May I never miss a sunset or a rainbow because I am looking down. - Sara June Parker.
After showing promise of scaling past resistance zones, the key indices have faltered in the face of weaker than estimated IIP data and less than forecast Infosys’ numbers.
Though inflation came in lower than consensus estimates, it still is above 10%. In addition, the Government has been revising upwards the previous month’s figure. What’s worse, the full impact of the fuel price increases is yet to reflect on the inflation numbers. Perhaps, the RBI could go in for another 25 bps hike in key rates on July 27.
The outlook for the day is not too exciting. At the same time it is not too grim either. Asian markets are pretty mixed after a flat finish on Wall Street. European shares too declined. A slew of data points from China to US are out and they seem to confirm a growing view that the global recovery may be faltering a bit.
Back home, the results so far have not been great, though we still have lot of numbers to ponder over.
Results Today: Axis Bank, Castrol India, Colgate-Palmolive, IL&FS Investment Managers, LIC Housing, Polaris, TCS, Uflex, UTV Software and Zensar Tech.
FIIs were net buyers of Rs5.69bn in the cash segment on Wednesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs3.3bn. In the F&O segment, they were net buyers at Rs3.68bn. On Tuesday, the FIIs were net buyers of Rs8.04bn in the cash segment.
China's latest GDP data as well as a number of other key economic indicators for June indicate that the nation's rapid economic expansion is beginning to moderate as it withdraws some of the crisis-fighting stimulus measures.
The first-half GDP growth came in at 11.1%, slower than the 11.9% growth recorded in the first quarter. The second-quarter GDP data wasn't immediately available.
China's June consumer prices rose 2.9% on year while June producer prices were up 6.4% on year. China's June Industrial output rose 13.7% on year and June retail sales climbed 18.3% on-year.
Shares of Agricultural Bank of China Ltd. opened 2.2% higher in their trading debut today on the Shanghai Stock Exchange, but then quickly pared some of their initial gains.
Strong results from Intel failed to ease worries about prospects for the US economy, highlighted by another weak retail sales report. Also, the Federal Reserve has cut its 2010 growth forecast for the first time since the economic recovery began last year.
The Fed’s ‘central tendency’ forecast is now for growth between 3.0% and 3.5% in 2010, down from the 3.2% to 3.7% that it forecast in April. Fed officials agree it would be a good idea to study what to do if the economy were to worsen severely, according to minutes from the June meeting.
Meanwhile, Moody's Investor Service downgraded eight Portuguese banks, on the heels of the two-notch downgrade of the country's sovereign debt rating the prior day to A1 from Aa2.
Weaker-than-expected retail sales data coupled with the downgrade in GDP growth by the Fed undermined strong earnings from chip titan Intel, prompting the bulls to break a six-day winning streak for US stocks.
The Dow Jones Industrial Average ended up 3.7 points, or 0.04%, to 10,366.72 for its seventh straight session of gains. Out of 30 components, 14 ended higher.
The S&P 500 Index finished flat at 1,095.17, dragged lower by financial stocks. Technology fared the best among the index's 10 industry groups.
The Nasdaq Composite Index rose 7.81 points, or 0.4%, to 2,249.84, with the tech-heavy index bolstered by Intel's earnings and sales forecast.
The dollar rose against its main trading partners, including the euro, the British pound and the Japanese yen.
US light crude oil for August delivery fell 16 cents to settle at $76.99 a barrel.
COMEX gold's August contract fell $3.80 to $1,209.60 per ounce.
Treasury prices rose, and the yield on the 10-year note fell to 3.05%.
US stocks staged a modest rally early in the session on optimism about second-quarter corporate profits. But the advance faded after the Fed released minutes from its June policy meeting.
The minutes showed that central bank officials downgraded their expectations for economic growth, stoking fears about a slowdown in the second half of the year.
Fed officials last month discussed contingency plans to further stimulate the world's largest economy if the outlook were to worsen appreciably.
The central banker reduced its outlook for US gross domestic product. GDP is now projected to grow between 3.0% and 3.5% this year, down from an earlier forecast of 3.2% to 3.7%. In the first quarter, GDP rose at an annual rate of 2.7%.
In addition, the Fed predicts the unemployment rate will range between 9.2% to 9.5% this year, slightly worse than the 9.1% to 9.5% range it forecast in April. Unemployment was 9.5% in June, but has averaged 9.7% over the first half of the year.
Separately, the Commerce Department said that retail sales fell 0.5% in June after dropping 1.1% in May, while sales excluding autos slipped 0.1%. Economists expected total sales to have fallen 0.2%, and sales excluding autos were forecast to have held steady after falling 0.8% in May.
Mortgage applications fell last week to their lowest level in more than 13 years, according to the Mortgage Bankers Association.
However, technology shares bucked the trend. Not only were Intel's sales and earnings good, but what they said about what lies ahead is encouraging. Late on Tuesday, the world's largest chip maker reported it swung to a profit that topped analysts' expectations and gave a stronger sales forecast.
Strong earnings and upbeat guidance from aluminum giant Alcoa and transportation company CSX boosted the market on Tuesday. Last week, the US market had its best weekly gain in a year in anticipation of good quarterly earnings.
JPMorgan Chase reports second-quarter results before the market opens on Thursday. Analysts expect the bank to report a profit of 70 cents per share, up from 28 cents per share a year ago. Google is slated to report quarterly results after the market closes on Thursday.
On the economic front, reports due on Thursday include weekly initial jobless claims, consumer and wholesale inflation data as well as a regional manufacturing report.
Bank of America and Citigroup are also due to report this week.
Around 21 S&P 500 companies will announce results this week. Second-quarter earnings are expected to be up 27%, according to earnings tracker Thomson Reuters. But investors are particularly keen to hear what corporate leaders expect for the second half of the year.
European shares snapped a six-session winning streak, as mining and automotive losses offset gains in the technology sector. After having moved as high as 257.03 earlier in the session, the Stoxx Europe 600 index ended nearly unchanged, down only seven points, to 255.92.
The French CAC-40 index dropped 0.1% to 3,632.98 and the UK's FTSE 100 index fell 0.3% to 5,253.52. The German DAX index added 0.3% to 6,209.76.
European industrial-production grew by 0.9% versus 1.3% expected, and weekly US mortgage applications fell by 3%. Separately, US retail sales fell a larger-than-expected 0.5% in June, government data showed.
Miners led the pullback in Europe while banks were also under pressure.
Intel's results and a better-than-expected second-quarter profit from Netherlands-based ASML gave European stocks an early boost and technology shares.
London Stock Exchange shares rose 3.6%. The firm reported a 1% rise in first-quarter revenue and said its market share of the trading in UK stocks improved in June after it lowered transaction fees.
BP shares fell 2.3% with the oil giant taking a go-slow approach in how it was conducting a pressure integrity test of the Macondo well, which has been spilling oil into the Gulf of Mexico for nearly three months.
A bigger decliner, shares of ITV fell 3.9%. Bank of America Merrill Lynch downgraded to underperform from neutral its rating on the television broadcaster.