Where we have strong emotions, we're liable to fool ourselves.
Some corporates may allow themselves to get emotional. But don’t try it with your holdings. There are challenging times when you need to let go of things close to you for your own survival. Such is the condition of the markets too. The bulls appear to be in a mood to add some greenery to the dry indices. Last afternoon they made their presence felt which helped the key indices recover after the BSE Sensex nearly breached the 10,000 mark. What could boost the sentiment is that the traded volume and turnover improved sharply over the previous day. We expect the market to open higher today following the overnight rebound in US shares. Another catalyst could be the continuing moderation in inflation and easing of the liquidity crunch in the domestic money markets.
Remain on guard as the market breadth was negative. These gains and green are just moments to charge you up and give hope that all is not lost. Don’t use it to make any fresh entry. Also, Asian markets are pretty mixed this morning, with only the Nikkei in the green (up 1.5%). Stock benchmarks in Europe and elsewhere remained under pressure. In addition, the macro picture is getting bleaker, with the excise duty receipts dropping 4% in September and several companies reportedly contemplating production cuts. The veracity of the government's data on IIP and Infrastructure growth is questionable. Like someone mentioned, ‘Just as there are no atheists in a foxhole, there are no economic fundamentalists in a crisis like this.’
Already, think tanks like CMIE and NCAER, and some brokerages have slashed their estimates for FY09 GDP. The Government and the regulators are doing their bit to shore up the banking system and check the slide in stocks. Further steps may be announced over the next few days if the situation so demands. But, the joker in the pack will continue to be global markets. And it’s not funny.
Watch out for the SEBI data on overseas lending by FIIs. On Wednesday, the market watchdog had asked FIIs and their sub-accounts to give information on lending of shares abroad and asked them to furnish details twice a week, on Tuesday and Friday. The first data will be provided today on SEBI's website, covering activity between Oct. 10 and Oct. 14.
FIIs were net sellers of Rs11.6bn (provisional) in the cash segment on Thursday while the local institutions poured in Rs7.38bn. In the F&O segment, the foreign funds were net sellers at Rs8.47bn. On Wednesday, FIIs were net sellers of just Rs8.4bn in the cash segment, taking their total outflows this year to above $11bn.
Key Results Today: Elecon Engineering, Fag Bearing, Goa Carbon, HDFC, India Infoline, JK Paper, Madras Aluminium, Mysore Cements, Novartis India, Panacea Biotec, Satyam Computer, Tata Coffee, Tata Elxsi, Zenotech Labs and Zensar Tech.
With oil prices tumbling 50% from the all-time peak of US$147 per barrel, oil producers' cartel OPEC is reportedly contemplating cutting group output at an emergency meeting in Vienna next week. According to the Finance Times (FT), OPEC has brought forward to next week an emergency meeting to consider a cut in production after oil prices dropped to less than US$70 a barrel for the first time in more than a year on worries about a global recession.
A late rebound helped US shares close higher on Thursday after a volatile day, as a steep fall in oil prices gave investors a reason to snap up shares battered in the recent selloff. After trading in a 815-point range, the Dow Jones Industrial Average rallied higher in the final hour, rising 401 points, or 4.7%, to end at 8.979.26. At one point, the blue chip barometer was down almost 400 points.
The S&P 500 climbed 38.59 points, or 4.3%, to 946.43, while the Nasdaq Composite gained 89.38 points, or 5.5%, to 1,717.71. The three main indices had been on both sides of the breakeven point throughout the morning. About four stocks gained for each that fell on the New York Stock Exchange.
US stocks fell in the morning on a couple of weak manufacturing reports and Merrill Lynch and Citigroup's losses. But the selling eased up after the major indices dipped close to last week's multi-year lows - which some market experts reckon could represent a bear market bottom.
In the last hour of trade, stocks rallied sharply, reversing the recent trend of selling off near the close. The market also seemed to benefit from a slump in commodities. The dollar strengthened versus other major currencies and the credit market showed some signs of loosening.
But, investor fear remains at an all-time high, with the CBOE Volatility (VIX) index rising to a record 81.17 on Thursday afternoon before pulling back a bit.
Oil prices continued to slide after the US government's weekly inventory report that showed a bigger-than-expected gain in crude and gasoline supplies. US light crude oil for November delivery fell US$4.65 to settle at US$69.85 a barrel on the New York Mercantile Exchange. The contract fell as low as US$68.57, the lowest level since August 2007. Gasoline prices fell another 4.1 cents overnight, to a national average of US$3.084 a gallon.
Treasury prices inched higher, lowering the yield on the 10-year note to 3.93% from 3.95% late on Wednesday. COMEX gold for December delivery plunged US$34.50 to US$804.50 an ounce. A variety of other commodities declined as well. In currency trading, the dollar rose against the euro and the yen.
Production at US factories fell by the largest amount in nearly 34 years, the Federal Reserve said. The decline was due largely to the impact of hurricanes Gustav and Ike on the Gulf Coast industry. Meanwhile, the Philadelphia Fed index, a regional reading on manufacturing, fell in October to an 18-year low. The September Consumer Price Index (CPI) showed only modest inflationary pressure.
The number of Americans filing new claims for unemployment last week fell to 461,000 from a revised 477,000 the previous week. In other news, mortgage rates spiked last week, seeing the biggest week-to-week jump since April 1987.
After the close, Google reported higher-than-expected third-quarter earnings on revenue that was in line with forecasts. The search engine's shares rose 12% in after-hours trading. AIG said it has tapped another US$12bn in emergency government funding, bringing its total to US$82.9bn as it struggles to stay afloat.
Also after the close, Advanced Micro Devices (AMD) reported a narrower quarterly loss, while IBM reported higher profit that beat estimates, after pre-announcing the results last week. Friday brings reports on housing starts and building permits in September as well as the University of Michigan's consumer sentiment index for early October. Additionally, President Bush is due to speak briefly before the market opens.
European stocks plunged, barely escaping a fresh five-year low on Thursday, as fears about an impending global recession outweighed more moves from central banks to shore up the financial system. The pan-European Stoxx 600 index slid 5% to 206.40, bringing losses since Tuesday to roughly 12%.
The UK's FTSE 100 index fell 5.4% to 3,861.39, again falling below the 4,000 level. Germany's DAX 30 dived 4.9% to 4,622.81 and the French CAC-40 index tumbled 5.9% to 3,181.00. In Vienna, the Austria ATX did even worse, falling over 9%.
Among the emerging markets, the Bovespa in Brazil fell 1% to 36,441 while the IPC index in Mexico slumped 3.2% to 20,457. The RTS index in Russia was down 9.5% to 713 and the ISE National 30 index in Turkey slid 6.9% to 34,949.
Markets staged a smart recovery in the second half of the day on the back of short covering in the realty, FMCG and banking stocks which lifted the markets. Also a sharp recovery in equity markets across Europe lifted the sentiments on Dalal Street.
BSE benchmark Sensex recovered over 550 points and NSE Nifty index recouped 170 points from their respective day’s low. Sensex ended 227 points or 2.5% lower to close 10,581 and the Nifty was down 69 points to close at 3,269.
Among the 30 components of the Sensex, 16 stocks ended in the red and only 14 stocks ended in the positive terrain. Reliance Industries, L&T, Infosys, HDFC Bank ONGC were among the major laggards. On the other hand, HDFC, Hindustan Unilever, RCom and SBI were among the major gainers.
Reliance Power announced that it would start operating its 4,000MW Sasan thermal project by December 2011. The company would start operating a 660MW unit at Sasan by 2011 and will complete the entire project by March 2013.
The Sasan plant would be the first of the company’s 13 projects to start operations. The company plans to add 28,200MW in five years, aiding to alleviate shortages of as much as 18%.
Reliance Power said that it was looking for long-term coal supply contracts from Indonesia, Chalasani. The company also sad that It would consider acquiring stakes in Indonesian coal mines.
Shares of RPower declined by 3% to Rs117 hitting an intra-day high of Rs119 and a low of Rs111 and recorded volumes of over 20,00,000 shares on BSE. The company's shares have fallen ~51% since listing in February compared to a 39% drop in benchmark 30-share Sensex.
Bank of India gained by 2.5% to Rs296 after the company announced that it raised Tier- II Capital through issue of Upper Tier-II Capital Bonds of Rs5bn on October 16, 2008. The scrip has touched an intra-day high of Rs302 and a low of Rs273 and recorded volumes of over 9,00,000 shares on BSE.
Biocon posted a net profit after tax of Rs335.3mn for the quarter ended September 30, 2008 (down 24%) as compared to Rs440.1mn for the quarter ended September 30, 2007.
However, Total Income has increased by 11% from Rs2,413.2mn for the quarter ended September 30, 2007 to Rs2682.7mn for the quarter ended September 30, 2008.
Biocon declined by over 3% to Rs125 touching an intra-day high of Rs128 and a low of Rs118 and recorded volumes of over 77,000 shares on BSE.
Cadila announced the filing of the IND application for ZYT1 - a novel lipid lowering molecule with the DCGI. Designed and developed at the Zydus Research Centre.
In preclinical studies, ZYT1 has demonstrated beneficial effect on LDL-cholesterol and triglycerides, comparable to the effects seen with statins. When combined with statins, ZYT1 exhibited a pronounced effect in lowering LDL-cholesterol and triglycerides with the added benefit of a very high margin of safety.
Shares of Cadila slipped 5% to Rs255 hitting an intra-day high of Rs265 and a low of Rs253.