Happiness is not a brilliant climax to years of grim struggle and anxiety. It is a long succession of little decisions simply to be happy in the moment.”
Happiness seems to be the resting with the bears for some time. Of course those with handy cash can take little decisions to pick scrips and exit at the first spurt. We hate to start with a grim prediction. The truth is that all signs are pointing to another weak opening and possibly another bad day in office for the bulls.
The US market suffered a big blow overnight amid pessimism about whether the Obama regime will be able to turn things around. Wall Street was shut on Monday when global markets were down. So, we hope that it was just playing catch up.
Markets in Europe and other parts of the world were also down sharply on Tuesday. In commodities, gold hit a seven-month high above $975 an ounce. Crude oil tumbled below $35 per barrel. Other commodities were also hit badly. In Asia, most stock benchmarks have extended recent losses.
It’s a no-brainer that Indian stocks will also fall today. One may think that the current sell-off is overdone, but unless the advanced economies stabilise, a sustained rebound is not possible. It’s going to be a long, hard road ahead.
FIIs were net sellers in the cash segment on Tuesday at Rs4.62bn while the local institutions pumped in Rs2.78bn. In the F&O segment, the foreign funds were net buyers at Rs4.81bn. On Monday, FIIs were net sellers in the cash segment at Rs2.83bn. Mutual Funds were net sellers at Rs2.88bn on the same day.
US stocks tumbled on Tuesday, extending the current bad run in global equities amid mounting concerns that the worldwide recession is spiraling out of control. The S&P 500 Index fell below 800 for the first time in nearly three months.
The sentiment remained weak amid apprehensions that the Obama administration's efforts to combat the recession won't be sufficient even as the US President signed the US$787bn economic stimulus bill into law.
The Dow Jones Industrial Average slid nearly 298 points, or 3.8%, to 7,552.6, ending just above the bear market closing low of 7,552.29 struck on Nov. 20. All but one of the blue-chip index's 30 components - Wal-Mart Stores - posted losses. The Dow fell as low as 7,551.01, above its Nov. 20 intraday low of 7,464.51.
The S&P 500 index plunged 37.67 points, or 4.6%, to finish at 789.17, just above its 752.44 close on Nov. 20, when it ended at its lowest level since November of 2002. The Nasdaq Composite Index shed 63.7 points, or 4.2%, to 1,470.66.
Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by more than 14 to 1 on volume of 1.6bn shares. On the Nasdaq, losers topped winners by almost 6 to 1 on volume of 2.4bn shares.
Wall Street retreated last week and resumed the sell-off on Tuesday. All financial markets were closed Monday for Presidents Day.
US investors were also concerned about the automakers, as Chrysler and GM were scheduled to announce their plans for becoming viable after receiving US$17.4bn in government aid.
After the market close, Chrysler said it will need at least US$5bn more to turn the company around, and that it will cut 3,000 jobs. GM said it needs an additional US$9.1bn and that if economic conditions deteriorate, it could increase that figure to US$16.6bn. The company also said that it will accelerate 47,000 job cuts.
President Obama signed into law the US$787bn stimulus bill Tuesday afternoon. Both chambers of Congress approved the bill last week, largely along party lines. The package includes at least US$290bn in tax provisions, as well as billions in aid and spending.
The financial sector suffered a big setback last week after Treasury Secretary Tim Geithner's bank bailout plan failed to provide the requisite detail that would have reassured investors. Bank stocks continued to plunge, with the KBW Bank index losing 10%.
Wal-Mart reported lower quarterly earnings that, excluding charges, topped analysts' estimates. However, the world's largest retailer forecast first-quarter earnings that are short of forecasts. Shares gained 3.7%.
Trump Entertainment Resorts filed for Chapter 11 bankruptcy protection, as the recession and weaker gambling revenue took a toll. Shares fell nearly 22%.
The day's one economic report of note was much weaker than expected. The N.Y. Empire State index, a regional manufacturing report, fell to negative 34.65 in February from negative 22.2 in the prior month. Economists expected a smaller decline.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.65% from 2.89% on Friday. Bond markets were closed on Monday. Treasury prices and yields move in opposite directions.
Lending rates inched higher. The 3-month Libor rate was 1.25% on Tuesday, up from 1.24% on Friday. The overnight Libor rate rose to 0.31% from 0.30%. Libor is a bank lending rate.
US light crude oil for March delivery fell US$2.58 to settle at US$34.93 a barrel on the New York Mercantile Exchange. Gasoline prices decreased half a cent to a national average of US$1.96 a gallon.
The dollar gained against the euro and fell against the yen. COMEX gold for April delivery rose US$25.30 to settle at US$967.50 an ounce.
Leading Western European banks were punished over their exposure to Eastern Europe, with losses from the sector helping to drag the broader market to three-week lows. The pan-European Dow Jones Stoxx 600 index traded down 2.5% to 183.98, a level not seen since Jan. 23.
Germany's DAX 30 index slid 3.4% to 4,216.60, while the French CAC-40 index dropped 2.9% to 2,875.23 and the UK's FTSE 100 index fell 2.4% to 4,034.13. In Austria, the Western European economy most geared toward Eastern Europe, the ATX tumbled 7.6% to 1,496.59.
Weak global cues, disappointing interim budget and selling pressure dragged the Indian bourses to fall sharply. It was the third straight trading session where the bears dominated. Heavyweights like Reliance Industries, ICICI Bank, Infosys, HDFC and HDFC Bank were among the major laggards. Finally, the Sensex declined 270 points to close at 9,035 and the Nifty slipped 78 points to close at 2,770.
Among the 30-components of Sensex, 29 stocks ended in the red and only stock bucking the negative trend was ITC. The major losers in the Sensex were Tata Steel, ICICI Bank, DLF, M&M, Hindalco, RCom and HDFC.
Among the major BSE Sectoral indices BSE Realty index was the top loser, the index fell 5%. Among the other major losers were BSE Consumer Durable index (down 5%), BSE Baknex index (down 4.5%) and BSE IT index (down 4%).
Even the BSE Mid-cap and the BSE Small-cap index fell over 2% each.
Shares of Corp Bank slipped by 2% Rs168. The company announced that it has planned raising Rs7bn via bonds. The scrip touched an intra-day high of Rs171 and a low of Rs167 and recorded volumes of over 6,000 shares on BSE.
Shares of Hindalco slipped by 4% to Rs42. According to reports, the company would use its Rs86bn share premium account to write off costs incurred on buying Novelis and to use the fund for its expansion purpose. The scrip touched an intra-day high of Rs44 and a low of Rs41 and recorded volumes of over 18,00,000 shares on BSE.
Jindal Steel & Power announced that the company would start production at its Bolivia mine in 6 months. It also said that, it would invest as much as US$20mn in Congo Diamond mine. The company aims to increase annual steel production to 2.6 million tons in 18 months.
The scrip ended at Rs974 down by 4% after hitting an intra-day high of Rs1015 and a low of Rs915 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Bajaj Auto Finance erased gains and ended flat at Rs57.6. The stock had earlier surged by over 5% after ~537,000 shares of the company were traded in two transactions at an average price of Rs62 per share. The scrip touched an intra-day high of Rs63 and a low of Rs56 and recorded volumes of over 9,00,000 shares on BSE.