A rocket won't fly unless somebody lights the fuse.
The bulls may have regained some lost ground with bears covering their shorts in the last couple of days. Global markets too have largely held up quite well and oil prices have retreated a bit. Lack of fresh bad news coupled with buying by local institutions have kept the bears on the defensive in the last two days. FIIs turned net buyers in the cash segment yesterday on a provisional basis. However, it remains to be seen whether the current momentum can be sustained, as the bulls still lack conviction.
Mutual funds may be sitting on a huge pile of cash, but the market needs FIIs to turn net buyers in a big way. In short the FIIs have to light the fuse to ignite positive action in the Indian bourses. Plus, the macro and micro environments have to change drastically. The flow of bad news has to slow down. All this will take a while to materialise. As a result, the market will remain largely rangebound and choppy with alternate bouts of buying and selling. It’s a no brainer that this outlook is subject to global market conditions and improvement in local fundamentals.
Today, we expect another cautious to slightly positive start, as the US indices fell overnight but most Asian markets are on a firm ground. The overall trend could slightly favour the bulls purely due to the current momentum though there may be some cooling at higher levels.
Results Today: Aurobindo Pharma, Dish TV, Era Infra, Finolex Industries, Greenply, Hotel Leela, Indraprastha Gas, Kei Industries, Marg, Mascon Global, Power Grid Corp., PNB and Rajesh Exports.
Asian stocks are trading mostly higher this morning. Shares of mining companies and Japanese real-estate developers advanced.
Mitsubishi Estate Co. climbed to a two-week high in Tokyo after rival Mori Building Co. forecast profit to rise by a quarter this year. BHP Billiton gained after metals prices rose. NEC Electronics led chipmakers higher after Goldman Sachs said growth in computer memory sales will boost earnings.
The MSCI Asia Pacific Index rose 0.5% to 144.22 as of 10:27 a.m. in Tokyo. Japan's Nikkei 225 Stock Average added 0.6% to 14,434.34. Benchmark indexes in South Korea and Australia rose, while markets elsewhere declined.
FIIs were net buyers of Rs1.4bn (provisional) in the cash segment on Tuesday while the local institutions poured in Rs4.2bn. In the F&O segment, foreign funds were net buyers of Rs9.51bn.
On Monday, FIIs were net sellers of Rs5.33bn in the cash segment. With this, they have pulled out over $5.5bn from the Indian market this year.
US shares closed down on Tuesday after reports revealed continued weakness in the housing and manufacturing sectors even as wholesale prices increased. Losses were capped after oil prices fell for the third day in a row and Goldman Sachs reported better-than-expected earnings.
The S&P 500 lost 9.21 points, or 0.7 percent, to 1,350.93. The Dow Jones Industrial Average declined 108.78, or 0.9 percent, to 12,160.3. The Nasdaq Composite Index slid 17.05, or 0.7 percent, to 2,457.73.
Market breadth was negative. Two stocks decreased for each that advanced on the New York Stock Exchange.
Financials came under fresh pressure after Goldman Sachs predicted that banks will have to raise $65bn in new capital to cover losses. The top Wall Street firm also said it remains cautious on regional banks.
Zions Bancorporation tumbled the most in eight years after the Salt Lake City-based lender projected more losses from bad loans.
All 23 companies in the S &P 500 Banks Index declined as the group slumped to its lowest level since 1996. Boeing and Deere & Co. declined on the unexpected drop in industrial output, while Lennar Corp. led builders lower on a report showing new-home starts slumped to a 17-year low.
Economic reports showed a surprisingly large rise in the May Producer Price Index (PPI) and a drop in industrial production. Plus, there is still uncertainty whether the Federal Reserve will lift interest rates when it meets at the end of this month.
Wednesday brings earnings reports from Morgan Stanley and FedEx before the opening bell. Later in the morning, the government will release its weekly crude oil supply report. Analysts are expecting oil stockpiles to have fallen by 2mn barrels, according to a survey from Platts, an energy research firm.
U.S. light crude oil for July delivery settled lower for the third day in a row, down 60 cents to $134.01 per barrel on the New York Mercantile Exchange.
COMEX gold for August delivery rose 60 cents to settle at $886.90 an ounce. The national average price for a gallon of regular unleaded gas eased to $4.078 from a record $4.080 the previous day, according to AAA.
In currency trading, the dollar fell versus the euro and the yen. In the bond market, Treasury prices gained, lowering the yield on the benchmark 10-year note to 4.20% from 4.27% late on Monday.
Inflation fears have hurt the bond market in the US. Yields are up sharply over the past few weeks, with the 10-Year Treasury touching 4.27% on Monday, up from 4% just a few weeks ago. The yield on the 2-Year Treasury is now hovering around 3%, up from around 2.75% not long ago
CME Group, parent company of the Chicago Mercantile Exchange, rallied on news that its purchase of NYMEX has received clearance from the Justice Department.
Best Buy reported a lower quarterly profit that topped estimates. The company also reiterated its full-year sales and earnings forecasts. However, the retailer's shares fell 5.3%.
European stocks climbed. Investors scaled back expectations of interest rate hikes, while carmakers rose on lower oil prices and Daimler's announcement of $9bn stock buy back.
The pan-European Dow Jones Stoxx 600 index ended with a rise of 0.5% to 306.36. The UK's FTSE 100 rose 1.2% to 5,861.90, while the German DAX 30 climbed 1% to 6,796.16 and the French CAC-40 advanced 0.6% to 4,686.33. Indexes finished off intra-day highs.
In the emerging markets, the Bovespa in Brazil was up 1.7% at 68,437 while the IPC index in Mexico shed 1.4% at 29,925. The RTS index in Russia jumped 1.4% to 2399 and the ISE National-30 index in Turkey rose 0.8% at 47,100.
Market may take a breather
After a flat start to the trading session bull were back on the bourses taking charge over the bears. Today’s rally could be attributed to buying support in the banking, realty and capital goods stocks. Firm cues from the European markets further aided support to the market sentiment. Even the broader indices like the Mid-Cap and Small-Cap stocks attracted buying interest.
The Nifty closed above 4600 and the Sensex above 15500 levels.
Among the 30-scrips of Sensex, 26 stocks ended in positive terrain and only 4 stocks ended in red. Finally, the BSE benchmark Sensex gained 301 points to close above the 15,500 mark at 15,696 and the Nifty closed above the 4,600 level adding 80 points at 4,653.
BPCL gained by 1.8% to Rs280. The company posted a net profit after tax of Rs584mn for the quarter ended March 31, 2008 as compared to Rs6700mn for the quarter ended March 31, 2007. Total Income has increased from Rs244.005bn for the quarter ended March 31, 2007 to Rs327.129bn for the quarter ended March 31, 2008.
The Group posted a net profit of Rs17.696bn for the year ended March 31, 2008 as compared to Rs21.452bn for the year ended March 31, 2007. Total Income has increased from Rs991.078bn for the year ended March 31, 2007 to Rs1124.104bn for the year ended March 31, 2008. Year ended results are audited. The scrip touched an intra-day high of Rs282 and a low of Rs272 and recorded volumes of over 1,00,000 shares on NSE.
Tech Mahindra surged by over 3% to Rs813 after the company announced that it entered into a stra-tegic global alliance with Microsoft Corp. to address its System Integration (SI) re-quirements for deployments of the award-winning Microsoft Mediaroom Internet Pro-tocol Television (IPTV) and multimedia software platform.
Through the alliance, Tech Mahindra's solution will provide deployment and integration services for new and ex-isting Microsoft Mediaroom broadband service provider customers to deploy IPTV services, which are expected to gain momentum in the coming years. The scrip touched an intra-day high of Rs828 and a low of Rs780 and recorded volumes of over 65,000 shares on NSE.
South Indian Bank advanced by 3% to Rs127 after the board of directors announced that they would meet today to consider bonus issue. The scrip touched an intra-day high of Rs146 and a low of Rs122 and recorded volumes of over 9,00,000 shares on NSE.
Vijaya Bank surged by over 5% to Rs43. The company announced that it hiked 1-2 years deposit rates by 30bps to 8.8%. The scrip touched an intra-day high of Rs44 and a low of Rs41 and recorded volumes of over 8,00,000 shares on NSE.
Ranbaxy gained by 2.5% to Rs581 after the company company’s alliance with IPCA received USFDA marketing approval for Metoclopramide. The scrip touched an intra-day high of Rs588 and a low of Rs564 and recorded volumes of over 22,00,000 shares on NSE.
JSW Steel ended on a flat note to close at Rs992. Reports stated that the company plans to set up a greenfield plant in Georgia (Europe) in partnership with UK's Geo Steel to produce bars used in building construction.
The company would invest around US$42mn by way of equity and debt. While JSW Steel would hold 49% stake in the venture, the majority stake will be held by Geo Steel, report stated. The scrip touched an intra-day high of Rs1008 and a low of Rs955 and recorded volumes of over 1,00,000 shares on NSE.
Balmer Lawrie surged by over 4.9% to Rs419 after reports stated that the company has decided to acquire a 50% stake in a travel and tourism company and has appointed SBI Caps to carry out a due diligence exercise and has set aside Rs1bn for organic and inorganic growth in areas like, travel and tourism, logistics infrastructure and services and greases and lubricants, said leading business daily.
According to report, Balmer Lawrie plans to expand its brand network in the sector by opening offices in Pune and other centres and the company is looking for opportunities to set up container freight stations in the south and west coast besides inland container depots in the north, stated reports. The scrip touched an intra-day high of Rs421 and a low of Rs402 and recorded volumes of over 11,000 shares on NSE.
Corporate News
Reliance Industries and ONGC may resume oil production from PMT fields. (ET)
Reliance Communications is considering buying over 40% in MTN. (BS)
Hindalco plans US$1bn rights issue. (ET)
IDEA close to launching operations in Mumbai. (ET)
UBI plans to raise upto US$2bn via MTN. (BS)
Reliance Power, Tata Power, Lanco, amongst companies qualified for Rajpura thermal power project. (BL)
Ashok Leyland may divest stake in Nissan JV. (ET)
Tech Mahindra enters into IPTV global alliance with Microsoft. (ET)
GMR’s Delhi hospitality project hits AAI hurdle. (ET)
Tata Motors plans to build US$150mn factory in Mexico to assemble cars for exports to South America. (DNA)
Two Glenmark drugs are set to enter the clinical trial stage in October 2008. (DNA)
JSW Steel Group will invest Rs5.5bn in Chile mines. (BS)
Jet Airways and SpiceJet are introducing sharp cutbacks in staff cost and salaries. (BS)
Pantaloon Retail’s arm ties-up with Dubai’s Aramex to open a 90,000 sqft warehouse in Mumbai. (BL)
Aditya Birla Group’s BPO division plans to acquire captive arms of niche financial services firms. (DNA)
Voltas buys remaining 50% stake in Fedders International. (FE)
Cadila to spin-off and merge the consumer products division into its unit, Carnation Nutra Analogue-Foods Ltd. (FE)
Escorts Group is developing a bio-fuel powered tractor. (FE)
Castrol intends to spend Rs1bn on advertisement and product promotion. (BL)
S Kumars Nationwide plans acquisitions in Europe and North America. (BS)
IBM set to invest in KLG Systel. (DNA)
Ipca Labs is looking at an overseas acquisition in the range of US$10-20mn. (DNA)
Chettinad Cement plans new plant in Karnataka and defers rights issue. (BL)
Indo Asian Fusegear is planning to foray into power generation. (BS)
KEC International wins Rs1.6bn order from NTPC for rural electrification in Jharkhand. (ET)
Godawari Power to invest Rs2.8bn over the next two years to expand capacity and acquire majority stake in an iron ore pelletisation plant. (DNA)
Champagne Indage plans to raise US$50mn through issue of securities in overseas market. (BL)
Shri Lakshmi Cotsyn plans to invest an additional Rs3.5bn in FY09 on capacity expansion. (ET)
Plethico Pharma plans to acquire a US-based nutraceuticals company. (DNA)
Economic News
Nuclear Power ventures may get overseas funding. (ET)
Indirect tax collection registers a growth of 12.8% in the first two months of the current fiscal. (BS)