The desire of gold is not for gold. It is for the means of freedom and benefit.
All that glitters in terms of investment remains Gold, which surged for the third straight day gaining almost 20% (in Mumbai) since Jan 16. As far as the stock market is concerned, we are in for another lackluster day. The change in settlement schedules due to Friday’s strike by RBI employees and Monday’s public holiday could add to meaningless swings. On the global front, Asian markets are mixed and volatile. The US stocks closed nearly unchanged, despite President Obama’s $275bn plan to stem foreclosures. The Federal Reserve however has cut its growth forecast for this year. European shares declined for a third consecutive day.
Given the uncertain backdrop and gloomy macro-economic scenario, we don’t see the Indian market making much headway in the near term. A sideways movement within a range of a few hundred points (on Nifty) appears more likely. There is no clear direction until we get fresh news-flow (bad or good) either locally or globally. Inflation data will be out later today, and a further slide in it is a given. However, it may not have a big impact on sentiment.
FIIs were net sellers in the cash segment on Wednesday at Rs2.88bn while the local institutions pumped in Rs1.02bn. In the F&O segment, the foreign funds were net sellers at Rs3.29bn. On Tuesday, FIIs were net sellers in the cash segment at Rs4.86bn. Mutual Funds were net sellers at Rs4.83bn on the same day.
US stocks finished more or less flat Wednesday, as strength in defensive stocks like Wal-Mart Stores and Procter & Gamble compensated for a slide in distressed stocks like General Motors, Citigroup and Bank of America, which neared their bear-market lows.
The Dow Jones Industrial Average added 3 points, or less than 0.1%, to end at 7,555.63. During the session, the Dow had fallen to the lowest point since Nov. 21, considered by some to be the low of the bear market.
The Standard & Poor's 500 index finished flat at 788.42. During the session, the S&P 500 also fell to its lowest point since Nov. 21. The Nasdaq Composite index lost less than 3 points or 0.2%, to close at 1,467.97.
The Federal Reserve revised lower its economic outlook for the first half of the year, saying it expects the economy to shrink and unemployment to rise. The report was part of the minutes from the last Fed policy meeting in which the bankers held interest rates steady at historic lows.
Obama unveiled a multi-billion dollar plan that is meant to help up to 9 million borrowers who are struggling amid falling home prices and unaffordable mortgage payments. Yet, investors remain worried about the prospects of an economic recovery and the timeline for any turnaround.
The Obama administration released some initial information last week about the multi-billion dollar bank bailout plan. But details were scarce and financial stocks have suffered since then. On Tuesday, President Obama signed into law the $787bn economic stimulus plan. But there are concerns that the plan is too heavy on spending.
January housing starts plummeted 17% from December to an all-time low. Building permits, a sign of builder confidence, fell 4.8% from December to an all-time low. Another report showed production at the nation's factories and mines slumped 1.8% in January, worse than expected.
After the market close on Tuesday, Chrysler and GM unveiled their plans for becoming viable after receiving $17.4bn in government aid late last year. The companies also said they would cut 50,000 jobs worldwide by the end of the year.
Goodyear Tire & Rubber said it will cut 5,000 jobs this year, as slowing auto sales have eaten into demand for its products.
Comcast reported a weaker quarterly profit and said it lost 233,000 subscribers in the fourth quarter of 2008. However, excluding charges, the cable provider's profit was better than what analysts were expecting. Shares fell 4% in active Nasdaq trading.
General Electric (GE) CEO Jeffrey Immelt said he gave up a 2008 bonus and other compensation in the aftermath of GE's weaker earnings and sliding stock price last year.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.75% from 2.65% on Monday. Treasury prices and yields move in opposite directions.
Lending rates were little changed. The 3-month Libor rate was 1.25%, unchanged from Tuesday. The overnight Libor rate fell to 0.3% from 0.31% on Tuesday. Libor is a bank lending rate.
US light crude oil for March delivery fell 31 cents to settle at $34.62 a barrel on the New York Mercantile Exchange. Gasoline prices decreased three-tenths of a cent to a national average of $1.957 a gallon.
The dollar gained against the euro and the yen. COMEX gold for April delivery rose $10.70 to settle at $978.20 an ounce.
After the market close, Hewlett-Packard (HP) reported lower fiscal first-quarter earnings that met analysts' estimates on higher revenue that missed estimates. The tech leader also gave a forecast for current-quarter results that is short of expectations. HP shares fell 4% in extended-hours trading.
Thursday brings quarterly earnings from General Motors, the weekly jobless claims report and a reading on wholesale inflation, all before the start of trading. The index of leading economic indicators is due after the start of trading, as is the Philadelphia Fed index - a regional manufacturing survey.
European shares declined for the third straight session, with energy producers pacing the drop as oil prices skidded lower. After a 2.5% drop on Tuesday on the back of Eastern European fears, the pan-European Dow Jones Stoxx 600 index closed 0.3% lower to 183.35.
UK's FTSE 100 index lost 0.7% to 4,006.83, while Germany's DAX 30 index fell 0.3% to 4,204.96 and the French CAC-40 index declined a sliver to 2,874.07.
Indian shares ended on a flat note on Wednesday after a choppy day, as traders took a breather after three straight sessions of heavy losses. Key stock indices remained in a narrow range through out the trading session, swinging between gains and losses. The bulls did manage to pull into in the green in the mid-afternoon session. The indices slipped again towards the end of trade to close barely changed.
Finally, the BSE Sensex declined by 20 points to close at 9,015 and the NSE Nifty finished almost unchanged at 2,776.
Among the 30-components of Sensex, 15 stocks ended in the red and 15 stocks ended in the positive terrain. The major gainers were, Reliance Industries, Bharti, NTPC, DLF and Maruti. On the other hand, the major losers were ICICI Bank, HDFC, SBI, M&M, L&T and Reliance Infra.
Shares of DLF surged by over 7% to Rs158 after reports stated that the government would consider 16 SEZ proposals including those from DLF next week. The scrip touched an intra-day high of Rs162 and a low of Rs142 and recorded volumes of over 87,00,000 shares on BSE.
Shares of Reliance Power slipped 0.4% to Rs100. Reports stated that the company was looking to start construction work at Butibori next week. The scrip touched an intra-day high of Rs102.6 and a low of Rs98 and recorded volumes of over 8,00,000 shares on BSE.
Shares of ITC erased gains and slipped by a percent to Rs179. The stock had earlier surged after reports stated that the Supreme Court ordered customs department not to take any action against the company. The scrip touched an intra-day high of Rs182 and a low of Rs178 and recorded volumes of over 4,00,000 shares on BSE.
Shares of Reliance Industries gained by 2% to Rs1294 after Petroleum Minister Murli Deora said that the company would start supplying natural gas from its eastern offshore KG-D6 fields by April.
The scrip touched an intra-day high of Rs1316 and a low of Rs1248 and recorded volumes of over 19,00,000 shares on BSE.
Maytas Infra surged by over 4% to Rs56.4 after the government sought the removal of the construction company’s directors.
The government asked the company Law Board to remove the directors of Maytas Infra and Maytas Properties Ltd. The scrip touched an intra-day high of Rs56.8 and a low of Rs51.4 and recorded volumes of over 14,00,000 shares on BSE.
Looking at the lackluster movement, markets might struggle to find direction. Again a lot would depend on the global cues.