Look for the ridiculous in everything and you will find it.
The market movement for most part of this week is ridiculous indeed. Bulls failed to extend Wednesday's rally, which turned out to be just a dream. Weakness across global markets and continued spike in crude oil (which crossed $145) weighed down on the sentiment. The outlook today is again wild swings in a narrower range. Among the ridiculous things we are forced to keep watch on includes the somewhat mysterious inflation data, which will be announced at noon. Not surprisingly, inflation is expected to inch further up. There are reports that it could hit 12%. But, even that number may have already been discounted. At least the Finance Minister sees inflation at 13% before it starts softening.
Besides the inflation data, Asian and European markets would be closely tracked. Any improvement there could well lift the spirits here as well. Otherwise, we see bouts of green and red depending on the news flow. For the day, not much fund flow is seen.
The nightmare continues for the bulls, as record crude oil prices coupled with weak global markets countered optimism over a possible Congress-SP alliance. The surprising (or should we say desperate) buyback announced by DLF could not improve the mood, as realty stocks led the slide. The BSE Realty index was down 9.2%.
Other sectors that suffered the most were Metals (8.5%), Power (4.7%) and Banking (4.6%). Even the usually defensive play - FMCG - could not withstand the bear onslaught. The BSE FMCG index was down 4%. The market breadth was highly negative. The only solace (if at all one can take one), was that the fall came on lower volume.
The other encouraging factor for the bulls is that European Central Bank (ECB) President Jean-Claude Trichet has hinted he is done boosting borrowing costs for now. The ECB yesterday raised interest rates for the first time in 13 months, to tame inflation despite an economic slowdown. He played down prospects of series of interest-rate increases, saying that the quarter-point hike will help bring inflation back below 2%. His comments pushed the euro to a one-week low against the dollar. European government bonds rallied as markets scaled back expectations for further rate hike. The news also helped lift European stocks.
On Wall Street too, things were rather okay, as the blue chip Dow Jones Industrial Average bounced back. The June jobs report came mostly in line with expectations and did not have anything alarming. The US market closed three hours earlier than normal ahead of Friday's Independence Day holiday. Crude oil is still above $145 per dollar mark. Asian markets are down marginally, though the Hang Seng and the Straits Times are bucking the trend.
FIIs were net sellers to the tune of Rs6.07bn (provisional) in the cash segment yesterday while the local institutions poured in Rs5.26bn. In the F&O segment, the foreign funds were net buyers of Rs34.48bn. On Wednesday, FIIs were net sellers of Rs3.5bn in the cash segment. Mutual Funds were net buyers of Rs2.99bn on the same day.
US stocks ended mostly higher on Thursday, though the technology shares remained in red. A disappointing sales forecast by graphics chipmaker Nvidia Corp. outweighed speculation that the Federal Reserve will refrain from raising interest rates this year.
The S &P 500 Index finished virtually unchanged at 1262.9 after earlier dipping below 1,252.12, a 20% correction from its Oct. 9 record. The Dow, which closed in a bear market on Wednesday, added 73 points or 0.7% to 11,288.54. The Nasdaq Composite Index lost 6 points, or 0.3%, to 2,245.38.
Market breadth was negative and the volume was modest, with many traders leaving early for the extended weekend. More than five stocks retreated for every three that rose on the New York Stock Exchange.
Nvidia shares plunged 31%, the most since 2004. Freddie Mac tumbled, helping drag the S&P 500 Banks Index to a 12-year low, after saying it is unlikely to raise capital this month. GE and GM advanced after a drop in jobs stoked speculation that the Fed will keep rates steady.
All US financial markets are closed on Friday for the Fourth of July holiday.
All three major stock indices posted declines for the abbreviated week. The Dow lost 0.5%, the S&P 500 lost 1.2% and the Nasdaq lost 3%.
The jobs report was mostly in line with forecasts and the dollar seemed to withstand the rate increase by the ECB, enabling stocks to stabilize. A report on the services sector of the economy though showed continued weakness in the world's biggest economy.
Employers cut jobs from their payrolls in June for the sixth month in a row. But the loss of 62,000 jobs was roughly in line with forecasts. The unemployment rate, generated by a separate survey, held steady at 5.5%, versus forecasts for it to slide to 5.4%.
Meanwhile, the weekly jobless claims report rose more than expected, with the number of Americans filing new claims for unemployment jumping to 404,000 last week.
Separately, the Institute for Supply Management's services sector index, fell to 48.2 in June from 51.7 in May. Economists were looking for a reading of 51. Any reading below 50 indicates contraction.
The ECB lifted its main interest rate to 4.25% from 4% in a widely expected move. However, the euro showed little reaction as Trichet, the central bank's chief suggested that he may adopt a 'wait-and-watch' strategy.
The dollar rose versus the euro and the yen.
US light crude oil for August delivery rose $1.72 to settle at $145.29 on the New York Mercantile Exchange after hitting an electronic trading record of $145.85 earlier. The national average price for a gallon of regular unleaded gas rose to a record $4.098 from the record $4.092 the previous day, according to AAA.
In the bond market, Treasury prices slipped modestly, raising the yield on the benchmark 10-year note to 3.97% from 3.96% late on Wednesday. COMEX gold for August delivery fell $12.90 to $933.60 an ounce.
Bulls that were in absolute control in the previous trading session erased almost all their gains as the benchmark Sensex lost over 550 points. The fall could be attributed to weak global cues and rising crude oil prices. Crude oil hit all time high of US$145.85/bbl.
Among the BSE Sectoral indices all the sectors were in red, with BSE Realty index dropping over 9% in a single trading session followed by BSE Metal index which slipped by 8.5%. Other major losers were, BSE Power, BSE Bankex and BSE FMCG index. Even, the BSE Mid-Cap and the Small-Cap index lost by over 2.5% each.
Finally, the BSE benchmark Sensex lost 570 points to close at 13,094 and the Nifty index lost 167 points to close at 3,925.
Avon Weighing Systems which assembles and sells weighing instruments in India started trading at Rs16 on the BSE against the issue price of Rs10 per share. The scrip finally ended at Rs11.9 translating into a premium of 19% despite a sharp cut in the overall market.
The public issue consisted of 13.7mn equity shares of Rs10 each. Of the total issue, the net offer to the public is of 98.36lakh equity shares aggregating to Rs98.3mn, which will constitute 59.33% of the post issue paid-up capital of the company.
Funds raised through the public issue will partly fund the company’s expenditure plan for setting up a manufacturing facility. The proposed manufacturing plant will be set up at Baddi in Himachal Pradesh with technical assistance from Tanita Corporation of Japan. Avon will be able to enjoy fiscal incentives provided by the Himachal Pradesh government for setting up plant at Baddi.
JSW Steel slipped by over 8% to Rs732. The company announced that crude-steel production increased 22% in the quarter ended June 30 from a year earlier. Output rose to 9,76,000 metric tons. Hot-rolled steel production fell 12% to 5,92,000 tons as the hot-strip mill was shut for 17 days to raise capacity to 3.2 million metric tons from 2.5 million tons this month. The scrip touched an intra-day high of Rs797 and a low of Rs700 and recorded volumes of over 5,00,000 shares on BSE.
Dolphine Offshore was down by over 5% to Rs152. The company announced that it won contract for providing diving services in Malaysia and South East Asia. The scrip touched an intra-day high of Rs164 and a low of Rs148 and recorded volumes of over 2,000 shares on BSE.
Archies rallied by over 10% to Rs97 after the company said that its promoters are not planning to sell controlling stake. However, announced that they are looking in to various and fund raising options. The scrip touched an intra-day high of Rs105 and a low of Rs90 and recorded volumes of over 96,000 shares on BSE.
Tera Software surged by 15% to Rs46 after the company announced that it signed an agreement for Rs241.4mn with director of school education, government of Andhra Pradesh implement of computer education programme in the district of Nalgonda (280 Schools) the period of 5 years.
Another order valued of ~Rs200mn from the governor of state of Rajasthan, acting through secretary planning (IF) department. State government of Rajasthan in consortium with Bartronics India Ltd to implement Bhamashah Financial Empowerment Scheme in Bharatpur Division for 10 Years. The scrip touched an intra-day high of Rs48 and a low of Rs38 and recorded volumes of over 61,000 shares on BSE.
Gujarat NRE Coke plunged by over 13% to Rs107. The company announced that the board of directors would meet on July 18, to consider issue of bonus shares and a rights issue. The scrip touched an intra-day high of Rs125 and a low of Rs106 and recorded volumes of over 39,00,000 shares on BSE.
GMR and GVK group will participate in bids to privatize Chicago’s Midway International Airport (Mint)
The Parikh family has been steadily increasing its holding in Zandu Pharmaceuticals to resist a hostile takeover by Emami Ltd. (Mint)
Reliance Power may take stake in unnamed Australian coal company. (Mint)
Ballarpur Industries lines up $1bn plan to raise capacity. (Mint)
Videocon group picks up stake in Archies Ltd. (Mint)
Nalco seeks to buy Tajik Aluminium. (Mint)
Singapore based GIC Special Investments Pte Ltd will invest Rs9bn in Reid and Taylor (India), a subsidiary of S Kumars Nationwide. (Mint)
Reliance Industries writes a second letter to RCom and MTN; invites RCom for conciliation. (BS)
ONGC JV plans IPO to raise Rs35bn. (BS)
OVL shortlisted for Angolan oil blocks. (BS)
Punj Lloyd wins Rs10.05bn GVK Power order. (BS)
Ashok Leyland June 2008 sales up 10%. (BS)
JSW Steel’s production rises 22% in April-June 2008 quarter. (BS)
Dabur expects 15% growth in sales after implementing new initiative ‘Astra’. (BS)
Sterlite Industries may offer to double Asarco capacity. (BS)
L&T to raise Rs170bn debt. (BS)
RCom plans to raise US$5bn from banks to finance its MTN deal. (ET)
Advanced tax paid by ACC and Ambuja Cement for June quarter declines by 30% and 17% respectively. (ET)
Reliance Industries, Gail to consider setting up US$1.3bn mega petrochemical plant in Qatar. (ET)
Gitanjali Gems in race to acquire US-based Whitehall Jewellers Holdings, for Rs3.5-4bn. (ET)
HCL Technologies to supply engineering service to EADS, Europe. (ET)
PE fund ChrysCapital acquired 7% stake in Amtek Auto for RS2.29bn. (ET)
Gammon Infraprojects bids for port projects worth Rs32bn on the east and west coast. (ET)
Jindal Saw plans to set up modern wagon manufacturing facility in Gujarat. (ET)
Cairn India decides to drill exploration wells in northern Bihar after monsoon. (ET)
Daiichi seeks government approval to subscribe up to 4.9% stake of Ranbaxy’s fully diluted equity. (ET)
Yes Bank raises its PLR by 50bps to 16.5% and deposit rate by 25bps. (ET)
SBI decides to sell pat of its holdings in NSE. (ET)
ICICI Prudential Life enters into partnership with Suvidha Infoserve. (ET)
Sterlite Industries to get break-up fees if Asarco bid fails. (FE)
PNB plans to spend 3.5bn in 12-18 months for expanding branches overseas. (FE)
GTL enters into “Global Supplier Co-Operation Agreement” with Huawei for network services. (FE)
Mastek revises its agreement with Capital Life & Pension to expand its license and service arrangement. (FE)
HPCL looks to secure 30% equity participation in Egyptian E&P blocks. (FE)
Spice Communication withdraws suit against DoT. (FE)
IFC agrees to invest US$1.5mn in Hikal Ltd. (FE)
Designmate has entered into tie-up with Educomp Solutions. (BL)
Siemens to set up facility to manufacture coaches for trains in India. (BL)
Suzlon Energy to invest Rs40bn in Tamil Nadu for setting up cluster of production facilities. (BL)
Greenply to invest Rs3.70bn in 2 new units. (BL)
ICSA India secures order worth Rs1.5bn from electricity board of Uttar Haryana Bijlee Vitaran Nigam. (BL)
Brigade Enterprise wins bid for BPL arm’s land. (BL)
Carborundum Universal to acquire 51% equity stake in Foskor Zirconia Ltd, South Africa. (BL)
Economic Front Page
The Government plans to promote clean-coal power projects for reduction in emissions. (Mint)
India bans export of Maize till October 15, 2008. (Mint)
Government lifts location curbs on industrial units. (BS)
Sikkim government scraps three more hydel projects. (BS)
Steel manufacturers may cut exports in July-Sept quarter. (ET)
TRAI set to recommend tighter licensing for cable services. (ET)
Steel makers agree to cut prices by 10%. (ET)
ECB hikes benchmark lending rate by a quarter points to 4.25%. (ET)
Steel producers to sell less to retailers and increase supply to actual users. (FE)
Railways roll back hike in freight charges. (BL)