Happiness is nothing more than good health and a bad memory.
The market fell like hell but the wise ones would have done well to pick some stocks. No point in discussing what went wrong on Wednesday. No earth shaking event happened. The only explanation could be profit booking by FIIs after a three-month rally. Of course sentiment associated with a large stock which gave way towards noon may have caught many on the wrong foot. Though we can’t really escape weak global cues for long, the Indian market could attempt a recovery after Wednesday’s sudden sell-off.
There have been some concerns over the lofty stock valuations without any commensurate improvement in fundamentals. However, today is a new day. The bulls are keen to get back to winning ways, especially considering India's relatively better positioning vis-à-vis other economies. A flat to positive opening is on the cards. Overall, the market will remain choppy with alternative bouts of rise and fall depending on how global cues play out. The recovery in economic growth and corporate profits will take time to catch up with market performance. At every fall, you could feel better if you pick up something.
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FIIs were net sellers in the cash segment on Wednesday at Rs3.64bn while the local institutions pumped in Rs5.69bn. In the F&O segment, the foreign funds were net sellers at Rs13.26bn. On Tuesday, FIIs were net sellers at Rs7.12bn in the cash segment. Mutual Funds were net buyers of Rs86mn on the same day.
The US markets closed mixed on Wednesday, with blue chips and broader market slipping and technology stocks advancing marginally. Financial shares slid after Standard & Poor's cut its outlook on 22 banks.
The Dow Jones Industrial Average lost almost 7 points, or 0.1%, to 8,497.18. The S&P 500 index ended unchanged at 1,808.06, and the Nasdaq Composite index advanced 12 points, or 0.7%, to 910.71.
Stocks fluctuated through the session as investors considered the corporate news, President Barack Obama's plan for an overhaul of the American financial market regulation and a tame reading on consumer inflation.
Stocks were down in the first two days of the week on worries that the recession could drag on longer than has been anticipated. Bets that the economy is close to stabilising have fueled a three-month stock rally, lifting three major gauges into positive territory for the year. After bottoming at a more than 12-year low on March 9, the S&P 500 gained as much as 40% before pulling back. It currently stands 35% above the lows, through Wednesday's close.
In order for the rally to sustain beyond the short term, investors will need to see sustained improvement in economic news that will drive earnings growth and justify further stock gains.
Wednesday's gains were tempered by a retreat in financial shares after S&P downgraded the credit ratings of 22 banks, including Wells Fargo, Fifth Third and KeyCorp. S&P said operating conditions for the industry will get worse as financial markets become more volatile and regulatory supervision gets tighter.
President Obama unveiled details on how he plans to reorganize the way banks and other firms are regulated in the wake of the worst financial crisis since the Great Depression. The plan includes giving increased power to the Federal Reserve to monitor the financial system and also increased Treasurys responsibilities. Obama also proposed creating a consumer watchdog agency to track mortgage and credit card practices.
FedEx reported a wider fourth-quarter loss that missed sales expectations but beat on a per-share-basis. The delivery firm, often seen as a proxy for the economy, forecast earnings of 30 cents to 45 cents per share in the current quarter, versus Wall Street's forecasts for a profit of 68 cents per share.
FedEx's management gave a mixed outlook. The company's chief executive said there are signs that the worst of the recession is over, and the chief financial officer said the operating environment in the first two quarters in fiscal 2010 is going to be extremely difficult. FedEx shares dropped modestly.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.60% from 3.66% on Monday.
US light crude oil for July delivery rose 56 cents to settle at $71.03 a barrel on the New York Mercantile Exchange. COMEX gold for August delivery gained $3.80 to settle at $936 an ounce.
In currency trading, the dollar tumbled versus the euro and yen, falling for the second session in a row.
The Consumer Price Index (CPI), measure of consumer inflation, posted a decline of 1.3% over the past year, the biggest year-over-year decline since 1950. The report also showed that inflation has not picked up in the last month, despite rising oil and gas prices and trillions in government spending.
The CPI rose 0.1% in May, versus forecasts for an increase of 0.3%. CPI was flat in April. The so-called core CPI, which strips out volatile food and energy prices, rose 0.1% in May, meeting forecasts. Core CPI rose 0.3% in April.
Thursday brings a slew of economic news, including weekly jobless claims from the Labor Department, the Conference Board's May index of leading economic indicators and the Philadelphia Fed index, a regional read on manufacturing.
European shares fell sharply, with mineral extractors, oil producers and banks under pressure. The pan-European Dow Jones Stoxx 600 index ended 2% lower at 204.63. It was the fourth straight session of losses for the index. The UK's FTSE 100 index fell 1.2% to 4,278.46, while Germany's DAX 30 index lost 1.9% to 4,799.98 and the French CAC-40 index closed down 1.6% at 3,161.14.
After snapping a three day losing streak, the southward journey resumed on Dalal Street on Wednesday. Weak global cues coupled with all round selling in scrips across the sectors dragged the NSE Nifty below crucial support levels. Finally, the Sensex dropped 435 points or 2.9% to end at 14,522 after touching a high of 14,996 and a low of 14,447. The index had opened at 14,978 against the previous close of 14,958.
The NSE Nifty declined 162 points or 3.5% to shut shop at 4,356.
Among the BSE Sectoral indices BSE Realty index was the top loser declining 6%, followed by the BSE Metal index down 5.6%, BSE PSU index down 4.2%, BSE Oil & Gas index down 4.2% and BSE Capital Good index down 4%.
In the Sensex, among the major losers were, Tata Steel, Tata Motors, JP Associates, RCom, DLF, ONGC, Hindalco and Sterlite. Tata Power was the only gainer among the 30-components of Sensex.
Shares of Ranbaxy slipped by 4.2% to Rs287 after reports stated that the company is sued by US firm for patent infringement. The scrip touched an intra-day high of Rs294 and a low of Rs274and recorded volumes of over 0.39mn shares on BSE.
Shares of IL&FS Investsmart were locked at 5% upper circuit to Rs141.25 after the company announced that it received a proposal from HSBC Securities and Capital Markets India (HSCI) to voluntarily delist the equity shares of the company from the BSE and the NSE.
HSCI and HSBC Violet Investment (Mauritius) Ltd are the promoters of the company and collectively hold 65,548,443 equity shares representing 93.86% of the issued and paid up equity share capital of the Company.
Shares of Apollo Tyres slipped sharply from its intra-day high after reports stated that Michelin is looking to sell the remaining stake in Apollo Tyres. Michelin’s stake decreased to 7.3% from 14%
The stock plunged by 8.5% to end at Rs31.7 after hitting an intra-day high of Rs36.7 Total traded quantity was over 10.4mn shares on BSE.
On June 6, 2009, Michelin had offloaded 3.3% in Apollo Tyres for around Rs500mn through open market sales. According to reports, French tyre giant who had earlier sold small portions of its investments in the Indian firm has made a reasonable profit in this transaction given the original cost of purchase.
Shares of Max India gained 1% to Rs230 after reports stated that the company is considering selling a further 23% stake to New York Life Insurance if the government changes investment rules. The scrip touched an intra-day high of Rs249 and a low of Rs228 and recorded volumes of over 0.36mn shares on BSE.
Looking at the panic selling in the last hour of the trading session and crucial technical levels being breached, Indian markets would further slide atleast in the early trades. However, one cannot rule out a smart bounce back later in the day.