It's easier to put on slippers than to carpet the whole world.
Inflation remains and will continue to be the bugbear for the global economy for quite a while. Only a steep fall in commodity prices, especially that of crude oil will improve the sentiment. Right now, one can just wait and watch the emerging situation, both locally and globally. But waiting for the world and its people will do no good to your portfolio. Narrow down your thinking to the select stocks you would like to own.
The slight bounce we expected was slight and short. Weakness in Asian markets coupled with nagging concerns over high oil prices, inflation and interest rates put paid to the bulls' hopes of a turnaround. The massacre was quite furious with the Sensex tumbling below its previous 2008 lows. Thankfully, a late spurt brought some relief; as in it pared the losses for the bulls.
The outlook for today is a tad better with no major carnage seen in global markets. What could also prop up sentiment a bit is that oil prices have softened after last Friday's record spike. Fed chairman Ben Bernanke's comments over inflation has sparked speculation that the central bank may be preparing the ground for higher borrowing costs later this year. This has boosted the dollar while bonds and commodities have taken some beating.
Last week, it was the European Central Bank (ECB) President Jean-Claude Trichet who hinted at a rate hike due to spiraling inflation worries. Over the last weekend, the Chinese central bank jacked up the banks 'reserve ratio by a whopping 100 bps to reign in inflation and suck out excess liquidity.
Given that most governments around the world are pre-occupied with inflation-controlling measures, it wouldn't be a surprise if the RBI too decides to tighten its monetary stance a wee bit further. It may even resort to increasing policy rates, though given the economic slowdown that may not be an appropriate policy instrument to contain inflation.
Today, we expect a cautious to positive start for our market. Its a no brainer that the bulls will struggle later to keep the early momentum going with too many negative factors floating around. The bravehearts may pick up battered quality stocks for long-term purpose. Having said that, one has to be vary careful while picking the scrips for investments.
NIIT could see some action as it will announce a strategic JV with Genpact for the BPO industry. Avoid the real estate pack for now unless you are trading on them with strict stop losses. Be content with small gains and book profits as you go along.
FIIs were net sellers of Rs9.1bn (provisional) in the cash segment on Tuesday while the local institutions poured in Rs2.96bn. In the F&O segment, foreign funds were net sellers at Rs5.37bn.
On Monday, FIIs were net sellers of Rs13.42bn in the cash segment. With this, they have pulled out a net of $4.88bn from the Indian market this year so far.
GMDC, KPIT Cummins, NIIT, NIIT Technologies and SCI will declare their results today.
Asian stocks are mostly down this morning, led by energy and mining shares, as the higher dollar reduced the appeal of oil and metals.
Woodside Petroleum dropped in Sydney and Inpex Holdings fell in Tokyo after crude declined more than $7 a barrel this week. Newcrest Mining, owner of Australia's largest gold mine, fell after gold tumbled the most in two months.
The MSCI Asia Pacific Index dropped 0.5% to 142.87 at 10:47 a.m. in Tokyo, extending a two-day, 4.6% decline. Almost two stocks fell for every one that rose. Japan's Nikkei 225 Stock Average lost 0.1% to 14,005.72.
All Asian equity markets open for trading fell, apart from Singapore and Malaysia. China's CSI 300 Index slumped 2.2%.
US stocks finished mixed on Wednesday as a fall in oil prices offset renewed jitters over inflation following remarks by Fed chairman Ben Bernanke that indicated that the central bank could hike interest rates later this year.
The dollar gained versus other major currencies. Bond prices slumped, raising the corresponding yields. Gold and other commodity prices slumped.
The S&P 500 slipped 3.32 points, or 0.2%, to 1,358.44. The Nasdaq Composite Index retreated 10.52 points, or 0.4%, to 2,448.94. The Dow Jones Industrial Average added 9.44 points, or 0.1%, to 12,289.76.
Market breadth was negative. More than four stocks decreased for every three that gained on the New York Stock Exchange.
In a speech made in Boston late on Monday, Bernanke emphasized the central bank's determination to anchor rising inflation expectations, which the markets viewed as a sign that the Fed may be ready to tighten monetary policy later this year.
Futures trading showed an 18% chance of an increase in the Fed funds target rate to 2.25% at the central bank's next meeting, up from 6% odds in the previous session and no chance a week earlier. Yields on two-year Treasury notes posted their biggest two-day increase since 1985.
Wall Street earlier received a boost from a sharp fall in crude oil prices after the US Energy Department and the International Energy Agency (IEA) slashed their forecast for global oil consumption for the year.
US stocks were mixed in the morning, but turned higher at midday as oil prices slipped. A rally in financial stocks helped the broader market after Monday's decline on Lehman Brothers' big quarterly loss.
But, the threat of rising pricing pressure and the possibility of higher interest rates to combat this pressure hung over markets for a second session in a row.
The US trade gap grew more than expected in April, due largely to high oil prices. The trade gap swelled to US$60.9bn in April, a 13-month high, from a revised US$56.5bn in March. Economists expected US$60bn.
US light crude oil for July delivery fell US$3.04 to settle at US$131.31 on the New York Mercantile Exchange, erasing early gains. The national average price for a gallon of regular unleaded gas rose to a record US$4.043 from the previous day's record of US$4.023, AAA reported.
The dollar gained versus the euro and yen. Treasury prices slumped, raising the yield on the 10-year note to 4.10% from 3.99% late on Monday. COMEX gold for August delivery fell US$26.90 to settle at US$871.20 an ounce.
Wednesday brings the release of the weekly oil inventories report and the Fed's Beige book.
Weakness in resources shares pulled European shares lower. The Fed's renewed call for a fight against inflation also kept investors on tenterhooks. The pan-European Dow Jones Stoxx 600 index declined 0.7% to 306.61. Decliners outpaced advancing stocks nearly 3 to 1.
Germany's DAX 30 lost 0.7% to 6,771.10, while the French CAC-40 fell 0.8% to 4,761.08 and the UK's FTSE 100 closed down 0.9% at 5,827.30.
Brazilian stocks dropped. In Sao Paulo, the benchmark Bovespa index fell 2.1% to 67,774.94, marking its third consecutive loss. In Mexico City, the IPC index slipped 0.1% to 30,898.87. Argentina's Merval fell 2.5% to 2,113.90 and Chile's IPSA closed fractionally lower at 3,018.08.
Among the other emerging markets, the RTS index in Russia was down 0.8% at 2339 while the ISE National 30 index in Turkey fell 1.2% to 46,973.
Dark clouds remain over D-Street
Markets continued to bleed for third straight trading session on back of global weakness, rising crude oil prices and unabated selling in scrips across the sectors.
After hitting the 2008 lows and breaches the previous low of 14,677 in the afternoon trades, the benchmark index managed to recover over 250 points and the Nifty recouped about 70 points from day’s low. Among the 30-scrips of Sensex, 11 stocks are in positive terrain and 19 stocks are in red.
Among the BSE Sectoral indices, barring the BSE Pharma index was the major gainer adding 2.1%. The major losers were, BSE IT (down 2.7%), BSE Bankex (down 2.4%) and BSE Realty index (down 2.1%). Even the Mid-Cap and the Small-Cap indices ended losing 1% each.
Among the 30-scrips of Sensex, 21 stocks ended in red and only 9 stocks ended in green. Finally, the BSE benchmark Sensex lost 176 points to close at 14,889 and the Nifty index lost 51 points to close at 4,449.
Zydus Cadila rallied by over 8% to Rs311 after reports stated that the company acquired majority stake in South Africa based Simalaya Pharmaceuticals. The scrip touched an intra-day high of Rs311 and a low of Rs291 and recorded volumes of over 30,000 shares on BSE.
Apollo Sindhoori was frozen at 5% upper circuit to Rs435.85 after reports stated that Aditya Birla Group may acquire 51% stake in Apollo Sindhoori Capital, a broking firm promoted by Apollo Hospital Group.
The Reddy family as promoters entered into an agreement to allow the Birla Group to acquire a 51% stake in the company. Reports also stated that the company was holding talks with other entities like Reliance and JP Morgan Group to come in as strategic investors. The scrip touched an intra-day high of Rs435.85 and a low of Rs435.85 and has recorded volumes of over 1,000 shares on BSE.
Sahara India Financial was again locked at 5% lower circuit to Rs152.70 after media reports on Monday stated that the Supreme Court directed Sahara the company to approach RBI on Thursday to convince it that its financial activities are in order. The scrip touched an intra-day high of Rs161 and a low of Rs152.70 and recorded volumes of over 9,000 shares on BSE.
SpiceJet surged by over 4% to Rs34 after reports again stated that Paramount Airways is likely to pick up stake in the company. The scrip touched an intra-day high of Rs34 and a low of Rs32 and recorded volumes of over 22,00,000 shares on BSE.
Spice Communication rallied by over 4% to Rs55 following reports that Idea cellular would buy out 40.8% BK Modi’s stake in Spice Communication for Rs22bn. The scrip touched an intra-day high of Rs59 and a low of Rs54 and recorded volumes of over 10,00,000 shares on BSE.
Bosch Chassis India was locked at 20% upper circuit to Rs538.85 after the company announced that they would consider delisting at a price not exceeding Rs600 per share. The scrip touched an intra-day high of Rs538.85 and a low of Rs432 and recorded volumes of over 94,000 shares on BSE.
Federal-Mogul Goetze gained by 1.6% to Rs67 after the Board of Directors of the company approved the "Issue of Shares on Right Basis" upto Rs 1300mn. The scrip touched an intra-day high of Rs67 and a low of Rs62 and recorded volumes of over 15,000 shares on BSE.
Aurobindo Pharma surged by over 3.5% to Rs281 after the company announced that it has secured final approval for Zaleplon Capsules. The scrip touched an intra-day high of Rs288 and a low of Rs268 and recorded volumes of over 43,000 shares on BSE
HDFC dropped by over 5% to Rs2101. The company posted a net profit attributable to the Corporation of Rs27.130bn for the year ended March 31, 2008 as compared to Rs17.42bn for the year ended March 31, 2007.The total Income has increased from Rs63.93bn for the year ended March 31, 2007 to Rs88.10bn for the year ended March 31, 2008. The scrip touched an intra-day high of Rs2200 and a low of Rs2064 and recorded volumes of over 25,00,000 shares on BSE.
Corporate News
Hindustan Motors to launch new passenger car in October 2008. (Mint)
Reliance Industries to produce oil from KG basin by August 2008. (Mint)
BPCL to invest $200mn in overseas exploration. (Mint)
IDFC to list $1.25bn India Infra Fund. (Mint)
JSW Steel plans to borrow from export credit agencies to fund its $3.3bn expansion plan. (Mint)
Grasim sells sponge iron unit from Rs10.3bn. (Mint)
Vedanta plans to invest $20bn in India in next four years. (Mint)
Idea Cellular to invest in Spice Communications network and technology upgrade. (BS)
Bosch makes considering increasing offer price for delisting its Indian arm, Bosch Chassis Systems. (BL)
TVS Motors plans power bikes to take on competition. (BS)
Scooters India to make E-bikes. (BS)
RCom-MTN combine may seek London listing. (BS)
Omaxe forays into Dubai market. (BL)
IDFC picks up 22% stake in Seaways Shipping. (BL)
Tata Elxsi has planned a capex of Rs450mn and addition of 1,000 employees in 2008-09. (BL)
Bharti Airtel to bring Apple’s 3G iPhone to India. (BL)
Spice Telecom to unveil Braille mobile phone. (BL)
UB Group says their IPL team, Royal Challengers have achieved breakeven in the first year of operations. (BL)
Gati may hike freight rates by 7-10%. (BL)
Tata Tea to develop new range of products, fortified water, functional water and enhanced water. (FE)
Indiabulls Real Estate arm enters in MoU with government of Jharkhand for setting up 1,320MW power project. (FE)
Tata Steel JV with Riversdale Mining in Mozambique to yield premium hard coking coal and thermal. (FE)
Jet Airways enters into code-share agreement with Etihad Airways effective July 1, 2008. (FE)
Gitanjali Gems raises stake in Fantasy Diamond Cuts Pvt Ltd to make its wholly owned unit. (FE)
Gitanjali Gems merged two founder group companies Decent Securities & Finance and Eureka Finstock with itself. (FE)
Aurobindo Pharma receives USFDA approval to manufacture and market Zaleplon Capsules. (FE)
Bosch Chassis makes an offer of acquiring the public holding at a price not exceeding Rs600 per share. (FE)
Godrej Appliance to foray into colour television market by August. (FE)
Tata Motors seeking to raise US$1bn in debt or equity from the overseas market. (FE)
Tata Motors looking to raise its borrowing limit to Rs200bn from the current Rs120bn. (FE)
Idea willing to pay a premium of 10-15% over the current market price of Spice Communication. (FE)
PNB to bid for stake in IFCI through a consortium. (FE)
PNB to foray into credit card business within six months. (FE)
BHEL, L&T, Crompton Greaves among major bidders for Rs180bn transmission strengthening and upgradation project. (FE)
Financial Technologies promoted Power Exchange to launch its operation within a fortnight. (FE)
Duncans Tea in talks with IOC to tap rural market. (FE)
Bombay Dyeing to open its first retail store in Dubai. (ET)
Bombay Dyeing tied up with Dubai-based luxury lifestyle retailer Revoli Group. (ET)
Karuturi Global looks to acquisition in Europe and to foray into Horticulture. (ET)
Dabur Pharma subsidy, to get accreditation from college of America next year. (ET)
GTL promoters to hike their equity stake in the group’s telecom tower arm GTL Infrastructure to 68.29% from 43.29%. (ET)
Middle East‘s Al Rostamani may buy 25% stake in GHCL for ~US$200mn. (ET)
ONGC to tie-up with SCI to manufacture rigs. (ET)
Bata India eyes franchise model to launch its upcoming retail stores. (ET)
Economic News
Fertilizer industry wants a pricing policy in place. (BS)
New 3G aspirants unlikely to get 2G spectrum. (FE)
Civil Aviation minister Praful Patel, to meet Prime Minister today for a reduction in landing and parking charges. (ET)
The NPPA made it mandatory for companies to inform it of their plans to change the composition of their drugs. (ET)
Karnataka Government planning to come out with semiconductor policy. (ET)
Sugar production declines 6% in May 2008. (ET)