Remember that there is nothing stable in human affairs; therefore avoid undue elation in prosperity, or undue depression in adversity - Socrates.
It’s one of the longest breaks the Indian markets have taken in recent years. Hope you are recharged for a choppy week ahead. After a bad start last week, the bulls recovered smartly to post moderate gains in the next couple of days. The extended weekend came as a welcome break for the bulls who had been reeling under the bear onslaught since the second week of January. What should come as further relief is that the US market managed to rebound on Thursday after suffering heavily the previous day. This augers well for the bulls at least this morning. For the day, we expect a positive start but trading will turn choppy ahead of Thursday's F&O expiry.
But there is no dearth of bad news. Swiss investment bank Credit Suisse warned that it will report a loss and hedge fund Monsoon Capital has also taken a hit due to the meltdown across global equity markets. India's inflation shot up to 5.92% in the week ended March 8. The infrastructure sector growth nearly halved in January, which taken together with the poor industrial production numbers points to a steep slowdown.
The Government has responded by cutting import duties on edible oils and rice and by imposing export tax on steel. But, despite these measures the Government and its other arms, like the RBI can only do so much to stem the soaring inflation. Most of the recent spike in inflation is due to a global surge in prices of various commodities, particularly that of food and oil. Hence, it will be really tough for the concerned authorities to reign in prices.
So, one still needs to be wary. And, though select buying can be done in quality scrips volatility and uncertainty are here to stay. The next set of earnings will be crucial. Interest rates may not soften due to high inflation. The Indian economy will slow down in FY09. So, the fight between the bulls and bears will continue.
Asian markets are trading mixed this morning. The Nikkei in Tokyo was up 55 points at 12,537 while the Kospi in Seoul gained 9 points at 1654 and the Straits Times in Singapore advanced 63 points to 2888.
The Shanghai Composite index in China dropped 69 points to 3726 and the Taiex in Taiwan jumped 291 points to 8816. The MSCI Asia Pacific Index gained 0.5% to 136.48 as of 11:30 a.m. in Tokyo, with eight of the index's 10 industry groups advancing.
Markets in Hong Kong, Australia and New Zealand are shut for holidays.
US stocks rallied on Thursday after the Federal Reserve said it will make $75bn in securities available to banks next week as part of its ongoing effort to ease the credit crunch. All financial markets were closed on Friday on account of Good Friday.
The Dow Jones Industrial Average advanced over 260 points or 2.2% to 12,361.32. The broader Standard & Poor's 500 index gained 31 points or 2.4% to 1,329.51, and the Nasdaq Composite index jumped 48 points or 2.2% to 2,258.11.
All the three US stock indices rose throughout the session as falling commodity prices, a stronger dollar and signs of stabilisation in the manufacturing sector gave investors an incentive to snap up beaten down shares.
US stocks had tumbled on Wednesday, with the Dow Jones losing almost 300 points, as investors gave back nearly all of the previous session's gains, with losses in financials and commodity stocks leading the way. But, drop in commodity prices, recovering dollar and Fed news helped facilitate a bounce on Thursday.
Investors also welcomed a latest report on the state of manufacturing in the US. The Philadelphia Fed index, a regional manufacturing survey, improved to a reading of -17.4 in March from -24.0 in February. Economists had forecast an improvement to -18.0.
Market breadth was positive and trading volume was heavy due to the quarterly options expiration, in which stock index futures and options and individual stock futures and options all expire at the same time.
Oil prices continued to slip while gold prices also plunged. Both oil and gold prices hit record highs early last week, but slipped since then along with other dollar-traded commodities in response to the stronger dollar.
US light crude oil for May delivery fell 70 cents to settle at $102.54 a barrel on the New York Mercantile Exchange, trimming bigger morning losses. Oil prices hit a record $111.80 in electronic trading on March 17.
COMEX gold for April delivery slumped $25.30 to settle at $920 an ounce after tumbling $59 in the previous session. Gold hit an all-time trading high of $1,033.90 an ounce on March 17.
Treasury prices slipped, erasing early gains, raising the yield on the benchmark 10-year note to 3.36% from 3.35% late on Wednesday.
European stocks declined for a fourth week on speculation that a slowing global economy will curb demand for energy and metals. The Dow Jones Stoxx 600 Index dropped 2.4% to 296.83 in the holiday-shortened week. The benchmark is down 26% from a June high.
National benchmarks decreased in all of the 18 western European markets. Germany's DAX Index slipped 2%, while France's CAC 40 lost 1.3%. The UK's FTSE 100 declined 2.4%. The Stoxx 50 retreated 2.5% and the Euro Stoxx 50, an index for the euro region, sank 1.7%.
In the emerging markets, the Bovespa in Brazil was up 0.3% at 58,987 while the IPC index in Mexico slid 1.5% to 29,071. The RTS index in Russia 0.9% to 1964 and the ISE National 30 index in Turkey lost 0.5% to 49,227.
Global cues to dictate trend
Despite kicking off in style, markets gradually lost ground as the session progressed. After hitting an intra-day high of 15,465 the fed inspired rally fizzled out as selling pressure in the index heavyweights like Hindustan Unilever, Hindalco and REL dragged the benchmark Sensex to a low of 14,930. Traders preferred staying light on their positions before one of the longest weekends in the market. The benchmark Sensex fell over 400 points and Nifty index dropped over 150 points from their respective days high. Finally, the BSE benchmark Sensex ended at 14,994 adding 161 points and the Nifty index added 38 points.
Overall about 761 stocks advanced; 1,914 stocks declined while 68 stocks remained unchanged. Among the 30-stocks of Sensex 21 stocks ended in positive territory. On the other hand, 9 stocks ended in red.
Power Grid was up by half a percent to Rs93 after the World Bank approved US$600mn loan to the company. The scrip touched an intra-day high of Rs99 and a low of Rs92 and recorded volumes of over 39,00,000 shares on BSE.
JRG Securities slipped 1.1% to Rs42. The company announced that it would invest Rs229mn in unit JRG Fincorp. The scrip touched an intra-day high of Rs45 and a low of Rs42 and recorded volumes of over 27,000 shares on BSE.
Aban Offshore was down by 3% to Rs3145. The company announced that it secured US$300mn. The scrip touched an intra-day high of Rs3390 and a low of Rs3070 and recorded volumes of over 38,000 shares on BSE.
MTNL edged lower by 0.7% to Rs97. Reports stated that the company had been selected as the preferred bidder to buy Sri Lankan telco Suntel, and is in talks with several other companies to offload 50% stake in Suntel. The scrip touched an intra-day high of Rs104 and a low of Rs96 and recorded volumes of over 7,00,000 shares on BSE.
Ram Informatics declined by over 5% to Rs11.30. The company said that it has received an orders from Saptagiri Grameena Bank and Pallavan Grameena Bank (Sponsored by Indian Bank) for SmartBanker Software for 25 new branches. The scrip touched an intra-day high of Rs12.50 and a low of Rs11 and recorded volumes of over 16,000 shares on BSE.
Diamond Cables dropped by 9% to Rs354. The company announced the receipt of EPC - Turnkey order for Implementation of Rajiv Gandhi Gramin Vidyutikaran Yojna (RGGY) for Bhavnagar District of Gujarat. The entire District RGGY in three lots has been awarded to the Company. The project will entail providing power to appex 21295 consumers resulting in Setting up of 139 Transformer Centers and Erection and Commissioning of Distribution Lines aggregating 382 Kms. The scrip touched an intra-day high of Rs383 and a low of Rs305 and recorded volumes of over 44,000 shares on BSE.
Tata Communications marginally gained 0.3% to Rs511 after the company announced the launch of its global TelePresence network service which has achieved Cisco Certified TelePresence Connection status. The scrip touched an intra-day high of Rs574 and a low of Rs504 and recorded volumes of over 1,00,000 shares on BSE.
PSTL fell 2% to Rs284.The company said that it has signed Memorandum of Cultural Cooperation with CSMRB, Ministry of Culture, Government of People's Republic of China and also a Joint Venture Agreement with Longzhe Group - forms a new JV "Jiangsu Pyramid Longzhe Group". The scrip touched an intra-day high of Rs330 and a low of Rs277 and recorded volumes of over 1,00,000 shares on BSE.
Subex was down by 5.8% to Rs142. The company announced that it secured contract for fraud management systems in Poland. The scrip touched an intra-day high of Rs164 and a low of Rs140 and recorded volumes of over 31,000 shares on BSE.
Corporate Front Page
BSNL and MTNL get DoT approval to launch nationwide CDMA services.(FE)
Coal India to invest Rs15bn to set up 28 washeries in its subsidiaries in the 11th plan.(ET)
BHEL likely to invest Rs50bn over the next three years on its JV with NTPC and Nuclear Power Corporation.(BS)
Time Warner promoted AOL may be selling its call centre business to the BPO arm of Essar group for US$100mn.(TOI)
NTPC to invest Rs44bn for setting up a 750MW coal-based thermal power project in Assam.(BS)
Aban Offshore receives an order for rig deployment in the Middle East forUS$300mn.(ET)
Maruti Suzuki to invest Rs90bn, mostly in non-vehicle manufacturing areas like R&D, logistics amongst others.(BS)
GMR Infrastructure led consortium takes charge of Turkey’s Sabiha Gocken International airport for development.(ET)
JSW Energy proposes to set up a 1,320MW power plant in Madhya Pradesh.(BS)
Sun Pharmaceuticals gets FDA approval to market generic drug Cerebyx used during neuro-surgery.(ET)
Ispat Industries promoted Global Steel Holdings signs up mining leases for iron ore and coal reserves in Brazil, Colombia and Mozambique.(BS)
State owned NMDC in talks with Canada’s New Millennium Capital Corp for an US$3.5bn iron ore project.(BS)
Telekom Malaysia to transfer its stake in Spice into a separate company, likely to be called Telekom International. (ET)
Cochin International Airport, which runs Kochi international airport, plans to raise Rs25bn through an IPO in 2009.(BS)
Reliance Infrastructure plans strategic alliance with Indiabulls Real Estate for development of latter’s SEZ in Maharashtra.(TOI)
ArcelorMittal plans to develop coal mines; seeks JV with Coal India.(TOI)
Petronet LNG on the look out for stakes in Australian gas fields.(TOI)
Unitech may look to ‘monetize’ its upcoming hotel business within 2.5 years of operations; options include listing, sale of assets or hotel REIT.(BL)
PNB expects to get Rs20bn from the government in the financial year beginning April for farm loan waiver.(BS)
Power Grid Corp to get a US$600mn loan from the World Bank to strengthen its network.(BS)
Elecon Engineering on look out for an acquisition in US or Europe in the range of Rs3-4bn.(DNA)
CALS Refineries, promoted by Spice group signs MoU with West Bengal Industrial Development Corp. and Haldia Development Authority for an Rs200bn refinery project in Haldia.(BS)
Champagne Indage acquires Australian Vintage’s Loxton winery for Rs2.3bn.(BL)
Blue Dart to increase warehousing capacity to 2mn sq.ft.(BS)
Rajasthan government stops work on a Cairn India pipeline; says it would result in loss of tax revenues to the state.(BS)
Amtek Auto to produce 5,000 railway wagons in a JV with a North American wagon supplier.(BL)
Essar Communications Holdings arm to invest US$450mn to rollout telecom services in Kenya.(BS)
Lehman Brothers and Deutsche Bank to invest US$500mn in Unitech SPV. (ET)
Ranbaxy suffers setback as a Canadian court upholds Pfizer patent for a molecule of cholesterol-lowering drug Lipitor.(FE)
George Soros buys 2.5% stake in Indiabulls Real Estate for Rs2.8bn.(ET)
Kribhco plans a Rs40bn power project in Bihar.(BS)
Economic Front Page
Inflation rises to eleven month high of 5.92%; government cuts import duty on edible oil and rice.(TOI)
DoT says all players can bid up to 10MHz of 3G spectrum rejecting TRAI’s recommendation on the same.(ET)
Core sector growth halved to 4.2% in January with decline in crude production.(FE)
Government may consider a proposal to levy 10% export duty on all grades of finished steel.(ET)
Government proposes cess of up to 6% on coal with high ash content.(ET)
India expected to attract FDI worth Rs1tn in mining exploration of gold and diamond.(Mint)
Sugar production in Uttar Pradesh is expected to drop by 15% to 7.2mn tons in current crushing season.(ET)
Sixth Pay Commission recommendations are expected to be submitted to the finance ministry early next week.(BS)
Non-food credit growth slows down to 21.8% during April-February 2007-08 compared with 29.6% a year ago.(BS)
Central government staff may get a 50% pay hike.(TOI)
Fiscal deficit for quarter ended December declined to Rs776bn from Rs949bn a year ago.(ET)
Domestic aviation growth in 2007 declines to 11.5% from more than 32% in the previous year.(ET)
I&B Ministry considering TRAI proposals to lower license fees for DTH players from 10% to 6%.(ET)
Five SEZs projects get approval with four in the IT sector.(DNA)
Insurance regulator IRDA may limit insurance companies’ investment in mortgage backed securities to 10%.(ET)