Jumping to conclusions seldom leads to happy landings.
Yesterday it was IIP. Today it is SEBI Board meet. The bears needed an excuse and they found one to begin with. An erroneous media flash of infrastructure growth figures as IIP numbers caused brief panic in the market. We expect the market to be under pressure again at the opening bell, as most global markets are down on fresh bad news from the western financial sector. But, crude oil has cooled off to $113 per barrel levels, which could encourage the bulls. Things could improve for the mid-cap space as NSE has decided to introduce 39 new scrips in the F&O segment from Aug. 21. Most of the stocks belong to the mid-cap segment. So, expect some positive action later in this space.
The focus however would be on the SEBI Board meeting. Expectations are a review of the Participatory Note (PN) guidelines issued in October 2007. The bulls are likely to be disappointed if the regulator does not relax its stance on PNs. Any negative announcement from SEBI will act as a dampener. On the other hand, lack of bad news from the regulator will be greeted with cheers.
Weak government data on industrial production and six key infrastructure industries for the month of June prompted the bulls to step back for a day on Tuesday. FIIs were the big sellers while local funds too remained largely inactive.
The IIP numbers for June are much better than May, when industrial output had sunk to a six-year low. Consumer durables and non-durables have also bounced back from last year's poor performance. The problem is industrial production growth has halved in the first quarter of FY09 over the year-ago period. At 3.5%, growth of the six core sector industries for the April-June period too has been dismal.
FIIs were net sellers of Rs6.87bn (provisional) in the cash segment on Tuesday and the local funds offloaded shares worth Rs76.5mn. In the F&O segment, the foreign funds were net sellers of Rs8.64bn. On Monday, FIIs were net buyers of Rs4.09bn in the cash segment. Mutual funds were net buyers of Rs4.55bn.
Bangalore-based realty firm Puravankara is expected to make an announcement on a mass housing project.
Asian stocks dropped, sending the region's benchmark index to a two-year low, after Japan's economy contracted and companies reported weaker profit growth. The MSCI Asia Pacific Index dropped 1.3% to 126.18 as of 11:20 a.m. in Tokyo, the lowest level since September 2006.
Japan's Nikkei 225 Stock Average lost 2.2% to 13,006.07. All other benchmark indexes in the region fell apart from Vietnam, which was little changed.
US stocks ended lower on Tuesday after a slew of financial companies warned about the ongoing impact of credit market problems, overshadowing any relief about lower crude oil prices.
The Standard & Poor's 500 Index slid 15.73 points, or 1.2%, to 1,289.59. The Dow Jones Industrial Average decreased 139.88 points, or 1.2%, to 11,642.47. The Nasdaq Composite Index slipped 9.34 points, or 0.4%, to 2,430.61.
Market breadth was negative. Two stocks dropped for each that rose on the New York Stock Exchange. But, trading volume was light.
The major stock indices were in negative territory for most of the day, although the Nasdaq made a few forays into positive zone, thanks to lower oil prices.
The issues plaguing financial shares have recently been offset by a decline in crude oil, which has revived hopes that less expensive energy costs would boost consumer and business spending.
JP Morgan Chase said it may post more credit losses, pushing the worldwide costs for the collapse of the subprime mortgage market to more than US $500bn.
JP Morgan dropped the most since 2002 after saying trading conditions have substantially deteriorated. Goldman Sachs had its worst decline in five months as Deutsche Bank and Oppenheimer cut their profit estimates for the top Wall Street firm.
Wachovia slid 12% and Morgan Stanley tumbled 6.4% as financial shares erased Monday's advance.
Oil prices slipped even as the dollar fluctuated and concerns about supply disruptions in Eastern Europe stayed front and center. BP shut down a Georgian pipeline for safety reasons, although Russia said it has halted its attacks on Georgia.
US light crude oil for September delivery fell $1.44 to settle at $113.01 a barrel on the New York Mercantile Exchange. Crude prices are down over 20% since peaking above $147 a barrel in mid-July.
In the bond market, Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.90% from 3.99% late on Monday. In currency trading, the dollar fell versus the euro and the yen. COMEX gold for December delivery fell $13.50 to settle at $810.80 an ounce.
After the close, Applied Materials reported sales and earnings that tumbled from a year ago due to the tough industry environment. Nonetheless, results edged out analysts' estimates. Shares gained 3% in extended-hours trading.
Wednesday brings key economic reports on July retail sales, June business inventories and the weekly crude inventories report.
In Europe, UK stocks ended an erratic session in the red. The UK FTSE 100 ended the day with a loss of 0.1%, or 7.3 points, at 5,534.5. The pan-European Dow Jones Stoxx 600 index traded down 0.4% at 291.84. Germany's DAX 30 lost 0.4% at 6,585.87, while the French CAC-40 dropped 0.4% to 4,518.48.
In the emerging markets, the Bovespa in Brazil was down 0.4% at 54,502 while the IPC index in Mexico fell 1.1% to 26,636. The RTS index in Russia surged 3.5% to 1803 after Russia ordered an end to military operations against Georgia. The ISE National 30 in Turkey was down 0.6% at 51,172.
Markets snapped a five day winning streak as bears got a boost after core sector data spooked the Indian bulls. India's production at six key industries, which account for a quarter of the nation's industrial production, rose 3.4% in June from 5.2% in the same month a year earlier.
Previous IIP data brought havoc to markets; however, this time Industrial Production figures barely had any impact on Dalal Street. India's industrial production growth accelerated to 5.4% in June from year ago and government also announced that it revised May Industrial Production to 4.1% vs 3.8%.
Finally, the benchmark Sensex lost 291 points to close at 15,212 and Nifty was up 68 points to close at 4,552.
Shares of Trent Ltd rallied by over 10% to Rs545 after the company announced that the board of directors of the company, approved the company entering into an association with Tesco Plc, UK's leading retailer, for the company's Star Bazaar hyper market business which is carried on by Trent Hypermarket Ltd (THL).
Under this association, THL will be entering into a franchise agreement with Tesco. This will facilitate access to Tesco's retail expertise and technical know-how for operation of the hyper-market business. The scrip touched an intra-day high of Rs587 and a low of Rs492 and recorded volumes of over 1,00,000 shares on BSE.
FDC Ltd declined by 7.1% to Rs34. The Board of Directors of the company approved the Buyback of its fully paid equity shares, from the open market, through the stock exchanges, at a price not exceeding Rs40/- per share being 10% of the total paid up capital and free reserves as per audited balance sheet for the year ended March 31, 2008. The scrip touched an intra-day high of Rs38.2 and a low of Rs34 and recorded volumes of over 11,00,000 shares on BSE.
Steel Strips Wheels surged by 4% to Rs121 after the company announced that it has achieved sales of 515,284 Wheel Rims during the month of July, 2008 as against 428,416 wheel Rims during the month of July, 2007, recording a growth of 20%. The company has also achieved production of 518,039 Wheel Rims during July 2008 as against 430,039 during July, 2007 recording a growth of 20%.
The company has also achieved the Export Sales of 38,640 wheel rims during the month of July, 2008 as against 9870 wheel rims during the month of July, 2007, recording a growth of 291%. The scrip touched an intra-day high of Rs123 and a low of Rs117.
IOB slipped by 1.5% to Rs97. The bank announced that the Board of Directors approved the increase of the Benchmark Prime Lending Rate (BPLR) of the bank by 0.50bps from existing 13.5% p.a. to 14% p.a. with effect from August 16, 2008.
The existing housing loans and education loans which are inked to BPLR, existing loans under special credit schemes where fixed rote option is applicable, fresh housing loans upto Rs30 lac and fresh education loans are exempted from the present revision in BPLR. The scrip touched an intra-day high of Rs100 and a low of Rs96 and recorded volumes of over 77,000 shares on BSE.
L&T ended 1.5% lower to Rs2849 . The company in consortium with Global technology partners has secured EPC orders aggregating to Rs38.16bn from various customers in the metals industry.
L&T in the consortium with Outotec, GmbH of Germany for Pellet plant and Paul Wurth, Italia for Blast Furnace has bagged EPC orders worth Rs25.45bn from Tata Steel for 6 MITPA Pellet Plant and 3,800 CuM Blast Furnace at Jamshedpur. L&T's portion is valued at Rs15.78bn. The scrip touched an intra-day high of Rs2930 and a low of Rs2889 and recorded volumes of over 5,00,000 shares on BSE.
Shares of Petronet LNG slipped by 2% to Rs61 after the company announced that it cut output at Indian terminal by 13%, the company said that it cut output on equipment breakdown. The scrip touched an intra-day high of Rs64 and a low of Rs61 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Idea slipped by 2.5% to Rs87 after reports stated that the company may lose as much as Rs3.5bn if it wants to go with its proposed acquisition of equity stake in Spice Communication. The DoT asked the company to surrender its licence in Punjab and Karnataka without getting a refund of entry fee paid for these circles to avoid overlapping of service areas.
While Idea Cellular had recently got licences for the two areas, Spice has been offering mobile services there. According to existing merger and acquisition rules, a single company cannot hold more than 10% stake in two different telecom firms in the same circle. Idea Cellular had announced in June that it was acquiring 40.8% stake, in Spice Telecom for Rs27bn. However, DoT norms do not permit acquisition in overlapping areas, the report stated.
The scrip touched an intra-day high of Rs90 and a low of Rs86 and recorded volumes of over 10,00,000 shares on BSE.
L&T bags orders worth Rs3.8bn from various customers in the metal industry. (ET)
ONGC has received nod from the government to include Pertrobras and Statoil in its KG project. (BL)
According to RNRL, Reliance Industries should pay US$17bn in cash if it fails to supply gas. (ET)
ICICI Bank expects overall credit growth of 15-16% in FY09. (FE)
Reliance Industries to start crude oil output from KG basin in second half of September 2008. (BL)
Indian Bank, IOB and OBC raises PLR by 75bps, 50bps and 25bps respectively. (BS)
ONGC and BHEL have signed a contract to set-up a 726mw gas based power project in Tripura. (FE)
Infosys cuts hiring target for FY09. (ET)
TESCO, UK’s supermarket group plans to enter India through an exclusive franchise agreement with Trent. (ET)
Chrysler has alleged that M&M has copied the front grill design of ‘Scorpio’ from ‘Jeep’. (ET)
Crompton Greaves plans to invest Rs2.2bn in FY09 for expanding capacity. (Mint)
Reliance Retail has tied up with British toy retailer Hamleys Group to set up a nation wide network of exclusive toy stores. (ET)
i-flex bags US$90mn deal from National Australian Bank. (ET)
Satyam Computers has signed a service pact with RelWare. (BS)
Following political disturbances in Pakistan and Nepal, Dabur India is rethinking its strategy for these two countries. (BS)
Videocon, LG, Godrej and others plan to raise consumer durables prices next month or at the start of festival season. (BS)
NDTV Imagine is launching a Bollywood entertainment channel. (BL)
Jindal Rail Infrastructure, a subsidiary of Jindal Saw is setting up a Rs3.5bn freight wagon manufacturing unit at Baroda. (FE)
Colgate-Palmolive India has decided to significantly reduce the number of stock keeping units it says. (MINT)
Federal Mogul buys 51% in Perfect Circle for Rs170mn. (ET)
National Housing Bank is all set to acquire 12.5% stake in Mahindra Rural Housing Finance, a subsidiary of M&M Financial Services. (ET)
Voltas acquires 51% stake in Rohini Industrial Electricals for Rs620mn. (ET)
HTMT to buy two US firms by the year end. (BS)
Sarovar Hotels plans to raise Rs7-8bn through SPV. (BS)
BSEL Infra Realty to consider raising US$100mn to various means. (BS)
SEL Manufacturing Company plans to invest Rs15bn for its capacity expansion programme. (BS)
Max India plans to invest Rs22bn for its expansion plans over the next three years. (BS)
Panacea Biotec bags order worth Rs1.4bn from UNICEF. (BL)
Economy Front page
IIP growth for June 2008 was at 5.4% as compared to 8.9% for June 2007. (ET)
TRAI has said that the decision to allot 3G spectrum to CDMA players without an auction is against the principles of equality. (ET)
Domestic airlines carried 3.04mn passengers in the month of July 2008 as compared to 3.48mn passengers in July 2007. (ET)
Power plant developers building large and UMPPs may soon get to buy equipments without paying customs or excise duties. (ET)
The ministry of corporate affairs is considering ways to bring uniformity between company laws and accounting standards that require companies to declare their foreign exchange losses. (ET)
Core sector growth dips to 3.4% in June 2008 from 5.2% in June 2007. (ET)
Government may cap prices for short term power trades. (BS)
SEBI is expected to review its restriction on P Notes in its board meeting today. (BS)
Government is considering allowing FII’s to invest in IDR. (BS)
Government has ruled out any hike in coal prices in the current fiscal. (BL)
Government has put sugar de-control on back burner following spike in retail sugar prices. (BL)
India is expected to expand its wind base power plant capacity by 6,000mw by 2012.
Maharashtra government has raised special fee by 200% on imported spirits and wine. (FE)
Sasan Power Ltd has requested coal ministry to allocate Semaria coal block to it. (FE)