Sometimes a good exit is all you can ask for.
The markets will hope for some Moses who will help the bulls cross over the sea of red on the bourses. Friday the 13th may be later this week. But looks like most of the damage may be done today itself; especially at start. The outlook continues to be grim, with a combination of negative local as well as global factors weighing heavily on the sentiment. Add to that some negative market rumors, which we wouldn’t want to speculate on or discuss (since it is unconfirmed).
Today, we see a gap-down opening, but do not rule out a slight rebound later in the day if global indices reverse the weak trend. Short covering could be the only other factor which could lessen the damage. Some key markets in Asia are actually shut today for holidays, which may be of some help to the bulls. Get in with an investment view. Should you be able to pocket some gains in the brief reversals, no harm in booking some quick profits. The undertone remains precarious and fragile.
After slipping to a level of around $120 per barrel, crude oil soared by a whopping $16 in the last two days of last week, to touch a new all-time high of $139. This included a near $11 gain on Friday. Renewed weakness in the dollar and a top Israeli official's reported threat of an attack on Iran were the two main reasons for crude's spike. A series of bullish reports on crude oil, predicting levels of $150 to $200 has added fuel to the fire.
It’s even worse for India, as the recent hike in retail fuel prices and the issue of bonds was done at a price of $123 a barrel. So in a nutshell, the Government's measures may not be of much help to anybody after all, if crude continues to climb.
A weakening rupee, coupled with a deteriorating fiscal situation and high interest rates pose a big challenge on the macroeconomic front. Foreign funds don't seem to be too upbeat on India at the moment. And, after a while even the local institutions may run out of cash.
Technically also, the market is on a sticky wicket. On the Nifty, the next support is seen at 4500 and the upside is capped at around 5200. Global brokerages also see the Nifty slipping to 4000. Quite a scary scenario! It remains to be seen whether the market indeed goes down to such levels.
FIIs were net buyers of Rs766.5mn (provisional) in the cash segment on Friday while the local institutions poured in Rs4bn. In the F&O segment, foreign funds were net buyers at Rs3.05bn. On Thursday, FIIs were net sellers of Rs14.19bn in the cash segment. With this, they have pulled out a net of US$4.6bn (Rs186.6bn) from the Indian market this year so far. Mutual Funds were net buyers of Rs5.47bn.
Gokaldas Exports and Inox will announce their results today.
Asian stocks are mostly down this morning, led by automakers and technology companies, after US unemployment rose the most in 22 years and oil gained more than $10 a barrel. Toyota and Samsung led declines on concern that demand for their exports in the US will slow. China Airlines, Taiwan's largest carrier, dropped the most in more than two months after saying it will cut flights because of surging jet-fuel costs.
The MSCI Asia Pacific Index lost 1.5% to 148.08 as of 10:33 a.m. in Tokyo, with about 20 stocks falling for each that climbed. All 10 industry groups dropped, with technology companies and consumer-goods makers posting the biggest losses.
Japan's Nikkei 225 Stock Average lost 2.3% to 14,162.58, on course for its largest decline since May 26. Benchmarks elsewhere in the region retreated. Markets in Australia, Hong Kong, China and the Philippines are closed for holidays today.
US stocks plummeted on Friday, with the Dow Jones Industrial Average tumbling by nearly 400 points, after a government report showed surprising weakness in the jobs market and oil prices soared to a new record.
The Dow plunged 394.64 points, or 3.1%, to 12,209.81, giving it a weekly loss of 3.5%. The decline, which left all the 30 Dow components in the red, is the largest in terms of points lost, since Feb. 27, 2007, when it fell 416.02 points.
The S&P 500 index slumped 43.36 points, or 3.1%, to 1,360.69, leaving it down 2.9% for the week. Financials and consumer discretionary were among the hardest hit sectors, down 4.8% and 4.3%, respectively.
The technology-dominated Nasdaq shed 75.38 points, or 3%, to 2,474.56 for a weekly decline of 1.9%.
The Dow had its eighth-biggest point drop in the blue-chip index's history. On the other hand, the S&P 500 and the Nasdaq saw their biggest one-day declines on both points and percentage terms in more than four months.
Market breadth was highly negative. On the New York Stock Exchange, losers beat winners by over 4 to 1 on 1.48bn shares. On the Nasdaq, decliners topped advancers by nearly 4 to 1 on volume of 2.2bn shares.
The dollar lost 0.9% against a basket of six currencies including the euro, against which it weakened 1.1% to US$1.5775, as investors pared bets the Fed will raise interest rates this year.
Yields on 10-year US Treasury securities and European government bonds declined as the price of fixed-rate investments climbed.
The jobless rate in the US increased to 5.5% in May, the highest since October 2004. It was 5% in April. The average estimate of economists was 5.1%, and no forecast was higher than 5.2%.
It was the biggest one-month surge in the jobless rate over 20 years. Meanwhile, non-farm payrolls shrank for a fifth month. The loss of 49,000 jobs versus forecasts for a decline of 60,000.
The report revived worries that the world's biggest economy could slip into a recession. At least from Wall Street's and the labor market's point of view, the US is already in a recession, regardless of what the economists say.
Sentiment got another jolt from surging oil prices. July crude futures climbed US$10.75, or 8.4%, to close at US$138.54 a barrel on the New York Mercantile Exchange. The rally was the largest in percentage terms since June 1996.
Oil prices rose US$11.33 to an all-time high US$139.12 during intra-day trading, breaking the previous trading record of US$135.09. Crude has jumped more than US$16 in two sessions and has more than doubled in the past one year.
Meanwhile, the world's top industrialized nations (G8) and leading oil consumers have pledged to fight skyrocketing energy prices by increasing efficiency and accelerating investment in new technologies, while urging producers to expand production.
Energy ministers from G8 countries, along with China, India and South Korea, voiced concerns over record oil prices and said both producers and consumers would benefit from greater market stability.
Gasoline rose to a new milestone in the US, as the national average compiled by motorist group AAA reached $4 a gallon for the first time. The national average for regular unleaded rose 1.7 cents to $4.005 a gallon. The milestone was expected after a surge in crude oil prices.
Goldman Sachs MD & Chief Economist
He added that the underlining reason for the high oil prices is a shortage of supply and strong demand from emerging economies. However, O'Neill said that the recent sharp rise in oil prices can't be explained by fundamentals.
European shares posted their biggest one-day drop in more than two months on Friday. The pan-European Stoxx 600 index fell 2% to 310.29, after trading as high as 319.32 earlier in the session. It was the index's biggest one-day drop since March 17.
Germany's DAX 30 closed down 2% at 6,803.81, while the French CAC-40 slid 2.3% to 4,795.32 and the UK's FTSE 100 lost 1.5% to 5,906.80.
In the emerging markets, the Bovespa in Brazil was down 2% at 69,785 while the IPC index in Mexico rose 1.8% to 31,149. The RTS index in Russia dropped 1.5% to 2342 while the ISE National 30 index in Turkey climbed 1.9% to 48,122.
Market to slide further
Markets ended the week with a negative bias, as bears made a come back in the second half of the session. Inflation figures which were released at noon barely had any impact on the sentiments as market players seemed to have already factored in inflation figures.
India's inflation, based on the wholesale price index (WPI), rose further in the penultimate week of May even as the country braced for even higher prices following the much-anticipated hike in retail fuel prices.
The annual point-to-point inflation increased to 8.24% in the week ended May 24 from 8.1% in the previous week, the Commerce & Industry Ministry said today. The rate is slightly below the average expectations of 8.29%.
Further moving on key indices witnessed a sudden bout of selling pressure in the last hour if the trading session, it was the FMCG, Realty and Metal stocks which were under immense selling pressure. Even the Mid-Cap and the Small-Cap stocks were unable to hold on to early gains. Only the BSE Auto index ended with a slight positive bias.
The benchmark Sensex tried to move closer to the 16,000 mark at open but was unable and closed just above 15,500 level. Like wise the Nifty also surges past the 4,700mark but faced stiff resistance as selling pressure dragged it below 4,650mark.
Among the 50-Nifty 40 stocks ended in red and 10 stock ended in green. Finally, the BSE benchmark Sensex ended 203 points lower to close at 15,566 and the Nifty index lost 49 points to close at 4,627.
Era Infra is trading flat at Rs601. The company announced that it bagged a contract worth Rs852mn from Mumbai Railway Vikas Corporation Ltd. for the construction of EMU Maintenance Car Shed between Nallasopara & Virar stations of Western Railway through International Competitive Bidding (ICB).
The project being funded by International Bank for Reconstruction Development (IBRD) is part of Mumbai Urban Transport Project. The scrip has touched an intra-day high of Rs607 and a low of Rs596 and has recorded volumes of over 11,000 shares on BSE.
Tata Comm gained by a 2 percent to Rs478. The company announced that that it has successfully attained the International Organization for Standardization (ISO) 20000-1:2005 and 27001:2005 certifications for its Global Managed Services Operations in the areas of Managed Hosting, Managed Storage Services and Hosted Messaging Services. The scrip touched an intra-day high of Rs508 and a low of Rs477 and recorded volumes of over 29,000 shares on BSE.
Indiabulls Real Estate rallied by over 5% to Rs424 ahead of Singapore unit share sale. The scrip touched an intra-day high of Rs477 and a low of Rs412 and recorded volumes of over 21,00,000 shares on BSE.
Videocon Industries slipped by 1% to Rs306. The company is reportedly planning to reduce workforce by 50%, because the company thinks, they are overstaffed. Videocon has 6,000 employees in its consumer durables business alone, including manufacturing and marketing.
The company is planning to set one corporate head office in Mumbai where the offices of only the strong sub-brands will be based. This is to no difficulty in communications and phase out unwanted and weak sub-brands. The scrip touched an intra-day high of Rs324 and a low of Rs304 and recorded volumes of over 4,00,000 shares on BSE.
Sahara India Financial has frozen at 5% lower circuit to Rs169.15. According to reports, the Lucknow bench of the Allahabad High Court has stayed the RBI order of banning Sahara India Financial Corporation Ltd (SIFCL) from accepting fresh deposits. The stay will be in place till the next hearing scheduled for the last week of July. The court has also issued a notice to the Centre in the matter. The scrip touched an intra-day high of Rs174 and a low of Rs169.15 and recorded volumes of over 22,000 shares on BSE.
Punj Lloyd ended 2% lower at Rs272 after the company announced that it secured Rs6.49bn contract from IOC for its Barauni Refinery. The scrip touched an intra-day high of Rs286 and a low of Rs271 and recorded volumes of over 10,00,000 shares on BSE.
GMR Infrastructure ended 2% lower to close at Rs120. The company announced that GMR Energy Ltd, the 100% subsidiary company having 220 MW power plant at Mangalore, entered into a power purchase agreement (PPA) with Karnataka Power Transmission Corporation Ltd for sale of power, for a period of 7 years.
GMR Energy Ltd Board has approved relocation of the 220 MW barge mounted power plant to Kakinada, State of Andhra Pradesh. The relocation of plant would take maximum of 9 months and the plant is expected to be re-commissioned at new location latest by April 2009 and would operate on gas. The scrip touched an intra-day high of Rs125 and a low of Rs120 and recorded volumes of over 9,00,000 shares on BSE.
The outlook for the Monday will again continue to hinge on global cues at start. Its been the same old story in recent past. But then, the bulls are just not getting enough thrust to move ahead. And so are left with less sunshine and more of dark clouds for time being.
Corporate News
Axis Bank plans to raise Rs65bn through upper and lower tier II bonds.(BS)
SpiceJet is looking to raise Rs4bn in equity capital to part finance aircraft acquisitions plans.(BL)
Punj Lloyd lines up a capex of US$100mn for 2008-09.(BS)
NTPC and its JV subsidiary, Nabinagar power plant, awards BTG contracts to BHEL for Rs35bn.(ET)
RCOM and MTN close to signing a deal to merge the two entities; swap formula of 35:100 likely.(BL)
Personal care product maker Emami forces Zandu Pharma to withdraw its preferential issue.(BS)
Nalco announces expansion plans worth Rs400bn for the next five years.(BL)
Essar Steel Holdings says it might raise its takeover bid for US based Esmark.(BS)
Punj Lloyd secures Rs6.5bn order from IOC for the latter’s Barauni refinery.(FE)
Reliance Petroleum's export oriented 29mn tons refinery to start generating revenues from current year.(BS)
Indian Oil and Oil India to acquire Reliance Industries’ offshore oil block in East Timor.(BL)
JK Lakshmi Cement is adding five more ready-mix concrete units as part of its expansion plans.(ET)
UAE based Etisalat pulls out of negotiations to acquire stake in Spice Communications; cites high valuations.(BS)
Cargill Ventures has cut by half the US$9mn investment it had announced into KPIT Cummins a year ago.(DNA)
GMR Infrastructure to relocate its 220MW power plant to Kakinada in AP from Mangalore in Karnataka.(DNA)
Sobha Developers to foray into the Mysore realty market with three projects in current fiscal.(BS)
Corporation Bank may waive Rs2.8bn under the debt relief scheme for farmers.(BL)
Coal India may come out with an IPO before getting ‘Navratna’ status.(BS)
UK based Vincent Tchenguiz is holding talks with Tata, to invite investment from the latter in a new US$10bn environment fund.(ET)
CavinKare and Henkel have announced a 5% hike across product categories.(TOI)
Axis PE, the PE arm of Axis Bank, is investing Rs1.4bn in two Ahmedabad companies.(ET)
Delhi government owned Indraprastha Power Generation to set up a 2,000MW coal fired power station in MP.(FE)
Gail India is looking at setting up a CNG corridor comprising Nagapattinam, Karaikal and Puducherry.(ET)
Adani Logistics is all set to develop 14 inland container depots across the country by 2010.(ET)
NHPC is likely to sign an agreement with J&K Power Development Corp. to harness 2,100MW at a cost of Rs150bn.(FE)
Six NBFCs, including Shriram Transport Finance, Ashok Leyland and Reliance Capital are believed to be in the race for buying a US$1bn loan portfolio of Citicorp Finance.(ET)
Renault-Nissan combine has started construction work on its passenger vehicle plant in Chennai.(ET)
Alok Industries has resumed talks with PE players to dilute 20% equity it owns in its unlisted unit, Alok Infrastructure.(ET)
Mercator Lines has chartered out a new offshore rig to a Singapore-based firm for US$93,000 per day for three years.(ET)
Economic News
The Government may increase export cess on long steel products from 10% to 15%.(ET)
Global telecom companies approach TRAI to open mobile market for entry of MVNO.(BL)
Seven bidders are vying for Mumbai International Airport’s Rs7bn annual ground handling contract.(Mint)
SEBI increases cumulative debt investment limits for FIIs to US$5bn and US$3bn in government securities and corporate debt, respectively.(FE)
NPPA, the pharma pricing authority, revises prices of 440 medicines.(BS)
PM’s Advisory Council scales down FY09 economic growth to 8% from 8.5%.(FE)
FMCG companies plan to increase prices again after the hike of 3-4% a few months ago.(BL)
Personal computer market in India grew by 10% yoy in January-March 2008 period.(Mint)