You may be disappointed if you fail, but you are doomed if you don't try.
One thing the bulls shouldn't try at this stage is buying into any sharp fall, at least not for the short-term. After a welcome break yesterday and a strong finish on Wednesday, the bulls would have hoped for continuity in the good times. Instead, what they will be confronted with today is fresh bad news from the global markets. Though, most global markets did well on Wednesday and Asian markets gained yesterday, the scene this morning is pretty gloomy. No prices for guessing, who is leading the latest sell-off. Its the Wall Street. US stock indices sank overnight on persistent jitters over the housing sector meltdown and the stress in global credit markets. Financial shares across the globe are once again bearing the brunt of the massacre.
Given the grim backdrop, we expect our market to tank at the opening bell and probably remain weak through the day unless there is a rebound in world indices. The sentiment may also take a hit due to the fresh showdown between the Congress and the Left parties over the Indo-US nuclear pact. The communists have once again warned the Government of adverse consequences if it goes ahead with the deal. They want a meeting before March 15 to discuss the issue with the UPA top brass. On the other hand, some experts say that emboldened by the feel-good budget, the Congress might just decide to act tough. Inflation figures will be released at noon today, and any further spike there may add to the negative mood.
Bank shares will be under pressure amid a growing view that the populist proposals being announced by the Government could hurt their profitability. TCS may fall after the management said that two of its Top 10 customers have deferred specific engagements. Nagarjuna Constructions will be in focus amid news that Blackstone is raising its stake in the construction company. Steel companies will also hog the limelight after some of them hiked prices despite the Government's diktat against such a move. Sonata Software could attract some attention amid news that it is scouting for buyouts in the US and Europe.
Shares of GSS America Infotech will get listed on the bourses today. The IT firm raised Rs1.4bn through its IPO last month. But, the stock may be under pressure on listing as the company's IPO was subscribed by just 1.08 times.
Most Asian markets are deep in the red this morning. The Nikkei in Tokyo was down 3% at 12,818 while the Hang Seng in Hong Kong tumbled 3.1% to 22,616. The Kospi in Seoul slid 2.2% to 1659 and the Straits Times in Singapore dived 1.9% to 2861.
The Shanghai Composite in China was down 1.85% to 4280 and the Taiex in Taiwan shed 1.6% to 8519.
Financial stocks were the biggest drag on the MSCI Asia Pacific Index, which slumped 2.4% to 140.54 as of 11:07 a.m. in Tokyo. The benchmark has lost 4.8% the past five days, the most since the week ended Aug. 17. It had rebounded as much as 13% from a 14-month low reached on Jan. 22.
US stocks fell sharply on Thursday, led by banks, after home foreclosures climbed to a record and loan defaults by Thornburg Mortgage and a Carlyle Group bond fund sparked concern that credit losses are deepening.
Citigroup, Bank of America and JPMorgan Chase led financial shares to the lowest level since May 2003. Retailers JC Penney and Gap fell on sales that trailed estimates. The S &P 500 Index lost 10 points in the final half hour of trading as investors speculated that Friday's US jobs report will show that the world's biggest economy has moved closer to a recession.
The S&P 500 tumbled 29.36 points, or 2.2%, to 1,304.34, the lowest closing level since September 2006. The Dow Jones Industrial Average lost 214.60 points, or 1.8%, to 12,040.39. The Nasdaq Composite decreased 52.31 points, or 2.3%, to 2,220.5.
Market breadth was decisively negative. More than 11 stocks fell for every one that rose on the New York Stock Exchange.
Bond prices rallied as investors opted for the relative safety of government debt. The dollar fell to another all-time low against the euro, which helped push oil prices to a record near $106 a barrel. Gold pulled back after edging closer to the $1,000 an ounce.
The number of US households in foreclosure hit an all-time high in the last quarter of 2007, according to a survey by the Mortgage Bankers Association. Another report showed that homeowners' debt on their houses beats their equity for the first time since 1945. However, US retailers saw some improvements in February, after weak sales the previous two months.
Merrill Lynch slumped 6% after it said it will stop issuing subprime mortgages through its First Franklin Financial subsidiary. The company plans to cut 650 jobs at First Franklin and said it is looking to sell the unit's mortgage servicing unit.
Thornburg Mortgage plunged 55% on bankruptcy fears after the residential mortgage lender said it had failed to meet a $28 million margin call and is now in default on $320 million in financing.
Mortgage real estate investment trusts (REITs) slid after Carlyle Capital Corp, a Dutch company that invests in mortgage-backed securities issued by Fannie Mae and Freddie Mac, missed margin calls and received a notice of default
Reports also suggested that Swiss bank UBS may have sold off its $24 billion portfolio of mortgage-backed assets at so-called fire sale prices. However, analysts suggested the number was probably smaller. Bond fund PIMCO said reports that it had bought $24 billion in bonds were an exaggeration.
Shares in Europe too tumbled. The pan-European Dow Jones Stoxx 600 index fell 1.3% to 311.42 as financials weighed, giving back gains made in the previous session. For every stock posting gains, nearly four declined.
The French CAC-40 slipped 1.7% to 4,678.05, while the UK's FTSE 100 closed down 1.5% to 5,766.40 and the German DAX 30 fell 1.4% to 6,591.31.
The European Central Bank (ECB) voted to leave its key interest rate unchanged at 4%, as inflation worries offset concerns about a possible slowdown in economic growth.
The Bank of England also opted to keep its key lending rate on hold at 5.25%. The British pound pressed back above $2 against a broadly weaker greenback.
The picture remained bleak in the emerging markets too. The Bovespa in Brazil tanked 2.6% to 62,974 while the IPC index in Mexico dropped 1.9% to 28,717. The RTS index in Russia added 0.4% to 2050 and the ISE National 30 index in Turkey shed 2.3% to 52,642.
Bulls look for resurrection
Reversing the downward trend of last four trading sessions, the benchmark Sensex on Wednesday posted a gain of over 200 points on back of renewed buying interest in the index heavyweight stocks, particularly IT stocks. Also the defensive sector Pharma and the under performing FMCG stocks were in demand. Finally, the 30-share Sensex closed at 16,542 adding 202 points. The NSE Nifty closed at 4,921 gaining 57 points.
Overall about 769 stocks advanced, 2,931 stocks declined while 50 stocks remained unchanged. Among the BSE 30 index 19 stocks advanced while 11 stocks declined.
Among the BSE Sectoral indices; BSE IT index (up 3.8%), BSE FMCG index (up 2.8%), Oil & Gas index (up 1.6%) and BSE Metal index (up 1.1%). However, the broader markets i.e. the BSE Mid-Cap and the Small-Cap indices were under pressure down over 1% each.
IOB plunged by over 6% to Rs145 after Goldman Sachs sold over 1 cr shares of IOB at an average price of Rs160 in one of the major bulk deals on BSE on Tuesday. The scrip touched an intra-day high of Rs154 and a low of Rs140 and recorded volumes of over 6,00,000 shares on NSE.
The IT pack of stocks were in momentum as the rupee rose after Finance Minister said limits on overseas borrowings by local companies are ``temporary''. Index heavyweights like Infosys up by over 4% to Rs1478, Satyam gained 6.5% to Rs433, Wipro advanced 4% to Rs436 and HCL Tech added 4% to Rs278.
Uttam Galve slipped by 1% to Rs41. The company announced that it hiked galvanized steel prices by Rs3,000 per ton. The scrip touched an intra-day high of Rs42 and a low of Rs39 and recorded volumes of over 2,00,000 shares on NSE.
Tata Steel has advanced by 2.7% to Rs799 as reports stated that the company is still in race for Liberian iron ore deposit project. The scrip touched an intra-day high of Rs803 and a low of Rs778 and recorded volumes of over 18,00,000 shares on NSE.
Nagarjuna Construction was down by 6% to Rs236. The company announced that it secured three new orders aggregating Rs42.4mn. The first order valued at Rs26.6mn, secured for construction of Sewerage System & allied works, Indore to be completed over a period of 36 months. The second order is from the MMRDA, Maharashtra for construction of Flyovers on Dr. Babasaheb Ambedkar Marg valued at Rs11.2mn to be completed over a period of 18 months. The third order valued at Rs46crores is secured from the Volkswagen India Pvt Ltd., Chakan, MIDC, Pune, Maharashtra for construction of Body Shop hall to be completed over a period of 12 months. The scrip touched an intra-day high of Rs256 and a low of Rs222 and recorded volumes of over 4,00,000 shares on NSE.
Maharashtra Seamless gained by 1.4% to Rs325 after the RBI allowed FIIs to purchase 40% of equity shares and convertible debentures of the company through primary and secondary markets in India upto the limits of their paid up capital shown against their names. The scrip touched an intra-day high of Rs326 and a low of Rs315 and recorded volumes of over 69,000 shares on NSE.
L&T edged lower half a percent to Rs3201 after the company announced that it secured three orders totaling Rs4.58bn for transmission line projects. The company received a Rs2.38bn order from Jaypee Powergrid Ltd for the construction of 155 kms of Transmission Line for evacuation of power from the 1000 mw Kacham-Wangtoo Hydro Electric Project. The scrip touched an intra-day high of Rs3235 and a low of Rs3205 and recorded volumes of over 6,00,000 shares on NSE.
JSW Steel slipped by 2.3% to Rs984. The company posted crude steel production in February 08 with the output growing by 8% to 2.55 lakh tons. Its production of HR Coils was up 10% at 2.28 lakh tons while that of HR Plates jumped 3% to 0.20 lakh tons. Galvanised steel production was up by 1% at 0.61 lakh tons and the output of pre-painted GI down by 5% to 0.07 lakh tons. The scrip touched an intra-day high of Rs1025 and a low of Rs980 and recorded volumes of over 3,00,000 shares on NSE.
IRB Infrastructure ended flat at Rs196. Reports stated that the company secured a 30 year contract for road development and maintenance in Kolhapur from Maharashtra State Road Development Corporation (MSRDC). The scrip touched an intra-day high of Rs201 and a low of Rs195 and recorded volumes of over 11,00,000 shares on NSE.
Number of uncertainties continue to hover over the market and with low liquidity in the trading ring too strong support for any up-trend would be tough. However, having said a technical bounce back from these levels cannot be ruled out. The trend will also depend on the news flow from the foreign markets.
Corporate Front Page
ONGC to review its refinery expansion plans in the wake of a government proposal to end a tax holiday for projects coming on stream after April 2009. (DNA)
Jet Airways has postponed its US$0.4bn rights issue slated for March this year by three or four months.(BS)
Jet Airways promoter, Naresh Goyal to offload 5% of his holdings in the airline before March-end to a PE firm. (DNA)
TCS said that two of its top 10 clients for IT outsourcing have postponed specific engagements that were to get under way in the current quarter. (BL)
Blackstone is all set to raise its stake in Nagarjuna Constructions from 9% to 12.2%. (ET)
Rcom cuts the prices of its internet data cards by over 13%. (ET)
The DoT has asked Rcom to pay liquidated damages for missing out on the targets for rolling out Rural Community Phones under the Universal Services Obligation fund. (BL)
Bharti Airtel to use Singtel expertise to roll out 3G services in Srilanka. (ET)
Tata Motors is seeking about US$3bn in loans to fund its planned purchase of Ford Motor Co’s Jaguar and Land Rover luxury brands. (DNA)
The risk of Tata Motors defaulting on its bonds rose to a record after the company sought to borrow US$3bn to fund the planned purchase. (BS)
BoB today said it will provision an additional US$2.5mn for its investments in Credit Linked Notes (CLNs). (BS)
Steel producers have raised prices by Rs1,500 to Rs3,000 a ton for long products. (BS)
The board of REL approved a Rs20bn share buyback at a maximum price of Rs1,600 each. (BS)
NHPC to approach Sebi by May for its IPO. (BS)
The GSPC’s IPO could be the state’s largest IPO with a target to raise over Rs50bn. (BS)
L&T secured three orders totaling Rs4.6bn for transmission line projects. (BL)
NTPC gets a site at Veloor for setting up 500MW from Sri Lankan Government. (FE)
Nagarjuna Construction secures orders worth Rs4.2bn. (ET)
Omaxe postpones its plan to raise Rs15bn through private placement. (ET)
Maruti Suzuki India Ltd by March end will be able to roll out 0.17mn units per annum from the new facility, up 70% from the current installed capacity. (BL)
DLF plans to invest Rs4.1bn for setting up an asset management company. (FE)
The Dabhol power plant of the Ratnagiri Power and Gas Company may not be able to meet its deadline of March. (BS)
TATA Steel to commence Orrisa plant operation by June 2008. (FE)
Sun Pharma gets tentative nod from US FDA for gemcitabine injection. (DNA)
Tata Communication tie –up’s with Bit Gravity for content delivery network. (FE)
Adhunik Metaliks to spend Rs4.22bn over 17 months to increase production of key inputs for steel making. (DNA)
Standard Chartered received the RBI approval to acquire American Express Bank from American Express Company (AXP) in a US$0.8mn cash deal. (BS)
LIC will sign an agreement with JV partners for launching the credit card business by the first week of September. (BS)
Simplex Projects has bagged the contract for development and management of a multi-level car parking project in Kolkata for Rs0.5bn. (BS)
United Spirits to launch Whyte & Mackay’s premium brands Charles McKinley and John Barr in India. (ET)
Aditya Birla Retail plans to invest around Rs2.5-3.0bn for setting up hypermarkets under the brand name more.Megastore. (BS)
KEC International will acquire a mid-sized power sector EPC player in the US. (BS)
Reliance Retail has signed a JV pact with Pearle Europe of the Netherlands to set up a chain of optical stores at its hypermarts, super stores and wellness stores. (BS)
Reliance Retail plans to open around 60 iStores, an exclusive Apple products reseller format, in the next 18 months. (BS)
Reliance Life Sciences (RLS) plans to set up an API and formulations manufacturing complex at Jamnagar. (BS)
ADAG’s plans to foray into pharmaceutical distribution have become a non-starter. (FE)
Yes Bank will raise US$150-175mn from private placement or QIP of equity shares in the first quarter of 2008-09. (BS)
Godrej Consumer fixes right issue price at Rs123 per share. (FE)
Truck sales in February were 25,404 units, slower by 3.72% yoy. (BS)
Ashok Leyland February vehicle sales down 7% to 7,501 units yoy. (DNA)
Eicher Motors February vehicle sales up 6.75% at 2,799 units yoy. (DNA)
The DoT said that the Government had no problems with the partnership between Tata Teleservices and Virgin Mobile. (BL)
Sonata Software is looking at acquisitions in US and Europe to accelerate its growth trajectory. (ET)
Hexaware is close to finalising a mid-size acquisition in North America for US$50mn. (DNA)
M&M takes over GR Grafica Ricerce Design an Italian based auto design company.(ET)
Binani Zinc plans to invest Rs5bn to double capacity from 38,000 tpa. (BL)
Essar Oil completed its core hole drilling in Ranigunj CBM block and is planning to launch the 15 well drilling in April. (BL)
Parsvnath, Ansal API and MBD Group are planning for niche luxury malls in metros. (ET)
GAIL may buy ADB’s 5.2% stake in Petronet LNG. (DNA)
BNP Paribas arm, Atisreal is acquiring over 50% in consultancy business of Bangalore-based Redwoods Projects. (ET)
Economic Front Page
The Sebi plans to reduce the gap between the closure of an IPO and its listing to between three and five days from the current 21 days. (BS)
A Parliamentary committee has suggested that the existing airports in the two cities of Bangalore and Hyderabad be kept open for commercial operations. (BL)
Government plans to give non-repayable grant-in-aid to pharma companies for inventing new drugs for neglected tropical diseases. (ET)
The Tamil Nadu Government has cleared Rs8.7bn plan to set up over 185 MW of cogeneration power plants in the cooperative and public sector sugar mills. (BL)
The finance minister ask manufacturing sector to hold the price line. (ET)
The commerce ministry says rising rupee may eclipse 2mn jobs in India.(ET)
New Fertilizer policy has been drafted in finance minister court. (ET)
Sebi may liberalize FII registration regime in India. (ET)
The commerce ministry has referred PM to make more tax exemption for exporters. (FE)
CII survey indicates India GDP to grow at 8.5% for FY09. (FE)
The FM indicated that interest rates on housing loans of up to Rs2mn may be lowered. (BS)
The Directorate General of Foreign Trade has hiked the minimum export price (fob) of non-basmati rice from US$500 to US$650 per ton and also slapped port restrictions. (BL)
The Government in Kerala decided to cut the tax for ATF from 32% to 4%. (FE)
Small to mid-sized domestic life insurance players would be in a cash crunch on account of the government’s decision of not opening up the sector. (FE)