Challenge is a dragon with a gift in its mouth. Tame the dragon and the gift is yours.
Despite the rise in volatility off late, the bulls have managed to hold off the challenge from the bears. The Sensex is up over 3% over last Friday's levels while the Nifty has gained 2.5%. Both the indices breached major milestones during the week, but have since come off those highs. The Sensex crossed 15,400 but slipped under 15,000 briefly yesterday. The Nifty on the other hand crossed 4600 but went below 4500 in intra-day trade yesterday.
Things have also been volatile globally, with markets trying to break out of the protracted downturn, but unable to ignore the slew of headwinds. The trend is likely to remain choppy over the coming days in the absence of any major market moving events. The key indices are likely to be rangebound and will face resistance at higher levels, as they have rallied around 20% over the past few weeks. Uncertainty continues over the local macro-economic factors and global scenario.
The recent correction in crude oil is the only notable positive for the global markets and will continue to drive sentiment. Inflation and rising interest rates are the other key factors to watch out for. Having said that most of it has been discounted. We expect the market to be cautious at open as most global markets are down. Given the lack of big-ticket events, things will turn volatile later in the day.
FIIs were net sellers of Rs2.23bn (provisional) in the cash segment on Thursday and the local funds pumped in Rs241mn. In the F&O segment, the foreign funds were net sellers of Rs2.26bn.
On Wednesday, FIIs were net buyers of Rs16.29bn in the cash segment. Mutual funds were net sellers of Rs3.8bn.
Asian markets are trading mixed this morning. The Nikkei in Tokyo was down 74 points at 13,050 while the Hang Seng was up only 0.1% at 22,133. The Kospi in Seoul rose by 4 points to 1567 while the Straits Times in Singapore lost 13 points at 2821.
The Shanghai Composite index in China was down 1% at 2697 and the Taiex in Taiwan climbed 1.7% to 7142. The MSCI Asia Pacific Index declined 0.6% to 127.30 as of 10:27 a.m. in Tokyo. For the week, the gauge has lost 2.6%.
US stocks slumped on Thursday as investors considered reports showing higher borrowing costs, weaker spending, rising jobless claims and more bad news on the financial sector.
Financial stocks were hurt by AIG's multibillion-dollar loss and a legal settlement that could cost Citigroup up to $7bn. Investor sentiment was also hit as crude oil prices rose slightly and Wal-Mart announced disappointing sales.
The S &P 500 Index lost 23.12 points, or 1.8%, to 1,266.07, retreating from a six-week high. The Dow Jones Industrial Average dropped 224.64 points, or 1.9%, to 11,431.43. The Nasdaq Composite Index dived 22.64 points, or 1%, to 2,355.73.
Market breadth was negative. More than four stocks dropped for each that rose on the New York Stock Exchange.
A report released in the late afternoon showed that consumer borrowing costs increased in June at the fastest pace in seven months. The selloff seemed to pick up the pace after that.
The number of Americans filing new claims for unemployment last week rose by 7,000 to 455,000. That figure represents a more than 6-year high. meanwhile, the June pending home sales index showed sales rose 5.3% in the month versus forecasts for a drop of 1%.
AIG has posted a steeper-than-expected quarterly loss of $5.36bn due to massive writedowns related to the credit collapse. Shares of AIG fell by over 18%, dragging on the Dow.
Citigroup agreed to buy back over $7bn in auction-rate securities after the New York Attorney General said the company misled investors. Citi shares lost 6%.
Wal-Mart reported July sales at stores open a year or more rose 3%, short of analysts' expectation that sales would grow 3.4%. Wal-Mart shares fell over 6%. Other retailers also reported lackluster sales.
US light crude oil for September delivery rose $1.44 to settle at $120.02 a barrel on the New York Mercantile Exchange after ending the previous session at a three-month low. Oil prices have slipped nearly 20% since peaking above $147 in July.
In currency trading, the dollar was flat versus the euro and inched lower versus the yen. In the bond market, Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.92% from 4.05% late on Wednesday. COMEX gold for October delivery fell $5 to settle at $873.80 an ounce.
European equity markets ended marginally down with losses limited by oil producers, Barclays and insurance giant Axa. The pan-European Dow Jones Stoxx 600 index closed down 0.3% at 286.89. The French CAC-40 closed up 0.2% at 4,457.43, while the UK-based FTSE 100 was down 0.2% at 5,477.50 and Germany's DAX 30 dropped 0.3% to 6,543.49.
In the emerging markets, Brazil's Bovespa fell 0.9% to 57,015.55 while the IPC index in Mexico fell 1.3% to 26,986.98. The RTS index in Russia jumped 1.5% at 1842 and the ISE National 30 index in Turkey was down 1.25% to 51,270.
Markets extended gains to third straight trading session as Indian markets ended with modest gains. Despite all the choppiness, the Sensex and Nifty indices both managed to hold on to their crucial 15,000 and 4,500 levels. Finally, the benchmark Sensex gained 43 points to close at 15,117 and Nifty was added 6 points to close at 4,523.
Shares of ICICI Bank edged higher by half a percent to Rs708 after reports stated that the bank is discontinuing loans for two-wheelers offered at the dealer’s end from August 15.
This Model accounts for the bulk of two-wheeler business for ICICI Bank. This move would impact the two-wheeler business which is already witnessing a slowdown. Currently ICICI Bank disburses around Rs1.8bn of two-wheeler loans every month added reports. The scrip touched an intra-day high of Rs720 and a low of Rs690 and recorded volumes of over 18,00,000 shares on BSE.
Shares of Hindustan Zinc slipped by 1% to Rs582. The company announced that it cut Zinc prices by Rs3,500 per ton and cut Lead prices by Rs6,000 per ton. The scrip touched an intra-day high of Rs599 and a low of Rs577 and recorded volumes of over 22,000 shares on BSE.
Shares of Shiv-Vani-Oil surged by over 5% to Rs575 after media reports stated that the company secured orders worth Rs16.10bn from ONGC for 8 rigs. The scrip touched an intra-day high of Rs608 and a low of Rs536 and recorded volumes of over 2,00,000 shares on BSE.
Corporation Bank marginally slipped by 0.2% to Rs275. The company announced that in order to cope with the impact of increase in the cost of funds, Corporation Bank Benchmark Advance Rate (COBAR) has been revised upward by 50bps from the present level of 13.50% p.a. to 14% p.a. with effect from August 11, 2008. The scrip touched an intra-day high of Rs279 and a low of Rs271 and recorded volumes of over 6,000 shares on BSE.
BHEL slipped down by 3% to Rs1774. According to reports, the company may win orders valued at Rs37bn. The company may win Rs22bn contract from Maharashtra State Power Generation Co. to equip a 1,000 megawatts power plant and a contract worth about Rs15bn from GVK Industries Ltd. for a 540 megawatt plant, reports added.
The scrip touched an intra-day high of Rs1830 and a low of Rs1760 and recorded volumes of over 4,00,000 shares on BSE.
Aksh Optifibre surged by over 2.5% to Rs43 after the company announced that it signed an agreement with BSNL on June 02, 2008 for providing IPTV services in 20 cities.
As per the terms of the agreement, the services in the first city were to be launched within 4 months of the signing of the agreement. Further the company has informed that the said services have been launched in Jaipur on August 04, 2008.
The scrip touched an intra-day high of Rs44 and a low of Rs40 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Petron Engineering rallied by over 6% to Rs256 after the company announced that it received Rs1bn order for Heater Works for CDU / VDU Units for Guru Gobind Singh Refinery Project of M/s. HPCL - Mittal Energy Ltd at Bathinda (Punjab). The scrip touched an intra-day high of Rs279 and a low of Rs250 and recorded volumes of over 57,000 shares on BSE.
Hansen Transmission, owned by Suzlon Energy plans big stake in Shanthi Gears. (Mint)
GM India to firm up plans for used car business in two months. (Mint)
Dabur looks to enter IT products, services. (Mint)
Bharti Airtel to launch Airtel DTH service in eight weeks. (Mint)
Coal India prefers foreign help in revival bid. (Mint)
GMR eyes airports in Eastern Europe. (Mint)
Lanco Infratech plans tie-up with four global firms to bid for railway stations. (Mint)
NTPC seeks government help to combat coal shortage. (Mint)
JK Paper looks to buy plant in South India. (Mint)
BSNL’s union rejects ESOP offer in the company from communications minister A. Raja. (BS)
Government may go ahead with BSNL IPO plan despite union protest. (BL)
SpiceJet-Ross deal runs into credit write-off problems. (BS)
Shiv-Vani wins Rs16.1bn order from ONGC. (BS)
Federal-Mogul plans 7th plan in India. (BS)
Reliance Industries says it will begin producing gas at KG field from December 2008. (BS)
Videocon group clarifies that it will be paying Rs9.5bn to Maharashtra government’s town and industrial infrastructure subsidiary CIDCO for a 100-acre plot in Navi Mumbai. (BS)
Bajaj Auto and KTM to make three vehicles. (BS)
Austral Coke to file defamation charges against Gujarat NRE Coke. (BS)
ITC to hike prices of premium brands. (BS)
SBI may raise rates by 50bps. (BS)
The Bombay High Court asks Company Law Board to pass orders in case relating to Zandu Pharmaceuticals and Emami in 15 days. (BL)
IVRCL arm to borrow more for Chennai desalination project. (BL)
HCC led JV wins Rs13.98bn pipeline order. (BL)
BPCL forays into solar power generation. (BL)
Arcelor-Mittal to invest $1.6bn in Brazil for expansion. (BL)
MRTPC says that Dish TV offer must specify scheme. (BL)
Oil producing companies, ONGC, Reliance Industries and Cairn India may have to share incremental revenues earned beyond US$75 per barrel. (ET)
Titan Industries partners with NGO to recycle old watches. (ET)
Hero Honda hikes prices by up to Rs850 with immediate effect. (ET)
Reliance ADAG venture Big TV secures IPL DTH partnership rights for Rs1.37bn. (ET)
BSNL to launch 3G services by next June. (ET)
HTMT Global in talks to acquire two companies in the US and one in UK. (ET)
Promoters raise their stake in Bajaj Holdings and Investments by 2.5%. (ET)
Tata Tea poised to issue shares of Amalgamated Plantations to a number of leading financial institutions. (ET)
Bank of India, Canara Bank and Corporation Bank raised benchmark rates to 14%. (ET)
Dena Bank hikes benchmark rates to 14.25%. (ET)
Dr Reddy’s Lab scrapped the issue of 8.41mn convertible warrants to promoters. (ET)
Adani Power signs power purchase agreement with government of Haryana for supply of 1,424MW of power for 25 years. (FE)
JSW Energy, Maha Transco to set up 400KV transmission system in the state for an investment of Rs4.75bn. (FE)
Tata Housing, Raheja group to invest Rs5bn on luxury complex in Gurgaon. (FE)
JSW Steel July crude steel output rose 24%. (FE)
Zenith Software to open a centre in Australia. (FE)
Petronet Engineering secures Rs1bn order from HPCL-Mittal Energy. (FE)
ITC Foods foraying into new categories. (FE)
SAIL to sign pact with STX for four bulk carriers. (BL)
SAIL plans coastal movement of imported coal between Vizag, Paradip and Haldia ports. (BL)
Gujarat NRE Coke accuses Austral Coke of false claims in IPO prospectus. (BL)
Promoters hike stake in Man Industries by 5% to 45%. (BL)
Aksh Optifibre signs agreement with BSNL for providing IPTV services. (BL)
KLG Systel establishes office in Singapore to market its power solutions in ASEAN. (BL)
Shiva Cement dispatches of cement in July 2008 grew 6.55%. (BL)
ITC arm acquires 0.5% stake in Ballarpur Industries. (BL)
Economy Front page
Airline firms cut weekly flights by 20% (Mint)
Panel appointed to suggest ways to reduce oil subsidy bill recommends raising oil prices every month. (Mint)
Ministry set to allow captive berths at ports. (Mint)
Japanese firms to launch scaled down versions of their international superbike models. (BS)
Inflation at 12.01% for week ended July 26, 2008. (BS)
Two wheeler companies increase prices in range of Rs800 to Rs2,000 (BL)
The National Pharmaceutical Pricing Authority approves 3-12% hike in prices of five bulk drugs. (ET)
Government plans to allow private healthcare companies to set up medical colleges. (ET)
Cement prices may fall on surplus output. (ET)
Mining Industry seeks a complete withdrawal of 15% ad volarem duty on iron ore. (ET)
Government considering a ban on export of flat steel products including hot and cold roll coils. (ET)
European Central Bank leaves interest rates at 4.25%. (ET)
Bank of England kept main interest rate unchanged at 5%. (ET)
EGoM fails to resolve issue on land ceiling, MAT or compulsory acquisition of land. (ET)
EGoM to take up gas shortage issue for Ratnagiri project on August 13, 2008. (FE)
Revived monsoon trims rain deficit to 1%. (BL)