The gap in our economy is between what we have and what we think we ought to have - and that is a moral problem, not an economic one.
A gap up opening is in store. The problem, as seen in recent times, is that markets open with a gap and hardly give a chance to pocket quick gains. Face it. After losing money quickly, who doesn’t want an opportunity to make some quick bucks? We won’t debate on whether greed is a moral or economic problem. The Nifty futures trading in Singapore point to a gap-up opening. The bulls will hope to have a blast before one of the longest weekends in the market. Remain guarded in approaching today's trade. We are not sure if this is a dead cat bounce or resumption of another bull phase.
The Federal Reserve has slashed its benchmark interest rate by 75 basis points, which may be a little less than the 100 bps that many were looking for. Nevertheless, the Fed has signaled yet again that it is prepared to take any step to mitigate the damage from the US housing sector mess and the ensuing turmoil in credit markets. The rate cut is the latest in the series of measures taken by the US central bank since September 2007 to bring back sanity in financial markets and avoid a recession.
The Dow Jones has notched up a gain of over 400 points, sparking a rally across global markets. The worst fears of Lehman Brothers perhaps following fellow Wall Street firm Bear Stearns towards bankruptcy has been proved wrong. Lehman, along with Goldman Sachs have come out with decent set of results.
FIIs were net sellers of Rs10.11bn (provisional) in the cash segment yesterday. Local institutions were net buyers of Rs1.77bn. In the F&O segment, foreign funds were net buyers of Rs13.15bn yesterday.
On Monday, FIIs were net sellers of Rs6.32bn in the cash segment and Mutual Funds too offloaded stocks worth Rs1bn.
Most Asian markets are trading higher on the back of the overnight rally in US shares. The Nikkei in Tokyo rallied 328 points or 2.75% at 12,292 while the Hang Seng in Hong Kong jumped 613 points to 21,997.
The Kospi in Seoul rose 38 points to 1627 while the Straits Times in Singapore was up 55 points at 2889. The Shanghai Composite in China gained 94 points to 3762 and the Taiex in Taiwan surged 162 points to 8220.
US stocks soared on Tuesday, with the Dow Jones Industrial Average logging its fourth-largest point gain ever after earnings from Goldman Sachs and Lehman Brothers topped estimates and the Federal Reserve cut its key rate by 75 basis points.
Up nearly 300 points before the Fed announcement, the major stock indexes briefly trimmed their gains, only to accelerate towards the close of trade, with all the three indices ending at session highs.
The Dow surged 420 points, its biggest one-day point gain since July 2002, for a gain of 3.5%. The broader Standard & Poor's 500 index rallied over 54 points, its biggest one-day point gain since Jan. 2001, for a gain of 4.2%.
The tech-fueled Nasdaq Composite index shot up over 91 points, its biggest one-day point gain since May 2002, for a gain of around 4.2%.
The Fed cut the fed funds rate, a key short-term lending rate that impacts consumer loans, by 75 basis points, to 2.25%, belying some expectations for a full percentage point reduction.
Stocks had rallied ahead of the news as investors welcomed better-than-expected quarterly earnings from Lehman Brothers and Goldman Sachs. But the market stumbled in the minutes after the Fed announcement, before regaining the momentum.
Market breadth was positive. On the New York Stock Exchange, winners trounced losers 7 to 1 on volume of 1.95bn shares. On the Nasdaq, advancers topped decliners 3 to 1 on volume of 2.41bn shares.
In the accompanying statement, Fed policy makers acknowledged the continuing strain in the financial markets, softer consumer spending and a weakening labor market, and also talked about higher inflationary pressure.
In other economic news, new home construction fell in February to an annual pace of just over a million properties, beating forecasts for a bigger drop. Building permits, a measure of builder confidence, tumbled more than expected.
The Producer Price Index (PPI), which measures inflation at the wholesale level, rose as expected in February. But core PPI, which excludes volatile food and energy prices, came in higher than expected.
US light crude oil for April delivery climbed $3.74 to $109.42 a barrel on the New York Mercantile Exchange. Prices hit a record $111.80 in electronic trading Monday. COMEX gold for April delivery rose $1.71 to $1,004.31 an ounce. Gold hit an all-time trading high of $1,033.90 an ounce on Monday.
Treasury prices slumped, as investors cashed in after the previous session's big rally. The selloff raised the yield on the benchmark 10-year note to 3.47% from 3.30% late on Monday.
In currency trading, the dollar gained against the euro after hitting another all-time low on Monday. The greenback rallied against the yen after touching a more than 12-year low Monday.
European shares rebounded sharply. The pan-European Dow Jones Stoxx 600 index rose 3.6% to 300.57. The UK's FTSE 100 closed up 3.5% at 5,605.80, while the German DAX 30 climbed 3.4% to 6,393.39 and the French CAC-40 jumped 3.4% to 4,582.59.
Latin American equity markets too finished higher. Brazil's Bovespa index closed up 3.2% at 61,932.78 while Mexico's IPC rose 1.6% to 29,515.55. Argentina's Merval gained 1.2% at 2,081.67 and Chile's benchmark stock index ended 0.2% higher at 2,840.61.
The RTS index in Russia was up 1.4% at 2018 while the ISE National-30 index in Turkey advanced 3.5% to 50,808Bulls may attempt another rally
It was a volatile trading session which ended on a flat note with modest gains. After hitting an intra-day high of 15,164 thanks to a smart recovery in Asian markets and a strong start in the equity markets across Europe proved to be a sentiment booster. However, the markets were unable to hold on to their gains as intra-day traders preferred to stay light ahead of the FED meet.
Select pharma, FMCG, telecom and power stocks were in demand. However, Banking, Metal snd Oil & gas stocks saw some offloading towards the end.
Finally, the BSE benchmark Sensex ended flat at 14,833 and the Nifty index added 29 points ending at 4,533.
Overall about 753 stocks advanced; 1,916 stocks declined while 65 stocks remained unchanged.
The broader markets witnessed selling as both the Mid-Cap and Small-Cap indices fell over 1.5% each.
Among the BSE Sectoral indices, BSE Realty index (up 1.9%), BSE Capital Good index (up 1.7%) and BSE Teck index (up 0.83%). While, Metal index (up 2%) and BSE Bankex index (down 1%)
Mukand was up by 2% to Rs85 after reports stated that the company would raise alloy steel prices by Rs7,000/ ton, effective April 1. The scrip touched an intra-day high of Rs93 and a low of Rs82 and recorded volumes of over 37,000 shares on BSE.
Confidence Petroleum the flagship company of Confidence Group has spurted over 5% to Rs12.6 after the company declared that they have entered into a joint venture with Energtek Inc., world leaders in NG abd Adsorbed Natural Gas (ANG) Technology to provide clean and affordable pipeless Natural Gas supply to Automotive and Industrial Consumers.
The scrip touched an intra-day high of Rs13 and a low of Rs10 and recorded volumes of over 9,00,000 shares on BSE.
Bharat Forge lost 3% to Rs248. Reports that they would develop equipment for power plants. The company also said that t hey would diversify into aerospace, railway - reports and would invest Rs5bn. The scrip touched an intra-day high of Rs261 and a low of Rs245 and recorded volumes of over 1,00,000 shares on BSE.
L&T gained by 2.2% to Rs2763 after the company said that the company secured Rs28mn Euro coal Gasifier equipment contract. The scrip touched an intra-day high of Rs2809 and a low of Rs2690 and recorded volumes of over 2,00,000 shares on BSE.
RPL slipped by over 1.2% to Rs152 after media reports stated that SEBI would examine insider trading charge in the company’s shares. The scrip touched an intra-day high of Rs159 and a low of Rs145 and recorded volumes of over 20,0,000 shares on BSE.
According to reports, Tata Steel is planning to raise Rs40bn through an issue of non-fungible GDRs. The proposed issue is to part-finance its acquisition of the Anglo-Dutch steelmaker Corus. The scrip slipped by 3% to Rs639 after hitting an intra-day high of Rs667 and a low of Rs630 and recorded volumes of over 11,00,000 shares on BSE.
Infotech Enterprise was up by 3% to Rs225 after the company announced that they secured contract from Tele Atlas. The scrip touched an intra-day high of Rs230 and a low of Rs194 and recorded volumes of over 8,000 shares on BSE.
All eyes would be on FED’s decision. Bulls would look to stage another rally. However, cues coming in from the global equity markets would be watched closely.
Corporate Front Page
ICICI Bank seeks additional collateral from corporate borrowers of offshore finance. (ET)
HDFC to raise Rs40bn debt to finance stake purchase in HDFC Bank. (BS)
TCS opens its largest delivery centre in the US at Ohio having a capacity of 1,000 people. (ET)
Jaypee Group leads race for ICICI’s 45% stake in exploration firm Prize Petroleum. (ET)
Ranbaxy has signed a pact with CD Pharma to market dental drug brand INERSAN in India and Nepal. (BL)
Reliance Communications to buy Europe-based specialty WiMax operator. (DNA)
Maruti Suzuki to ramp-up its plant capacity in Manesar, Haryana, to 3lacs units per year by October 2008. (BL)
ICICI Bank has announced country’s largest securitization program of Rs58bn. (ET)
REL to hire more engineers and managers to execute contracts worth US$3.65bn. (BL)
Indiabulls Power, owned by Indiabulls Real Estate, has won the bid to set-up a 1,600MW Bhaiyathan power project in Chattisgarh. (ET)
RCF has lined up an investment plan of Rs76.4bn for setting up an ammonia-urea and phosphatic plant in Mozambique. (FE)
MTNL likely to offload 50% stake in Suntel, a Sri Lankan telco. (ET)
Reliance ADAG is setting up a cement unit in Madhya Pradesh. (DNA)
L&T wins contract worth Rs1.7bn from a Chinese firm to supply gasification equipments. (DNA)
Tata Motors to get US$3bn one-year bridge loan from Ctitgroup and JP Morgan to help finance potential purchase of Jaguar and Land Rover. (BL)
Vishal Retail signs an agreement with HPCL for opening stores at its selected outlets across the country. (BL)
Orient Global Tamarind has picked up nearly 1% in Axis Bank for Rs2.38bn in open market transactions. (DNA)
Allied Digital to raise utpo US$100mn through issue of securities in domestic as well as international markets. (DNA)
DCM Shriram acquires 49% stake in hybrid seeds business from its JV partner for US$13.3mn. (BS)
Sical Logistics plans to buy an Indian freight forwarding company. (DNA)
Barings PE buys 12% in brokerage firm Sharekhan for Rs2.4bn. (ET)
Economic Front Page
Corporate advance tax payments rise 110%. (ET)
GDP growth may slow down to 8% in 2008-09 says Mr. Montek Singh, Deputy Head of the planning commission. (ET)
MMRDA auctioned three plots in Bandra Kurla Complex for Rs13.2bn. The price was significantly lower than Rs27.9bn for a similar transaction three months back. (ET)
Government plans to scrap purchase preference policy from 1st April 2008 under which the CPSEs get 10% price preference for government contracts in various areas. (ET)
I&B Ministry favours 74% FDI limit for DTH. (BL)
Home loan rates have declined in last one year says FM. (BS)
Gems & jewelry exports grew 9.3% yoy during April-Feb 2008. (BS)