The thing to remember is that that the future comes one day at a time
As expected, the market rebounded on the back of short covering. Firm global markets and stable oil prices helped the bulls' cause. For the day, we expect the market to open on a flat to slightly positive note, as the short squeeze may continue. Global markets are mixed with no clear direction being exhibited by any region. As a result, the market may turn sideways with a positive bias unless we get fresh bad news. But, the bulls may just be able to hold on to their gains today.
F&O indicators suggest that there may be more upside in the offing. The Nifty futures expiring in June shed more than 20 lakh shares in open interest while the discount slumped from about 30 points to almost nil. With this, the total open interest in Nifty futures has slipped below 4 crore shares. Over the past few months there have been a few instances where the market trend has taken an about turn following this event. It remains to be seen if the bulls are lucky this time round as well.
The advance tax numbers for a few top companies are out and as usual it’s a mixed bag. Banks like ICICI Bank, SBI and HDFC have done well and so has Reliance Industries. Bajaj Auto, Tata Motors and Ambuja Cements have reported lower tax outgo versus the same period last year.
Results Today: BPCL, Bilpower, Cambridge Solutions, Chettinad Cement, IRB Infra, Jumbo Bag, Sical Logistics, Sri Digvijay Cement, Tantia Constructions, Tata Communications, Wire & Wireless and Zee News.
Cadila Healthcare's Board will meet today to consider options to consolidate / restructure the Consumer Products business of the group, including its listed subsidiary, namely Carnation Nutra-Analogue Foods Ltd.
Champagne Indage's Board will consider raising of long term / medium term financial resources.
Both L&T and Crompton Greaves have denied reports that L&T is doing due diligence to acquire Crompton Greaves' project business.
FIIs were net sellers of Rs5.48bn (provisional) in the cash segment on Monday while the local institutions poured in Rs2.9bn. In the F&O segment, foreign funds were net buyers of Rs593.2mn.
On Friday, FIIs were net sellers of Rs518mn in the cash segment. With this, they have pulled out over $5.4bn from the Indian market this year.
Asian stocks are trading mixed this morning. Japanese steelmakers are down after Mizuho Securities downgraded shares of JFE Holdings and Kobe Steel. BHP Billiton rose in Sydney after metals prices advanced. Tokyo Electric Power Co. led a gain by utilities.
The MSCI Asia Pacific Index fell 0.1% to 142.66 as of 9:41 a.m. in Tokyo. Japan's Nikkei 225 Stock Average was little changed at 14,351.08. Benchmarks in South Korea, Australia and New Zealand declined.
US stocks closed mixed on Monday after crude oil prices retreated after very nearly touching $140 per barrel and brokerage Lehman Brothers expressed optimism about its future, sparking a rally in financial shares.
"Our capital and liquidity positions have never been stronger," Lehman Brothers CEO Dick Fuld said during a conference call to discuss the company's $2.8bn quarterly loss.
Equities also regained some lost ground as crude oil futures closed 25 cents lower at $134.61 per barrel in New York after hitting the day's record high of $139.89 in electronic trading on Globex.
The Dow Jones Industrial Average fell 38.27 points, or 0.3%, to end at 12,269.08. The S&P 500 index finished virtually flat at 1,360.14. The Nasdaq Composite index climbed 20.28 points, or 0.8%, to end at 2,474.78.
Telecom stocks were hit after UBS cut its ratings on Verizon and AT&T. Citi led blue-chip gains, gaining 1.7%. AIG ended down 0.5%. On Sunday, the world's largest insurer said that Martin Sullivan was leaving as CEO and that chairman Robert Willumstad replacing him.
Stocks struggled in the morning as oil prices surged to a new record and investors considered Lehman Brothers' quarterly loss and the management shakeup in AIG. But stocks recovered in the afternoon as oil erased most of its gains and strength in tech and financials continued to dominate.
Oil prices had jumped earlier on the weaker dollar and reports of a North Sea rig fire. Reports that Saudi Arabia plans to boost oil production by 200,000 bpd had little impact on the price. Analysts think that an extra 200,000 bpd would mostly be eaten up by international demand.
The dollar fell versus the euro and gained against the yen. COMEX gold for August delivery rose $13.20 to settle at $886.30 an ounce. Treasury prices fell, raising the yield on the benchmark 10-year note to 4.27% from 4.25% late on Friday.
The national average price for a gallon of regular unleaded gas rose to a record high of $4.077, up from the previous day's record of $4.060, AAA reported.
The National Association of Home Builders (NAHB)/Wells Fargo said the housing market index fell 1 point to a seasonally adjusted reading of 18, down from May's reading of 19. A reading below 50 indicates poor home sales conditions.
The New York Empire State index, a regional manufacturing reading, fell to -8.7 from a prior reading of -3.2. Economists forecast an improvement to -2. Any reading that is positive implies expansion in the sector, while a negative reading implies further weakness.
Tuesday brings a slew of economic reports, including the May Producer Price Index (PPI), a measure of wholesale inflation, due out before the start of trade. Other economic reports due Tuesday morning include May housing starts and building permits and readings on factory usage.
Additionally, earnings are due from Goldman Sachs.
European shares ended lower, but off the day's lows. Weakness in food and beverage stocks weighed and another record for oil futures knocked airlines and auto makers. The pan-European Dow Jones Stoxx 600 index fell 0.26% to 304.9. UK's FTSE 100 lost 0.14% to 5,794.60, while Germany's DAX 30 fell 0.5% to 6,729.88 and the French CAC-40 dropped 0.5% to 4,657.74.
In the emerging markets, the Bovespa in Brazil was up 0.1% at 67,284 while the IPC index in Mexico shed 0.2% at 30,354. The RTS index in Russia gained 0.4% at 2366 and the ISE National-30 index in Turkey rose 0.6% to 46,720.
Bulls may gain further ground
Markets ended with smart gains as bulls were back on the bourses. Key indices kicked off positively, mirroring gains in the International equity markets and buying momentum in the index heavyweights like ICICI Bank, Infosys and Bharti Airtel.
However, as the day progressed, key indices were unable to hold on to their early gains as traders and investors preferred to book some profits at higher levels. As the benchmark Sensex slipped over 200 points from days high and Nifty came off nearly 40 points from days high.
The Auto, Pharma and Capital Goods stocks were under the pressure. However, the Realty, Bankex and IT stocks were among the ones in demand. Even the Mid-Cap and the Small-Cap stocks attracted some buying interest. Both the indices were in up by a percent each.
Among the 30-scrips of Sensex, 23 stocks ended in positive terrain and only 6 stocks ended in red. Finally, the BSE benchmark Sensex gained 26 points to close at 15,395 and the Nifty index was up 55 points to close at 4,572.
Lupin advanced by 3% to Rs725 after the company announced that it secured USFDA approval for Escitalopram Oxalate tablet. The scrip touched an intra-day high of Rs730 and a low of Rs707 and recorded volumes of over 8,00,000 shares on BSE.
Cadila edged higher by half a percent to Rs313. The company announced the first day launch of Venlafaxine Hydrochloride Tablets upon receiving the final approval fi-oni the US FDA. The scrip touched an intra-day high of Rs320 and a low of Rs311 and recorded volumes of over 9,000 shares on BSE.
Jupiter Bioscience gained by over 0.5% to Rs137 after the company announced that it entered into licensing agreement with California based GI Logics Inc for development and sales for the use of Diamox for eradication of H. pylori and for a diagnostic test for infection by and eradication of the bacterium.
The scrip touched an intra-day high of Rs146 and a low of Rs137 and recorded volumes of over 82,000 shares on BSE.
Hindustan Zinc slipped by 0.3% to Rs588. The company announced that it lowered prices of zinc and lead. The price of zinc was cut by Rs2,400, or 2.6%, to Rs90,300 per metric ton and Lead prices were lowered by 3.5% to Rs93,300 per ton. The scrip touched an intra-day high of Rs602 and a low of Rs585 and recorded volumes of over 31,000 shares on BSE.
Hindalco Industries slipped by 2.3% to Rs171. According to reports, the company is considering various options including rights issue to repay a US$3bn bridge loan it took to finance the acquisition of Novelis Inc. The scrip touched an intra-day high of Rs179 and a low of Rs170 and recorded volumes of over 11,00,000 shares on BSE.
Tata Steel gained by a percent to Rs848 after the company said that its wholly owned subsidiary, Rawmet Ferrous Industries Ltd entered into a share subscription agreement and shareholders' agreement with Jasper Industries Pvt Ltd to set up a coal based power plant of 2 X 67.5 MW capacity at Anantpur Village, Cuttack, Orissa.
Pursuant to the shareholders' agreement, Tata Steel and Rawmet together will hold 26% and Jasper Industries will hold 74% of the stake of the equity in Bhubaneshwar Power Pvt Ltd (JV Company). The scrip touched an intra-day high of Rs864 and a low of Rs845 and recorded volumes of over 5,00,000 shares on BSE.
JSW Steel rallied by over 5.5% to Rs994 following reports that the company plans to invest Rs800bn to add 20mn tonne capacity. The scrip touched an intra-day high of Rs1019 and a low of Rs965 and recorded volumes of over 2,00,000 shares on BSE.
Wipro advanced by 1.8% to Rs486 after reports stated that the company has pulled out of its joint venture with Motorola. The scrip has touched an intra-day high of Rs490 and a low of Rs460 and has recorded volumes of over 81,000 shares on BSE.
Satyam Computer advanced 1.5% to close at Rs488 after the company announced that it has been awarded Tier 1 Engineering Supplier Status by EADS, an international leader in the aerospace and defense industries. The scrip touched an intra-day high of Rs494 and a low of Rs483 and recorded volumes of over 3,00,000 shares on BSE.
3i Infotech marginally slipped by 0.5% to Rs115. Reports stated that the company completed the acquisition of US based Regulus Group for US$100mn. The scrip touched an intra-day high of Rs121 and a low of Rs115 and recorded volumes of over 76,00,000 shares on NSE.
Corporate News
Japanese drug-maker Daiichi-Sankyo may revise the open offer price for Ranbaxy in the case of a competitive bid. (BS)
Reliance Industries is seeking to borrow US$1bn to fund its expansion projects. (DNA)
Reliance Power will get a US$500-million loan from ADB for the 4,000-MW UMPP coming up at Krishnapatnam in AP. (BS)
IOC, HPCL and BPCL sell bonds to RBI at a premium. (BS)
Maruti may launch a stripped-down version of Maruti 800 to compete with Nano. (BS)
Balmer Lawrie is set to acquire a 50% stake in a travel and tourism company with a national presence. (ET)
TCS plans to participate in e-governance projects in India as well as countries in the Middle East, Latin America, eastern Europe and Africa. (ET)
Unitech has scrapped plans for a US$600mn sale of shares in a real estate investment trust in Singapore. (BS)
ITC Welcom Group through its subsidiary Fortune Park Hotels Ltd is planning to add another 21 hotels in the next three years. (BS)
The Al Rostmani group, one of the largest conglomerates in the UAE, is planning to pick up a majority stake in GHCL for an estimated investment of Rs7bn. (BS)
Srei Equipment Finance Pvt. Ltd., a 50:50 JV between Srei Infrastructure Finance Ltd and BNP Paribas, will raise ~Rs80-90bn during FY09. (DNA)
Aksh Optifibre, in collaboration with MTNL has cut its subscription rates to Rs199 per month. (ET)
Daiichi-Sankyo has been granted two product patents by the Kolkata Patent Office. (BS)
Jet Airways plans to put its international expansion on hold until the end of next year due to soaring oil prices. (ET)
Jet Airways has announced a two-year tie-up with Shell-MRPL Aviation Fuels and Services Pvt. Ltd for its fuel supply at the new airports in Banaglore and Hyderabad. (Mint)
Sterlite Industries may consider legal action if the bankruptcy court favors Grupo Mexico's counter-offer of US$4.1bn for Asarco, the US copper mining giant. (BS)
Godavari Fertilisers and Chemicals Limited would solely cater to the agri input requirements of the state farmers, starting this kharif season. (BS)
Gujarat State Petroleum Corporation (GSPC) has applied to the Directorate General of Hydrocarbons (DGH) for declaration of commerciality of its discoveries in the KG basin block. (BL)
SRF plans to put its share buyback plan on hold. (Mint)
NMDC has resumed operations at three iron ore mines in Chattisgarh. (Mint)
Transport Corporation of India plans to raise capital for its expansion plan by diluting promoter holding by ~10%, which is expected to generate ~Rs680mn. (ET)
Goldman Sachs has acquired a minority stake in Shapoorji Pallonji’s engineering arm Sterling & Wilson for over Rs2bn. (ET)
Gemini Communications has acquired a majority stake in Chennai based Veeras Infotek for Rs70mn. (ET)
Nokia’s market share in India has increased to 62.5% in 2007-08 from 53.6% last year. (ET)
Cobra Beer India, the Indian subsidiary of the US$400mn UK-based Cobra Beer will be launching diet beer in India. (ET)
Malaysian national carmaker Proton plans to enter the Indian passenger vehicle market (ET)
Economic News
State governments to roll back jet fuel tax cuts, as they believe that benefits have not been passed on to the consumers. (BS)
The Government has allowed private mobile operators to enter into mutual agreements for intra circle roaming with each other. (BS)
Mumbai Metro rail project will generate 651,938 carbon credits between 2011 and 2020. (BL)
States have asked the Centre to pay them Rs40bn for the revenue loss due to duty cuts on petrol, diesel and cooking gas during the remaining part of 2008-09. (FE)
Soaring steel and cement prices have virtually put the brakes on the Pradhan Mantri Gram Sadak Yojana, the rural road component of the UPA’s flagship ‘Bharat Nirman’ programme. (FE)
The department of fertiliser (DoF) has firmed up a time-bound completion of revival of seven sick units of Fertiliser Corporation of India (FCI) and Hindustan Fertiliser Corporation (HFC). (FE)
According to ministry officials, the national-wide rollout of CAS will happen only after the general elections in 2009. (ET)
According to TRAI, Mobile Virtual Network Operators (MVNOs) that intend to enter the domestic mobile space will not be allowed to own spectrum. (BS)
The empowered group of state finance ministers deferred its decision on rationalization of sales tax on aviation turbine fuel to June 23, 2008. (DNA)
According to CMIE, GDP is expected to grow at an impressive 9.5% in 2008-09. (ET)
Small and medium enterprises will get Rs550mn IPR facilitation package for implementation over the next four years. (ET)
Gems and jewellery exports rose by over 36% yoy to US$1.8bn in May 2008. (ET)