Truth is like the sun. You can shut it out for a time, but it ain't goin' away.
The sun has set on Satyam but we are not convinced if the confessions are to be taken at face value. Almost a decade ago India Infoline was the first to cite issues in Satyam’s balance sheet. In the coming days, a political angle could emerge. The real money may have made its way to a political party close to Satyam’s promoters. Figures of bribes paid for mega government projects through group companies too may be out it in the open soon.
The market has witnessed many a catastrophes and this too shall pass. But, one should not get carried away, as the undertone appears to have turned a bit weak yet again. Even globally, there has been a string of bad news in terms of profit warnings and grim economic numbers.
Today, the US government will release the monthly jobs report, which is expected to be bad. Back home, today’s inflation data will reveal further moderation in prices at the wholesale level. IIP may also rebound into positive zone (to be released on Monday). Corporate earnings announcements will gather pace from next week, with Infosys slated to declare results on January 13.
We see the key indices opening flat to slightly lower. Some bounce back may come later in the day. The market may turn choppy over the next few days given the anxiety over earnings and uncertainty about the emerging global situation. Stay on the sidelines for a while and wait for some more clarity on direction.
US stocks ended mixed on Thursday, as investors chose to remain cautious ahead of Friday's monthly jobs data. Earlier, losses were sparked by Wal-Mart's gloomy forecast and on a private survey that the private sector shed 693,000 jobs in December.
Bouncing back from a triple-digit decline, the Dow Jones Industrial Average ended down 27.24 points, or 0.3%, at 8,742.46.
The S&P 500 index gained 3.08 points, or 0.3%, to 909.73, with telecom services, energy and materials faring the best among the S&P's 10 industry groups. Also turning positive, the Nasdaq Composite index added 17.95 points, or 1.1%, to 1,617.01.
Wal-Mart proved to be the biggest laggard, off 7.5%. The world's largest retailer posted lower-than-expected December sales and cut its fourth-quarter forecast.
Market breadth was positive. Volume on the New York Stock Exchange came to nearly 1.2bn, and advancers outpaced decliners more than 3 to 2. On the Nasdaq, almost 754mn shares traded, and advancers led decliners 8 to 5.
US stocks had slipped on Wednesday and drifted on Thursday, as weak labor market reports and dour retail sales reports gave investors reasons to retreat after the recent rally.
But stocks recovered on Thursday afternoon after Democratic lawmakers said they have reached a deal with Citigroup to let bankruptcy judges change home loans in a bid to prevent foreclosures.
The combination of weak retail sales, questions about the economic stimulus plan and jitters about Friday's jobs report kept stocks choppy. The market should drift higher over the next few weeks, as more details of president-elect Barack Obama's new stimulus plan are revealed.
Obama made the case for his administration's $775bn stimulus package on Thursday morning, warning that failure to act could mean the recession lingers on for years.
As expected, the nation's retailers reported dismal December sales, as the recession continued to hit consumer spending. Many retailers also warned that quarterly results will decline as well.
In the final hour of trading, investors seemed cheered by news of a breakthrough agreement that could help curtail home foreclosures. Sen. Richard Durbin, D-Ill., hailed a decision by Citigroup to drop opposition to legislation that would give bankruptcy judges the power to eliminate some mortgage debt.
Better-than-anticipated weekly jobless claims data did little to overshadow the disappointing retail results, and they did not alter gloomy forecasts for Friday's unemployment report.
The US government early on Thursday reported a drop in weekly jobless claims, but analysts said the decline was likely due to technical glitches that come with seasonally adjusting the numbers around the holidays.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.44% from 2.49% on Wednesday. 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 1.35% from 1.40% on Wednesday. That marked a fresh 4 1/2 year low. Libor is a key bank lending rate.
In other overseas news, the Bank of England lowered its key interest rate by 50 basis points to 1.5%, the lowest level in the bank's history dating back to the late 17th century.
The dollar tumbled versus the euro and yen.
COMEX gold for February delivery rose $12.80 to settle at $854.50 an ounce.
US light crude oil for February delivery fell 93 cents to settle at $41.70 a barrel on the New York Mercantile Exchange after slumping 12% Wednesday.
Gasoline prices rose 3.5 cents to a national average of $1.762 a gallon.
Stocks in Europe fell on Thursday. The pan-European Dow Jones Stoxx 600 index fell 0.7% to 208.77, the second straight day of losses for the index. It gained about 10% in the five trading sessions ending Monday. The UK FTSE 100 index closed down 0.1% at 4,505.37. Germany's DAX 30 index fell 1.2% to 4,879.91 and the French CAC-40 index declined 0.7% to 3,324.33.
Indian market was jolted severely on Wednesday as stock markets snap a four day rally after the biggest corporate scam in India. Markets were unable to hold on to their early gains as sentiment was badly hit post the resignation of Ramalinga Raju from Satyam’s board.
Promoters of Satyam had cheated on its investors and stake holders as Ramalinga Raju confessed that the company had been manipulating its books of accounts by inflating its balance sheet for several years.
It was complete mayhem on Dalal-Street as all round selling in scrips across the sectors dragged the BSE benchmark Sensex and the NSE Nifty to drop below the 10,000 and 3,000 level respectively.
Heavy offloading was witnessed in the realty, oil & gas and IT stocks. Also the second rung stocks were badly battered as the BSE mid-cap and the BSE small-cap indices fell over 6% each.
The BSE benchmark Sensex ended down by 749 points at 9,586 and the NSE Nifty index was down by 192 points at 2,920.
Shares of Satyam tumbled by over 77% to Rs39 after Ramalinga Raju the chairman resigns from Satyam’s board. The scrip plunged to an intra-day low of Rs30 after hitting an intra-day high of Rs188. The stock recorded volumes of over 3,00,00,000 shares on NSE.
Shares of Unity Infraprojects declined 13% to Rs126. The company announced that it received a contract amounting to Rs740mn from Project Seabird, Deputy Director General, Government of India West Block New Delhi for Construction of Township and associated facilities at Amadalli for Project Seabird, Karwar (Civil Works Pkg - IX).
The scrip touched an intra-day high of Rs157 and a low of Rs120 and recorded volumes of over 33,000 shares on BSE.
Shares of HCC lost 15% to Rs50. Reports stated that the company plans to set up a high end township project near Sanand at a cost of Rs300bn. The scrip touched an intra-day high of Rs61 and a low of Rs48 and recorded volumes of over 15,00,000 shares on BSE.