Weak eyes are fondest of glittering objects.
Global markets are bleeding, dismissing any hopes one may have had yesterday of a bounce back. Wall Street suffered its worst one-day decline in nearly three months. No prices for guessing we will have a gap-down start on local bourses. The Nifty may find support at the crucial 5000 level, hopefully. Further selling may pull it down to 4950. In short, bears will have a field day today. A rebound will hinge on improvement in global sentiment and perhaps on surprisingly strong results from India Inc. Conversely, there may be a few more nasty surprises like L&T.
The market had largely been consolidating in recent weeks after last year's stupendous rebound and owing to uncertainty over the prospects in a new year. So, a slight decline was always on the cards. It will be interesting to see whether the bulls have enough steam left in them to stage a come back after this week's reversals. In this context, the big event to watch out for will be next week's RBI policy meet. A CRR hike is factored in but not a rate hike. All eyes will be on Mint Street and RBI chief D. Subbarao. Next week will also be truncated due to the Republic Day holiday.
US bank shares tumbled under the threat of new regulations. The basic-materials space was hit by worries about further tightening in China. Dow slid 214 points in its biggest drop since October 2009, wiping out all its year-to-date gains. European indices closed down by about 1.5-2%. Most Asian benchmarks are down sharply this morning.
China's stronger than expected growth was accompanied by higher inflation, raising fears that Beijing may announce fresh tightening measures to avoid overheating. The dollar advanced across the board. At the same time, recovery in Europe seems to be stalling. Concerns over Greece’s fiscal problems have not been addressed fully. Oil futures surrendered gains due to a stronger dollar and bearish weekly data. The World Bank warns that while the risk of a double-dip recession is receding, the effects of the financial crisis will linger on for some time.
We expect RIL to register 63.7% yoy jump in net sales and 17.3% yoy growth in net profit. We expect Grasim to register 12.2% yoy growth in revenues and 69.1% yoy growth in net profit.
Results Today: 3i Infotech, Allahabad Bank, Asian Paints, Bharti Airtel, CEAT, CESC, Concor, Corporation Bank, Dish TV, Edelweiss, Essar Oil, Grasim, HCC, Hindustan Zinc, ICI India, ITC, Mcleod Russel, Neyveli Lignite, Punj Lloyd, RIL, Tech Mahindra, UB and Zee News.
FIIs were net sellers in the cash segment on Thursday at Rs8.54bn on a provisional basis. The local funds were net buyers of Rs2.31bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs22.62bn. As per the SEBI figures, FIIs were net sellers of Rs323mn in the cash segment on Tuesday.
Thursday turned out to be terrible for the bulls, as a few disappointing earnings made investors jittery ahead of an impending monetary tightening. After three days of topsy-turvy ride, the market sentiment weakened due to all round selling. Global markets too have been choppy due to mixed earnings from key US companies, coupled with growing worries about possible overheating in China.
Profit booking was seen across the board, with the Capital Goods, Power and PSU stocks among the top losers. Even the Mid-Cap and the Small-Cap stocks were not spared. Moreover, the sell-off was accompanied by a big spurt in traded volumes and turnover, indicating that marketmen are a bit wary about the near-term prospects.
In addition, renowned economist Nouriel Roubini was quoted as saying that a global rally in stock markets may end in the second half of the year amid a subdued recovery in US and lackluster growth in corporate earnings. The World Bank also said that it sees only a modest recovery after a disastrous 2009.
Failure to restrain asset-price bubbles in emerging markets, fueled by loose monetary policies in the US and around the world, may also cause an unraveling and a significant correction of asset prices which will be damaging to global and regional economic growth, Roubini said in Hong Kong.
The BSE Sensex fell 423 points to end at 17,051 after touching a high of 17,465 and a low of 17,025. The Nifty fell 126 points to end at 5,094.
Equity markets in Asia ended mixed. The Nikkei in Japan was up 1.2%, while Australia's S&P/ASX ended lower by 0.9%. The Shanghai SE Composite ended flat and Hang Seng index in Hong Kong was down 2%.
In Europe, stocks were trading higher. The DAX in Germany was up 0.2% and the CAC 40 index in France was up 0.5%. The FTSE in the UK was up 0.2%.
Coming back to India, all the BSE sectoral indices ended in the red, the Capital Goods index was the top loser, shedding 5.1%, followed by the Power index that was down 3.5% and the BSE PSU index was down 3.1%. The BSE Mid-Cap index slipped 2.3% while BSE Small-Cap index was down 2.5%.
All the 30-components of Sensex ended in the negative terrain. L&T, Reliance Industries, ICICI Bank, HDFC and BHEL were among the top losers.
Outside the frontline indices, the big losers in the broader market were Hindustan Copper, Piramal Health, NMDC, LITL and GMDC. On the other hand, gainers included Jet Airways, Chambal Fert, Jai Irrigation and RCF.
L&T announced that it posted a decline of 50% in profit after tax at Rs7.59bn for the quarter ended December 31, 2009 as compared to Rs15.2bn for the quarter ended December 31, 2008.
Total Income has decreased from Rs89.24bn for the quarter ended December 31, 2008 to Rs83.55bn for the quarter ended December 31, 2009.
Shares of L&T dropped over 7% to end at Rs1524. The scrip opened at Rs1644 it touched an intra-day high of Rs1644 and a low of Rs1518 and recorded volumes of over 1.5mn shares on BSE.
BHEL announced its Q3 results with net profit at Rs10.7bn registering a growth of 35% as against 7.91bn in the same period last year.
Sales also rose by 18% to Rs71bn in the quarter ended December 2009, as against Rs60.22% in the same period precious year.
The stock ended lower by 4% at Rs2297 it opened at Rs2394 it touched an intra-day high of Rs2410 and a low of Rs2275 and recorded volumes of over 0.13mn shares on BSE.
Shares of Dredging Corp plummeted by over 10% to end at Rs649 after media reports stated that the government has no plans to divest its stake in the company.
Yes Bank has reportedly raised as much as US$225mn selling shares to large investors. The bank plans to sell shares at an average price of Rs269.50 a piece. Morgan Stanley, CLSA India and Goldman Sachs are managers to the sale.
The stock declined 3% to end at Rs263, it opened at Rs271 it touched an intra-day high of Rs275 and a low of Rs263 and recorded volumes of over 0.45mn shares on BSE.
Shares of Cairn India slipped by 3.5% to end at Rs279 after reports stated that Comptroller & Auditor General of India has sought government intervention to access financial records of the company’s’ Rajasthan oil fields.
The scrip opened at Rs289 it touched an intra-day high of Rs289 and a low of Rs278 and recorded volumes of over 0.4mn shares on BSE.