Safety is not a gadget but a state of mind.
Imagine. A US Airways plane crash lands into the Hudson River and most of them on board survive. Similarly, US stocks too rebounded remarkably, on news that Bank of America will get a new lifeline from the government. A measure to block the release of the second part of the stimulus plan was dismissed in the Senate, giving the incoming Obama regime the final $350bn of TARP funds. The twin bit of good news put short sellers on the defensive, leading to a sharp snap-back in the afternoon session.
Coming to the Indian market, most participants have been crash landing since the start of 2008 and have found to their dismay that there is no pilot to take charge. In turbulent times, one has to be one’s own saviour and hope for some luck. What one also needs is a bit of a pluck.
Today, we see the market opening higher after Thursday’s setback. The bulls may be able to hold on to the gains if global markets are supportive, and there is no fresh bad news from any quarter. One caveat though, one should avoid any flights of fantasy given the uncertain scenario.
Key Results Today: Alphageo, Bajaj Holding, Bajaj Auto, Federal Bank, Hindustan Construction, Jet Airways, JP Hydro, MMTC and Zensar Technologies.
FIIs were net sellers in the cash segment on Thursday at Rs4.84bn (provisional) while the local institutions pumped in Rs1.75bn. In the F&O segment, the foreign funds were net sellers at Rs8.07bn. On Wednesday, they were net buyers of Rs748mn while Mutual Funds were net sellers of Rs1.46bn.
US stocks posted modest gains on Thursday, thanks largely to a late rally that was sparked off by news of Bank of America getting up to $200bn from the government and the president-elect Obama getting the second part of the stimulus announced by his predecessor.
Stocks tumbled through most of the session on worries about the banking sector's financial health, the future of Apple, and the depth of the recession. But stocks snapped back in the afternoon after more information circulated about the government's economic stimulus plan and reports that Bank of America may get a government-backed guarantee related to its purchase of Merrill Lynch.
Investors also reacted to the latest details about the proposed economic stimulus plan. House Democrats are pitching an $825bn bill that is roughly $550bn in spending and $275bn in tax cuts. The measure is likely the most expensive spending plan Congress has ever proposed.
After the close, a Senate measure to block the release of the second half of the bailout failed, giving the Treasury and Obama access to the remaining $350bn.
Fear of a prolonged recession has taken its toll on US stocks in the new year. As of Thursday's close, the S&P 500 is down almost 7% year-to-date.
For the week ended Jan. 14, investors pulled $13.3bn out of stock funds, according to investment-research firm Trim Tabs. In the previous week, investors poured $6.4bn into funds.
JPMorgan Chase reported a surprise quarterly profit. But income was down 76% from a year ago, and the company's CEO, Jamie Dimon, warned that the economy and financial sector will continue to weaken. Shares fell 6% after spending time on both sides of breakeven through the session.
Bank of America tumbled 18.4% on reports that the company is seeking billions more in federal funds to help it complete the purchase of Merrill Lynch. Shares had been down more than 26% in the morning, before the broad market turned around.
Citigroup shares slipped 15.5% one day before the company is expected to report another massive quarterly loss and announce restructuring moves. Earlier, Citi had been down as much as 25%.
On Wednesday, Citi said it is selling a majority stake in its brokerage unit to Morgan Stanley, a move that would seem to indicate the beginning of the break-up of the troubled banking firm.
Apple CEO Steve Jobs said late on Wednesday that he is taking a medical leave through the end of the second quarter because his health-related issues are more complex than he thought. Shares closed down 2.3%, erasing bigger losses.
In other news, Motorola said late on Wednesday that it will slash 4,000 jobs on top of the 3,000 cuts it announced in late 2008. Shares gained 7%.
In the day's economic reports, both the New York Empire State index and the Philadelphia Fed index fell more than expected, showing the deepening recession. The number of people filing for first-time unemployment benefits rose more than expected last week, pushing the number to 524,000.
The Producer Price Index (PPI), a measure of wholesale inflation, fell 1.9% last month, as expected. PPI fell 2.2% in November. The so-called core PPI, which strips out volatile food and energy prices, rose 0.2% after rising 0.1% in the previous month. Economists thought it would rise 0.1%.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.21% from 2.20% on Wednesday. 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 tightened. The 3-month Libor rate rose to 1.09% from 1.08% Wednesday, a five-year low, according to the British Banker's Association. Overnight Libor rose to 0.12% from 0.10% on Wednesday, a record low.
US light crude oil for February delivery fell $1.88 to settle at $35.40 a barrel on the New York Mercantile Exchange. COMEX gold for February delivery fell $13.40 to settle at $807.30 an ounce.
The dollar fell versus the euro and gained against the yen. Gasoline prices rose seven-tenths of a cent to a national average of $1.799 a gallon.
After the close, Intel reported a 90% drop in fourth-quarter earnings that nonetheless met forecasts. Shares gained modestly in extended-hours trading.
Also, Bank of America said that it will report fourth quarter and full-year 2008 earnings Friday morning.
European shares fell for the seventh session in a row on Thursday, as economic troubles pressured banks once more and prompted the European Central Bank (ECB) to slash interest rates.
The pan-European Dow Jones Stoxx 600 index fell 0.9% to 191.17 in a choppy session, with banks the worst performers once more. The ECB lowered its key interest rate by 50 basis points to 2.0%, matching an all-time low.
Germany's DAX 30 index fell 1.9% to 4,336.73, while the French CAC-40 index declined 1.8% to 2,995.88 while the UK's FTSE 100 index closed down 1.4% at 4,121.11.
Bulls were unable to carry the previous day’s momentum as weak global cues and profit booking at higher levels dragged the BSE benchmark Sensex below the 9,000 mark in intra-day trades.
Selling was witnessed all over the bourses with banking, realty and metal stocks among the major losers. Also the second rung stocks were under pressure. However despite all the odds the BSE benchmark Sensex managed to end the day above the 9,000 level.
The BSE benchmark Sensex ended at 9,046 plunging 323 points and the NSE Nifty index losing 98 points to close at 2,736.
Shares of Sasken Communication plummeted by over 19% after reports stated that the company may lose orders because of the bankruptcy filed by Nortel Networks Corp. The scrip touched an intra-day high of Rs49.9 and a low of Rs43 and recorded volumes of over 11,00,000 shares on BSE.
Shares of Satyam plunged by over 30% on Thursday to end at Rs20 per share after the government announced that it was not considering bailing out the company.
Shares of Infosys fell over 4% to end at Rs1252. The company announced that it does not see any impact on its finances after one of its clients Nortel Networks filed for bankruptcy. The company also clarified that Nortel's contribution to Infosys revenues was less than half a percent of our yearly revenues.
Shares of Wipro were also down by 3% to Rs235. The company came out and clarified saying that Nortel one of its clients accounts for less than 1.5% of the IT business revenue.
Maytas Infra continued its downward journey; the stock was locked at 5% lower circuit to Rs123.15. According to reports, the company is in talks with two other organizations to sell stakes in projects it can’t afford to complete
The company controlled by the family of Ramalinga Raju, the former chairman of Satyam Computer needs around Rs13bn in working capital and is stated to be in negotiation with Nagarjuna Construction and Ramky Infrastructure to sell the stakes, added reports. The scrip touched an intra-day high of Rs123.15 and a low of Rs123.15 and recorded volumes of over 1,000 shares on BSE.