There are two ways of spreading light: to be the candle or the mirror that reflects it.
Just when the bulls were beginning to see light at the end of tunnel, comes yet another jolt from the US market, mainly on account of grim economic data. The Dow Jones Industrial Average slumped by nearly 300 points after two days of gains. Jobless claims surged and existing home sales slid more than forecast, to touch a 10-year low. Ford shares plunged the most since August 2000 after reporting a loss of $8.7bn, twice as big as analysts estimated.
Markets also tumbled in Europe on the back of weak economic reports, and on Daimler's poor earnings outlook. Meanwhile, Brazil's benchmark stock index slid into a bear market. Markets in Asia are down 1.5-2% this morning. Japan's consumer prices rose at the fastest pace in a decade in June on higher food and gasoline costs. South Korea's economy grew 0.8% in the April-June quarter over the previous quarter.
Coming to the Indian market, the main stock indices broke a five-session rally during which the Sensex had surged by over 2,300 points. Traded volume and turnover were down from Wednesday. Market breadth was negative. Oil & Gas stocks were the only notable gainers. Select Real Estate shares also gained, while the Auto index was flat. Metals, IT, Power, Capital Goods, Banking and FMCG were the top losers.
FIIs were net buyers in the cash segment even as local institutions remained net sellers. Another encouraging factor is that the southwest monsoon appears to have revived over the western parts after a protracted lull. The market could stay firm if the situation on this front keeps improving over the next few days and even weeks. A good kharif harvest will soften the spiraling food inflation.
Meanwhile, talk of the Government pursuing its unfinished reform agenda is gathering momentum. The Finance Minister has made no bones about the Centre's intention to push ahead with bills on insurance, banking and pension. A few divestments through the public issue route are possible. The Government could be tested on this front and one will have to adopt a wait-and-watch approach. Any positive movement on reforms will boost market sentiment.
The fate of the Indo-US nuclear deal too is as yet undecided, though both the sides are keen to close the pact as early as possible. The other worry is that interest rates could inch higher as the RBI may announce further tightening next week despite tight cash conditions in the money markets. We expect the market to fall at open, given the
Key Results Today: 3i Infotech, ABB, Alstom Projects, Ambuja Cement, Andhra Bank, CEAT, Dredging Corporation, Educomp, Engineers India, Gateway Distriparks, Godrej Consumers, Grasim, Gujarat State Petronet, Hindustan Unilever, HCC, i-flex, Indiabulls, Indian Hotels, IndusInd Bank, IPCA Labs, JB Chem, Jindal Steel, Karnataka Bank, Karur Vysya Bank, MRPL, Mphasis, Nagarjuna Fertilizers, Noida Toll Bridge, OBC, Redington, RNRL, RPower, SRF, Tata Power, Union Bank and UB.
FIIs were net buyers of Rs2.73bn in the F&O segment yesterday while the local funds pulled out Rs6.09bn. In the F&O segment, they were net buyers of Rs393.2mn. On Wednesday, FIIs were net buyers of Rs16.36bn in the cash segment. Mutual funds were net buyers of Rs3.34bn on the same day.
US stocks fell sharply on Thursday, as investors reacted to gloomy data on the housing sector and the job market. Financial shares suffered their worst drop in eight years, after home sales slid more than forecast and investor Bill Gross predicted the housing slump will cost banks and brokerages $1 trillion.
Citigroup, Bank of America and Goldman Sachs retreated and shares of builders posted their biggest decline ever as a report showed sales of previously owned homes fell to the lowest level in a decade.
The Standard & Poor's 500 Index dropped the most since June 26, losing 29.65 points, or 2.3%, to 1,252.54. The Dow slid 283.1 points, or 2.4%, to 11,349.28. The Nasdaq Composite Index tumbled 45.77 points, or 2%, to 2,280.11.
Market breadth was overwhelmingly negative. Five stocks fell for each that gained on the New York Stock Exchange.
Oil prices rose $1.05 to settle at $125.49 after falling nearly $4 on Wednesday on continued concerns about reduced demand. Oil has plummeted about $22 from its high of $147.27 set on July 11.
The average price of a gallon gasoline fell 1.6 cents to $4.026 a gallon in the United States, declining for the 7th straight day, according to a daily survey from motorist advocacy group AAA.
In currency trading, the dollar continued to rise against European currencies. The US currency rose against the euro and British pound, but fell slightly against the Japanese yen. COMEX gold for August delivery fell 50 cents to settle at $922.30 an ounce.
Treasury prices rose, bringing the yield on the benchmark 10-year note down to 4.01%.
Across the Atlantic, the pan-European Dow Jones Stoxx 600 slipped 1.6% to 282.21, with selling picking up late in the session after US existing-home sales dropped to a 10-year low. The UK FTSE 100 slipped 1.6% to 5,362.30 and the French CAC 40 fell 1.4% to 4,347.99.
The Ifo Institute's German business climate fell to a three-year low and other European economic indicators also pointed to slowing growth. However, shares of Swiss financial major Credit Suisse jumped after its earnings beat consensus estimates.
Brazilian equities entered into a bear market on Thursday, stoked by a bigger-than-expected interest-rate hike. Mexican stocks fell to a seven-month low following a report of higher inflation.
Brazil's Bovespa fell 3.3% to 57,434.37, its lowest closing level since late January. The benchmark Brazilian equity index has now lost 22% since hitting its high of 73,516.81 on May 20. Mexico's IPC index finished down 2.7% at 26,878.19, its worst finish since Jan. 18.
Markets snapped five day rally on Thursday led by profit booking in the IT and the Metal stocks. Rising rupee again had an impact on the IT stocks and heavyweights like Tata Steel and SAIL led the down fall in the Metal stocks. Finally, the benchmark Sensex sharply fell almost 375 points from day’s high to close at 14,777 losing 165 points and Nifty slipped ~110 points from its days high to close at 4,433 losing 42 points.
Among the 30-scrips of Sensex, 22 stocks were in red and only 8 stocks were in green. Reliance industries, ONGC, HDFC Bank and DLF were among the major gainers. Among the major laggards were, SBI, Infosys, Tata Steel and RCom.
Shares of ACC declined by over 5% to Rs560 after the company’s total Income decreased from Rs19,113.6mn for the quarter ended June 30, 2007 to Rs18,690.3mn for the quarter ended June 30, 2008.
However, it posted a net profit of Rs2714.242mn for the quarter ended June 30, 2008 as compared to Rs3458.333mn for the quarter ended June 30, 2007.The scrip touched an intra-day high of Rs599 and a low of Rs552 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Hindustan Zinc dropped by 3.7% to Rs531 after the company posted net profit of Rs8478.10mn for the quarter ended June 30, 2008 as compared to Rs12,113.60 million for the quarter ended June 30, 2007. Total Income decreased from Rs22,660.60mn for the quarter ended June 30, 2007 to Rs18,530.40mn for the quarter ended June 30, 2008. The scrip touched an intra-day high of Rs563 and a low of Rs525 and recorded volumes of over 71,000 shares on BSE.
Shares of SCI surged by over 5.5% to Rs229 after the company announced that it secured approval from the government to buy four bulk carriers for US$238.2mn. The company will buy Panamax carriers of 80,000 dead weight tons each to replace its old fleet, the government said. The scrip touched an intra-day high of Rs231 and a low of Rs220 and recorded volumes of over 5,00,000 shares on BSE.
Sobha Developers surged by over 4% to Rs264 after the board of directors of the company unanimously decided to issue shares on Rights basis, to the existing shareholders up to Rs3,500mn. The scrip touched an intra-day high of Rs275 and a low of Rs259 and recorded volumes of over 3,00,000 shares on BSE.
Shares of United Breweries rallied by over 14% to Rs320 after the company announced its results for the quarter ended June 30, 2008 with net profit after tax of Rs88.60mn for the quarter ended June 30, 2008 as compared to Rs294.60mn for the quarter ended June 30, 2007. Total Income decreased from Rs1079.70mn for the quarter ended June 30, 2007 to Rs710mn for the quarter ended June 30, 2008. The scrip touched an intra-day high of Rs335 and a low of Rs277 and recorded volumes of over 2,00,000 shares on BSE.
United Phosphorus gained by 3% to Rs320 after the company announced that the board of directors of the company approved a bonus issue of equity shares in the ratio of 1 equity share of the company of Rs2/- each for every 1 equity share of the company held by the shareholders of the company. The Company also announced its Q1 results with net profit of Rs466.30mn as compared to Rs295.30mn for the quarter ended June 30, 2007. Total Income increased from Rs3589.10mn for the quarter ended June 30, 2007 to Rs5536.70mn for the quarter ended June 30, 2008. The scrip touched an intra-day high of Rs348 and a low of Rs313 and recorded volumes of over 4,00,000 shares on BSE.
Reliance Infrastructure plans four JVs with Shanghai Electric. (BS)
ONGC to enter nuclear mining. (BS)
Pantaloon Retail offers 1:10 bonus with differential rights. (BS)
Phoenix Mills to sell 30% in hotel unit for $250mn. (BS)
Scooters India plans to make electric bikes. (Mint)
Despite good sales, Hyundai Motor reported 11% decline in profit on forex losses. (Mint)
Tata’s Nano to be introduced in Q3 FY09 says Ratan Tata. (Mint)
Ajay Mahajan resigns from Yes Bank. (Mint)
M. Damodaran joins the board of Tech Mahindra. (BS)
Gail ties up with BPCL for natural gas. (BS)
Ashok Leyland is seeking shareholder approval to raise Rs9.5bn. (BS)
Gitanjali Gems buys metals company, B Vijay Retail Ventures. (BS)
Kingfisher Airlines has run up a debt of Rs40bn. (BS)
RBI approves merger of SBI and State Bank of Saurashtra. (BL)
Piramal Healthcare to make narcotic input for cough syrup. (BL)
Phillips Carbon Black plans to expand capacity of its Cochin plant to 90,000 tons from 40,000 tons currently. (BL)
Ramco Systems plans R1,730mn rights issue. (BL)
Tata Motors to partner Norway based company to produce electric car. (ET)
Cipla, Ranbaxy and US Vitamin (India) to face Rs15.63bn fine for over-charging customers on price controlled medicines. (ET)
Marico likely to raise prices of flagship brand, Parachute. (ET)
Educomp to acquire 76% stake in A-Plus Education for Rs107.5mn. (ET)
Reliance Infrastructure to tie-up with Chinese banks to fund its proposed US$3bn JV with Shanghai Electric. (ET)
Diageo in talks to acquire 30% stake in Cobra Beer. (ET)
Gujarat Alkalies forms JV with Dow Chemicals for setting up Rs6bn plant in Dahej. (FE)
Government approves Volvo’s proposal to invest US$275mn in their JV with Eicher Motors.(FE)
L&T and Reliance Infrastructure bids for Rs14.40bn mono-rail project. (FE)
SCI secures cabinet nod to buy four bulk carriers. (BL)
Economic Front Page
India relaxes offshore vessel hiring rules for oil explorers; April 2008 order reversed. (Mint)
Government waives licence fee on rural fixed line phones. (Mint)
RBI tells banks to stop excessive credit card charges. (BS)
Wholesale price index rose to 11.89% in the week ended July 12, compared to 4.76% in the same period last year. (ET)
TRAI favours industry-led body for regulating TRP ratings. (BL)
Government to consider ban on two fertilizer inputs, Sulphuric and Phosphoric acid. (ET)
SEBI seeks P-Note detailed information from FIIs. (ET)
Government approves execution of 444MW hydroelectric project in Uttarkhand. (ET)
Indian Railways invited global tenders to select JV partners for manufacturing locomotives and passenger coaches. (ET)
Panel comprising officials from MoF and RBI to review ECB policy shortly. (ET)
Annual Monsoon rains from July 17 to July 23 were 33% below the long term average, said weather office. (FE)
Parliamentary standing committee on finance to hold negotiations with RBI on management of foreign exchange reserves. (FE)
Commerce ministry recommends definitive dumping duty on imported inorganic chemical hydrogen peroxide. (BL)