Thirst on the Street!

When the well is dry, they know the worth of water.

After a flood of liquidity and news, there seems to be a drought of positive news flow. With most global markets flashing red signs, we expect a lower opening. The IIP data might bring some cheer though. On the whole, things will remain volatile and uncertain. The Fed is set to leave rates steady at near zero levels. What the Fed policymakers say will be keenly followed.

After having enjoyed the green shoots-led rally since early March, we may witness some drought in the form of slight softening in the market. Agri output is set to take a beating with the rain Gods not showering its blessings in several districts. The Centre has put the number at 161 districts. This will only aggravate the problems facing the UPA. Food prices are already hitting the roof. Given that festivals are round the corner and the low base effect too will start waning soon, tackling inflation will assume top priority.

Don’t be surprised if the Centre unleashes few more measures to reign in inflation. At the same time, it has the uphill task of bolstering growth. The global economic recovery is still fragile and with the monsoon shortfall it will take some doing to attain 6.5-7% GDP growth.

FIIs were net sellers of Rs1.77bn in the cash segment on Tuesday on a provisional basis while the local funds pumped in Rs6.28bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs6.89bn.

On Monday, the foreign funds were net sellers at Rs2.27bn in the cash segment. Their net purchases of Indian stocks have crossed $7.2bn year-to-date. Mutual Funds were also net sellers at Rs2.18bn.

US stocks fell on Tuesday, led by weakness in bank shares and some jitters ahead of the Federal Reserve announcement. JPMorgan Chase said credit losses may overwhelm capital at MBIA Inc. and analyst Dick Bove said bank earnings won’t improve in the second half of the year.

The Dow Jones Industrial Average lost 97 points, or 1%. The S&P 500 index fell 13 points, or 1.3%. The Nasdaq Composite index dipped 23 points, or 1.1%. Stock declines were broad based, with 26 of 30 Dow issues falling.

US stocks slipped modestly in the first 30 minutes of the session, but lost more steam as new banking sector woes surfaced and after the government said wholesale inventories fell 1.7% in June versus forecasts for a drop of 0.9%.

The benchmark index for US stock options jumped the most in two weeks. The VIX, as the Chicago Board Options Exchange Volatility Index is known, climbed 4% to 25.99. The index, which measures the cost of using options as insurance against declines in the S&P 500, is down from a record 80.86 in November yet above its 20.22 average over its 19-year history.

Investors were focusing on the Fed's two-day meeting, which concludes Wednesday afternoon with the release of a decision on interest rates and a statement on the economy.

The Fed is expected to hold rates steady at historic lows near zero percent. In its closely scrutinized statement, the bankers are expected to say that economic activity is picking up, but that they remain cautious about the outlook. The FOMC is not expected to say anything too specific about what its exit strategy may be after putting so much stimulus into the financial system.

US stocks rallied through the end of last week as part of a broader advance that lifted the S&P 500 over 50% off the March lows. But investors have turned cautious as they look for fresh signs that the economy is stabilizing.

The banking sector retreated after CIT Group delayed its quarterly filing, reviving bankruptcy fears, and several analysts sounded an alarm on the sector.

Influential analyst Richard X. Bove of Rochdale Securities said that bank stocks are trading on "fumes" and that investors should take some short-term profits.

JPMorgan Chase downgraded bond insurer MBIA.

Applied Materials is likely to be active on Wednesday. After the close on Tuesday, the chipmaker reported a quarterly loss versus a profit a year ago on weaker revenue. However, the results were better than what analysts were expecting and shares gained 3% in extended-hours trading.

Dow financial shares American Express, Bank of America, JPMorgan Chase and Travelers Companies all declined. The KBW Bank index lost 4.4%.

Among other financial sector movers, CIT Group slumped after saying it will delay filing its quarterly report as it continues to try to restructure its debt and avoid filing for bankruptcy protection.

IBM, Cisco Systems, Chevron, Caterpillar, Walt Disney and General Electric (GE) were the Dow's other big decliners.

US productivity in the second quarter jumped at the fastest pace in six years, the government said. Productivity - which measures how much workers produce per hour worked - rose 6.4% versus forecasts for a rise of 5.5%. Productivity rose 0.3% in the first quarter.

US light crude oil for September delivery fell $1.15 to settle at $69.45 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose 70 cents to settle at $947.60 an ounce.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.67% from 3.77% late on Monday.

The US government is offering $75 billion this week as part of its ongoing efforts to reduce the deficit and fuel its recovery efforts. Investors reacted mildly to the conclusion of the first auction on Tuesday. Treasury sold $37 billion in three-year notes and saw stronger demand than in other recent auctions. On Wednesday, the government auction $23 billion in 10-year notes and on Friday it auctions $15 billion in 30-year bonds.

In currency trading, the dollar fell versus the euro and the Japanese yen.

Ahead of the FOMC meeting, the Commerce Department releases the June trade gap. The trade gap is expected to have widened to $28.5 billion from $26 billion in May, a 10-year low.

The weekly oil inventories report from the Energy Information Administration is also due in the morning. The July Treasury budget is due on Wednesday afternoon.

European shares declined, with financials and miners under pressure. The pan-European Dow Jones Stoxx 600 index dropped 1.4% to 226.37 in the second day of losses in four. However, the index is still trading near its 2009 high and rallied hard in July.

Germany's DAX index fell 2.4% to 5,285.81, the UK's FTSE 100 index lost 1.1% to 4,671.34 and the French CAC-40 index shed 1.4% to 3,456.18.

Indian markets staged a slight rebound on Tuesday, snapping a three day losing streak. The NSE Nifty index managed to take support at the 4,398 levels which is close to the 50 Day Moving Average.

Bulls overlooked the fears of declining monsoon and the outburst of pandemic H1N1 Flu as markets traded in a narrow range throughout the day. But, offloading in the index heavyweights dragged the Nifty below the 4400 levels in intra-day trades. However, markets staged smart recovery from there on taking support at crucial technical levels.

The BSE Sensex gained 65 points or 0.4% at 15,074 after touching a high of 15,218 and a low of 14,864. The index opened at 15,000 against the previous close of 15,009. The NSE Nifty ended higher by 34 points to shut shop at 4,471.

In Asia, the Nikkei in Japan ended higher by 0.6% at 10,585 while Australia's S&P/ASX ended higher by 0.6% at 4,332. The Hang Seng index in Hong Kong ended higher by 0.7% at 21,074. Shanghai index in China gained 0.5% at 3,264.

In Europe, stocks were trading mixed. The FTSE in the UK was flat. The DAX was flat and the CAC 40 index in France was up 0.3%.

Coming back to India, among the BSE sectoral indices, the Auto index was the top gainer, gaining 3.2%, followed by the Realty index that was up 2.7%. The BSE Metal index up 2.4% and the BSE Pharma index was up 1%.

On the other hand, BSE PSU index ended lower 0.02%.

The BSE Mid-Cap index ended higher by 1.2% and the BSE Small-Cap index edged higher by 0.6%.

Within the Sensex, the major gainers were Tata Motors, M&M, Hindalco, Maruti, Bharti, Sun Pharma and Tata Power. Among the major losers were JP Associates, HDFC, NTPC, ONGC, Wipro and ICICI Bank.

Outside the frontline indices, the big gainers in the broader market were Cummins India, Tech Mahindra, Bharat Forge, GVK Power, Torrent Power and HCL Tech. On the other hand, losers included REI Agro, Glenmark, P&G, Indian Hotels and Glaxo.

Strides Arcolab announced that it is also one of the approved and qualified manufacturer of ‘Oseltamivir Capsules’ – the generic equivalent of Tamiflu – Roche’s innovator product.

Mr. V.S. Iyer, CEO – India Operational stated that "Strides is fully geared up to meet significant supply need of the product for domestic and international markety"

Shares of Strides shot up by over 5% to Rs158. The stock opened at Rs154 and made an intra-day high of Rs166 and a low of Rs151. Total traded volumes stood at 1.3mn shares.

Ranbaxy Laboratories received final approval from the U.S. Food and Drug Administration to manufacture and market Sumatiptan Succinate Tablets, 25mg (base), and 50mg (base).

The office of Generic Drugs, U.S.Food and Drug Administration, has determined the Ranbaxy formulation to be bioequivalent and have the same therapeutic effect as that of the reference listed drug Imitrex by GlaxoSmithKline.

Shares of Ranbaxy shot up by over 6% to Rs277. The stock opened at Rs262 and made an intra-day high of Rs280 and a low of Rs262. Total traded volumes stood at 0.9mn shares.

Shares of Lupin advanced by 2% to Rs994 after ~1.39% equity shares of the company changed hands in two blocks deals on the BSE. The stock opened at Rs980 and made an intra-day high of Rs1002 and a low of Rs976. Total traded volumes stood at 1.2mn shares on the BSE.

IIFL in its recent reports said that "With a revenue CAGR of over 50% over FY06-09, Lupin has grown faster than most of its peers in the US market. Newly in-licensed products and accelerated ANDA filings will maintain its growth momentum in the branded and generics businesses respectively. In the domestic market, the company’s revenues have consistently risen at over 20% annually, as against the industry’s growth rate of 10-12%. Its business in other emerging markets and Japan too is growing well. As the Japanese market warms up to generics, we see significant synergies that can boost growth rates".

Shares of Tata Steel were in demand and are trading with smart gains after reports stated that the company is looking for several mineral projects in Brazil and Australia. Tata Steel Europe, which controls Corus's operations, had imported around 22mt of iron ore and 11mt of coal in FY09.

The stock was up by 1.5% to Rs463, it opened at Rs454 and made an intra-day high of Rs466 and a low of Rs450. Total traded volumes stood at 2.9mn shares.

The Board of Directors of Gammon Infrastructure approved the sub-division of the issued and un-issued equity shares of the Company of the face value of Rs 10/- (Ten) each into 5 (Five) equity shares of Rs 2/- (Two) each, subject to the approval of the shareholders.

Shares of Gammon Infra were locked by 5% upper circuit to Rs103.5. The stock opened at Rs95 and made an intra-day high of Rs103.5 and a low of Rs94. Total traded volumes stood at 27,000 shares.