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After new all-time peaks last week, the main indices could face resistance at today. Wall Street tumbled on Friday after weaker-than-expected jobs data sparked renewed concerns over a possible recession in the US. That triggered a world-wide sell-off and would most certainly hurt sentiment here as well, at least at the start of trading. But, with inflows from FIIs and Mutual Funds holding firm there is a chance of a rebound later in the day or tomorrow. The biggest trigger for India will be the quarterly results that will start kicking in from this week. IT shares will of course be the focus of attention amid a sharp fall in the Nasdaq on Friday and anxiety over their Q3 earnings and outlook.
Apart from the results, one will have to watch out for three other big events that will have a major bearing on the sentiment - the Fed announcement on Jan. 31, RBI's quarterly review and the Union Budget. Ideally speaking, the Indian economy should not be that affected by a recession in the US, though some export-driven sectors may take a hit. If rates fall further in the US, the overseas inflows into Indian stocks should increase further. Expect more volatility with a positive bias. Persistent bad news from the US and further declines on Wall Street could prove to be a potential party pooper for the Indian bulls.
Results Today: ABG Shipyard, Bilpower and Kohinoor Broadcasting.
State Bank of India (SBI) says that its Central Board will meet on January 14, to consider the Rights Issue.
Advanta India has acquired the business of Unicom Seeds, which has a strong presence in the domestic and export markets of vegetable seeds. Unicom also undertakes the custom production of vegetable seeds for the customers all around the globe.
MIC Electronics' Board will meet on January 12, to consider setting up of subsidiaries in Singapore, China, Taiwan, Korea and South Africa / Kenya. The Board will also discuss Separate Business Units (SBUs) for Digital Display Rental Business, Digital Bill Board Infrastructure and LED Lighting (grid & off grid) on Build-Operate-Transfer model. It will also consider finalization of acquisition of two companies.
US stocks sank on Friday after a grim jobs report heightened concerns that the housing sector mess and the subsequent strain in the credit markets would drag the world's biggest economy into a recession.
The Dow Jones Industrial Average suffered its worst start to a year since the Great Depression and the Nasdaq its worst since inception following a steep jump in the unemployment rate last month.
Technology shares were the worst performer in a broad-based decline with Intel slumping 8%.
The Dow dropped 256.54 points, or 1.96%, at 12,800.18. The Standard & Poor's 500 Index slid 35.53 points, or 2.46%, at 1,411.63. The Nasdaq Composite Index was down 98.03 points, or 3.77%, at 2,504.65.
It was the Nasdaq's biggest one-day point loss since Sept. 17, 2001, the day Wall Street resumed trading after having been shut in the aftermath of the 9/11 terror strikes in New York. On that day, the Nasdaq lost 115.83 points.
Market breadth was negative. Ten shares declined for every one that rose on the New York Stock Exchange.
US bonds rallied, as investors rushed for safe haven investments and the dollar fell further versus other major currencies. However, oil and gold prices declined from recent all-time highs.
The bleak jobs report reinforced a growing view on Wall Street that the US economy had slowed substantially and could slip into a recession following the housing sector meltdown and the stress in the credit markets.
At the same time, it raised hopes that the Federal Reserve this month might cut rates aggressively to prevent the impending recession. The FOMC, the Fed's policy panel, is holding a two-day meeting on January 29-30.
According to interest rate futures, traders and investors were pricing in a 68% chance that the Fed would cut rates by a half percentage point at its Jan. 31 meeting, up from 34%. The odds of a quarter point cut slipped to 32% from 66%.
Harvard University economist Martin Feldstein, head of the group that dates economic cycles in the US, says that the odds of a recession are more than 50% after a report showing the unemployment rate jumped. "We are now talking about more likely than not," Feldstein, President of the National Bureau of Economic Research, has been quoted as saying by a newswire agency. "I have been saying about 50%. This now pushes it up a bit above that."
Treasury prices rose, as investors sought safety in the relatively less risky government debt. The rise lowered the yield on the 10-year note to 3.84% from 3.89% late on Thursday. In currency trading, the dollar slipped versus the yen and the euro.
US light crude oil for February fell US$1.27 to settle at US$97.91 per barrel on the New York Mercantile Exchange, after hitting a record trading high above US$100 a barrel during Thursday's session.
COMEX gold for February delivery fell US$3.40 to settle at US$869.10 an ounce, pulling back from an all-time high hit Wednesday.
Asian markets were trading soft this morning following big losses in US shares on Friday amid mounting worries over the impending recession. The Nikkei was down 147 points or 1% at 14,544 while the Hang Seng in Hong Kong shed 710 points or 2.6% at 26,807.
The Kospi in Seoul fell 35 points or nearly 2% at 1828 while the Straits Times in Singapore dropped 81 points or 2.4% at 3556. The Taiex in Taiwan dived 270 points or 3.3% at 7950 while the Shanghai Composite in Singapore added 22 points or 0.4% at 5383.
Samsung Electronics and Nintendo declined on speculation that consumer spending in the US, Asia's largest export market, will slow. BHP Billiton led mining companies lower after metals prices dropped on concerns that the US housing slump and tighter credit conditions are hurting demand.
The MSCI Asia Pacific Index fell 2.1% to 152.81 as of 11:10 a.m. in Tokyo, adding to a two-day, 1.5% decline. About six stocks fell for each that gained on the benchmark, which is headed for its biggest drop since Dec. 17.
European stocks too crumbled on Friday. The pan-European Dow Jones Stoxx 600 index declined after early gains, falling 1.9% to 352.00. The UK's FTSE 100 closed down 2% at 6,348.50, while the French CAC 40 slipped 1.8% to 5,446.79, and the German DAX 30 lost 1.3% at 7,808.69.
The scene was similar in the emerging markets. The Bovespa in Brazil was down almost 3% at 61,036 while the IPC index in Mexico slid nearly 1.9% to 28,317, and the ISE National-30 index in Turkey lost 2% at 66,152.
Global weakness to dampen sentiment
It was a stellar session as sustained buying in the frontline stocks lifted the benchmark Sensex to hit all time high on Friday. The Capital Good, Banking and the Oil & Gas stocks led the rally. However, on the other side the IT, pharma and the Small-Cap stocks were the major laggards.
Better than expected Inflation figures coupled with positive cues form the Asian and the European markets kept the sentiments bullish. India Inflation was at 3.50% in the week ended Dec 22 against expectation of 3.43%. Finally, 30-share Sensex closed at 20,686 gaining 341 points and Nifty ended at 6,274 up 95 points.
NOCIL was locked at 5% lower circuit to Rs64.60 after the company clarified that the is not a part of Mukesh Ambani led Reliance Industries and NOCIL Petrochemicals is not a subsidiary of NOCIL and hence the question of shareholders of NOCIL getting new shares of NOCIL Petrochemicals does not arise at all. The scrip touched an intra-day high of Rs67.95 and a low of Rs64.60 and recorded volumes of over 17,00,000 shares on NSE.
JP Associates surged by over 2.5% to Rs485 after media reports stated that the company is looking to raise $1bn through its power arm. The scrip touched an intra-day high of Rs509 and a low of Rs480 and recorded volumes of over 1,00,00,000 shares on NSE.
Ramsarup Industries gained 1.3% to Rs286 after the company announced that they secured order worth Rs440mn. The scrip touched an intra-day high of Rs300 and a low of Rs282 and recorded volumes of over 18,000 shares on NSE.
BHEL gained 1.8% to Rs2544 after the company declared that they secured export order for transformers. The scrip touched an intra-day high of Rs2560 and a low of Rs2461 and recorded volumes of over 6,00,000 shares on NSE.
RCF was locked at 5% upper circuit to Rs143.25 after reports stated that the company diversifies in to Rapid wall production. Intends to manufacture 1.4mn sq.mt of wall panels annually. The scrip touched an intra-day high of Rs143.25 and a low of Rs143.25 and recorded volumes of over 1,00,000 shares on NSE.
Tulip IT marginally slipped 0.2% to Rs1114 the company announced that it secured a project worth Rs577mn from Assam state Wide Area Network. The scrip touched an intra-day high of Rs1166 and a low of Rs1140 and recorded volumes of over 25,000 shares on NSE.
Ahluwalia Contracts was down 1.2% to Rs353. The company announced that they secured order worth Rs3.87bn. The scrip touched an intra-day high of Rs376 and a low of Rs301 and recorded volumes of over 1,00,000 shares on NSE.
Rajesh Exports was flat at Rs881. Reports stated that they have launched diamond jewellery range. The scrip touched an intra-day high of Rs898 and a low of Rs878 and recorded volumes of over 1,00,000 shares on NSE.
Tata Motors was down 1.2% to Rs784. According to reports Ford selected the company as the preferred bidder for its Jaguar and Land Rover brands. The scrip touched an intra-day high of Rs812 and a low of Rs722 and recorded volumes of over 4,00,000 shares on NSE.
Flawless Diamond advanced 1.8% to Rs124 after the company declared that it received export order worth Rs321mn. The scrip touched an intra-day high of Rs128 and a low of Rs123 and recorded volumes of over 70,000 shares on NSE.
What the FIIs are doing
FIIs were net buyers of Rs160.1mn (provisional) in the cash segment on Friday while the local institutions pumped in Rs5.07bn. In the F&O segment, foreign funds were net sellers of Rs9.08bn.
On Thursday, FIIs were net buyers of Rs7.25bn in the cash segment. Mutual Funds were also net buyers of Rs4.9bn on the same day.
News Snippets:
Jet Airways to go for a private placement or QIP to dilute promoters stake by 5%. (BL)
M&M may pull out of the Rs40bn three way Chennai joint venture with Renault and Nissan. (FE)
Chrysler has initiated negotiations with M&M for a partnership in India. (ET)
ONGC seeks Rs160bn worth of incentives for its proposed 15mn ton pa refinery at Kakinada. (BS)
London based Caparo group to invest Rs35bn to set up an automotive and aerospace components park in Andhra Pradesh. (BL)
SBI, ICICI Bank, Bank of Baroda and Bank of India to book mark-to-market losses on the exposures of their foreign offices to credit derivatives. (BS)
Reliance Industries seeks a minimum supply of 3.6mn scmd of gas for its petrochemical plants from Panna-Mukta and Tapti fields. (TOI)
BSNL to form a separate tower company early this year; may lease out 40,000 towers to private companies. (Mint)
ADAG plans to bring all its proposed overseas power generation projects under Reliance Power; group evaluates options to make power equipment. (ET)
SAIL scouting for new iron ore mines; applies for prospecting and mining leases. (BL)
BHEL plans to boost exports six-fold by 2012. (DNA)
Gitanjali Gems on look out for more buy outs in US, the largest jewellery market in the world. (BS)
Reliance Power may invest in Ratnagiri Gas and Power if private companies allowed in the erstwhile Dabhol project. (Mint)
Indian Oil’s 330km Paradip-Haldia crude oil pipeline to go on stream in six weeks. (BS)
Reliance Industries may offer rigs to ONGC in two or three locations in 2008-09 on a sharing basis. (BL)
Gujarat Fluorochemicals will sell half the poly tetra fluoro ethane (PTFE) output of its Dahej plant to an European collaborator. (DNA)
HPCL has raised Rs2.9bn from sale of oil bonds. (DNA)
PE firm General Atlantic may buy 10% stake in Essar Power. (ET)
PE firm would pick up 15% equity stake in Mahindra Forgings. (ET)
PFC plans SPV to offer consultancy services across various sectors. (TOI)
Canara Bank may acquire a bank this year. (ET)
DoT doubts Spice Telecom’s eligibility for licenses in 20 circles on lack of the required net worth. (BS)
Indian Railways hikes iron ore freight, less than two months prior to railway budget. (BL)
Inflation rises to 3.5% for week ended December 22nd, as vegetables become costlier. (TOI)
Ethanol may get ‘declared goods’ status in Budget. (ET)
Fuel prices may rise after January 17th when PM’s ministerial panel on commodity prices meets to approve the hikes. (TOI)
Government expects investments worth Rs2tn in the aviation sector in the next 10 years. (ET)
Mandatory licensing requirement for Indian banks to open branches may be abolished. (BS)
Government plans to set up a national electricity fund with a corpus of Rs1tn for investment in the transmission and distribution sector. (FE)
Government to earn Rs70bn from spectrum fee in 2008-09, without impacting tariffs. (TOI)
Himachal Pradesh Government invites bids from domestic and global companies for 1,481MW hydel units. (BS)
Finance Minister asks public sector banks to cut deposit & lending rates by 50bps. (FE)