Success is the ability to go from one failure to another with no loss of enthusiasm.
The bulls certainly lack enthusiasm at the moment, and conviction as well to build on last month's rally. Losses mounted for the bulls yesterday even as crude oil repeatedly touched new all-time highs, stoking fresh concerns over inflation, which is already at a 3 1/2 year peak. The Government will announce its latest data on inflation at noon today, and the same is likely to increase further from 7.57%. However, it has been observed that the market at times have completely brushed aside rising inflation and has charted its own course. Last Friday was a case in point when the Sensex rallied by over 300 points despite inflation touching a 42-month high. The same trend may play out today as well, especially because the Sensex has lost more than 500 points this week. Having said that one should not fooled by any spurt, as the market is most likely to witness profit booking on every rally. Any fresh purchases should be restricted to high-quality stocks (preferably large caps) with clear visibility in terms of earnings growth. That too should be done in smaller chunks.
One should not get carried away by momentum in any scrip, as the trend could reverse rapidly. The market is still facing several headwinds, both local as well global. We are unlikely to see a one-way movement this year unless the factors that are hurting the market sentiment turn around. This may take a while. The market doesn't like uncertainty. And, with no immediate triggers for a big-bang rally, the market is expected to swing in a range of a few thousand points (Sensex: 16k-18k) with alternate bouts of buying and selling. Today, we expect yet another cautious to lower opening for the market. Asian markets have turned sharply lower after a flat opening. The Hang Seng was last seen down over 400 points, while The Nikkei was down by more than 100 points at mid-day break. The trend will remain dull till inflation numbers are out. Thereafter, its anybody's guess, though the bulls would be hoping for a better end to what has been a bad week.
FIIs were net sellers of Rs7.24bn (provisional) in the cash segment yesterday while local institutions poured in Rs6.1bn. In the F&O segment, foreign funds were net sellers of Rs13.69bn yesterday. On Wednesday, FIIs were net buyers of Rs3.25bn. Mutual Funds were net sellers of Rs231mn.
Key Results Today: Apollo Tyres, Asian Paints, Bharat Bijli, Kotak Mahindra Bank, Novartis India, Shalimar Paints and Su-Raj Diamond.
Meanwhile, the rupee fell to the lowest level in almost 13 months as crude oil traded near an all-time high, boosting demand for dollars from oil refiners. Crude oil is up 10% in the past week. " The rupee's fall reflects the uncertainties in global financial markets," said RBI Governor YV Reddy. Apparently, there were no dollar sales by either RBI or exporters. A weak stock market also hurt sentiment on the rupee.
The rupee declined 0.9% yesterday to 41.7375 per dollar, the lowest close since April 20, 2007. It is down 2.7% this week, the most in a five-day period since November 1997. The local currency may fall to 42 in the coming days, according to currency experts.
Asian stocks were mostly down for a third day, led by automakers and technology companies, after Toyota and Olympus forecast lower profits on rising raw material costs.
Toyota shares slumped after saying higher gasoline prices and a US economic slowdown will erode profit. Olympus tumbled the most in three months. BHP Billiton and Japan's Inpex Holdings gained after oil futures traded above $124 a barrel.
The MSCI Asia Pacific Index was down 0.5% at 149.90 as of 11:02 a.m. in Tokyo, after earlier advancing as much as 0.1%. The benchmark is poised for a five-day, 1.3% fall, its worst weekly performance in two months and snapping a two-week rally.
Japan's Nikkei 225 Stock Average was down 0.9% at 13,815.68. Australia's S&P/ASX 200 index climbed 1.2%, the biggest gain in the region, after National Australia Bank announced a 26% increase in its profit. Most other Asian markets declined.
US stocks rose marginally on Thursday, as investors welcomed some better-than-expected April retail sales. But, gains were capped by record-high oil prices and weakness in the financial sector.
Wal-Mart rose as the retail giant reported better than expected sales. News Corp. jumped on revenue that was lifted by advertisements for American Idol and the Super Bowl.
Freeport-McMoRan Copper & Gold and Chevron helped send raw-material and energy companies to the biggest gains in the S &P 500 Index. Alcoa climbed to a six-month high after naming a new CEO.
The S&P 500 added 5.11 points, or 0.4%, to 1,397.68. The Dow Jones Industrial Average gained 52.43 points, or 0.4%, to 12,866.78. The Nasdaq Composite Index rose 12.75 points, or 0.5%, to 2,451.24. About six stocks gained for every five that fell on the New York Stock Exchange.
Seven of 10 industry groups in the S&P 500 advanced as the market was also boosted by a government report that showed that initial jobless claims dropped last week more than economists had forecast.
With most of the quarterly earnings reports already having been released, the focus over the next few weeks will be on the economic news and the direction of commodity prices.
AIG shares dropped 2.1% after a S&P equity analyst slashed her forecasts for the insurance major ahead of it's first-quarter results. After the close, AIG reported a steeper-than-expected quarterly loss of $7.8bn and said it will look to raise $12.5bn in capital.
The national average price for a gallon of regular unleaded gas rose to a record $3.645 from $3.618 the previous day, according to AAA.
US light crude oil for June delivery rose 16 cents to settle at a record $123.69 a barrel on the New York Mercantile Exchange Thursday. Oil hit a record $124.49 in after-hours electronic trading.
COMEX gold for June delivery rose $11.10 to $882.30 an ounce. The dollar was little changed versus the euro and fell against the yen. Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.78% from 3.84% late on Wednesday.
The number of Americans filing new claims for unemployment fell by 18,000 last week to 365,000. Economists thought claims would post a narrower drop to 375,000 new claims.
Another economic report showed that wholesale inventories fell 0.1% in March, missing forecasts for growth of 0.5%. February's reading was revised down to growth of 0.9% from an initial reading of 1.1%.
Banking major Citigroup is holding an investor conference on Friday. It is likely to announce its strategy to deal with the ongoing crisis.
Most European stock benchmarks ended lower, as the European Central Bank and the Bank of England kept interest rates on hold, flagging inflation concerns. The pan-European Dow Jones Stoxx 600 index closed nearly unchanged at 329.28, with banks leading the decline.
ECB President Jean-Claude Trichet emphasized that inflation risks remain to the upside. After the comments from Trichet, the euro firmed and stocks moved further into the red.
The German DAX 30 ended 0.1% lower at 7,071.90, while the French CAC-40 slipped 0.4% to 5,055.58 and the Italian S&P/MIB index closed 1.3% lower at 34,082.00. The UK's FTSE 100, however, gained 0.2% to 6,270.80.
In the emerging markets the trend was mixed. The Bovespa in Brazil was up 1% at 69,722 while the IPC index in Mexico finished flat at 30,751. The RTS index in Russia surged by 3.75% to 2283 and the ISE National 30 index in Turkey slid 2.9% to 52,071.
Outlook remains cloudy
Losing streak for the bulls extends to fourth trading session on back of weak global cues and all round selling pressure. After starting off with a negative gap down, bulls were unable to stage a comeback led by fall in the Banking, IT and the capital Good stocks. The IT stocks after being in the upward trend in the past trading sessions also were under pressure after U.S. based Cognizant Technology Solutions Corp. forecast second-quarter profit and sales that missed analysts' estimates.
Finally, the BSE benchmark Sensex ended 258 points lower to close at 17,080 and the Nifty index lost 53 points to close at 5,081.
Overall about 1,106 stocks advanced; 1,589 stocks declined while 51 stocks remained unchanged. Among the 50-Nifty 35 stocks ended in red and 15 stocks ended in green.
Among the BSE Sectoral indices, BSE Bankex index (down 3%), BSE IT index (down 3%) and BSE FMCG index (down 2.7%). The BSE Metal index was the only gainer (up 0.5%).
TCS declined by 2.2% to Rs943. The company announced that it has renewed its managed services contract with one of the world’s leading long haul airlines Virgin Atlantic. By entrusting the management of its IT infrastructure and applications management to TCS, Virgin Atlantic is in a position to focus on core business activities and flex with the future challenges of the international airline industry. The scrip touched an intra-day high of Rs971 and a low of Rs919 and recorded volumes of over 2,00,000 shares on BSE.
Uttam Galve steels dropped by over 3% to Rs38 after the company said that it cut galvanized steel prices. The scrip touched an intra-day high of Rs40 and a low of Rs38.45 and recorded volumes of over 76,000 shares on BSE.
Ashok Leyland declined by over 3% to Rs40. The company announced that its Q4 net profit was at Rs1.81bn (up 5.2%) revenues were at Rs25.7bn (up 11.2%). The scrip touched an intra-day high of Rs41 and a low of Rs40 and recorded volumes of over 31,00,000 shares on BSE.
Patni Computer was down by a 2% to Rs271. The company on Thursday announced that it has partnered with Schindler, a leading global mobility company, for the development, enhancement and testing services for Schindler's double-deck elevator. The scrip touched an intra-day high of Rs283 and a low of Rs267 and recorded volumes of 1,00,000 over shares on BSE.
IFCI was down by 3.5% to Rs60 after LIC seeks to dilute its holding in the company and is awaiting cues from the government on its future strategy, reports stated. The insurance major has approached the IFCI management to reduce its holding from 11.39% to 8.39%, the level it was at prior to conversion of debt into equity earlier this year, according to reports. The scrip touched an intra-day high of Rs61 and a low of Rs57 and recorded volumes of over 14,00,000 shares on BSE.
Videocon Industries was up by 3% to Rs366 after reports stated that the company would be setting up a multi-product industrial park and a 1,320 MW thermal power plant in the West Godavari District of Andhra Pradesh. The scrip touched an intra-day high of Rs372 and a low of Rs345 and recorded volumes of over 6,00,000 shares on BSE.
Indiabulls Real Estate dropped by over 1.5% to Rs547. The company announced that it acquires Dev Property development. The scrip touched an intra-day high of Rs554 and a low of Rs520 and recorded volumes of over 5,00,000 shares on BSE.
HCL Technologies declined by over 2% to Rs288. The company has announced a significantly expanded partnership with Serena Software, Inc. Further strengthening a seven relationship between the two companies, HCL will now provide end-to-end product development, sustenance engineering and release managemønt for Serena PVCS Professional and Serena Dimensions RM, and will open a dedicated offshore development center for Serena. The scrip touched an intra-day high of Rs295 and a low of Rs283 and recorded volumes of over 39,000 shares on BSE.
MRPL was down by over 5% to Rs97. During the Q4 ended 31st March 2008, MRPL recorded tunover of Rs1081.2mn and earned net profit of Rs22.5mn after providing the interest Rs3.6mn, Depreciation Rs9.5mn and Tax Provision Rs8.4mn. During the Financial year ended 31st March 2008, company has earned net profit of Rs127.2mn as compared to Rs52.5mn in the previous year, after providing interest and finance charges of Rs14.8mn, depreciation of Rs37.8mn and tax liability of Rs46.1mn.The exports during the year were Rs1123.2mn. The scrip touched an intra-day high of Rs102 and a low of Rs96 and recorded volumes of over 25,00,000 shares on BSE.
Tata Investment gained by 2.5% to Rs542 after the company announced that the Board of Directors of the Company would meet on May 16, 2008 to consider raising of additional long term funds. The scrip touched an intra-day high of Rs550 and a low of Rs530 and recorded volumes of over 5,000 shares on BSE.
Corporate News
BHEL to invest Rs10bn in Tiruchi plant in the current fiscal. (BL)
Lafarge leads the race to acquire L&T Concrete; deal size estimated at Rs10bn. (BS)
Tata Steel raises Rs20bn via private placement of redeemable non-convertible rupee debentures. (BL)
Hungary’s MOL acquires 35% stake in ONGC’s onshore block in North-West India. (BL)
Suzlon’s operations at Sangli and Satara in Maharsahtra hit a roadblock due to local ire. (FE)
ACC to hold cement prices over the next 2-3 months. (BL)
TCS to renew contract with Virgin Atlantic till 2011. (ET)
Canara Bank, HSBC and OBC gets IRDA license to jointly launch a life insurance company in India. (BS)
BHEL plans JVs with APGenco and Tamil Nadu power board. (BS)
JSW Steel reduces prices of HR, CR and galvanized products by Rs4,000/tonne. (FE)
Satyam Computers is looking at new markets besides the US for its SAP business. (FE)
PTC to spend Rs3bn for acquiring coal assets in Indonesia. (DNA)
DoT defers decision on 26% stake sale in Tata Communication. (BL)
Indiabulls Real Estate files for IPO in Singapore. (BS)
RCF is looking at opportunities for joint ventures in African nations. (BL)
MTNL to launch mobile TV services. (ET)
Indiabulls Real Estate to buy 100% shares of Dev Development Property. (BS)
3i Infotech picks up 26% stake in Hyderabad-based Locuz Enterprise Solutions. (BL)
Shree Cement to spend Rs3.5bn to further expand capacity at its Rajasthan unit. (BL)
Thermax to invest Rs2bn in FY09 for expansion. (BL)
Garware Offshore to buy a new vessel from Singapore for US$15.5mn. (DNA)
Merck targets a turnover of Rs18bn by 2015 from its India operations. (FE)
NIIT Tech gets order worth Rs420mn form Maharashtra Government. (DNA)
Nagarjuna Fertilizers plans to set-up overseas plants and a foray into complex fertilizers. (DNA)
Tata Metaliks plans to set-up projects in Madhya Pradesh and Karnataka; signs MoUs to secure raw material linkages. (BL)
Jubilant Organosys acquires Specialty Molecules, a niche manufacturer of specialty intermediates, for Rs200mn. (BL)
S Kumars acquires a controlling stake in Italy’s Klopman for US$107mn. (ET)
EXL services eyes mid-sized companies in US and India. (BS)
Ramsarup Industries to invest Rs15bn in next two years. (BS)
Samtel enters into JV with Thales to make cockpit helmets. (ET)
Economic News
Government has imposed a temporary ban on exports of pig iron by PSUs. (ET)
Government mulls over a proposal to scarp license fees for landline operators. (BS)
Cement producers assures government of a price cut. (FE)
DTH operators to charge carriage fee from new channels for shoring-up revenues. (ET)
Auto companies to hold price hikes after steel companies announced cut in prices. (ET)