Man must be prepared for every event of life, for there is nothing that is durable.
Hoping for One Fine Day has also become difficult these days. Just when global cues seemed better, grim industrial output report spooked the bulls yesterday. We expect the market to open soft in the wake of the weakness in US and Asian markets. The trend thereafter will partly hinge on global cues. Tomorrow, we will get the weekly inflation data. A fresh spike there could deal another blow to the sentiment.
Shares of V-Guard Industries will get listed today on the bourses. The company has fixed the issue price at Rss82 per share. The issue was subscribed 2.45 times. The stock may list around Rs90 to Rs100. It can see the intraday level of Rs105 to Rs110.
India's industrial production halved in January (5.3%) from 11.6% in the year-ago period. The steep drop was led by continuing weakness in the consumer durables segment, which shrunk yet again. But, surprisingly, growth dipped sharply even in capital goods (2.1% vs 16.3%), which had so far held up quite well in the face of a slowdown on the consumption side. The figures are certainly worrisome and point to a clear slowdown in the domestic economic activity from the peak of last year.
The bad news on the industrial slowdown comes in the backdrop of an imminent recession in the US and persistent turmoil in the global financial markets. Another factor that could pose serious challenge for policymakers worldwide is the spurt across various commodities over the past few weeks. So, what we have is a weird situation where economic growth is slipping across the globe while at the same time inflation has started shooting up again.
It will be really tough for the Finance Minister and the RBI Governor to revive momentum in the Indian economy. The budget is partly an exercise in this direction. Another remedy to boost both consumption and investment demand could be an immediate easing of interest rates. But, it remains to be seen if the RBI obliges when it meets for its annual policy meeting next month. Before that we will have the Fed meet on March 18 and of course the all-important fourth quarter and annual results.
Asian stocks fell for the first time in three days, on concerns that demand for the region's exports will slow as record crude oil prices threaten to dent consumer spending worldwide.
Toyota dropped as the dollar slumped to the lowest against the yen since 1995. Mitsubishi UFJ Financial Group led declines among banks. But, Japanese oil producer Inpex Holdings rose.
The MSCI Asia Pacific Index fell 0.7% to 139.53 as of 10:24 a.m. in Tokyo, snapping a two-day, 2.3% gain. Nine of the benchmark's 10 industry groups declined, with more than three stocks dropping for each one that climbed.
The Nikkei in Tokyo was down 2% at 12,600 while the Hang Seng in Hong Kong slid 2.1% to 22,915. The Kospi in Seoul fell 1.2% to 1639 while the Straits Times in Singapore dropped 1.3% to 2880.
The Shanghai Composite in China shed 1.2% to 4019 after briefly slipping below 4,000 for the first time since July. The Taiex in Taiwan fell 0.6% to 8382. Australia's S&P/ASX 200 Index declined 1.4%. All markets open for trading fell except New Zealand.
US stocks ended lower on Wednesday, erasing early gains, as record oil and gas prices overshadowed the Fed announcement that it will inject $200bn into the banking system to soften the liquidity crunch. Some Wall Street observers also attributed the decline to investors taking profits from the previous session's rally.
Stocks rose through the early afternoon as investors continued to cheer the Fed's plan to restore sanity in the credit markets. But the rally fizzled out late in the session and stocks turned lower as investors paid attention to record oil and gas prices.
The S &P 500 Index dropped 12 points, or 0.9%, to 1,308.77. The Dow Jones Industrial Average slipped 47 points, or 0.4%, to 12,110.24. The Nasdaq Composite fell 12 points, or 0.5%, to 2,243.87.
The Dow fell 211 points from its midday high as oil rose. On Tuesday, the bluechip benchmark had rallied 416 points, or 3.6%, its largest percentage climb since March 2003 and its fourth biggest point jump.
Market breadth was negative. Two stocks dropped for every one that rose on the New York Stock Exchange.
Nine of 10 industries in the S&P 500 fell after Merrill Lynch, Goldman Sachs and others said that the Fed's plan may not be able to ease the strain in the credit markets.
Crude oil prices resumed their advance, topping $110 for the first time, as the dollar remained under pressure. Oil had fallen in the morning after the government's weekly inventory report showed a surprise jump in crude supplies.
US light crude oil for April delivery rose $1.19 to settle at $109.72 a barrel in New York, a record close. COMEX gold for April delivery added $4.50 to $980.50 an ounce.
In currency trading, the dollar fell versus the euro but was off its worst levels of the day after touching a fresh record low against the European currency earlier. The greenback fell versus the yen.
Treasury prices rallied after plunging a day before. The advance lowered the yield on the benchmark 10-year note to 3.45% from 3.59% late on Tuesday.
European shares rose for a second straight session. The pan-European Dow Jones Stoxx 600 index climbed 1.2% to end at 311.48. The UK's FTSE 100 closed up 1.5% at 5,776.40, while the French CAC-40 climbed 1.5% to 4,697.10 and the German DAX 30 advanced 1.2% to 6,599.37.
In the emerging markets, the Bovespa in Brazil was down 0.3% at 62,176 while the IPC index in Mexico shed 0.6% to 29,283. The RTS index in Russia rose 1% to 2079 and the ISE National 30 index in Turkey gained 2.4% to 55,190.
Bulls may continue to struggle
The start was quite promising for bulls with the benchmark Sensex hitting an intra-day high of 16,683. Key indices were firm and were in momentum ahead of break. However, post sun-outage disappointing IIP figures dampened the sentiments on Dalal Street.
Government data indicated that India’s industrial growth dropped. India's industrial output growth shrank sharply in January as high interest rates sapped consumer spending in Asia's fourth-biggest economy even as a US-led global economic slowdown loomed.
Production at factories, mines and utilities rose by 5.3% in January as against 11.6% in the same month last year, data released by the Government showed today. The reading was lower than average expectations of 7-8% expansion.
Finally, the 30-share Sensex closed flat at 16,127 hitting an intra-day low of 16,064. The NSE Nifty also closed flat at 4,872 touching an intra-day high of 5,019 and a low of 4,854.
Overall about 1,264 stocks advanced, 1,442 stocks declined while 57 stocks remained unchanged. Among the Nifty-50 stocks 28 stocks advanced while 22 stocks declined.
Among the BSE Sectoral indices; BSE Metal index (down 2.3%), BSE IT index (down 2.1%), FMCG index (down 1.05%) and BSE Auto index (down 0.4%).
REC Electrification Corporation a public sector enterprise engaged in financing and promoting transmission, distribution and generation projects started trading at Rs124.65 against the issue price of Rs105. During the day the scrip took a beating hitting a low of Rs118, however, it managed to make a come back finally closing at Rs121 translating into a premium of 15%.
REC raised close to Rs1,640crore through its IPO. The company entered the capital market with its issue offering of 15.6crore shares. The issue got subscribed over 27 times. The price band for the IPO was Rs90 to Rs105.
The initial public offering of Rural Electrification Corporation was subscribed 27.30. The retail portion was subscribed 0.78 times of the 30% of the total offer on offer. The non-institutional investor portion was subscribed 0.76 times. The qualified institutional buyers segment, was subscribed 6.5 times.
Strides Arcolab slipped by 2% to Rs148. The company said that it secured an approval from Canada for its Tazo PIP Sterile. The company also secured approval for Penicillin Sterile facility. The scrip touched an intra-day high of Rs157 and a low of Rs148 and recorded volumes of over 71,000 shares on NSE.
Bajaj Auto gained by a percent to Rs2093. The company said that it would change name to Bajaj Holdings and Investments Ltd and would exit from benchmark Sensex and Nifty from March 14, 2008. The scrip touched an intra-day high of Rs2150 and a low of Rs2055 and recorded volumes of over 4,0,000 shares on NSE.
Orbit Corp lost ground and slipped 2% to Rs521. Rodere Holdings, the Cyprus-based private equity investor, would invest Rs2bn in Orbit Corp. The scrip touched an intra-day high of Rs583 and a low of Rs515 and recorded volumes of over 60,000 shares on NSE.
Suven Life Science surged by over 8% to Rs38.30 after the company announced that it entered in a drug discovery pact with Eli Lilly. The scrip touched an intra-day high of Rs38.30 and a low of Rs31.35 and recorded volumes of over 7,00,000 shares on NSE.
Corporate Front Page
Vedanta Resources to set up a large aluminum complex at Bihanbag, Asansol, at an investment of Rs200bn. (ET)
DLF REIT to raise Rs20bn from a clutch of PE investors. (ET)
TCS forms JV with Thai Re-Insurance Public Corporation to offer IT outsourcing services on an ASP model to insurance providers in Thailand. (BL)
Bharti Airtel signs a US$100mn investment agreement with the Board of Investment of Sri Lanka to begin operations there. (ET)
Ashok Leyland plans to invest Rs60bn to shore up CV business in the next few years. (ET)
NTPC Board approves an investment of Rs73.4bn in 1,920 MW Barh super thermal power project stage-II in Bihar. (FE)
Tata Steel to source chrome ore from Iran for its upcoming ferro chrome plant in South Africa. (BS)
IOC to invest Rs5bn in R&D during the 11th five-Year plan ending 2012. (BL)
M&M’s arm, Mahindra Intertrade opens an electrical steel plant in Vadodara, Gujarat. (BL)
Alok Industries has taken 50% stake in Ashford Infotech through a 100% subsidiary for joint development of realty projects. (BS)
Hikal to invest Rs2bn to set up four new manufacturing facilities in Bangalore and Mumbai and a R&D centre in Pune. (BS)
Gujarat Gas Company expects 10% drop in the availability of natural gas from Panna-Mukta-Tapti source from April. (BL)
Voltas eyes 20% share in AC market by adding 1,000 new channel partners to the distribution network. (DNA)
Gayatri Projects to enter the urban infrastructure and water treatment business segments. (DNA)
Everonn Systems plans to raise US$50mn to carry forward the expansion in the virtual classroom segment. (ET)
Tanla Solutions is in acquisition talks with 3-4 US-based firms with annual revenues in the range of US$30-70mn. (DNA)
Godfrey Phillips launches ‘Fundamint’ brand of mouth freshner. (DNA)
Goldstone Tech plans to roll-out IPTV services in 11 countries by the end of FY09. (BS)
Mumbai-based property developer, Oberoi Constructions, is planning Rs40bn IPO by the year end. (BS)
Piaggio eyes 5-fold increase in its Ape Truk (sub-one-tonne light CV) sales. (BS)
Shriram Properties to invest Rs5bn to develop mid-income housing projects across India over next 2-3 years. (ET)
Blackstone has picked up minority interest in Titagarh Wagons at Rs672/share. (ET)
Economic Front Page
The Government has notified new FDI norms for sectors including PSU oil refineries, industrial parks, credit information companies, titanium mining, commodity exchanges and civil aviation. (BL)
Royalty on iron ore mining may be changed to an ad Valorem rate of 10% from the current fixed rate of Rs13-27/ton. (ET)
Cement sales for the month of February were up 13% yoy. (BL)
Indian battery industry is set to double by 2011, says Exide Industries. (BL)
India's Travel & Tourism revenues are estimated at US$100bn in 2008 and may increase to US$276bn by 2018. (ET)
Global PC shipments to grow 12.8% this year, as per IDC. (BL)