standard & Poor's 500 Index added 19 points or 1.4%, to 1,409.13, rallying from a 10-month low. The Dow Jones Industrial Average climbed 146 points, or 1.2%, to 12,735.31, erasing an 87-point drop. The Nasdaq gained 34 points, or 1.4%, to 2,474.55.
The S&P 500 rebounded from the lowest level since March after Berkshire said it may buy stakes in municipal bond insurers, which account for two of the eight worst-performing shares in the S&P 500 this year. Banks and brokerages fell as much as 2.3% earlier after Countrywide Financial said foreclosures are rising.
Banks also rose after Bear Stearns CEO Alan Schwartz told CNBC that the firm won't take more writedowns because it is adequately marked to market on its investments. Stock-index futures climbed in extended trading after Alcoa reported profit that topped estimates. Alcoa shares gained 4% in extended trade.
Also after the close, Target said its CEO will retire in May amid slumping sales. He will be replaced by the retailer's president. Target shares were little changed in after-hours trade.
There are no big market-moving earnings or economic reports scheduled for Thursday. Fed chairman Ben Bernanke is slated to deliver a speech in the afternoon in Washington DC, on the economic outlook and monetary policy.
Treasury prices slumped, raising the corresponding yields on the 10-year note to 3.82 percent from 3.77 percent late on Tuesday. In currency trading, the dollar gained versus the yen and euro.
US light crude oil for February delivery fell 66 cents to settle at $95.67 a barrel on the New York Mercantile Exchange. The price of oil seesawed following the morning release of a mixed oil inventories report.
COMEX gold for February delivery rose $1.40 to settle at $881.70 an ounce, nearing record highs hit on Tuesday.
European stocks markets finished in the red after British retailer Marks & Spencer posted its worst quarterly sales in more than two years, heightening worries about trends in consumer spending and economic growth.
The pan-European Dow Jones Stoxx 600 index shed 1.3% to 348.77, the sharpest percentage drop since last Friday. London's FTSE 100 index slipped 1.3%, or 83.80 points, to 6,272.70 while the French CAC-40 lost 1.1% at 5,435.42 and the German DAX 30 fell 0.9% to 7,782.71.
In the emerging markets, the Bovespa in Brazil gained nearly 1% at 62,673 while the IPC index in Mexico rose 0.5% at 28,401. The RTS index in Russia was up almost 0.3% at 2296 and the ISE National-30 index fell 1% to 66,235.
Asian markets were trading mixed this morning. The Nikkei in Tokyo was down 117 points at 14,482 while the Hang Seng in Hong Kong dropped 160 points at 27,455. The Kospi in Seoul and the Shanghai Composite in China were flat at 1848 and 5434, respectively. The Straits Times in Singapore was unchanged at 3344 and the Taiex in Taiwan rose 36 points to 8121.
Bulls hope to sustain gains
Markets ended on a flat note showing strong resilience against the US slump. The index heavyweights witnessed fresh buying interest as stocks like HDFC, NTPC, RCOM and DLF lifted the benchmark Sensex to hit the 21k mark for the second time. However, it was yet another volatile session as alternate bouts of buying and selling tossed the key indices into negative and positive terrain. The Sugar, Mid-Cap IT and banking stocks recorded smart gains ahead of the earning season. Finally, 30-share Sensex closed flat at 20,869 and Nifty ended at 6,272 down 15 points.
Omnitech surged by over 4% to Rs218 after the board of directors of the company announced that they would meet on January 14 to mull fund raising plan. The scrip touched an intra-day high of Rs224 and a low of Rs201 and recorded volumes of over 2,00,000 shares on NSE.
ICRA edged lower by 0.8% to Rs940. The company announced that it entered in MoU with state Bank of Mysore to rate bank loans. The scrip touched an intra-day high of Rs980 and a low of Rs906 and recorded volumes of over 4,000 shares on NSE.
EMCO rallied by over 9% to Rs1559 after the Board of Directors of the company declared that they would consider a stock split on January 17. The scrip touched an intra-day high of Rs1623 and a low of Rs1500 and recorded volumes of over 15,000 shares on NSE.
Taneja Aerospace rose over 6.5% to Rs237 after the company announced that it has entered in to MRO facility agreement with Awacs. The scrip has touched an intra-day high of Rs249 and a low of Rs210 and has recorded volumes of over 4,00,000 shares on NSE.
Bajaj Auto ended flat at Rs2533. According to reports the company unveiled the prototype of its small car; company to roll out its LCV by 2009. The scrip touched an intra-day high of Rs2579 and a low of Rs2500 and recorded volumes of over 39,000 shares on NSE.
Power Grid ended 0.6% lower to Rs143. Reports stated that the company has planned to enter entertainment and telecom business. The scrip touched an intra-day high of Rs145 and a low of Rs142 and recorded volumes of over 55,00,000 shares on NSE.
Sugar stocks, especially south based ones like Shree Renuka Sugars and Sakthi Sugars, reacted positively today to reports that government issued notification to the extent which effectively allows only sugar companies to manufacture ethanol from sugarcane. This put a spanner in the plans of companies like Reliance Industries and HPCL, which were earlier planning to bid for closed sugar mills in Bihar to make ethanol. Renuka Sugar rallied by over 12% to Rs1254 and Sakhti Sugar surged over 15% to Rs125.
The Mid-Cap banking stocks were in limelight on back of expectation of good results. Bank of India surged by over 6.5% to Rs400, Bank of Baroda was up 2.2% to Rs462 and Andhra Bank gained 2% to Rs118. Axis Bank rose over 3% to Rs1009 after the company announced its Q3 result with net profit rising 66% to Rs3.07bn from Rs1.85bn a year earlier.
The Mid-Cap IT stocks also gained momentum ahead of the result season. I-flex jumped by over 8% to Rs1585, Polaris was up by over 6% to Rs138, Mphasis advanced 6.2% to Rs304 and Rolta added 2% to Rs716.
What the FIIs are doing
FIIs were net sellers of Rs3.92bn (provisional) in the cash segment on Wednesday while the local institutions were net buyers of just Rs855.1mn. In the F&O segment, foreign funds were net sellers of Rs8.9bn.
On Tuesday, FIIs were net buyers of Rs10.53bn in the cash segment. Mutual Funds were net buyers of Rs125mn on the same day.
News Snippets:
Bajaj Auto is looking at acquiring a car company to break into the higher segments of the market and plans an electric car for Europe. (BS)
Goldman Sachs is in advanced talks to invest in the Mahindra group. (BS)
SC stays PIL against Reliance Power IPO. (BS)
ICICI bank to unlock value in four of its subsidiaries and the process could begin in the next six months. (ET)
Aditya Birla Nuvo will raise Rs42bn through preferential allotment of warrants to the Kumar Mangalam family in the next 18 months. (ET)
ITC plans to launch new energy bars and breakfast cereals to extend its product profile. (FE)
UTI Mutual Fund to offer ESOPs to all its employees. (ET)
Unitech to go for US$1.5bn QIP in the next couple of months.
Tata Power and Reliance Energy are among the six short- listed companies by the Maharashtra Government for the proposed Dhopave project. (ET)
RIL and RNRL have moved the Mumbai High Court over the gas supply dispute between the two companies. (ET)
PE players JPMorgan and IDFC are eyeing a minority stake in Hyderabad-based logistics player, Seaways. (ET)
Kingfisher Airlines would be permitted to fly abroad this year. (BS)
European aerospace giant EADS is acquiring 24% stake in India Aero Ventures, promoted by ex-BPL mobile chief Rajeev Chandrashekar for Rs1.3bn. (ET)
The DoT is reconsidering the applications of six companies for telecom licenses, which it had rejected on Tuesday. (ET)
The Government assures TDSAT that enough spectrum would be available for existing as well as new players after allotting radio frequencies to RCOM. (ET)
Private cement producers in Tamil Nadu agree to set aside two million bags per month for economically weaker section and lower middle class people at a price of Rs200 per bag. (ET)
Pharma companies unlikely to get sops for R&D outfits. (ET)
Stainless steel companies have asked the Government to increase customs duty on value added stainless steel cold rolled coils to prevent China from dumping into India. (ET)
The Government may bring procurement contracts of defence ministry under tax collected at source (TCS) in this budget. (ET)
Indian Bank Association members to meet on interest rate cut. (FE)
Commerce Minister Kamal Nath says that the Government might consider importing more cement to meet the demand – supply mismatch situation. (BL)