Courage is doing what you're afraid to do. There can be no courage unless you're scared.
The bulls seem to have lost courage as bears put on their horror Halloween masks and scared the wits out of the bulls. Another rate hike by Australia; a big loss for UBS and a massive shake up of UK banks spooked sentiment globally. Warren Buffett's blockbuster deal for Burlington Northern Santa Fe could provide bulls some cheer. At the same time the latest chart patterns for the S&P 500 suggest that the uptrend may be running out of gas. All eyes and ears will be on the tone of central banks in US, UK and EU. Most of them may refrain from action in terms of raising rates.
Back home, the FM has reiterated that he is in no hurry to reverse the fiscal stimulus. Disinvestment would happen when the market offers the best possible value. Technically though, the bulls could lose some more ground. On the downside, support may kick in at 4450. On the way up, 4630-4650 could prove to be tricky levels to surpass. We expect a slight rebound at start followed by another choppy session.
FIIs were net sellers in the cash segment on Tuesday at Rs8.74bn on a provisional basis. But, the local funds were net buyers of Rs7.52bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs5.67bn. On Friday, the foreign funds were net buyers of Rs7.36bn in the cash segment. FIIs' net investments in Indian stocks this year is above $14.2bn.
US stocks ended mixed, as investors mulled improved auto sales, surging commodity prices and Warren Buffett's buyout of railroad Burlington Northern Santa Fe. The first day of the Federal Reserve's two-day policy meeting and some bearish news in the UK financial sector also weighed on the sentiment.
The Dow Jones Industrial Average lost 17 points, or 0.2%, to 9,771.91. The S&P 500 gained 2 points, or 0.2% to 1,045.41 and the Nasdaq Composite rose 8 points, or 0.4%, to 2,057.32.
The Dow Jones Transportation index surged 5.3% after Warren Buffett's Berkshire Hathaway said that it will buy railroad operator Burlington Northern Santa Fe.
US stocks managed gains on Monday at the end of a choppy session, but the selling resumed on Tuesday. The S&P 500 has tumbled over 5% in the last two weeks.
Warren Buffett's Berkshire Hathaway is buying Burlington Northern Santa Fe in a $44 billion cash-and-stock deal that the so-called Oracle of Omaha dubbed an "all-in wager on the economic future of the United States." The deal involves Berkshire buying the remaining 77.4% of the company it doesn't already own for around $100 per share. Burlington shares surged 28%.
In other merger news, Stanley Works said late on Monday that it would buy Black & Decker in a $4.5 billion all-stock deal. Stanley Works shares gained 10% and Black & Decker gained 8%.
MasterCard reported higher-than-expected quarterly earnings, reversing a year-ago loss. The credit card processor also reported a higher quarterly revenue that topped estimates. Looking forward, MasterCard said that fiscal-year 2009, 2010 and 2011 revenue growth will come in shy of the long-term objective of 12% to 15%. Its shares fell 1.6%.
Swiss bank UBS reported a bigger quarterly loss that was worse than expected Tuesday and also issued a cautious outlook. Shares fell 3.2%.
Royal Bank of Scotland Group (RBS) said it will sell its insurance unit and some branches as it receives an additional £25.5 billion, or $41.6 billion, in aid from the UK Treasury. RBS shares fell 5%. Lloyds Banking Group will also receive over $9 million in aid.
Initially, the banking sector woes weighed on a variety of bank shares, lowering the KBW Bank index by 1%. But the index erased losses by the close.
Most major US automakers reported that sales bounced back in October following a weak September, as more cars became available. Ford said sales rose 3% versus a year ago, topping forecasts for a decline of 3%. Sales also jumped 21% from September.
Toyota reported sales that were pretty flat versus a year ago, but that was better than the decline of 6% that analysts expected. Results were also up 21% from September. GM said October sales rose 5% versus a year ago, but that was short of expectations.
Dow component Johnson & Johnson said it is cutting 7% of its global workforce as part of a cost-cutting plan that could save the company up to $1.7 billion by 2011. Shares lost less than 1%. Shares were barely changed.
Intel shares slumped 2.7% after Morgan Stanley cut its rating on the company to "equal weight" from "overweight."
The two-day policy meeting of the Federal Reserve got underway on Tuesday, with a statement due on Wednesday afternoon. The Fed is widely expected to hold the fed funds rate, a key bank lending rate, at historic lows near zero. As always, investors will be attuned to what the Fed says about the economic outlook in its statement. The Fed could also provide hints as to when it might start withdrawing some of the trillions in stimulus. It is not expected to boost interest rates until sometime next year.
In the day's key economic news, factory orders rose 0.9% in September after falling 0.8% in the previous month. Economists thought it would rise 0.8%.
The dollar gained versus the yen and fell against the euro. Typically, a stronger dollar would pressure dollar-traded commodities such as oil and gold, but that wasn't the case on Tuesday.
US light crude oil for December delivery rose cents $1.47 to settle at $79.60 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rallied $30.90 to settle at $1,084.90 an ounce after earlier hitting an intraday record high of $1,087 an ounce.
Treasury prices fell, raising the yield on the 10-year note to 3.47% from 3.41% on Monday.
European shares ended lower. The pan-European Dow Jones Stoxx 600 Index fell 1.2% to close at 234.90. Every sector ended in the red while the index's gains for the year were pared to about 18.6%.
The UK's FTSE 100 Index lost 1.3% to close at 5,037.21, while Germany's DAX Index declined 1.4% to end at 5,353.35 and the French CAC-40 Index fell 1.5% to settle at 3,584.25.
Anyone who thought that the holiday on Monday would save the bulls was in for a rude shock. It was an absolute carnage on Dalal Street after an extended weekend. All hopes of a rebound after last week's decline were completely shattered amid concerns that the nascent economic recovery could stall as central banks start reversing the stimulus. Australia's central bank raised interest rates for the second time in as many months; UBS posted another big loss and RBS and Lloyds Bank agreed to fresh bank bailout from the UK government.
Savage all round selling dragged the NSE Nifty below the 4,600 mark for the first time since September 3. It was an outright bear assault as the 100 DMA which has acted as a strong support for the index seemed to have lost its significance. What was even worse about today's bloodbath was that it came on higher volume and turnover. Market breadth was highly in favour of the bears.
Apart from the index heavyweights like DLF, Reliance Industries, Hindalco and JP Associates, even the Mid-Caps and the Small-Cap stocks were badly battered.
The realty stocks crumbled amid massive sell-off. The BSE Realty index was the top loser among the BSE sectoral indices, plummeting by over 9.5% in a single trading session.
Shares of DLF lost over 9% to Rs336, Unitech declined over 9% to Rs74, Parsvnath plunged over 9% to Rs95 and Sobha Developers slumped over 10% to Rs201.
On Tuesday, the BSE Sensex fell 491 points to end at 15,404 after touching a high of 15,957 and a low of 15,330. The index opened at 15,838 against the previous close of 15,896. The NSE Nifty was down 147 points to shut shop at 4,564.
In Asia, Australia's S&P/ASX ended lower by 0.2% at 4,531. Shanghai SE Composite was down 2.3% and Hang Seng index in Hong Kong fell by 1.7% on the other hand, the Nikkei in Japan was closed on account of a holiday.
In Europe, stocks were in the red. The FTSE in the UK was down 2%, The DAX in Germany was down 2.1% and the CAC 40 index in France fell 2.2.
Coming back to India, among the BSE sectoral indices, the Realty index was the top loser, shedding 9.7%, followed by the Metal index that was down 6% and the BSE Oil & Gas index was down 4.1%. Even, the BSE Mid-Cap index fell 3.7% and the BSE Small-Cap index was down 4.5%.
Among the 30-components of Sensex, 27 stocks ended in the red and only Bharti Airtel, Maruti and Sun Pharma ended in the positive terrain. Reliance Industries, Infosys, SBI, L&T and Sterlite Industries were among the major laggards.
Outside the frontline indices, the big losers in the broader market were Rolta, Aban Offshore, Gujarat NRE Coke, Syndicate Bank and India Cement. On the other hand, gainers included Jet Airways, Marico, BEL, Indian Hotels and BEML.
Shares of Bharti Airtel staged a smart bounce back and ended adding nearly 2.7% at Rs299. The company posted a net profit of Rs22.96bn for the quarter ended September 30, 2009 as compared to Rs16.04bn for the quarter ended September 30, 2008.
Total Income has increased from Rs83.02bn for the quarter ended September 30, 2008 to Rs89.27bn for the quarter ended September 30, 2009.
Singapore Telecommunications bought additional 1.52 % stake in Bharti and will pay up to Rs30.084bn in three installments ranging over 18 months.
As a result of the acquisition, Sing Tel's effective interest in Bharti Telecom will increase from 32.81 percent to 36.16% and its effective interest in Bharti Airtel from 30.43% to 31.95%.
According to media reports, the possible acquisition deal between Bajaj Hindusthan and Balrampur Chini has been called off. Bajaj Hindusthan was looking to buy promoter stake in Balrampur Chini.
Shares of Balrampur Chini plunged by over 10% to Rs134. On the other hand, Bajaj Hindusthan shares ended marginally higher by 0.5% to Rs196.
Bhavesh Gandhi, Analyst, IndiaInfoline, says "In short term it is beneficial for Bajaj Hindusthan".
Jindal Steel & Power posted a net profit of Rs3.05bn for the quarter ended September 30, 2009 as compared to Rs4.5bn for the quarter ended September 30, 2008. Total Income has decreased from Rs22.31bn for the quarter ended September 30, 2008 to Rs16.18bn for the quarter ended September 30, 2009.
The Group has posted a net profit of Rs8.08bn for the quarter ended September 30, 2009 as compared to Rs7.62bn for the quarter ended September 30, 2008. Total Income has decreased from Rs28.81bn for the quarter ended September 30, 2008 to Rs24.90bn for the quarter ended September 30, 2009.
The stock slipped by 4% to Rs613, it opened at Rs634 and made an intra-day high of Rs638 and a low of Rs600. Total traded volumes stood at 1.4mn shares.
Shares of Genus Power plunged by over 18% to Rs133 after a fire at IOC's Jaipur depot forced the closure of its plant adjoining the affected oil terminal.
The company announced that a 5 km area around the fire spot has been seized by the Government, The estimated loss and status shall be informed after entry of the employees allowed.
The stock opened at Rs155 and made an intra-day high of Rs155 and a low of Rs131.8. Total traded volumes stood at 0.42mn shares.
Shares of IRB Infra advanced by 1% to Rs233 after the Board of Directors approved raising of funds by further issue of securities in Domestic / International markets through various instruments including equity shares / warrants with Non-Convertible Debentures under QIP. The stock opened at Rs228 and made an intra-day high of Rs245 and a low of Rs228. Total traded volumes stood at 0.72mn shares.