Mishaps are like knives, that either serve us or cut us, as we grasp them by the blade or the handle.
After a market mishap, Satyam management is still contemplating various ways of pacifying an aggrieved investor community. The stock may see some rebound today but don’t mistake it as restoration of confidence. Similar is the scene with the broader market. After a day's correction, the main indices could resume their uptrend after a cautious opening. The undertone could receive some fillip from news that the Government is considering a new set of stimulus measures to revive a sluggish Indian economy.
Real Estate, Auto and Steel sectors are likely to benefit from the proposed second round of fiscal-cum-monetary steps. Among the other positives include the recent resurgence in foreign portfolio investments, strength in the rupee and falling interest rates. Add to it a healthy global markets and the bulls may just be able to hold off the might of the bears for some more time.
Having said that, the advance is unlikely to sustain unless the headwinds - both global as well as local - gradually start dissipating. As a result, we would continue to maintain the view that every rally should be used to lock in gains though long-term investors can continue to dabble in quality stocks at lower levels. Remember quality stocks. Catch them only if you can get a grip on the handle.
We expect the market to regain its winning ways at start but may remain choppy in the face of continuing uncertainty over the fate of the global economy. Inflation will be out today and is likely to fall further. But, that anyway has been factored in by most players.
FIIs were net sellers of Rs1.88bn (provisional) in the cash segment on Wednesday while the local institutions pulled out Rs978.2mn. In the F&O segment, the foreign funds were net buyers at Rs5.05bn. On Tuesday, FIIs were net buyers of Rs275mn in the cash segment.
US stocks retreated on Wednesday at the end of a volatile session, with the Standard & Poor's 500 index slipping from a one-month peak, led by financials after Morgan Stanley reported a bigger-than-expected loss.
After a triple-digit slide and brief stab at turning positive, the Dow Jones Industrial Average finished at 8,824.34, down 99.8 points, or 1.1%. Twenty-five of the Dow's 30 components posted declines, with Citigroup proving to be the heaviest weight, its shares falling 4.9%.
After hitting a five-week high on Tuesday, the S&P 500 Index fell 8.76 points to 904.42, with utilities and financials leading sector losses among the index's 10 groups. The technology-laden Nasdaq Composite Index fell 10.58 points to 1,579.31.
Market breadth was positive. Advancers beat out decliners 3-to-2 on the New York Stock Exchange on volume of 1.34 billion shares. And advancers just beat decliners on the Nasdaq, with a volume of 2.16 billion shares.
US stocks started the session sharply lower and battled back to positive territory briefly, but in the final hour of the session, the key indices gave back all of their earlier gains.
Stocks rallied on Tuesday after the Federal Reserve slashed its target rate for overnight loans between banks to between zero and 0.25%, and said that it would buy more debt and mortgage-backed securities.
Crude oil futures declined, with the contract for January delivery off US$3.54 to end at US$40.06 a barrel as traders paid little heed to a widely expected production cut of 2.2 million barrels in current oil output by the Organization of Petroleum Exporting Countries.
The dollar remained under pressure, hitting a more-than two-month low against the euro and a fresh 13-year low against the Japanese yen.
Treasury prices were mixed, with shorter-dated securities falling and longer-term notes gaining. The benchmark 10-year note gained nearly 0.2%, pushing its yield down to 2.2%.
Before markets opened, Morgan Stanley posted a staggering US$2.3bn loss for the fourth quarter, which was far greater than the US$298mn loss that analysts were expecting. The loss was yet another indication that every part of the financial sector has been battered by stock-market volatility and credit-market weakness. The announcement from Morgan Stanley came the day after rival Goldman Sachs posted a US$2.1bn loss - the company's first since it went public in 1999.
Lending rates continued to decline. The overnight Libor rate declined to 0.13% from 0.16% on Tuesday, while the 3-month Libor rate dropped to 1.58% from 1.85%. Libor, or the London Interbank Offered Rate, is a daily average of what 16 different banks charge other banks to lend money in London. The improvements in Libor rates are one indicator of credit-market pressures easing.
European shares fell on Wednesday. The pan-European Dow Jones Stoxx 600 index fell 0.8% to 197.51, after trading as high as 200.79 earlier. The index has closed lower in four out of the last five sessions. Germany's DAX 30 index declined 0.5% to 4,708.38 and the French CAC-40 index fell 0.3% to 3,241.92. The UK's FTSE 100 index closed up 0.4% at 4,324.19 after a volatile session, helped by strong gains for oil producers.
Banks exerted the most pressure, with BNP Paribas shares down 17.2%. The French bank late on Tuesday warned its investment banking arm had posted a loss for the first 11 months of the year and said it could shed around 800 workers in the division. BNP said that, as a whole, it was "largely profitable" over the 11-month period.
Market snapped two day winning streak on Wednesday erasing almost all previous day’s gains. The realty, power and telecom stocks were among the major laggards. Also the mid-cap and the small-cap stocks were heavily offloaded.
Market sentiments also dampened tracking a sharp slide in the equity markets across Europe. Finally, the BSE benchmark Sensex ended at 9,708 losing 268 points and the NSE Nifty index ended at 2,954 losing 87 points.
All the BSE Sectoral indices ended in the red with the realty, Teck, Power and auto stocks were under pressure.
Market breath was negative, 1,568 stocks declined against 957 advances, while, 71 stocks remained unchanged.
Among the 30-components of Sensex, 21 stocks ended in the red and 9 stocks ended in the positive terrain, the big gainers were ICICI Bank (2.5%), HDFC Bank (2%), Infosys (1.5%) and Wipro (1.5%).
On the other hand, major losers were Satyam (30%), Reliance Infrastructure (13.7%), RCom (13.3%), JP Associates (12.1%) and ACC (9%).
V Guard Industries is planning either a technology agreement or an acquisition to enter the online power backup business in 2009, said reports. The company said that it has earmarked upto Rs300mn for the foray.
The stock rose by 1% to Rs46.8 hitting an intra-day high of Rs53 and a low of Rs46 recording volumes of over 26,000 shares on the BSE.
Shares of HDIL rallied by over 1.54% to Rs146 after reports stated that the company was planning to enter the sub Rs2mn home category. The scrip touched an intra-day high of Rs161 and a low of Rs144 and recorded volumes of over 3,00,00,000 shares on NSE.
Shares of Bharat Forge gained by half a percent to Rs85 after reports stated that both Bharat Forge and Alstom would set up manufacturing facility with an annual capacity of 5,000mw at Mundra port. The scrip touched an intra-day high of Rs96 and a low of Rs84 and recorded volumes of over 25,00,000 shares on NSE.
Shares of Accentia Technologies surged by over 2.5% to Rs128 after the company announced that it secured an order in the HRCM arena amounting to US$22mn to service a chain of hospitals in the USA. The scrip has touched an intra-day high of Rs132.15 and a low of Rs122 and recorded volumes of over 28,000 shares on BSE.
Shares of ACC have declined by 9% to Rs485 after the company announced that it would shut one of its kilns in the state of Himachal Pradesh and Punjab because of poor demand.
The 15-day closure of the kiln at Gagal in Himachal Pradesh started yesterday. The scrip touched an intra-day high of Rs544 and a low of Rs477 and recorded volumes of over 7,00,000 shares on NSE.
Markets might continue to remain sluggish ahead of inflation data to be released tomorrow. Also in the US, Morgan Stanley would announce its Q4 results. It is advisable to stay cautious.