There cannot be a crisis today; my schedule is already full – Henry Kissinger
After a hell of a ride this week, days like Friday the 13th may have no relevance even for the very superstitious. Things have more or less gone by script as we mentioned in the beginning of the week. Except for some worsening inflation numbers nothing else may matter for the day. Today, the prospects are not looking that bad, as the US stock indices finished higher after a volatile day. Markets also advanced in Europe and key emerging markets. Oil fell by over $4 per barrel, but turned up later in the day to end virtually flat. Having said that, Asian markets are mostly in the red this morning, though not that much. We see a flat to positive opening and a choppy day ahead.
The bulls managed to bounce back yesterday after yet another gap-down opening and a steep fall. The Sensex rebounded by more than 500 points to end at 15,250. The Nifty too closed above 4500 after slipping under 4400. The market breadth too was positive and volume was also on the higher side.
Among the other worrying factor is that FIIs net sold Indian shares worth more than Rs12bn on a preliminary basis. The relentless selling by the foreign funds is a big impediment for the bulls. This has to turn positive on a sustainable basis for the market to rebound from recent lows.
The fallout from the repo rate hike and further spike in inflation on the economy and corporate earnings is not fully factored in. And though the IIP numbers for April turned out to be higher than most forecasts, there are still doubts whether this pace of growth can be sustained. A good monsoon can go a long way in helping the Indian economy and India Inc, bounce back from the slowdown.
Most Asian stocks fell, led by financial and shipping companies, on concern that credit-market turmoil and slowing global growth will erode profit.
Australian securities firm Babcock & Brown plunged to a record low in Sydney after UBS downgraded the stock. Mitsui OSK Lines dropped after rates for transporting commodities by sea had a record decline.
Samsung Electronics rose after Macquarie said the company may buy back shares.
The MSCI Asia Pacific Index was little changed at 140.26 as of 11:03 a.m. in Tokyo. The index is down 6.7% this week. Four stocks retreated for every three that rose.
Japan's Nikkei 225 Stock Average lost 0.5% to 13,823.17. Australia's S&P/ASX 200 Index declined 0.6%.
FIIs were net sellers of Rs12.11bn (provisional) in the cash segment on Thursday while the local institutions poured in Rs5bn. In the F&O segment, foreign funds were net sellers of Rs5.95bn.
On Wednesday, FIIs were net sellers of Rs1.51bn in the cash segment. With this, they have pulled out over $5.1bn from the Indian market this year so far. Mutual Funds were net buyers of Rs3.2bn on the same day.
Lok Housing's Board will today consider and explore various avenues to raise funds from foreign markets. The quantum of the funds to be raised shall be discussed and decided in the scheduled Board meeting.
Meanwhile, IFCI's Board meeting to discuss the revival of strategic stake sale ended inconclusive. The stock may come under some pressure.
US stocks struggled for direction on Thursday, managing modest gains after a choppy session, as better-than-expected retail sales and the $46bn takeover bid for Anheuser-Busch offset volatile oil prices.
Stocks rallied in the morning on InBev's unsolicited offer for Budweiser maker Anheuser-Busch and slumping oil prices, but the advance lost steam in the afternoon as oil prices erased losses and turned higher again.
News that the Microsoft-Yahoo marriage won't happen briefly sent stocks into negative territory, before investors managed to stage a recovery in the last minutes of the session.
The S&P 500 added 4.38 points, or 0.3%, to 1,339.87, its first advance in three days. The gauge briefly fell after bond yields surged and oil erased a $4 drop. The Dow Jones Industrial Average jumped 57.81 points, or 0.5%, to 12,141.58. The Nasdaq Composite climbed 10.34 points, or 0.4%, to 2,404.35.
Market breadth was positive. Seven stocks advanced for every five that fell on the New York Stock Exchange.
Yahoo shares plunged 10% in active Nasdaq trading on news that its talks with Microsoft ended without a deal. But, Yahoo’s shares climbed slightly in after-hours trading on news that the company and Google had struck an online advertising partnership.
Worries about inflation and the weakening economy remained in place, but were countered by some of the corporate news, like the multi-billion-dollar bid for Anheuser-Busch. This shows that US companies are still highly sought after globally and that business is holding up. Anheuser-Busch shares jumped 5.2%.
May retail sales report was positive, but was probably not a meaningful indicator of consumer activity, as it was mostly driven by the tax rebate checks. Sales jumped 1% in May, thanks to the government's economic stimulus plan, double what economists were expecting. Sales rose 0.4% in April.
Lehman Brothers said it was replacing two top executives, including its CFO, just days after announcing a massive $2.8bn quarterly loss. Lehman stock lost 4.4%.
However, other financial stocks rallied. Citigroup jumped on news that it's closing the Old Lane Partners hedge fun once run by its CEO Vikram Pandit. The sector as a whole benefited from a Morgan Stanley upgrade to "neutral" from "underweight".
US light crude oil for July delivery rose 36 cents to settle at $136.74 a barrel on the New York Mercantile Exchange, after having slumped more than $4 a barrel in morning trade. The national average price for a gallon of regular unleaded gas rose to a record $4.060 from the previous day's record of $4.052, AAA reported.
The dollar rose versus the euro and yen. Treasury prices tumbled, raising the yield on the benchmark 10-year note to 4.21% from 4.07% late on Wednesday. COMEX gold for August delivery fell $10.90 to settle at $872 an ounce.
European shares snapped a six-session losing streak. The pan-European Dow Jones Stoxx 600 index rose 0.9% to 304.09, with advancers outpacing decliners more than 2 to 1. The UK's FTSE 100 closed up 1.2% at 5,790.50, while the German DAX 30 added 1% to 6,714.52 and the French CAC-40 rose 0.2% to 4,672.30.
In the emerging markets, Brazil's benchmark Bovespa index rose 0.5% to 67,138. In Mexico, the IPC index added 0.1% to 30,475. The RTS index in Russia was up 0.7% at 2356 while the ISE National 30 index in Turkey rose 1% to 46,899.
Bulls look to carry forward momentum
It was a remarkable come back by the bulls as key indices extended their positive run to second straight trading session. After hitting an intra-day low of 14,748 the benchmark index managed to erase all their early losses as the index recovered nearly 500 points from days low. Also the Nifty index recouped over 120 points from days low.
Markets slightly started gaining ground post announcement of IIP numbers as the April industrial output was above a forecast of 5.5-6.5%. India's industrial production growth rebounded in April, the first month of the current fiscal year, from a six-year low hit in March, as strong performance of mining and manufacturing offset weakness in electricity.
However, the growth in industrial production declined to 7% in April from 11.3% in April 2007. Meanwhile, the Government revised the year-on-year industrial output growth in March to 3.9% from a preliminary estimate of 3%.
The bounce back was led by the interest rate sensitive stocks like Banking and Realty. The BSE Bankex and BSE Realty index regained almost over 4.5% each from days low. Even the Mid-Cap and the Small-Cap index recovered 3% and 2.5% respectively. Further, sentiments were lifted as even the European markets started off with a positive bias.
Among the 30-scrips of Sensex, 18 stocks ended in positive terrain and 12 stocks ended in red. Finally, the BSE benchmark Sensex gained 64 points to close at 15,250 and the Nifty index added 15 points to close at 4,539.
Everonn Systems gained by 3.3% to Rs589 after the company announced that it received Letter of Intent LOI from School Education Department, Government of Andhra Pradesh for implementation of Computer Aided Learning in 405 High Schools in Andhra Pradesh. The scrip touched an intra-day high of Rs598 and a low of Rs547 and recorded volumes of over 23,000 shares on NSE.
Thomas Cook gained 2% to Rs88 after India's largest integrated travel and travel related financial services company, will now offer life insurance solutions of Bajaj Allianz Life Insurance, through its distribution network of over 160 retail branches across the country. The scrip touched an intra-day high of Rs91 and a low of Rs85 and recorded volumes of over 4,000 shares on NSE.
Lupin surged by over 5% to Rs723 after the company announced that it received approval fro the US Food and Drug Administration to launch its generic version of hypertension drug Altace in the US. The scrip touched n intra-day high of Rs728 and a low of Rs675 and recorded volumes of over 2,00,000 shares on NSE.
Idea further surged by 11% to Rs107 following reports that, Telekom Malaysia would pay Rs150 per share for a less than 15% stake in Idea Cellular, valuing the AV Birla Group company at Rs400bn. The scrip touched an intra-day high of Rs109 and a low of Rs94 and recorded volumes of over 57,00,000 shares on NSE.
Gammon India slipped by 3% to Rs371. The company’s overseas units have acquired stakes in two Italian firms, stated reports. The scrip touched an intra-day high of Rs388 and a low of Rs368 and recorded volumes of over 2,000 shares on NSE.
ABG Shipyard propelled towards the end, the stock was up y over 6.5% to Rs443. The company announced that it secured two orders worth Rs30.5mn from Marnavi Spa, Italy for the construction of 1 vessel of 130 Tonne Bollard Pull AHTS for Anchor Handling, Towing, rescue, offshore supply and other related duties.The scrip touched an intra-day high of Rs445 and a low of Rs395 and recorded volumes of over 47,000 shares on NSE.
Wipro ended higher by 2% to Rs483 after the company announced that it is bidding for 12 contracts worth ~US$100mn each. The scrip touched an intra-day high of Rs487 and a low of Rs463 and recorded volumes of over 1,00,000 shares on NSE.
Educomp Solutions edged higher by 0.3% to Rs3459 after the company announced that it has received Letter of Intent from School Education Department, Government of Andhra Pradesh for implementation of Computer Aided Learning in 890 High Schools in Andhra Pradesh under BOOT model. The scrip touched an intra-day high of Rs3500 and a low of Rs3348 and recorded volumes of over 29,000 shares on NSE.
Steel Strips Wheels slipped by over 4% to Rs129. The company announced that the Company has achieved sales of 500,905 wheel rims during the month of May, 2008 as against 405,588 wheel rims during the month of May, 2007, recording a growth of 23.50%.
The Company also achieved production of 500,565 wheel rims during May 2008 as against 401,200 during May, 2007 recording a growth of 24.76%. The scrip touched an intra-day high of Rs133 and a low of Rs127.
Corporate News
Pfizer may counter bid for 65% non-promoter stake in Ranbaxy. (BS)
Reliance Industries to sell natural gas this year at US$25.20/barrel of crude oil equivalent. (FE)
L&T has postponed listing of its infotech business to the second half of 2009-10. (ET)
Wipro is bidding for 12 contracts worth US$1.2bn. (BL)
NMDC may increase iron ore prices by 65% for lumps and 88% for fines. (BL)
West Bengal government to offer 25 acres of land near Kolkata Airport to ICICI Bank. (ET)
L&T will invest US$6bn in the power generation business over the next five years. (DNA)
Sanofi-Aventis sues Sun Pharma for infringement of a US patent for Uroxatral. (DNA)
Videocon Group to set-up a solar power plant in West Bengal. (DNA)
IOC plans to set-up mini liquefaction plants to source gas from the marginal fields. (BL)
Oil India plans to launch IPO by September 2008. (DNA)
ADAG Group pulls out of Mumbai sea-link project citing state government’s indecisiveness over awarding the contract. (BS)
PNB receives not from RBI for 51% stake in Bhutan venture. (BL)
IFCI allows LIC to pare its stake to 8.39%. (BL)
Jet Airways has pulled out of negotiations to buy a strategic stake in SpiceJet. (BS)
Moody’s assign Baa3 rating to Tata Chemicals. (FE)
GMR Group forays into security services training academy in Andhra Pradesh. (BS)
Mercator Lines is planning to acquire a jack-up rig with an investment of Rs15bn. (ET)
Central Bank plans to raise Rs15bn from the market by December. (ET)
PSL wins an order from GAIL for supply of coated line pipes valued at Rs19.28bn. (BL)
Educomp to implement computer-aided learning in select schools in Andhra Pradesh. (BL)
SpiceJet expects to report a loss of Rs0.8-1bn in the current year. (BL)
Welspun Group plans to start an e-commerce portal in US to expand its customer base. (BS)
ABG Shipyard bags two orders worth Rs3.05bn. (ET)
Spentex Industries to further reduce workforce over the next six months to cut cost. (DNA)
Economic News
Industrial output in April 2008 grows by 7% yoy. (ET)
Price of complex fertilizers may decline by an average of 17.5% as the Government clears nutrient-based subsidy-cum-pricing policy. (BL)
Railways register a 26% growth in freight earnings in May 2008. (BL)
Sugar mills in Uttar Pradesh are facing shortage of cane during the 2008-09 crushing season. (BS)
Coffee production may increase 12% next year. (FE)