Confidence is contagious, so is lack of confidence!
It’s not just the ruling government which needs to pass a vote of confidence soon. The market would look at Infosys to give some words of confidence. Most factors will be pushed into the background (though only temporarily) as software major Infosys announces its results today. Traditionally, the company sets the tone for the quarterly results season, especially for the IT sector. A few top companies (like Bajaj Auto) have already announced their results though.
The market is eager to hear what the Infosys management has to say on the emerging challenges for the company, as well as for the sector. There could be a positive surprise on the cards from Infy, as it has lower hedging exposure this time around. This may lift the stock and other IT shares. The company could also up its fully-year guidance. But, the euphoria may not last longer as major headwinds facing the sector are still in place. No harm in enjoying the day.
Coming to the broader market, the trend will remain choppy and will hinge on the news flow from various quarters. It's a mixed bag across global markets. Crude oil remains a big worry amid growing geo-political concerns with Iran testing more missiles.
The local political situation is also tense, though it may not impact the sentiment unless the Government fails the 'Trust Vote'. The prime minister appears confident of winning the vote of confidence. Later in the day we will know the exact date on which the special parliament session will be called.
Being Friday, there is of course the Inflation numbers which will continue to give an excuse for swinging the mood either way. We will also get the IIP data today.
Shares of Lotus Eye Care Hospital Ltd. will get listed on the bourses.
Results Today: Edelweiss Capital, Infosys and Orbit Corp.
FIIs were net sellers of Rs5.52bn (provisional) in the cash segment yesterday while the local institutions too withdrew Rs1.12bn. In the F&O segment, the foreign funds were net buyers of Rs9.14bn. On Wednesday, they pulled out Rs2.88bn from the cash segment.
US stocks ended higher the end of a volatile session. A steep increase in oil prices, coupled with the nagging worries about the health of the financial sector continued to cloud the sentiment.
Concerns about the viability of government-sponsored mortgage buyers Fannie Mae and Freddie Mac were offset by Dow Chemical's big-ticket acquisition of Rohm & Haas and a 10% rise in shares of Alcoa.
In a testimony to the US Congress, Treasury Secretary Henry Paulson assured that Fannie Mae and Freddie Mac remain well capitalized. Paulson and Federal Reserve chief Ben Bernanke also told the Congress that legislation is needed to modernize the nation's financial system.
After swinging up and down throughout the session, the major indexes found some footing late in the day, with the S&P 500 Index rebounding from a two-year low. The S&P 500 added 8.7 points, or 0.7%, to 1,253.39. The benchmark marked its first bear market since 2002 on Wednesday.
The Dow Jones Industrial Average advanced 81.58 points, or 0.7%, to 11,229.02. The Nasdaq Composite Index rose 22.96 points, or 1%, to 2,257.85.
Investors snapped up technology and other shares hit hard in Wednesday's selloff. However, some of those gains dissipated after crude oil spiked more than $5 per barrel, surging over $141 a barrel, on reports that Iran had again tested some missiles and that the cease-fire in Nigeria has ended.
Stocks turned higher again towards the close, as reports quoted Intel CEO as saying that the chip giant has not been hurt by the US slowdown and continues to enjoy strong global sales.
Market breadth was positive. About three stocks rose for every two that dropped on the New York Stock Exchange.
Shares of Fannie Mae and Freddie Ma continued to plunge on worries about a potential collapse. A former Fed president said that the companies were insolvent and may need a government bailout. Fannie Mae lost 13.8% and Freddie Mac was down 22%.
Lehman Brothers lost another 12.4% on ongoing concerns about its solvency after it posted a $3bn quarterly loss last month. Automakers continued to plummet, with GM hitting a 54-year low, despite CEO Rick Wagoner dismissing bankruptcy rumors.
Wachovia said it would report a quarterly loss of between $2.6-2.8bn, prompting Moody's to put the bank's long-term debt rating on review for a downgrade. Shares fell over 8%.
Wal-Mart reported stronger-than-expected June sales, thanks in part to the economic stimulus package. Discounters benefited most from the tax rebates. Alcoa gained 9.7% on reports that Chinese aluminum companies will cut back production to save energy.
US light crude oil for August delivery gained $5.60 to settle at $141.65 a barrel on the New York Mercantile Exchange. The national average price for a gallon of regular unleaded gas fell to $4.104 after holding stead at a record $4.108 for three days straight.
In currency trading, the dollar fell versus the euro and rose against the yen. In the bond market, Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.80% from 3.81% late on Wednesday. COMEX gold for September delivery rose $13.40 to settle at $944.50 an ounce.
Friday brings quarterly earnings from GE, with the Dow company expected to have earned 54 cents versus 53 cents a year ago. Also on the docket Friday: the May trade balance and the July consumer sentiment index from the University of Michigan.
European shares fell. The pan-European Dow Jones Stoxx 600 index dropped 2.1% to 277.95 reversing Wednesday's 1.8% rise. For the year, the index is down 24%, led by a 35% decline from the banking sector.
Germany's DAX 30 fell 1.3% to 6,305.00, while the French CAC-40 dropped 2.5% to 4,231.56 and the UK's FTSE 100 shed 2.2% to 5,406.80.
Markets recovered sharply from their day’s low to end on a flat note. Volatile trading session started off with slight positive bias, however from thereon selling pressure in the index heavyweights like Reliance Industries, ITC, Infosys and ICICI Bank dragged the benchmark Sensex to hit an intra-day low of 13,763.94.
However, bulls made a comeback in late trades managing to recover almost all the losses. The recovery was led by the Metal stocks after China’s 20 biggest Aluminium smelters agreed to cut production by as much as 10%. Stocks like Hindalco, Nalco, Hindusthan Zinc and Tata Steel were among the major gainers.
Finally the Sensex recovered almost 150 points from days low to close at 13,926 losing marginally by 38 points and the Nifty recouped nearly 50 points from days low to close flat at 4,162.
Shares of DLF advanced over 2% to close at Rs458 after the company announced that its board of directors approved the buyback of its equity shares from open market. In a resolution approved by the board, DLF will buy a maximum of 22mn equity shares at a price not exceeding Rs600/share. The company plans to spend Rs11bn on the buyback.
The maximum price fixed for the buyback is at a premium of 33.24% over the last average closing price of the company's equity shares on the BSE and NSE as of July 09, 2008.
Commenting on the buyback decision, Mr. Rajiv Singh, Vice Chairman, DLF said, "The company's aim has always been to maximize shareholder value and we see the share-buyback decision as a highly attractive opportunity for our shareholders. This decision would be value accretive for the shareholders. While we respect the market, we believe that our current share prices do not reflect the intrinsic strength and future growth potential of DLF."
DLF has appointed JM Financial Consultants Pvt Ltd and DSP Merrill Lynch Ltd as the merchant bankers for the buyback.
DLF had hit a 52-week high of Rs1,225 on January 14, 2008 and a 52-wek low of Rs350 on July 2, 2008.
Kale Consultants surged by over 4.5% to Rs41.7 after the company announced a co-creation initiative with bmi, the leading airline operating out of UK to jointly develop a financial decision support system for airlines taking the 2 year bmi-Kale association to the next strategic level. The scrip touched an intra-day high of Rs42 and a low of Rs39 and recorded volumes of over 18,000 shares on NSE.
Sintex Industries was down by 7% to Rs295. The company announced its Q1 results with net profit at Rs565mn (up 71.2%) and net sales at Rs7.15bn (up 107.8%). The scrip touched an intra-day high of Rs326 and a low of Rs292 and recorded volumes of over 2,00,000 shares on NSE.
Era Infra edged lower by half a percent to Rs574. The company announced that it is expanding its horizon in Power Sector. In pursuance of this objective, the company would establish a thermal Power Plant of 1200 MW in the State of Madhya Pradesh.
The company has also initiated relevant steps and procedures for obtaining various clearances and permissions from concerned departments.
The scrip touched an intra-day high of Rs580 and a low of Rs567 and recorded volumes of over shares 11,000 on NSE.
Vakrangee Softwares surged by over 8.5% to Rs188 after the company announced that it secured a project from the Chief Election Commission, Maharashtra Unit for the Delimitation exercise of the said state. Delimitation is the exercise of redrawing boundries of Lok Sabha and Assembly Constituencies to maintain equitable distribution of population across constituencies. The scrip touched an intra-day high of Rs191 and a low of Rs170 and recorded volumes of over 1,00,000 shares on NSE.
Kilburn Engineering was down by 1.2% at Rs28. The company announced that it secured order worth Rs161mn. The scrip touched an intra-day high of Rs29 and a low of Rs26 and recorded volumes of over 7,000 shares on NSE.
DLF says would spend up to Rs11bn to buy back shares at a maximum of Rs600 per share over next 12 months.(TOI)
Suzlon Energy plans to set aside Rs5.9bn to pay client as damages for output losses owing to defective blades.(BS)
Great Offshore lines up US$230mn outlay for acquisition of multi support vessel and jack-up rig.(BL)
SP targets gas policy as Reliance Industries’ KG output nears (ET)
Allied Digital Services acquires 80.5% stake in US based EnPointe Global Services for US$30mn.(FE)
Special Undertaking of UTI set to sell around 17% stake in Axis Bank through block deal.(BS)
Ruias, owners of Dunlop India, buy UK-based Schlegel Automotive. (Mint)
Bharti Airtel adds 2.56mn subscribers in June according to industry data.(BS)
Taro Pharmaceuticals disapproves Sun Pharmaceutical’s open offer as financially inadequate.(BL)
Sterlite Industries and unions representing the workers of US based Asarco agree to acquire all the assets of the bankrupt copper producer.(DNA)
ICICI Bank is considering acquisitions to expand outside India.(TOI)
Bajaj Auto plans two JVs with Renault. (ET)
Ashtavinayak invests Rs9bn in forthcoming movies. (ET)
Jet Airways gets rights to fly to Dubai. (Mint)
Sony Ericsson may buy Spice Mobile. (ET)
WNS (Holdings) buys BPO arm of Aviva for US$228mn.(BS)
ChrysCapital invests $440mn in HCL Technologies and Infosys. (ET)
Apollo Tyres, JK Tyres hike prices by 5%. (ET)
Economic Front Page
Air passenger traffic declines by 4% in the first week of July, for the first time in three years.(BS)
Cement shipments rose 8.7% in June from a year ago, according to industry data.(BL)
Passenger car sales witness 6.1% growth in June.(TOI)
DoT can go ahead with global auction for 3G spectrum says TRAI.(BL)
Boeing to deliver more jets as carriers seek to upgrade fleets. (Mint)
Mall space estimate falls by 1/6th on sagging demand as per Cushman and Wakefield. (Mint)
MNCs may need FIPB stamp to swap shares in local arms. (ET)
Telecom operators tell TRAI not to regulate VAS. (FE)