"Success will not lower its standard to us. We must raise our standard to success."
With crude oil hitting $100 per barrel mark and global markets in a tizzy over disappointing manufacturing data from the US, stock benchmarks in India will soften at start after touching new record yesterday. FIIs too were net sellers (provisionally) in yesterday's trade, which could also have some sobering effect on the bulls.
The bulls would hate to surrender the advantage at this stage. So, there is a possibility of a rebound after a lower opening. Use this to get into better counters as many have been dangerously taking positions in risky counters. Remember, markets recovered from most falls in recent times only because leverage was less. The situation may be changing now with habit of winning causing risk abilities to increase. Stay cautious.
We mentioned select banking stocks yesterday and right enough the sector dominated. A lot of news-based action is expected today, especially in the energy and oil & gas space. Oil PSUs could be in the thick of things amid reports of an impending price hike next month. Reliance Energy might lead other stocks in the power sector higher on news that Reliance Power will allow retail investors an option to pay only 25% at the time of application. Pantaloon could also hog the limelight as Future Capital Holding has announced the price band for its IPO.
We also expect stocks in the infrastructure and media (WWIL and Dish TV) sectors to do well today. In a nutshell, the bullish trend in small-cap and mid-cap counters could continue. Chettinad Cement, Grasim, India Cements, Madras Cements and Ultratech Cement could be under pressure amid news that the Tamil Nadu Government may nationalise state cement companies if they do not slash prices. A couple of listings are also there today. BGR Energy and Burnpur Cement will make their stock market debut.
Among other counters Dewan Housing could see buying as the company will soon convene an EGM to raise funds. Adani Enterprises too is looking at raising resources. Total Exports will consider entering into JV for media foray and explore other investment opportunities. Kohinoor Broadcasting Board will meet next week to announce results and consider merger with Tagore Theaters with itself.
US stocks tumbled on the first trading day of the year, as record high oil and gold prices coupled with a weak manufacturing sector report raised worries about the state of the world's biggest economy. Banks and technology companies led the decline after the biggest decline in manufacturing in five years sent the Dow Jones Industrial Average to its worst start since 1983.
Intel, the largest semiconductor maker, fell the most in almost a year after Bank of America cut its rating and investors speculated companies will spend less on technology. Caterpillar, the largest maker of earthmoving equipment, and IBM led the Dow to a 1.7% fall.
The Standard & Poor's 500 Index lost 21 points or 1.4%, to 1,447.16, the most to start a year since it fell 2.8% on Jan. 2, 2001. The Dow slipped 221 points to 13,043.96. The Nasdaq Composite Index slid 43 points, or 1.6%, to 2,609.63.
Market breadth was negative. More than three stocks fell for every one that rose on the New York Stock Exchange.
US stocks briefly trimmed losses after the release of the minutes from the last Federal Reserve meeting raised bets that more interest rate cuts are on the way. But any recovery attempt was short lived.
US light crude oil for February delivery briefly topped $100 a barrel for the first time ever, before pulling back a bit to end at a record settle price of $99.62 a barrel. COMEX gold for February delivery surged $23.20 to $861.20 an ounce, an all-time high, rising in tune with other dollar-traded commodities.
Treasury prices rallied, as investors sought safety in the comparatively safer haven of government debt, lowering the yield on the 10-year note to 3.9% from 4.03% late on Monday. In currency trading, the dollar slipped versus the euro and the yen.
European stocks slipped on the first day of trade in 2008, with higher oil prices and data showing a contraction in US factory activity offsetting M&A speculation. The pan-European Dow Jones Stoxx 600 index dropped 1.3% to 360.11.
The data dampened the mood in London as well. The UK's FTSE 100 which had gained earlier, closed down 0.6% to 6,416.70. The French CAC 40 fell 1.1% to 5,550.36. Germany was the laggard after a 22% gain last year, as the German DAX 30 slipped 1.5% to 7,949.11.
In the emerging markets, the Bovespa in Brazil was down 1.7% at 62,815 while the IPC index in Mexico plunged 2.8% at 28,699. The RTS index in Russia finished flat at 2290 and the ISE National-30 index in Turkey was down 1.8% at 69,208.
Most Asian markets are in the red this morning. The Hang Seng in Hong Kong was down 477 points at 27,083 while the Kospi in Seoul was down 11 points at 1842. The Taiex in Taiwan was down 130 points at 8192 and the Shanghai Composite in China dropped 34 points at 5239. The Straits Times in Singapore fell 50 points at 3410.
Bulls hope to extend rally
It was a see-saw trading session as after opening with a positive gap, markets slipped in to deep red following weak cues from the Asian markets. However, after hitting the days low of 20,007 in the afternoon trades benchmark Sensex recovered over 390 points; crossing its previous all time high of 20,498. The late recovery was led by gains in the banking, Realty and Pharma stocks.
Finally, 30-share Sensex closed at 20,465 adding 164 points and Nifty gained 35 points to close at 6,179.
Parvnath Developers edged lower 0.4% to Rs475. Reports stated that the company is close to tying up with JW Marriott, Starwood, Intercontinental and ITC for several hotels it is planning to build. The scrip touched an intra-day high of Rs492 and a low of Rs462 and recorded volumes of over 27,00,000 shares on NSE.
Bhushan Steel gained 6% to Rs1658 amid reports that the company would expand steel manufacturing capacity to 7mtpa over the next five years. The scrip touched an intra-day high of Rs1688 and a low of Rs1575 and recorded volumes of over 68,000 shares on NSE.
GMR Infrastructure was down 0.6% to Rs248. Reports stated that the company would set-up a subsidiary in Mauritius for routing equity investments in overseas ventures. The scrip touched an intra-day high of Rs251 and a low of Rs245 and recorded volumes of over 32,00,000 shares on NSE.
UCO Bank rallied by over 16% to Rs81 after reports stated that the company has planned to raise Rs4.5bn from the proposed FPO. The scrip touched an intra-day high of Rs84 and a low of Rs72 and recorded volumes of over 44,00,00,000 shares on NSE.
HCL Technologies slipped 2.7% to Rs314. According to reports the company won Rs1bn contract from RBI to set-up two large data centres in Maharashtra and for completely overhauling the latter’s IT infrastructure. The scrip touched an intra-day high of Rs325 and a low of Rs313 and recorded volumes of over 4,00,000 shares on NSE.
Maruti Suzuki was up 0.6% to Rs997. The company declared its December sales at 62,515 units (up 9.7%) the company’s December exports were at 4,114 units (down 75%). The scrip touched an intra-day high of Rs1009 and a low of Rs978 and recorded volumes of over 3,00,000 shares on NSE.
Bajaj Auto ended flat at Rs2602. The company’s December sales were at 1,99,470 units (down 7.1%) its 11th straight month of declines. The scrip touched an intra-day high of Rs2629 and a low of Rs2560 and recorded volumes of over 1,00,000 shares on NSE.
TVS Motors slipped 1% to Rs72 after the company announced that its December two-wheeler sales declined 5.4% yoy to 97,576 units. The scrip touched an intra-day high of Rs73 and a low of Rs71 and recorded volumes of over 21,00,000 shares on NSE.
What the FIIs are doing
In the F&O segment, foreign funds were net sellers of Rs2.15bn.
On Tuesday, FIIs were net buyers of Rs1.42bn in the cash segment.
News Snippets:
The Government is considering a hike of Rs4 and Rs2 per litre for petrol and diesel respectively in February. (ET)
MTNL is likely to get pan-India mobile license. (ET)
LN Mittal in talks with HPCL to make joint bids for offshore oil & gas blocks. (ET)
Future Capital fixes its IPO price band at Rs700-765 for its IPO. (BS)
RIL and ONGC to face competition from LN Mittal for NELP blocks. (ET)
ONGC revives Kakinada refinery after shelving it in 2006. (Mint)
Bharti Airtel cut its local call rates to a flat Re1 per minute. (ET)
Retail investors may get an option of paying 25% at application stage in Reliance Power IPO. (ET)
Auto companies report low sales in December (ET)
Rotterdam Port in talks with L&T for investing in a Greenfield project in India. (Mint)
The JV between Verizon and Videocon to start offering internet services; awaits security clearance. (ET)
Nuclear Power Corporation may team up with BHEL to build turbines. (BL)
ONGC to pay subsidy of Rs170bn in FY08. (BL)
Tata group plans to transfer Tata Powers’ strategic electronic division (SED) to Nelco. (ET)
Oil PSUs to buy 10% stake in Oil India (OIL) at issue price (ET)
Essar led consortium likely to bag Ratna and R-series oilfields. (ET)
ONGC and Hinduja plan to invest US$10bn for developing oil and gas fields in Iran. (ET)
Petronet’s upcoming LNG terminal in Kochi will be delayed, to be ready by 2011. (BS)
Oil PSUs plan to open 3,000 outlets this year. (BS)
Abu Dhabi awards US$460mn contract to Japan’s Sumitomo, Germany’s Salzitter and Jindal Saw of India. (BS)
UB to seek out a JV partner to grow its Rs15bn business. (BS)
Religare to sell stake in its NBFC arm, Religare Finvest to Societe Generale, Goldman Sachs, Blue River Capital and a couple of other PE funds. (BS)
Ashok Leyland develops multi point fuel injection engines for CNG carriers. (BL)
Parsvnath gets a go ahead from Haryana Government for its IT Park. (BS)
Sebi has ruled out flexibility for PSUs in complying with Clause 49. (ET)
Broadcasters to receive duty cuts in line with IT and telecom sectors. (ET)
Tamil Nadu to nationalize cement plants if companies don’t cut prices. (ET)
The Government says Goa's decision on seeking de-notification of three SEZs legally untenable. (BS)
The Government plans to bear 80% of the cost of generating solar power. (BS)
Singapore Exchange plans launch of BSE products. (BS)
The Government may revive ailing fertilizer firms. (FE)
The Government may clear civil aviation policy today. (FE)
The Government allows 28 new SEZ approvals, including SAIL's Salem SEZ in Tamil Nadu. (BL)