Without leaps of imagination, or dreaming, we lose the excitement of possibilities. Dreaming, after all, is a form of planning.
Wednesday’s wonderful run may seem like a dream as bulls wake up to a new day. But plans of continuing the up-move could go awry. Crude oil rose to a new all-time high of $144.44 per barrel and may well flirt with the US$150 mark. US stocks had another bad day overnight, as did markets in Europe and other emerging economies. Asia too is weak this morning. FIIs continue to sell. The only positive is that SP could bail the Government out on the Indo-US nuclear deal.
Against this backdrop, and after yesterday's steep jump, we expect the main indices to soften a little bit. Thereafter, the direction would hinge on global factors, particularly on the European markets. The European Central Bank (ECB) is all set to hike rates today to contain inflation. We will also have the US jobs report later in the day. And, of course there is oil, which will continue to dampen sentiment. If the ECB indeed raises rates, the euro will strengthen against the dollar, which may push oil further up.
After a stellar rally, which took most market players by surprise, the bulls were hoping to extend the advance. Especially after being dominated by the bears for most part of the year so far. Some technical analysts suggest that good times may return soon. Their contention is that the Nifty rebounded from a level which marked 50% correction from the lows of May 2004, when the current bull run began.
There's a view among some market experts that the selloff has been overdone and valuations are reasonable. However, when the market faces a slew of headwinds (both local and global) its difficult to digest such theories. Some may argue that the negatives are well known for quite a while. But, the fact remains that they are still very much in place and things could get worse before they start turning better.
FIIs were net sellers of Rs6.68bn (provisional) yesterday even as the Sensex and the Nifty rallied by over 5% each. Local institutions pumped in Rs4.21bn. In the F&O segment, the foreign funds were net buyers of Rs16.87bn. On Tuesday, FIIs were net buyers of Rs1.74bn in the cash segment.
Andrew Yule, Hikal and Prism Cement will declare their results today while Avon Weighing Systems Ltd. will make its stock market debut.
US stocks ended sharply lower on Wednesday, with the Dow and Nasdaq ending in bear market territory on the back of record high crude oil prices, a big slump in GM and nervousness ahead of the jobs report and ECB rate decision.
The S&P 500 slid to its lowest since July 2006 as crude climbed above $144 a barrel. GM shares plunged 15%, to touch a 54-year low after Merrill Lynch warned that bankruptcy is not impossible for the world's No.1 automaker.
Nucor Corp. led the steepest decline in steel shares since 2002 on mounting concerns that the slump in the auto industry will reduce demand and the government said metal orders decreased. Peabody Energy, the largest US coal producer, slid as European prices fell the most since 2005.
The Dow nose-dived 166.75 points, or 1.5%, to 11,215.51. The S&P 500 plunged 23.38 points, or 1.8%, to 1,261.53, extending its 2008 loss to 14%. The Nasdaq Composite Index slid 53.51 points, or 2.3%, to 2,251.46.
More than five stocks fell for each that rose on the New York Stock Exchange.
Both the Dow and the Nasdaq closed at levels that meet the technical definition of a bear market i.e. a drop of at least 20% off the highs. The Nasdaq previously fell into bear market territory in March, when it fell 24% off its highs.
All US financial markets will close early on Thursday and are closed on Friday for the "Fourth of July" holiday.
August crude oil futures set a record high at $144.44 per barrel in extended New York trading after a US government report showed that crude supplies fell last week. It was last trading up 81 cents at $144.38 a barrel.
Crude supplies declined by 2mn barrels to 299.8mn for the week ended June 27, the Energy Information Administration reported. The decline came as refiners used more crude oil to boost production of petroleum products.
The national average price for a gallon of regular unleaded gas rose to a record $4.092 from the record $4.087 the previous day, according to AAA.
In currency trading, the dollar fell versus the euro and the yen. In the bond market, Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.97% from 4.00% late on Tuesday. COMEX gold for August delivery rose $2 to settle at $946.50 an ounce.
Factory orders rose 0.6% in May, after rising a revised 1.1% in April. That was above economists' forecasts for a rise of 0.5%.
Private sector employment slumped in June, with employers cutting 79,000 jobs from their payrolls after adding a revised 25,000 in May, according to payroll services firm ADP. Economists expected employers to cut 20,000 jobs.
Microsoft has approached other media companies about the possibility of partnering to buy Yahoo's search business, according to a Wall Street Journal report. News Corp. and Time Warner were among the companies approached, the paper said. In May, Microsoft abandoned its $47.4 billion bid for Yahoo.
Blockbuster said its withdrawing its more than $1 billion bid for Circuit City because of poor market conditions. UnitedHealth Group warned that 2008 profit won't meet previous forecasts due to higher costs and weaker business.
Starbucks said late on Tuesday that it will close 600 stores, or 8.5% of its 7,100 stores, expanding an initial plan to close 100 stores.
After the close, Nvidia warned that current-quarter sales won't meet forecasts due to slower global demand. The graphics chipmaker also warned that its gross margin won't meet forecasts. Shares slumped 20% in after-hours trade.
European markets finished lower ahead of an expected rate hike by the ECB. The pan-European Dow Jones Stoxx 600 index lost 0.8% to 280.69, extending the 2.2% loss made on Tuesday. The UK's FTSE 100 closed down 1% at 5,426.30, while Germany's DAX 30 fell 0.2% to 6,305.42 and the French CAC-40 lost 1% to 4,296.48.
Jean-Claude Trichet and fellow members of the ECBs rate-setting governing council are most likely to announce a quarter-percentage-point increase in the euro-zone's key interest rate today.
Inflation pressures have mounted in the eurozone, with annual consumer inflation hitting 4% in June, more than double the ECB's target of just less than 2%. ECB's official lending rate is at 4%.
Brazilian and Mexican stocks slid to their lowest levels in more than three months. Brazil's Bovespa stumbled 3.6% to 61,106.22. Mexico's IPC index fell 1.8% to 28,680.83 yesterday.
In other emerging markets, the RTS index in Russia rose 0.6% to 2255 while the ISE National-30 index in Turkey gained 1.6% to 40,376.
Indian bourses snapped a four day losing streak as a sudden burst of short-covering and bargain hunting at lower levels in late afternoon trade saw the benchmark index to close above the 4,050mark.
It was a highly volatile session with benchmark indices witnessing wild gyrations throughout the trading session. Finally, the BSE benchmark Sensex surged 702 points to close at 13,664 and the Nifty index was up 196 points to close at 4,093.
ACC ended lower by half a percent to Rs502. The company announced in the month of June, the cement production was 1.75mn tonnes and cement despatches was 1.79mn tonnes as compared to cement production of 1.70mn tonnes and Cement despatches of 1.70mn tonnes in June 2007.
In June 2008, the cumulative cement production was 10.57mn tonnes and cement despatches: 10.61mn tonnes as compared to cement production of 10.21mn tonnes and Cement despatches of Rs10.2 mn tonnes.
ABB gained by over 3.5% to Rs798 after the company on Tuesday announced that it secured order worth Rs3.1bn from IGIA, Delhi. The scrip touched an intra-day high of Rs825 and a low of Rs711 and recorded volumes of over 9,00,000 shares on NSE.
Akruti City surged by over 19% to Rs799 after the company posted a net profit of Rs2992.692mn (up 287%) for the year ended March 31, 2008 as compared to Rs772.220mn for the year ended March 31, 2007.
Total Income increased from Rs1985.842mn for the year ended March 31, 2007 to Rs47045.557mn for the year ended March 31, 2008. The scrip touched an intra-day high of Rs800 and a low of Rs625 and recorded volumes of over 71,000 shares on NSE.
Glenmark Pharma advanced by 3.5% to Rs629 after the company announced that it established a new company in Poland and has acquired a product portfolio of 7 established brands. The scrip touched an intra-day high of Rs639 and a low of Rs606 and recorded volumes of over 1,00,000 shares on NSE.
Sobha Developers surged by over 5.4% to Rs277. The company announced that Dubai’s Pan Atlantic would invest US$10mn in Sobha’s India Project and would hold 40% in the project. The scrip touched an intra-day high of Rs288 and a low of Rs244 and recorded volumes of over shares 1,00,000 on NSE.
FDC gained by a percent and half to close at Rs25after the company announced that it has secured USFDA approval for Ciprofloxacin Ophthalmic. The scrip touched an intra-day high of Rs25 and a low of Rs23 and recorded volumes of over 1,00,000 shares on NSE.
Sterlite Industries spurted by over 6% to Rs715 after reports stated that Asarco LLC, a U.S.-based bankrupt copper producer, may sell its assets to Sterlite for at least US$2.6bn in an auction this year. The scrip touched an intra-day high of Rs722 and a low of Rs655 and recorded volumes of over 4,00,000 shares on NSE.
Bharti Airtel in talks to acquire Kuwaiti Telecom major, Zian a US$5.9bn company. (FE)
RCOM may buy stake in MTN directly, likely to float a SPV for buying stake. (ET)
Reliance Power Ltd claims that it would expedite the commissioning of the six units of its Sasan ultra mega power project by 16 to 36 months. (BL)
US bankruptcy judge allows Asarco's parent Grupo Mexico to come up with a revival package, a setback to Sterlite’s US$2.6bn bid. (BS)
Sterlite to get break–up fees if Asarco bid fail. (ET)
NTPC and PFC have entered into a memorandum of agreement for financing NTPC’s ongoing capacity addition program across the country. (BL)
Foreign firms like Ineos and Mitsui in the race for equity stake in ONGC's Dahej project. (BS)
Holcim, though its investment subsidiary Holderind Investment and Ambuja Cement, has acquired 4.62% stake in ACC by way of creeping acquisition. (BL)
HPCL proposes to develop bio-fuels for aircraft engines, namely bio-jet, from ethanol, bio-diesel and bio-butanol through a collaborative R&D project. (FE)
Citra Developers Ltd, a 100% subsidiary of Indiabulls Real Estate, has withdrawn its Rs6.8bn bid for 134 acre PAL-Peugeot land in Dombivli Kalyan. (BL)
ABB has won Rs3.1bn order for a new terminal T3 at Indira Gandhi International Airport in Delhi. (BL)
Reliance ADAG group has picked by 26% stake in Riyada, a Saudi Arabia based financial services company. (ET)
Tata’s likely to cut Nano publicity on rising costs. (ET)
Dabur India increases 5% prices across most product categories.
The Bajaj family plans to sell its 69.49% stake in Hercules Hoists for over US$100mn. (BS)
Minister’s panel to hasten NTPC’s troubled Rs87bn Barh Stage I project.(ET)
Essar Steel compensated with US$45.3mn for withdrawing its bid for US steel maker Esmark. (BS)
IFC to invest in port management company Ocean Sparkle. (TOI)
Sobha Developers received US$10mn in FDI from Pan Atlantic of Dubai as investment in the SPV created to build a residential project. (BS)
Videocon to buyout majority stake in Archies. (ET)
BGR Energy Systems Ltd bagged an order worth Rs31bn from the Tamil Nadu Electricity Board to construct a 600MW thermal power plant in Tamil Nadu. (BS)
EMCO plans to set-up 600MW coal plant in Chhattisgarh. (ET)
Aurobindo Pharma is setting up a formulation unit in Saudi Arabia in a joint venture with a local company. (BL)
Piramal Healthcare acquires PlasmaSelect AG a Germany based company. (FE)
Glenmark Pharmaceuticals has inked a deal with Iceland’s Actavis and its Polish affiliate Biovena to acquire seven pharmaceutical brands in Poland. (BL)
Piramal Healthcare buys global rights on Haemaccel. (BL)
Solar Semiconductor signs US$1.2bn delivery pact with SolarWorld. (BL)
Vijay Mallya may acquire a stake in SpiceJet. (TOI)
PSL lines up US$60mn capex and is raising its Sharjah unit capacity. (BL)
Economic Front Page
The Centre has decided to initiate decontrol of the sugar industry from the new crushing season, beginning October. (BL)
The Government may ease service tax norms for truckers. (BS)
The Karnataka government set to scrap Rs300bn petroleum, chemicals and petrochemicals investment region (PCPIR) project. (BS)
The steel ministry has summoned steel producers to discuss retail prices and export figures. (BS)
PF Act likely to cover firms with 10 employees. (BL)
The soaring global food prices will adversely impact government finances in countries like India, says S&P. (FE)
The Government to liberalizing the 10% mandatory cap on price hike of drugs outside the price control. (ET)
India to have 737mn mobile users by 2012, says Gartner. (ET)
3G spectrum auctions not before the year end. (TOI)
There is no threat from Blackberry services, says Telecom Secretary Siddharth Behura. (FE)