Even a fool knows you can't touch the stars, but it doesn't stop a wise man from trying
Even as the US government is persuading its lawmakers to push through the $700bn bailout plan, comes news that investment guru Warren Buffett is pouring $5bn into the troubled Wall Street titan Goldman Sachs. The investment by Buffett's company Berkshire Hathway in Goldman is likely to act as further cushion to the battered US and global markets. Already, the effects of this news are visible, with US stock futures surging. Shares of Goldman and others of its ilk too have climbed in extended trading. Meanwhile, Japanese giant Nomura has picked up failed US investment bank Lehman Brothers' operations in Europe and the Middle East. Not all news is good though. Reports in the US say that the FBI has opened preliminary investigations into possible fraud involving Fannie Mae and Freddie Mac, Lehman Brothers and the American International Group (AIG).
In India, the bulls may yet again get caught in the whirlwind of the constant news flow emerging from the global markets, especially the US. We expect a cautious start amid anxiety and uncertainty over the US situation. However, given the intensity of the fall on Tuesday, a bounce-back is always on the cards. To add to the volatility, the sun outage (and the protracted session) will commence from today. We also have to contend with the F&O expiry tomorrow.
Inflation numbers will be announced on Thursday and in the next couple of weeks the latest earnings announcements. Overall, the market is likely to remain choppy and will trade in a range of a few hundred points (NSE Nifty). We would advise investors to stick to basics and catch the falling stars for brighter times ahead.
European markets didn't do well overnight and Asian markets are trading mixed this morning. While the Nikkei is down over 1% (it was shut on Tuesday), the Hang Seng is up over 1%. Meanwhile, crude oil is hovering around $107 per barrel.
US stocks slipped further on Tuesday with the Dow Jones Industrial Average back down below 11,000 amid concerns that White House' massive rescue package may get delayed in Congress. Some members of the Senate Banking Committee have expressed skepticism about Treasury Secretary Henry Paulson's plan.
In their testimony on Capitol Hill on Tuesday, both Paulson and Federal Reserve chief warned that the bailout plan must be cleared soon to avoid adverse effects on the US economy and the jobs market.
The US Congress is expected to announce a deal by the end of the week. But, one has to see how things progress on this front even as analysts warn that the credit crunch is going to become far more severe than anybody thought two weeks ago.
After triple-digit rises and declines during the session, the Dow Jones Industrial Average fell 161.51 points, or 1.5%, to end at 10,854.17, with all but three of its 30 components ending in the red.
The S&P 500 index dropped 18.87 points, or 1.6%, to end at 1,188.22, with energy and materials leading the losses that extended to all of the index's 10 industry groups. The Nasdaq was down 25.64 points, or 1.2%, at 2,153.34.
Oil futures slipped after soaring more than $16 in the previous session. Crude oil for November delivery closed at $106.61 a barrel on the New York Mercantile Exchange, down $2.76, or 2.5%, for the session.
Gold futures fell sharply, with the contract for December delivery off $17.80 to end at $891.20 an ounce on Nymex.
Treasury prices gained, sending yields lower, with the two-year note yields off 6 basis points to 2.076%.
The dollar pulled higher. The dollar index , which tracks the greenback against a trade-weighted basket of six major currencies, recently stood at 76.55 from 76.003 in North American trading late on Monday.
Paulson and Bernanke urged senators to quickly approve the plan to prop up the shell-shocked US financial system, saying that the failure to do so would risk the stability of financial markets and the economy.
Some critics on Capitol Hill likened the White House's hurried approach to the financial market crisis to its headlong plunge into the Iraq War
Economic officials and lawmakers are meeting this week in an attempt to hammer out an historic $700bn bank rescue plan that would get bad mortgage bets off bank balance sheets and ultimately loosen up the credit markets.
The move is seen as critical for the stability of the financial sector as the 15-month-old credit crisis stretches on.
US stocks rose in the morning, slipped in the afternoon, rallied again, and then sold off near the close. A selloff in oil, gold and other safe-haven commodities caused investors to bail out of the underlying stocks.
General Motors (GM) continued to slump on worries about its cash position. The stock fell 7.4% as investors continued to fear for its ability to raise capital amid the sluggish auto market.
Across the Atlantic, European shares declined, with banks under pressure yet again. The pan-European Dow Jones Stoxx 600 fell 1.9% to 267.31. The UK's FTSE 100 was down 1.9% at 5,136.12, while Germany's DAX 30 dropped 0.6% to 6,068.53 and the French CAC-40 slid 2% to 4,139.82.
In the emerging markets, the Bovespa in Brazil was down 3.8% to 49,593 while the IPC index in Mexico fell 0.45% to 24,969. Russia's dollar-denominated RTS stock index slipped 2.85% to 1,272 while the ISE National-30 index in Turkey was down nearly 2% at 44,069.
Global gloom to cloud sentiment
Markets extended losing streak to second straight trading session led by weak global cues and selling witnessed in the IT, realty and Capital Goods stocks. Index heavyweights like Infosys, ICICI Bank, HDFC and HDFC Bank. The BSE benchmark Sensex declined 424 points to close at 13,570 and the NSE Nifty index slipped 95 points to close at 4,126.
Among the 30 components of the Sensex 28 stocks ended in the red and only 2 stocks ended with positive bias. Infosys, ICICI Bank, HDFC and HDFC Bank were among the major laggards. Bucking the negative trend were, Tata Power and ACC.
Among the BSE Sectoral indices, BSE IT index (down 5.07%), BSE Realty index (down 4.6%), BSE Consumer Durable index (down 2.4%) and BSE Capital Goods index (down 2.2%). Even the Mid-Cap and the Small-Cap indices lost over 1.5% each.
NIIT Technologies gained by 1% to Rs95 after the company announced that it would offer Cargo handling solutions for Cathay Pacific.
The company would deliver cargo handling solution for Cathay Pacific at their new Cargo Terminal at Hong Kong International Airport. The scrip touched an intra-day high of Rs97 and a low of Rs93 and recorded volumes of over 79,000 shares on BSE.
Lanco Infratech announced that it won Rs3.1bn contract from the Andhra Pradesh Government. LITL slipped by over 7% to Rs208. The scrip touched an intra-day high of Rs223 and a low of Rs207 and recorded volumes of over 6,00,000 shares on BSE.
Shares of Panacea Biotec gained by 1.5% to Rs229 after 13.75 lakh equity shares of the company changed h ands at an average price of Rs228.5 on the BSE. The scrip touched an intra-day high of Rs234 and a low of Rs221 and recorded volumes of over 21,00,000 shares on BSE.
Moser Baer announced that its wholly owned photovoltaic (PV) subsidiary received in full the agreed capital injection of Rs4.15bn from a consortium of global investors to fund the capacity expansion of its high efficiency crystalline silicon and thin film solar verticals.
The Company had announced on September 4, 2008 had announced that it had signed definitive contracts with global investors, including Nomura, CDC Group, Credit Suisse, Morgan Stanley, IDFC PE, and IDFC.
This straight equity transaction values Moser Baer's PV business at over Rs63.50bn and the investors will be entitled to a 6.5% stake in the business.
Shares of Moser Baer had rallied by over 19% on Monday to close at Rs133.5. The stock ended at Rs122 down by 8.5% on the back of profit booking. The scrip touched an intra-day high of Rs137 and a low of Rs120 and recorded volumes of over 40,00,000 shares on BSE.
Punj Lloyd slipped towards the end losing 2% at Rs287. The stock had hit an intra-day high of Rs308 after the company announced that it secured an engineering, procurement, installation and commissioning contract worth Rs36.36bn from Qatar Petroleum. The scope of work includes laying of 211 km of pipeline with associated stations and infrastructure.
Tata Motors announces US$383mn H1 loss at JLR. (FE)
RIL may acquire discovered oil and gas assets abroad. (DNA)
US Committee on Energy and Commerce have asked US Secretary of State to provide details of AIDS drug supplied by Ranbaxy. (ET)
Punj Lloyd bags order worth US$800mn from Qatar Petroleum. (FE)
Cipla unveils Roche’s generic version of anti-infection drug, valganciclovir in India. (BS)
Sun Pharma gets US FDA nod to market generic Paraplatin Carboplatin injection. (DNA)
RNRL plans to invest Rs120bn in cement and shipping business in next three years. (DNA)
Reliance Power plans to enter alternate energy segment, to set-up a 100mw solar power plant. (DNA)
CESC plans to invest Rs240bn over the next four years to boost power generation capacity. (DNA)
Akruti, DLF and Reliance ADAG among others are eyeing commercial development of 45,371 sq. meters of railway land in Mumbai. (BL)
Power ministry approves allocation of gas to the power sector from RIL KG D6 block. (FE)
HPCL appeals to finance ministry for 10% interest rate ceiling on borrowings from public sector banks by the company. (FE)
BPCL in talks with Shell and LNG Petronet to source gas up to 2.5 mmscmd as an alternative to KG basin. (DNA)
Etisalat buys 45% stake in Swan Telecom for US$900mn. (ET)
Maruti Suzuki in talks with Haryana government to acquire land for expanding its R&D operations in India. (DNA)
GSPC arm plans to rope in IFC as an equity partner in the company. (DNA)
Videocon starts major restructuring by cutting down manufacturing location across the country, trimming work force and pruning its brand portfolio. (ET)
Tech Mahindra and TCS eyes Flextronics units. (ET)
Akruti has formalized JV with Gujarat government and NCDEX to re-develop bus terminal and warehousing facilities, respectively. (ET)
BPCL venture to invest Rs22bn in bio-diesel project. (BL)
Nagarjuna Construction secures four new orders worth Rs4.13bn. (BL)
Tata Elxsi signs a MoU with subsidiary of Samtech Group, a Belgium-based company. (BL)
Satyam Computer opens development center in Pune SEZ. (BL)
Alok Industries spin-off its retail operations into a new subsidiary under the name of Alok India Retail Ltd. (BL)
Sanwaria Agro to form a SPV in Latin America to invest in corporate farming of soybean and other oil seeds. (DNA)
Ion exchange in talks with three South African companies for an acquisition. (DNA)
Maruti Suzuki in talks with taxi union in Mumbai to sell Omni as a replacement to ageing Premier Padminis. (DNA)
Balaji Telefilms plans to start Hindi entertainment channel. (ET)
Future Group to launch slew of consumer goods ranging from chocolates to toothpaste. (BL)
Economy Front page
India GSM operators are likely to be charged Rs2.66bn per MHz of spectrum for all the 2G radio frequency they hold over 6.2MHz. (ET)
Employee Provident Fund Organization may withdraw Rs530bn invested in special deposit scheme if the finance ministry doesn’t agree to raise interest rate for the scheme. (ET)
Chairman of India Tea Association says 2009 tea season to see short-fall in output. (ET)
Private companies were able to produce only around 15% of their annual target set in the current Five-Year Plan period. (BS)
Government revives plan to take FIIs out of FDI sector limits. (BS)
SEBI chairman says no move to ban short selling in India. (BS)