Between stimulus and response is our greatest power - the freedom to choose
The RBI may well choose not to respond to the pleas of the bulls. Expectations are that a status quo could be maintained like in many earlier policies and action would be initiated at an ‘appropriate time’ later. Given that the lending activity has not picked up as much as RBI would like to see despite the liquidity easing, the central bank may choose to ask banks to lend more to specific sectors.
The markets have expectedly turned choppy. Given the gains in recent weeks, a cool-off was always on the cards. How the RBI plays its cards today will determine the further course of action (just for the day).
The market is likely to open weak. The global cues are adding to the discomfort. US markets tumbled snapping a six-week long rally on concerns about the financial sector earnings.
Bank of America Corp slumped 24%, Citigroup Inc. declined 19%, U.S. Steel Corp. and Exxon Mobil Corp. also were major losers as oil and industrial metal prices decreased.
The Dow Jones industrial average fell 290 points, or 3.6%. The S&P 500 index declined 37 points, or 4.3% and the Nasdaq composite was down 65 points, or 3.9%.
In Asia, equity markets lost ground in the morning trades following a steep decline in the US. The fall was led by the financial and mining stocks. Orix Corp fell 6%, BHP Billiton fell 3.6% and Mitsubishi Corp slipped 5% were among the major losers.
The Nikkei index in Japan was down 299 points or 3.3% at 8,625.6, the Hang Seng index in Hong Kong fell 551 points or 3.5% at 15,210, however, the Shanghai SE Composite was flat at 2,551.
Results today: Wipro, Hero Honda, HCL Tech, Praj Industries, Rolta, Ultra-tech
Second rung stocks seem to be outperforming the main indices. Metals, capital goods and realty space were among the gainers on Monday.
The US Food and Drug Administration found nine deviations in Cipla’s manufacturing process during a recent inspection of its Bangalore plant, according to a report. The company, however, said the deviations are minor ones.
Power Grid Corporation plans a capex of Rs 120bn for the current fiscal year, much higher than the Rs90bn spent in the previous year.
Jet Airways and Kingfisher airlines raised fuel surcharge on domestic flights following a hike in ATF. The scrips were up 4.5 per cent and 8 per cent respectively.
Vakrangee Softwares gained after it said it expects revenue of about $15.67 million during the fiscal year 2009-10 from a tripartite agreement with 1 Document Corporation and IL&FS Technologies.
PSU refiners are likely to cut diesel imports and buy from Reliance Industries, which has started looking at the domestic market, Petroleum Secretary R.S. Pandey was quoted as saying. It may be recalled that RIL surrendered the export status, and the associated tax benefits.
In an age of firing, reports say as many as 28 American companies in the Fortune 100 list including
retail giant Wal-Mart, Time Warner and beverage company Coca-Cola are still hiring.
IndiGo on Monday said there is no truth in reports that its competitor Spicejet is acquiring 7.5 per cent stake in it.
Oracle announced it will buy Sun Microsystems in a deal worth $7.4 billion.
PepsiCo offered $6bn to buy out shareholders of its two largest bottlers, Pepsi Bottling Group and PepsiAmericas.
GlaxoSmithKline (GSK) agreed to pay up to $3.6bn for independent skincare specialist Stiefel Laboratories. Stiefel is partly owned by private equity firm Blackstone Group.
Bank of America reported earnings of 44 cents a share, better than expectations. However, the stock and the markets cracked as the bank warned of deteriorating credit quality.
Highly volatile market ended on a flat note on Monday. It was a day of wild gyrations as alternate bouts of buying and selling often tossed the key indices into the red and green. The BSE Sensex swung over 340 points and the NSE Nifty gyrated 45 points between their intra-day high’s and low’s. The BSE Sensex slipped 43 points to close at 10,979 and the NSE Nifty ended lower by 7 points at 3,377.
Among the 30-components of Sensex, 19 ended in negative terrain and 11 ended in the green. Among the major loser were, ICICI Bank, ITC, HDFC, NTPC and TCS.
Among the major gainers were L&T, Bharti Airtel, Reliance Infra, JP Associates and Sterlite Industries.
Among the BSE Sectoral indices BSE Banking index was the top loser, the index lost 1%. Among the other major loser were BSE FMCG index (down 0.8%) and BSE Pharma index (down 0.3%).
Bucking the negative trend were, BSE Metal index (up 2.5%), BSE Capital Goods index (up 1.8%) and BSE Realty index (up 1.5%)
Market breath was positive, 1,495 advanced against 1,033 declines, while, 86 remained unchanged.
All eyes would be on the Reserve Bank of India as the monetary policy would to be unveiled on Tuesday. A rate cut may well boost some sentiment for the markets in the short term. The RBI, however, is likely to maintain a status quo considering that despite ample liquidity, credit offtake has remained lesser than desired.