Life is tough, and if you have the ability to laugh at it you have the ability to enjoy it.
The bulls surely are neither enjoying the current bearish phase nor are they laughing. In fact, many may be sulking at the prospect of a tough year ahead. We expect the market to witness an improved opening after yesterday's crash. Global cues are supportive in terms of firm Asian markets. However, oil and gold prices continue to make new all-time highs, posing inflationary risks amid clear signs of worldwide economic slowdown. The key indices may turn choppy after a good start owing to global uncertainties and also because of sun outage, which will last through March 18. Be stock specific and do proper homework before taking any buy call(s) and again remember, its time again to plan your time in the market rather than timing the market.
The credit bubble has deflated and the bull market in the US and other advanced equity markets is over. These are the words from the Marc Faber. However, he has some soothing comments for emerging markets such as India and China, saying that these may be less affected by the turmoil in the US and its global ramifications.
Another prominent investor, the legendary Warren Buffet says the US economy is essentially in a recession even if it hasn't met the technical definition of one yet. Buffett said in an interview to a US television network that the reports he gets from the retail businesses his holding company owns show a significant slowdown in purchases. He added that it's not clear how far the impending recession in the US will go.
These are indeed very, very bleak and gloomy predictions. Hence, remain cautious as things aren't going to be as rosy as they have been in the past 4-5 years. Making money will be extremely tough this year, for every category of investors. Adopt a guarded approach even though valuations and stock prices appear to be mouth-watering.
Nestle India and Esab India will declare their latest quarterly results today.
FIIs were net sellers of Rs7.11bn in the cash segment (provisional) on Monday. Local institutions were net buyers of Rs804.7mn on the same day. In the F&O segment, FIIs were net sellers of Rs3.04bn yesterday. On Friday, FIIs were net sellers of Rs2.44bn in the cash segment.
Asian markets are trading mixed, but have done better than yesterday. The Nikkei in Tokyo was up 94 points or 0.7% at 13,086 while the Hang Seng in Hong Kong gained 175 points or 0.75% at 23,760. The Kospi in Seoul added 6 points to 1678 while the Straits Times in Singapore was nearly flat, up 0.2% at 2932.
The Taiex in Taiwan jumped 170 points or 2% to close at 8433 while the Shanghai Composite index in China lost 0.2% at 4427.
Tokyo Electric Power Co. led declines among utilities on concern that rising fuel costs will erode earnings. Toyota dropped after its US sales slipped in February. Mitsui & Co. climbed after oil, gold and copper prices rose to records.
The MSCI Asia Pacific Index lost 0.3% to 142.23 as of 10:35 a.m. in Tokyo, adding to a three-day, 4.6% decline. The benchmark's four-day retreat will be its longest losing streak since a seven-day slide through Dec. 20.
Stock benchmarks also fell in Australia and New Zealand.
US stock indices ended marginally in the red, with the Nasdaq Composite index touching a 16-month low. Investors remained on the sidelines amid record high commodity prices, further weakness in the dollar and fresh bad news on the economy.
Down nearly 100 points earlier in the session, the Dow Jones Industrial Average recovered late in the session to close 7.49 points down, at 12, 258.90. The S&P 500 Index finished flat at 1,331.34, while the tech-heavy Nasdaq shed 13 points, or 0.6%, to 2,258.60, its lowest closing level since Oct. 3, 2006.
All the three major US stock indices were volatile throughout the session.
On the New York Stock Exchange, 949 stocks rose and 930 fell.
Bond insurers were among the worst hit after billionaire investor Warren Buffett said that he had withdrawn his offer to reinsure $800bn in municipal bonds.
Gold and crude oil futures surged to new highs, propelled by sharp weakness in the US dollar. Gold for April delivery hit a record of $992 an ounce. Crude oil for April delivery soared to a record of $103.95 a barrel. Oil gained 61 cents to settle at $102.45.
The euro climbed to a fresh high against the dollar at $1.5272. The dollar fell to 102.59 yen, its lowest level since February 2005, before recovering to 103.30 yen.
The day's economic news did little to soothe fears that the world's biggest economy is in a recession or is in danger of falling into one soon.
The Institute for Supply Management's index of manufacturing activity came in lower than expected. The index, which surveys purchasing managers, dropped to 48.3 from 50.7 in February. Economists were expecting a reading of 49. Any reading below 50 indicates contraction.
Ahead of the ISM report, Philadelphia Federal Reserve President Charles I. Plosser signaled that the central bank is still in favor of lowering interest rates despite concerns about inflation.
Separately, the Commerce Department reported that construction spending fell 1.7% in January, marking its largest drop in 14 years.
Northrop Grumman shares advanced after it was awarded a $35bn contract from the US Air Force over the weekend, dealing a severe blow to rival plane maker Boeing. Shares of Boeing fell nearly 3%.
United Technologies said it has made an offer to buy ATM maker Diebold for $2.63bn. Diebold shares surged 59%. HSBC said that profit rose 21% last year despite significant impairment charges due to the subprime mortgage crisis in the US.
Ford and GM reported February sales that were slightly better than expected, though both said sales declined. Toyota said sales fell 6.3% over last year, much steeper than the 3.5% increase that analysts had predicted.
London shares fell sharply as worries over prospects for a US recession continued to weigh on the banking sector. The FTSE 100 closed down 1.1%, or 65.70 points, to 5,818.60. HSBC managed to outperform on the strength of its full-year financial results.
The pan-European Dow Jones Stoxx 600 index fell 1.4% to 314.46, moving towards a low of 310.96 last seen on Feb. 11. The German DAX 30 lost 0.9% to 6,689.95 and the French CAC-40 fell 1% to 4,742.66.
In the emerging markets, the Bovespa in Brazil climbed 1.6% to 64,490 while the IPC index in Mexico surged 2.1% to 29,526. The RTS index in Russia dropped 1.5% to 2032 and the ISE National-30 index in Turkey shaved off 3.2% to end at 53,693.
Nervousness to continue
Friday’s budget blues continued to haunt the markets as benchmark Sensex posted a deeper cut on the first day of the week. The benchmark Sensex closed below the 17k and the Nifty index closed below the 5k mark on back of weak cues from the international equity markets coupled with the announcement of a hike in short-term capital gains and the withdrawal of the tax rebate on STT. Finally, the 30-share Sensex closed at 16,677 losing 900 points. The NSE Nifty closed at 4,953 slipping 270 points.
Overall about 393 stocks advanced, 2,333 stocks declined while 40 stocks remained unchanged. Among the BSE 30 index only 4 stocks advanced while 26 stocks declined.
Among the 30-scrips of Sensex, RIL, ICICI Bank, HDFC and SBI were among the major laggards. However, Hindustan Unilever, Cipla, Ranbaxy and Maruti were among the major gainers.
ITC India's biggest tobacco company, dropped by over 5% to Rs192 after Finance Minister Palaniappan Chidambaram on Feb. 29 raised the excise tax on non-filter cigarettes to the same level as the filter-tipped variety. The scrip touched an intra-day high of Rs198 and a low of Rs189 and recorded volumes of over 2,00,00,000 shares on NSE.
Jain Irrigation gained by 3% to Rs739 after the company announced that it acquired controlling stake in Swiss based Thomas Machines S.A. The scrip touched an intra-day high of Rs770 and a low of Rs681 and recorded volumes of over 1,00,000 shares on NSE.
TTML edged lower by 0.5% to Rs35. Reports stated that Virgin Group launched its Virgin Mobile brand in India in association with Tata Teleservices. The scrip touched an intra-day high of Rs36 and a low of Rs34 and recorded volumes of over 1,00,00,000 shares on NSE.
Astra Microwave declined by over 5.5% to Rs113. The company announced that it secured order worth Rs216mn. The scrip touched an intra-day high of Rs113 and a low of Rs102 and recorded volumes of over 1,00,000 shares on NSE.
IVRCL Infrastructure dropped by over 7% to Rs436. The company announced that it secured contracts worth Rs4.78bn. The scrip touched an intra-day high of Rs464 and a low of Rs431 and recorded volumes of over 3,0,000 shares on NSE.
Subhash Projects declined by over 9% to Rs371. The company said that it secured orders worth Rs805.4mn for execution of water supply projects from Chennai Metropolitan Water Supply and Sewerage Board. The scrip touched an intra-day high of Rs402 and a low of Rs365 and recorded volumes of over 4,000 shares on NSE.
Aurionpro solutions fell by 3.8% to Rs396. The company said that it entered into an agreement to acquire SENA Systems Inc (SENA). The board unveiled plans to raise up to Rs1.5bn through preferential allotment to Promoters including Promoter Group and strategic investors. The scrip touched an intra-day high of Rs430 and a low of Rs395 and recorded volumes of over 9,000 shares on NSE.
Tata Communications slipped by 4% to Rs491. According to reports, the company would consider to sell a stake in its retail and broadband business to Singapore state investment firm Temasek Holdings. Tata Communications may hold a majority stake in the retail business venture and Temasek could be a financial investor for the said project, the report stated. The scrip touched an intra-day high of Rs511 and a low of Rs488 and recorded volumes of over 2,00,000 shares on NSE.
Venus Remedies dropped by over 5.5% to Rs430. The company announced that it secured India approval to sell Cystis Fibrosis Drug. The scrip touched an intra-day high of Rs448 and a low of Rs430.
TVS Motor shifted to reverse gear, the scrip was down by 2% to Rs42 after the company’s February sales was at 95,235 unit down 21% while, motorcycle sales slipped 33% to 46,565 unit However, the company’s February exports grew 56%. The scrip touched an intra-day high of Rs45 and a low of Rs42 and recorded volumes of over 27,00,000 shares on NSE.
National Aluminum advanced by a percent to Rs467 after media reports stated that the company hiked aluminum prices by Rs10,000 per ton. The scrip touched an intra-day high of Rs475 and a low of Rs430 and recorded volumes of over 5,00,000 shares on NSE.
Nervousness would prolong on D-Street with the Nifty and Sensex index shutting shop below the 200 DMA. However, a dead cat bounce back cannot be ruled out. Cues from the overseas markets would be closely watchedNews Snippets:
Developers of gas fields like RIL, ONGC and Cairn India may not get the seven-year tax holiday under Section 80-IB of the Income Tax Act, 1961. (BS)
The pipeline to evacuate gas from RIL block in the KG basin is set to be commissioned in the next three months. (BS)
Tata Steel has outlined its “vision” for 2012, which entails, among other things, doubling of ROI from around 16% at present to 32%. (BL)
The Government is understood to have granted ONGC’s request for status change for its oil and gas block in Mahanadi basin from a shallow water block to a deepwater block. (BL)
The Government has approved plans by ONGC Videsh (OVL), to invest up to US$458.21mn in oil and gas projects in Venezuela and Qatar. (BL)
A consortium of Adani group, GSPC and Essar Oil, plans to spend Rs100bn to build a LNG regassification terminal at Mundra in Gujarat. (BS)
The user development fee for domestic air travelers will not be collected for now by GMR Hyderabad International Airport Ltd. (BL)
Eicher Motors announced a reduction in the prices of its trucks and buses between Rs5,000 and Rs19,000. (BL)
MRTPC has found Cement Manufacturers Association and nine others including ACC and Grasim Cement, guilty of cartelization in Jabalpur (Madhya Pradesh) during 2000 and 2001. (BL)
JSW Steel will be setting up a 3mn ton cement plant at Salboni in West Bengal. (ET)
Parsvnath Developers is looking to invest between Rs20-25bn for the development of 40 more hotels. (BL)
Sintex Industries is scouting for companies in the composites space and has earmarked US$150mn for the same. (BS)
Bank of India is looking to sell aggregate stressed assets of around Rs2.5bn to an asset recovery company. (BL)
The US subsidiary of TCS has received incentives worth more than US$19mn for setting up base in Cincinnati in the US. (BL)
Power Grid Corporation of India's Chairman and Managing Director, Mr R.P. Singh, has resigned after a ten-year stint at the helm of the power transmission utility. (BL)
Economic Front Page
Commercial banks’ NPAs in the farm sector were just Rs110bn at the end of December 2007. (BS)
Oil companies have begun selling some of their holdings of oil bonds to meet their respective liquidity requirements. (BL)
Exports for January 2008 clocked a growth of 20.47% and cumulative export growth during the first 10 months of the fiscal at 21.62% in dollar terms. (BL)
Sugar output is likely to decline by 15 lakh ton in 2007-08. (ET)
The tea industry is exploring various ways and means to expand its market share abroad with specific focus on Egypt, Pakistan and Iran. (BL)
India’s coffee exports rose by 5.4% yoy to 35,877 tons during Jan-Feb’08. (Mint)
The TRAI has sought comments on raising the foreign investment limit in the broadcasting sector to 100% to permit the Indian subsidiaries of foreign companies to provide broadcasting services. (BS)
Standards for 17 products in steel are to be made mandatory from May 2008. (BL)
Cooking oil prices have surged by ~Rs8 and are expected to rise by another Rs10 per kg on par with global rates. (ET)
Insurance companies will soon be allowed to invest up to 5% of their total investible corpus in venture capital funds investing in infrastructure projects. (BS)
Indian companies with subsidiaries abroad and those planning overseas mergers & acquisitions would not benefit from the dividend distribution tax offset announced in Budget 2008-09. (FE)
Budget 2008-09 has proposed that the service tax rate on the composite works contract scheme be doubled from 2% of the total value of the contract to 4%. (FE)
India and Pakistan on Monday agreed to expedite the process of allowing banks of both countries to open branches in either country. (FE)
The ailing fertiliser industry has expressed serious disappointment over allocation of Rs309.85bn in the annual Budget against the subsidy requirement of a whopping Rs750bn for 2008-09. (FE)