An adventure is only an inconvenience rightly considered. An inconvenience is an adventure wrongly considered.
Even the most adventurous are being inconvenienced by the wild swings in the market. Another day and another round of bloodbath in stocks across the globe! The story is all-too familiar by now, and could even be getting a bit monotonous. The writing is on the wall is that we are staring at a global recession. The major worry is how long and severe it will be? Nations across the world have been doing their best to limit the fallout from the unprecedented financial crisis. Those efforts still continue, with central banks cutting rates aggressively to boost lending and pump-prime the contracting economies.
Last week, there was some relief for global equities. This week too started on a promising note. But, the past couple of days have seen resumption of a savage worldwide sell-off, that is threatening to take indices to new lows. It is really tough to make any prediction on the movement of the stock indices, as volatility has increased. This morning's trade in Asian markets is a case in point, with key indices witnessing wild swings. We expect yet another weak opening today. There may be some technical bounce. But, stay light for the weekend and come back to pick up few goodies at lower prices next week.
FIIs were net sellers of Rs5.1bn (provisional) in the cash segment on Thursday while local institutions pumped in Rs3.5bn. In the F&O segment, the foreign funds were net sellers at nearly Rs12bn. On Wednesday, FIIs were net buyers of Rs3.39mn in the cash segment.
US stocks extended the post-election slump into Thursday, as a fresh batch of poor corporate earnings and economic reports heightened fears of a prolonged recession in the world's largest economy.
Disappointing sales reported by retailers coupled with a struggling auto industry and a bleak forecast from Cisco Systems sparked further selling. What was surprising was that the selloff came despite stabilization in the credit markets and rate cuts by major European central banks.
The last two days have been the worst in the US stock market since 1987. In 48 hours, the Dow Jones Industrial Average has dropped nearly 1,000 points, and the Standard & Poor’s 500-stock index has lost nearly 10%.
Investors were also nervous ahead of Friday’s key monthly jobs report, which is also likely to pain a grim picture of the labour market. The report is expected to show that US companies cut hundreds of thousands of jobs in October.
The Dow closed at 8,695.79, down 443.48 points, or 4.9%, its lowest finish since Oct. 28, after swinging in a 518-point range. The S&P lost 47.89 points, or 5%, to 904.88, and the Nasdaq Composite index fell 72.94 points, or 4.3%, to 1,608.70.
The Russell 2000 Index of small US companies declined 3.7% to 495.84.
The two-session decline of 929 points, or 9.7%, in the Dow marked the biggest two-session point loss ever and the biggest two-session percentage decline in 21 years, according to Dow Jones.
The declines on Wall Street came despite sharp reductions in interest rates by leading European central banks seeking to further ease the tight credit markets.
The Bank of England (BOE) lowered its benchmark rate by 1.5%, much more than analysts had expected, and the European Central Bank (ECB) cut its benchmark rate by half a percentage point.
October retail sales at the nation's chain stores were pretty bad, with some discount operators like Wal-Mart managing to buck the trend. The housing market collapse, and the ensuing credit crunch and worsening labor market have hit consumer spending.
Even the sharp fall in oil and gasoline prices has not had any positive impact on consumer spending.
Automakers were hit especially hard on continued worries about their ability to stay afloat without government help. GM slumped 13.7% and Ford lost 5.3%.
Cisco said late on Wednesday that it has stopped hiring and that revenue for the current quarter won't meet forecasts. That overshadowed the company's better-than-expected earnings report. Shares fell 2.6%.
Las Vegas Sands continued to plummet on worries that it may default on certain debt obligations and that it can't raise enough capital. The company operates the Venetian and Palazzo casinos and a pair of casinos in China.
The dollar rallied against the euro and the pound after monetary policy makers in Europe cut interest rates in response to growing economic weakness. However, the greenback edged lower versus the Japanese yen.
COMEX gold for December delivery fell 10.20 to settle at US$732.20 an ounce.
US light crude oil for December delivery fell to a 19-month low, sinking US$4.53 to settle at US$60.77 a barrel on the New York Mercantile Exchange.
Gasoline prices fell another 2.5 cents to a national average of US$2.34 a gallon. The decline marks the 50th consecutive day that prices have decreased. During that same time period, prices dropped by US$1.51 a gallon, or 39.2%.
The credit market continued to improve. The 3-month Libor fell to 2.39% from 2.51% on Wednesday, a nearly four-year low. Overnight Libor rose slightly to 0.33%, bouncing off an all-time low of 0.32% the previous day. Libor is a key interbank lending rate.
The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, fell to 0.30% from 0.39% on Wednesday. Last month, the 3-month yield reached a 68-year low around 0% as investor panic peaked.
Treasury prices were little changed, with the yield on the benchmark 10-year note at 3.70%.
European stocks ended sharply lower on Thursday, notwithstanding the rate relief from the ECB, the Swiss National Bank and a sharp one from the Bank of England. The pan-European Dow Jones Stoxx 600 index ended 5.6% lower to 215.48 as stocks in the basic resources sector took heavy falls.
All of the 15 Stoxx sector indexes traded lower. Across the exchanges of London, Paris, and Frankfurt, decliners outnumbered advancers by about a 3-to-1 ratio.
UK's FTSE 100 index dropped 5.7% to 4,272.41, slightly outperforming their euro-zone counterparts. Germany's DAX 30 index slid 6.8% to 4,813.57 and the French CAC 40 index slumped 6.4% to 3,387.25.
Overnight losses in the US and the Asian markets coupled with selling pressure in index pivotal dragged the key indices to open with a negative gap. Bulls although managed to stage a strong come back ahead of inflation announcement.
However, markets were unable to hold on to their gains and slipped sharply after India’s Inflation for the week ended Oct 25 rose to 10.72% missing market expectation of 10.49%. Government also announced that it revised inflation for the week ended to August 30 to 12.38% versus 1.1%
Finally, after a volatile session, Indian market fell on Thursday extending its fall to second straight trading session. The BSE benchmark Sensex fell 373 points or 3.7% to close 9,746 and the NSE Nifty index was down 102 points to close at 2,892.
Among the 30-components of Sensex, 24 stocks were in the negative terrain and 6 stocks ended in the green. Reliance Industries, Infosys, Bharti Airtel, HDFC and ICICI Bank were among the major losers. On the other hand, bucking the negative trend were, HUL, JP Associates, Ranbaxy and DLF were among the major gainers.
Shares of Hindustan Zinc slipped by 4% to Rs297 after the company announced that it has cut zinc prices by Rs5,000 per ton, stated reports. The scrip touched an intra-day high of Rs310 and a low of Rs292 and recorded volumes of over 19,000 shares on BSE.
Shares of KLG Systel snapped its rally erased all its gains and finally ended 3% lower at Rs110. The company announced that the Power System Solutions (PSS) Division of the company received orders of Rs1.32bn from Punjab State Electricity Board under Rajiv Gandhi Gramin Vidyutikaran Yojna for design, engineering, erection and commissioning of 11 KV lines, 25 KVA substations and release of around 1.48 lacs new connections to Below Poverty Line (BPL) households. The scrip touched an intra-day high of Rs125 and a low of Rs106 and recorded volumes of 72,000 over shares on BSE.
SBI announced that it would cut its lending rate by 75 basis points, following a reduction in the benchmark rate by the central bank and measures to free up cash in the system. The reduction would be effective from November 10. The stock ended down by 4.5% to Rs1215 hitting an intra-day high of Rs1265 and a low of Rs1201 and recorded volumes of over 14,00,000 shares on BSE.
Suzlon Energy announced that the New Zealand based TrustPower Ltd on November 02, 2008 did an official public opening of Stage 1 of its first Australian wind farm located at Snowtown 170 km north of Adelaide. The said wind farm comprises of 47 numbers of Suzlon S88 turbines. The stock gained 3% to Rs60 after hitting an intra-day high of Rs63 and a low of Rs52 and recorded volumes of over 2,00,00,000 shares on BSE.
Bulls might look to make a come back on Friday after sliding over atleast in the morning trades as in a surprising move major central banks in Europe cut interest rate. The Bank of England slashed its key interest rate by as much as 1.5 percentage points.
However, given the bleak economic background, both globally and locally, stocks are unlikely to rise too much. There may be some more room on the upside, but there will be selling after every spurt.