Fear drives you and makes you better.
The Tatas may be on the driver’s seat of Land Rover and Jaguar. But drivers seem to be missing for the market. It remains more of a rollercoaster ride. After rising for four consecutive days, the Sensex and the Nifty closed in the red though FIIs continued to be net buyers. The trend was similar across world markets, where stock benchmarks resumed their downward drift after the pull-back rally.
For the day, we see a lot of volatility due to the F&O expiry and uncertain global cues. And we maintain our stance of selectively picking the blue-chips and re-building a strong portfolio. There is still significant anxiety over the depth and length of the impending recession in the US. Fresh bad news has emerged on the slowdown in the world's biggest economy and the sorry state of the credit markets.
Deutsche Bank says it may not meet the year's profit target due to the ongoing turbulence in global financial markets. Data on new home sales and durable goods orders in the US doesn't inspire any confidence. A multi-billion-dollar deal in the US is facing a major crisis due to the gridlock in the credit markets. All this is going to make it tough for the bulls to sustain any buying momentum, though most bad news may already be reflected in stock prices.
Back home, the local economy is also suffering. Industrial and consumer spending seems to have been hit due to tight monetary policy while inflation has flared up, partly due to soaring global commodity prices. The market is eagerly awaiting quarterly results to ascertain the impact of a global as well as local slowdown on India Inc's health. RBI's annual policy meeting will also be crucial.
FIIs were net buyers of Rs3.94bn in the cash segment yesterday while local institutions pulled out Rs1.08bn. In the F&O segment, foreign funds were net buyers of Rs2.82bn yesterday. On Tuesday, FIIs were net buyers of Rs13.45bn in the cash segment. Mutual Funds were net buyers of Rs5.34bn on the same day.
Tata Motors may weaken amid apprehensions over the company's ability to manage the loss-making Ford brands - Jaguar and Land Rover. The company's ADR was down nearly 7% in the US. The stock ended flat yesterday at Rs679.
Asian markets were trading mostly down this morning, led by automakers and banks, on concern that the health of the US economy is deteriorating as the credit market crisis deepens.
The MSCI Asia Pacific Index lost 1.1% to 139.79 as of 11:20 a.m. in Tokyo, with about seven stocks retreating for each that gained. Speculation the US will limit credit market losses contributed to a 5.3% advance in the benchmark in the previous four days. It has tumbled 11% this year.
Japan's Nikkei 225 Stock Average slid 1.8% to 12,480.98, on course for its biggest decline since March 17. Benchmarks dropped in other markets open for trading.
US stocks closed lower on Wednesday after a three-day rally on a worsening outlook for banks' earnings and an unexpected drop in durable goods orders. Concerns that financing for acquisitions has collapsed due to the current logjam in the credit markets also weighed on the sentiment.
Citigroup tumbled the most in the Dow Jones Industrial Average and led financials to their biggest decline in almost two weeks after Oppenheimer's Meredith Whitney said the largest US bank's quarterly loss will be four times bigger than previously forecast.
Deere & Co. and United Technologies declined on the government's report showing the worst-ever slump in machinery demand. Clear Channel Communications posted its steepest fall since 1989 on concern that banks will pull out financing for the broadcaster's $19.5bn takeover.
The S &P 500 Index lost 12 points, or 0.9%, to 1,341.13. The Dow slid 110 points, or 0.9%, to 12,422.86. The Nasdaq Composite Index declined 17 points, or 0.7%, to 2,324.36.
Market breadth was negative. More than two stocks fell for every one that rose on the New York Stock Exchange.
Stocks slipped at the open on a weak factory orders report. But the selloff picked up steam later in the morning after the release of the February new home sales report and a spike in oil prices.
US light, crude oil for May delivery rose $4.68 to settle at $105.90 a barrel in New York. Oil prices hit a record $111.80 in electronic trading last week. COMEX gold for April delivery rose $14.20 to settle at $949.20 an ounce. Gold hit an all-time trading high of $1,033.90 an ounce one week ago.
The dollar fell versus the euro and the yen. The greenback hit an all-time low versus the euro and a 13-year low versus the yen last week. Treasury prices rose modestly, lowering the yield on the benchmark 10-year note to 3.47% from 3.5% late on Tuesday.
New home sales fell to a 13-year low in February. However, the decline was smaller than Wall Street expectations. Orders for manufactured goods slumped 1.7% in February versus forecasts for a rise of 0.8%. January's drop in durable goods was revised to 4.7% from an initial read of 5.3%.
Treasury Secretary Henry Paulson said the Bear Stearns collapse highlights the fact that investments banks need to be brought under the kind of federal regulation that has long been given to commercial banks.
After the close, Oracle reported quarterly earnings that rose from a year ago and met estimates on sales that rose a year ago and missed forecasts. Shares fell 8.5% in after-hours trading.
Ford Motor said it is selling its Jaguar and Land Rover brands to India's Tata Motors for $2.3bn in cash. Motorola said its board has approved a plan to break the company into two independent, publicly traded companies.
Clear Channel plunged 17% for the second-biggest drop in the S&P 500. The Wall Street Journal said banks financing the deal for Thomas H. Lee Partners LP and Bain Capital LLC haven't been able to agree with the buyers on terms.
Stocks in Europe also closed lower. The pan-European Dow Jones Stoxx 600 index slipped 0.7% to close at 304.62. Germany's DAX 30 ended down 0.5% at 6,489.26, while the French CAC 40 lost 0.3% to 4,676.68 and the UK's FTSE 100 closed down 0.5% at 5,660.40.
Deutsche Bank, Germany's biggest bank, fell almost 3% in Frankfurt after its annual report said possible asset writedowns and slowing economic growth will make it harder to reach its full-year profit target.
European Central Bank (ECB) President Jean-Claude Trichet said yesterday that large euro-area banks are likely to face pressure on revenues on account of the strained credit markets and reduced risk appetite.
In the emerging markets, the Bovespa in Brazil up 0.3% at 61,415 while the IPC index in Mexico gained 0.25% at 30,057. The RTS index in Russia finished nearly unchanged at 1995 while the ISE National 30 index in Turkey fell 0.7% to 50,716.
Market may consolidate further
After opening with a positive bias, markets traded in a range bound for major part of the trading session. However, towards last hour of the day, a four day rally fizzled out as weak cues from the US, Asian and the European markets coupled with selling pressure in the Banking, Oil & Gas, Telecom and Pharma stocks dragged the benchmark Sensex to close in red. Finally, the BSE benchmark Sensex slipped 130 points to 16,086 and the Nifty index lost 48 points to close at 4,828.
Overall about 1,733 stocks advanced; 978 stocks declined while 50 stocks remained unchanged. Among the 50 Nifty 19 stocks ended in positive territory. On the other hand, 31 stock ended in red.
Among the BSE Sectoral indices, BSE Bankex index (down 0.8%), BSE Oil & Gas index (down 0.8%), BSE Teck index (down 0.7%) and BSE Pharma index (down 0.7%). Gainers were, BSE Small-Cap index (up 2.1%), Mid-Cap index (up 1.5%) and Metal index (up 1.5%).
Among the 30-stocks of Sensex, ICICI Bank, Bharti Airtel, Hindustan Unilever, RIL and BHEL were among the major laggards. However, bucking the trend were HDFC, Tata Steel and ITC.
Aries Agro advanced by 2.2% to Rs120 after the company announced that they opened largest Micronutrient unit at Hyderabad. The scrip touched an intra-day high of Rs125 and a low of Rs116 and recorded volumes of over 8,000 shares on BSE.
Dewan Housing was up over 3% to Rs108 after the company said that it entered into an agreement with UAE sponsorship centre. The scrip touched an intra-day high of Rs108 and a low of Rs102 and recorded volumes of over 3,00,000 shares on BSE.
Strides Arcolab was up by 1.4% to Rs156. The company said that it secured first US approval for HIV drug, according to reports. The scrip touched an intra-day high of Rs159 and a low of Rs151 and recorded volumes of over 10,000 shares on BSE.
Ashok Leyland marginally slipped by half a percent to Rs33. The company said that they raised US$200mn in overseas loan. The scrip touched an intra-day high of Rs33 and a low of Rs32 and recorded volumes of over 6,00,000 shares on BSE.
Maruti Suzuki ended on a flat note to Rs845. The company said that they would begin selling swift Dzire in India march 29. The scrip touched an intra-day high of Rs852 and a low of Rs833 and recorded volumes of over 1,00,000 shares on BSE.
Tata Chemicals slipped by half a percent to Rs274. Reports stated that the company would raise US$850mn to part fund its US$1bn acquisition of US-based General Chemicals Industries Products. The scrip touched an intra-day high of Rs278 and a low of Rs272 and recorded volumes of over 85,000 shares on BSE.
SBI was down by 1.5% to Rs1713. Report stated that the company has secured full bank license from the Monetary Authority of Singapore to establish up to 25 outlets. The scrip touched an intra-day high of Rs1791 and a low of Rs1696 and recorded volumes of over 3,00,000 shares on BSE.
Religare surged by over 4% to Rs380 following reports that the company would acquire UK broking firm Hichens, Harrison & Co for US$100mn. The scrip touched an intra-day high of Rs390 and a low of Rs351 and recorded volumes of over 65,000 shares on BSE.
Markets would further look to consolidate and with F&O expiry on Thursday traders should be cautious.Corporate Front Page
Tata Motors has signed a deal to buy luxury brands Jaguar and Land Rover (JLR) from Ford for US$2.3bn in cash. (BS)
Pfizer has filed two law suits to block Ranbaxy's generic version of Lipitor and Caduet. (ET)
RCOM and TCS to enter last leg of bid for setting up 12,000 common service centres across the country. (ET)
Tatas to get approval to make an eco-car from the Thailand’s Board of Investment. (BS)
ONGC, along with its partner the Hinduja Group, to sign an initial agreement to develop two huge oil and gas fields in Iran. (BL)
Religare Enterprises to buy a London-based broking firm, for ~Rs7bn. (BS)
DLF to add Ferragamo to luxury brand portfolio. (BS)
IDBI reduces its benchmark prime lending rate by 50 basis points to 12.75% from 13.25%. (BL)
Gujarat NRE Coke plans to set up coke oven flu gas power plants in its production facilities. (BS)
KS Oils has acquired 50,000 acres of palm plantation in Indonesia with an investment of Rs2.3bn. (BL)
ITC stops non-filtered cigarette production. (BL)
Ashok Leyland has recently concluded an ECB program of US$200mn. (BL)
Tata Teleservices has partnered with PayMate to enable Tata Indicom customers to book domestic flight tickets. (BL)
Idea Cellular to extend its network to cover 3,000 towns and 30,000 villages by the end of the year. (BL)
Alok Infra, a subsidiary of Alok Industries, to raise $100mn through a PE fund. (ET)
Economy News
SEBI Board will take up listing norms for corporate bonds in the next board meeting. (ET)
Withdrawal of income tax holiday for refinery may hit three government refinery projects. (ET)
Cabinet to take up DPEB extension today. (ET)
The CAG has recommended the closer of 12 state PSUs on account of the poor turnover and continuous losses. (BS)
Maharashtra Government will not take further action for three months with regards to land declared as private forest. (ET)
Government to create a debt relief fund to provide liquidity to bank for implementing the Rs600bn loan waiver package. (ET)
Government still wary of easing ECB curbs. (ET)
TRAI to fix prices of pay channels on the DTH platform in line with the Rs5 per channel cap on CAS. (BS)
Government to talk to iron ore exporters for raw material security. (BS)
DoT may agree to allow niche operators specifically for providing services in the rural sector. (BL)
Cabinet nod for farm debt relief fund today. (BL)
India's crude oil production increased 2.3% yoy and natural gas output rose 4.7% yoy in February. (BL)
Indian refiners February oil processing grew 5.8% on yoy basis. (FE)
TRAI is looking to reduce a fee charged by telcos from other telcos. (Mint)