"Some people change their ways when they see the light; others when they feel the heat." - Caroline Schoeder.
It is time for the bulls to change their way a bit, at least for today, as heightened sovereign debt troubles in Europe has sent global markets in a bit of a tizzy. Risk appetite has taken a beating amid concerns that the financial mess in "PIGGS" could spread to more European nations and may hurt the global economic recovery. The Goldman Sachs fraud case and worries about more tightening in China are among the other pressure points.
To add to the volatility we have the F&O expiry on Thursday. The Fed will keep rates steady later today. Still, the markets will be eager to know if there is any change in its language. Given the weak global backdrop, the Indian market too will witness a gap-down opening. Whether we recover from this global jolt will hinge on how European markets open.
One will also have to keep a close tab on the latest developments in the region. The Nifty has a good support at 5200 but may fall below it if there is any further deterioration in the global sentiment. It is time to be a little guarded and wait for the turbulence to get over. A selective and careful approach is the need of the hour.
Results Today: Alfa Laval, Alstom Projects, Balaji Telefilms, Balrampur Chini, Bharti Airtel, Bank of Baroda, Canara Bank, Dabur India, Eicher Motors, Essel Propack, Exide, GHCL, Ingersoll Rand, JSL, Kesoram, LIC Housing, Marico, Mindtree, Patni and Shoppers Stop.
FIIs were net sellers of Rs1.64bn on Tuesday on a provisional basis. Local funds were net buyers of Rs10.9mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers of Rs1.08bn. On Monday, FIIs were net buyers of Rs5.65bn in the cash segment, as per the SEBI web site.
US stocks got pounded on Tuesday, with the key benchmarks falling to their worst finish in nearly three months after Standard & Poor's cut Greece's debt rating to junk and lowered Portugal's debt rating, stoking fears of a wider debt problem in the eurozone.
The Dow Jones Industrial Average tumbled 213 points, or 1.9%, closing below 11,000, a key psychological level. The Dow ended the previous session at its highest point in 19 months. The slide was the Dow's biggest one-day point drop since July 15, 2009, when it lost 257 points.
The S&P 500 index fell 28 points, or 2.3%, closing below 1,200, a psychological level traders look at. The Nasdaq Composite slid 51 points, or 2%, to 2,471.47.
The Dow has ended higher for eight straight weeks, its best winning streak since January 2004. The Nasdaq has also been on the rise for 8 weeks, while the S&P 500 rose for 7 of the last 8 weeks.
Prior to Monday's selloff, the Dow and S&P 500 were just shy of 19-month highs, while the Nasdaq was at the highest point in nearly two years.
Goldman Sachs gained 1%, but other bank shares plunged, with the KBW Bank index losing over 3%. Sliding oil prices dragged on energy stocks, including Dow components Exxon Mobil and Chevron.
Declines were broad based, with 28 of 30 Dow components falling. In addition to the Dow's financial and energy components, other losers included heavily weighted tech stocks.
The dollar gained versus the euro and fell against the yen.
US light crude oil for June delivery fell $1.76 to settle at $82.44 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery rose $8.20 to settle at $1,162.20 per ounce.
Treasury prices rallied, lowering the yield on the 10-year note to 3.70% from 3.82% late on Monday.
US stocks were flat to lower in the morning as Goldman Sachs sought to defend itself on Capitol Hill against allegations it profited from the housing market collapse. But news that ratings agency S&P had cut Greece and Portugal's debt ratings overshadowed the Goldman Sachs testimony.
Fear was also reflected in the so-called flight to safety as investors poured money into bonds and the euro fell to a new low for the year.
That was reflected by a jump in the CBOE Volatility index, Wall Street's so-called fear gauge. It spiked 24%, hitting the highest point since February. Typically a surge in the VIX corresponds with a selloff in stocks.
S&P cut its ratings on Greece's long-term debt status to "BB+" with a negative outlook from "BBB+." The double-B plus rating is considered to be speculative or "junk," and reflects the ratings agency's concern about Greece's long-term ability to get out the current fiscal crisis. S&P cut Greece's short-term debt even lower.
S&P also cut Portugal's long-term debt ratings by two notches and the short-term rating by one notch, but did not lower the debt to junk status. The cost of insuring both Greece and Portugal's debt rose to record highs following the news.
Worries about the fiscal health of Greece and the other so-called PIIGS have weighed on the global stock markets for most part of the year amid worries that the debt problems could worsen and destabilize the euro.
Goldman Sachs CEO Lloyd Blankfein and other executives from the Wall Street bellwether were answering lawmakers' questions as part of a Senate hearing on the role investment banks played in the financial market meltdown in 2008.
Blankfein, in prepared testimony, denied that the company sought to profit from the housing market collapse, an allegation lawmakers have made recently.
Fabrice Tourre, the Goldman Sachs trader charged in the Securities and Exchange Commission's fraud case against Goldman Sachs defended himself, saying he categorically denied the SEC's allegations.
In the day's economic news, the Case-Shiller 20 city home price index rose 0.6% in February versus a year earlier, the first rise on an annual basis in three years. However, economists were expecting a bigger gain of 1.1%. Prices fell 0.7% in January.
Consumer confidence surged in April, according to the Conference Board, with its index rising to 57.9 from 52.3 in March. Economists thought it would rise to 53.5.
Policymakers need to put a plan in place to get spending in line with revenue so as to close the unsustainable fiscal gap threatening the recovery, Federal Reserve Chairman Ben Bernanke said. Bernanke spoke at the first meeting of President Obama's bipartisan debt commission.
The Fed policymakers are meeting on Tuesday and on Wednesday with an announcement on interest rates and the outlook due Wednesday afternoon.
The Fed is expected to hold interest rates steady at historic lows near zero. However, what the US central bank policymakers say in the accompanying statement about the outlook for the economy and interest rates will be scrutinized.
Ford Motor reported a better-than-expected first-quarter profit that rose from a year earlier. But shares slumped after the company's revenue growth was shy of expectations.
After the market closed on Monday, Texas Instruments reported quarterly sales and earnings that topped estimates and rose from a year earlier. Shares were slightly lower.
3M reported higher quarterly sales and earnings that topped estimates thanks largely to strong international sales. The Dow component, considered to be a good barometer of the economy because of the breadth of its business, also boosted its 2010 profit forecast.
However, 3M said growth in Asia and Latin America are the drivers of that forecast and that the US economic recovery will be patchy. Shares gained 0.6%.
Fellow Dow component DuPont also reported higher quarterly sales and earnings that topped expectations, and lifted its 2010 profit forecast. But investors took a sell-the-news response and sent shares nearly 4% lower.
Across the Atlantic, European shares plunged, led by Greek stocks as the specter of debt restructuring continues to hang over the Hellenic Republic with S&P cutting their ratings on both Portugal and Greece.
After Monday's rise of 1%, the Stoxx Europe 600 index plummeted 3.1% to 261.65, the worst single-day percentage drop since Nov. 26, as S&P cut Greece's debt rating to junk territory, and also cut Portugal's debt rating two notches. S&P threatened to cut both ratings further.
The Greek ASE Composite Index tumbled 6% to 1,698.68 - with that drop coming before S&P's latest downgrade. Greek stocks had been under pressure on worries that the country will restructure its debt. S&P expects holders of Greek debt to recover 30 to 50 cents on the dollar. Greek banks, which hold much of the government paper, plunged.
The PSI 20 index dropped 5.4% to 7,152.42 as S&P cut Portugal's rating to A- from A+, saying the government could struggle to stabilize its relative high debt ratio. "We believe past dependence on now more scarce external financing as a source of economic growth, and weak external competitiveness add to the likely adverse growth dynamics in Portugal," S&P said.
In Madrid, Spain's IBEX 35 index fell 4.2% to 10,480.90, and the FTSE MIB dropped 3.3% to 22,036.40 in Milan.
The French CAC-40 index dropped 3.8% to 3,844.60, the German DAX index lost 2.7% to 6,159.51 and the U.K. FTSE 100 index fell 2.6% to 5,503.52.
After being on an upswing for five straight trading sessions, bulls finally took a breather on Tuesday as traders and investors preferred to book some profits around the 5350 levels. Weakness in the Asian and the European markets cast a shadow on local sentiment. "Markets players were also cautious with the F&O expiry and Fed meet on the horizon. Slightly disappointing results from the index heavyweights like RIL, ICICI Bank and Maruti added to the jitters", says Amar Ambani Vice President IIFL.
The BSE Sensex slipped 55 points to end at 17,691 and NSE Nifty slipped 15 points to close at 5,308. Among the 30 components of Sensex, 20 ended in the negative terrain and 10 were in the green.
Markets in Asia ended in the red; the Nikkei in Japan ended higher by 0.4%, Australia's S&P/ASX was almost unchanged, the Hang Seng index in Hong Kong was down 1.5% and Shanghai SE Composite ended lower by 2%.
On the other hand, European indices were trading with negative bias, the DAX in Germany was down 0.6%, the CAC 40 index in France was down 1.5% and the FTSE in the UK was down 1%.
Coming back to India, among the BSE sectoral indices, the BSE Realty index was top loser, the index lost 1.5%, followed by BSE Banking index down 0.9% and Auto index down 0.8%. However, the Mid-Cap and the Small-cap index ended flat.
Outside the frontline indices, the big losers in the broader market were Jain Irrigation, Concor, IDFC and Yes Bank. On the other hand, gainers included GMR Infra, LITL, IRB Infra and GSPL.
Shares of Maruti Suzuki slipped by 3.8% to end at Rs1283 after the company posted a net profit of Rs6.56bn for the quarter ended March 31, 2010 compared to Rs2.43bn in quarter ended March 31, 2009. For the reporting quarter, total income increased to Rs85.03bn from Rs65.38bn in the quarter ended March 31, 2009.
Shares of Power Finance slipped 1.7% to end at Rs276. The company announced Q4 results with net profit at Rs5.98bn for the quarter ended March 31, 2010 as compared to Rs10.05bn for the quarter ended March 31, 2009. Total Income has increased from Rs18.19bn for the quarter ended March 31, 2009 to Rs21.04bn for the quarter ended March 31, 2010.
The Unaudited results for the Year ended March 31, 2010. The Company posted a net profit of Rs23.55bn for the year ended March 31, 2010 as compared to Rs19.69bn for the year ended March 31, 2009. Total Income has increased from Rs65.83bn for the year ended March 31, 2009 to Rs80.73bn for the year ended March 31, 2010.
Shares of Yes Bank ended lower by 2% to end at Rs275. The company announced its Q4 results with a net profit of Rs1.4bn for the quarter ended March 31, 2010 as compared to Rs801.1mn for the quarter ended March 31, 2009. Total Income has increased from Rs6.56bn for the quarter ended March 31, 2009 to Rs8.24bn for the quarter ended March 31, 2010.
The Bank posted a net profit of Rs4.77bn for the year ended March 31, 2010 as compared to Rs3.03bn for the year ended March 31, 2009. Total Income has increased from Rs24.38bn for the year ended March 31, 2009 to Rs29.45bn for the year ended March 31, 2010.
Infinite Computer Solutions announced that it signed the Restructured Accelerated power Development Reform Programme (R-APDRP) with Uttarkhand power Corporation. Shares of Infinite Solutions advanced by 1% to end at Rs184. The scrip opened at Rs180 it touched an intra-day high of Rs188 and a low of Rs179 and recorded volumes of over 96,000 shares on BSE.
Shares of Divis Laboratories slightly slipped by 0.7% to end at Rs691. The company announced that it received letter of approval from the Development Commissioner, Visakhapatnam Special Economic Zone, for setting up and development of a new manufacturing Unit in Special Economic Zone for pharma ingredients at Vill., Chippada, Bheemunipatnam Mandal, Visakhapatnam Dist. The Project cost is estimated at Rs2bn.