The nice part about being a pessimist is that you are constantly being either proven right or pleasantly surprised.
The bears will be pleasantly surprised as investors find themselves in a season of surprises. After China’s unexpected second hike in the reserve ratio last week, the Fed has increased the discount rate by 25 basis points. The US central bank said the move reflects improvements in the US economy and does not reflect a change in policy.
Late last week, Fed chief Ben Bernanke had indicated a move was coming, but no many anticipated any action between meetings. The dollar is up while gold prices have slipped further. Crude oil too is also up. The Fed move came after Wall Street trading, where US stocks gained in a volatile session. European shares advanced but Asian markets are mixed. China market remains shut.
We expect a weak start in India amid concerns on monetary tightening worldwide. One needs to be careful amid constant flow of news and heightened market volatility across asset classes. Inflation is threatening to touch double digits though the RBI maintains it won’t hike rates before April. But then the RBI too could surprise if inflation shoots up sharply.
Nestle India, SKF India and Wyeth will announce their results today.
The Indian cricket team has bounced back to retain the No. 1 spot in the ICC Test Rankings after a nail biting win in the second test match at Eden Gardens. On the other hand, the Indian market bulls got bowled out as they succumbed to weak global cues and profit booking. The main indices snapped a two-day advance with offloading seen in index heavyweights like Reliance Industries, ITC and Sterlite Industries. By the close of trading, the NSE Nifty found itself below the 4900 levels.
The BSE Sensex fell 101 points to end at 16,328 it hit an intra-day high of 16,452 and intra-day low of 16,287. While the NSE Nifty slipped 26 points to end at 4,887.
Among the 30-components of Sensex, 21 ended in the negative terrain and 9 ended in the green. Reliance Industries, Sterlite, JP Associates, Reliance Infra and RCom were among the top losers. On the other, major gainers were, HDFC Bank, HDFC, NTPC and Bharti Airtel.
Fertilizer stocks got a boost towards the fag end of the day after the government announced a 10% increase in urea prices. In addition, the Cabinet also announced the decontrol of other fertilizer prices. Shares of Chambal Fert shot up by over 6%, Nagarjuna Fert up 5% and RCF gained 3%.
BSE Banking, Consumer Durables and IT index were the gainers among the BSE sectoral indices.
Among the top losers were the Realty, Oil & Gas and the Metal index, shedding over 1.5% each. Even the broader indices were under pressure with the BSE Mid and Small-Cap index shedding 0.5% each.
Food Inflation which was announced today remained almost unchanged at 17.97% in the week ended February 04, 2010 as compared to 17.94% in the previous week.
Fuel inflation dropped to 9.89% in the week ended February 04, 2010 as against 10.44% in the previous week. On the other hand, Primary Articles Inflation rose to 16.33% as against 15.75% in the previous.
Among the 30-components of Sensex, 21 ended in the negative terrain and 9 ended in the green. Reliance Industries, Sterlite, JP Associates, Reliance Infra and RCom were among the top losers. On the other, major gainers were, HDFC Bank, HDFC, NTPC and Bharti Airtel.
Outside the frontline indices, the big losers in the broader market were Castrol, IB Real Estate, Renuka Sugars, Balrampur Chini and NMDC. On the other hand, gainers included Apollo Hospital, IDFC, Chambal Fert and Max India.
Among the BSE sectoral indices, BSE Realty index was the top loser, shedding 2.1%, followed by BSE Oil & Gas and BSE Auto index down 2% and 1% respectively. On the other hand, BSE Banking index was up0.5% and BSE IT index was up 0.2%.
BSE Mid-Cap and BSE Small-Cap index fell 0.5% each.
Shares of Reliance Industries lost further ground on Thursday after reports stated that the company may have to increase its bid to buy bankrupt chemicals and fuels-maker LyondellBasell Industries AF.
Lyondell Chemical Co., a unit of LyondellBasell, reached at a settlement with unsecured creditors and lenders on February 16 to pay them US$450mn which is 50% higher than an earlier proposal for US$300mn.
The scrip fell over 3% to end at Rs997, it opened at Rs1030 it touched an intra-day high of Rs1038 and a low of Rs995 and recorded volumes of over 4.5mn shares on NSE.
Shares of Rural Electrification fell over 3% to end at Rs214 after the company announced that Empowered Group of Ministers (EGoM) fixed the floor price for FPO at Rs203 per equity share. The EGoM has also decided to offer a discount of Rs.10 per share on the above floor price to eligible employees submitting bids in the Employee Reservation Portion.
Suzlon Energy has won an order from L&T Infrastructure Development Projects Limited (L&TIDPL) a subsidiary of Larsen & Toubro Ltd – one of India’s leading engineering companies - to set up, operate and maintain a 8.7 MW wind energy project. The project will comprise of three units of Suzlon’s S82 – 1.5 MW turbines and two units of Suzlon’ S88 – 2.1 MW wind turbine generators, and is scheduled to be completed and commissioned by March 30, 2010.
Shares of Suzlon Energy erased early gains and ended at Rs70.7. The scrip opened at Rs72.9 it touched an intra-day high of Rs73.9 and a low of Rs72.8 and recorded volumes of over 20mn shares on NSE.
Mahindra & Mahindra may borrow from overseas market to finance the upgradation of its product line and manufacturing facilities.
"Pricing has eased off for good credits in recent months," Uday Phadke, the company’s president for finance, legal and financial services, was quoted as saying.
The company plans to spend about Rs55bn in the 3 three years to modernize plants and may use debt finance to expand a factory in Chakan, he added. The company can apply "comfortable leverage" to a Rs20bn cash surplus earmarked for capital expenditure, he said.
The stock ended lower 1.5% to end at Rs1013. The scrip opened at Rs1034 it touched an intra-day high of Rs1034 and a low of Rs1001 and recorded volumes of over 0.46mn shares on NSE.
Shares of BPCL surged over 5% to end at Rs591 after Bharat PetroResources Ltd (BPRL), a wholly owned subsidiary of the company advises that M/s Anadarko Petroleum Corporation, U.S.A. the Operator of exploration block in Rovuma Basin, Area I, offshore Mozambique, has announced yesterday that the exploration well, Windjammer, which is currently being drilled in the acreage, has reached an intermediate casing point and encountered more than 145 net meters of natural gas pay in multiple high quality reservoir sands with a gross column of more than 365 meters.
Dishman Pharmaceuticals gained by 1% to end at Rs209 after the company announced the formation of a strategic alliance with Codexis, Inc. a California based biotechnology company. This strategic partnership covers the use of Codexis' proprietary enzymatic biocatalysis technology for the manufacture of building blocks, intermediates and API's for innovator pharmaceutical companies.