Let us not look back in anger or forward in fear, but around in awareness.
After a five-day, 2300-point rally in the Sensex, the bulls decided to take stock of the situation. Hence, the correction in the last two days. Friday's serial blasts in IT hub Bangalore made matters worse. Sentiment may get hit further (albeit temporarily) by weekend blasts in Ahmedabad. History shows that stock markets have bounced back in the aftermath of terrorist strikes. We expect history to get repeated today. After a cautious to lower opening, things should start looking up again, especially if oil prices remain stable or fall further, and global markets hold up. Another positive could be the strong revival in monsoon, which should ease inflationary expectations.
Talking of macroeconomics, the market will also be nervous ahead of tomorrow's RBI policy meeting. Given that inflation is still ruling near 12%, the central bank is expected to go for a minor tightening. The recent cooling in crude oil could prompt the RBI to soften its hawkish stance though. In any case, the market has discounted the fact that interest rates will stay high unless inflation falls sharply. Overall, we expect the market to remain choppy and rangebound after the rebound from the 52-week lows. A major downside may not happen unless we get fresh bad news from local or global markets.
Companies that announced their results after the close on Friday or over the weekend will be in action. Among the prominent ones included SBI, ICICI Bank, Reliance Infrastructure, SCI, Gujarat State Petronet, Jindal Steel & Power, Mphasis, Vijaya Bank, Uco Bank, Eicher Motors, Divi's Lab and PTC India.
Key Results Today: Adani Enterprises, Anant Raj, Andhra Cement, Bank of India, BPCL, Bhushan Steel, Blue Star, Bosch, Britannia, Cinemax, Dabur India, Dena Bank, Dewan Housing, Diamond Cables, Dish TV, EID Parry, EIH, Era Infra, Escorts, Genus Power, GSK, Glenmark, HDFC Bank, Hindalco, ICSA India, IOB, Jain Irrigation, Jyoti Structures, KS Oils, Kansai Nerolac, KLG Systel, Kotak India, L&T, Man Industries, Mic Electronics, Monnet Ispat, Mundra Port, Neyveli Lignite, Nirma, Nitin Fire, ONGC, Panacea Biotec, REC, Shiv-Vani Oil, Sterlite Industries, Sun Pharma, Sun TV, Tata Communication, Tata Tea, TVS Motor, Viceroy Hotels, Welspun India, Wockhardt and Wyeth.
FIIs were net sellers of Rs5.66bn in the F&O segment on Friday and the local funds pulled out Rs3.02bn. In the F&O segment, they were net sellers of Rs19.39bn. On Thursday, FIIs were net buyers of Rs5.56bn in the cash segment. Mutual funds were net sellers of Rs4.85bn on the same day.
Asian markets are pretty mixed this morning. The Nikkei in Tokyo and the Hang Seng in Hong Kong were up 0.5% each at 13,405 and 22,779, respectively. The Kospi was down 0.3% at 1592 and the Straits Times in Singapore shed 0.2% at 2916.
The Shanghai Composite index in China jumped 1.7% at 2912 while markets in Taiwan were shut after Typhoon Fung-Wong struck the island. Australia's S&P/ASX 200 index slid 1.5% to 4896.
The MSCI Asia Pacific Index was little changed at 132.93 as of 10:57 a.m. in Tokyo. More than three stocks rose for every two that declined.
US stocks finished largely higher on Friday after a choppy session, as encouraging economic indicators outweighed investors' fears about financials. The bluechip indices managed modest gains on crude oil's decline and upbeat economic data, including a surprising rise in orders for durable goods.
The Dow Jones Industrial Average gained 21 points to end at 11,370, leaving it with a 1.1% loss for the week. The S&P 500 rose 5 points to 1,257, down 0.2% from a week ago. The Nasdaq Composite climbed 30 points to 2,310, leaving the technology-laden index with a weekly gain of 1.1%.
US blue chips fell from their highs - briefly into negative territory - after Standard & Poor's (S&P) said the mortgage meltdown has led to investor fears about the credit positions of government-backed mortgage finance giants Freddie Mac and Fannie Mae.
Though S&P affirmed Fannie and Freddie's AAA credit ratings, the credit ratings firm put the mortgage financers on a negative credit watch list and said it may lower its ratings after a further review.
Market breadth was positive. On the New York Stock Exchange, advancers topped by a 3-to-2 ratio on a volume of 1.3 billion shares. On the Nasdaq, winners edged out losers on a 3-to-2 ratio on a volume of 2 billion shares.
Wall Street investors will see if the market can sustain a rally on Monday, a day devoid of any scheduled economic reports. Kraft Foods and Verizon Communications will report on quarterly earnings before the bell.
Oil prices fell $2.23 to settle at $123.26 per barrel on renewed concerns about demand destruction. Crude oil has plummeted $24 from its high of $147.27 per barrel set on July 11.
The average price of gasoline fell 2 cents to $4.006 per gallon in the United States, declining for the eighth straight day, according to a daily survey from motorist advocacy group AAA. It was gasoline's lowest level since June 7, when the average crossed $4 for the first time.
In currency trading, the US dollar was mixed against global currencies. The greenback rose against the Japanese yen, but fell a bit against the euro and British pound. COMEX gold for August delivery rose $4.50 to settle at $926.80 an ounce.
Treasury prices fell, bringing the yield on the benchmark 10-year note up to 4.11% from 4.01% late on Thursday.
European stock benchmarks ended mixed on Friday. Financials retreated after a profit warning from Munich Re and a prediction from Citigroup that the British economy was about to enter a recession.
The pan-European Dow Jones Stoxx 600 fell 0.2% to 281.76. The UK's FTSE 100 closed down 0.2% at 5,352.60, while Germany's DAX 30 dipped 0.1% to 6,436.71. The French CAC 40 rose 0.7% to 4,377.18.
In the emerging markets, the Bovespa in Brazil dropped 0.4% to 57,199 while the IPC index in Mexico was up 0.8% at 27,084. The RTS index in Russia plunged 5.6% to 1951 and the ISE National-30 index in Turkey slumped 4% 46,110.
Markets witnessed a see-saw session on Friday with key indices sliding sharply at open, bouncing back in the mid-afternoon and once again erasing gains towards the end. The fall could be attributed to weak global cues and heavy selling witnessed in the several index heavyweight stocks.
Barring the FMCG and the Pharma index all the other major BSE Sectoral indices ended with a negative bias. The BSE Realty index was the top loser, slipping 5.7%, followed by Oil & Gas, Realty and Capital Goods index slipping over 3% each.
Finally, the benchmark Sensex sharply fell 502 points to close at 14,272 and Nifty slipped 121 points to close at 4,311.
Shares of Reliance Industries sharply dropped by 7% to Rs2147 on concern increasing competition in its core refining business may curb profit growth. In additions, the company reported that it earned US$15.7 from every barrel of crude processed, which was lower than market expectations.
The company posted a net profit of US$955mn an increase of 13%. Petrochemicals production increased by 4%; Crude processed 8.13mn tons, Increase of 1.5%. The scrip touched an intra-day high of Rs2289 and a low of Rs2132 and recorded volumes of over 20,00,000 shares on BSE.
APIL fell by 2 percent to Rs428. The company announced its Q1 results with net profit at Rs183mn (up 4.5%) and net sales at Rs3.76bn (up 50.4%). The scrip touched an intra-day high of Rs437 and a low of Rs422 and recorded volumes of over 86,000 shares on BSE.
Pratibha Industries gained by 1.6% to Rs212 after the company announced Q1 with net profit at Rs116.1mn and net sales at Rs1.95bn. The scrip touched an intra-day high of Rs222 and a low of Rs210 and recorded volumes of over 33,000 shares on BSE.
Godrej Consumer slipped by 2 percent to Rs120. The company announced its Q1 results with net profit at Rs391mn (up 1.1%) and net sales at Rs3.62bn (up 26.57%). The scrip touched an intra-day high of Rs125 and a low of Rs120 and recorded volumes of over 10,000 shares on BSE.
Shares of MRPL rallied by over 16% to Rs67.45 after the company announced that its Q1 net profit rose by 129% to Rs8,454mn for the quarter ended June 30, 2008 as compared to Rs3,685.5mn for the quarter ended June 30, 2007.
The company’s total Income increased by 44% to Rs10,8113mn for the quarter ended June 30, 2008 compared to Rs75,093.8mn for the quarter ended June 30, 2007. The company also announced its Q1 gross refining margin at US$18.03/bbl which was US$2.33 higher than the market leader Reliance Industries. The scrip touched an intra-day high of Rs69 and a low of Rs55 and recorded volumes of over 1,00,00,000 shares on BSE.
Educomp declined by over 11% to Rs2992. The company posted a net profit of Rs167.7mn for the quarter ended June 30, 2008 as compared to Rs59.6mn for the quarter ended June 30, 2007.
Total Revenue increased from Rs313.6mn for the quarter ended June 30, 2007 to Rs720.9mn for the quarter ended June 30, 2008. The scrip touched an intra-day high of Rs3300 and a low of Rs2950 and recorded volumes of over 1,00,000 shares on BSE.
Shares of HCC declined by over 5% to Rs95 after the company announced its Q1 results with net profit dropping by 11.8% to Rs308.4mn as compared to Rs349.8mn for the quarter ended June 30, 2007. It also incurred losses worth Rs506mn in forex.
However, the company’s total Income increased from Rs7608mn for the quarter ended June 30, 2007 to Rs8783.3mn for the quarter ended June 30, 2008 and also gained Rs618mn from land sale. The scrip touched an intra-day high of Rs100 and a low of Rs94 and recorded volumes of over 18,00,000 shares on BSE.
In the coming week, a lot would depend on the decision of central bank. Further, if the rain gods won’t shower then drought like situations could prove to be another dampener. However, one cannot rule out a bounce back after two consecutive days of downfall. Volatility would be the order in the next week.
Exide Industries to invest Rs1.8bn towards capacity expansion of both automotive and industrial batteries in this fiscal.(BL)
Jindal Infrastructure, part of the JSW group, is setting up a Rs20bn deep-sea port in the Bhadrak district of Orissa.(DNA)
ONGC says it is receptive to the idea of windfall profit tax on oil companies.(BS)
CCEA gives its consent to AB Volvo to own 45.6% stake in the JV with Eicher Motors to produce commercial vehicles and components.(BL)
GE, Westinghouse and Areva are in negotiations with Larsen &Toubro for a possible JV in nuclear power equipment and nuclear power generation.(ET)
BHEL plans to diversify into the manufacture of diesel locomotives, making and refurbishing of oil rigs, defence equipment and casting and forging, according to its CMD.(DNA)
GSPC rejects HPCL’s proposal for stake in the proposed 5-7.5mn tonne LNG terminal at Mundra.(BL)
Reliance Power to borrow US$4bn in ECBs to fund two mega power projects.(BL)
HSBC and ICICI Prudential along with SBI have been short listed to manage about Rs 250bn in provident fund.(TOI)
Reliance Industries, Tata Group and Reliance Power among the nearly two dozen firms that have bid for setting up projects to convert coal into oil.(FE)
Pantaloon Retail plans bonus issue with differential voting rights.(TOI)
Bharat Electronics plans an investment of around Rs15bn in the solar energy space, in a tie-up with Bharat Heavy Electricals.(BS)
Godrej Consumer Products eyeing acquisitions in its home market and abroad.(Mint)
Suzuki Motorcycles India plans to double capacity.(BL)
HCC will spin off four businesses construction, infrastructure development, real estate and the Lavasa project and list them separately.(DNA)
The open offer by Emami for Zandu Pharmaceutical Works has been delayed following queries by SEBI.(ET)
Tata group through Indian Hotels to foray in to Chinese hospitality sector.(TOI)
Federal Bank has bought 5% shares of Catholic Syrian Bank and is in the process of going for a full-fledged takeover.(ET)
Zee Entertainment Enterprises plans to float a film subsidiary, Zee Entertainment Studios; to raise US$210mn for the proposed venture.(DNA)
Suzuki Motors rejects proposal by Tata Motors and Fiat JV to set up a plant to manufacture the 1.3 multijet small diesel engine.(BS)
Maruti Suzuki to roll out new M800 Uniq.(ET)
Kolkata based South Asian Petrochem may scrap its proposed PET resin JV project with Egyptian Petrochemicals Holding Company if the necessary approvals are not received by year end.(BS)
Government is looking at selling half of its holding in NTPC BHEL Power Projects, the newly formed JV.(DNA)
Kingfisher Airlines may sell-off 2 out of 5 A340-500 aircrafts it had committed to buy from Airbus last year.(BS)
ONGC keen to restart exploration on Kochi-Konkan coast.(BL)
IDBI Bank to expand its network both in domestic and overseas markets, besides entering into new businesses like mutual fund, private equity and credit information bureau.(ET)
ADAG in talks with Gujarat government to set up 200MW power project worth an investment of Rs12bn.(BS)
Maharashtra government to recheck godowns of Subhiksha store chain following complaints of violation of hygiene norms.(BS)
Tata Sky has come under the scanner of MRTPC for monopolization of price. (ET)
Omnitech Infosolutions is close to acquiring two companies for a collective valuation of US$20mn.(DNA)
Zoom Developers receives a contract worth Rs4.3bn for construction of four lane Bhopal by-pass road project on BOT basis.(ET)
Reliance Infra to build Rs120bn power equipment plant in JV with Chinese company Shanghai Electric Corporation.(BS)
Essar Power is planning to set up a 500 MW hydel power plant in Bhutan.(ET)
Amtek Group is going in for a major restructuring exercise, to consolidate all its Indian companies under group flagship Amtek Auto. (ET)
Economic Front Page
DoT waives the license fee from revenues earned from fixed line phones in rural areas.(BL)
Tea production in India declines in 2007 due to erratic weather conditions in North and South India.(BS)
Mobile operators cumulatively added 8.94mn wireless subscribers in June.(BL)
The National Pharma Pricing Authority may allow the price increase of 70 drugs including a few antibiotics and life savers.(BS)
Finance ministry rejects aviation ministry’s proposal to levy a specific excise duty on ATF. (ET)
Retail steel prices drop by 6% in the last two weeks; Government says would continue to discourage high steel prices.(FE)
DoT has identified between 51 and 60MHz of spectrum in several service areas that will allow it to offer between 10 and 12 licenses to operators to introduce 3G services.(BS)
New 3G policy would allow global players to 2G services also if they acquire spectrum through auction process.(FE)
Government to fund 80% of R&D projects undertaken by private enterprises in defence sector.(BS)
External borrowings decline to US$4bn in Q1 FY09 as compared to US$8.5bn same period last year.(BL)
Government imposes anti-dumping duty on picture colour-tubes for televisions imported from China, Malaysia, Thailand and Korea. (BS)
RBI asks banks not to charge excessive interest rates on personal loans.(FE)
Cumulative seasonal rainfall for the entire country between 1st June and 23rd July is 2% below the long-period average.(BS)
The country’s first mega power project in the private sector will become fully commercial by August 15th.(BS)