When the boss is a way, work becomes a holiday.
Such has been the market's ways this year that quite a few market players, including a high-profile investor, have taken a long summer break. Many more may choose to go on holidays as the market may remain rangebound and choppy in the near term. Come to think of it, a break from the market isn't a bad idea at this point in time. There are no immediate triggers for the main indices to head firmly higher. FII inflows have tapered off. Inflation is running at 3 1/2 year high. Industrial production hit a six-year low in March. Though a high base effect may be the reason for it, but overall economic activity has definitely slowed considerably.
The bulls are hoping for a good monsoon to perk up the mood. Talking of rains, the weather bureau on Monday reported monsoon has hit the east coast five days in advance. A good monsoon could lift farm output and thus boost overall demand and more importantly sentiment. An improved agriculture produce may also have a soothing effect on inflation. However, all this is in a realm of conjecture at this juncture. A lot hinges on the actual rainfall and its spatial distribution across the country. Any disappointment on this front will only add to the string of headwinds. The market will continue to witness sideways movement till we get some clarity on monsoon (for lack of other reasons).
Today, we expect a brighter start given the overnight rally on Wall Street. Asian markets are also not doing too badly. Markets also rose in Europe yesterday. However, nobody's sure whether the early gains will be sustained as FIIs remain net sellers. Crude oil is still above $123 a barrel. We haven't had a fuel price hike since long, which has put the oil PSUs in a major trouble. The situation is no different for steel and cement companies in the face of Government's diktat on maintaining price lines. The steep run-up in oil prices and wild swings in the currency market are also putting pressure on several other sectors. Be stock specific. Focus on quality scrips and avoid aggressive buying.
Results Today: DCM Shriram Consolidated, Gail India, Omnitech Solutions, Usha Martin and Varun Shipping.
FIIs were net sellers of Rs2.1bn (provisional) in the cash segment yesterday while local institutions poured in Rs2.41bn. In the F&O segment, foreign funds were net buyers of Rs5.72bn. On Friday, FIIs were net sellers of Rs3.7bn. Mutual Funds were net sellers of Rs3.33bn.
Asian stocks rose for a second day, led by technology companies and automakers, after higher profit forecasts by Fujitsu Ltd. and Isuzu Motors Ltd. bolstered speculation earnings will withstand a global slowdown.
The MSCI Asia Pacific Index climbed 0.4% to 149.67 as of 10:50 a.m. in Tokyo. About five stocks gained for every three that fell. The Nikkei 225 Stock Average rose 0.7% to 13,844.97. All other Asian benchmark indexes advanced.
Chinese stocks fell after the strongest earthquake in 58 years struck southwestern Sichuan province, killing 10,000 people and damaging power plants and transmission lines.
The CSI 300 Index, which tracks stocks traded in Shanghai and Shenzhen, lost 22.06, or 0.6%, to 3,882.86, paring an earlier loss of as much as 3.2%. As of 10:27 a.m. local time, 174 of the 300 stocks and seven of the 10 industry groups were lower, led by financial and industrial companies.
US stocks surged as investors shrugged off a spate of negative corporate news and opted to snap up shares battered in last week's selloff. Retailers rallied in anticipation of better-than-estimated earnings and financial shares climbed after the world's largest bond insurer said it has enough cash to cover claims.
Wal-Mart jumped on speculation that profit grew as discounts lured shoppers away from competitors. MBIA led financial shares to their first advance in four days after the debt guarantor said it has ample liquidity and won't have to raise more money. EDS surged the most ever on a report that H-P may buy the company.
The S&P 500 Index added 15.30 points, or 1.1%, to 1,403.58. The Dow Jones Industrial Average climbed 130.43 points, or 1%, to 12,876.31. The Nasdaq Composite Index rose 42.97 points, or 1.8%, to 2,488.49.
Market breadth was positive. Almost four stocks climbed for each that fell on the New York Stock Exchange, the broadest rally since April 18.
Tuesday brings reports on April retail sales and March business inventories and earnings reports from Liz Claiborne and Wal-Mart.
The Nasdaq got a boost from Research In Motion (RIM), which soared after it announced its new version of its best-selling Blackberry smartphone, which has been updated with features meant to make it more of a competitor to Apple's iPhone.
Bond insurer MBIA reported a $2.4bn quarterly loss as it contended with ongoing problems in the credit market and took billions in writedowns. Despite this, shares jumped 4.5%.
Sprint Nextel reported results that fell from a year earlier, as it lost monthly subscribers and had to pay severance and other charges. The results, excluding items, nonetheless topped analysts' forecasts. Shares fell 1.5%.
FedEx, often seen as a proxy for the economy, warned that fiscal fourth-quarter earnings won't meet forecasts due to surging fuel costs. Shares were little changed.
AIG shares slumped 4.5% in active trading after the company's former CEO said the insurer was in crisis and should postpone its annual general meeting scheduled for Wednesday.
Clear Channel rallied 9.6% on news that the company and its prospective buyers are in settlement talks regarding whether banks have to fund promised loans of $19.5bn. Earlier, a judge delayed the start of the trial over financing, raising hopes that a settlement could be reached.
Cablevision is buying New York newspaper Newsday for $650mn from Tribune Co., beating out News Corp CEO Rupert Murdoch, who withdrew his own $580mn bid.
US light crude oil for June delivery fell $1.73 to settle at $124.23 per barrel in New York after settling at a record $125.96 on Friday. The national average price for a gallon of regular unleaded gas rose to a record $3.718 from $3.707 the previous day, according to AAA. It was the fifth record in a row.
COMEX gold for June delivery fell 90 cents to settle at $885.80 an ounce. The dollar fell versus the euro and rose against the yen. Treasury prices fell, raising the yield on the benchmark 10-year note to 3.78% from 3.77% late on Friday.
European shares gained ground. The pan-European Dow Jones Stoxx 600 rose 0.3% to 325.95, with HSBC Holdings' shares up 1.9%. The UK's FTSE 100 closed up 0.3% at 6,220.60, while Germany's DAX 30 rose 0.5% to 7,035.95 and the French CAC-40 climbed 0.3% to 4.976.21.
In the emerging markets, the Bovespa in Brazil gained 1.1% at 70,415 while the IPC index in Mexico was down 0.1% at 30,637. The RTS index in Russia rallied 1.6% to 2321 and the ISE National 30 index in Turkey dropped 1.1% to 51,216.
Bulls may carry momentum further
Markets made a strong come back in the later half of the trading session on back of buying witnessed in the IT, Fertilizer, FMCG and Telecom stocks. Markets nose dived in the mid-afternoon trades after IIP numbers for March came in at a shocking low of 3% vis-à-vis 8.6% in the month of February. However, the Nifty index closed above the 5k mark recovering over 100 points from its days low. The Mid-Cap and the Small-Cap stocks also witnessed offloading. Finally, the BSE benchmark Sensex ended 123 points lower to close at 16,860 and the Nifty index gained 30 points to close at 5,012.
Overall about 920 stocks advanced; 1,777 stocks declined while 50 stocks remained unchanged. Among the 50-Nifty 31 stocks ended in green and 18 stocks ended in red.
Great Offshore was down by a percent to Rs673. According to reports, the company acquired Cayman Islands-based SeaDragon Offshore for US$1.4bn. The scrip touched an intra-day high of Rs684 and a low of Rs655 and recorded volumes of over 29,000 shares on BSE.
Satyam Computer surged by over 3.5% to Rs489 after reports stated that the company has drawn up capital expenditure of US$125mn to develop four SEZs. The scrip touched an intra-day high of Rs491 and a low of Rs471 and recorded volumes of over 8,00,000 shares on BSE.
PTC India was trading lower by 2% to Rs92. The company announced that it has formed a joint venture to buy Indonesia coal assets. The company also said that it plans to set up electricity exchange within a month. The scrip touched an intra-day high of Rs92 and a low of Rs88 and recorded volumes of over 2,00,000 shares on BSE.
NTPC edged lower by 0.5% to Rs192. The company announced its plans to allocate 0.5% of profit for R&D fund and has also planned R&D fund for development of sustainable development. The scrip touched an intra-day high of Rs193 and a low of Rs189 and recorded volumes of over 10,00,000 shares on BSE.
Bajaj Holdings was down by over 2.6% to Rs682. The company announced that they would form a joint-venture company to develop, produce and market the car code-named ULC with wholesale price range starting from US$2500.
The new joint-venture company will be 50% owned by Bajaj Auto, 25% by Renault and 25% by Nissan. Targeting the growing Indian new vehicle market, the ULC will be made at an all-new plant to be constructed in Chakan (Maharashtra state) in India. Initial planned capacity will be 400,000 units per year. The scrip touched an intra-day high of Rs693 and a low of Rs670 and recorded volumes of over 10,000 shares on BSE.
Reliance Industries gained by a percent to Rs2554. The company plans to convert its fuel retail outlets, which were recently closed owing to unviable operations, into malls and multiplexes, said reports. Alloting about Rs50bn for the project, company is planning to develop 700 to 800 properties at important locations. Company, has also approached its fuel dealers with offers to buy out the properties they own, according to reports. The scrip touched an intra-day high of Rs2564 and a low of Rs2480 and recorded volumes of over 8,00,000 shares on BSE.
Ashok Leyland ended flat at Rs39. The company said that it would form a venture with JBM Auto and would spend Rs1bn. The scrip touched an intra-day high of Rs39 and a low of Rs37 and recorded volumes of over 14,00,000 shares on BSE.
Wall Street Finance ended with modest gains after being locked at 10% upper circuit, the scrip gained only by a percent to Rs44. The company’s 33.1% equity changed hands in a single trade. Around 3.85mn shares were traded at ~Rs45 per share. The scrip touched an intra-day high of Rs48.05 and a low of Rs39.75 and recorded volumes of over 41,00,000 shares on BSE.
Hindustan Zinc was down by 2.7% to Rs625. The company announced that it lowered lead prices by 3.7%or Rs4,500 to Rs1,17,200 per metric ton from May 8. Zinc prices were kept unchanged at Rs98,500 per ton. The scrip touched an intra-day high of Rs638 and a low of Rs618 and recorded volumes of over 14,000 shares on BSE.
Corporate News
Bharti Airtel is expected to submit revised bid to acquire South Africa’s MTN as Dubai based Emirates Telecommunications (Etisalat) joins the race. (ET)
Tata Motors ‘Nano’ project is on schedule to roll out of the Singur factory during the latter part of 2008. (BL)
Ranbaxy has signed a strategic product development agreement with German pharma major Merck for anti-infective drugs. (ET)
NTPC plans to acquire a majority stake in coal mines in Indonesia, with reserves of ~200-300mn tons. (DNA)
Phase II of the Simhadri thermal power plant of the NTPC, adding two more units of 500 MW each, will be completed by 2011 and the additional power will be shared among the southern States. (BL)
Videocon Industries is planning to enter into hospitality and hydropower businesses. The company is in talks with the Uttarakhand government for various projects. (BS)
Jindal Stainless has signed a joint venture agreement with the Indonesia-based PT Antam Tbk to develop a nickel smelting and stainless steel facility in North Konawe, South East Sulawesi at an investment of about Rs29bn. Antam will hold 55% stake in the project. (BS)
Bharti Airtel has announced a tie-up with US-based Apple Inc to bring the popular GSM-based iPhone in the country. (FE)
French-US equipment firm Alcatel-Lucent has formed a JV with Reliance Communications to offer managed-net-work services to domestic as well as international telecom operators. (ET)
ONGC launched India's first pilot plant to extract helium from natural gas at Kuthalam in Nagapattinam district. (BS)
Reliance, ITC queue up for railways’ land of 4,800 hectares, to be leased out to retailers and logistic companies. (ET)
Tata Communications has partnered with US based Sonus to build network to offer phone calls over the internet globally. (ET)
Arvind Mills plans to invest ~Rs4bn in expanding its retail presence. (ET)
ONGC has put on hold its plans for rolling out 1,600 fuel stations together with MRPL, due to rising crude oil prices. (ET)
Arunachal Pradesh has cancelled NTPC’s contract to build two hydroelectric power projects in the state at an estimated cost of Rs225bn. (Mint)
Power Finance Corp. to raise Rs2bn through bonds. (Mint)
SBI has decided to partner Insurance Australia Group for its proposed non-life joint venture. (ET)
Aurobindo Pharma has got approval from the Medicines Control Council to manufacture and market nine products in South Africa. (Mint)
Tata Chemicals and Ireland based Total Produce JV company Khet-Se Agriproduce has launched cash & carry business in Punjab. (ET)
Mercator Lines has drawn up a Rs40bn capital expenditure programme for the next two years to expand its fleet of ships. (BL)
Lanco Hills Technology Park Private Limited, part of the Lanco group has entered into an agreement with Global Hyatt Corporation for the management of the 400-room Grand Hyatt Hyderabad, due to open in early 2011. (BS)
Phillips Carbon Black Ltd has doubled the investment commitment in its Vietnam joint venture to Rs3bn from Rs 1.5bn as the capacity for the plant has been raised to 100,000 tons from 50,000 tons planned earlier. (BL)
Graphite India Ltd will expand graphite electrode capacity by 10,500 tons at a cost of Rs1.9bn at its Durgapur plant. (BL)
Koutons India Retail Ltd will expand its product line and launch its own brand of shoes by the third quarter of this year under the brand name of ‘Koutons Footwear'. (BS)
Country Club India Ltd has forayed into ayurvedic spa business. (BS)
Kewal Kiran Clothing Ltd had raised Rs806mn by issuing 31mn equity shares of Rs10 each at a premium of Rs250 a share. (BL)
DLF will file papers for US$2bn REIT in June 2008. (DNA)
The UK-based promoter-director Bhulo (Bhupendra) Kansagra of Delhi-based low-cost carrier SpiceJet is willing to divest the family stake in the airline. (BS)
Another round of price hike has begun in India’s FMCG industry. Tata Tea Ltd is raising the price across categories this month while ITC Foods is increasing prices of its select brands. Emami Ltd has hiked the price of its hair oil brands and Marico Ltd is in the process of raising the prices of its select products. (FE)
Real estate developer Paramount Group plans to invest ~Rs11bn in three projects over the next two years. (ET)
Texas Pacific Group controlled Parkway Hospital is leading the race to buy 25-30% stake in Manipal Hospitals for over Rs5bn. (ET)
Cement companies may withdraw or curtail their proposed investment of ~Rs50bn in setting up nearly 10mn tons of cement manufacturing facilities in the north-east. (ET)
Economic News
Top banks in India said that they have been advised by none other than the Union Finance Minister to shrink their NIMs to acceptable levels. (BL)
The Indian steel industry will take a decision on revising its prices after the government reviews the export duty on the alloy. (BS)
Loss from retail sale of cooking gas (LPG) has fallen 3.26% from Rs316 per 14.2-kg cylinder to Rs306 per cylinder over the last one month. (BS)
IT exports from India are poised to reach US$80bn within three years effectively doubling from US$40bn achieved in 2007-08. (BL)
TRAI has sought views from the industry and experts on the issue of allowing ISPs to provide internet telephony to call landline or mobile subscribers, within the country. (BL)
Post-CRR hike by 75 basis points, the banks are planning to hike their sub-PLR rates and other retail rates like credit card and auto loan rates. (FE)
China’s central bank has raised CRR by 0.5% w.e.f. May 20, 2008. (DNA)