In the end, we decide if we're remembered for what happened to us or for what we did with it.
Usually in life there is so much to do and so little time. But for those in the markets there is hardly anything to do and of course there is all the time in the world. In fact Indian investors have to be more glued or clued on the global market openings and closings. After five consecutive days of seeing red, the bulls may finally get to see some green on trading screens today thanks to a late spurt in US shares, particularly the blue chips, though technology stocks ended nearly unchanged.
The key Indian stock indices have been battered in the past five sessions. So, some sort of a bounce is not ruled out. The cut in import duty on iron, steel and soya oil, coupled with the Government's promise to do more may also perk up the mood. However, one must bear in mind that such measures announced in the recent past have failed to bring much cheer. Even the improvement in inflation and IIP numbers last week didn't stop the bloodbath, nor have the latest RBI steps. What could also check any meaningful rise today is that Asian markets are trading in the red, barring China (which had plunged yesterday). What we need is a substantial improvement in sentiment across global equity markets. And, for that to happen, the flow of bad news from around the globe has to stop.
We expect the Indian market to open on a cautious to flat note today. They could see accelerated gains later if Asian stocks turn around, and Europe opens higher. Use any bounce to lock in some gains, i.e. if one has made any. In any case, it will take some time for investor confidence to return. Markets need to consolidate for a while before they can move up in any significant manner on a sustained basis. Investors are holding back on fear that October lows could be breached. Excessive fear can drag markets down further. Earnings will be a key factor in bringing investors back into the market. Though valuations are attractive, one should not rush in. Wait, we repeat wait and watch before committing fresh money.
Maruti may attract some attention as it is to launch its latest compact car, the A-Star. Sugar stocks may also hog the limelight, as the Allahabad High Court continues its hearing in the UP sugar mill case. The court yesterday refused to pass any interim order, staying the sugarcane SAP set by the UP government. Also watch out for Ess Dee Aluminium, which has received BIFR clearance to acquire India Foils from Vedanta group. Airlines might gain on reports that the Government is likely to classify ATF as 'declared goods'. This will bring down sales tax on jet fuel, from over 20% at present to 4% across India.
FIIs were net sellers at Rs4.41bn (provisional) in the cash segment on Tuesday while the local institutions pumped in Rs4.58bn. Foreign funds were net sellers of Rs6.32bn, taking it's total outflows in the year 2008 to US$12.95bn.
Foreign funds have sold a net US$13bn worth of Indian stocks in 2008 after buying a record US$17.4bn in 2007.
US stocks rose on Tuesday, spurred by a late buying binge in blue chip stocks, after PC maker Hewlett-Packard and home improvement retailer Home Depot came out with encouraging results.
The main Wall Street indices had slid to within few points of 2003 lows earlier on a report that showed that the confidence among homebuilders dropped to the lowest level on record.
US stocks seesawed throughout the day, spiking after officials said the US$700bn bailout is working, then slumping again after the housing market report. The swings are also reflective of the volatility that has increased recently.
After shifting between positive and negative territories, US stocks staged another last-minute push, with the Dow Jones Industrial Average rising 151.17 points, or 1.8%, to 8,424.75. The S&P 500 index added 1% to 859.12, the first advance in three days. The Nasdaq Composite Index finished almost flat at 1,483.27.
Market breadth was negative. About six stocks retreated for every five that advanced on the New York Stock Exchange.
Energy and consumer staples fronted sector gains among the S&P's 10 industry groups, while financials and consumer discretionary shares led the declines.
HP shares jumped 14% as earnings topped analysts' estimates, while Exxon Mobil climbed more than 4%. Shares of Home Depot gained 3.6% after it reported a shallower-than-forecast 31% profit fall for the third quarter.
The advance in equities accelerated near the close as investors tracking the S&P 500 Index bought shares to replace Anheuser-Busch Cos., which was removed from the index following its takeover by InBev.
The S&P 500 erased a drop of as much as 2.8% in the final hour of the trading session, as fund managers prepared for the replacement of Anheuser-Busch by Stericycle.
The S&P 500 earlier slid below its lowest closing level since 2003 after the National Association of Home Builders/Wells Fargo index of builder confidence decreased to a worse-than- forecast reading of 9, the lowest level since record-keeping began in 1985.
The benchmark index for US equities is down more than 41% in 2008, poised for its worst year since 1931.
GM shares fell 2.8% as its chief executive, along with those of Ford and Chrysler pressed their case for government assistance in a Senate hearing. Citigroup weighed most heavily on the Dow, sliding 6%.
Treasury Secretary Henry Paulson and Federal Deposit Insurance Corp. chairwoman Sheila Blair clashed over whether to use some of the US$700bn package to aid Americans facing foreclosure on their homes.
A separate report showed that inflationary pressures remain moderate.. The Labor Department reported that US producer prices declined a record 2.8% in October, the most since 1947, as gasoline prices plummeted. But prices excluding food and energy, the so-called "core" reading, rose more than expected.
Wednesday's economic news includes reports on consumer prices, building permits and housing starts and the minutes from the last Federal Reserve policy meeting.
Yahoo shares climbed 8.7% after the company said CEO Jerry Yang would step aside, six months after merger talks broke down between Microsoft and the Internet tech giant.
Corning withdrew its previous forecast for the fourth quarter and 2009, saying it now expects fourth-quarter sales to be below management's prior range. Corning's shares fell 6.9%.
Pepsi Bottling Group announced job cuts and warned on profits, with shares of the beverage maker and distributor slipping 3.6%.
In currency markets, the dollar gained versus the euro and the yen.
In commodities, COMEX gold for December delivery fell US$9.30 to settle at US$732.70 an ounce.
US light crude oil for December delivery fell 56 cents to settle at US$54.39 a barrel on the New York Mercantile Exchange, the lowest close since January 2007.
Gasoline prices dipped another 1.9 cents to a national average of US$2.068 a gallon. The decline marks the 62nd consecutive day that prices have decreased. During that time, prices dropped by US$1.78 a gallon, or 46.3%.
Treasury prices gained, lowering the yield on the benchmark 10-year note to 3.52% from 3.65% late on Monday.
The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, rose to 0.11% from 0.08% on Monday, with investors preferring to take a piddling return on their money than risk the stock market. In September, the 3-month yield reached a 68-year low around 0% as investor panic peaked.
Borrowing rates were little changed from the previous day, with the credit market continuing to stall after a month long improvement. The 3-month Libor rate fell to 2.22% from 2.4% on Monday, while overnight Libor was unchanged at 0.4%. Libor is a key bank lending rate.
European shares ended higher on Tuesday, led by oil producers. After briefly hitting three-week lows, the pan-European Dow Jones Stoxx 600 index rose 0.8% to 201.91. Germany's DAX 30 index rose 0.5% to 4,579.47, while the French CAC-40 index gained 1.1% to 3,217.40 and the UK's FTSE 100 index jumped 1.9% to 4,208.55.
Indian stocks continued their downward journey on Tuesday, tracking a relentless rout in world equities, as Citigroup's announcement of massive job cuts and grim economic data heightened concerns over the health of the global economy.
The market continued to be highly volatile, as the key stock indices turned weaker again after twice failing to rebound - once in the morning and second time in the afternoon. European markets sank after a quiet opening and Asian indices slumped.
Earlier, the BSE Sensex had fallen below 9,000 and the NSE Nifty slipped under 2,700, as global investors continued to shun risky assets like equity in favour of safe havens like bonds amid growing concerns over corporate profits in a worsening global economic climate.
The BSE Sensex closed at 8,937.20, down 353 points or 3.8% over the previous close. It had earlier hit a low of 8,871 and a low of 9,169. The BSE Small-Cap and Mid-Cap indices were down 2.8% and 2.3%, respectively. The Sensex is down 15% in the last five sessions and has lost over 50% in 2008.
On the other hand, the NSE Nifty was down almost 4.2% to 2,683 after being as low as 2,664 and as high as 2,802.
IT (4.7%), Power (4.7%), Banking (4.5%), Metals (4.4%), Real Estate (3.6%), Capital Goods (3.5%) and Auto (2.9%) were the top losers among BSE sectoral indices. FMCG, Consumer Durable, Pharma and Oil & Gas fell 1-2%.
Within the Sensex, the top losers were Wipro (8.8%), NTPC (7.9%), ACC (7.2%), TCS (7%), ICICI Bank (6.8%), Maruti (6.7%), Bharti Airtel (6.3%), Jaiprakash Associates (6.2%), M&M (5.8%), Tata Power (5.75%), HDFC (5.3%) and SBI (5.1%).
ONGC, RCOM, Grasim, Infosys, Sterlite, Satyam Computer, L&T and Hindalco were down 3-5%. Ranbaxy managed to buck the trend, as it closed just in the green.
Outside the main indices, the prominent losers included NALCO, Max India, Sintex, Sun TV, Kotak Bank, Jai Corp, Jindal Saw, Moser Baer, Karnataka Bank, Great Offshore, Idea, LIC Housing, Amtek Auto, Unitech, Indian Overseas Bank, NIIT and HCL Tech.
EIH (18%), Rolta, IVRCL Infra, Nestle India, India Cement, Balarampur Chini, Mphasis, GSK Pharma, HPCL, Lanco Infra, TV 18 and Apollo Hospitals were among the notable gainers in the market today.
The market breadth was negative on the BSE, as 1,831 shares declined and 661 shares advanced. Total turnover in the BSE cash segment was Rs30.32bn versus Monday's Rs32.3bn. Total turnover in the NSE cash segment was Rs83.3bn as against yesterday's Rs89.02bn.
Traded volume on BSE stood at 227.8mn shares while on NSE the same was 504.39mn shares.
Finance Minister P. Chidambaram's reassured that the Indian economy will bounce back next year after this year's drop. He, however, added that the global recession will be longer and painful for all. He is scheduled to address the media later this evening.
India's economy will bounce back next year as the Government takes steps to stimulate domestic demand, Chidambaram said today.
"There will be a slowdown in India and steps taken and those that will be taken, to a large extent, will compensate the factors causing the slowdown," he said at the India Economic Summit in New Delhi. "We are confident we'll end this year with satisfactory growth rate."
Chidambaram said that the Government would take steps to stimulate the economy and the rupee would strengthen again once capital starts flowing in. "We will take steps to stimulate the domestic economy to compensate for the downside caused by the downturn in the world economy," he said.
He added that India could miss its annual export target of US$200bn for this fiscal year as the slowdown in developed nations trims overseas demand.
JP Morgan on Monday cut its Indian growth forecast for 2008-09 to 6.7% from 7% and for 2009-10 to 6.2% from 6.8%, and saw aggressive rate cuts by the Reserve Bank of India (RBI) to support growth momentum.
Citigroup too has lowered India's economic growth rate projection to 6.8% from 7.2% for this fiscal year due to slowdown in consumption and investment.
Sentiment continued to get hit by almost relentless sell-off in global markets. US stocks fell overnight after Citigroup announced that it will cut more than 50,000 jobs to cut costs. Asian stocks too extended their fall amid mounting worries over the global economic gloom.
HSBC said yesterday that it was laying off an additional 500 staff in Asia after announcing 1,100 job cuts in September. Separately, London's Daily Telegraph reported over the weekend that JP Morgan Chase is planning thousands of job cuts worldwide, citing people close to the matter.
Asia-Pacific stocks outside of Japan fell 1.85%, bringing year-to-date losses to around 58%, according to an MSCI index. Asia's losses have outpaced the all-country world index, which is down 47.5% in 2008.
Meanwhile, the rupee weakened further today, as expectations of further selling by FIIs hurt sentiment. At around 4:30 p.m., the partially convertible rupee was at 49.65/66 per dollar as against Monday's close of 49.34/35. It had touched a lifetime low of 50.29 on Oct. 27.
Foreign funds have sold a net US$13bn worth of Indian stocks in 2008 after buying a record US$17.4bn in 2007.