There is no royal road to anything. That which grows fast, withers as rapidly. That which grows slowly, endures.
Guess what! Even Queen Elizabeth and the British Royal family has not been spared by inflation. The queen's household costs for the 12 months through March, paid for by the British taxpayer, rose by 6.1%. The rise per tax payer per annum may be equivalent to just what you would pay for an ipod download. But the fact remains that nobody is spared. Reports suggest India Inc going slow on capex. And by the way, the royal household is also paying close attention to obtaining the best value for money in all areas of expenditure.
Markets around the world are fighting the twin menace of fire (inflation) and ice (growth slowdown). Some say it may only be the beginning of the bear market, while others are a bit more optimistic. On the whole, the market remains jittery, vulnerable to daily dose of bad news. Traders and investors are hoping that the market will bottom out soon.
Whether that happens remains to be seen. Today, we see another tumultuous day for the bulls, which should begin with a cautious opening. The intra-day choppiness will continue and one may see some buying at lower levels, though the rebound may prove to be short-lived.
The next big trigger will come from the first-quarter results, which will be declared over the next few days. As always, IT sector will lead the way, with Infosys announcing its results on July 11. Though the advance tax numbers were quite encouraging, it will be interesting to see how India Inc is coping with slowing growth momentum and rising costs. Operating margin is an area that everybody will be keen to watch.
Among stock specific news, Blue Green Constructions and Investments could be in action as the board will met to sell majority stake to discount retailer Subhiksha.
There is no dearth of bad news and complete lack of positive news. Crude oil continues to hover around $140/bbl. The US financial sector is not in a pink of health either. Though technically, the US might have avoided a recession, it still remains in a pretty bad shape. The dollar remains weak (except against the rupee), which will continue to fuel the rally across various commodities.
This week, the ECB (European Central Bank) will take a call on interest rates. If it decides to jack up rates to fight inflation, there will be more trouble for the dollar. On the domestic front, the political situation has once again turned precarious with the Congress determined to go ahead with the nuke deal, and the Left reiterating its threat of pulling down the Government.
Asian markets are mixed this morning. The Nikkei in Tokyo was up 45 points at 13,589 while the Hang Seng in Hong Kong was flat at 22,043. The Kospi in Seoul was also nearly unchanged at 1685 while the Straits Times in Singapore rose 14 points at 2969. The Shanghai Composite in China added 6 points at 2754 while the Taiex in Taiwan was down 14 points at 7534.
FIIs were net sellers of Rs7.03bn (provisional) in the cash segment on Friday while the local institutions poured in Rs3.06bn. In the F&O segment, foreign funds were net sellers of Rs632.8mn. On Thursday, FIIs were net sellers of Rs4.69bn in the cash segment. With this, they have pulled out more than $6.1bn from the Indian market this year.
Results Today: Ansal Infra, Asian Hotels, BEML, Bombay Dyeing, BPL, Deccan Chronicle, Gammon India, India Cement, Indo Rama Synthetics, Ispat, MMTC, Madras Cement, Matrix Labs, Pfizer, REI Agro, Sun TV, Trent, TVS Motor and Wyeth.
ANG Auto will consider buy back of shares.
US stocks slipped on Friday, as record-high oil prices, a weak dollar and more trouble for the financial sector continued to unnerve investors. The US market has now fallen nearly 20% from its 2007 high, marking an official entry into bear-market territory.
Crude oil hit a new intraday high of $142.99 a barrel, heightening worries about the impact of surging commodity prices on consumer spending. A survey by the University of Michigan revealed that consumer confidence slid further in June, nearly at a 50-year low.
The Dow fell 106 points, or 0.9%, to 11,346. With the last week's 4.2% loss, the Dow has now down nearly 20% since its Oct. 9, 2007, record high of 14,165. The blue-chip index is also on track for its worst month of June since 1930.
The S&P 500 index dropped 4.8 points, or 0.4%, to 1,278, while the Nasdaq Composite Index dipped 5.7 points to 2,315. The S&P 500, which most Wall Street experts use as a benchmark to gauge market's direction, is now off 18.1% from its high of 1,562 points hit on Oct. 10, 2007.
US stocks posted bigger losses in mid-afternoon trade, but managed to close off the lows. All three major gauges fell for the week.
US financial firms and credit markets continue to be in pain. Ratings agency Moody's said it may downgrade Morgan Stanley, citing big trading losses recently that have undermined confidence in the investment bank's risk management.
Personal income jumped 1.9% in May, and 0.4% excluding the stimulus payments. The 0.4% rise was in line with estimates. Income rose 0.4% in April. Personal income rose 0.8%, topping the forecast for a rise of 0.7%. The report's closely watched inflation component rose a smaller-than-expected 0.1%.
US light crude for August delivery reached a record high of $142.99 a barrel on the New York Mercantile Exchange before pulling back to settle at $140.21 a barrel, up 57 cents.
The national average price for a gallon of regular unleaded gas fell to $4.066 from $4.067 the previous day, according to AAA.
In currency trading, the dollar fell versus the euro and the yen. In the bond market, Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.96% from 4.03% late on Thursday.
COMEX gold for August delivery rose $16.20 to settle at $931.30 an ounce.
Palm lost more than 8.3% as the handset maker reported a worse-than-forecast 26% sales fall and didn't offer an outlook. Sony Ericsson warned of slowing demand for mid- to high-level phones. Ericsson shares fell 5.4%.
Merrill Lynch could post a $5.4bn second-quarter writedown, Lehman Brothers said, due to its exposure to bond insurers. That's more than currently expected. Merrill shares fell 1%.
In addition, AIG likely will take $5bn in quarterly losses from its insurance units, which have been hit by $13 billion in writedowns, according to published reports. AIG shares slipped more than 2%.
Micron Technology posted a wider-than-expected quarterly loss late on Thursday, despite higher revenue, due to pricing pressures. Its shares fell 12.7%.
Next week on Wall Street will be a curtailed one on account of the Fourth of July holiday. Markets will close early on Thursday ahead of the long weekend. Plenty of economic news is on tap, however, including reports on manufacturing, construction, factory orders and the labor market.
European stocks drifted to a new multi-year low on Friday. The pan-European Dow Jones Stoxx 600 extended Thursday's big fall with a drop of 0.4% to 287.34, with losses led by the technology sector after a warning by Sony Ericsson.
The UK's FTSE 100 ended 0.2% higher at 5,529.90. But most regional markets dropped. The French CAC 40 lost 0.7% to 4,397.32 and Germany's DAX 30 fell 0.6% to 6,421.91.
In the emerging markets, the Bovespa in Brazil gained 0.6% at 64,321 while the IPC index in Mexico rose 0.3% at 29,295. The RTS index in Russia was up 0.4% at 2318 and the ISE National-30 index in Turkey slid 2.28% to 43,343.
After a disappointing June series, bears greeted the July series with benchmark index tanking over 4.5% (provisional). Bears were in the ring right from the first minute. Weak global cues coupled with crude oil prices hitting an all time high triggered a sell off on the Indian bourses. Crude oil prices hit an intraday record of US$141.71 per barrel.
Further, rising inflation also added fuel to the sell off. India’s Inflation rate was at 11.42% for the week ended June 14. Market had expected inflation to be 11.22%. The wholesale price index rose 0.4% to 236.1 from 235.2.
The interest rate sensitive stocks like Banking, Auto and realty again were under immense selling pressure. Even, the Mid-Cap and the Small-Cap indices ended losing 2.5% each.
Finally, the BSE benchmark Sensex lost 619 points to close at 13,802 and the Nifty index lost 179 points to close at 4,137.
HT Media surged by over 4 percent to Rs101 as the company reportedly acquired 0.65% stake in real estate major Sunil Mantri Realty for Rs200mn. HT bought equity shares of Re1 at a price of Rs125. The company plans to use the funds for new projects. The scrip touched an intra-day high of Rs102 and a low of Rs92 and recorded volumes of over 5,00,000 shares on BSE.
Sun Pharma edged lower by 0.8% to Rs1333 after reports stated that the company has launched a hostile bid for Taro Pharma. The scrip touched an intra-day high of Rs1382 and a low of Rs1305 and recorded volumes of over 92,000 shares on BSE.
Jet Airways dropped by 5.2% to Rs490 after reports stated that the company may post Rs20bn loss in two years. The scrip touched an intra-day high of Rs509 and a low of Rs488 and recorded volumes of over 14,000 shares on BSE.
Cairn India advanced by 1.4% to Rs275 after crude oil prices hits all time high of US$141.71/bbl. The scrip touched an intra-day high of Rs282 and a low of Rs267 and recorded volumes of over 23,00,000 shares on BSE.
Allcargo Global rose 2.5% to Rs825. The board of directors of the company said that it deferred the decision on sub-division (split) of nominal value of equity shares of Rs10 each. They have also recommended final dividend of 30% (Rs3 per share). The scrip touched an intra-day high of Rs825 and a low of Rs751 and recorded volumes of over 43,000 shares on BSE.
Bafna Pharmaceuticals started trading at Rs43.7 against the issue price of Rs40. The scrip finally closed at Rs38.50 translating slipping below its issue price of Rs40 per share. It hit an intra-day high of Rs47 and a low of Rs37.3 and recorded volumes of over 2,00,00,000 shares on BSE.
The company offered 64,00,000 equity shares of Rs10 each for cash at premium of Rs30 per share. The issue to the public constituted 40.05% of the post issue paid-up capital.
The Chennai-based Bafna Pharmaceuticals is engaged in the manufacturing of betalactum and non-betalactum pharmaceutical formulations in tablets, capsules and liquid forms. The company manufactures 126 formulations under various therapeutic segments such as anti-infective, cholesterol lowering agents, analgesic and antipyretic, antihelmintics, appetite stimulants, cough & cold preparations, antiulcerants anti diabetic and vitamins .
The proceeds of the issue would be utilized towards brand building exercise in domestic market. It intends to register the company, products and create brand in international markets. Bafna would also strengthen up R&D facility at its grantlayon plant besides getting MHRA certification. It is also proposing to retire high-cost debts through the IPO proceeds.
Anant Raj Industries advanced by 5% to Rs142 after the company announced that that M/s. Acacia Real Estate Ltd, a Bahrain based development fund has entered into a joint venture agreement with the company to acquire minority stake in one of its wholly owned subsidiary, Anant Raj Projects Pvt Ltd for Rs2.16bn.
The scrip touched an intra-day high of Rs153 and a low of Rs126 and recorded volumes of over 59,000 shares on BSE.
Renuka Sugars has slipped by 1.5% to Rs107. The company announced that it commenced production at its Haldia Sugar Refinery, having a refining capacity of 2000 metric tons sugar per day and Power cogeneration plant of 15 MW.
The scrip has touched an intra-day high of Rs107 and a low of Rs105 and has recorded volumes of over 3,00,000 shares on BSE.
Unitech plans to dilute 26% stake in its telecom arm to a foreign company. (TOI)
Reliance Industries may tie up with BP or Shell for bidding for new oil blocks under NELP VII round.(ET)
Daiichi Sankyo may sell debt to raise half the cost of its US$4.6bn acquisition of Ranbaxy Laboratories.(BS)
India’s crude oil production rose by 3.2% in May on back of better performance by ONGC.(FE)
Jupiter Biosciences acquires a facility of Merck in Switzerland and signs a five year agreement for its peptide products with the latter’s biosciences company.(BL)
Apollo Tyres launches capacity expansion at its Africa plants.(BL)
ONGC to start commercial production from Jaria-Parbatpur block by early 2009.(BL)
SAIL plans to run its own fleet of vessels in partnership with public as well as private players to ship imported cooking coal.(ET)
Unitech plans to invest Rs40bn in hospitality business in the next five years.(DNA)
China-based Dongfang Electric Corp. may tie up with BHEL or L&T for its proposed manufacturing unit in India.(ET)
Kingfisher Airlines receives an in-principle approval from ICICI Bank for a Rs10bn loan facility.(ET)
ONGC Videsh decides to surrender its Qatar block as reserves are low and not commercially viable.(BL)
M&M arm FirstChoice Wheels plans to invest Rs2bn in the next five years for its expansion.(TOI)
GMR Group plans to create holding firms for its three primary businesses and list them overseas.(Mint)
Food and grocery retail chain Subhiksha to invest Rs12bn by 2010.(BS)
Holcim divides the operations of its two companies, ACC and Ambuja Cements India, into three regions.(ET)
Essar group plans port terminal for LNG and a container cargo facility and depots.(Mint)
Cairn India and ONGC have nearly finalized the plan for joint development of Ambe and North Tapti offshore marginal gas fields on the Gujarat coast.(BL)
AT&T is likely to buy 74% stake held by Maxis Communication in Aircel.(ET)
Subhiksha Trading Services, which runs country’s largest food & grocery discount retail chain, acquires majority stake in Chennai based Blue Green Constructions and Investments.(BL)
Future Group plans to split Big Bazaar into two entities.(ET)
Duncan Tea has tied up with Essel Group’s portal itzcash.com for online retailing of tea.(ET)
Reliance Retail is planning to open a chain of specialty stores of retail mobile phone handsets across the country.(ET)
Economic News
Higher crude oil prices could cause fuel subsidy bill to reach Rs3tn this year.(BS)
DoT scraps plan to auction 3G spectrum for CDMA players.(BL)
Railways to increase freight rates to offset diesel price hike.(BS)
PSU oil companies to raise ATF prices by Rs3,000/KL from July 1, 2008.(ET)
Hotel tariffs in five and four star segments may be soon revise downwards as economy heads for a slowdown.(BS)
TRAI to study long term spectrum availability to see whether there is space for new players.(FE)
It would not be possible for India to maintain 9% growth in current fiscal due to rising inflation, says Planning Commission Deputy Chairman.(BS)
Railways to increase discounts on empty-flow direction freight from 30 to 50%.(ET)
Accounting regulator ICAI says firms would have to provide for FCCB redemption premium in their books over life of instrument.(FE)
Government may temporarily ban export of cotton.(ET)
Tyre makers mull 7% price increase due to rising input costs.(BS)
Implementation of commodities transaction tax is likely to be delayed to end of year or next year due to rising inflation.(BS)
Ministry of renewable energy announces a generation-based incentive of 50 paise per unit of electricity for investors who do not have access to the benefits of accelerated depreciation.(ET)