It's easier to resist at the beginning than at the end.- Leonardo da Vinci.
The slight recovery on Thursday may make one forget that the Sensex and Nifty are down about 2-3% each this month. Some news the market and the industry will hope to hold on dear to is the heftier packets by way of an additional 6% dearness allowance from next month for government employees. Consumption and savings could see improvement. How the rising fiscal deficit would be contained remains a mystery. Today, we expect another cautious start and a lackluster day due to mixed global cues.
The government will release Q3 GDP data today, and consensus forecast is that growth will slip below 7%. Among the other news to watch out for is Tata Steel’s consolidated results. Meanwhile, the Rupee has slipped to a low of 50.69 versus the US dollar.
Though India’s performance in February is better than some other global indices, economic and business conditions continue to be highly challenging. Trading this month was quite choppy with the Nifty gyrating in a range of 300 points. The trend may remain the same in March as well. The bias is likely to remain on the downside, considering the strong headwinds. The jury’s still out on whether the key indices will make new lows or not.
Top companies like GM and RBS have announced massive losses. Economic reports from across the globe too reveal further pain. And, India is no exception, though it may still manage a moderately better performance.
US stocks fell for a second day, erasing early gains, as investors focused on the healthcare and banking initiatives in President Obama's federal budget amid continued worries about the state of the world's largest economy.
Concerns that healthcare companies' profits will be hurt by a White House overhaul of the medical system offset a rally in banks spurred by the administration’s request for more financial-rescue funds.
The Dow Jones Industrial Average lost 89 points, or 1.2%, to 7,182.08. The S&P 500 index lost 12 points or 1.6%, to 752.83. The Nasdaq Composite index slid 34 points, or 2.4%, to 1,391.47.
A bank sector rally propelled the market through the late morning. But the advance lost steam as the session wore on and stocks closed in the red.
Banking stocks held on to gains on hopes for the government's various rescue plans. But technology, transportation, retail and healthcare stocks declined.
The markets have been disappointed by what the Obama regime has been coming up with in terms of solutions for the housing collapse and bank crisis. Until investors have some confidence in the various plans, the downturn will continue.
Bank stocks have crawled back over the last few sessions on hopes that the government's plans to help the financial sector will work. But those hopes could be dashed if more details don't emerge soon, say some analysts.
President Obama outlined his plans for the federal budget for the next 10 years, with a more detailed account due in April. The plan includes making permanent some tax breaks from the stimulus plan, ending certain tax breaks for the wealthy and moving closer to a universal healthcare system.
The budget includes an additional $250 billion to stabilize the financial system. That would be on top of the $700 billion bank bailout plan already in existence. The plan calls for $3.6 trillion in spending in fiscal 2010, which begins in October.
The government is forecasting a $1.75 trillion deficit for the 2009 fiscal year and a $1.17 trillion deficit for the 2010 fiscal year. Obama has said he plans to cut the deficit inherited from former President George W. Bush in half by 2013.
JPMorgan Chase said it expects steeper home-equity loan losses this year and that it will cut up to 14,000 jobs, more than it said previously. Shares gained 6%, closing off their highs.
Citigroup is close to finalizing a deal for the government to increase its stake in the troubled bank to as much as 40%, according to reports. A deal was expected to be announced shortly. Citi shares tumbled 2.4%, erasing early gains.
Royal Bank of Scotland (RBS) will dump £325 billion ($462.7 billion) in bad debt into the government program. RBS posted an annual loss of £24.14 billion ($34.4 billion), the biggest loss in British corporate history. RBS announced a huge restructuring plan and said it will sell off certain assets. Shares gained 18.8% in US trading.
Swiss bank UBS has named Oswald Gruebel, the former head of Credit Suisse, as its new CEO, replacing its much-criticized CEO Marcel Rohner. Shares gained 10%.
GM reported a massive $9.6 billion quarterly loss in the fourth quarter, in a period in which its sales plunged and it needed a federal bailout to stay afloat. GM shares fell 6.7%.
A variety of healthcare companies slipped in response to the overhaul detailed in President Obama's budget, in particular the smaller Medicare payments to private insurers.
Yahoo shares gained on news that Chief Financial Officer Blake Jorgensen is leaving as part of a broader reorganization initiated by new CEO Carol Bartz.
New home sales plunged to an annual unit rate of 309,000 in January, the worst level since the government began keeping records in 1963. Economists thought sales would fall to 324,000 in the month. Sales stood at a 344,000 annual unit rate in December.
An earlier report showed that weekly jobless claims rose to a fresh 26-year high last week of 667,000 versus forecasts for a drop to 625,000. Claims stood at a revised 631,000 in the prior week.
Durable goods orders fell to a 6-year low in January, declining for the sixth straight month, the government reported. Orders fell 5.2% in January versus forecasts for a drop of 2.5%. Orders dropped a revised 4.6% in December.
Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.99% from 2.92% on Wednesday. Treasury prices and yields move in opposite directions.
Lending rates were little changed. The 3-month Libor rate was 1.26%, unchanged from Wednesday and the overnight Libor rate rose to 0.28% from 0.27%. Libor is a bank lending rate.
In currency trading, the dollar fell versus the euro and gained against the yen.
US light crude oil for April delivery rose $2.72 to settle at $45.22 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery fell $23.60 to settle at $942.60 an ounce.
After the close, Dell reported quarterly sales and earnings that missed analysts' forecasts, sending shares 3% lower in extended-hours trading.
Reports on GDP growth and manufacturing are due Friday morning.
European shares closed higher for the first time in five sessions, with banks in the lead as Royal Bank of Scotland and UBS posted strong share price gains after announcing separate restructurings.
The pan-European Dow Jones Stoxx 600 index rose 2.2% to 176.14, with banks at the forefront of those gains.
UK-based FTSE 100 index climbed 1.7% to 3,915.64, while Germany's DAX 30 index advanced 2.5% to 3,942.62 and the French CAC-40 index rose 1.8% to 2,744.84.
A lackluster day ended with modest gains on Thursday. After a weak star, key indices climbed gradually throughout the day aided by falling inflation, firm European markets and buying momentum in the index heavyweights. Finally, the BSE Sensex advanced 52 points to close at 8,954 and the NSE Nifty was up 23 at 2,785.
Among the 30-components of Sensex, 21 stocks ended in positive terrain and 9 stocks ended in the red. Among the major gainers were, Tata Motors, Grasim, Maruti, ONGC, RCom, NTPC and Sterlite.
Among the major laggards were, Ranbaxy, ICICI Bank, HDFC, Hindalco and Tata Power.
Petron Engineering announced that it received two orders worth Rs725.5mn from HPCL - Mittal Energy Ltd (HMEL), Bathinda (Punjab). The stock gained by 0.7% to Rs67 after hitting an intra-day high of Rs70 and a low of Rs67.5.
Shares of KEC International slipped 1.5% to Rs125. The company announced that it won order worth Rs2.27bn from Power Grid Corp. The scrip touched an intra-day high of Rs134 and a low of Rs125 and recorded volumes of over 32,000 shares on BSE.
Shares of GMR Infra gained by 4.5% to Rs78 after the company yesterday announced that GMR Energy, a subsidiary of GMR Infrastructure acquired 100% stake in Barasentosa Lestari PT, an Indonesian coal mining company for US$80mn. The scrip touched an intra-day high of Rs79 and a low of Rs75 and recorded volumes of over 0.9mn shares on BSE.
Shares of RCom advanced by 3% to Rs158 after reports stated that the company would raise Rs130bn debt in the next three months to meet certain capex requirements and scheduled debt repayment obligations. The scrip touched an intra-day high of Rs159 and a low of Rs153 and recorded volumes of over 2.2mn shares on BSE.
Shares of Ranbaxy plunged by over 18% to Rs169 after US regulator said that Ranbaxy won’t be allowed to introduce new generic drugs from one of its factories after it falsified data about products’ shelf life. The scrip touched an intra-day high of Rs204 and a low of Rs168 and recorded volumes of over 6mn shares on BSE.
Shares of Piramal Healthcare rallied by over 17% to Rs208 after reports stated that Sanofi- Aventis has emerged in the lead to buy a substantial stake in the company. The scrip touched an intra-day high of Rs219 and a low of Rs185 and recorded volumes of over 1.3mn shares on BSE.
Shares of DLF erased early losses and manage to end higher by half a percent to Rs155. The stock had dropped to a low of Rs146 after the company announced that the authorities were to carry out an assessment of its accounts. The junior finance minister, S.S. Palanimanickam, told parliament the previous day that the income tax department was auditing the company. The scrip touched an intra-day high of Rs156 and a low of Rs146 and recorded volumes of over 6.4mn shares on BSE.
With F&O expiry out of the way, markets might consolidate further. Government would release quarterly GDP numbers on Friday. Also global cues would direct the markets atleast at open.