Knowing that there is worse pain doesn't make present pain hurt any less – Anonymous.
After several days of turbulence, we are in for a gap-up start this Monday morning, as the EU and the IMF have agreed on an emergency funding facility worth as much as €720bn in loan guarantees and credits to stabilise the eurozone. The ECB will buy government bonds in the secondary market to calm jittery credit markets. The Fed will reopen dollar swap program and Bank of Japan has offered $21.6bn in liquidity. Asian markets are mostly positive. US stock futures and euro jumped on euro zone package news. Markets in Europe are also likely to open higher on the news of deal among European nations to help stabilize troubled economies.
Needless to say, bourses in India will start on a stronger footing. Shares in Nifty 50 will also be affected by the proposed changes in free float of its constituents. Reliance and ADAG group shares will remain in focus following the SC verdict. The latest IIP data will be out on Wednesday and is expected to be robust. Monthly inflation figures will be announced later in the week. Monsoon will be a key variable over the next few weeks and even months.
Volatility will prevail in the near term as investors gauge the impact of the unprecedented efforts to stem the European debt crisis. Apart from Europe, one should also keep an eye on developments in key economies such as the US and China. On the domestic front, the immediate worries persist on high inflation and its possible fallout on monetary policy. And, despite the recent decline, valuations (based on one year forward earnings) too are looking a bit stretched. Fund flows, especially from the overseas investors will of course continue to have a bearing on the overall sentiment.
Results Today: Elecon Engineering, HT Media, Jubilant Organosys, Jubilant Foodworks, McNally Bharat, Monnet Ispat, Orbit Corp, Radico Khaitan, Unichem Labs, Usha Martin and Zicom.
FIIs were net sellers of Rs13.08bn in the cash segment on Friday on a provisional basis, according to NSE web site. Local institutions were net buyers of Rs6.54bn. In the F&O segment, the foreign funds were net buyers of Rs8.07bn. FIIs were net sellers of Rs13.89bn in the cash segment on Thursday, as per the SEBI data.
US stocks tumbled on Friday, with all the three major indexes ending in negative territory for the year, as investors mulled the European debt crisis and the aftermath of one of the most gut-churning days in Wall Street trading history. The fall capped the worst week in at least a year for Wall Street and the worst start for US stocks to May ever.
The Dow Jones Industrial Average closed down 139.89 points, or 1.3%, to 10380.43. For a week that included three triple-digit point declines, the Dow was off 5.7% - its worst week since March 2009. Its weekly point drop was the worst since October 2008.
The S&P 500 shed 17 points or 1.5% to end the session at 1,110.88 as all 10 of its categories ended lower. The Nasdaq Composite Index finished at 2,266, down 54 points or 2.33%, putting it in correction territory from its April 26 high.
All three US indexes also closed lower for the fourth straight session and the second straight week.
The selloff from the late April highs has been substantial enough that the Nasdaq, with a loss of 10.5%, is now considered to be in a correction. The Dow and S&P 500 are also approaching double-digit losses, down 7.4% and 8.7% respectively.
Wall Street's key volatility measure soared to a 13-month high as stocks continued their slide, a day after computer glitches caused erroneous trades that prompted a huge sell-off in equities.
The CBOE Volatility index, or the VIX, was up 26% to $41.43, after rising as high as $42.15 earlier in the session.
Treasury prices slipped, pushing the yield of the benchmark 10-year note up to 3.420%. But government debt ended with its best week since August 2008. The US dollar had its best weekly gain since October 2008.
Gold rose 1.1%, at $1,210.40 an ounce, a five-month high for the metal, while oil tumbled.
Trading was unusually heavy throughout the day. Composite activity in New York Stock Exchange-listed companies hit 9.6 billion shares, well above the 2010 daily average but below Thursday's total near 11 billion.
The technology and industrials sectors led decliners in the Standard & Poor's 500-stock index, off more than 2% each.
US stocks were extremely volatile throughout Friday, with the major indexes criss-crossing the breakeven line several times during the day. Investors also continued to worry about Europe's debt crisis as riots continued in Greece. Those worries overshadowed a Labor Department report showing job growth in April at its fastest pace in four years in the US. British elections failed to produce a ruling majority, resulting in a hung Parliament for the first time since the 1970s.
Meanwhile, US investors remained rattled after a session in which the Dow lost almost 1,000 points before closing off 3.2%, or 348 points. That 998.5-point loss was the worst ever on an intraday basis. Exchanges and traders struggled to figure out what went wrong.
Germany approved its contribution to a joint European Union-International Monetary Fund loan package for Greece. The finance ministers of the Group of Seven leading economies also held a telephone conference to discuss the Greek debt turmoil.
In the day's key economic report, American employers added 290,000 jobs to their payrolls in April, the government said, surprising economists who expected 187,000 new jobs. It was the biggest one-month gain since March 2006. March's number was revised up to 230,000 from the originally reported 162,000.
In company news, AIG reported a quarterly profit Friday morning, versus a year-ago loss, as the company's insurance business continued to stabilize. The company's shares are up 23% this year on hopes it can pay back the more than $120 billion in loans it owes taxpayers. The company received a bailout worth up to $182 billion from the government.
Goldman Sachs was a notable exception to the selloff among the financials, with shares rising 0.5% as executives faced an annual shareholder meeting amid civil and criminal investigations into the company's mortgage deals.
European shares closed out their worst week in 18 months on a weak note as Greece's debt problems remained in the spotlight and UK election results proved inconclusive. The Stoxx Europe 600 index fell 3.9% to 237.19, bringing losses for the week to 8.7%. That is the largest weekly percentage drop for the index since the week to Nov. 21, 2008 when it fell 11.48%.
The French CAC-40 index fell 4.6% to 3,392.59 and the German DAX index slipped 3.3% to 5,715.09. The UK's FTSE 100 index traded down 2.6% to 5,123.02.
With no clear winner in British general election, markets saw greater risks for the UK. Sterling dropped 1.2% to $1.4689 as investors fretted there won't be a strong enough government to cut the country's deficit even as two credit rating agencies reaffirmed their view on the country.
The euro managed to take back a fraction of recent losses against the dollar, as the upper and lower houses of the German parliament approved the country's participation in the aid package for Greece.
The value of the auction for 3G spectrum moves up to Rs129bn.(BL)
Foreign exchange reserves were up US$157mn to US$278bn for the week ending April 30. (BL)
The government may soon ask companies with less than 50% foreign equity to seek approval of the FIPB to make any downstream investment. (BS)