A good retreat is better than a bad stand
The market has been waiting for a correction though nothing substantial is expected immediately. The global cues point to a weak start for the main indices. The action, as we have been mentioning, will be more in non-index stocks on the positive side. Asian markets are mostly in the red. Overnight the US market retreated from 12-month highs following disappointing housing and inflation data. Barring MTNL, most Indian ADRs were in the red.
The Ambani-battled continues to subdue sentiment with the index heavyweight RIL pulling down the Sensex on Tuesday. RIL counsel has told the Supreme Court that the ongoing legal battle with the Anil Ambani group company, Reliance Natural Resources Ltd (RNRL), should not be construed as one between shareholders of the companies, but between stewards of the two companies. It will take a while before some settlement or decision is arrived at.
Crude oil in New York fell below $US79 a barrel with a climb in the dollar. An industry report showed an increase in crude stockpiles in the US. The indices may remain lackluster but keep a close eye on the mid-cap segment where there is money to be made.
In a bid to woo retail investors, the government plans to give small investors a 5% discount when it sells shares in three state owned companies, a report stated.
The Benchmark Prime Lending Rate will soon be replaced with a base rate, once the Reserve Bank of India Working Group’s report on BPLR is implemented. The RBI has given November 17 as the deadline for any feedback.
All’s not well in auto land. Production at 60 auto component manufacturing units, except that of Maruti Suzuki, in Gurgaon-Manesar belt was severely affected after around lakh workers observed a day long token strike protesting the death of a striking employee of Rico Auto on Sunday.
Results Today: Hero Honda, Jaiprak Associates, Adhunik Met, Agro Tech, Centuryply, Cera Sanitry, Chambal Fert, Diana Tea, Everonn Systems, Kaveri Seeds, Lanco Industries, Mm Forgings, Mukand, Omnitech, Pidilite, Thirumalai, Vinati Organics, Yes Bank and Zuari Industries.
Demat accounts rose at a steady rate of 1.34 per cent both in August and September, show data collated from depositories NSDL and CDSL.
Reports state that Public sector oil refiners are worried that losses on subsidized fuels could touch Rs50bn a month in the third quarter this fiscal if the crude oil remains higher. The saving grace has been the strong rupee so far which will keep a check on the cost of imports. Close on the heels of RIL announcing a bonus, IOC has announced a 1:1 bonus issue, which comes after a gap of six years.
FIIs remain buyers while domestic mutual funds were net sellers on a provisional basis. Interestingly, shareholding patterns released in September indicate FIIs have been upping their stake in many companies while promoters are seen diluting stake.
In the US, building permits, a measure of builder confidence, rose to a 573,000 unit annualized rate in September from a revised 580,000 unit annualized rate in August.
The Producer Price Index (PPI), slipped 0.6% in September.
Asian stocks declined, led by materials and consumer companies. In the US, the Dow Jones fell 50.71 points but managed to stay above the psychological 10K mark closing at 10,041.48. The Nasdaq fell 13 points to close at 2,163.
Indian ADRs were in the red with HDFC BANK falling around 3% to $121.96. Dr Reddys was down 1.5% at $20.06. ICICI Bank too fell by around 1% to $40.72. MTNL was the lone gainer among the ADRs up 3.5% at $3.63.
Markets ended in the negative terrain on Tuesday after returning from a sparkling Diwali break. The start seemed to be quite promising; however bulls were unable to hold on to their gains as key indices witnessed a constant declining intra-day trend.
The BSE Sensex erased nearly 230 points while the NSE Nifty wiped out almost 70 points from their respective intra-day’s high. The index like heavyweights like Reliance Industries, ONGC, M&M and RCom were the major laggards. Weak start to the equity markets across Europe further dampened the sentiment on Dalal-Street.
The BSE Sensex fell 103 points at 17,223 after touching a high of 17,457 and a low of 17,185. The index opened at 17,414 against the previous close of 17,326. The NSE Nifty slipped 29 points to shut shop at 5,112.
In Asia, the Nikkei in Japan ended higher by 1% at 10,336, while Australia's S&P/ASX ended higher by 1.1% at 4,846. Shanghai SE Composite in China rose 1.5% at 3,084 and Hang Seng index in Hong Kong advanced 0.9% to end at 22,384.
In Europe, stocks were flat. The FTSE in the UK was down 0.2%, The DAX in Germany was down 0.1% and the CAC 40 index was flat.
Coming back to India, among the BSE sectoral indices, the Realty index was the top gainer, adding 0.7%, followed by the Metal index that was up 0.7% and the BSE IT index was up 0.3%.
Even the BSE Mid-Cap index was flat and the BSE Small-Cap index was up 0.2%.
Among the 30-components of Sensex, 18 stocks ended in the red and 12 ended in the positive terrain. Among the major laggards were, M&M, RCom, ONGC, Reliance Industries and Grasim.
On the other hand, Hindalco, Tata Steel, TCS, JP Associates and Wipro were among the major gainers.
Outside the frontline indices, the big losers in the broader market were Essar Oil, EIH, Sun TV, PTC, Crompton Graves and Idea. On the other hand, gainers included Hind Copper, Andhra Bank, APIL, Yes Bank and GVK Power.
The tussle between the two brothers seems to be far from over after the Supreme Court on Tuesday adjourned the hearing for the gas dispute.
Shares of Reliance Industries slipped 2% to end at Rs2183. On the other hand, shares of RNRL gained by 1.2% to end at Rs87.9.
RNRL is fighting with the Reliance Industries for supply of gas at US$2.34 per mBtu based on a family agreement between the two brothers. However, the centre told the Supreme Court that the terms of a MoU signed between Reliance Industries and RNRL on supply of gas from the KG basin violated the production sharing contract between Reliance and the government.
According to the MoU, Reliance is to supply 28mmscmd of gas to RNRL at US$2.34 per mmBtu which is at a 44% discount to a price of US$4.20 per mmBtu fixed later by the government for sale of gas by Reliance to some power and fertiliser companies.
Shares of NTPC gained by 1% to Rs216 after reports stated that the government announced that it may sell a 5% stake by as early as December.
Post the stake dilution, the Government’s holding in NTPC would fall to 84.5% from the current 89.5%. The proceeds would go into the National Investment Fund, which was set up in 2005.
Varicent and HCL Technologies announced that they entered in to a partnership to deliver Sales Performance Management solutions. Shares of HCL Tech gained 3% to Rs310. The stock opened at Rs305 and made an intra-day high of Rs314 and a low of Rs302. Total traded volumes stood at 0.23mn shares.
Reliance Infra won Rs5.9bn Jaipur-Reengus road project from NHAI. Shares of Reliance Infra have gained by 1% to Rs1303. The stock opened at Rs1314 and made an intra-day high of Rs1323 and a low of Rs1286. Total traded volumes stood at 0.4mn shares.
Shares of Sical Logistics surged by over 4% to Rs67.5 after the company announced that pursuant to the LOA received from the New Mangalore Port Trust for the setting up of iron ore handling facilities at the deep draft multi purpose berth on BOT basis at New Mangalore Port, the Concession Agreement was signed on October 19, 2009 between the Board of Trustees of New Mangalore Port Trust and Sical Iron Ore Terminal (Mangalore) Ltd (an SPV arm of Sical).
Daiwa Securities, Japan has denied reports that the company is entering in to an alliance with Reliance Capital. Reports had stated that Reliance Capital, through its subsidiary Reliance Securities, was planning to enter into a strategic alliance with investment bank Daiwa Securities, Japan to set up investment banking business in India.
Reports also added that the two companies are in advanced stages of negotiations to finalise the contours of the deal. Shares of Reliance Capital slipped by 1.5% to end at Rs927. The stock opened at Rs942 and made an intra-day high of Rs945 and a low of Rs923. Total traded volumes stood at 0.82mn shares.
Pipavav Shipyard announced that it signed a contract with ONGC for an amount of Rs5.14bn.
The contract is for construction and supply of 12 Offshore Support Vessels. Vide the said Contract ONGC also reserved the right to place order for Spares upto Rs81mn for the Offshore Support Vessels.
Shares of Pipavav Shipyard ended flat at Rs57. The stock opened at Rs56 and made an intra-day high of Rs58.35 and a low of Rs47.65. Total traded volumes stood at 2.9mn shares.