The universe is full of magical things, patiently waiting for our wits to grow sharper.
Last time around the Fed chairman spoke of green shoots and sowed the hope of recovery. This time though, there is some apprehension as to how many of the sprouts will survive the unpredictable weather in the months ahead. The Fed’s two-day meet ends later today.
Markets are looking for the Fed to outline its expectations on the US economy and signal when it might raise interest rates. But, a close mate of Bernanke says the US central bank is unlikely to rush into any "exit strategy" from current policy just yet.
On the domestic front, FIIs have turned net sellers lately, bringing the rupee near crucial support levels of 49 to the dollar.
We expect a flat to cautious start today due to the indecisive trend across the globe. A small rebound is not ruled out if global markets oblige. The best strategy right now is to sit on the sidelines till the budget. One will also need to grapple with India Inc.’s latest report card.
The current yo-yo trend is likely to continue in the near term, though the medium- to long-term outlook is broadly encouraging.
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FIIs were net sellers in the cash segment on Tuesday at Rs6.55bn while the local institutions pumped in Rs3.18bn. In the F&O segment, the foreign funds were net buyers at Rs100mn. On Monday, FIIs were net sellers at Rs1.98bn in the cash segment. Mutual Funds were net buyers of Rs1.21bn on the same day.
Meanwhile, Americans' confidence in President Barack Obama's massive economic stimulus plan is waning, says a survey.
The Chicago Board Options Exchange's volatility index, otherwise known as the VIX, fell back 1.9% to 30.58. It spiked 10% on Monday to briefly touch the 32 level, as stocks sold off upon concerns about global growth.
Ballpark estimates suggest that the weather bureau may revise down its official monsoon forecast to ‘below normal’ from ‘near normal’.
The Bombay Stock Exchange (BSE) on Tuesday said it would halt trading in derivatives of seven companies as they did not meet the eligibility requirements of the Securities & Exchange Board of India (SEBI). The companies are Dr Reddy's, Ambuja Cements, Ashok Leyland, Tata Chemicals, IOC, Canara Bank and Petronet LNG, the BSE said in a circular.
"Derivatives contracts for the far month, i.e.., September 2009 and onwards would not be introduced...upon expiry of June 2009 contracts i.e. on June 25, 2009," the circular said. Existing contract months - July and August - would, however, continue to trade till they expire on the last Thursday of their respective expiry months, it added.
US stocks continued to struggle for direction on Tuesday, with the Dow Jones Industrial Average touching a fresh three-week low, as investors eyed a weaker-than-expected housing market report and geared up for the latest from the Federal Reserve.
The Dow fell 16 points or 0.2%. The S&P 500 index added 2 points, or 0.2% and the Nasdaq Composite index ended just below unchanged.
After rallying 40% in 14 weeks, the US stock market, as represented by the S&P 500, have lost around 6% in just over a week. Bets that an economic recovery is bound to take place fueled that advance. But the same euphoric optimism has given way to worries that the recession will drag on.
US stocks sank to three-week lows on Monday after the World Bank's dour outlook on global growth and a selloff in commodities spooked investors.
Existing home sales rose 2.4% to a 4.77 million unit annualized rate in May from a 4.66 million unit annualized rate in April. That was short of forecasts for a rise to 4.82 million units, according to economists. The median home price fell 16.8% year over year.
A Labor Department report said mass layoffs - or layoffs affecting 50 people or more - rose last month to tie a multi-year record hit in March, as the job market continued to struggle.
The Fed's policy-setting body - FOMC - began its two-day policy meeting on Tuesday with an announcement expected Wednesday afternoon. The central bank is expected to hold interest rates steady at historic lows near zero. However, what the bankers say about the economy, the bond market and the outlook for inflation will be critical.
Boeing said that it has again delayed the initial test flight of its new 787 jet because it needs to reinforce part of the aircraft. The flight had initially been planned for late 2007, but got postponed because of production problems and a labor strike. Boeing shares fell 6.5% and dragged on the Dow.
United Technologies and Hewlett-Packard were the Dow's other big drags.
Ratings agency Moody's said that the US government's credit rating was still triple-A but that it could be at risk if Washington can't start bringing its debt down.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.63% from 3.68% on Monday.
The US bond market showed little reaction after positive results from a $40 billion two-year Treasury auction. The auction showed strong demand, a positive as the government looks to raise funds to pay for its bailout and stimulus programs.
US light crude oil for August delivery rose $1.74 to settle at $69.24 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery rose $3.30 to settle at $924.30 an ounce.
In currency trading, the dollar gained versus the euro and fell against the yen.
Wednesday brings a slew of economic news in the US. The May durable goods orders report is due before the start of trading. The May new home sales report is due out after the start of trading. In Washington, the House Financial Services Committee holds a hearing on regulatory restructuring. The weekly crude oil supply report from the Energy Information Administration is due.
Stocks in Europe closed lower on Tuesday. Coming off the worst one-day fall in two months, the pan-European Dow Jones Stoxx 600 index finished 0.5% lower to 201.49, as markets moved closer to the May closing low level of 200.72.
The French CAC-40 index slipped 0.2% to 3,116.82 and the UK's FTSE 100 index slipped 0.1% to 4,230.02 while the German DAX index rose 0.3% to 4,707.15.
Markets ended on a flat note on Tuesday amid huge volatility. Alternate bouts of buying and selling often tossed the key indices in to the negative and the positive terrain. Weak cues from the US and the Asian markets dragged the Indian markets to start off with a negative gap down.
However, as the day progressed, buying momentum in the index heavyweights like Reliance Industries, ONGC and HDFC lifted the markets to close flat. The Sensex ended flat at 14,324 after touching a high of 14,394 and a low of 14,016. The index had opened at 14,148 against the previous close of 14,326. The NSE Nifty gained 12 points or 0.2% to shut shop at 4,247.
Among the BSE Sectoral indices BSE Oil & Gas index was the top gainer gaining 2.6%, followed by the BSE PSU index up 2.1%, BSE Power index up 1.4%
Among the major losers were BSE Bankex index down 2.1%, BSE Metal index down 1.5%, and BSE Consumer Durable index down 1.5%..
Shares of Great Offshore surged by over 8% to Rs413 after ~1.6mn shares or 4.3% of the company changed hands at an average price of Rs404.75 per share.
ABG Shipyard announced a counter offer for buying a substantial stake in the company, countering an existing bid by Bharati Shipyard.
ABG, through its wholly-owned subsidiary, Eleventh Land Developers Pvt. Ltd. aims to buy 12,571,072 shares, or 32.12% stake in Great Offshore at Rs375 per share.
Later on, Bharati Shipyard in a counter bid raised the offer price for Great Offshore to Rs403 per share and could further revise its offer for the company, said the chairman PC Kapoor.
On June 4, Bharati had offered Rs344 per share for acquiring an additional 20% stake in Great Offshore. The open offer is scheduled to begin on July 25 and close on August 13.
Shares of Bharti Shipyard declined by 5% to Rs162 after hitting an intra-day high of Rs169 and a low of Rs160 and recorded volumes of over 0.3mn shares on BSE.
While, ABG Shipyard shares advanced by 2% to Rs213 after hitting an intra-day high of Rs222 and a low of Rs205 and recorded volumes of over 0.3mn shares on BSE.
Shares of BHEL have gained by 1.5% to Rs2136 after the company announced that it secured Rs1bn order from IOC for setting up a captive power plant at the latter’s Barauni refinery complex. The scrip touched an intra-day high of Rs2161 and a low of Rs2054 and recorded volumes of over 0.18nm shares on BSE.
Shares of Jindal Saw gained by 3.2% to Rs395 after the company announced that it bagged orders worth Rs10bn for supply of large diameter pipes and ductile iron pipes in domestic and export markets, which are to be executed by March, 2010.
Shares of IFCI advanced by 3% to Rs53 after reports stated that the company is exploring options to rope in a strategic investor by issuing convertible instruments or by facilitating the acquisition of shares from existing partners.