The hallmark of our age is the tension between aspirations and sluggish institutions.
The institutions remain sluggish to buy at lower levels and that more or less explains the continued tension on the bourses. After a two-day rally (any small gain is a rally these days), the key indices gave up some of the gains. Renewed weakness in global markets and fresh tension between the Government and the Left parties over the Indo-US nuclear deal played spoilsport. The sudden rise in political temperature in New Delhi could do some more harm today amid worries over the fate of the Congress-led UPA regime. Given the uncertain political environment, the bulls may like to tread cautiously. Also, global markets fell sharply overnight while Asian markets too are in the red this morning. Crude oil continues to be highly volatile, keeping global markets on the edge.
Inflation numbers for the week ended June 7 will be out tomorrow. The WPI-based gauge is expected to jump sharply as the Government had announced the hike in fuel prices during this week. Inflation may rise to anywhere between 9.5-10% from 8.75% in the week ended May 31. Though much of the spike in inflation is already discounted by the market players, a double-digit inflation or something near it could lead to some knee-jerk reaction.
We expect the market to open on a weak note and the trend may not change for most part of the day, unless there is some fresh short covering. The market will have to keep one eye on New Delhi and the other eye on global markets. Quite a strain for the eyes and the market!
FIIs were net sellers of Rs4.35bn (provisional) in the cash segment on Wednesday while the local institutions poured in Rs1.94bn. In the F&O segment, foreign funds were net sellers of Rs1.93bn.
On Tuesday, FIIs were net buyers of Rs3.72bn in the cash segment. With this, they have pulled out over $5.4bn from the Indian market this year.
Shares of Niraj Cement Structurals Ltd. will get listed today.
Results Today: EIH Associates, Future Capital, JHS Svendgaard, Kirloskar Ferrous, Ratnamani Metals, Simplex Realty and Uniflex Cables.
US stocks slid on Wednesday, with the Dow Jones Industrial Average ending at a three-month low, after FedEx announced disappointing results and regional banking giant Fifth Third Bancorp cut its dividend, highlighting the impact of rising fuel prices and the credit crisis.
Dipping below the 12,000 mark for the first time since March 17, the Dow recovered a bit by the close, yet finished at a three-month low of 12,029.06, down 131 points, or 1.1%. All but four of the blue-chip index's 30 components ended in the red.
The S&P 500 index dropped 13 points, or 1%, to close at 1,337.81. Of the S&P's 10 industry groups, only energy advanced fractionally, fueled by higher oil prices. The Nasdaq Composite dived 28 points, or 1.1% to finish at 2,429.71.
Market breadth was negative. Three stocks fell for each that rose on the New York Stock Exchange.
Wall Street was volatile partly because investors were unwinding their positions ahead of the so-called "quadruple witching" day on Friday. Quadruple witching refers to the day - four times a year - when a range of options expire.
The markets began to sell off in the morning following weak quarterly results from FedEx and Morgan Stanley. The selling accelerated in afternoon trading as financial stocks joined in Morgan's disappointment.
FedEx said it swung to a fourth-quarter loss, with the company pointing in part to the weak economy and the surge in fuel costs. FedEx shares slumped 2.1%. It was the company's first quarterly loss in 11 years.
Shares of Fifth Third Bancorp, Ohio's second- largest bank, tumbled the most in at least 28 years after the lender said it would cut its dividend and raise $2bn in new capital. Fifth Third Bancorp shares plunged 27%.
Shares of Morgan Stanley recovered from early declines, closing 0.3% higher. The Wall Street brokerage reported a 60% fall in its second-quarter profit, with the results reflecting the ongoing credit crunch and falling real-estate market.
Shares of the exchange-listed futures broker MF Global sank as much as 40% the day after announcing that the company will sell shares to raise $300mn to pay back debts.
The US market is in a consolidation phase and it is unlikely to break out until next week's meeting of the Federal Open Markets Committee (FOMC), according to some analysts.
GM and Ford shares declined on forecasts that US vehicle sales slid to a 15-year low this month.
President Bush called for the lifting of a ban on offshore oil drilling. US must produce more oil, and the Congress must face a hard reality, the US President said. "Unless members are willing to accept gas prices at today's painful prices or even higher, our nation must produce more oil, and we must start now," he added.
In a nearly $5 swing from its lows, crude prices ended sharply higher following a report that Nigerian oil workers are threatening to go on strike. Crude oil for July delivery rose $2.67 to settle at $136.68 a barrel on the New York Mercantile Exchange.
Oil traded as low as $131.82 shortly after the government released its weekly inventory report before starting the dramatic rebound in the afternoon. The Energy Department reported that supplies of crude fell 1.2mn barrels last week.
In currency trading, the dollar lost against both the euro and the yen in afternoon trading. The dollar's decline was sparked with the release of a report from the Labor Department that showed increasing food and energy prices had driven up wholesale inflation by 1.4%.
COMEX gold for August delivery was up $6.60 to $893.50 an ounce. In the bond market, Treasury prices gained, lowering the yield on the benchmark 10-year note to 4.13%.
Thursday brings a number of economic reports in the US. The Labor Department reports initial claims for unemployment benefits. The Conference Board, a business research group, releases the Leading Indicator index, which predicts the economy's future performance.
In addition, the Philadelphia Federal Reserve bank announces its regional manufacturing survey for June.
European shares too finished lower. Banks in particular were under notable pressure amid lingering worries about the fallout from the worldwide credit crunch amid weakening economic growth.
UBS, the worst-hit European bank in the credit crisis, fell another 4% after UK activist investor Olivant built up a stake of 2.5% and repeated calls for a major shake-up of the troubled Swiss financial giant.
The pan-European Dow Jones Stoxx 600 index declined 1.5% to 301.74. The UK's FTSE 100 declined 1.8% to 5,756.90, Germany's DAX 30 fell 1% to 6,728.91 and the French CAC-40 slid 1.4% to 4,618.75.
Year-to-date, the CAC-40 is worst of the three, sinking nearly 18%, compared to the 17% fall for the DAX 30 and the 11% drop for the FTSE 100.
In the emerging markets, the Bovespa in Brazil was down close to 2% at 67,090 while the IPC index in Mexico shed 1% at 29,618. The RTS index in Russia added 0.15% to 2402 and the ISE National-30 index in Turkey dropped 1.7% to 46,286.
See-Saw movement to continue
The market, which opened on a cautious note and stayed in a narrow range till the first half of the day, saw a sudden down fall led by the banking, realty and the IT stocks. Sentiments were further dampened after the equity markets across Europe started off with a negative bias. Finally, the BSE benchmark Sensex lost 274 points to close below the 15,500 level at 15,422 and the Nifty index dropped 70 points to close below the 4,600mark at 4,582.
Among the BSE sectoral indices, BSE Realty index (down 3.5%), BSE Bankex index (down 3.4%) and BSE IT index (down 2.3%). On the other side, BSE FMCG index was up 0.3% and BSE Auto index was barely up by 0.2%. Among the 30-scrips of Sensex, 21 stocks ended in negative terrain and only 9 stocks ended in green.
UTV Software edged higher by half a percent to Rs779 after the company announced that it approved the acquisition of Potters stake in Ignition Entertainment Ltd by IG Interactive Entertainment Ltd, wholly owned subsidiary of the company. The scrip touched an intra-day high of Rs814 and a low of Rs773 and recorded volumes of over 1,00,000 shares on NSE.
Sintex Industries ended flat at 383. Reports that the company has acquired network services and tower manufacturing business of Digvijay Communication and Network Pvt Ltd through its 74% Subsidiary, Zeppelin Mobile Systems India Ltd on slump sale basis. The scrip touched an intra-day high of Rs401 and a low of Rs381 and recorded volumes of over 20,000 shares on NSE.
Rajesh Exports slipped 1.2% to Rs86. The company announced its results for the quarter & year ended March 31, 2008. The company posted a net profit after tax of Rs489.39mn for the quarter ended March 31, 2008 as compared to Rs333.35mn for the quarter ended March 31, 2007. Total Income has increased from Rs17946.41mn for the quarter ended March 31, 2007 to Rs25254.04mn for the quarter ended March 31, 2008.
The company posted a net profit after tax of Rs2065.62mn for the year ended March 31, 2008 as compared to Rs1012.84mn for the year ended March 31, 2007. Total Income has increased from Rs68933.93mn for the year ended March 31, 2007 to Rs86670.9mn for the year ended March 31, 2008. The scrip touched an intra-day high of Rs90 and a low of Rs85 and recorded volumes of over 9,00,000 shares on NSE.
Exide Industries dropped by over 4% to Rs71. The board of directors of the company had given their approval, for investment in a second local Lead Smelter upto Rs35crores.
The company acquired 51% shareholding in Leadage Alloys India Ltd located near Bangalore, Karnataka. This Company's core business is to produce various types of Lead and Lead alloys for secondary Lead and Lead concentrates. Leadage Alloys India Ltd is an unlisted public company. The scrip touched an intra-day high of Rs74 and a low of Rs70 and recorded volumes of over 2,00,000 shares on NSE.
Suven Life declined 2.2% to Rs35. The company announced that they commenced Phase I clinical trials of SUVN-502, a potent, safe, highly selective, brain penetrant and orally active antagonist at a nonperipheral, CNS receptor site 5-HT6, intended for the symptomatic treatment of Alzheimer's disease and other disorders of memory and cognition like Attention deficient hyperactivity, Parkinson, Schizophrenia. The scrip touched an intra-day high of Rs37 and a low of Rs35 and recorded volumes of over 5,00,000 shares on NSE.
Plethico Pharma advanced 2.5% to Rs384 after the company announced that it is considering an acquisition in US and Brazil. The scrip touched an intra-day high of Rs408 and a low of Rs380 and recorded volumes of over 33,000 shares on NSE.
GSS America rallied by over 6% to Rs319 following media reports that the company announced plans to buy US Co. for US$130mn in 1-2 months. The scrip touched an intra-day high of Rs343 and a low of Rs302 and recorded volumes of over 17,00,000 shares on NSE.
Tata Comm ended lower by 2.2% to close at Rs421. The company announced that it signed a joint venture agreement with China Enterprise Communication. The scrip touched an intra-day high of Rs448 and a low of Rs417 and recorded volumes of over 1,00,000 shares on NSE.
ICSA India lost 2.3% to Rs384. The company announced that the Board of Non-Conventional Energy Development Corporation of Andhra Pradesh Ltd awarded permission to set up a 20 MW Capacity Wind power project in Anantapur district of Andhra Pradesh.
This will enhance the revenues and shall reduce the Income tax burden of the Company. The scrip touched an intra-day high of Rs407 and a low of Rs383 and recorded volumes of over 25,000 shares on NSE.
Corporate News
Ranbaxy settles worldwide patent litigations with Pfizer over Lipitor. Under the agreement, Ranbaxy will be allowed to sell generic versions of the drug in the US from November 30, 2011. (BL)
ONGC, IOC and Gail have expressed interest in buying ADB's stake in Petronet LNG. (ET)
RCom may initiate criminal proceedings against RIL officials involved in the signing of January 12, 2006 agreement. (BL)
The MSRDC may ask Mukesh Ambani-controlled SeaKing Infrastructure Ltd (SKIL)-led consortium to bring down the concession period for the Rs60bn, 22-km sea link between Sewari and Nava Sheva. (BS)
MTNL has received the international long distance license from DoT. (ET)
Zee Entertainment may list its two divisions Zee Motion Pictures and Zee Limelight on the London Stock Exchange’s AIM. (FE)
Tata Steel and Essar Steel are vying for a majority stake in the proposed joint venture of Indonesia's PT Krakatau Steel to build a 2.5mtpa plant. (BS)
The Government may infuse more capital into Central Bank of India on improved performance. (FE)
RIL has denied it has signed formal gas sale contracts with prospective customers in defiance of a Bombay High Court order. (ET)
M&M plans to roll out "Mahindra" tractors from the Punjab Tractors unit in Mohali. (BS)
The NCD-cum-convertible warrants offer of Indian Hotels faced lukewarm response, forcing the promoters to pick up the unsubscribed portion of just over 80% for about Rs4.8bn. (ET)
Reliance Big Entertainment is in talks with PEs for selling a 10% stake for a valuation of US$5bn. (ET)
Andhra Bank to raise US$300mn foreign currency loan in 2008-09. (BL)
The Leela Palaces, Hotels and Resorts signs a sales and marketing agreement with US-based Preferred Hotel Group. (ET)
MindTree to invest US$45mn in its new software development centre at Mahindra World City SEZ in Maraimalai Nagar. (BL)
Union Bank of India to raise US$2bn through medium term debt from international market for its overseas expansion. (ET)
With the Karnataka High Court approving the Kingfisher Airlines – Deccan Aviation merger, Kingfisher Airlines’ plans to fly overseas soon. (BL)
Moschip Semiconductor has acquired US-based Indigita, the audio and video division of Intellasys. (BL)
Sintex Industries has acquired Digvijay Communications and Networks in the form of a slump sale. (BL)
Citrix to invest US$200mn in its second R&D facility in Bangalore over the next five years. (ET)
Sujana Towers has acquired of 51% stake in an African telecom infrastructure company, Telesuprecon. (BL)
Exide Industries acquires 51% in Bangalore-based lead smelter Leadage Alloys India Ltd. (BL)
Shyam Group and Spanco have sign an agreement with Punj Lloyd to acquire its Internet services company Spectranet. (BL)
Economic News
Infrastructure sector growth dips to 3.6% in April compared to the same month last year. (BL)
Aided by higher TDS collections, the Centre’s net direct tax collections recorded a 71.3% increase during the first two months of the current fiscal to Rs228.4bn against Rs133.4bn in the same period last year. (BL)
India to receive an estimated loan amount of US$9.2bn from the Asian Development Bank between 2008 and 2010 for various development projects. (FE)
The Government to allow only Gujarat companies to export cement. (ET)
The RBI has made it mandatory for RRBs to report all suspicious transactions above Rs1mn to the directorate of financial intelligence as part of exercise to strengthen the anti-money laundering drive. (ET)
The Government reduced prices of complex fertilizers by up to Rs2,296 per ton. (BS)