Numbers are intellectual witnesses that belong only to mankind - Aristotle.
It’s Friday and besides the weekly inflation data today, which is likely to increase from 7.82%, the Centre will also come out with GDP data for the Q4 and the entire year. There are concerns that GDP growth may slip below 8% owing to high interest rates, slowing global demand and rising cost pressures.
The Government on Thursday said agriculture growth will be higher by almost a percentage point to 3.5%. But, given its low weightage in GDP, it may not be able to help arrest the slide in overall economic growth.
Any negative surprise in either of the reports may pull down the key indices. On the positive side, a better-than-expected data (inflation or GDP) could help revive buying.
Global cues are quite encouraging though, with US stocks rising for a third day in a row and oil prices falling below $127. Asian markers are mixed this morning, which may check gains.
Concerns about higher inflation appeared to get the better of the bulls as the Government inched closer to announcing an impending hike in retail fuel prices. Though no announcement was made yesterday the Centre is likely to take a final call before the weekend. An increase in petrol and diesel (this is still being debated), will push up inflation further from the near 8% level. And, given the cascading effect it will have on various other items of consumption, inflation may even touch double-digit mark. This fear seemed to hurt market sentiment yesterday.
On the F&O side, FIIs are believed to have let their short positions in May Nifty futures expire, which may be the reason behind the sharp sell-off yesterday afternoon. What's more, the June Nifty futures have seen strong addition in open interest with the contract ending at a substantial premium of 23 points to the spot index. The overall rollover was lower than last month, which actually is good as most of the positions were shorts.
We expect the market to open on a positive note, mainly due to positive global markets and encouraging F&O indicators. However, the bulls could turn wary ahead of the release of inflation and GDP reports. Having said that, the Government's decision to ease the norms for FII investments, both for equity and debt, coupled with the relaxed ECB measures may just be able to lift the mood.
The stocks to watch out for include IFCI, Bombay Dyeing, SREI Infra and Hanung Toys.
Key Results Today: Colgate, Dabur Pharma, Deepak Fertilizers, GSFC, Indo Tech Transformers, Nagarjuna Construction, Northgate Technologies, Punj Lloyd, Sanghvi Movers, Sobha Developers, Sun Pharma, Swaraj Mazda, Tata Tea and Welspun India.
FIIs were net sellers of Rs12.78bn (provisional) in the cash segment on Thursday while local institutions were net buyers of Rs6.98bn. Foreign funds were net buyers of Rs13.69bn in the F&O segment yesterday.
On Wednesday, FIIs offloaded Indian shares worth Rs7.34bn from the cash segment. Mutual Funds were net buyers of Rs1.85bn.
Asian stocks were trading mixed this morning, with Japanese and Chinese shares bucking the overall weak trend across the region. However, a regional benchmark advanced as a drop in oil prices reduced concerns that higher energy costs will hit profits and consumer spending.
Sony climbed to a two-week high. Bridgestone gained. Boart Longyear rose the most since March after the Australian drilling-services company lifted its sales forecast.
The MSCI Asia Pacific Index added 0.4% to 149.23 as of 9:51 a.m. in Tokyo. The index is set to decline 0.9% this week and lose 0.5% in May. Nine of 10 industry groups climbed today.
Japan's Nikkei 225 Stock Average gained 0.8% at 14,240.73.
US stocks gained for the third day running as investors cheered a steep fall in oil prices, a stronger dollar and a government report that showed that first-quarter GDP growth was better than initially reported.
After the close, Dell reported quarterly sales and earnings that topped estimates, sending shares almost 10% higher in after-hours trading. MasterCard's forecast of increased profit growth helped fuel a rally in financial shares while tumbling oil prices boosted consumer-centric companies.
Citigroup, Bank of America and JPMorgan Chase helped send the KBW Bank Index to its steepest rally in two weeks after MasterCard said consumers are using credit and debit cards more.
Target and Best Buy led retailers to their first three-day advance in a month as crude slid more than $4 a barrel on signs that record prices are reducing demand. Google gained after the most popular Internet search engine had more clicks on its US text advertisements in April.
The S&P 500 Index added 7.42 points, or 0.5%, to 1,398.26, capping its biggest three-day gain in almost a month. The Dow Jones Industrial Average rose 52.19 points, or 0.4%, 12,646.22. The Nasdaq Composite Index gained 21.62 points, or 0.9%, to 2,508.32.
Market breadth was positive Almost two stocks climbed for each that fell on the New York Stock Exchange.
Wall Street seesawed throughout the morning session in tune with the volatile oil market, but stocks finally moved higher around midday as crude prices again slumped. Stocks are seeing a little bit of a relief rally as oil prices continue to back off the high above $135 a barrel hit last week.
Still, the outlook for US stocks remains largely weak over the next few months, with the market likely to see slow growth amid a struggling economy and ongoing problems in the financial sector.
Friday brings economic reports on personal income and spending and the report's inflation component before the start of trade. After trading begins, reports are due on manufacturing in the Midwest and consumer sentiment.
Meanwhile, futures traders have sharply raised their bets that the Federal Reserve will raise interest rates back to 2.25% in late October, encouraged by more positive economic news and a spate of inflation warnings.
Oil prices fell by over US$4 on Thursday amid wild gyrations despite crude supplies tumbling and the US economy doing better than expected in the first quarter. News of a six-month government probe into oil trading added to the volatility.
Crude oil for July delivery touched a high of US$133.12 a barrel on the New York Mercantile Exchange after the supply data were released. That was its strongest intraday level since Friday. But the contract eventually lost US $4.41 to close at US $126.62, its weakest level since May 16.
The 3.37% decline was the biggest on a percentage basis since March 19, according to the Energy Information Administration (EIA).
In its weekly inventory report, the EIA said crude stocks decreased by 8.8mn barrels last week. Analysts were looking for an increase of 750,000 barrels, according to a survey from Platts, an energy research firm.
But the report issued online by the EIA said that the drop was due to temporary delays in crude oil tanker off-loadings on the Gulf Coast.
News of a government investigation into oil trading came later in the day. The Commodity Futures Trading Commission said it launched a nationwide investigation into the purchase, transportation, storage, and trading of crude oil and other petroleum product contracts back in December.
The commission said that details of the investigation remain confidential, but announced a handful of other initiatives designed to increase transparency of U.S. and international energy futures markets.
The national average price for a gallon of regular unleaded gas rose to a record $3.952 from the previous day's record of $3.944, AAA reported.
Gold also slumped on the dollar's rise. COMEX gold for August delivery fell $23.30 to settle at $881.70 an ounce. The dollar gained versus the euro and yen. Treasury prices tumbled, raising the yield on the 10-year note to 4.08% from 4%.
Economic growth in the first quarter grew at a faster paced than initially thought, the government reported. US GDP rose at an annual rate of 0.9%, as expected, versus the initial reading of 0.6%. The Core PCE deflator, the report's closely-watched inflation component, was 2.2%.
The number of Americans filing new claims for unemployment rose 4,000 to 372,000 last week, topping expectations.
As expected, the majority of Bear Stearns shareholders endorsed JPMorgan Chase's proposed takeover of the brokerage, which nearly collapsed amid the subprime mortgage market meltdown. Both stocks gained.
European shares ended a volatile session higher. The pan-European Dow Jones Stoxx 600 index rose 0.2% to 320.91, extending gains of 1% on Wednesday. UK's FTSE 100 closed virtually unchanged at 6,068.10, while Germany's DAX 30 rose 0.3% to 7,055.03 and the French CAC-40 gained 0.1% at 4,975.90.
In the emerging markets, the Bovespa in Brazil dropped 1.85% to 71,797 while the IPC index in Mexico was up 0.6% at 31,837. The RTS index in Russia jumped 1.8% to 2439 while the ISE National 30 index in Turkey shed 0.8% to 47,413.
GDP, inflation may decide direction
A highly volatile F&O expiry session ended with losses. Bulls managed to extend yesterday’s gains in the early trades tracking firm cues from the US and the Asian markets, but were unable to hold on as key indices turned highly choppy. After trading in a range for major part of the day, markets took a nosedive after a sudden bout of selling all over, dragged the Nifty below the 4,850 mark.
Barring the Capital Goods index al the other key Sectoral indices ended in red, with the BSE Auto index slipping the most (down 3.3%). Others like Bankex and Oil & Gas indexes were down by 2% each.
Finally, the BSE benchmark Sensex ended 209 points lower to close at 16,316 and the Nifty index lost 83 points to close at 4,835.
Overall about 1,116 stocks advanced; 1,539 stocks declined while 105 stocks remained unchanged. Among the 50-Nifty 41 stocks ended in red and 9 stocks ended in green.
NTPC ended down by over 3% to Rs171 after the company announced that its Q4 net profit fell 23% to Rs13.4bn and net sales were at Rs107.4bn (up 21%). The scrip touched an intra-day high of Rs178 and a low of Rs168 and recorded volumes of over 25,00,000 shares on NSE.
HTMT Global slipped by 2% to Rs355. The Company reported consolidated results for the quarter ended 31st March 2008. The revenues stood at Rs1864.6mn up by 16%. The EBITDA were at Rs412.5mn. The net profit gone up by 49% at Rs241.2mn. The company has added 17 new customers during the year. The scrip touched an intra-day high of Rs381 and a low of Rs354 and recorded volumes of over 2,000 shares on NSE.
Hindustan Zinc gained by 1.5 percent to Rs641. The company said that it has cut zinc prices by Rs4,000 per ton and lead prices by Rs5,800 per ton. The scrip touched an intra-day high of Rs677 and a low of Rs630 and recorded volumes of over 63,000 shares on NSE.
L&T rallied by over 6.5% to Rs2889 after the board of directors of the company approved bonus issue at ratio of 1:1. Further on the company announced its Q4 results with net profit at Rs9.66bn (up 37.8%) and its net sales rose 35.7% to Rs84.7bn. The scrip touched an intra-day high of Rs2949 and a low of Rs2715 and recorded volumes of over 15,00,000 shares on NSE.
HPCL edged higher by 0.3% to Rs249. The company announced its Q4 results with net profit at Rs3.85bn (down 30%). However, the company’s were up by 44.2% at Rs317.9bn. Also the company said that they would pay final dividend of 30%. The scrip touched an intra-day high of Rs259 and a low of Rs246 and recorded volumes of over 6,00,000 shares on NSE.
Shares of IFCI have surged by over 6.5% to Rs62 after the company announced that the board of directors of the company would today meet to consider induction of strategic investor. The scrip touched an intra-day high of Rs65 and a low of Rs57 and recorded volumes of over 5,00,00,000 shares on NSE.
Sun Pharma declined by over 5% to Rs1388 after Taro rejected merger plans. Israel's Taro Pharmaceutical Industries on Wednesday announced that its Board of Directors unanimously voted to terminate the merger agreement with Sun Pharmaceutical Industries. The merger agreement of May 18, 2007 provided for the acquisition of Taro Pharma by Sun Pharma for US$7.75 per share and allowed either party to terminate after December 31, 2007.
Taro Pharma's Board determined that permitting the merger agreement to remain in force is no longer in the best interests of the company. The Board determined that the merger agreement had become stale and does not reflect the dramatic operational and financial turnaround that the company has achieved since last year, the future value that the company expects to achieve from the changes made in its business model and the value in its new product pipeline, Taro Pharma said. The scrip touched an intra-day high of Rs1480 and a low of Rs1376 and recorded volumes of over 50,00,000 shares on NSE.
After taking a short breather, the bears were back on the bourses with a vengeance. On Thursday it was the expiry jitters that dragged the Indian bourses to deep red. For Friday important economic data like the quarterly GDP figures and the inflation data to be released would be tracked closely. So, one could again expect a day full of gyrations.
Corporate News
Reliance Industries and Standard Chartered Bank may co-bid for strategic stake in IFCI. (DNA)
Sun Pharma may take legal action against Israel’s Taro Pharma, for terminating merger. (BS)
L&T schedules first of three IPOs for 2009-10. (BL)
Jubilant completes acquisition of Canada's Draxis Speciality Pharma for US$253mn. (BS)
Exide plans investment worth Rs350mn to acquire lead smelter company. (BL)
SAT sets aside SEBI penalty on Holcim. (BS)
Tata group is setting up a BPO on its proposed steel plant site in Orissa. (BS)
Tata’s small car Nano is hit by rising input costs. (DNA)
Videocon is planning to set up a 1,000MW hydropower project in Uttaranchal. (DNA)
Piramal Life to invest Rs2bn p.a. for next 2-3 years on R&D. (DNA)
Gujarat Industries Power Co. (GIPCL) is expected to start work on the 500MW lignite based power plant soon. (DNA)
PTC plans to raise US$500mn. (BL)
Kavveri Telecom signs MoU with MS Ramaiah School of Advanced Studies to augment its R&D. (BL)
TCS to spend Rs19bn in the current fiscal year. (BL)
ABG Infralogistics is set to get deals for two Haldia dock terminal operations. (BL)
Havells India among 14 FDI plans cleared for issuing shares and warrants. (BL)
NMDC and Spice Minerals sign MoU for a JV to seek overseas acquisitions. (BL)
Linde Group, Germany plans to invest euro 1bn in its unit BOC India over 7-10 years. (FE)
ICICI Prudential ties-up with American Express Banking Corp.(FE)
Karuturi Global to raise US$250mn for agri project in Ethopia. (FE)
Dish TV to increase borrowing limits by Rs10bn. (FE)
Orchid Chemicals to convert business alliance with Ranbaxy into an agreement next month. (FE)
Hindustan Aeronautics to manufacture over 1,000 Honeywell TPE331 aircrafts engines for the US Company. (FE)
HPCL decides to put on hold Rs317.5bn worth of capital investment. (FE)
TDSAT directs BSNL to restore connection to Bharti Airtel in parts of Bangalore. (FE)
L&T proposes to set up 15-hector IT SEZ in Gujarat. (FE)
BoA to consider the in-principle approval to SEZ proposals of Gremach Infrastructure. (FE)
Maharashtra government delays land acquisition process, slows down Tata Power, Reliance Energy power project development. (FE)
Hanung Toys to acquire frontline US home furnishing marketing company. (ET)
Wipro wins an interim court ruling against bulb maker KK Lamps. (ET)
JB Group announces foray into food business by forming a new company JB N JEG Foods. (ET)
TTML in talks with Srei Group company Quippo Telecom to merge its tower arm. (ET)
Bombay Dyeing sold off its DMT plant to Gujarat Company. (ET)
Economic News
Government allows infrastructure firms to borrow US$100mn abroad through ECBs for rupee expenditure under the approval route. (BS)
Railways considers aluminium coaches to up payload and save fuel cost. (BS)
Sebi eases registration norms for FIIs and sub accounts. (BS)
FIIs can issue participatory notes to entities like hedge funds. (FE)
Monsoon misses May 29th date to reach Kerala. (BL)
Telecom players divided over WiMax spectrum pricing. (BL)
RBI to revise exposure limit to 25% of capital funds for oil companies. (FE)
Spread over Libor eased to benefit SMEs accessing foreign debt. (FE)
Government to meet on June 4, 2008 to consider 15 new SEZ proposals. (FE)
Petroleum ministry says India to have a total refining capacity of 242mn tons by 2011-12. (FE)
Government clears FDI proposals worth Rs8.26bn. (ET)
No plans to raise notified prices of coal this year: Government. (ET)
AAI freezes all kind of airport charges to aid airlines tide over crises. (ET)
RBI to allow Co-operative banks to raise capital through innovative instruments. (ET)