Search Now

Recommendations

Tuesday, June 08, 2010

Step out and hope!


Hope is the power that gives us the power to step out and try.

With US markets in the dumps, and Asian markets barely in the green, the Indian indices are staring at a flat start this morning. While the psychological support remains at 5000 for the Nifty, the near-term support is seen around the 4940 levels.

A lot of action is being seen in MNC counters following expectations of disinvestment after the latest directive asking for a 25% public float for listing. The maximum impact is expected on PSUs, as each of the top 10 PSUs (by market cap) has GoI shareholding above 75%.

The main US indices came crashing especially towards the end with the Dow shedding 115.48 points, or 1.2%, to end at 9,816.49. This is below its May 6 low of 9,869. The S&P 500 index fell 14.41 points to 1,050.47 while the Nasdaq fell 45.27 points to 2,173.90.

The Asian markets didn’t mimic the US markets following Federal Reserve chairman Ben Bernanke’s view that he didn't think that the U.S. economy would slip back in to recession. He said consumer spending and business investment seem strong enough to keep the economy growing, albeit at a relatively subdued rate.

The bruised bulls will have to pin their hopes on a European market rebound. On economic front, German industrial production rose by 2.8% mom and 29.6% yoy in April. Meanwhile, European finance ministers at their meet in Luxembourg seemed in no hurry to halt the euro's slump against the dollar opining that the ‘euro's current level would be a tonic for the economic recovery.’

The Finance Minister is in Mumbai to meet a host of people including corporates. Don’t expect too many statements which could boost the market. Meanwhile, the much awaited Empowered Group of Ministers on petroleum pricing was deferred, in other words, the government failed to reach a decision of freeing auto fuel prices from government control.

The government’s revenue from the sale of spectrum for 3G and broadband wireless access is set to cross Rs1000bn with a pan-India bid for BWA touching Rs106bn on the 12th day of the auction. At this bid amount, the government will earn ~Rs320bn from the sale of BWA spectrum alone, according to a report.

After enjoying its stay above the 17,000 levels in the previous week, the Indian markets ended with a deeper cut on Monday. The benchmark indices opened with a gap down on account of the global crash witnessed over the weekend. As if concerns over the European debt crisis and weakness in the U.S. was not enough comes another cause of concern i.e Hungary. There are fears that Hungary would be the next to suffer after Greece.

"It was a boring sort of a day, where the NSE Nifty traded in a narrow trading band of mere 30 points. The Mid-Cap and the Small-Cap stocks showed some spark in opening session however it was short lived. On the positive side, the NSE Nifty has managed to hold above the 200-DMA, however today’s session lacked participation", says Amar Ambani, Vice President, Research IIFL.

Domestically, the Empowered Group of Ministers (EGoM) would meet to decide on petroleum products pricing which kept the oil stocks in action, this time they were badly battered, stocks like HPCL, BPCL and IOC were among the top losers. Stocks like Mastek shot up over 14% and RCom also was among the notable gainer.

Finally, the BSE 30-share Sensex fell 337 points at 16,781 and NSE Nifty lost 101 points at 5,034.

Markets in Asia ended in deep red; the Nikkei in Japan fell by 4%, Australia's S&P/ASX lost 3% while the Hang Seng index in Hong Kong fell 2% and Shanghai index in China lost 1.6%.

European indices also were trading in the negative terrain, the DAX in Germany was down 0.5%, the CAC 40 index in France was down 0.9% and the FTSE in the UK was down 0.8%.

All the BSE sectoral indices ended in the negative terrain, BSE Realty index was the top loser, the index was down 4%, followed by BSE Metal index was down 3.6% and BSE Consumer Durables index was down 2.1%. Even the BSE Mid-Cap index and the BSE Small-Cap index fell by 1.4% each.

Outside the frontline indices, the big losers in the broader market were Concor, Hindustan Copper, NMDC, KSK Energy and Balrampur Chini. On the other hand, gainers included REI Agro, Oracle Fin, GTL Infra and Apollo Hosp