This time, like all times, is a very good one, if we but know what to do with it.
After another tumultuous week, and an extended weekend, the bulls are hoping for some liberation from the recent drubbing. They could have their wish granted with global markets back on their feet. The multi-billion Pfizer-Wyeth deal, coupled with encouraging report on existing home sales and leading indicators pushed US shares higher. Some soothing remarks from Barclays and ING managed to lift the sagging spirits across the Atlantic. Shares in Japan and Australia are up sharply this morning, with rest of the Asia-Pacific markets shut on account of the Lunar New Year.
As a result, markets here should get strong fillip at least in early days. Later on of course, the trade will hinge on what the RBI does in its quarterly review. Expectations of further monetary easing are relatively muted this time around. The odds on another round of aggressive rate cuts are not quite as favourable. Still, the central bank commentary will be keenly followed. The RBI is likely to slash its GDP estimate for FY09. (Also read PM panel trims FY09 growth projection) Apart from the RBI review, the market will also keep tabs on the earnings and global developments. Trading might turn more volatile ahead of Thursday’s F&O expiry.
Key Results: Birla Corp., Blue Star, Cadila Healthcare, Century Textiles, Corporation Bank, Cummins India, Educomp Solutions, EIH, Engineers India, Finolex Cables, GSK Consumer, Glenmark Pharma, Godrej Industries, Gujarat Alkalies, Gulf Oil, HCL Infosystems, Jubilant Organosys, Monsanto India, Nagarjuna Construction, Opto Circuit, Oracle Financial, REC, Sesa Goa, SAIL, Sun TV and Zicom.
US stocks gained on Monday, ending a volatile session higher, as investors looked beyond massive job cuts at Caterpillar and Home Depot among others and opted to snap up battered stocks.
The Dow Jones Industrial Average rose 38.50 points, or 0.5%, to 8,116.03. The Standard & Poor's 500 index added 4.6 points points, or 0.6%, to 836.57. The Nasdaq Composite index advanced 12.20 points or 0.8%, to 1,489.46.
US stocks had tumbled last week on disappointing set of earnings, continued problems for the ailing bank sector and questions about when and how the new administration will be able to engineer the economic revival.
Pfizer's confirmation of a $68bn Wyeth acquisition lifted investor sentiment. Better-than-expected readings on existing home sales and the index of leading economic indicators also helped lift stocks. But gains were limited after corporations announced more than 71,000 job cuts.
The fourth-quarter earnings have been devastating as expected, but that investors have been taken by surprise by how aggressively companies have been cutting jobs in anticipation of worse results in the future.
Year-to-date, the three major indices are all down between 6% and 8%, as investors have scaled back after pushing stocks higher in December and the first week of January.
The sell-off has been the process of the market trying to discount how bad things are going to get in future.
Pfizer is buying rival Wyeth in a $68bn cash-and-stock deal that values Wyeth at almost 15% above Friday's closing price. Thousands of job cuts are expected to follow the completion of the deal. Pfizer also said it is cutting its dividend in half to 16 cents a share. Pfizer lost 10% and Wyeth lost less than 1%.
Caterpillar, a Dow component, said it will cut 20,000 jobs, or 10% of its workforce due to the impact of the rough economic environment. Caterpillar also reported that fourth-quarter earnings tumbled 32% from a year ago. Caterpillar shares lost 8.4%.
Home Depot said it was eliminating 7,000 jobs as a result of closing its high-end EXPO business and cutting its support staff. Shares gained 4.7%.
Sprint Nextel said it will cut up to 8,000 jobs in the first quarter and take a charge of more than $300 million, as it contends
with the sluggish economy. Shares gained 1.2%.
In other company news, McDonald's, a Dow component, reported weaker fourth-quarter earnings that were nonetheless better than expected. Shares rose less than 1%.
After the market close, Dow component American Express reported lower quarterly sales and earnings that missed expectations. Despite that, shares gained 3% in after-hours trading.
Also after the close, Texas Instruments said it was cutting 3,400 jobs due to weakening demand in a sluggish economy. Shares gained almost 5% in extended-hours trading.
December existing home sales rose by 6.5% from the previous month, topping forecasts, according to a report from the National Association of Realtors released Monday morning.
The median sales price plunged 15.3% from a year ago, the largest year-over-year decline since the NAR began keeping records and probably the largest drop since the Great Depression, Reuters reported.
The December index of leading economic indicators rose 0.3% in December after falling 0.4% in the previous month. Economists thought it would fall 0.3%.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.66% from 2.61% on Friday. Treasury prices and yields move in opposite directions. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates were mixed. The 3-month Libor rate increased to 1.18% from 1.17% on Friday. Overnight Libor fell to 0.23% from 0.24%. Libor is a bank-to-bank lending rate.
US light crude oil for March delivery fell 74 cents to settle at $45.73 a barrel on the New York Mercantile Exchange.
Gasoline prices fell three-tenths of a cent to a national average of $1.845 a gallon.
The dollar fell versus the euro and the yen. COMEX gold for April delivery rose $13 to settle at $910.70 an ounce.
The Senate is expected to meet on Monday night to decide on Timothy Geithner's nomination as Treasury Secretary. Also this week, President Obama's $825bn stimulus package is expected to be taken up in the House, amid opposition from several influential Republican lawmakers.
Dow components DuPont and Verizon Communications are expected to report quarterly results before the start of trade on Tuesday.
Tuesday also brings the January consumer confidence index from the Conference Board, which is expected to hold steady at an all-time low of 38.0, unchanged from December. The S&P/CaseShiller home index for November is due as well and is expected to show steep declines.
The Federal Reserve begins its two-day policy setting meeting Tuesday, with an announcement expected Wednesday afternoon.
Barclays and ING led a rally for European stocks on Monday. The pan-European Dow Jones Stoxx 600 index rose 3.1% to 188.06, with financial stocks firmly in the lead. The UK's FTSE 100 index closed up 3.9% to 4,209.01, while the French CAC-40 index climbed 3.7% to 2,955.37 and Germany's DAX 30 index advanced 3.5% to 4,326.87.
Markets yet again ended the trading session with losses on Friday led by fall in the index heavyweights like ICICI Bank, SBI, Infosys and L&T. The BSE benchmark Sensex slipped 139 points to close at 8,674 and the Nifty lost 35 points to close at 2,678.
Among the 30-components of Sensex, 26 stocks ended in the red and only 4 stocks ended in the positive terrain. Among the major laggards in Sensex were ICICI Bank, SBI, Infosys and L&T.
Among the major gainers were Reliance Industries, Tata Motors, NTPC, Ranbaxy and Hindalco.
Among the BSE Sectoral indices BSE Bankex index was the top loser, the index lost 3.8%. Among the other losers were BSE Metal index (down 3.1%), BSE Capital Goods index (down 2.8%) and BSE Realty index (down 2. 7%). Even BSE Mid-cap and the BSE Small-Cap index lost over 1.5% each.
Reliance Industries gained 2% to Rs1153 after reporting earning. The scrip has touched an intra-day high of Rs1335 and a low of Rs1120 and has recorded volumes of over 2,00,000 shares on NSE.
The company announced its financial results for the fiscal third quarter with net profit at Rs35.01bn compared to Rs38.82bn in the same quarter last year. Net sales for the quarter ended December 31, 2008 stood at Rs315.63bn as against Rs345.90bn in the third quarter of last year. The company posted other income of Rs6.63bn against Rs2.41bn in the third quarter of last year.
The scrip touched an intra-day high of Rs1174 and a low of Rs1120 and has recorded volumes of over 20,00,000 shares on BSE.
Pfizer rallied by over 6% to Rs514 after reports stated that US pharma giant Pfizer is believed to be in talks to acquire rival American drugmaker Wyeth for about US$60bn. The scrip touched an intra-day high of Rs528 and a low of Rs481 and recorded volumes of over 13,000 shares on BSE.
Crompton Greaves slipped by 1% to Rs129. The Company posted a net profit from ordinary activities after tax of Rs847.7nm for the quarter ended December 31, 2008 as compared to Rs679mn for the quarter ended December 31, 2007.
Total Income has increased from Rs9,290.6mn for the quarter ended December 31, 2007 to Rs1,0882.7nm for the quarter ended December 31, 2008. The scrip touched an intra-day high of Rs131 and a low of Rs125 and recorded volumes of over 1,00,000 shares on BSE.
Canara Bank plunged by over 14% to Rs174 on rumors that it had exposure in Maytas Infrastructure. However, later the management clarified there would be no major impact.
The bank posted a net profit of Rs7,015mn for the quarter ended December 31, 2008 as compared to Rs4,588.30mn for the quarter ended December 31, 2007.
The total income increased from Rs40.97bn for the quarter ended December 31, 2007 to Rs53.82bn for the quarter ended December 31, 2008. The scrip touched an intra-day high of Rs212 and a low of Rs167 and recorded volumes of over 25,00,000 shares on BSE.
L&T slipped 3.5% to Rs640. Larsen & Toubro (Oman) LLC, secured major orders cumulatively valued at Rs.11.98bn. The orders cover construction of a hotel and apartments for the 2nd Asian Beach Games, a mosque and underground cabling.
The 2nd Asian Beach Games complex is being developed by Oman Tourism Development Company - the government of Oman's tourism development, and its investment arm. The project comprises construction of a hotel, marine apartment buildings, administrative buildings for the Games and an athletes' village. All these projects are scheduled to be completed in less than two years.
The scrip has touched an intra-day high of Rs668 and a low of Rs637 and has recorded volumes of over 12,00,000 shares on BSE.
Shares of Gujarat Apollo gained by over 3.5% to Rs57 after almost 6% equity shares changed hands in blocks. The scrip touched an intra-day high of Rs60 and a low of Rs52 and recorded volumes of over 85,00,000 shares on BSE.