“If you wait to do everything until you're sure it's right, you'll probably never do much of anything.”
Will he, won’t he? The market is still divided over what action the RBI will take in today's annual policy meeting. A hike could well provide the bears a fresh opportunity to nail the bulls. On the other hand, a status quo (waiting for the Fed to act first) will perk up the mood on the street. The key indices lost ground yesterday as investors developed cold feet amid fears that the RBI may hike the repo rate by 25 bps to contain inflation. As a result, the Nifty failed to cross the 200 DMA of 5150 yesterday.
Meanwhile, a survey of professionals done by the RBI shows that the Indian economy will grow at a healthy 8.1% in FY09. If indeed GDP grows at 8% in the current fiscal it would not be a bad feat at all given the slew of headwinds that we are facing right now. The survey also reveals that corporate profits will clock a 25% growth in FY09, which again would be quite commendable. The central bank also believes that inflation will moderate in the second half, though high crude oil prices will continue to pose a risk.
The market appears to have factored in most bad news, both local as well as global. As a result, the bulls may remain in command in the near term, especially if global markets too hold their nerve. Some more grim developments lurking somewhere could spark renewed sell-off. For today, we expect a cautious start and a lackluster trading till noon, when the RBI will announce its monetary policy for the year 2008-09. Select stock centric action will continue based on the results and other company specific announcements.
Key Results Today: Aban Offshore, Alstom Projects, Atlas Copco, Aurionpro Solutions, Bhushan Steel, Cadila Healthcare, Cairn India, Castrol India, CEAT, Esab India, Gateway Distriparks, Gayatri Projects, Grasim, Hanung Toys, IFCI, ING Vysya Bank, JK Tyre, Jyothy Labs, Maharashtra Seamless, Mirc Electronics, Nagarjuna Fertilizers, NALCO, Nestle, Patni, Pioneer Embroideries, Raymond, Reliance Capital, Subex, Taj GVK Hotels, Tata Sponge, UTV, Venus Remedies, Viceroy Hotels and Vishal Retail.
FIIs were net sellers of Rs383.3mn (provisional) in the cash segment yesterday while local institutions were net sellers of Rs1.67bn. In the F&O segment, foreign funds were net buyers of Rs4.55bn. On Friday, FIIs were net buyers of Rs3.49bn in the cash segment while Mutual Funds were net sellers of Rs734mn.
Asian markets were trading mixed this morning. The Hang Seng in Hong Kong was up 289 points or 1.1% at 25,955 while the Kospi in Seoul was down 6 points or 0.3% at 1817. The Straits Times in Singapore dropped 26 points or 0.8% at 3175 while the Shanghai Composite in China rose 46 points or 1.3% to 3521 and the Taiex in Taiwan was down 50 points or 0.6% at 9029.
Benchmarks elsewhere in Asia fell barring Malaysia, the Philippines and China. Japan's markets are closed for a public holiday.
US stocks closed almost unchanged on Monday as investors turned cautious ahead of Wednesday's Fed policy announcement. Stocks had risen earlier after billionaire Warren Buffett financed the $23bn takeover of Wm. Wrigley Jr. Co. and investor Kirk Kerkorian bought a stake in Ford Motor.
Wrigley, the world's biggest maker of chewing gum, jumped the most since at least 1980 after Mars agreed to acquire the company at a 28% premium to its closing price last week. Ford shares rallied after Kerkorian said he bought 4.7% of the second-largest US automaker and plans to buy more.
Microsoft shares slumped for a second day, helping drag the S &P 500 Index and Dow Jones Industrial Average lower, on speculation that the world's largest software company will have to increase its bid to acquire Yahoo.
The S&P 500 ended virtually flat at 1,396.37. The Dow dropped 20 points, or 0.2%, to 12,871.75. The Nasdaq Composite Index finished barely changed at 2,424.4. The Russell 2000 Index, an index of small-cap companies, gained 0.5% for its fourth consecutive advance.
Market breadth was positive. About five stocks gained for every four that fell on the New York Stock Exchange.
Stock gains were limited and tapered off by the close, as investors geared up for the two-day FOMC meeting starting Tuesday. The Fed is expected to cut interest rates again, and then perhaps signal that it is done for the time being.
US light crude oil for June delivery rose 23 cents to settle at $118.75 a barrel in New York after hitting a record $119.93 earlier in electronic trading. Meanwhile, the national average price for a gallon of regular unleaded gas hit an all-time record of $3.603, AAA reported.
COMEX gold for June delivery rose $5.80 to settle at $895.50 an ounce. The dollar gained versus the euro and yen. Treasury prices advanced, lowering the yield on the benchmark 10-year note to 3.82% from 3.87% late on Friday.
Candy maker Mars is buying gum maker Wrigley in an all-cash deal worth nearly $23bn. The deal will eventually make Wrigley a subsidiary of Mars. Warren Buffett's Berkshire Hathaway is making a minority equity investment in the new subsidiary. Wrigley shares surged 23%.
Kirk Kerkorian's Tracinda Corp. is offering $170mn to buy an additional 20mn shares of Ford. Tracinda already owns 100mn Ford shares. Shares of the US auto giant jumped 9.5%.
Continental said it wasn't interested in entering into a merger agreement with another company right now, surprising United Airlines' parent UAL, which had been in advanced talks with the carrier. However, reports say Continental has been in talks with American Airlines' parent AMR about an arrangement that would involve an alliance but not a merger.
Verizon Communications reported higher quarterly earnings that met analysts' estimates on higher revenue that was short of expectations. Shares gained 2.5%. RadioShack reported lower quarterly earnings and sales that nonetheless topped forecasts. Shares slumped 13.5%.
Across the Atlantic, banks helped European shares gain ground for the fourth session in a row. Oil companies and miners also performed well. The pan-European Dow Jones Stoxx 600 index rose 0.6% to 323.62, building on strong gains made on Friday when the index recaptured levels last seen in February.
Germany's DAX 30 rose 0.4% to 6,925.33 and the French CAC-40 advanced 0.7% to 5,012.75, while a poor performance from supermarket chains led the UK's FTSE 100 to close nearly unchanged at 6,090.40.
In the emerging markets, the Bovespa in Brazil gained 0.75% to 65,677 while the IPC index in Mexico was down 1.2% at 30,623. The RTS index in Russia rose 1% to 2150 while the ISE National 30 in Turkey finished flat at 54,167.
All eyes on RBI
In a lackluster trading session, both the key indices struggled to find any direction resulting into sideways movement. Profit booking was witnessed key index heavyweights like RIL, ICICI Bank and Tata Steel. Also, some consolidation was seen in today’s trade after recording around 4% returns last week. Even, the volumes dried up ahead of the outcome of RBI’s monetary policy meet on Tuesday.
As large-caps were seen consolidating, momentum continued in select-side counters with sugar and fertilizers stocks among the major gainers. Oil & gas, IT and banking stocks were among the major laggards dragging the benchmark Sensex down by 110 points at 17,016 and Nifty lower by 22 points at 5,090.
ICICI Bank dropped by over 2% to Rs894. Reports said that the company made additional provisions of US$45mn for mark to market losses on its credit derivative obligations and credit-linked note portfolio in February and March 2008. The scrip touched an intra-day high of Rs947 and a low of Rs890 and recorded volumes of over 14, 50, 000 shares on BSE.
Reliance Industries was down by over 1% to Rs2,592. Reports said that the Government approved an oil and gas development plan of the company in its D6 block off the east coast. The scrip touched an intra-day high of Rs2,650 and a low of Rs2,583 and recorded volumes of over 6, 00, 000 shares on BSE.
ONGC reduced by over 0.5% to Rs1,047 following reports stating that the company is expecting to seal the deal for a stake in the South pars block during next week visits of Iranian president. The scrip touched an intra-day high of Rs1,064 and a low of Rs1,041 and recorded volumes of over 2, 00, 000 shares on BSE.
Essar Oil fell by over 3% to Rs271. Essar E&P, a subsidiary of the company, bid for two shallow water offshore blocks in Australia, said reports. The scrip touched an intra-day high of Rs283 and a low of Rs267 and recorded volumes of over 26, 50, 000 shares on BSE.
Siemens took a huge fall by 10% to Rs580 after the company announced a decline in net profit by 98.5%. The scrip touched an intra-day high of Rs620 and a low of Rs542 and recorded volumes of over 23, 50, 000 shares on NSE.
KPIT Cummins fell sharply by 11.5% to Rs94 after the company announced its Q4 results with MTM loss of Rs89cr as on 31st March. The scrip touched an intra-day high of Rs107 and a low of Rs89 and recorded volumes of over 14, 50, 000 shares on NSE.
Biocon was down by 0.5% to Rs483. The company has plans to set up its own R&D subsidiary arm in the current fiscal, according to reports. The scrip touched an intra-day high of Rs494 and a low of Rs480 and recorded volumes of over 1, 00, 000 shares on NSE.
Cairn India was up by 1% to Rs258 after the company announced that it managed to extract 200mn barrels of oil from Andhra reserves which were estimated at 101mn barrels. The scrip touched an intra-day high of Rs263 and a low of Rs256 and recorded volumes of over 19, 50, 000 shares on NSE.
Last week’s intermediate uptrend was halted due to profit taking ahead of the RBI’s policy meet on Tuesday. FIIs have largely been in the sidelines, which is a cause of concern. Globally, we may well have a 25 bps rate hike from the Federal Reserve, on April 30. But, our market will only be able to react to the Fed decision and to whatever comments it makes on May 2, as the markets will be shut on Thursday on account of Maharashtra Day.
Corporate News
GAIL would be a part of the consortium building the US$7.6bn Turkmenistan-Afghanistan-Pakistan-India gas pipeline by 2015. (BL)
TCS has bagged Rs4.5bn contract from Scottish Water, a UK based utility firm. (BS)
Bharti Airtel has cut STD tariffs to a flat Rs1.5/minute from up to Rs2.65/minute and roaming charges by 43% for incoming calls. (ET)
RCom plans to offer free unlimited national long-distance calls for a monthly rent of Rs440 for post-paid and Rs496 for pre-paid customers. (Mint)
IOC is seeking board approval for doubling of its borrowing limit to create a war chest of Rs800bn to fund a major acquisition in E&P sector. (FE)
Tata Steel is joining hands with MMTC for acquiring mining assets abroad through a special purpose vehicle (SPV). (ET)
M&M enters spares, used-car markets, plans to invest ~Rs2.5bn in this segment. (ET)
Dishman Pharma may divest stake in its pharmaceutical SEZ to private equity funds or list it on the bourses in 2009-10. (Mint)
Tata Motors is planning a new platform for a compact car code-named X4. (DNA)
US Patent and Trademark Office has rejected Pfizer’s request for reissue of patent in Lipitor case against Ranbaxy. (BS)
IVR Prime Urban Developers is planning to invest Rs6.86bn in two projects in South India. (BS)
Mindtree Consulting and Satyam Computers have bagged a three year contract from Arcelor Mittal. (BS)
M&M is planning to pursue private placement route for raising funds for its inorganic growth plans. (BS)
KPIT Cummins has reported Rs900mn MTM losses in forex derivatives transactions. (BS)
Sun Network and Zee Entertainment have dethroned Star group as the leading Asia Pacific pay broadcaster. (BS)
Hinduja Group and ONGC Videsh have won approval of Iranian authorities to conduct due diligence for taking stakes in one of the largest oil and gas fields in the Persian Gulf nation. (BL)
BHEL-NTPC joint venture is planning to enter equipment manufacturing business. (BL)
Lanco Infratech has said that there were no inconsistencies in its successful bid for Sasan UMPP. (FE)
Economic News
RBI has said that performance of the manufacturing sector is expected to be lower in Q1 FY09 compared to Q1 FY08. (BS)
RBI has exempted joint ventures and overseas subsidiaries of banks from an investment limit on affiliates. (BS)
RBI has allowed banks and brokers as the first participants to start currency futures on existing exchanges. (BS)
Almost 32,000 petrol pump dealers have threatened to go on a strike from May 17, 2008 if the commission they get on fuel sales is not increased. (BS)
Government is considering imposing a 15% export duty on export of steel products. (BS)
ICAI Accounting Standard’s board has cleared the proposed accounting standard on disclosure of financial instruments (AS-32). (BL)
The group of ministers examining finances of the power sector has proposed that the government divest up to 49% in profitable central power sector companies that include NTPC, PFC, REC, PGCIL and NHPC. (FE)
The total production capacity of the Indian cement industry has gone up to 190mn tons for FY08 as compared to 167mn tons in FY07. (FE)
The Government plans to penalize drug makers who pay wholesalers and chemists over and above the fair margin notified by it. (ET)
The Government has decided not to revive the four state-owned vaccine units whose licences were recently suspended. (ET)
Flowers will be eligible for an additional duty credit equivalent to 2.5% of FOB value of exports over and above the credit available under Vishesh Krishi and Gram Udyog Yojana. (ET)