It is no profit to have learned well, if you neglect to do well.
The lessons in the past make not help one profit given the wild swings the market has been witnessing. The least you can do is prevent losses. Last week, the indices moved ahead against all odds to finish the week higher by 8%. Bulls ignored the dismal IIP numbers, which fell into the negative territory for the first time.
For the time being the bulls are all set to continue the momentum even today. The biggest factor is the positive comments from the US Treasury Department who may step in and bail out the troubled automakers after a US$14bn bill collapsed in the Senate. Asian markets too have opened sharply higher this morning.
The main indices could advance a little more in the near term, investors are still skeptical about a sustained turnaround. That is because considerable amount of headwinds still persist, both on the local as well as global front. India too remains vulnerable to a sharp slowdown despite the slew of measures unleashed by the government and the RBI to arrest the slide. Its move to increase planned expenditure by Rs20,000cr is a step in this direction. However, considering it is just about 0.4% of the GDP, it is not significant.
Remain guarded even though the ongoing rally may prompt traders to reckon that the worst is near an end. Put higher trading stop losses and ride the brief rally for now.
The Fed is expected to cut interest rates at the conclusion of a two-day meeting this coming Tuesday. And if the central bank does lower its key federal funds rate, that would be the 10th cut since September 2007.
A lot of attention will be paid as usual to the global developments. Reports are due this week on housing, manufacturing and consumer prices. Goldman Sachs, Best Buy and Oracle are among the companies expected to report weaker results than they did a year ago.
Gas prices rose for the second consecutive day following eighty-six consecutive declines.The average price for a gallon of gas rose to $1.663 a gallon from $1.66 the previous day.
Reports say the outlook for Goldman Sachs and Morgan Stanley has turned increasingly bleak.
Morgan Stanley was expected to report a narrow profit,now expectations are it will post a loss of $351mn, or 37 cents a share. For Goldman Sachs reports say it could report a loss of $1.45 billion, or $3.50 a share, when it reports its quarterly results.
Among other domestic news:
Unprovisioned bad loans of Indian banks rose 22.8% in the fiscal year 2007/08, junior finance minister told parliament.(FE)
- TRAI proposes per second based mobile tariffs; asks operators to cut SMS rates.(BL)
- NSE has reduced the margins for its stock lending and borrowing scheme.(ET)
- Indian Railways has planned a Rs300bn infrastructure spend which envisages upgrade and procurement of new assets of rolling stock during current fiscal.(FE)
- Government plans to bail out the shipping sector by providing 2-3% interest subsidy.(ET)
- FMCG prices set to come down with decline in input costs.(TOI)
- 3G auctions to begin on January 16, says DoT.(BL)
- Foreign exchange reserves fell by US$1.83bn to US$246bn for the week ended December 5.(FE)
- Textile companies top the distressed list for corporate debt recast.(BL)
- Domestic air traffic declined 21.3% yoy in November.(TOI)
Indian market recovered sharply from its day’s lows ignoring poor economic data and weak cues from the international markets.
Weak global cues coupled with heavy selling witnessed in the Auto stocks dragged the markets to open with negative gap. However, as the day progressed, buying momentum picked up as bulls ignored poor economic data and a sharp cut in the equity markets across Europe.
The rally was led by the index pivotal like Reliance Industries, RCom, HDFC and Reliance Infrastructure.
India’s industrial production fell for the first time in 10 years. Output at factories, utilities and mines dropped 0.4% in October from a year earlier after a revised 5.45% gain in September. Market has expected an increase of 2.1%. IIP last declined in output in April 1993.
The BSE benchmark Sensex finally ended at 9,690 adding 44 points and the NSE Nifty index ended flat at 2,921.
Market breath was positive, 1,545 stocks advanced against 82 declines, while, 82 stocks remained unchanged.
Among the 30-components of Sensex, 17 stocks ended in the green and 13 stocks ended in the negative terrain, the big gainers were DLF (7%), Reliance Infra (6.5%), Reliance Industries (4.1%) and RCom (4%).
On the other hand, major losers were TCS (5%), Wipro (3.5%), Tata Motors (3.5%), ONGC (3%) and Infosys (2.6%).
Tulip Telecom sky rocketed after 1.4% of equity changed hands in a single transaction.
~399,960 shares of the company were traded at an average price of Rs433.95 per price on the BSE.
The scrip surged over 15% to Rs51 hitting an intra-day high of Rs558 and a low of Rs420 and recorded volumes of over 5,00,000 shares on BSE.
Shares of TVS Motor gained by 3% to Rs25 after the company announced the launch of its premium segment motorcycle, the Apache RTR 160 RD, reports stated. The scrip touched an intra-day high of Rs26 and a low of Rs23 and recorded volumes of over 1,00,000 shares on BSE.
NMDC slipped by 1.5% to Rs142 after the company announced that it would need to cut production because of falling demand for the steelmaking raw material.
The company said that iron-ore sales in the domestic market fell as much as 30%. The scrip touched an intra-day high of Rs147 and a low of Rs132 and recorded volumes of over 36,000 shares on BSE.
Shares of Ranbaxy declined by 1% to Rs209 after reports stated that the company’s US sales dropped 45% in 60 days. The scrip touched an intra-day high of Rs214 and a low of Rs198 and recorded volumes of over 2,00,000 shares on BSE.
The coming week will again dance to the global market music. On the domestic front there will be leaks of advance tax numbers. More focus would be on a Fed meet likely next week and industrial production data in the US which is expected to be negative.