The optimist pleasantly ponders how high his kite will fly; the pessimist woefully wonders how soon his kite will fall.
Happy Makar Sankranti, Pongal and Lohri. This day the Sun changes its position from one sign of the Zodiac to the other and is considered auspicious as it coincides with the harvest season and marks the end of the winter season. We have gone through many auspicious days only to get rattled later. But the market is likely to see some bounce today given the firm trend across Asian markets amid growing anxiety over corporate governance issues. What remains to be seen is whether the market will be able to sustain the early advance. So, let go of the kites when they are high lest you have to feel the pain of seeing it get cut.
Tuesday saw a few stocks plunge intra-day amid a plethora of market rumours about these companies' financial management. Though some of them have sought to assuage investor concerns about possible financial irregularities, the market will remain jittery about these issues in the wake of the Satyam scandal.
Coming to the broader market, the traded volume and the turnover have taken a hit in the wake of the sordid Satyam episode and lack of clarity on the near-term market direction. With the earnings season just starting to pick up, the mood will remain cautious with alternate bouts of buying and selling. Given this backdrop, one should remain guarded though valuations may well appear mouth-watering. One can still indulge in select stock- specific buying, though. But that should be restricted to quality stocks and only for long-term purpose.
Key Results Today: HDFC Bank, GTL Infra, NIIT Tech and PSI Data Systems.
On the global front, the scenario is unlikely to change rapidly, as the daily dose of bad news continues unabated, from both corporate as well as economic front. Citigroup has announced a merger of its brokerage unit with Morgan Stanley. The ECB is likely to cut key rates on Thursday.
US stocks ended mixed on Tuesday amid growing doubts about Citigroup's future even as aluminium major Alcoa's big quarterly loss exacerbated worries about the weak corporate profit environment.
Stocks swayed on both sides of unchanged through the afternoon, with weakness in banks and Alcoa tempering strength in technology.
Shares of Citigroup turned higher as word circulated that the breakup of the company is likely to go beyond a widely expected brokerage joint venture with Morgan Stanley. After the close, Citi confirmed that it is selling 51% of its Smith Barney unit to Morgan Stanley.
Reports said that Citigroup may sell its CitiFinancial consumer-lending unit and rein in trading with the bank’s own capital after agreeing to cede control of its Smith Barney retail brokerage.
The Dow Jones Industrial Average ended at 8,448.56, losing 25.41 points, or 0.3%, and down for a fifth straight session. Sixteen of the Dow's 30 components finished lower, the declines led by Bank of America off 6.8%. Also weighing, Alcoa shares fell 5.1% after the aluminum major announced weak results.
The S&P 500 index gained 1.53 points, or 0.2%, to 871.79, while the Nasdaq Composite index climbed 7.67 points, or 0.5%, to 1,546.46.
GE shares slumped 5.6% after Barclays said the firm's quarterly results could be at the lower end of estimates and that Moody's could then cut its ratings outlook on GE's debt to negative. Shares of JP Morgan Chase, rose 5.8%. The bank said late on Monday that it plans to report quarterly results on Thursday, almost a week ahead of schedule.
On Wednesday, the government releases its December retail sales report and the November reading on business inventories. The weekly energy supply report is also due in the morning, while the afternoon brings the release of the Fed's semi-annual "beige book" reading on the economy.
Alcoa started off the fourth-quarter reporting period on a downbeat note on Monday. The aluminum maker lost 28 cents per share in the quarter, versus a profit of 36 cents per share a year ago. Analysts expected Alcoa to lose 10 cents per share on average. The company also reported a bigger-than-expected rise in revenue.
Yahoo announced that it has hired Carol Bartz, a longtime technology executive, as its new CEO.
In other corporate news, drugmaker Pfizer said it is cutting up to 800 scientist jobs. Barclays confirmed it was going to lay off some employees, but would not give a number. Earlier reports speculated the bank could cut as many as 2,000 jobs.
Market breadth was positive. On the New York Stock Exchange, 1.3 billion shares traded, with advancers outpacing decliners 8 to 7. On the Nasdaq Stock Market, 801 million shares traded and advancers ran ahead of decliners 7 to 6.
In a speech delivered in London, Federal Reserve Chairman Ben Bernanke called the timing and strength of the global economic recovery "highly uncertain," saying President-elect Barack Obama's stimulus plan could boost economic activity, but a recovery won't stick unless other steps are taken to stabilize the financial system.
The next step in the battle against the financial market crisis is to get toxic assets off the balance sheets of financial institutions, Bernanke said, which may require government outlays above the $700 billion fund set up by Congress.
The US federal budget deficit grew by $83.6 billion in December, the government said on Tuesday afternoon, versus forecasts for $83 billion. That brings the total deficit for the first three month of fiscal 2009 to $485.2 billion, more than the deficit for all of 2008.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.29% from 2.30% on Monday. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates improved. The 3-month Libor rate fell to 1.09% from 1.16% Monday, according to the British Banker's Association. Overnight Libor held steady at 0.10%. Libor is a key bank lending rate.
The dollar gained versus the euro and yen.
US light crude oil for February delivery fell 19 cents to settle at $37.78 a barrel on the New York Mercantile Exchange.
COMEX gold for February delivery down 30 cents to settle at $820.70 an ounce.
Gasoline prices held steady at a national average of $1.79 a gallon.
European shares ended lower for a fifth straight session on Tuesday. The pan-European Dow Jones Stoxx 600 index fell 1.4% to 201.65, pulled down by sharp losses in the banking sector.
On a national level, the French CAC-40 index dropped 1.5% to 3,197.89, Germany's DAX 30 index fell 1.8% to 4,636.94 and the UK's FTSE 100 index dropped 0.6% to 4,399.15.
Indian market extended losses to fourth straight trading session on Tuesday. It was a highly volatile session with the BSE benchmark Sensex gyrating over 200 points between its intra-day high and low.
Weak global cues and selling in the oil & gas, banking and metals’ stocks dragged the Sensex below the 9k mark to hit a low of 8,992.
Although on the other side better-than-expected results from Infosys boosted other IT stocks.
However, mid-cap stocks like Rolta, Polaris plummeted after reports stated that theses companies may also face some issues with accounting and compliance.
Others like Jet Airways, ICSA India, BRFL and Gammon India also were under pressure for the compliance reason. Finally, the BSE benchmark Sensex ended at 9,071 losing 38 points and the NSE Nifty index lost 28 points to close at 2,744.
Shares pf PSTL have locked at 5% lower circuit to Rs33.7 after PS Saminathan, the founder chairman and MD of the company sold over 6% stake through off-market deals. The scrip has touched an intra-day high of Rs33.7 and a low of Rs33.7 and has recorded volumes of over 27,000 shares on NSE.
Shares of Bajaj Auto advances by over 1% to Rs432 after the company announced that it plans to launch six new bikes in 2009 to rev up market share. The scrip has touched an intra-day high of Rs448 and a low of Rs425 and has recorded volumes of over 19,000 shares on NSE.
NMDC has advanced by 3.7% to Rs152 following reports that it was looking for partners to jointly acquire mine coal blocks to secure fuel supplies.
The company has formed a venture with four other state-run companies to acquire coal mines overseas.The scrip has touched an intra-day high of Rs156 and a low of Rs146 and has recorded volumes of over 45,000 shares on NSE.
RCom has slipped by over 7’% to Rs165 after reports stated that the telecom tribunal TDSAT has dismissed the company’s plea for GSM spectrum in six circles. The scrip has touched an intra-day high of Rs186 and a low of Rs165 and has recorded volumes of over 1,00,00,000 shares on NSE.
The aftershocks from the Satyam quake would continue to haunt the Indian market. The unexpected improvement in the industrial production data may not prevent the key indices from slipping further as the economy will take time to pick up momentum again. Corporate earnings will continue to be in focus. Politics may become a key factor next month onwards till the end of Lok Sabha polls.