Act quickly, think slowly.
When the world was down, India was shining, especially late in the afternoon. The rise coincided with the Finance Minister’s announcement that the government plans an additional Rs257bn in public expenditure during the current fiscal year.
The gains are less likely to be maintained given the weakness all around the world. However, bulls will strive for a recovery later in the day. In the US, the Dow shed over 100 points following a strengthening dollar, weakening oil and gold prices and some below expectation corporate numbers. Asian markets are weak after Japan’s economy expanded less than expected. Japan has also cleared an additional US$81bn stimulus.
UK and Germany manufacturing is still weak. Ratings agencies have warned about debt problems. First it was Dubai and now Fitch has lowered Greece's credit rating. People may not know where to find Greece on the map but some impact will be felt in markets.
Flows into emerging markets equity and the riskier bond fund groups lost momentum in early December, as investors digested the implications of the moratorium being sought by Dubai World on its US$60bn debt pile. The uncertainty - and the accompanying market volatility - heightened the already keen investor appetite for exposure to commodities and to the more conservative bond fund groups.
Risk appetite weakened amid ongoing concerns about the US economy's recovery prospects. A toxic cocktail of negative economic and debt news caused a slump in US and European stocks. Sales declines at McDonald's added to investor jitters about the pace of economic recovery, sending US stocks down sharply in early trading.
European equities fell after Fitch slashed Greece's A-grade credit rating, the first time in 10 years that one of the leading agencies has lowered the country below the A category. Fitch cut Greece to BBB-plus with a negative outlook, because of the poor state of the country's public finances, after rival S&P threatened Athens with a downgrade.
The US dollar gained against major currencies, as worries about high levels of debt in Greece and Dubai lead investors to buy assets that would offer protection in a crisis. Oil futures fall for a fifth straight session, extending their losing streak to the longest in five months.
On Wall Street, the Dow Jones Industrial Average tumbled 104 points, or 1%. The S&P 500 index lost 11 points, or 1%. The Nasdaq Composite shed 17 points, or 0.8%.
Stocks slipped at the open as investors took a cue from falling global markets and a rising dollar. Reports in the UK and Germany showed manufacturing is still weak, Japan approved $81bn in fresh stimulus money, and ratings agencies warned about debt problems in Dubai and Greece.
The rising dollar also played a role in the stock weakness. The weak dollar has added to stock gains over the last nine months, but for the last two weeks, the greenback has started to make a comeback versus the euro. The dollar has remained weak against the yen.
Since hitting a more than 12-year low on March 9 at the height of the financial market panic, US stocks have been on the rise, gaining 60% through Monday's close.
US stocks had ended mixed on Monday as comments from Federal Reserve Chairman Ben S. Bernanke cooled worries about higher interest rates but failed to overshadow the stronger dollar and weaker commodities.
Dow component 3M issued a 2010 profit forecast in a range that meets or beats analysts' expectations. The diversified conglomerate also reiterated that 2009 earnings would fall in a range of $4.50 to $4.55 per share versus analysts' forecasts of $4.57. Shares fell 1%.
Fellow Dow component McDonald's said sales at U.S. stores open a year or more, a retail metric known as same-store sales, fell 0.6% in November, the second monthly decline in a row. Shares fell 2.1%.
Kroger said it swung to a fiscal third-quarter loss from a profit a year ago. The grocery store chain also cut its full-year forecast and cut its target for same-store sales growth. Shares fell 12%.
Procter & Gamble Chairman A.G. Lafley is retiring in January, the company said Tuesday. His position will be filled by Bob McDonald, the company's CEO. McDonald replaced Lafley as CEO in July.
General Motors may pay back all $6.7 billion in loans it owes the government in one lump sum, rather than on a quarterly basis as is currently expected, new chief executive Ed Whitacre said.
FedEx shares rallied after it said fiscal second-quarter earnings will top forecasts, thanks to strength in international demand.
President Obama outlined a new multi-billion dollar jobs plan and stimulus proposal, in a speech at the Brookings Institution in Washington. He said he wants to expand tax breaks for small businesses, invest in infrastructure profits and give consumers rebates for making their homes more energy efficient. Funds would come from the $200 billion in unallocated bailout money - some of which would also be used to pay down the deficit.
The dollar fell versus the euro late in the day, erasing gains. The dollar gained against the yen.
COMEX gold for February delivery fell $20.60 to settle at $1,143.40 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last week.
US light crude oil for January delivery fell $1.31 to settle at $72.62 a barrel on the New York Mercantile Exchange.
Treasury prices rose, lowering the yield on the 10-year note to 3.38% from 3.43% late on Monday.
In European trading overnight, banks dropped following credit-rating downgrades for Dubai and Greece. Manufacturing data from Germany and the UK painted a grim picture. The pan-European Dow Jones Stoxx 600 Index ended the day down 1.6% at 244.01. Banks ended sharply lower following reports that Dubai World-owned property developer Nakheel posted a $3.65 billion first-half loss.
British banks, which are thought to be some of the most exposed to Dubai debt woes, fell. The state of Dubai owns Dubai World and on Tuesday Moody's Investors Service downgraded all six Dubai government-related issuers.
Greek banks were slammed following the ratings downgrade by Fitch.
The UK's FTSE 100 Index fell 1.7% to 5,223.13, while Germany's DAX Index lost 1.7% to 5,688.58 and the French CAC-40 Index shed 1.4% to 3,785.30.
What a turnaround! An absolute twisting trading session ended with smart gains defying weak global cues. After staying in a narrow range for most part of the first half, markets gained momentum led by a sudden bout of buying and some short squeezing.
The Real estate, Consumer Durables, Metals and the telecom stocks were among the major gainers. Even the Mid-Cap and the Small-Cap stocks participated in the rally.
The BSE Sensex advanced 244 points to end at 17,227 after touching a high of 17,238 and a low of 16,964. The index opened at 17,984 against the previous close of 17,983. The NSE Nifty was up 81 points to shut shop at 5,148.
In Asia, the Nikkei in Japan was marginally down 0.3%, while Australia's S&P/ASX ended lower by 0.2%. Shanghai SE Composite in China slipped 1% and Hang Seng index in Hong Kong was down 1.2%.
In Europe, stocks were flat with positive bias. The FTSE in the UK was up 0.2%, The DAX in Germany was up 0.3% and the CAC 40 index in France was flat.
Coming back to India, all the BSE sectoral indices ended in the positive terrain, the Realty index was the top gainer, surging 3.5%, followed by the Metals index that was up 2.3% and the BSE Consumer Durables index was up 2.1%. The BSE Mid-Cap index gained 1.2% and the BSE Small-Cap index was up 1.3%.
Among the 30-components of Sensex, 27 stocks ended in the positive and only SBI, Maruti and Hero Honda ended in the negative terrain. Among the major gainers were Bharti, DLF, Tata Motors, Hindaclo and Reliance Industries.
Outside the frontline indices, the big gainers in the broader market were Jai Corp, IFCI, Indian Hotels, IDBI Bank and Balrampur Chini. On the other hand, losers included PFC, Cadila, Godrej Industries, GSPL and Piramal Health.
Shares of Reliance Industries gained by 2.3% to end at Rs1080 after reports stated that the company is holding discussions with several banks in a bid to establish US$8-US$10bn in financing to acquire LyondellBasell Industries AF, which has filed for bankruptcy.
Technically, the stock yet again bounced back from its 50 Day moving average for the second straight trading session. The scrip opened at Rs1054 it touched an intra-day high of Rs1084 and a low of Rs1050 and recorded volumes of over 0.92mn shares on BSE.
Shares of 3i Infotech gained by 4.5% to Rs88.9 after reports stated that ICICI Bank is in discussions to sell its entire 27% holding in the company. ICICI Bank has already appointed PricewaterhouseCoopers to advise on the sale, added reports.
However, the company clarified post market hours stating that it is not aware of any move by ICICI Group to sell their stake in the company and 3i Infotech would not like to comment on the News Reports or market rumors.
NDTV announced that it entered into a conditional agreement with Turner Asia Pacific Ventures, Inc. for the sale of most of its indirect stake in NDTV Imagine Ltd, which is held through its subsidiary NDTV Networks plc.
The total transaction size is US$117mn and involves a sale of 76% of NDTV Imagine for a consideration of US$67mn together with the subscription to fresh shares in Imagine by TAPV for US$50mn.
Prior to the issuance of primary shares to TAPV, NDTV Networks plc will retain a stake of 5% in Imagine. The transaction is subject to receipt of an approval from the board of Time Warner Inc (the parent of TAPV), and from regulatory authorities.
Shares of NDTV gained 3.5% to Rs165. The scrip opened at Rs160 it touched an intra-day high of Rs172 and a low of Rs159 and recorded volumes of 1mn over shares on BSE.
Shares of M&M edged higher by 0.7% to end at Rs1034 after the company announced that it plans to consolidate its auto parts businesses into a single company over the next two years to cut costs, Hemant Luthra, head of the division, said. Mahindra may own as much as 60% of the consolidated unit, he said.
The company also plans to enter aviation component business as well and is already in talks with Airbus, Boeing to supply parts. The company further plans to spend US$10mn to produce Aircraft parts.
Shares of Gammon India surged over 3.5% top end at Rs245 after the company announced that it’s subsidiary, Franco Tosi Meccanica S.P.A. Italy, procured an order from an IPP for supply of Hydro Turbines, aggregating to Rs5.1bn.
Gammon Infrastructure advanced by 6.5% to Rs20.30 after the Company signed an agreement with Dragados Servicios Portuarios y Logisticos S.L. (Dragados) of Spain to purchase its equity shares in Indira Container Terminal Pvt. Ltd. (ICTPL).
The agreement envisages buying of 24% equity stake in ICTPL now and a further 26% equity stake after three years post the commencement of commercial operations of the Offshore Container Terminal Project being implemented by ICTPL.