Endure the present, and watch for better things.
It has been an enduring task to stay afloat in the markets, especially for the last two months. Better things remain a hope. In fact, on Friday, bulls may have powered ahead. That does not hide the fact that inflation is reaching alarming levels. The Government has already announced measures to contain price pressures. More steps are likely to be announced over the next few days. The moot point is whether these measures will be enough to check inflation amid a global rally across various commodities.
The RBI too may take steps to rein in inflationary expectations. Most experts see the central bank keeping rates unchanged and resorting to a CRR hike. It may also allow the rupee to appreciate further to make imports cheaper. One has to see whether the RBI waits till next month's annual policy meeting or makes the anticipated announcements well ahead of it. A tighter monetary policy at a time when the economy is slowing down spells bad news for India Inc. and therefore the stock market. Not long ago, many were betting on a rate cut.
Aside from inflation, the market will also have to brace for the change in the STT regime from Tuesday. The withdrawal of STT benefit will hit traders, jobbers and arbitrageurs hard. This may have an adverse effect on traded volume and push up transaction costs, though past experience shows that the market has adjusted well to such events over time. Then there are the lingering concerns over the state of the US economy and global credit markets. There is no dearth of bad news on this front. This will remain a stumbling block for the bulls.
Today, we expect the market to open on a cautious note after Friday's surprising rally and on mixed global cues. Though indicators from the technical and derivative side are encouraging, weak fundamentals (both locally as well as globally) and erratic behaviour of the FIIs will keep the market on tenterhooks. The upcoming quarterly results will be keenly followed for ascertaining the impact on future earnings growth. Given the year end considerations, mutual funds may do their best to prevent a slide in their counters today.
Asian markets are trading mixed this morning. The Nikkei in Tokyo was down 192 points or 1.5% at 12,627 while the Hang Seng in Hong Kong dropped 290 points or 1.25% at 22,995. The Kospi in Seoul was flat at 1702 and the Straits Times in Singapore added 6 points or 0.2% at 3037.
The Shanghai Composite in China slid 82 points or 2.3% to 3497 and the Taiex in Taiwan shed 95 points or 1.1% to 8528.
US stocks closed lower for a third successive day on Friday, with two of the three major indexes recording weekly losses. A grim outlook from retail major JC Penny and disappointing economic data weighed on the sentiment.
Stocks rose through the early afternoon as investors welcomed a report showing a rise in personal income and tame inflation - as well as falling oil and gold prices. But the advance was short-lived as most of the gains evaporated by the close of trade.
The Dow Jones Industrial Average declined 86.06 points to 12,216.40, off 1.2% from the previous week's close.
Of the blue chip's 30 components, 22 posted losses, with financials including JP Morgan Chase erasing the bulk of earlier gains to close down nearly 0.4%. Other financials on the Dow also fell, with Citigroup easing 4.4% and American Express down 3.8%.
The S&P 500 shed 10.54 points to 1,315.22, down 1.2% from the previous week ago, while the technology-laden Nasdaq Composite index dropped 19.65 points to 2,261.18, rising by just 0.1% from the previous week.
The Dow is down just under 8% in the January-March quarter, the S&P 500 down 10.4% and the Nasdaq down 14.7%. Next week brings a heavy spate of economic news, including readings on manufacturing and construction spending, factory orders and employment.
Personal income in the US rose 0.5% in February, beating economists' forecasts. But spending rose just 0.1%, the smallest rise since September 2006.
On the upside, core PCE, the spending report's inflation component, rose 0.1%, in line with expectations. That left PCE at 2% over the last 12 months, within the 1-2% range at which the Fed is said to be comfortable.
Separately, the Fed announced that it would make an additional $100bn available to cash-deficient banks during the month of April, as part of its ongoing plan to help unfreeze the credit markets.
Another report showed that consumer sentiment fell to 69.5 in March from a previous reading of 70.5 and down from 70.8 in February.
Meanwhile, retailer JC Penney issued a profit warning. The department store operator said first-quarter earnings won't meet forecasts, due to sagging consumer demand amid the economic slowdown. Its shares slumped 7.5%.
Citi Investment Research upgraded Lehman Brothers to "buy" from "hold", saying that the company is attractively valued after the recent selloff and is in good shape in a tough environment. Lehman shares fell around 2.2%.
US light, crude oil for May delivery fell $1.96 to settle at $105.62 a barrel in New York. Oil prices hit a record $111.80 in electronic trading last week.
COMEX gold for April delivery fell $18.20 to settle at $930.60 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.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.44% from 3.53% late on Thursday.
In Europe, the pan-European Dow Jones Stoxx 600 index fell 0.6% to 306.68 on Friday but was still more than 3% higher on the week. The UK's FTSE 100 closed down 0.4% at 5,692.90, while the German DAX 30 slipped 0.3% to 6,559.90 and the French CAC-40 dipped 0.5% to 4,695.92.
In the emerging markets, the Bovespa in Brazil gained 0.5% at 60,452 while the IPC index in Mexico gained 0.3% at 30,089. The RTS index in Russia was up by nearly 1% at 2049 and the ISE National 30 index in Turkey was down almost 3% at 49,191.
Bulls may extend gains
Markets posted a smart start to the April series with benchmark Sensex shutting shop gaining over 350 points and Nifty index adding over 100 points. Markets snapped two day losing streak on back of positive cues from the Asian and the European markets
Despite accelerating inflation figures markets surged pass the 16,400 mark in intra-day. Finally, the BSE benchmark Sensex surged 386 points to 16,401 and the Nifty index ended at 4,942 adding over 111 points.
Overall about 2,328 stocks advanced; 374 stocks declined while 38 stocks remained unchanged. Among the 50 Nifty 40 stocks ended in positive territory. On the other hand, 10 stock ended in red.
Era Infra gained by 1% to Rs596 as the company’s venture with KMB Ukrain secured order worth Rs1.48bn. The scrip touched an intra-day high of Rs614 and a low of Rs591 and recorded volumes of over 68,000 shares on BSE.
Ranbaxy Labs was up by half a percent to Rs435. The company said that it would pay final dividend of Rs6 per share. The scrip touched an intra-day high of Rs446 and a low of Rs434 and recorded volumes of over 3,00,000 shares on BSE.
Tata Power gained 3.5% to Rs1211 after media reports stated that it would increase capacity to 12,861MW against 2,474MW by 2013. The scrip touched an intra-day high of Rs1225 and a low of Rs1153 and recorded volumes of over 93,000 shares on BSE.
Aegis Logistics surged by over 7% to Rs204 after the company said that it plans to set up subsidiary in Singapore. The scrip touched an intra-day high of Rs225 and a low of Rs196 and recorded volumes of over 21,000 shares on BSE.
Varun Shipping rallied over 7% to Rs72 after the company acquired India’s largest AHTS vessel. Fitch also rated the company’s bank loan facilities at A+/F1. The scrip touched an intra-day high of Rs77 and a low of Rs69 and recorded volumes of over 1,00,000 shares on BSE.
Jupiter Bioscience surged by over 9% to Rs148 after the company announced that it is acquiring a Manufacturing facility of Merck Life Sciences, Switzerland. Also the Company has concluded a long term business contract with Merck Life Sciences. The scrip touched an intra-day high of Rs150 and a low of Rs138 and recorded volumes of over 1,00,000 shares on BSE.
Reliance Power gained by 1.7% to Rs333 after reports stated that the company would place Rs100bn equipment order for its power plants. The scrip touched an intra-day high of Rs337 and a low of Rs327 and recorded volumes of over 16,00,000 shares on BSE.
MIC Electronic advanced by 4% to Rs700 after the company said that it secured orders from Delhi Metro Rail. The scrip touched an intra-day high of Rs744 and a low of Rs651 and recorded volumes of over 3,000 shares on BSE.
Suryachakra Power was locked at 5% upper circuit to Rs21.75 after the company announced that Lahari Power & Steels Ltd being the wholly owned subsidiary Company of Suryachakra Power, having its 9.8 MW Biomass Power Plant located at Madwa Village, Champa-Janjgir District, Chattisgarh State, started its operations from March 28. The scrip touched an intra-day high of Rs21.75 and a low of Rs21.75 and recorded volumes of over 34,000 shares on BSE.
J.B Chemicals, after being locked at 20% upper circuit in the previous trading session, the scrip further rallied by over 13% to Rs50 after the company announced its plan to buy back shares. The company would consider buyback plan on April 8. The scrip touched an intra-day high of Rs52 and a low of Rs47 and recorded volumes of over 6,00,000 shares on BSE.
Corporate Front Page
Reliance Energy has bagged two contracts worth about Rs12bn for execution of transmission system in the Western region.(Mint)
Tata Power plans to sell stakes in holding companies and assets to help fund its US$6bn capacity expansion plans.(Mint)
Tata Power is evaluating opportunities to make another overseas acquisition of a coal mine.(BS)
Bharat Oman Refineries' IPO is likely to hit the market in the second quarter of the coming fiscal.(BL)
BPCL says it can no longer absorb the losses it suffers on account of having to sell petroleum products at a government-mandated price.(Mint)
IDBI has deferred its earlier decision to cut benchmark PLR by 50 basis points.(BS)
Nagarjuna Fertilisers has completely exited from the inter-state mega power project under construction in Udupi, Karnataka, selling its 26% stake to the Lanco group.(BL)
Marks & Spencer is likely to hold majority stake in Reliance
Retail joint venture. (ET)
Power Grid Corp has signed agreements with World Bank and Asian Development Bank for two loans of US$600mn each for funding projects.(ET)
Ispat Industries to increase its steel capacity to 10 mtpa by 2014.(BS)
Shareholders of Ispat Industries approved the issue of convertible warrants to the tune of Rs5.1bn to the promoters of the company.(BL)
The Netherlands-based Pearle Europe is entering into a 50:50 JV partnership with Reliance Retail to sell optical products.(ET)
The Supreme Court has asked Posco to approach the Orissa government for allotting demarcated mining area for its proposed Rs510bn steel plant.(FE)
Tata Motors’ credit rating has been downgraded following its acquisition of Jaguar and Land Rover by Crisil.(ET)
The DoT has approved the Tata Teleservices–Virgin alliance.(ET)
GSPC has sought about one-tenth of the gas produced from Panna/Mukta and Tapti fields (PMT) for sale to customers in Gujarat.(BS)
Oil marketing companies (IOC, HPCL and BPCL) debt may swell to
Rs700bn in the current fiscal. (ET)
HDFC Bank to move its BPO activity to the semi-urban area by hiring about 2,000 people in next two months.(FE)
Gujarat NRE Coke is planning to invest US$425mn in the next three years to develop its mines.(DNA)
DLF Assets plans to raise more than US$2bn in a private stock sale to buy office properties.(DNA)
DLF will spend US$5bn in the next seven years to build about 125 hotels in the world’s fastest-growing tourist destination.(FE)
Four Soft and Take Solutions, providers of IT products and solutions in the supply chain management (SCM) space to merge.(BS)
Diamond Cables has raised Rs1bn as debt to meet its working capital requirement.(DNA)
Welspun Gujarat secured an order for supply of spiral pipes worth Rs10.8bn in Northern Africa.(BS)
IndianOil is mulling transportation of crude through pipeline from the upcoming SPM at Paradip in Orissa.(BL)
Bata India recorded a PAT of Rs0.5bn, up from the Rs0.4bn last year, on a turnover of Rs8.9bn for the year ended December,2007.(BL)
GSPC defers IPO due to market uncertainties, to come out with the IPO of Rs40-60bn before Diwali.(BL)
Electrotherm to raise Rs3bn via QIP route.(BL)
Morgan Stanley has increased its stake in S Kumars to over 7% for Rs1bn.(DNA)
KMB-ERA JV, of which Era Infra Engineering Ltd is a partner, has secured a contract from Delhi Metro valued at Rs1.5bn.(BL)
Lok Capital LLC has raised US$22mn from institutional investors to fund micro-finance institutions in India.(Mint)
Finance Ministry examining Essar Power’s $2 billion FDI proposal.(Mint)
Hinduja Group in talks with Europe’s third-largest auto component manufacturer Valeo SA to buy a controlling stake in the companyat around US$1.5bn.(BS)
Bhushan Steel to give free land to land-losers as a part of its rehabilitation and resettlement (R&R) package.(BS)
Havells will invest Rs4bn for increasing its capacities in India. (TOI)
HUL has shelved plans to sell its 28acre land in Brookefields,
Bangalore. (ET)
JetLite will soon start air services between Delhi and Islamabad. (ET)
Ispat Industries is all set to acquire in a cluster of coal and iron ore mines in Colombia, Mozambique and
Dena Bank will write-off Rs2bn under the loan waiver packaged announced in the Union budget. (TOI)