Better be despised for too anxious apprehensions, than ruined by too confident security.
Corporate performance may have beaten street expectations but that does not prevent the stocks to get beaten down. We had mentioned about the "Sell on News" habit of the market. The market has been running ahead pricing these positives for some time now. A cool-off was only to be expected.
The market looks set for a low key start. The global markets are in the red, led by the US. Volatility will continue in the near term. With funds (both local and foreign) selling, there might be some more softening before the uptrend resumes.
Meanwhile, counting has begun for three state assemblies. All eyes are on Maharashtra where the ruling Congress-NCP combine is expected to hold on to its reigns. It may also triumph in Arunachal Pradesh and Haryana. A victory will only strengthen the hands of the Congress at the Centre. This will also auger well for the economy, provided the UPA is willing to take tough decisions.
Inflation remains an overhang. Crude oil has already crossed $80 per barrel. The Prime Minister’s Economic Advisory Council sees inflation at 6% by March end. The latest weekly data will be out today.
Investors should wait for all the results to get over before taking a call on the market. One way of countering the uncertainty is to stick to a stock specific approach. But do proper due diligence before picking stocks, especially small- and mid-caps.
Results Today: ACE, Allahabad Bank, Asian Paints, Bhushan Steel, Biocon, Hanung Toys, Hikal, Hindustan Zinc, ICI India, Info Edge, Jubilant Organosys, Kale Consultants, Kirloskar Brothers, L&T, Noida Toll Bridge, Piramal Healthcare, Raymond, Reliance Media Works, Rolta, Unichem Labs, Vimta Labs and WWIL.
FY10 GDP is forecast to grow by 6.5% by the PM's Economic Advisory Council.
The procurement season has kicked off on a sour note, as purchases of rice by government agencies has dropped 14% from last year. This shows that food inflation coupled with rising commodity prices could hit India Inc. in the months to come.
FIIs were net sellers in the cash segment on Wednesday at Rs5.12bn on a provisional basis. The local funds were net sellers at Rs2.9bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs11.4bn. On Tuesday, the foreign funds were net buyers of Rs17.7bn in the cash segment. Their net investments in Indian stocks this year has crossed $14bn. Mutual Funds were net sellers at Rs3.18bn on Tuesday.
US stocks closed lower on Wednesday after a downgraded of Wells Fargo triggered a selloff in banks. The Dow Jones Industrial Average slid 92 points, or 0.9%. The S&P 500 index lost 10 points, or 0.9%. The Nasdaq Composite shed 13, or 0.6%.
Stocks had rallied through the early afternoon as investors welcomed better-than-expected results from Wells Fargo, US Bancorp and Morgan Stanley. But the downgrade of Wells Fargo knocked the wind out of the banking sector in the late afternoon, and that sent the rest of the market lower.
Bove of Rochdale Securities cut Wells Fargo to "sell" from "neutral" following the company's better-than-expected quarterly earnings. He said that the results were mixed, and that losses due to bad loans seem to be accelerating.
The CBOE Volatility index, Wall Street's so-called fear gauge, hit a 14-month low of 20.10 Wednesday morning. While that would seem to be a positive, since it implies investor anxiety is waning, it also suggests that investors could be getting too complacent and that a bigger stock retreat could be in store. The VIX bounced back after the stock selloff, ending at 22.22.
Investors are deep in the thick of the quarterly reporting period, with 135 of the S&P 500 companies reporting results this week.
After the close on Wednesday, eBay reported weaker quarterly earnings that topped estimates, but the online marketplace also issued a fourth-quarter earnings forecast at the low end of analysts' expectations. Shares fell 5% in extended-hours trading.
US stocks had slipped on Tuesday, as disappointing results from DuPont and Coca-Cola and a weaker-than-expected reading on the housing market caused investors to step back. But the rally found some new fuel through most of Wednesday until the 11th hour selloff.
So far, 122 companies, or nearly one-fourth of the S&P 500, have reported results. Profits are currently on track to have fallen 20.9% versus a year earlier, according to the latest from Thomson Reuters. Revenue is expected to have dropped 10.4% from a year ago.
The Dow 30's results are expected to be weaker, Thomson said, with profits due to slide just short of 30% versus a year ago.
Wells Fargo reported a profit of $3.2 billion in its latest quarter as strength in its mortgage-lending business and other units tempered the impact of losing billions in bad loans. The bank reported higher quarterly earnings that soundly topped estimates. Shares were up moderately in the morning, but they fell 1% by the end of the
day.
US Bancorp reported weaker quarterly earnings that topped estimates thanks to strong mortgage banking revenue, up 350% from a year ago. Shares rose 6.7%.
Morgan Stanley reported its first quarterly profit in a year thanks to strong fixed-income sales and trading revenue. The bank reported earnings and revenue that fell from a year ago but topped estimates. Shares gained 7%.
Dow component Boeing reported an earnings-per-share loss versus a year-ago profit due to expenses connected to its long-delayed 787 Dreamliner program. The aerospace developer also reported higher revenue. Both revenue and earnings results fell short of analysts' estimates. Boeing also cut its 2009 earnings outlook. Shares fell 1%.
After the close on Tuesday, Yahoo reported higher quarterly earnings that beat forecasts on weaker revenue that also beat forecasts. Shares climbed 2%.
In other company news, Sun Microsystems said late on Tuesday that it was cutting 3,000 jobs related to its purchase by Oracle. Its stock fell 3%.
All 50 states and the District of Columbia reported big jumps in unemployment rates in September versus a year ago. Fifteen states reported jobless rates above 10% in September, with Michigan's unemployment topping the list at 15.3%.
The US economy has shown signs of stabilizing or even improving in recent weeks, according to the Fed's "beige book" of economic conditions, released in the afternoon.
Treasury prices rallied, lowering the yield on the 10-year note to 3.41% from 3.34% late on Tuesday.
The euro jumped to a 14-month high against the dollar, extending its recent run against the US currency. The dollar inched higher versus the yen.
US light crude oil for December delivery rose $2.25 to settle at $81.37 a barrel on the New York Mercantile Exchange, pushing toward a fresh one-year high. Prices rose after the latest weekly supply data from the government showed a smaller-than-expected rise in crude supplies.
COMEX gold for December delivery rose $5.90 to settle at $1,064.50 an ounce. Gold has surpassed records repeatedly this month due to the weak dollar and longer-term worries about inflation.
European stocks turned around to end higher on Wednesday. The pan-European Dow Jones Stoxx 600 index rose 0.4% to 249.29, up for the second time in four sessions. The French CAC-40 index gained 0.1% to 3,873.22, while Germany's DAX index was up 0.4% at 5,833.49 and the UK's FTSE 100 index climbed 0.3% to 5,257.85.
Indian markets ended with losses for the second straight trading session on Wednesday. The BSE Sensex lost nearly 2% or 317 points and the NSE Nifty shedding ~80 points or 1.5% in the last couple of days.
Sentiments were hit after US market retreated from 12-month highs following disappointing housing and inflation data, Asian markets also were mostly in the red in addition even the European markets started off with a negative positive.
Disappointing quarterly earning by few companies like Tech Mahindra, Yes Bank and Sesa Goa further dampened the mood.
Finally, the BSE Sensex fell 213 points at 17,009 after touching a high of 17,248 and a low of 16,997. The index opened at 17,229 against the previous close of 17,223. The NSE Nifty fell 51 points to shut shop at 5,063.
In Asia, the Nikkei in Japan ended flat at 10,333, while Australia's S&P/ASX ended lower by 0.2% at 4,838. Shanghai SE Composite in China ended lower by 0.5% at 3,070 and Hang Seng index in Hong Kong was down 0.3% to end at 22,318.
In Europe, stocks were in the green. The FTSE in the UK was down 0.9%, The DAX in Germany was down 1.1% at 5,749 and the CAC 40 index in France slipped 1.4%.
Coming back to India, among the BSE sectoral indices, the Bankex index was the top loser, shedding 2.1%, followed by the Auto index that was down 2.1% and the BSE FMCG index was down 2%. On the other hand, BSE IT index gained 0.5% and the BSE Teck index added 0.4%.
Even the BSE Mid-Cap index slipped 1% while the BSE Small-Cap index was up 0.21%.
Among the 30-components of Sensex, 24 stocks ended in the red and 6 ended in the positive terrain. Among the major laggards were, Tata Steel, JP Associates, SBI, HDFC, Hero Honda and Tata Motors.
On the other hand, TCS, Tata Power, Bharti Airtel and DLF were among the major gainers.
Outside the frontline indices, the big losers in the broader market were Balrampur Chini, APIL, Bank of Baroda, Indian Bank and Renuka Sugar. On the other hand, gainers included Hind Copper, Jet Airways, HCL Tech, Gujarat NRE and Adani Ent.
The Supreme Court suggested arbitration in the Ambani gas dispute on Wednesday. Reliance Industries announced that the government has taken over the right to allocate gas and also told Supreme Court that the government’s gas utilization policy was a suitable arrangement for supply of fuel from field that it operates.
Shares of Reliance Industries ended flat at Rs2182 while, shares of RNRL slipped by 1.3% to Rs86.
Shares of Jindal Steel & Power surged by over 2% to Rs715 after reports stated that Essar Group withdrew from a bidding contest with the company for Australian coal explorer Rocklands Richfield Ltd.
The Jindal offer of 42 Australian cents per share remains on track with the company continuing its due diligence
The stock opened at Rs778 and made an intra-day high of Rs778 and a low of Rs694. Total traded volumes stood at 1.4mn shares.
Shares of IOC gained by 2% to Rs653 after the company announced a 1:1 bonus issue after a gap of six years. The last time the company had declared a bonus issue was in 2003.
The shareholders of IOC, by way of postal ballot, have approved the 1:1 bonus issue, IOC said in a filing to the Bombay Stock Exchange. The company has fixed October 30 as the record date for the purpose of ascertaining the eligibility of shareholders for the issuance of bonus shares, it added.
Shares of Polaris shot up by over 16% to Rs174 on the back of huge volumes. The stock opened at Rs151 and made an intra-day high of Rs176 and a low of Rs150. Total traded volumes stood at 5.6mn shares.
The company on October 20 announced its second quarter results for FY 2009-10. The Profit after tax grew (PAT) by 11% to Rs352mn from Rs318.4mn in the previous quarter. Income grew by 4% to Rs3.38bn from Rs3.26bn.
In dollar terms, Profit grew by 12% to 7.27 million from 6.52 million and income grew by 5% to 69.93 million from 66.61 million sequentially.
Sterlite Industries reportedly got a leg-up in its takeover battle for bankrupt copper miner Asarco in the US as a district court in Texas has allowed it to argue for its amended bid of US$2.6bn which was earlier rejected by a lower court.
The district court is expected to take a decision on the sale by the end of this month. Reports stated that the district court’s move would help them in presenting a better stand.
Shares of Sterlite Industries slipped 1.4% to Rs822. The stock opened at Rs837 and made an intra-day high of Rs837 and a low of Rs819. Total traded volumes stood at 0.26mn shares.
Yes Bank Q2 net profit was at Rs1.12bn as against Rs636.2mn in the same period last year. Interest income was at Rs5.27bn versus 4.9bn. On the other hand, interest expenses were at Rs3.67bn as against Rs3.67bn. The bank’s other income was at Rs1.52bn as against Rs802.7mn in the same period last year.
The stock slipped 4% to Rs244. The stock opened at Rs256 and made an intra-day high of Rs257 and a low of Rs241. Total traded volumes stood at 1.8mn shares.
Shares of Bank of India slipped by over 3% to Rs441 after the FIIs were prohibited from purchasing the bank’s stocks. The Central bank said that the foreign investors share holdings have reached the maximum limit allowed and any additional purchases will require regulatory approval.
Shares of HCL Technologies surged by over 4% to Rs322 after the company announced that it has partnered with Varicent Software for providing the latters solution products in the Asia-Pacific region. The stock opened at Rs311 and made an intra-day high of Rs328 and a low of Rs310. Total traded volumes stood at 0.5m shares.