Everybody gets so much information all day long that they lose their common sense.
With so much talk these days on oil prices (they have cooled off a little), some of us may even be losing our common sense. Meanwhile, the Congress-led Government, which yesterday marked its fourth anniversary, is definitely feeling the heat from soaring crude prices. The Prime Minister says inflation will come down in the next 2-3 months. That's a tall and bold claim to make in the face of clear signs that crude oil may remain higher for a considerable time to come. Top global brokerages have hiked their forecast for oil prices for the year. Goldman Sachs sees crude hitting $200 per barrel in the next 24 months. Surging oil prices have become the single-biggest challenge facing the global economy, and it will be a while before one can heave a sigh of relief. Having said that its possible that the crude bubble may bust, especially if there is a mass exodus from funds. But, given the current momentum and fundamental factors backing it, looks like high oil prices are here to stay.
This will only add to the list of worries for the market, what with the economy slowing and inflation at multi-month high. A weakening local currency coupled with foreign capital outflows and faltering momentum in India Inc's earnings growth will continue to keep investors edgy. The long-term may look promising, but most market players are probably not even thinking that far. They are more concerned with the near-term outlook, which unfortunately doesn't appear to be all that bright. Today, we could see a better opening and hopefully a good end to what has been a tumultuous week. The weekly inflation data has the potential to swing the mood of the market either way. Plus, one has to continuously keep an eye on global markets as well.
Meanwhile, the Government has denied reports of rationing of transportation fuels; stopping of supply of normal fuels in the metros and freeze on new LPG connections. It has clarified that it has not issued any such directions to the OMCs, which have been advised to rectify the situation.
FIIs were net sellers of Rs5.37bn (provisional) in the cash segment on Thursday while local institutions were net buyers of Rs4.15bn. In the F&O segment, foreign funds were net sellers of Rs2.48bn. On Wednesday, foreign funds were net sellers of Rs6.1bn in the cash segment. Mutual Funds were net buyers of Rs131mn.
Key Results Today: BHEL, Crompton Greaves, Federal Bank, Geojit Financial, ITC, India Glycol, Mount Everest Mineral, Munjal Showa, Repro India and VIP Industries.
US stock indices ended marginally higher on Thursday after a two-day selloff that was sparked by record high crude oil prices. Market sentiment improved as oil prices softened from the $135 per barrel level. Also, an unexpected drop in jobless claims countered analyst recommendations to sell shares of brokerages.
The S&P 500 added 3.64 points, or 0.3%, to 1,394.35. The Dow Jones Industrial Average rose 24.43 points, or 0.2%, to 12,625.62. The Nasdaq Composite Index climbed 16.31 points, or 0.7%, to 2,464.58.
Market breadth was positive. More than three stocks climbed for every two that fell on the New York Stock Exchange.
Stocks had been stronger in the early afternoon, but the advance lost some steam by the close, ahead of the long holiday weekend. All US financial markets are closed on Monday for Memorial Day, and some Wall Street players could make it a four-day weekend.
Wall Street tumbled in the previous two sessions, with the Dow losing more than 425 points, as investors reacted to soaring oil and gas prices, in addition to a gloomy economic and inflation outlook from the Federal Reserve.
The focus this week has been on oil prices and how its rise could hurt consumer spending - already hit by the housing sector meltdown and a slowing economy. Markets on Friday will likely take a cue from the April existing-home sales report, due out before the start of trade.
US light crude oil for July delivery hit a new electronic trading record of $135.09 a barrel before pulling back to settle at $130.81 on the New York Mercantile Exchange, a decline of about $2.36.
The national average price for a gallon of regular unleaded gas rose to a record $3.831 from the previous day's record high for gas.
COMEX gold for August delivery fell $10.20 to settle at $923 an ounce. The dollar rose versus the euro and yen. Treasury prices tanked, raising the yield on the 10-year note to 3.91% from 3.81% late on Wednesday.
In the day's economic news, prices of homes sold in the first quarter fell 3.1%, according to a US government report. It was the biggest quarterly decline since the agency started keeping records 17 years ago.
Another report showed that the number of Americans filing new claims for unemployment fell last week, surprising economists who were expecting a slight rise.
Ford said it will cut production through the rest of 2008 amid rising oil prices and the sluggish economy, and is no longer expecting to return to profitability next year. Ford shares slumped 8.2% and dragged on fellow automaker GM.
UBS said it would raise about $15.5bn in capital at a deep discount below the current share price. The investment bank also said it sold subprime and other mortgage-backed assets to a new investment fund run by BlackRock for $15bn.
European shares ended up after two days of losses, as a reversal in oil prices brought relief to stocks sensitive to consumer spending and growing fuel costs. The pan-European Dow Jones Stoxx 600 index rose 0.4% to 324.41. Germany's DAX 30 rose 0.4% to 7,070.33, while the French CAC-40 ended nearly unchanged at 5,029.74. The UK's FTSE 100 couldn't hold onto early gains and fell 0.3% to 6,181.60.
In the emerging markets, the IPC index in Mexico was up 0.4% at 31,245. The RTS index in Russia fell 1.4% to 2433 while the ISE National 30 index in Turkey fell 0.9% to 49,916. the Brazil market was shut for a holiday.
Can the bulls bounce back
Another weak session comes to an end with the benchmark Sensex closing below the 17k mark and the Nifty index losing over 90 points. The gap down opening could be attributed to the weakening global cues and all round selling over the bourses. Rising crude oil prices and a weak start to equity markets across Europe proved to be a sentiment dampener. US light crude oil for July delivery set a closing record of $133.17 in New York Mercantile Exchange trading, up more than $4 a barrel.
All the BSE Sectoral indices ended in negative terrain, with BSE Bankex and BSE Realty indices slipping over 2.6% each. Even the broader indices i.e. BSE Mid-Cap and the Small-Cap indices witnessed selling pressure.
Finally, the BSE benchmark Sensex ended 336 points lower to close at 16,907 and the Nifty index slipped 92 points to close at 5,025.
Overall about 1,040 stocks advanced; 1,684 stocks declined while 67 stocks remained unchanged. Among the 50-Nifty 45 stocks ended in down and 5 stocks ended in green.
Bajaj Holdings gained by over 3% to Rs697 after the company said that it plans to set up Economic Zone in Aurangabad. The company also said that Bajaj Finserve, Bajaj Auto would list on exchanges May 26. The scrip touched an intra-day high of Rs697 and a low of Rs641 and recorded volumes of over 1,00,000 shares on NSE.
Praj Industries ended lower by 2.5% at Rs212. The company announced that it received a Rs1.20bn contract for supply of key equipment to Vivergo Fuels, UK through its subsidiary, BioCnergy Europa B. V. (a Joint Venture with Aker Solutions, Netherlands). The plant is designed to produce approximately 400mn litres of fuel ethanol a year (1,200,000 litres per day). The scrip touched an intra-day high of Rs222 and a low of Rs210 and recorded volumes of over 38,00,000 shares on BSE.
Hindustan Zinc dropped by 4.5% to Rs717. The company announced that it cut lead prices by Rs2,300 per ton to Rs1,06,300 and kept zinc prices unchanged. The scrip touched an intra-day high of Rs745 and a low of Rs714 and recorded volumes of over 1,00,000 shares on BSE.
M&M slipped by 2.2% to Rs652. According to reports, the company signed a term sheet with Kinetic Motors, in its bid to acquire 76% stake in the company valued at about Rs1.20bn. The scrip touched an intra-day high of Rs657 and a low of Rs650 and recorded volumes of over 41,000 shares on BSE.
Infosys edged lower by half a percent to Rs1860. The company is exploring options to restore its organisational structure and has hired consultants. The company also intends to increase the spend on education and training of its employees by 15-20% as compared to the Rs7bn spent last year, according to reports. The scrip touched an intra-day high of Rs1898 and a low of Rs1847 and recorded volumes of over 2,00,000 shares on BSE.
Ranbaxy Labs was in poor health and ended lower by half a percent at Rs498. According to reports, the company has sold off its land and building to its group companies at Rs900mn and bought 24.9% stake at Rs934mn in its other group company Shimal Labs. The scrip touched an intra-day high of Rs505 and a low of Rs493 and recorded volumes of over 1,00,000 shares on BSE.
ONGC ended down by 1.5% to Rs924. Reports, stated that the company is planning to sell 30-40% stake in the two blocks won in Vietnam in 2006. There were also buzz that ONGC has infused Rs50bn in western offshore fields. The scrip touched an intra-day high of Rs937 and a low of Rs916 and recorded volumes of over 2,00,000 shares on BSE.
Corporate News
An increasing number of dealers have stopped accepting BPCL’s petro and smartfleet cards after the company cut commission rates. (Mint)
Subhash Chandra exists from Centrum Capital. (Mint)
IndiaBulls Real Estate pays its UK listed entity Rs4.5bn more than estimated by independent valuers. (Mint)
Providence Equity Partners get 20% in Idea Cellular unit for US$640mn. (Mint)
HT Media’s ‘Hindustan’ launched in Uttarakhand. (Mint)
HPCL seeks borrowing limit hike by Rs50bn. (Mint)
SCI’s management says it’s not affected by the global credit crisis. (Mint)
Videocon Industries plans major global retail foray under ‘VC’ brand. (BS)
Bajaj Auto expects flat sales in FY09. (BS)
Bharti Airtel ties up with global smartphone company HTC. (BS)
Hewlett Packard clarified that it will not make an open offer for Mphasis shares. (BS)
Tata Communication has designed detection and mitigation service to defend against cyber attacks on critical network infrastructure and business applications. (BS)
Tata Elxi announced setting up two new development centers in Coimbatore and Hyderabad and further expand its facility in Thiruvananthapuram. (BS)
Spice Telecom cuts STD and roaming rates. (BS)
Gail India to get into gas pipeline deal with J&K government. (BS)
Satyam and GE Healthcare enter into agreement to support customers deploying healthcare solutions based on GE Centricity Enterprise software. (BS)
Hyundai Motor raises prices by 2%. (BS)
Sail signs MoU with Rajasthan State Mines & Minerals for long term supply of low-silica limestone. (BS)
Madhya Pradesh Power Transmission Company agreed to buy 1,241MW power produced by Reliance Power’s MP plant. (BS)
Aditya Birla group plans to invest Rs800bn in Orissa. (BS)
Essar Oil offers Vadinar output to ease fuel deficit. (BS)
RCom talks to television vendors for DTH launch. (BS)
Gujarat State Petroleum Corporation firms up plans for LNG terminal at Mundhra. (BL)
Dr. Reddy’s launches gastritis drug. (BL)
Trent adopts franchise model to reach out to smaller cities. (BL)
Bajaj Finserv to set up asset management and distribution company. (BL)
TCS secures ~Rs10bn contract for processing Indian passport applications. (ET)
ICICI Ventures, M&M teams up for acquiring Belgian gear-maker VCST Industrial Products for ~Rs15.5bn. (ET)
Welspun India secures supplier of the year award for quality in home products. (ET)
Omaxe ties-up with Leander Sport to build and manage spa, sport and fitness centers at five locations in the country. (ET)
TCS, Wipro, HP, Infosys and Satyam been shortlisted to commence the integration of Railways commercial portal. (ET)
The Hinduja Group receives approval for setting up a World Knowledge Center in Mumbai. (ET)
IDBI Bank looking to seal an acquisition this year and is looking at both private and public sector banks for this purpose. (ET)
Jaypee Group Company acquires Bina Power from Aditya Birla group for Rs1.5-1.75bn. (ET)
Reliance Infrastructure set to secure MP power supply contract. (ET)
Jindal Steel & Power may secure mining license for 20bn tons of iron ore deposits of El Mutun mine in Bolivia. (ET)
Tata Elxsi to triple manpower on overseas design orders. (FE)
Bank of Maharashtra opens its 1,377th branch in India. (FE)
ONGC refuses to accept oil bonds as payment for its crude oil sales to PSU refiners. (FE)
Government approves merger of Sponge Iron India with NMDC. (FE)
Essar Oil offers to wipe out most fuel deficit in the country by supplying the entire output from its Vadinar Refinery. (FE)
Expansion plans of SAIL and RINL on track to double capacity by 2010 at a collective cost of Rs630bn says government. (FE)
Economic News
SEBI defers upfront margin payment by institutional investors in the cash market. (Mint)
The UPA government will not allow relaxation of labour laws in tax free zones. (BS)
Centre plans package to give relief to oil companies. (BS)
Government authorized Nuclear Power Corporation of India (NPCIL) to start land acquisition for new projects ahead of formal sanctions. (BS)
Bangalore’s new airport starts operations today. (BS)
Government may relax ban imposed on exports of various commodities. (ET)
Planning Commission cautions the civil aviation ministry against setting up larger then required airport infrastructure in Kolkata and Chennai. (ET)
Drug companies may get a reprieve on price caps for brands containing price-controlled ingredients. (ET)
Karnataka real estate developers decide to raise home price by 3-8% from June 10. (ET)
Petroleum minister to meet PM on Friday to discuss raising retail prices. (FE)
Ficci, CII and Assocham seek finance minister’s intervention for service tax exemption. (FE)
Punjab infrastructure Development Board approves Rs200bn worth projects. (FE)