There may come a time when the lion and the lamb will lie down together, but I am still betting on the lion.
The lions are unlikely to be separated from the lambs before Saturday. For now, most political parties appear like horses willing to be traded for the best price. The swines and its related flu can take a break from India. Don’t take big bets this week. Wait on the sidelines till there is clarity on the political outcome.
The recent bull dominance appears to be under temporary threat as players don’t want to take any chances ahead of the election results. Perhaps they are smarting from the May 2004 experience when the market had corrected after a surprise defeat for the NDA.
Traded volume was low on Monday and may remain so this week. Overall, the market will be choppy and rangebound.
Besides uncertainty over Government formation, one must also ponder over another big question i.e. how long will the new regime last? What’s worse, the long election process has left a sluggish economy without leadership at a critical juncture.
IIP for April and the FY09 will be out today and is not expected to show any big improvement.
Talking of the economy, the turnaround may take longer than anticipated. Economic activity may remain sluggish for a while before rebounding decisively. Even after the bounce back, the unwinding of the large stimulus will have its own set of issues like inflation, ballooning deficits, etc around the globe. Back home, we will have to contend with yawning deficits, precarious public finances and of course budget. Conjecture over monsoon may also have a bearing.
Asian Paints, Hinduja Ventures, JB Chemicals and Kotak Mahindra Bank will announce their results today.
FIIs were net buyers in the cash segment on Monday at Rs798.8mn while the local institutions pulled out Rs173.1mn. In the F&O segment, the foreign funds were net buyers at Rs1.03bn. On Friday, the foreign funds were net buyers at Rs12.41bn in the cash segment. Mutual Funds were net sellers at Rs714mn in the cash segment on the same day.
US stocks declined on Monday after hitting four-month highs last week, as major banks said they would sell shares to repay government funds and General Motors (GM) moved closer to bankruptcy.
The Dow Jones Industrial Average fell 155.88 points, or 1.82%, to 8418.77, the biggest drop for the blue-chip index since April 20. The broad Standard & Poor's 500 fell 19.99, or 2.15%, to 909.24. The technology-oriented Nasdaq Composite fell 7.76, or 0.45%, to 1731.24.
US stocks have been rallying since hitting multi-year lows in early March. The Dow and S&P 500 have risen for eight of the past nine weeks; the Nasdaq has risen for 9 in a row. In that time the Dow gained 31% and the S&P 500 and Nasdaq gained 37%.
Bank shares slipped, with the KBW Bank sector index losing 7.1%. Last week, the government revealed that 10 of the 19 banks that had been part of the stress tests would need to raise a collective $75 billion to be strong enough to withstand a potentially deeper recession.
Wells Fargo and Morgan Stanley, two of the 10 banks needing capital, sold billions in stock just one day after the stress test announcements. Bank of America also registered Friday to sell 1.25 billion shares, which the company said will yield around $11 billion.
On Monday, US Bancorp, Capital One Financial, BB&T and KeyCorp all announced plans to issue stock, with the intention of paying back the money their received under the government's bank bailout plan. KeyCorp was one of the 10 banks that was told to raise more capital as a result of the stress tests. The other three were not.
ADRs of global bank HSBC fell 2.5%. The bank said its US consumer-finance operation saw a slight slowdown in the deterioration of its mortgage loans in the first quarter, but warned improvements in the US mortgage market may be a seasonal blip.
Troubled insurer AIG is selling its Japanese headquarters to Nippon Life Insurance for $1.2 billion, in its latest undertaking to pay back a massive government loan. AIG shares fell 5.5%.
Morgan Stanley shares fell 7.6% after Japanese bank Mitsubishi UFJ Financial Group increased its stake to over 20% by buying 25 million shares at $24 each.
GM shares dropped 11% after CEO Fritz Henderson repeated earlier comments that a bankruptcy filing is "probable." Analysts said a bankruptcy filing is all but inevitable as the auto giant faces tough propositions such as persuading bondholders to swap $27 billion in debt for 10% of its risky stock.
Ford Motor shares were also down. After the close, the carmaker said it planned a 300-million-share follow-on sale of common stock as it seeks to rebuild funds for health-care benefits.
US President Barack Obama said that he has secured the commitment of a number of industry groups to cut health care costs by $2 trillion over the next decade. And the administration's top antitrust official said Obama will take a more aggressive approach to cracking down on monopolies than did his predecessor.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.17% from 3.28% on Friday.
Lending rates continued to fall. The three-month Libor rate fell to an all-time low of 0.92% from 0.94% on Friday. The overnight Libor rate held steady at 0.23%. Libor is a bank lending rate.
In currency trading, the dollar rose versus the euro and fell against the yen.
US light crude oil for June delivery fell 13 cents to settle at $58.50 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery fell $1.40 to settle at $913.50 an ounce.
European shares also lost ground. The pan-European Dow Jones Stoxx 600 index declined 1.4% to 206.59, having gained ground in six of the prior eight trading sessions. The index rose almost 5% last week, marking the eighth time it has posted weekly gains in the last nine weeks.
On a regional level, the French CAC-40 index fell 1.9% to 3,248.67, Germany's DAX 30 index lost 1% to 4,866.91 and the UK's FTSE 100 index slipped 0.6% to 4,435.50.
Markets started off the week on a negative note with the NSE Nifty breaking below the key support levels. 3,610-3,600 were the strong support for Nifty.
Firm cues from the US and Asian markets lifted the key indices to open in the green. However, markets were unable to hold on to their gains as all round selling pressure dragged the benchmark indices to extend losses to second straight trading session.
The BSE Sensex slipped 193 points to close at 11,682 and the NSE Nifty fell 66 points to close at 3,554.
Among the 30-components of Sensex, 24 ended in the negative terrain and 6 ended in the green. Top losers were DLF, SBI, JP Associates, RCom, Tata Steel and Tata Motors.
Bucking the negative trend were, M&M, ICICI Bank, Sun Pharma and Maruti.
Shares of Orchid Chemical have declined by over 7% to Rs101. The company announced that it received USFDA nod for Sumatriptan tablets. The scrip touched an intra-day high of Rs112 and a low of Rs99 and recorded volumes of over 0.7mn shares on BSE.
Shares of JSW Steel surged by 3.3% to Rs423 after the company announced that its April crude steel production grew 60%. The scrip touched an intra-day high of Rs432 and a low of Rs398 and recorded volumes of over 2.6mn shares on BSE.
Shared of Tata Steel slipped by 4% to Rs271 after reports stated that the Corus unit in UK is on verge of closure. The scrip touched an intra-day high of Rs289 and a low of Rs268 and recorded volumes of over 5.9mn shares on BSE.
Shares of Aurobindo Pharma gained by 6% to Rs297 after the company announced that it received approval from TGA Australia for Simvastatin tablets. The scrip touched an intra-day high of Rs303 and a low of Rs277 and recorded volumes of over 0.2mn shares on BSE.
Shares of Gujarat NRE advanced by 3.7% to Rs31 after the company’s unit signed US$50mn long term loan facility. The scrip touched an intra-day high of Rs32 and a low of Rs29.6 and recorded volumes of over 11.7mn shares on BSE.
Indian market may continue its downward trend. Key support for the Nifty is around 3,450 levels. Also uncertainty over the outcome of elections would continue to keep the traders and investors on tenterhooks.