Sometimes the heart sees what is invisible to the eye.
The market remains in a precarious situation. It is time to keep your heart, mind, eyes and ears open before taking a decision. The extended weekend brought mixed news. The industrial output data for December surpassed all optimistic estimates. China surprised by raising the reserve ratio for banks. Data also showed that Eurozone growth came to a halt in the last quarter of 2009. Among the other bad news was of course the blast in Pune just as India and Pakistan get ready to resume bilateral dialogue. On the M&A front, reports suggest that Kuwait-based Zain is said to have accepted a $10.7bn offer from Bharti Airtel for its African assets.
We expect a flat to slightly positive start for Indian markets with a likelihood of another short-covering-led bounce. Do not get carried away by any sudden spurt if any as the upside too could get capped sooner than later. In the near term, the Nifty could rise to the 5000 levels again; and perhaps cross 5000 before the Budget. On the whole, the market will remain volatile, largely owing to external factors and concerns over FII outflows. Outcome of the Budget will be another factor to determine near-term direction.
FIIs were net buyers in the cash segment on Thursday at Rs2.11bn on a provisional basis while the local funds were net buyers of just Rs608.2mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs10.77bn. On Wednesday, FIIs were net sellers of Rs236mn in the cash segment, while Mutual Funds were net buyers at Rs2.67bn, according to SEBI web site.
Markets in China, Taiwan, Hong Kong, Singapore, South Korea and Malaysia are shut today for the Lunar New Year.
US markets will be closed today as well on account of the Presidents’ Day holiday.
Elsewhere in the world, Finance Ministers from the 16-member eurozone will meet today to discuss Greece’s fiscal woes.
Concerns about the health of the global economy weighed heavily on Wall Street on Friday, as China surprisingly hiked the banks' reserve requirements again and economic growth in the 16-member eurozone came to a halt.
The Dow Jones Industrial Average lost 45 points, or 0.4%, to end at 10,099.14. The Dow had dropped as much as 160 points in the morning before recovering.
The S&P 500 index slid 3 points, or 0.3%, to close at 1,075.51. The Nasdaq Composite index rose 6 points, or 0.3%, to finish at 2,183.53.
US stocks had slumped in early morning, but managed to cut losses in the afternoon thanks to some gains in the technology space. On Thursday, they were up smartly after the European Union agreed to help Greece.
The Dow's slight loss on Friday left it with a gain of 0.9% for the week, thanks mostly to a big advance Thursday. The Nasdaq was up 2% for the week while the S&P 500 gained 0.9% on the week.
Wall Street extended 2009's rally through the middle of January, but lost steam soon after. The Dow, S&P 500 and the Nasdaq have declined in the past four weeks as decent earnings have been overshadowed by worries about tightening in China, US plans to limit bank trading and European debt issues. Also, a stronger dollar has pressured commodities and companies that do a lot of business overseas.
Between rally highs hit Jan. 19 and the lows of last week, the S&P 500 lost over 9%, close to the 10% selloff that is the technical definition of a correction. The Dow's high-to-low was just over 7%.
The dollar rallied versus the euro and against the Japanese yen. The US Dollar Index, which measures the US currency against a basket of six other currencies, was up 0.5%.
US light crude oil for March delivery fell US$1.15 to settle at US$75.28 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery fell US$4.70 per ounce to settle at US$1,090.
Treasury prices rose, lowering the yield on the 10-year note to 3.69% from 3.72% late on Thursday.
China told its banks to raise reserve requirements for the second time in a month, in an effort to slow lending and contain any inflation threat that could set back the economic recovery.
The government boosted the reserve requirement for financial institutions by a half-percentage point to 16.5% for big lenders and 14.5% for small lenders. Rural lenders will see no change.
China kept its yearly target for bank lending unchanged, suggesting that it is not looking to cut back lending, so much as slow the pace.
Elsewhere in the world. European Union (EU) members meeting in Brussels, on Thursday said that Greece must do whatever is necessary to cut its huge budget deficit and that the group would be prepared to step in if needed.
The nation's financial problems have sparked fears of a broader financial crisis in Europe with Portugal, Spain, Ireland and Italy among the other euro zone nations seen as having growing debt problems.
Meanwhile, a report showed that euro zone GDP growth in the fourth quarter was 0.1% over the previous three months, short of the 0.3% economists were expecting. In the third quarter, GDP had risen by 0.4%. Problems in Greece and a struggling German economy were among the factors dragging on growth.
The B shares of Warren Buffett's Berkshire Hathaway were among the most actively-traded on the New York Stock Exchange. The stock was added to the S&P 500 after the close of trading.
Motorola gained 7.5% in heavy NYSE volume after announcing a long-in-the-works decision to split itself into two publicly-traded companies. Motorola is splitting its cell phone and cable set-top box business from its networking gear sales businesses.
The company said late on Thursday that it will complete the deal in the first quarter of 2011.
In the day's economic news for the US economy, January retail sales growth was stronger than expected, according to a Commerce Department report released in the morning. The report, delayed by snow storms in Washington, showed sales rose 0.5% versus forecasts for a rise of 0.3%. Sales excluding autos rose 0.6% versus forecasts for a jump of 0.5%.
A separate report from the University of Michigan showed that consumer sentiment dipped to 73.7 in early February from 74.4 in late January. Economists thought it would rise to 75.
Stocks in Europe ended lower on Friday, snapping a four-session run of gains, hit by weak data out of the euro zone and more signs that China is acting to cool its economy. The pan-European Dow Jones Stoxx 600 index closed 0.25% lower to 241.14 after weaker-than-expected euro zone GDP and industrial production numbers and another hike in reserve ratio requirements for banks from China.
Banks were lower again in Greece. The Greek economy not only contracted 0.8%, but data from the first, second and third quarters of the year were all revised lower.
The German DAX index lost 0.1% to 5,500.39, the French CAC-40 index shed 0.5% to 3,599.07 and the UK's FTSE 100 declined 0.4% to 5,142.45.
After scaling back to the 16,000 levels in the previous trading session, bears yet again dragged the Sensex below the psychological level. This time Indian markets seemed to have ignored the positive cues spilling in from US, Asia and Europe.
On Wednesday, indices surrendered their gains in the last hour of the day as selling picked momentum. Barring the Consumer Durables and Realty index all the other sectoral indices ended in the red. The Capital Goods index was the top loser followed by PSU index losing 1%.
The BSE Sensex slipped 120 points to end at 15,922 after touching a high of 16,141 and a low of 15,892. The Nifty fell 35 points to end at 4,757.
Equity markets in Asia ended in the green. The Nikkei in Japan was up 0.3%, while Australia's S&P/ASX ended marginally higher by 0.2%. The Shanghai SE Composite ended higher by 0.4% and Hang Seng index in Hong Kong added 0.7%.
In Europe, stocks were trading higher as well. The DAX in Germany was up 1% and the CAC 40 index in France was up 0.8%. The FTSE in the UK was up 0.6%.
Coming back to India, among the BSE sectoral indices, the BSE Capital Goods index was the top loser, shedding 1.2%, followed by PSU index that was down 1% and BSE Power index was down 1%. The BSE Mid-Cap and BSE Small-Cap index both ended flat.
Among the 30-components of Sensex 21 ended in the negative terrain and 9 ended in the green. M&M, SBI, Tata Steel, Sun Pharma and L&T were among the top losers. On the other hand, major gainers were Hindalco, HDFC Bank, Sterlite, Grasim and Hero Honda.
Outside the frontline indices, the big losers in the broader market were Sun TV, Chambal Fert, Renuka Sugar, RCF and Jai Corp. On the other hand, gainers included Glaxo, REI Agro, IRB Infra and Voltas.
HCC announced that it received three letter of awards from NHAI to develop three contiguous sections of ~256 Kms length between Bahrampore to Dalkhola on NH-34 in the State of West Bengal on Design, Build, Finance, Operate and Transfer (DBFOT) Toll basis.
Shares of HCC advanced by 2% to end at Rs134. The scrip opened at Rs134.7 it touched an intra-day high of Rs137.5 and a low of Rs132.1 and recorded volumes of over 0.87mn shares on BSE.
BHEL secured a contract worth Rs4.5 for setting up a 330 MW (3x110 MW) Hydro Electric Project (HEP) in the state of Jammu and Kashmir. The turnkey order for the Kishanganga HEP of NHPC was bagged by Hindustan Construction Company (HCC) along with BHEL under stiff International Competitive Bidding (ICB), as its offer was found techno-economically the best.
BHEL ended lower by 1.3% to end at Rs2302. The scrip opened at Rs2341 it touched an intra-day high of Rs2346 and a low of Rs2290 and recorded volumes of over 63,000 shares on BSE.
Shares of Mcnally Bharat gained by 3% to end at Rs249 after the company received two orders, first to design, engineering, supply of equipment, underloading, storage, haqndling, erection testing & commissioning and structural work at site of an HDPS System for Aditya Aluminium Smelter Project of HINDALCO for a total value of Rs283.2mn; and
Also to Design, Engineering, Supply of Equipment, Underloading, Storage, Hanqndling, Erection testing & commissioning and Structural Work at Site of an HDPS System for Mahan Aluminium Smelter Project of HINDALCO for a total value of Rs283.2mn.
Shares of oil marketing companies were in demand after reports stated that the government would meet today to discuss panel recommendations on fuel pricing.
Implementation of the recommendations will result in an increase in gasoline, diesel and cooking gas prices, reports stated.
Shares of BPCL gained by 2% to end at Rs573, HPCL ended higher by 1.5% to end at Rs348 and IOC advanced 2% to end at Rs316.
The government rejected the first genetically modified food after protests by farmers. "There is no overriding food security argument for Bt brinjal," or genetically modified eggplant, Environment Minister, Jairam Ramesh was quoted as saying. "Our objective is to restore public confidence and trust in Bt brinjal." A moratorium will be imposed until safety studies are carried out "to the satisfaction of the scientific community," he said.
Monsanto, supplied the gene for the vegetable and introduced genetically modified cotton in India in 2002.
Shares of Monsanto India slipped by 6.5% to end at Rs1763. The scrip opened at Rs1899 it touched an intra-day high of Rs1899 and a low of Rs1755 and recorded volumes of over 12,000 shares on BSE.
Shares of Golden Tobacco were locked at 5% upper circuit to end at Rs135.35 after the company announced that the board of directors will meet on February 16, 2010 to consider a proposal to develop properties. The scrip opened at Rs135.35 it touched an intra-day high of Rs135.35 and a low of Rs134.5 and recorded volumes of over 53,000 shares on BSE.