Desire is a bonfire that burns with greater fury, asking for more fuel….
Inflation will yet again play a crucial role today as the Government will release the numbers for the week ended June 7. For the day market guesstimates are anything between 9.8% and 10.2%.
What's good for the bulls is that the scene across global markets is not too bad. Oil prices have cooled off after China announced a hike in fuel prices. US shares closed up, though the worries over its economic health and the troubled financial sector remain. Asian markets, barring that of Japan, are mostly up this morning, with Hang Seng and Shanghai leading from the front. This may result in a positive opening, though the undertone will be jittery ahead of the release of inflation data.
After dithering for several weeks, the Centre had finally hiked fuel prices on June 4. It has also slashed duties on crude and petro products to partly cushion the economy from higher fuel prices. Ever since then, there has been speculation (and fear to some extent) that inflation will touch double-digit mark soon. It may happen when the data is released at noon.
If not today, inflation is likely to cross 10% in the next few weeks due to the cascading effect of higher fuel prices. The market and most players have been bracing for this. So, the event, whenever it happens, could draw only a temporary reaction (or over-reaction).
Anxiety over the latest slugfest between the Government and the Left may also have some bearing. In short, the market remains at the mercy of day-to-day news and any rally could vanish in a jiffy with the next bad news. We expect the market to remain choppy and rangebound.
FIIs were net sellers of Rs5.98bn (provisional) in the cash segment on Thursday while the local institutions poured in Rs1.4bn. In the F&O segment, foreign funds were net sellers of Rs10.86bn. On Wednesday, FIIs were net sellers of Rs4.5bn in the cash segment. With this, they have pulled out over $5.5bn from the Indian market this year.
Results Today: Abbott India, Dredging Corp., EIH, Essar Shipping, Hindalco, Nectar Lifescience, Onward Tech and Parsvnath.
Asian stocks are mostly higher, except for Japan. Weakness in energy stocks offset gains in airlines and refiners after crude oil fell the most in almost three months.
The MSCI Asia Pacific Index lost 0.5% to 140.57 as of 11 a.m. in Tokyo, leaving it little changed this week. Almost five stocks declined for every three that gained. Japan's Nikkei 225 Stock Average dropped 0.9% to 13,999.06.
Woodside Petroleum fell for the first time in four days. Korean Air Lines and Singapore Airlines rallied. China Petroleum jumped in Shanghai after China said it will raise transport fuel prices for the first time in 7 1/2 months.
US stocks closed higher, led by strength in the technology space, but the advance in blue-chip indices was capped by a Citigroup warning that it saw substantial additional writedowns going ahead.
Crude oil prices fell by nearly $5 per barrel on the back of China's move to increase fuel prices by up to 18%. Technology shares rallied on forecasts for higher earnings at Broadcom Corp.
The S&P 500 added 5 points, or 0.4%, to 1,342.83. After dipping below 12,000 for a second day, the Dow Jones Industrial Average rose 34 points, or 0.3%, to 12,063.09. The Nasdaq Composite Index jumped 32 points, or 1.3%, to 2,462.07.
Market breadth was mixed. More than three stocks rose for every two that fell on the New York Stock Exchange.
US light crude oil for July delivery fell $4.75 to settle at $131.93 a barrel on the New York Mercantile Exchange after China said it will lift fuel subsidies on gas and diesel - a move that could curb demand in the country and lower prices globally.
The market extended gains after regional bank BB&T said it expects to increase its dividend this year, countering speculation of a reduction in payout. Broadcom rallied the most since April after Lehman Brothers said the maker of computer chips is poised for steadier profit growth.
Ryder Systems and Southwest Airlines led nine of ten transportation companies in the S &P 500 Index higher as crude oil slid.
AIG gained 4.9% after Citigroup the insurance giant and Dow component to a buy. Citigroup shares came under pressure after its CFO told a conference call that the bank is likely to take substantial additional markdowns if current trends prevail.
The troubled financial sector was also affected by reports of possible criminal charges against two former managers of two Bear Stearns hedge funds that collapsed last year. Two ex-Bear Stearns hedge fund managers in question surrendered to authorities.
The Philadelphia Fed index, a regional reading on manufacturing, weakened to minus 17.1 in June from minus 15.6 in May, a bigger drop than what economists had expected. It was the index's seventh straight monthly decline.
The number of Americans filing new claims for unemployment fell modestly by 5,000 last week to 381,000, but stayed at levels that continued to reflect a struggling economy. The Conference Board's index of leading economic indicators rose 0.1% in May, as it did in April. Economists had expect LEI to remain unchanged.
The national average price for a gallon of regular unleaded gas eased to $4.073 from $4.075 the previous day, according to AAA. COMEX gold for August delivery rose $10.70 to settle at $904.20 an ounce. In currency trading, the dollar rose versus the euro and the yen.
In the bond market, Treasury prices fell, raising the yield on the benchmark 10-year note to 4.21% from 4.13% late on Wednesday.
There are no market-moving earnings or economic news tomorrow. Friday brings the quadruple options expiration Friday, a quarterly event in which stock futures and options and stock index futures and options all expire simultaneously. This can sometimes add volatility to the underlying stocks.
Stocks in Europe ended mostly lower. The pan-European Dow Jones Stoxx 600 index ended down 0.5% at 300.24. The index came close to falling below the 300 level for the first time since late March.
Despite early gains from far stronger-than-forecast retail sales, the UK's FTSE 100 ended 0.8% lower to 5,708.40. The French CAC-40 dropped 0.6% to 4,591.39 and Germany's DAX 30 dipped modestly, losing 0.1% to 6,721.17.
In the emerging markets, the Bovespa in Brazil was down 0.75% at 66,590 while the IPC index in Mexico rose 0.8% at 29,847. The RTS index in Russia dipped by 0.08% to 2400 and the ISE National-30 index in Turkey dropped 0.4% to 46,104.
All eyes on Inflation
Markets ended in negative terrain for second consecutive trading session. Weak global cues coupled with unabated selling in scrips across the sectors dragged the Nifty to slips below the 4,500mark to hit a low of 4,488. The benchmark Sensex also fell below the 15,100 level to hit a low of 15,051 during the day.
Among the 30-scrips of Sensex, 27 stocks ended in negative terrain and only 3 stocks ended in green. Finally, the BSE benchmark Sensex lost 334 points to close at 15,087 and the Nifty index was down 78 points to close at 4,504.
MTNL gained 1% to Rs97 after reports stated that the company received the international long distance license from DoT. The scrip touched an intra-day high of Rs99 and a low of Rs95 and recorded volumes of over 5,00,000 shares on NSE.
Zee Entertainment ended flat at Rs243. Reports that the company may list its two divisions Zee Motion Pictures and Zee Limelight on the London Stock Exchange’s AIM. The scrip touched an intra-day high of Rs247 and a low of Rs237 and recorded volumes of over 3,00,000 shares on NSE.
Tata Comm end lower by 3% to Rs408. According to reports, a wholly owned subsidiary of Tata Communications Limited has signed an equity JV with China Enterprise Communications (CEC) for the acquisition of 50% equity in CEC, a value-added telecommunications services and integrated IT solutions provider. The scrip touched an intra-day high of Rs420 and a low of Rs401 and recorded volumes of over 64,000 shares on NSE.
BOC India was frozen at 20% upper circuit to Rs196.65 after the company founder offered to pay 21% more for shares held by other investors. The Indian unit of the U.K.'s BOC Group Plc raised the open-offer price to Rs200 per share, from an initial price of Rs165, according to reports The scrip touched an intra-day high of Rs196 and a low of Rs190 and recorded volumes of over 16,00,000 shares on NSE.
Time Techno advanced 1.2% to Rs780 after the company announced that its board of directors of the company would meet on June 27 to consider stock split. The scrip touched an intra-day high of Rs845 and a low of Rs765 and recorded volumes of over 23,000 shares on NSE.
MindTree ended lower by 2.7% to Rs455. The company announced that it today opened its own development center, MindTree Coromandel, in Chennai. The center was inaugurated by U.S. Consul General in Chennai, David T. Hopper.
MindTree Coromandel, named after the famous coastline of India, has been built by Ascendas Mahindra IT Park Pvt Ltd. Situated in the pristine and upcoming Mahindra World City SEZ in the city suburb, MindTree Coromandel has the capacity to seat 2,800 MindTree Minds. The interiors of the center have been designed and executed by Chandavarkar and Thacker Architects Pvt. Ltd. The scrip touched an intra-day high of Rs474 and a low of Rs451 and recorded volumes of over 10,000 shares on NSE.
Union Bank of India slipped by 2% to Rs129. There were reports stating that it would raise US$2bn through medium term debt from international market for its overseas expansion. The scrip touched an intra-day high of Rs131 and a low of Rs127 and recorded volumes of over 1,00,000 shares on NSE.
Vikas WSP slipped by a percent to Rs24.45. The company announced that it acquired agricultural land in the state of Rajasthan. The company purchased agricultural land measuring 2025 acres for raising certified organic crops like Guar to meet out the increased export demand of certified organic guar gum polymers mainly for the production of lactofermented foods, dairy and convenient food products and Wheat to manufacture pregelatinized certified organic wheat farina for export. The scrip touched an intra-day high of Rs24.95 and a low of Rs24.25 and recorded volumes of over 1,00,000 shares on NSE.
Roman Tarmat gained by 3% to Rs73 after the company announced that it secured orders worth Rs1.1bn from Tamil Nadu Infrastructure. The scrip touched an intra-day high of Rs74 and a low of Rs68 and recorded volumes of over 28,000 shares on NSE.
National Aluminum slipped by a percent to Rs459 after the company announced that they may have to shut plants as truck drivers strike has disturbed the supplies of coal to its plants. The scrip touched an intra-day high of Rs474 and a low of Rs456 and recorded volumes of over 81,00,000 shares on NSE.
GSS America fell by 2.5% to Rs311. The company clarified that acquisition of companies is one of the objects of the IPO of the company and the same has been mentioned in the column 'Objects of the Issue' in page 24 of the IPO Prospectus of the Company dated February 19, 2008. Since then the company is in the process of identifying the prospective companies for acquisition.
Company made this announcement with reference to the news item appearing in a leading web portal titled "GSS America plans to buy US Company for $ 130 MN in 1-2 months". The scrip touched an intra-day high of Rs333 and a low of Rs308 and recorded volumes of over 7,00,000 shares on NSE.
Corporate News
TCS to set-up separate business unit for BPO services. (ET)
DLF Mansear SEZ deal likely to called off. (ET)
Reliance Infra plans to invest US$7bn in next three years to expand its engineering construction business. (DNA)
MTN board avoids discussion on Rcom during the AGM. (BL)
IVRCL Infra close to acquiring Swedish construction equipment manufacturer for US$100mn. (DNA)
HDFC to raise funds for buying stake in HDFC Bank by listing its two arms. (ET)
PFC sanction’s Rs100bn loan to NTPC. (ET)
GE Shipping to invest Rs30mn in fleet expansion over three years. (ET)
Bank of Baroda signs pact with BSE for acting as a clearing and settlement bank for the exchange. (ET)
Bata India to open 240 outlets in next three years for a total capex of Rs4.8bn. (ET)
Radico Khaitan to set-up distillery in Maharashtra. (ET)
Supreme Infra to expand its ready mix concrete business by adding two more units. (ET)
Essar Steel looks to acquire Bulgaria’s based Kremikovtzi AD. (DNA)
Nalco may shut plans due to shortage of coal. (DNA)
ICRA acquire kolkatta based Axiom Technologies. (DNA)
Neyveli Lignite plans to add 750MW power capacity and 6.6mtpa of lignite mining by Sep’09 for an investment of Rs66.3bn. (DNA)
Jet Airways to hike basic fare by 10%. (BS)
Ess Dee Aluminium wins regulatory approval to bail-out India foils. (BS)
Ashok Leyland set’s up new facility for development of friendly diesel engines. (BS)
Bata India sold off its Hawai brand to Brazilian company , Alpragatas for ~Rs39mn. (BS)
ITC wholly owned subsidiary, ITC Info eyeing an acquisition with strong presence in US and Europe. (BS)
TNPL to spend Rs10bn to boost capacity. (BS)
NIIT to set-up training hub in china. (BS)
HPCL to acquire four sugar mills in Andhra Pradesh. (BS)
Gitanjali Gems acquire entire equity holding in CRIA Jewellery. (BL)
Roman Tarmat secures order worth Rs1.6bn from Tamil Nadu Road Infrastructure Development Company. (BL)
Corus to hike flat product prices by pound 200 per ton from June 30. (BL)
Bartronics US arm secures pilot project from Comic-con International. (BL)
Titagarh Wagons acquires 50% stake in Delhi based brake system unit for Rs75mn. (BL)
Punj Lloyd enters into agreement with Shyam group to divest interest in its internet service provider division. (FE)
Economic News
RBI decides to defer issuance of credit derivatives guidelines. (ET)
Securitised debt instrument to soon get listed on stock exchange. (ET)
TRAI recommends an open bidding process to acquire license for national integrated directory enquiry service. (ET)
CBDT raises tax collection estimates by Rs300bn for the current fiscal. (ET)
Monsoon 45% above normal Indian Metrological Department. (DNA)
Airlines to increase basic fares anywhere between 5-20% from today. (BS)
Power and Steel ministry seeks priority based gas allocation. (FE)