A good scare is worth more to a man than a good advice.
Despite all the big gains, the market environment remains ever so fragile. It took just one bad news about a possible flu epidemic to rock investors’ confidence worldwide. But, India managed to emerge largely unscathed from the global scare over the spread of swine flu. Still, there is no scope for any complacency. We’ve already had a sharp rally. In fact, the Indian market has outperformed major world indices. There hasn’t been any meaningful correction either.
All the possible good news is already in the price. And, we are only talking about tentative signs of improvement. So, the upside from here looks limited. That doesn’t mean stocks will collapse, but some softening is imminent. Therefore, one needs to be little careful. The outcome of the Lok Sabha elections could be a trigger. Global markets could also throw up some negative surprises. Today, we expect the market to remain cautious amid mixed global trends. Intra-day swings are a given in an expiry week.
Key Results Today: AV Birla Nuvo, Alfa Laval, Allied Digital, Avaya Global, Aventis Pharma, Biocon, Cadila, Central Bank, CRISIL, Gillette India, GSK Pharma, Hexaware, India Infoline, IDFC, ING Vysya Bank, Jubilant Organosys, Patni Computer, P&G Health & Hygiene, Shree Cement, Sterlite, Syndicate Bank, Tata Elxsi, Thomas Cook, UB and Vijaya Bank.
FIIs were net buyers in the cash segment on Monday at Rs2.57bn (provisional) while the local institutions were net buyers of Rs680.6mn. In the F&O segment, the foreign funds were net buyers at Rs8.04bn. On Friday, FIIs pumped in Rs5.13bn in the cash segment. Mutual Funds were net buyers at Rs2.04bn on the same day.
US stocks ended lower on Monday as worries that the swine flu outbreak would further deepen the global recession overshadowed gains in healthcare shares and General Motors' (GM) plan to cut liabilities. Oil fell for the first time in a week, while Treasuries, the dollar and yen advanced.
The Dow Jones Industrial Average fell 51.29 points, or 0.6%, to 8,025.00. The S&P 500 Index shed 8.73 points, or 1%, to stand at 857.50, while the Nasdaq Composite index declined 14.88 points, or 0.9%, to 1,679.41.
The Dow Jones Transportation (DJT) average, which includes airlines, fell 4.7%.
Stocks slumped in the first half-hour of trade, turned higher near midday and then slipped again in the afternoon. The market was already primed for a pullback anyway, with the recent rally losing steam in a busy week for quarterly results and economic news, and ahead of the results of Treasury's "stress tests" for the largest US banks.
All three major gauges gained for six straight weeks, adding between 25% and 30% on bets that the worst for the economy and corporate profits has already happened. But investors showed some hesitation last week and only the Nasdaq managed to end higher for the seventh week in a row.
Declared a public health emergency by the World Health Organization, swine flu dragged on markets globally, particularly in Europe.
In the US, the federal government declared a public health emergency and President Obama called the outbreak a cause for concern but not a cause for alarm.
As many as 103 deaths in Mexico are believed to have been caused by the disease. At least 40 cases have been diagnosed in the US.
The European Union health commissioner advised Europeans to avoid non-essential travel to both Mexico and the US. However, the acting director of the Centers for Disease Control and Prevention said such an advisory was unwarranted.
On Sunday, Chrysler said it won some key concessions from its union, a critical step as it races against the clock to avoid filing for bankruptcy protection. Chrysler has until Thursday to hammer out a deal with its creditors and Italian automaker Fiat.
GM - which has until June 1 to cut debt and avoid bankruptcy - announced a broad restructuring plan. GM will cut 23,000 jobs by 2011, including those already announced in its recent viability plan. The company will also eliminate its Pontiac brand and cut 40% of its dealer network. GM shares rallied nearly 21%.
Verizon Communications reported earnings of 63 cents per share, up from 61 cents a year ago. Analysts thought income would fall to 59 cents per share. The telecom benefited from its purchase of rival telecom Alltel and growth in customers. Verizon fell 1.5%.
Among other movers, big bank shares slumped, dragging down the KBW Bank (BKX) sector index by 4.9%. A variety of airlines plunged, lowering the Amex Airline index by over 10%.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.92% from 2.99% on Friday.
Lending rates were mixed. The 3-month Libor rate fell to 1.05% from 1.07% Friday. The overnight Libor rate rose to 0.21% from 0.2%. Libor is a bank-to-bank lending rate.
In currency trading, the dollar gained versus the euro and fell against the yen.
US light crude oil for June delivery fell $1.41 to settle at $50.14 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery fell $5.90 to settle at $908.20 an ounce.
Indian market ended almost on a flat note on Monday managing to survive the global scare as governments and health authorities across the world are in a tizzy over the breakout of a new influenza epidemic after the death toll in Mexico from the new type of swine flu crossed 100. The outbreak of a new strain of flu in Mexico in the last few days has stoked fears of a global pandemic. Click here to read more…
Markets across Asia and Europe were in the red over concerns the the new swine flu would spread all over.
The NSE Nifty index again managed to close over the 200DMA led by the banking and the capital goods stocks. On the other hand, the Realty, Power and the PSU stocks were under pressure.
The BSE Sensex was up 42 points to close at 11,371 and the NSE Nifty ended lower by 11 points at 3,470.
Among the 30-components of Sensex, 14 ended in positive terrain and 16 ended in the red. Among the major gainers were, ICICI Bank, Wipro, JP Associates, Sterlite, TCS and Sun Pharma.
Among the major losers were, Ranbaxy, Reliance Infra, RCom, Hindustan Unilever and ACC.
Among the BSE Sectoral indices BSE Consumer Durable index was the top loser, the index lost 3%. Among the other major losers were BSE Realty index (down 2.6%), BSE Power index (down 1%), BSE PSU index (down 1%) and BSE Teck index (down 1%)
Market breath was negative, 1,344 declined against 1,157 advances, while, 80 remained unchanged.
Shares of Aban Offshore declined by 12% to Rs427 after the company posted a Q4 group loss of Rs930.4mn versus profit of Rs339.2mn. Group sales were at Rs7.7bn and EPS was at Rs12.16. The scrip touched an intra-day high of Rs504 and a low of Rs417 and recorded volumes of over 1.6mn shares on BSE.
Shares of JP Associates advanced by 4.5% to Rs131 after the company announced that it expects FY10 revenue of Rs110bn and cement sales of 14mn metric tons versus 8.7mn metric tons in FY09.
The company posted Q4 profit of Rs3.85bn versus Rs2.1bn. The company posted net sales of Rs20.84bn against Rs12.bn. Other income was at Rs429mn and EPS was at Rs3.01 against Rs1.84. Operating margin was at 28.9% against 27.2%.
Shares of Aptech erased early gains and ended lower by 1.5% at Rs95. Reports stated that the company is planning to enter into a 51:49 JV with the Falgo Group to set up its training centre.
The company is planning to focus into Brazilian venture and the investment is pegged at US$1mn, added reports. The scrip touched an intra-day high of Rs101 and a low of Rs94 and recorded volumes of over 2.9mn shares on BSE.
Shares of Ranbaxy Laboratories declined by over 4% to Rs167 after the company posted a loss for the third straight quarter as sales fell in the U.S.
The company also forecast a loss for the current year. The net loss for the quarter ended March was Rs7.61bn compared with a profit of Rs1.37bn a year earlier.
Shares of 3i Infotech rallied by over 5% to Rs44 after the revenue for the quarter was Rs6.10bn, a growth of 73.4% from the corresponding quarter of the previous year.
The net profit stood at Rs926.1mn, including exceptional items of Rs259.6mn and Rs666.5mn excluding exceptional items, recording a growth of 32.7% over the previous year. Earnings per share (EPS) increased to Rs4.80 from Rs3.61 in the same quarter of the previous year.