The drought stresses trees!
It’s not just the trees or the bulls that are feeling stressed. The last thing India needs is a drought. The protracted lull in the monsoon is causing dizziness all around literally. After a nearly 8% drop, we are poised for a rebound, though broadly the trend would continue to be volatile in the run up to the budget. India Inc’s latest report card will also have a bearing for sure.
We expect a higher opening. Asian markets are trading up. Markets in the US and Europe too eked out modest gains. The trend has turned choppy after a three-month rally as the current stock prices already discount moderation in recession. Stocks will continue to face some resistance given that the recovery process will be slow.
Instead of focusing on every day swings in key indices, one should adopt a stock-centric approach. The market will remain in a consolidation phase in the near term after the stupendous run we have had. Budget could provide the next big impetus. At the same time, there could be some disappoints too.
Corporate earnings will also be mostly in line with expectations, without any big surprises on either side. One big factor that has the potential to drive markets higher will be fund flows from overseas investors. FII inflows have been good over the past few months, though they have started receding a bit in recent days. However, with India expected to perform much better than some of the battered mature economies, overall trend in FII flows is likely to remain positive.
India Foils to re-list today. Watch out for United Spirits and Idea Cellular.
Results Today: ABG Shipyard, Berger Paints, DCB, Emkay Global, Four Soft, Himatsingka Siede, Man Industries and Marico.
FIIs were net sellers in the cash segment on Thursday at Rs5.85bn while the local institutions pumped in Rs5.39bn. In the F&O segment, the foreign funds were net sellers at Rs3.12bn. On Wednesday, FIIs were net sellers at Rs2.27bn in the cash segment. Mutual Funds were net sellers of Rs1.79bn on the same day.
US equity benchmarks closed mixed yet again, but this time the blue chips managed moderate gains while the technology shares languished. Blue chips managed to advance after encouraging signs in the day's labor market and manufacturing reports, but the gains were modest.
The Dow Jones Industrial Average gained 58 points, or 0.7%. The S&P 500 index rose 7 points, or 0.8%. The Nasdaq Composite was barely changed.
A three-month rally has lost steam over the last week as bets that the pace of the recession is easing have turned to worries about expensive stock valuations.
The S&P 500 rallied 40% between March 9, when it hit a 12-year low, and the end of last week. But it has pulled back so far this week. As of Thursday's close, the S&P 500 was up 35.5% off of the lows. Markets in Europe and Asia have pulled back too.
Trading was also being influenced by quadruple options expiration, a quarterly event on a Friday in which stock index futures and options and individual stock futures and options all expire at the same time.
BlackBerry maker Research in Motion was likely to slide Friday morning. After the close, the company reported higher quarterly earnings that topped estimates and higher quarterly revenue that missed estimates. The company also forecast current-quarter earnings that are above forecasts and sales at the low end of forecasts. Shares slumped 5% in after-hours trading.
Treasury Secretary Timothy Geithner testified before lawmakers, defending President Obama's new reforms for financial regulation.
The number of Americans filing new claims for unemployment rose slightly last week to 608,000 from a revised 605,000 in the prior week, the Labor Department reported. Economists expected 604,000 claims. But continuing claims slumped for the first time since the week ended Jan. 3. Continuing claims refer to people who have been collecting claims for a week or more.
The Philadelphia Fed index, a reading on regional manufacturing, improved to negative 2.2 from negative 22.6 last month. Economists expected a reading of negative 17. In addition, the index's measure of future activity surged to its highest level since September 2003.
An index of leading economic indicators rose 1.2% in May, the Conference Board reported. LEI gained 1.1% in April and was expected to increase 1% last month.
Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.83% from 3.69% on Wednesday.
US light crude oil for July delivery rose 34 cents to settle at $71.37 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery fell $1.40 to settle at $934.60 an ounce.
In currency trading, the dollar fell versus the euro and gained against the yen.
In global trading, Asian markets ended lower and European markets mostly ended higher.
For the week ended June 10, EPFR Global, a provider of fund flows and asset allocation data, said US Equity Funds attracted US$3.4bn, the biggest weekly inflow since mid-December. Amid such flows; however large reserves of cash still remain on the sidelines.
European bourses tracked gains on Wall Street after the Philadelphia Federal Reserve Bank reported that its business activity index rose to its highest level since last September, drastically outperforming market forecasts.
Indian markets extended losses on Thursday with the NSE Nifty index losing over 5% or 318 points and the BSE Sensex shedding 6.2% or 947 points in last four trading sessions.
Markets witnessed heavy selling after the NSE Nifty broke below the 4,360 levels which was the 26 day moving average. Nifty's 100 DMA (Day moving Average) for the second straight trading session failed to cross over the 200 DMA keeping the traders in a limbo. If the 100 DMA breaches the 200 DMA from below the signal is considered to be a bullish one.
The Realty, Metals, Power and the Capital Goods stocks were among the major losers and even the Mid-Cap and the Small-Cap stocks witnessing some offloading. However, bucking the negative trend were, the IT stocks, the IT index gained 0.2%.
India’s inflation slipped into the negative terrain for the first time in more than 30 years. Annual rate of inflation fell to -1.61% for the week ended June 6, 2009 as compared to 0.13% for the previous week ended May 30, 2009 and 11.66% during the corresponding week of the previous year.
On Thursday, the Sensex dropped 257 points or 1.7% to end at 14,265 after touching a high of 14,630 and a low of 14,188. The index had opened at 14,503 against the previous close of 14,523.
The NSE Nifty declined 104 points or 2% to shut shop at 4,251.
Among the BSE Sectoral indices BSE Realty index was the top loser declining 5.2%, followed by the BSE Metal index down 4.4%, BSE Power index down 3.6%, BSE Capital Goods index down 3.6% and BSE PSU index down 3.2%.
In the Sensex, the major losers were, ACC, JP Associates, Tata Steel, Grasim, NTPC, Hindalco, ONGC, Reliance Infra, L&T and BHEL. SBI, Sun Pharma, Tata Motors, Infosys, Bharti and TCS were the gainers among the 30-components of Sensex.
Outside the frontline indices, the top loser included Aban Offshore, Max India, GMDC, Moser Baer, Bhushan Steel and Ispat Industries.
Among the big gainers in the broader market were Mphasis, Marico, TTML, IDBI Bank, Biocon, GVK Power, Andhra Bank and OBC.
Aviation stocks were beaten down badly with stocks like Jet Airways and Kingfisher Airlines losing over 5% each.
However, SpiceJet surged to higher altitude after the low cost carrier on Thursday announced that it had hiked fuel surcharge on tickets by Rs400 per passenger following a steep increase in jet fuel prices.
The stock surged by over 6% to Rs21.10 after hitting an intra-day high of Rs21.9 and a low of Rs20.35 and recorded volumes of over 9.2mn shares on BSE.
Jet Airways also decided to increase its fuel surcharge by Rs.400/- on all domestic sectors w.e.f. tickets purchased starting 17th June.
This will be applicable on all flights of Jet Airways, Jet Airways Konnect and JetLite. The increase was necessitated by sharp increase in ATF prices by 33% since March 2009.
Shares of Kalpataru Power slumped by over 7% to Rs671 after hitting an intra-day high of Rs726 and an intra-day low of Rs651 recording volumes of over 93,000 shares on NSE.
According to reports, the Maharashtra government has decided to cancel a Rs.9.98bn contract awarded to Kalpataru Power due to alleged delay in installation of transmission feeders to separate household and agricultural customers.
Shares of JSW Steel plunged by over 9% to Rs573 after reports stated that Sajjan Jindal proposes to sell 10% of his holding in JSW Steel to raise resources.
However, the founder, Sajjan Jindal later clarified that this was absolutely false, baseless and misleading and we strongly deny these reports.
He further clarified that the board of directors of the company approved an enabling resolution to raise resources upto US$1bn through equity and quasi equity instruments including QIP placement subject to approval of shareholders with an intention primarily to deleverage the Company.