The slower you go; the farther you will be.
The markets are getting slower, boring and yet choppy. The Finance Minister is visiting the Bombay Stock Exchange today. No fireworks are expected. Just yesterday he said the economic growth would slow in FY09 to around 8%. The Economist Intelligence Unit says growth will probably average around 7.5% for FY09 and FY10. For the day, we are mildly positive on the back of decent F&O cues and positive FII figures. If inflation softens a little, it will be a bonus for the bulls, but the volatility is here to stay.
Inflation figures will be released at noon, and a further spike in it could be a dampener. Over the past few days, the Government has taken several measures to boost domestic supply of key commodities. More steps are not ruled out if inflation remains above the RBI's comfort level of 4% for a sustained period.
A less than average rollover (63% vs 75%) in the F&O space suggests that the bulls may just be able to extend the current phase of recovery. The April Nifty futures ended yesterday at a premium of around 23 points to the spot Nifty. Also, the put-cal ratio of Nifty options for the April series has improved to 1.25 from under 1 that was the norm for most part of March series. These are indeed encouraging signs for the bulls who had been reeling under the bear squeeze since early part of January. Another positive is that the FIIs have been net buyers over the past few days.
So, in the near-term the bulls may just be able to hold the edge over the bears, unless another bad development takes place in the US. Still, one has to be on guard for any fresh negative news, from either abroad or from the home turf. On Tuesday, chairman of Bear Stearns' board sold 5.7mn shares at a price of $10.84 apiece ahead of the announcement that JP Morgan will buy the securities firm.
Next month's annual RBI policy meeting will be keenly followed for clues on the central bank's stance in the wake of the economic slowdown and spiraling inflation. The corporate report card for the fourth quarter will also play its role in determining the market sentiment. At the same time, one will have to keep oneself abreast with the events unfolding globally to gauge the impact on the Indian economy and local markets.
FIIs were net buyers of Rs2.48bn (provisional) in the cash segment yesterday while local institutions too pumped in Rs3.4bn. In the F&O segment, foreign funds were net buyers of Rs2.71bn. On Wednesday, FIIs were net buyers of Rs5.58bn in the cash segment while Mutual Funds pulled out Rs4.32bn on the same day.
Asian markets are trading mixed this morning. The Nikkei in Tokyo was nearly flat at 12,597 while the Hang Seng in Hong Kong rose 276 points or 1.2% at 22,940.
The Kospi in Seoul advanced 17 points or 1% to 1693 while the Straits Times in Singapore added 6 points to 3031. The Shanghai Composite in China gained 49 points or 1.4% at 3460 and the Taiex in Taiwan was static at 8609.
The MSCI Asia Pacific Index added 0.2% to 140.30 as of 11:33 a.m. in Tokyo, after earlier losing as much as 0.5%. An index of financial stocks retreated 1.2%, the biggest decline among the index's 10 industry groups.
The main MSCI benchmark gained 3.1% this week, its best weekly gain this year, as companies reported higher profits. The advance helped trim the index's 2008 decline to 11%. The benchmark is still on course for its worst quarter since the period ended Sept. 30, 2002.
Asian stock benchmarks advanced in other markets open for trading, except Australia and China.
US stocks closed lower for the second day running with the Dow Jones Industrial Average notching up its second straight triple-digit loss. Technology shares came under pressure as a result of disappointing numbers from Oracle and Google.
Oracle tumbled the most since November on revenue that trailed analysts' estimates. Google slid after the most popular search engine received fewer ad clicks last month. Lehman Brothers lost 9% as options traders increased bearish bets on the biggest US underwriter of mortgage bonds, while Bank of America and JPMorgan Chase fell on reduced earnings estimates for large banks.
The S &P 500 Index slipped 15.37 points, or 1.2%, to 1,325.76. The Dow lost 120 points, or 1%, to 12,302.46. The Nasdaq Composite index slid 44 points, or 1.9%, to 2,280.83.
Market breadth was negative. Three stocks fell for every one that rose on the New York Stock Exchange.
Financials and brokerages took a hit as a Lehman Brothers cut estimates on Citibank, Bank of America, UBS and other large banks. The analyst said losses from troubled loans will continue to drive down the banks' earnings. Two more analysts reduced estimates for Merrill Lynch.
The market opened the day higher after the government said personal spending, which accounts for more than two-thirds of the economy, rose at a 2.3% annual rate in the fourth quarter and jobless claims unexpectedly decreased last week.
The Commerce Department said its estimate of 0.6% growth in fourth-quarter GDP was unrevised from the previous two estimates.
A Texas judge ordered banks to fund the proposed $19bn acquisition of radio broadcaster Clear Channel by two private-equity firms. Clear Channel's shares rallied 11.3%, recovering much of the heavy losses they suffered Wednesday.
Boston Federal Reserve Bank President Eric Rosengren said credit market turmoil has reduced US banks' ability to lend, crimping economic growth. "As banks have seen housing prices decline, they have been reducing lines of credit associated with credit cards and home equity loans," Rosengren said in a speech in Seoul. Declining home prices also erode the collateral value for home-equity lines," he said.
Wall Street attempted several comebacks throughout the day, as the Fed auctioned off another $75bn in credit to investment banks. But the efforts for a rebound stalled each time, and stocks tanked towards the close of trade.
US light, crude oil for May delivery settled up $1.68 to $107.58 after surging more than $4 on Wednesday. Oil prices hit a record $111.80 in electronic trading last week. COMEX gold for April delivery settled down 40 cents to $948.80 an ounce. Gold hit an all-time trading high of $1,033.90 an ounce one week ago.
The dollar rose 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 slipped, raising the yield on the benchmark 10-year note to 3.53% from 3.47% late on Wednesday.
Across the Atlantic, European shares advanced. The pan-European Dow Jones Stoxx 600 index rose 1.3% to 308.46. The German DAX 30 closed up 1.4% to 6,578.06, while the UK's FTSE 100 increased 1% to 5,717.50 and the French CAC-40 rose 0.9% to 4,719.53.
In the emerging markets, the Bovespa in Brazil lost 1% at 60,761 while the IPC index in Mexico dropped 0.2% at 29,987. The RTS index in Russia rallied 1.75% to 2030 and the ISE National 30 index in Turkey finished almost flat at 50,693.
Choppiness may prevail
The benchmark Sensex which recorded its second biggest rally on Tuesday ended in negative terrain for second straight trading session. The major laggards were the IT, Bankex and Auto stocks which dragged the benchmark Sensex below the 16k mark hitting an intra-day low of 15,869. However, key indices managed to trim some losses, led by buying momentum in the Realty, FMCG, Power and Metal stocks. Finally, the BSE benchmark Sensex fell 71 points to 16,015 and the Nifty index ended flat at 4,830.
Overall about 1,490 stocks advanced; 1,223 stocks declined while 61 stocks remained unchanged. Among the 50 Nifty 28 stocks ended in positive territory. On the other hand, 22 stock ended in red.
BSE Realty index (up 2.2%), BSE FMCG index (up %), BSE Pharma index (up 1.3%), BSE Power index (up 1%) and BSE Metal index (up 0. 7%). On the other hand, BSE IT index (down 3%) and BSE Bankex index (down 1.5%).
Tata Motors dropped 3.5% to Rs655 after it signed a deal to buy luxury brands Jaguar and Land Rover (JLR) from Ford Motor for US$2.3bn in cash. The scrip touched an intra-day high of Rs689 and a low of Rs630 and recorded volumes of over 9,00,000 shares on BSE.
Nagarjuna Construction dropped by over 4.5% to Rs210. Media reports stated that 66 lakh shares of Nagarjuna Construction changed hands on BSE at an average price of Rs211. The scrip touched an intra-day high of Rs219 and a low of Rs208 and recorded volumes of over 68,00,000 shares on BSE.
PFC gained by 2% to Rs166 after the company announced that it has signed an MoU with RITES Ltd whereby both the parties have agreed to combine their resources and expertise to the facilitate import of coal from African countries and elsewhere to address the problem of power deficit in India. The scrip touched an intra-day high of Rs170 and a low of Rs158 and recorded volumes of over 6,00,000 shares on BSE.
Rajesh Exports gained by 3% to Rs72 after the company clarified saying that it they have no losses on options and commodity trading. The company also said that rising gold prices haven’t affected earning. The scrip touched an intra-day high of Rs74 and a low of Rs69 and recorded volumes of over 10,00,000 shares on BSE.
GMR Infra gained by 3% to Rs149 after media reports that they have bid for US-based power Generation Company. The scrip touched an intra-day high of Rs151 and a low of Rs141 and recorded volumes of over 24,00,000 shares on BSE.
J.B. Chemicals was locked at 20% upper circuit to Rs44.80 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 Rs44.80 and a low of Rs37 and recorded volumes of over 4,00,000 shares on BSE.
Allahabad Bank was down 2% to Rs78. The company announced that they have cut PLR by 25bps. The scrip touched an intra-day high of Rs81 and a low of Rs77 and recorded volumes of over 1,00,000 shares on BSE.
Satyam Computer declined by over 4% to Rs395. The company announced the establishment of a Pega Business Process Management Center of Excellence (CoE) at its 2000-seat Global Solutions Center (GSC) at Cyberjaya, Malaysia. Satyam teamed with US-based business software maker, Pegasystems Inc., to create the facility. Satyam will leverage the capabilities of Pegasystems SmartBPM Suite to drive business agility, grow revenue, and improve productivity for its global customers. The scrip touched an intra-day high of Rs412 and a low of Rs392 and recorded volumes of over 3,00,000 shares on BSE.
Gujarat NRE Coke rallied by over 7% to Rs146 following reports that the company plans to set up coke oven flu gas power plants in its production facilities. The scrip touched an intra-day high of Rs152 and a low of Rs135 and recorded volumes of over 44,00,000 on BSE.
Corporate Front Page
Reliance Power to place Rs100bn equipment order for its power plants. (BS)
Ultratech to add 15mn tonne capacity by September. (BS)
Government relaxes Rs10bn equity investment cap on NTPC in a JV or subsidiary set up to bid for power projects. (FE)
Reliance Industries and BG group have sought 5mmsmd of gas produced from Panna-Mukta-Tapti gas fields before entering any agreement with Gail. (ET)
Maruti Suzuki to hike capacity to 1mn units by October; two years ahead of earlier schedule. (ET)
Daimler gets Government nod for Rs16.5bn JV with Hero Group. (BL)
Tata Tea to increase prices across all its seven brands. (BL)
Hindustan Zinc cuts zinc product prices by Rs5,200/tonne. (BL)
HCL Technologies' infrastructure deal with Bear Stearns could be in trouble. (ET)
India Cements to spend Rs20.1bn to boost capacity to about 14mtpa by December. (DNA)
UB has invested Rs700mn for a vineyard on 350 acres at Baramati. (DNA)
Prime Securities sets aside Rs230mn as a provision for losses suffered on investments during the recent market crash. (BS)
Power Finance Corporation and RITES sign a MoU to jointly import coal. (ET)
Dabur India has earmarked US$200mn for overseas acquisitions. (Mint)
Parsvnath Developers’ CFO quits on differences with the management. (BS)
Allahabad Bank cuts PLR as well as home loan rates by 25 bps effective next month. (BL)
Bharat Forge is eying 40% of revenues from non-automotive components in 3-4 years. (BS)
Firstsource Solutions is looking at healthcare industry for diversification. (FE)
Jindal India Thermal Power signs a MoU with MP Government for setting up a 2,000 MW coal-based power plant. (FE)
Volvo India to launch six car models in phases. (BL)
Japanese automaker Suzuki is likely to set up engineering and design work in India. (BL)
Economy News
Finance Minister admits to a lower GDP growth rate of near 8% in 2008-09. (FE)
TRAI proposes abolition of access deficit charge (ADC) wef April 1st 2008. (FE)
The Government is planning to ask iron ore producers to check prices. (FE)
The Government is planning to liberalise FDI norms in real estate by waiving two conditions; three year lock-in on foreign investment and the requirement of at least US$5mn investment in case of JVs. (ET)
IPO regime is set to change from July with requirement of 100% payment by QIBs and shorter period between IPO closing and listing. (BS)
DTH operators have approached TRAI asking it to fix the price that they have to pay to the broadcasters. (ET)
The Government projects 30% growth in exports in dollar terms in 2008-09. (BL)
The Government temporarily suspends export subsidy under the DEPB scheme on steel. (ET)