It is the way we react to circumstances that determines our feelings.
The bulls reacted strongly to the falling crude prices . For the second time in three days the Sensex gained over 500 points which led to the benchmark closing above 15,000 and Nifty ending above 4,500. And talking of reaction, stocks related to the Indo-US nuclear deal could fall amid reports that the US will terminate the agreement if India conducts a fresh nuclear test. The UPA says this is the internal matter of the US government, and that it would have no impact at the NSG meeting, which is scheduled for today. Prime Minister Dr. Manmohan Singh is believed to have told a meeting of the Congress Working Committee that India has the right to test, and the US has the right to react.
For the day, we expect some cooling as global markets are not that supportive. The bias remains positive though, as FIIs were big buyers on Tuesday. Inflation numbers will be out today after the market closes. There is a likelihood of some more moderation as crude oil has cooled off considerably in the past few days. The Government will also come under pressure to reduce fuel prices if crude slips below $100.
Stock specific action is expected in Moser Baer and Salora International, as the two companies are scheduled to announce new business initiatives today. Tata Motors will surely be among the stocks to watch out for, as it has formally decided to pull out of Singur.
Shares of Austral Coke & Projects Ltd. will get listed on the bourses. The company's IPO was subscribed 1.65 times, mainly due to heavy subscription in the HNI portion. The retail segment was highly under-subscribed while the QIB portion was subscribed 1.29 times. The issue price is Rs 196 per share. One has to see how the stock performs in the wake of the stupendous show put up by Resurgere Mines, which has shot up sharply after listing.
Crude futures in New York slumped as low as $105 per barrel on Tuesday after Hurricane Gustav caused less than expected damage to oil facilities in the Gulf of Mexico. It is hovering around the $109 mark today, which is still considerably lower than the all-time peak of $147, struck on July 11. A further correction in oil prices is likely to boost sentiment for global equities. India will undoubtedly one of the biggest beneficiaries of lower oil prices. So, one has to keep an eye on crude all the time, for it could single-handedly push our market higher from the current levels.
At the same time, one has to be slightly careful, as global markets have actually not reacted very strongly to the softening of crude oil as much as our markets have. One reason could be the deterioration in economic conditions in the industrialised nations like the US, UK, Japan and Europe. Any further bad news on this front might spoil the party for the bulls here. Besides, the macro-economic situation here too is not that healthy either, though India is still better off than its advanced counterparts.
US stocks ended mixed on Wednesday in a choppy session, as falling oil prices, a lackluster growth report from the Federal Reserve and weak auto sales kept investors on tenterhooks.
A stronger-than-expected factory orders report failed to calm investors' nerves about the state of the world's biggest economy. General Motors' smaller-than-expected sales decline was a rare bright spot for the industry, hit by slowing sales.
The S&P 500 slid 2.59 points, or 0.2%, to 1,274.99. The Dow added 15.96 points, or 0.1%, to 11,532.88. The Nasdaq Composite Index slipped 15.51 points, or 0.7%, to 2,333.73.
Market breadth was positive. About the same number of stocks rose as fell on the New York Stock Exchange.
Though US equities have gained from the correction in commodity prices over the past few weeks, especially that of crude oil, there are fears about a recession and the decline in oil prices is adding to those fears.
US light crude oil for October delivery fell 36 cents to settle at $109.35 a barrel, the lowest level since April 7, after tumbling $5.75 a barrel on Tuesday.
The threat of Gustav and other storms had driven prices even higher last week as investors tried to assess the impact it might have on the Gulf coast. Facilities in the area are responsible for roughly 25% of US oil production.
However, Gustav's impact was seen as less devastating than might have been expected and oil prices began slipping anew. Goldman Sachs is still forecasting that crude prices will set new records at around $149 per barrel by the end of the year, due to fundamentals in the oil market.
In the bond market, Treasury prices inched higher, lowering the yield on the benchmark 10-year note to 3.69% from 3.73% late on Tuesday. The dollar gained modestly versus both the euro and the yen.
COMEX gold for December delivery fell $2.30 to settle at $808.20 an ounce after plunging nearly $25 in the previous session.
GM reported that North American sales fell 20.4% in August versus forecasts for a decline of 29%. Shares gained 6%. Other automakers reported worse-than-expected results, including Ford, which said sales fell almost 27% versus a year ago.
Ambac Financial rallied 22% in active New York Stock Exchange trade on signs that it is making progress in rebuilding its struggling business.
Lehman Brothers inched higher on reports that Korea Development Bank has offered to buy a 25% stake in the troubled financial services firm for as much as $5.3bn. In related news, a commodities hedge fund that the company has a 20% stake in will close down after losing 27% in August.
July factory orders rose 1.3%, the government reported, after climbing an upwardly revised 2.1% in June. Fed's semi-annual beige book, which showed that the pace of economic activity has been slow in most of the 12 districts. Consumer spending has been sluggish as well.
Thursday's big news of note will be the August retail sales figures from the nation's chain stores. Also due are: weekly jobless claims, weekly crude supplies, the revised reading on second-quarter productivity and the ISM's reading on the services side of the economy.
European shares declined on Wednesday mid more uncertainty about economic growth, with banks and technology stocks pacing the fall. The pan-European Dow Jones Stoxx 600 index fell 1.6% to 285.58. The UK's FTSE 100 closed down 2.2% at 5,499.70, while Germany's DAX 30 fell 0.8% to 6,467.49 and the French CAC-40 dropped 2% to 4,447.13.
Bulls may be tested
Bulls kept the momentum going on Tuesday and ended with healthy gains. The up trend got another boost after a sharp decline in crude oil prices coupled with firm cues from the European markets saw the BSE benchmark index soar past the 15,100 mark in intra-day trades.
The Auto and the oil marketing stocks were in momentum following a sharp drop in crude oil prices. Crude oil fell as low as US$105.46. The interest rate sensitive stocks were among the major gainers. Finally, the benchmark Sensex closed at 15,049 surging 551 points and the Nifty ended at 4,504 adding 155 points.
PBA Infra was locked at 20% upper circuit to Rs65.50 after media reports stated that the company secured order worth Rs1.22bn. The scrip touched an intra-day high of Rs68.50 and a low of Rs56 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Archies gained by 2% to Rs137 after the company announced that it secured an exclusive tie up with UK's leading brand 'Carte Blanche' to distribute and sell its renowned brand 'Me to you' in India.
The 'Me to You' brand has Tatty teddy, a grey teddy with a blue nose, as its mascot and has been licensed for a number of products including calendars' jewellery, cross-stitch kits, confectionery, apparel and personalized items in more than 70 countries. The scrip touched an intra-day high of Rs141 and a low of Rs131 and recorded volumes of over 11, 00,000 shares on NSE.
Shares of Wipro surged by over 4% to Rs451 after the company announced that it would open Engineering center for Harman International. The center would employ 250 engineers and would provide services to develop Harman developers. The scrip touched an intra-day high of Rs457 and a low of Rs435 and recorded volumes of over 1,00,000 shares on NSE.
Bosch Ltd slipped 3% to Rs4048. The board of directors of the company approved and recommended to the shareholders, proposal to buyback such number of equity shares of the company from existing shareholders from open market "through the Stock Exchange", not exceeding Rs4500/- per equity share. The scrip touched an intra-day high of Rs4350 and a low of Rs4000 and recorded volumes of over 13,000 shares on BSE.
Shares of Suzlon Energy surged by over 5% to Rs229 after the company announced its plans to spend US$1bn on research to develop bigger and more efficient turbines as it battles customer concerns about quality. The scrip touched an intra-day high of Rs233 and a low of Rs216 and recorded volumes of over 19,00,000 shares on BSE.
Shares of Rallis India slipped by 1% to Rs558 after the company announced that it stopped operations at Hyderabad factory. The scrip touched an intra-day high of Rs562 and a low of Rs540 and recorded mere volumes of over 1,000 shares on BSE.
Tata Motors suspends work and plans to relocate out of Singur (ET)
RIL has made a conditional offer to the petroleum ministry to maintain current LPG supplies to IOC, BPCL and HPCL (FE)
NTPC-BHEL Power Projects JV plans to sell up to 50% stake to private companies (BL)
Maruti Suzuki to scale up its R&D work for small car engines from its Indian operations (BL)
M&M is understood to have begun discussions with LCV manufacturer Swaraj Mazda to sell its stake to Japanese major Sumitomo Corporation (ET)
TATA Teleservices continues to have the least congested cellular network among all pan-India telecom operators, according to Trai (ET)
Taro Pharma to appeal in Israel’s Supreme Court against last week’s decision by a district court in favour of Sun Pharma (FE)
Wipro has entered into a partnership with Harman International to provide R&D services in areas such as semiconductor technology, RFID and hardware engineering (ET)
IOC to invest Rs120bn to meet Euro-IV deadline (ET)
Tata Motors will issue shares with lower voting rights ‘A’ on a rights basis at Rs305 per share (BL)
Maruti plans to focus on fuel-efficient cars in future (ET)
Gail is planning to increase its petrochem capacity by 2.5 times to 10 lakh mt with an investment of Rs5bn in five years (ET)
Wipro has renegotiated few contracts at higher prices (DNA)
OIL to invest Rs130bn in 5 years, mulls IPO in November (BL)
Dr Reddy’s Labs is scouting for acquisitions as part of its strategy to handle economic slowdown (BL)
Videocon, Hero Honda, Adani and Sterling Biotech are in talks with UCO Bank for acquiring a 25% stake in the proposed financial services subsidiary (ET)
IOC to raise Rs180bn debt for Paradeep refinery in Orissa (BS)
Ambuja Cement reports 6.9% growth in cement production at 1.20mt in August (BL)
Suzlon to consolidate REpower accounts by December 2008 (DNA)
Titan launches low-priced super fibre watches under its Sonata brand (ET)
Bombay Dyeing to develop eight lakh sq ft of property on its surplus land in Mumbai (ET)
Great Offshore acquires two Hyderabad-based companies for Rs1.6bn (ET)
Kingfisher Airlines is looking to raise US$400mn through equity by March 2009 (BS)
Parsvnath to invest about Rs150mn to build a luxury housing project at Moradabad, Uttar Pradesh (FE)
Archies ties up with UK-based Carte Blanche Greetings to distribute and sell its brand ‘Me to You’ in India (BL)
Apollo Hospitals Group to invest Rs100bn to set up 250 small and medium-sized multi-specialty hospitals over the next seven years (BS)
Sical Logistics to finalise location for Jurong Port JV in 3 months (BL)
Economy Front page
The proposal to raise FDI cap in insurance to 49% from existing 26% has obtained green signal from the group of ministers (GoM) (ET)
CERC has proposed uniform price cap of Rs5 per unit and Rs6 per unit (during 6 pm and 10 pm) for inter-state short-term sale (FE)
Arun Ramanathan, a senior bureaucrat in the finance ministry, is likely to be named the next finance secretary of India (FE)
Coal India to restart 18 underground mines (DNA)
SEBI to allow ETFs based on interest rate futures in early 2009 (ET)
SEBI mulls FII role in currency futures (FE)
Shipping firms that do not have at least 15% of their crew as trainees will be liable for a penalty up to Rs2mn per vessel (ET)
Revenues from coffee exports rises 33% in the first eight months of 2008 (BS)