I never did give them hell. I just told the truth, and they thought it was hell – Harry Truman.
Well, well, well or should we say Hell, hell, hell? That’s what could happen at the opening bell as yet again hell seems to have broken loose on the markets. All that talk of the world markets having placed a bottom last week suddenly appears to have been too optimistic. A fresh bout of grim economic reports in the US, UK, Europe and Japan has heightened worries that a global recession is now inevitable. And, it could be a long and painful road to recovery.
Global investors continue to shun risky assets like equity and shift to safe haven assets like government bonds and gold. At the same time, growing concerns of a crippling global recession has sent crude oil into a tailspin. Which generally is seen to be quite a positive event for India, but the slide in the rupee has to a large extent nullified that advantage. Also, investors and traders are more concerned about the incessant selloff in the stock market. Meanwhile, governments and regulators across the globe continue to look for ways to stop the bloodletting and end the logjam in credit markets.
Coming to India, the Centre, RBI and SEBI are pulling out all stops to shore up liquidity, encourage more dollar inflows and check relentless selling in the stock market. There may be some temporary relief, but the weak global markets will once again play spoilsport. Brace up for another sharp fall as markets in the US, Europe and Asia have lost anywhere between 6-10%. And, though we had a fall of more than 5% yesterday, another round of selling is expected in the wake of the global rout. We would continue to advocate caution as the key indices may fall below last week's lows. One can only pray for some sort of rebound in Asian and European markets as the day wears on. That again should give you no reason to get in as yet.
The result season is of course on and L&T got beaten for really no fault. These are times when the last ones standing face the brunt and that could include the best of the blue chips. In fact, blue chips are getting chipped faster than one can imagine.
US stocks plummeted on Wednesday, sending the Dow Jones industrial average to its second biggest one-day point loss ever. A weak retail sales report and downbeat forecasts from the Federal Reserve, coupled with grim comments from Fed chairman Ben Bernanke, sent stocks tumbling.
The Dow Jones Industrial Average tumbled 733 points, its second biggest one-day point loss ever, second only to Sept. 29 of this year, when the House of Representatives initially rejected the government's $700bn bank bailout plan.
Wednesday's decline was equal to around 7.9%, the Dow's biggest one-day percentage loss since Oct. 26, 1987.
The Standard & Poor's 500 index slid 90 points, its second-worst one-day point loss ever, also second only to Sept. 29. The loss was equal to 9%, its second biggest slide on a percentage basis since Oct. 19, 1987, a.k.a. Black Monday.
The Nasdaq Composite index slumped 150.68 points, or 8.5% and closed at a new low for 2008, its worst level since June 30, 2003. The decline was its biggest one-day percentage loss since Aug. 31, 1998. On a point basis, it didn't rate among the 20 worst days.
The decline Wednesday equaled a loss of $1.1 trillion in market value, as measured by the Dow Jones Wilshire 5000, the broadest measure of the stock market. It was the second-biggest one-day loss ever, following Sept. 29.
The day's news included retail sales at a three-year low, a reading on manufacturing in the New York area at an all-time low, the Fed's weak forecast and comments from Bernanke.
Better-than-expected quarterly results from Intel, Coca-Cola, Wells Fargo, JPMorgan Chase and a host of regional banks had little impact amid worries about a recession.
The credit market showed some signs of easing, as a key overnight bank lending rate fell. But the improvement was slow and failed to reassure investors.
Treasury prices gained Wednesday, lowering the corresponding yields. The dollar gained versus the yen and fell against the euro. Oil and gas prices slipped, while gold prices rose.
Fed chief Bernanke, speaking in the afternoon, said that while policymakers now have the tools they need to fix the financial and credit markets, the economic rebound will take time.
The Fed's 'beige book' reading on economic activity, released in the afternoon, showed weakness in all 12 districts. The outlook was also pessimistic, with businesses unable to access much-needed credit.
After the close, eBay posted a higher-than-expected quarterly profit, but warned fourth-quarter results won't meet forecasts. The stock slid 5.5% in extended-hours trading.
Third-quarter earnings are currently on track to have fallen 9.8% from a year ago, according to the latest estimates from Thomson Reuters.
Shares in Europe plunged on Wednesday, falling for the first time in three sessions, amid renewed worries about worldwide economic recession. The pan-European Dow Jones Stoxx 600 index fell 6.5% to 217.17. The basic-resources sector led the way down.
The UK's FTSE 100 closed down 7.2% at 4,079.59, while Germany's DAX 30 dropped 6.5% to 4,861.63 and the French CAC-40 slid 6.8% to 3,381.07.
In the emerging markets, the Russian markets dived 9.3% to 788. Elsewhere, the Bovespa in Brazil was down 11.4% at 36,833 while the IPC index in Mexico fell by nearly 5% to 21,135 and Turkey's ISE National 30 index dropped 3.5% to 37,572.
Markets snapped a two-day rally to close in the negative terrain led by heavy selling in capital goods, consumer durables and metal stocks. Among the 30-stocks of Sensex JP Associates was the biggest loser, the stock fell by over 14%. Other major losers were L&T, RCom, Reliance Infra and. Finally, The BSE benchmark Sensex ended 674 points or 5.9% lower to close 10,809 and the NSE Nifty index was down 180 points to close at 3,338.
All the 30 components of the Sensex ended in the red with Reliance Industries, L&T, ICICI Bank, Infosys and HDFC were among the major laggards.
Among the BSE Sectoral indices, BSE Capital Goods index (down 9.3%), BSE Consumer Durables index (down 9.1%), BSE Metal index (down 8%) and BSE Power index (down 6.1%). Even the Mid-Cap and the Small-Cap indices declined over 4.5% each.
Electrosteel Castings announced that the board of directors of the company accorded its consent, to issue 42.4mn shares to two Non-Promoter overseas companies on a preferential basis at a price of not less than the price to be calculated as per SEBI guidelines or Rs38/- per share which ever is higher.
The stock was down by 2.5% to Rs19.1 touching an intra-day high of Rs21 and a low of Rs18 and recorded volumes of over 10,00,000 shares on BSE.
Bharti Airtel announced that it entered into an innovation and technology partnership with Infosys Technologies Ltd (Infosys) to deliver superior customer experience to the customers of Airtel digital TV, its Direct (DTH) TV service.
As part of its Digital Convergence Platform, Infosys will provide a suite of products including devices, application servers and interactive applications that will focus on providing an enhanced digital lifestyle to Airtel digital IV customers.
Bharti Airtel declined by over 6% to Rs718 touching an intra-day high of Rs752 and a low of Rs696 and recorded volumes of over 6,00,000 shares on BSE.
Chettinad Cement was up 2% at Rs480 after the company announced that the board of directors of the company would meet on October 16 to consider rights issue. The scrip touched an intra-day high of Rs480 and a low of Rs475 and recorded volumes of over 1,000 shares on BSE.
Sterlite Industries declined by 10% to Rs292 after reports stated that the company wouldn’t complete the US$2.6bn purchase of the bankrupt copper producer Asarco LLC without a price reduction of ``hundreds of millions of dollars,''. The scrip touched an intra-day high of Rs320 and a low of Rs283 and recorded volumes of over 26,00,000 shares on BSE.