The art of living is more like that of wrestling than of dancing; the main thing is to stand firm and be ready for an unseen attack.
The bulls had their time to dance and now it is indeed a daily wrestle for them. Hinterland heroes like wrestler Sushil Kumar and boxer Vijender Kumar have done India proud at the bull ring winning medals at the Olympics. But, market bulls will find it difficult to cope with the blows, bruises and cuts which seem to be coming a bit too often.
We expect a cautious to higher opening and a choppy day ahead amid lack of major positive triggers. Things could turn volatile given the mixed trend across global markets. While the markets in the US and Europe advanced overnight, stock benchmarks in Asia are trading lower after yesterday's strong rally. This, coupled with the economic headwinds, both globally as well as locally, could hamper the progress of the bulls.
Also, the FIIs - who tend to play a big role in determining the market's direction - have been selling continuously over the past few days. Local funds, who have been buying gradually, do not have the strength to offset the outflows from overseas investors. Neither is it their agenda to do so.
Inflation numbers will be released after the market today, and it is likely to inch up slightly from a 16-year high of 12.44%. Any sharp spike in inflation tends to revive fears of further rate increases, which hurts both companies and consumers. Though the macro-economic challenges are quite well known by now, they will continue to cast their shadow on the market, preventing large scale gains.
The NSE would commence trading in futures and options (F&O) in 39 new stocks. Although most market players would welcome the move, the low liquidity in these counters is a bit of a concern. What's more, these stocks have already been gaining ground ever since the announcement was made about 10 days ago
FIIs were net sellers to the tune of Rs4.47bn (provisional) in the cash segment on Wednesday. Local institutions were net buyers of Rs2.06bn. In the F&O segment, the foreign funds were net buyers of Rs3.5bn. On Tuesday, the foreign funds were net sellers of Rs11.36bn in the cash segment. Mutual Funds too were net sellers of Rs1.36bn on the same day.
Asian stocks were mostly down this morning, led by financial companies, after Australia's Babcock & Brown Ltd. posted its first profit decline and amid speculation credit-market losses will widen.
The MSCI Asia Pacific Index lost 0.5% to 122.83 as of 10:51 a.m. in Tokyo, with more than three shares declining for each that advanced. Financial companies were the biggest drag among the measure's 10 industry groups.
The Nikkei ended the morning session down 0.4% at 12,807.13. Hong Kong's Hang Seng index dropped 1.4% to 20,635.23. China's Shanghai Composite declined 1.4% to 2,488.92.
US stocks ended a volatile and low-volume session marginally higher on Wednesday, with rising oil prices lifting the energy sector and upbeat results from Hewlett-Packard helping offset concerns about ailing financial firms.
The S &P 500 Index rose 7.85 points, or 0.6%, to 1,274.54. The advance was limited by 22% drops in Fannie Mae and Freddie Mac on concern they need a government bailout. The Dow Jones Industrial Average added 68.88 points, or 0.6%, to 11,417.43 and the Nasdaq Composite Index rose 4.72 points, or 0.2%, to 2,389.08. Trading volume was low and that added to the volatility in the market. Market breadth was mixed.
Stocks fell in the morning as rising oil prices and worries about Fannie Mae and Freddie Mac overshadowed HP's earnings. But by midday, stocks recovered as oil prices slumped after the government's weekly oil supply report showed a bigger-than-expected jump in crude inventories.
Major stock indices fluctuated in the afternoon, as investors tried to balance competing influences. A last hour run-up in recently battered financial shares helped stocks finish higher. But the outlook for US stocks is expected to remain murky in the weeks ahead due to persistent uncertainty over the health of the financial sector. So, it's going to be hard for US stocks to move much either way.
Oil prices closed just below $115 per barrel on the New York Mercantile Exchange, well off highs above $147 a barrel from a month ago. A fall below $110 a barrel over the next few weeks would give a bigger boost to stocks. But, if that doesn't happen, stocks will remain volatile.
Goldman Sachs has maintained that crude oil will reach $149 a barrel. Fundamentals of supply and demand are still more important in setting oil prices than investor flows linked to movements in the U.S. dollar, Goldman added. Oil rose 0.8% to $115.47 a barrel.
Separately, Goldman Sachs also cut third-quarter and full-year earnings estimates on five brokerages, according to reports, saying that more writedowns are on the way. The companies mentioned were Citigroup, JP Morgan, Lehman Brothers, Merrill Lynch and Morgan Stanley.
HP shares gained 5.7% after the PC maker reported higher quarterly sales and earnings that topped forecasts late on Tuesday. The company also forecast that fiscal fourth-quarter earnings would top current expectations.
In the bond market, Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.79% from 3.83% late on Tuesday. Prices and yields move in the opposite direction. In currency trading, the dollar gained against the euro and the yen. COMEX gold for October delivery rose $1.90 to settle at $812.40 an ounce.
Stocks in Europe ended higher in a low-volume, choppy session. Commodity-sector stocks put in a notably strong performance. The pan-European Dow Jones Stoxx 600 index finished the session up 0.4% to 280.76. The UK's FTSE 100 rose 1% to 5,371.80, while the French CAC-40 climbed 0.8% to 4,365.87 and Germany's DAX 30 gained 0.6% at 6,317.80.
In the emerging markets, Brazil's Bovespa rose 3.2% to 55,377 while Mexico's IPC index gained 0.5% to 26,865. The RTS index in Russia was up 1.7% to 1713 and the ISE National-30 index in Turkey was down 1.8% at 49,178.
Further advance likely
Bulls were back on the bourses as markets finally snapped five day losing streak on Wednesday. It was Bulls day out as benchmark Sensex stayed in the green through out the trading session.
Firm cues from select Asian markets like Shanghai and Hang Seng markets and a positive start in equity markets across Europe boosted the sentiments on Dalal Street. Barring the FMCG index all the other major BSE Sectoral indices ended in positive terrain.
BSE Realty index (up 1.76%), BSE Power index (up 1.7%) and BSE Capital Goods index (up 1.7%) were among the top gainers. Even the mid-Cap and the Small-Cap stocks attracted buying interest as the Mid-Cap index gained 1.04% and ther Small-Cap index added 0.7%.
Finally, the benchmark Sensex gained 134 points to close at 14,678 and Nifty ended 47 points higher to close at 4,415.
Visa Steel surged by over 3% to Rs53 after the company announced that it would spend Rs47.5bn for setting up 2.5mn TPA steel plant in Chhattisgarh. The scrip touched an intra-day high of Rs55 and a low of Rs52 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Kirloskar Electric rallied by over 8% to Rs129 after the board of directors of the company approved acquiring approximately 95% of shareholding of a German manufacturing Company, viz., Lloyd Dynamowerke GmbH & Co. KG (LDW) and acquisition of 100% holding in Lloyd Beteiligungs GmbH from CMP Fonds I GmbH. The acquisition is through the wholly owned subsidiary of the Company - Kirsons B.V. - in the Netherlands.
The scrip touched an intra-day high of Rs142 and a low of Rs121 and recorded volumes of over 64,000 shares on BSE.
National Aluminium marginally gained by half a percent to Rs401. The company announced that it cut prices by 2.9%, the third price cut this month. The price of ingots, the basic product, was lowered by as much as Rs4,000 to about Rs1,32,200 per MT. The scrip touched an intra-day high of Rs406 and a low of Rs400 and recorded volumes of over 64,000 shares on BSE.
WWIL advanced by over 3% to Rs24.7 after the board of directors of the company approved the issue of shares on Rights Basis to the shareholders of the company, upto Rs4.5bn. The scrip touched an intra-day high of Rs25.4 and a low of Rs24.1 and recorded volumes of over 27,00,000 shares on BSE.
Shares of BSEL Infrastructure surged by over 6% to Rs38.9 after the board of directors of the company decided that it would raise the funds not exceeding US$100mn by way of GDR/ADR/FCCB/ and or other securities linked to equity / preference shares and or any instrument or securities representing convertible securities such as NCD / PCD / Bonds / Warrants. The scrip touched an intra-day high of Rs39 and a low of Rs37 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Ansal Properties gained by 1% to Rs106 after the company announced that it would invest about Rs36bn in their soon to be launched IT/ITES SEZs/Parks.
The company currently has approval for setting up IT/ITES SEZs in Greater Noida, Gurgaon and Mumbai. While the IT SEZs have been branded as ‘The Campus', the IT Parks have been christened ‘Net City'. Construction, for some of the projects has already commenced and they are expected to be completed in the next five to seven years. The scrip touched an intra-day high of Rs108 and a low of Rs105 and recorded volumes of over 13,00,000 shares on BSE.
Petron Engineering trimmed early gains and only managed to end 1.5% higher to Rs238 after the company announced that it received a Letter of Intent worth Rs640mn from M/s. Utility Energytech and Engineers Pvt. Ltd, an associate Company of Reliance Energy Ltd, Mumbai, for Erection of Boiler Proper for 2 x 600MW DVC for their Ragunathpur Thermal Power Project, West Bengal. The scrip touched an intra-day high of Rs257.45 and a low of Rs236 and recorded volumes of over 2,000 shares on BSE.
Market may extend gains atleast in the early trades. However, on the whole it is likely to remain sideways and rangebound, as it tries to break free. Persistent concerns over the western financial sector, coupled with fears of recession in key economies and local economic worries will continue to check gains. Adopting a cautious approach and staying stock specific would be a better strategy.
Tata Motors abandons plan to raise Rs30bn through an issue of convertible preference shares, instead, will divest some of its investments (ET)
GSM companies to interconnect with RCOM (ET)
IDEA enters Mumbai, bets on quality edge to gain market share (ET)
ONGC Videsh gets nod for Imperial Energy bid (BS)
RIL mulling a JV with Petrobras to set up two petrochemical units (BS)
Nalco cuts aluminium prices by Rs3,600/ton (DNA)
Infosys CEO says no downward pressure on pricing (FE)
Maruti Suzuki to use K-series engine in all models (BS)
M&M may hike farm equipment prices (BS)
Tata Motors planning electric-drive version of Nano (ET)
Reliance Infrastructure shortlisted for a project is Nepal (DNA)
Wipro and SAP to jointly launch a ready-to-use ERP solution for mid-market Indian companies (ET)
Maruti Suzuki to pump up exports, aims at 2 lac cars annually by 2010-11 (ET)
M&M to launch Logan in Nepal (ET)
Tata BlueScope Steel rolls out retail products (ET)
Raymond-GAS 50:50 JV may come to dead end (ET)
Future Group subsidiary is planning to bring its own brand of skin and beauty products (ET)
ICICI Prudential, HSBC may lead PF caretakers (ET)
Kingfisher may phase out Simplifly Deccan (BS)
Jet Airways cuts flights on Mumbai-San Francisco route (BS)
Godrej Appliances to hold back price hike (BS)
Ansal to invest Rs36bn in developing six IT SEZs (ET)
Great Offshore backs out of Sea Dragon buy (BL)
IOB plans to raise Rs10bn through Tier-II instruments (BS)
Jubilant Organosys to integrate North American operations (BS)
BSEL Infra to raise US$100mn via issue of bonds or equity overseas (DNA)
Escorts to hike tractor prices and expects to clock 10-12% volume growth in year ending September 2008 (BL)
Visa Steel has entered into an agreement with Chattisgarh Government to set-up Rs47.5bn integrated steel plant (BL)
IndusInd Bank acquires Rs1bn micro finance portfolio from SKS Microfinance (BS)
ABG International, parent of ABG Shipyard, to set up cement units in Gujarat (ET)
Asian Oilfield picks up stake in Ensearch Petro, a Singapore-based E&P company (BS)
WWIL to raise Rs4.5bn via rights issue (DNA)
Kirloskar Electric acquires Germany-based LDW, a manufacturer of electric rotating machines and drive systems (ET)
Bartronics has identified three companies in RFID space for a buyout in Europe (BS)
Tata Elxsi to set-up a design studio in UK (DNA)
SCI in talks with foreign firms to start new line of services (BL)
Modern India to raise Rs1bn for its proposed Rs6.75bn IT SEZ (BS)
Economy Front page
FDI cap in DTH may rise to 74% (ET)
Centre to release Rs220bn to fertiliser companies soon, followed by another Rs310bn in three months (ET)
Government may reduce tax incentives to check rising deficits (ET)
Fund houses may soon get to sell insurance cover for a fee (ET)
General insurers may bee allowed to tap capital market this year (BL)
Air fare revision unlikely next month (BS)
Government partially relaxes ban on basmati exports (BS)
Power Ministry proposes PPP model to achieve 11th plan capacity targets (FE)
TRAI seeks regulation over television content (BL)
Centre to notify revised pay rules around August 28th (BS)
Infrastructure jobs up 12% yoy in Q1 FY09, says Assocham (ET)
Banks want higher interest rate subsidy on crop loans (ET)
Government approves 15 new Clean Development Mechanism (CDM) projects (BS)
IT companies to cut marketing spends to keep margins steady (ET)
Tax sops for IT companies setting up shops in Maharashtra’s rural areas (ET)