Whenever you fall pick up something!
Picking up oneself after a market fall is in itself an achievement. The world has to grapple with fresh signs of economic weakness even as Barack Obama gradually settles down in the White House. The bad news is coming from other parts of the globe, like Europe and Asia. China’s economy grew at the slowest pace in seven years in Q4 of 2008. South Korea’s GDP has shrunk by a bigger-than-expected 5.6%. Singapore’s economy is likely to contract by up to 5% this year. Europe is engaged in renewed fire-fighting to keep its banking sector from collapsing. News from the corporate side is anything but cheerful, with job cuts and plant shutdowns galore.
Back to India, we may still get away with a slight bounce early on due to the overnight rally in US stocks. A few Asian indices are up about 1%. But, one must not get carried away as the outlook remains murky. Inflation will be out today, and may slip below 5%. A top government official sees deflation in the next few months. This may prompt the RBI to go for further monetary easing. However, it remains to be seen what it does in next week’s review. Market is also eagerly awaiting some crucial results today, including that of index bellwether RIL. Chances are RIL will maintain its gross refining margins. The overall numbers may be a different picture altogether.
Key Results Today: 3i Infotech, Bank of India, Bharat Forge, BPL, Cipla, Dish TV, Future Capital, Gateway Distriparks, Idea Cellular, Inox, Ipca Labs, JB chemicals, J Kumar Infra, JK Tyre, Kotak Mahindra Bank, Marico, Navneet Publication, NDTV, Noida Toll, Novartis, Piramal Healthcare, Praj Industries, Ranbaxy, Reliance Infra, Reliance Industries, Reliance Power, Tata Sponge, TVS Motor, Voltas, Zandu Pharma and Zee News.
US shares closed sharply higher on Wednesday, led by strong gains in the financial space, as traders perceived the previous day's sell-off as overdone. IBM's solid earnings coupled with news of Bank of America share purchases by company executives helped improve sentiment.
The Dow Jones Industrial Average advanced 279.01 points, or 3.5%, to 8,228.1. The Standard & Poor’s 500 Index rose 35.03 points, or 4.4% to 840.24, its steepest gain since Dec. 16. The Nasdaq Composite index gained 66.21 points, or 4.6%, to 1,507.07.
The Dow had earlier reversed an early triple-digit rise to briefly dip into negative territory before resuming its course higher.
Bank of America jumped 31%, the most since at least 1980, after CEO Kenneth Lewis and five directors bought shares. Citigroup and JPMorgan Chase rallied more than 25%, helping the S&P 500 Financials Index rebound from its lowest level since 1995 with a 15% gain.
US stocks had fallen to two-month lows on Tuesday, closing below 8,000 for the first time since November, as worries about the banking sector overshadowed President Barack Obama's historic inauguration. It was the market's worst Inauguration Day performance ever, according to S&P.
Market sentiment was better on Wednesday, as demonstrated by the CBOE Volatility index or the VIX. The market's fear gauge dropped a good 10 points after jumping more than 10 points on Tuesday.
IBM reported quarterly earnings late on Tuesday that rose from a year earlier and topped estimates, on revenue that fell from the prior year and missed estimates. The IT services company also forecast that it would earn $9.20 per share this year, 45 cents more than what analysts had been expecting. IBM shares gained 11.5%.
S&P 500 earnings are expected to have fallen more than 20% in the fourth quarter of 2008, according to the latest Thomson Reuters tallies. That would make it the sixth consecutive quarter of slowing earnings.
United Technologies reported higher quarterly earnings that topped forecasts on revenue that fell from a year earlier and missed forecasts. The company also reiterated its 2009 forecast. Shares ended little changed.
GM lost its crown as the world's largest automaker to Toyota in 2008, as the company sold 610,000 fewer cars than its rival. GM's global sales fell 10.8% in 2008 to 8.36 million vehicles. Shares erased losses to end with modest gains.
Ericsson reported fourth-quarter earnings that beat estimates and also said it was cutting 5,000 jobs to save costs. Shares of the Swedish telecom rose 16.6%.
United Airlines' parent UAL also reported a wider quarterly loss versus a year ago. However the loss was not as steep as some analysts were expecting. Shares fell 6%. Fellow airline AMR reported a wider quarterly net loss that was worse than expected. AMR shares fell 24%.
Obama's pick for Treasury Secretary, Tim Geithner, testified before the Senate Finance Committee. He said that bold action is needed to soften the blow of the economic downturn. Geithner also said that if confirmed, he would work to reform the Troubled Asset Relief Program (TARP), the government's much-maligned $700bn bank rescue plan.
After the close, Apple reported higher fiscal first quarter sales and earnings that topped estimates. The tech leader also issued a fiscal second quarter sales and earnings forecast that was short of forecasts. But investors focused on the earnings and sent shares 9% higher in extended-hours trading.
eBay reported a lower fourth-quarter profit that nonetheless topped estimates. The online auctioneer also issued a current-quarter profit forecast that is short of expectations. Shares fell in extended-hours trading.
Intel said that it was shuttering sites in Asia and scaling back US operations in a restructuring move that will affect up to 6,000 people.
Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.52% from 2.33% on Tuesday. 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 held steady at 1.12%. Overnight Libor rose to 0.19% from 0.14%. Libor is a bank-to-bank lending rate.
US light crude oil for March delivery rose $2.71 to settle at $43.55 a barrel on the New York Mercantile Exchange. Gasoline prices rose one-half of a cent to a national average of $1.848 a gallon.
The dollar fell against the euro and the yen. COMEX gold for February delivery fell $5.10 to settle at $850.10 an ounce.
Banks dropped again in Europe on Tuesday, weighing on the broader market. The pan-European Dow Jones Stoxx 600 index declined 2.1% to 185.70, as the banking sector tanked 7.3%.
The French CAC-40 index declined 2.2% to 2,925.28, while Germany's DAX 30 index fell 1.8% to 4,239.85 and the UK's FTSE 100 index closed down 0.4% to 4,091.40.
Indian market extended losses to third straight trading session on Wednesday as a sell off in the equity markets across the globe triggered a broad-based selling on the Indian bourse. The slide was led by metal, banking, oil & gas, realty and IT stocks.
The BSE benchmark Sensex lost 321 points to close at 8,779 and the NSE Nifty lost 90 points to close at 2,706.
Among the 30-components of Sensex, 28 stocks ended in the red and only 2 stocks ended in the positive terrain. Among the major losers in Sensex were Reliance Industries, Bharti, ICICI Bank, HDFC and Infosys.
Bucking the negative trend were Hindustan Unilever and ITC.
Shares of Educomp plunged by over 22% to Rs1534 after reports surfaced that the company may have fabricated its accounts overstating its turnover and profits to boost its shares and the promoters exited when stock prices reached its peak.
The company said that it has lodged a complaint with the police to investigate "malicious emails" and rumors about the company.
The stock had hit 52-week high of Rs4,860 on January 21, 2008 and a 52-week low of Rs1,376 on January 21, 2009.
Shares of Wipro have slipped by 3.5% to Rs219 after the company announced its consolidated results for third quarter missing market estimates. The company posted net profit of Rs10.04bn against Rs9.70bn in the July to September quarter.
Net sales were at Rs66.34bn against Rs65.20bn in the second quarter. The scrip touched an intra-day high of Rs224 and a low of Rs215 and recorded volumes of over 7,00,000 shares on BSE.
Shares of Dr. Reddy’s Lab slipped by 4% to close at Rs444. The company announced its Q3 results posting net profit from a loss a year earlier. Net income for the quarter ended Dec. 31 was Rs1.92bn. The scrip touched an intra-day high of Rs467 and a low of Rs442 and recorded volumes of over 72,000 shares on BSE.
Shares of Hero Honda advanced by a percent to Rs839 after the company announced a better-than-estimated 9.1% gain in third-quarter profit. Net income rose to Rs3bn. The scrip touched an intra-day high of Rs848 and a low of Rs830 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Indian Bank gained by 0.2% to Rs124 after the company’s net profit rose by 14% to Rs3,507.02mn for the quarter ended December 31, 2008 as compared to Rs3,075.04mn for the quarter ended December 31, 2007.
Total Income increased from Rs16,760mn for the quarter ended December 31, 2007 to Rs20,713.72mn for the quarter ended December 31, 2008. The scrip touched an intra-day high of Rs129 and a low of Rs123 and recorded volumes of over 2,00,000 shares on BSE.
Madras Aluminium was locked at 5% upper circuit to Rs62.10 after reports stated that Vedanta Resources Plc is planning to buyback the remaining 20% stake held by the public in Madras Aluminium Ltd. The scrip touched an intra-day high of Rs62.10 and a low of Rs62.1 and recorded volumes of over 4,000 shares on BSE.
Market mood would continue to remain jittery ahead of the important results to be announced on Thursday. Also weekly inflation data to be released would effect the market sentiments.