Growth, in some curious way, depends on being always in motion just a little bit, one way or another. - Norman Mailer
For the time being, the market’s motion somehow seems to have stalled. The key indices remain stuck in a range and a major breakout is not on the cards anytime soon. Earnings are mixed. The ones that are beating estimates are seeing some upgrades but those are few and far between. One may have to wait for an across-the-board 'market upgrade' for 2-3 quarters.
We expect a lackluster start due to mixed global cues. Markets in the US barely moved though European markets managed strong gains despite resurfacing of the jitters over Greece. Asian markets are mostly in the red. The NSE Nifty is likely to face resistance between 5350 and 5400. Support will kick in at 5200 in case of a fresh fall.
Coming back to motion, the Government will face some more music in parliament today. The opposition has called for a cut-motion on two Budget measures but reports suggest the UPA is comfortably placed in terms of numbers. F&O expiry and Fed meet are the events to watch out for later this week. The broader market will continue to hog the limelight as more results pour in.
Results Today: Aventis Pharma, Concor, Dena Bank, Gillette India, GSK Pharma, Greaves Cotton, IDFC, Ispat Industries, JSW Energy, Motilal Oswal Financial, Petronet LNG, Piramal Life, PFC, PTC India, Raymond, Shree Renuka Sugars, Sobha Developers, TAJ GVK Hotels, Welspun Gujarat and Yes Bank.
FIIs were net buyers of Rs2.34bn on Monday on a provisional basis. Local funds were net sellers of Rs736.9mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs3.66bn. On Friday, FIIs were net buyers of Rs8.80bn in the cash segment, as per the SEBI web site.
In terms of global markets, US stocks ended mixed. The Dow Jones Industrial Average finished flat but still managing a fresh 19-month high. Strong earnings from Caterpillar and Whirlpool were countered by weakness in financials.
The Obama administration's plan to begin divesting itself of Citigroup weighed on the banking sector. Citigroup shares fell 5.1% after the Treasury Department said that it would sell up to 1.5 billion of the bank's shares.
The Dow ended just above unchanged at 11,205.03. The S&P 500 index lost 5 points, or 0.4%, at 1,212.05 after ending Friday's session at a 19-month high. The Nasdaq Composite shed 7 points, or 0.3%, at 2,522.95 after ending the previous session at the highest point in almost two years.
The dollar gained versus the euro and yen.
The dollar index, which measures the US unit against a trade-weighted basket of six other currencies, recently traded at 81.316, down from 81.41 late on Friday.
US light crude oil for June delivery fell 92 cents to settle at $84.20 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery rose 30 cents to settle at $1,153.70 per ounce.
Treasury prices were little changed, with the yield on the 10-year note at 3.82%, unchanged from late on Friday.
Decliners edged past advancers by about 16 to 14 on the New York Stock Exchange, where 1.2 billion shares traded hands. Composite volume neared 5.9 billion.
Stocks were volatile through the session as investors welcomed Caterpillar's earnings and forecast but showed reluctance at the start of a busy week. Stocks had gained on Friday after a surprisingly strong new-home sales report. The Dow, Nasdaq and S&P 500 all gained last week. The Dow has now gained eight weeks in a row, the longest wining streak since January 2004.
The Fed's two-day policy meeting concludes on Wednesday, with a statement due in the afternoon. Reports on jobless claims, consumer confidence and gross domestic product (GDP) are due later this week.
While the trend for the market remains up, there are still headwinds, including any fallout from Goldman Sachs' fraud charge, the debate over financial reforms and Greece's lingering debt issues.
Goldman Sachs shares fell ahead of a Senate hearing on Tuesday aimed at investigating the role investment banks played in the 2008 financial crisis. Goldman CEO Lloyd Blankfein, Fabrice Tourre, the only Goldman employee named in the SEC's fraud charge, and other Goldman employees will be among those testifying.
E-mails released on Monday showed that Tourre - who helped create a bond deal tied to subprime mortgages that regulators say defrauded investors - knew the complex deals were bunk. The release of the emails came amid another partisan battle on Capitol Hill, with Republicans vowing to block an overhaul of financial regulation.
Separately, the Obama government said it will sell up to 1.5 billion shares in Citigroup in its latest move toward withdrawing some of the support for big banks it put in place during the height of the financial crisis. The sales are equivalent to about one-fifth of the government's ownership stake and would reduce its holdings to roughly 22% of the company. Citigroup shares plunged 5%.
Other bank shares fell too, dragging the KBW Bank sector index down 3%.
Heavy-machinery maker Caterpillar reported higher quarterly earnings that beat estimates on weaker revenue that missed estimates. The company said that the economic outlook is improving, but that it is cutting its outlook for housing starts by 20% due to the weak labor market. The Dow component also boosted its 2010 profit forecast. Shares gained 4.2%.
Whirlpool reported higher quarterly sales and earnings that beat estimates due to stronger sales of its appliances both domestically and abroad. The company also reported a stronger 2008 profit. Shares gained 14%.
With roughly 34% of the S&P 500 having reported results, earnings are currently on track to have risen 50% from a year ago, while revenues are on track to have risen 11%, according to tracker Thomson Reuters. So far, about 83% of earnings and 81% of revenues have topped estimates.
Hertz said it will buy Dollar Thrifty in a $1.2 billion cash and stock deal that combines the two car rental companies.
Retail stocks rose, helped by a 5.9% gain in Office Depot shares. Analysts said that the office-supplies retailer might show improved sales when it reports quarterly results on Tuesday.
After the bell, Senate Republicans, united in opposition to the Democrats' legislation to tighten regulation of the financial system, voted to block the start of floor debate.
The vote was 57 to 41, as Democrats fell short of the 60 votes needed to cut off a filibuster of the motion to proceed to the bill.
One Democrat, Senator Ben Nelson of Nebraska, sided with Republicans apparently on concerns over a provision related to tightening the rules on derivatives trading.
European shares advanced, although worries about Greece's finances surfaced once again. The Stoxx Europe 600 index rose 1.1% to 270.23, moving back toward the 18-month closing high of 272.14 that the benchmark hit on April 15.
The French CAC-40 index rose 1.2% to 3,997.39, the German DAX index added 1.2% to 6,332.10 and the U.K.'s FTSE 100 index gained 0.5% to 5,753.85.
Greek banks failed to take part in the broad gains for Europe. The Greek ASE Composite Index, which lost 2.9% to 1,804.91. The euro declined 0.4% to trade at $1.3324 against the dollar.
The cost of insuring Greek, Portuguese and Spanish government debt soared to record intraday levels as relief following Friday's announcement that Greece would tap a joint European Union-IMF rescue package proved to be short-lived amid reported discord over terms.Indian stocks managed modest gains on Monday as investors mulled slightly disappointing results from index heavyweights Reliance Industries and Maruti. Gains in Metals, Banks, IT and Capital Goods stocks were countered by weakness in Real Estate, Oil & Gas, Pharma and Auto stocks.
"The key Indian indices were largely rangebound and lackluster throughout the day with the BSE Sensex moving in a narrow band of 134 points. The tepid performance by Indian indices was in contrast to fairly good gains witnessed across Asia and Europe," said Amar Ambani, Vice President - Research, IIFL.
The BSE Sensex closed at 17,745.28, up 51 points or 0.3% over the previous close. It touched a high of 17,826 after opening at the day's low of 17,692. The NSE Nifty finished at 5,322.45, up 18 points or 0.35%.
The BSE Small-Cap index and Mid-Cap index erased some of the early gains and ended higher by 5% and 0.6%, respectively.
In terms of sectoral performance, Metals stood out with a 2.3% gain in the BSE Metals index. Banking and IT sector indices also did well along with select gains in Power and Capital Goods shares.
On the other hand, Auto, Pharma, Oil & Gas, Real Estate stocks were the laggards today. The FMCG index turned flat after seeing some early gains.
Within the Sensex, the top gainers were Sterlite Industries, HDFC, Hindalco, HDFC Bank, M&M, Tata Steel, Jaiprakash Associates and Hindustan Unilever. Among the major losers were Sun Pharma, DLF, Maruti, Reliance Industries and ICICI Bank.
Outside the key indices, the notable gainers were Country Club, Indian Bank, Gati, Sasken, Balmer Lawrie, Great Offshore, Jain Irrigation, Gujarat NRE Coke, Graphite India, UTV Software, Navneet Publication, Finolex Industries, 3M India, SKF India, Dalmia Cement, Greaves Cotton and Corporation Bank.
The list of losers include the likes of Prithvi Info, Zee News, Balrampur Chini, Hexaware and Kirloskar Brothers.
European markets, which had opened smartly higher, came off a bit while Asian stocks climbed, led by the biggest gain in the Nikkei 225 Stock Average in seven weeks. Commodities rallied as economic reports pointed to faster growth in the US and concerns about Greece’s debt abated.
In currency markets the yen weakened. The euro declined, sliding for the seventh time in eight days against the dollar, on concerns that the EU-IMF bailout plan for Greek will face hurdles as donor countries begin ratifying the aid package.
US stock futures moved slighter higher on Monday morning. Standard & Poor’s 500 Index futures gained 0.1%.
The MSCI Asia Pacific Index increased 1.6% to 127.25 and the Stoxx Euro 600 rose 1% to 270.14 as of 4 p.m. in Tokyo. The Nikkei jumped 2.3%, the most since March 5. Hong Kong’s Hang Seng Index climbed 1.5% and Taiwan’s Taiex advanced 1.9%.
Meanwhile, Greek bonds tumbled, pushing yields to the highest since at least 1998, on speculation that Germany may refuse to guarantee an early release of bailout funds. The premium investors demand to hold Greek 10-year notes rather than German bunds touched a record 6%.
Equities worldwide gained on Friday after Greece decided to tap into the EU-IMF loan. Greece’s request for a US$60bn bailout doesn’t reduce the risk of default next year, according to some experts.