Honest differences are often a healthy sign of progress – Mahatma Gandhi.
After two days of strong gains and a welcome break, (thanks to Gandhi Jayanthi) the bulls would love to walk ahead if not run. But, like the Mumbai climate this morning, everything seems pretty hazy. The newsflow is quite mixed. While the US Senate has done its bit by passing both, the nuke deal and the $700bn bank bailout plan, the overnight crash on Wall Street and weakness in other global markets could play spoilsport.
Should one invest now or wait for sharper dips. There is a clear difference in opinion all around. However, we can’t progress much debating on the same. Revisiting bear periods of the past may make one believe that the markets could see some upsurge this month and thereafter further pain before finding its bottom. But leave the future aside because we have to worry first for today.
We expect our market to soften at the opening bell. The key indices may turn choppy later in the day, as the global cues will continue to determine the overall market trend. The sentiment will remain jittery due to the uncertainty surrounding the US and other key global economies. What might add to the nervousness will be the inflation numbers and anxiety over the latest quarterly numbers.
Despite the US Senate passing the sweetened financial rescue package, there are concerns as to whether the Bush government's much-hyped measure will be able to avert a recession. With weekly jobless claims soaring to a 7-year high, and factory orders slumping to a 2-year low, the concerns seem to be legitimate. What's worse, some key industrialised economies in Europe and Japan too are staring at a recession. We also have to deal with the choked credit markets. As far as India is concerned, the macro picture remains far from pretty.
In Asian markets, Japan's benchmark Nikkei index sank below the 11,000 level for the first time three years, as export-related stocks and resource shares take a beating. Markets in China and South Korea closed for national holidays.
US stocks tumbled on Thursday, as rising jobless claims and slumping factory orders revived recession fears amid heightened concerns over the frozen credit markets and the fate of the $700bn bank bailout plan.
The S&P 500 Index fell 46.78 points, or 4%, to 1,114.28. The Dow Jones Industrial Average declined 348.22 points, or 3.2%, to 10,482.85. The Nasdaq Composite Index slipped 92 points or 4.5% to 1,976.72.
Market breadth was negative. Almost 14 stocks retreated for each that rose on the New York Stock Exchange.
News of rising weekly jobless claims ahead of Friday's key monthly employment report suggests that the world's biggest economy is now on a slippery road toward a consumer-led recession, said some analysts.
There are still concerns about whether or not the House will pass the financial rescue bill and, even if it does, whether it will be effective. A vote on the bill is expected on Friday. The House shot down the original version on Monday.
Billionaire investor Warren Buffett said that it is crucial to the global economy that the US bailout plan gets cleared by the Congress and added that the $700bn plan may not be enough.
Credit markets remained tight, with two closely watched measures of bank lending jitters at record highs. Treasury prices jumped, lowering the corresponding yields, as investors sought less risky places to put their money.
Weekly jobless claims soared to a seven-year high, alarming investors ahead of Friday's big monthly report. And factory orders slumped to a two-year low.
GE shares slid after the company sold $12bn in common stock Thursday at $22.25 per share, a 9% discount to Wednesday's closing price. The stock failed to benefit from late Wednesday news that Warren Buffett's Berkshire Hathaway will buy $3bn in preferred stock.
Oil prices continued to retreat on bets that slower global growth will keep hitting demand for oil. US light crude oil for November delivery fell $4.56 per barrel to settle at $93.97 a barrel on the New York Mercantile Exchange.
Gasoline prices fell for the 15th day in a row, according to a nationwide survey of credit card activity. COMEX gold for December delivery fell $43 to settle at $844.30 an ounce. In currency trading, the dollar gained against the euro and fell against the yen.
Stocks in Europe ended lower on Thursday. The pan-European Stoxx 600 index, after early gains, ended the session with a 1.4% loss to 254.24. UK's FTSE 100 dropped 1.8% to 4,870.34, while the French CAC-40 shed 2.3% to 3,963.28 and Germany's DAX 30 traded down 2.5% at 5,660.63.
The European Central Bank (ECB), as expected, left its key interest rate unchanged at 4.25% on Thursday.
US Republicans decision of considering a new version of bailout package and buying in the IT, banking, FMCG and select telecom stocks coupled with firm cues from the European markets lifted the BSE benchmark Sensex to close above the 13k mark. The BSE benchmark Sensex gained 205 points to close at 13,065 and the NSE Nifty index gained 29 points to close at 3,950.
Among the 30 components of the Sensex, 24 stocks ended in the green and 6 stock ended with negative bias. Infosys, HDFC Bank, ICICI Bank and HDFC were among the major gainers. However, among the top losers were, Reliance Industries, L&T and DLF.
Among the BSE Sectoral indices, BSE IT index (up 4%), BSE Bankex index (up 3.2%), BSE Consumer Durables index (up 3%) and BSE FMCG index (up 1.5%).
Gremach Infra was locked at 10% upper circuit at Rs54.8 after the company announced that it has found coal in Mozambique. The scrip touched an intra-day high of Rs54.8 and a low of Rs50.1 and recorded volumes of over 65,000 shares on BSE.
Omaxe fell from its high, on the back of profit booking, The stock fell 3% to close at Rs93. The company announced that M/s. Omaxe Infrastructure and Construction Pvt. Ltd, a subsidiary of the company secured a contract for development and construction of township for the new zinc smelter plant at Dariba, Udaipur of Hindustan Zinc Ltd.
Total Built-up Area for the township is 4,50,000 Sq.Fit in a 12.5 Acre Plot and the total Contract Value is Rs907.1mn.
The scrip touched an intra-day high of Rs99 and a low of Rs90 and recorded volumes of over 99, 000 shares on BSE.
Shares of XL Telecom surged by over 12% at Rs141 after 1.9% of its equity traded in a single transaction.
~358,370 shares were sold at Rs136.5 per piece on the BSE. The scrip touched an intra-day high of Rs143 and a low of Rs126 and recorded volumes of over 4,00,000 shares on BSE.
Shares of Alfa Laval surged by over 3% to Rs745 after the company announced that it won an order worth 150mn Swedish Krona (SEK) for three thermal evaporation systems from Vedanta Aluminum Ltd for their expansion project in India. The scrip touched an intra-day high of Rs755 and a low of Rs731 and recorded volumes of over 2,000 shares on BSE.
Aftek gained by 1.5% to Rs33 after reports stated that the board of directors of the company would consider spinning off real estate and infrastructure business. The scrip touched an intra-day high of Rs34 and a low of Rs33 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Moser Baer rallied by over 3% to Rs112 after the company announced that secured customer sales orders worth US$500mn for solar modules. The scrip touched an intra-day high of Rs117.9 and a low of Rs109 and recorded volumes of over 19,00,000 shares on BSE.
Shares of Panacea Biotec gained by 2% to Rs244 after the company announced that that it entered into a strategic alliance with PharmAthene, Inc., Annapolis, MD, US, that includes a strategic equity investment by the company through its wholly-owned subsidiary, Kelisia Holdings Ltd., of US$13.1mn in exchange for the purchase of common stock and warrants in PharmAthene.
The company’s subsidiary has agreed to purchase ~3.73mn shares of PharmAthene common stock at a negotiated price of US$3.50/share. The scrip touched an intra-day high of Rs246 and a low of Rs230 and recorded volumes of over 11,000 shares on BSE.