Politics is the gentle art of getting votes from the poor and campaign funds from the rich by promising to protect each from the other With the Congress and the Left toughening their respective stance and the last ditch effort by Sonia Gandhi failing to elicit any positive response from Prakash Karat & Co., the country is likely to be headed for mid-term polls sometime in the first half of next year. If the Government goes ahead and holds talks with the IAEA, the Communists are most likely to withdraw their support. So, there is only one way this coalition regime can complete its full term i.e. if the Centre decides to defer negotiations with the IAEA. But, after Sonia Gandhi's strong remarks on Sunday, this scenario looks difficult. The next few days are going to be critical. While the initial flow of words in the market will be directed at results, post that we will have expectations of the budget. If elections are around the corner, a populist budget for the masses is what may lie ahead. Who knows, a number of popular moves could be seen even before budget day.
This is not good for the bulls, who were eager to push the Sensex past the 18k mark. The movement in the market in the next few days will hinge on the statements emanating from Congress and Left leaders. So, brace yourself for lots of volatility in the near term. The quarterly results and global events like the BOJ meeting this week and the Fed meeting later in the month will also have a bearing on the market. Today, we see a cautious to weak opening as global trend, barring a few markets like Brazil and Japan, is generally down. A wait and watch approach is the best strategy one can adopt at this stage.
DS Kulkarni Developers' Board of Directors will meet today to approve the merger between the company and Oyster Promoters & Developers.
Prime Securities, Prism Cement, S Kumars Nationwide and Vikas WSP will announce their results today.
ICICI Bank could be in the limelight after the country's largest private bank received Reserve Bank of India’s approval for establishing new branches and additional off-site ATMs.
Nitco Tiles is planning to double capacity in at its ceramic tile plant in Alibaug. The company plans a capex of Rs800mn to double its capacity up to 24,000 sq.mt a day from the existing 13,500 sq.mt.
US stocks fell for the first time in three days, led by oil producers and miners, on concern that a slowing economy will reduce demand for energy and metals. Also, investors were cautious after last week's rally and ahead of the start of the quarterly earnings reporting period.
The Standard & Poor's 500 Index lost 5 points, or 0.3%, to 1,552.58, retreating from a record. The Dow Jones Industrial Average slipped 22 points, or 0.2%, to 14,043.73. The Nasdaq Composite Index rose 7 points, or 0.3%, to 2,787.37.
Trading volume was pretty light and the treasury bond market was closed due to the Columbus Day holiday. The New York Stock Exchange had its slowest full-day session of the year with 852.3mn shares changing hands.
US light crude for November delivery fell $2.20 or 2.7% to settle at $79.02 a barrel on the New York Mercantile Exchange.
In currency trading, the dollar rose against other major currencies. The rising dollar sent gold and other dollar-traded commodities lower. COMEX gold for December delivery fell $8.50 to settle at $738.70 an ounce.
After the close of trade, Sprint Nextel said its CEO Gary Forsee was stepping down, effective immediately.
European shares ended lower on Monday, with SAP among the leading decliners after the German technology giant said its $6.8bn purchase of Business Objects would hurt earnings next year.
The pan-European Dow Jones Stoxx 600 index declined 0.2% to 386, with technology and resource shares under pressure. The UK's FTSE 100 fell 0.8% to 6,540.90, the German DAX 30 lost 0.4% to 7,974.37 and the French CAC-40 slipped 0.2% to 5,829.40.
Major Latin American markets ended higher on Monday, with Brazilian stocks finishing at a record closing level and Mexican stocks reversing losses after a credit upgrade by S &P.
Brazil's Bovespa rose 0.6% to end at 62,660.85. Just a week ago, the index marked its first close above 62,000. In Mexico, the IPC index finished up 0.9% at 31,825.51.
Chile's IPSA index closed nearly flat at 3,360.16. Argentina's Merval index reversed course to end 9 points higher at 2,286.71.
In the other emerging markets, the RTS index in Russia was up 0.7% at 2130 while the ISE National-30 index in Turkey was down over 1% at 71,488.
Asian markets were trading mixed this morning. The Nikkei in Tokyo was up 157 points at 17,222 while the Hang Seng in Hong Kong fell by 218 points to 27,552. The Straits Times in Singapore gained 7 points at 3827 and the Kospi in Seoul dropped 16 points to 1996.
The Morgan Stanley Capital International Asia-Pacific Index rose 0.5% to 166.55 as of 10:28 a.m. in Tokyo, set to exceed its Oct. 3 record close of 166.41. Barring energy and materials, all the other indices in the benchmark's 10 industry groups, fell in step with crude oil and metals prices.
Developers Mitsui Fudosan and Mitsubishi Estate advanced on speculation that the Bank of Japan will leave its key interest rate unchanged at a meeting this week.
Benchmarks in other Asian markets open for trading advanced, except for New Zealand.
Wait and watch
Political uncertainties, coupled with weak cues from the Asian and the European markets and all round selling in scrip’s across the sectors dragged the key indices to register its biggest fall in seven weeks. After hitting a low of 17,322 benchmark index managed to recover over 150 points on back of IT stocks finally to close at 17,491 losing 212 points and NSE Nifty slipped 100 points to close at 5,085.
Among the BSE sectoral indices, BSE Metal index (down 3.7%), BSE PSU index (down 3.7%) and BSE Realty index (down 3. 6%). Even the broader indices were under pressure. The BSE Mid-Cap and the Small-Cap indexes lost over 3% each. However, IT index was the only gainer 0.63%.
Among the 30-scrip’s of Sensex, twenty three stocks ended in red. However, seven stocks ended in positive territory. Reliance Industries, ICICI Bank, SBI and L&T were among the major losers. On the other hand, Satyam, BHEL, Infosys and Wipro were among the major gainers.
DLF slipped 1.5% to Rs839. The country's largest developer, would be added to the benchmark while Dr. Reddy's Laboratories India's biggest drugmaker, will be removed. The changes will take effect November 19. The scrip touched an intra-day high of Rs875 and a low of Rs800 and recorded volumes of over 18,00,000 shares on NSE.
EKC dropped by over 3.5% to Rs229. The company announced that they would sell shares to TVG India, CLSA private equity. The scrip touched an intra-day high of Rs240 and a low of Rs225 and recorded volumes of over 2,00,000 shares on NSE.
Patni Computer surged by over 4.5% to Rs479. The Indian software developer announced that two of its directors G.K. Patni and A.K. Patni would be re-designated as `founder directors'' and cease being executive directors of the company effective Oct. 1. The scrip touched an intra-day high of Rs485 and a low of Rs465 and recorded volumes of over 19,00,000 shares on NSE.
SBI slipped 4% to Rs1781. According to reports India's largest lender may raise Rs100bn after the government sells a stake in the lender. The scrip touched an intra-day high of Rs1888 and a low of Rs1755 and recorded volumes of over 1,00,000 shares on NSE.
Raj Tele lost 4.8% to Rs218 after the company announced that they have secured approval to start 24x7 news channel. The scrip touched an intra-day high of Rs235 and a low of Rs217 and recorded volumes of over 1,00,000 shares on NSE.
IT index was the only gainer, the index gained 0.63% despite India's rupee gained, trading near the highest in more than nine years. Satyam Computer advanced by 2.6% to Rs455, TCS was up by 1% to Rs1078 and Infosys added 1% to Rs2003.
Realty stocks were badly beaten up led by fall in the index heavyweight, Unitech, the scrip dropped by over 5.5% to Rs309, Parsvnath dropped 4.5% to Rs348, DLF was down 1.5% to Rs839 and Akruti declined 4.6% to Rs737.
Auto stocks also were on the receiving end. According to reports, India is considering cutting the excise duty on large cars to 16% from 24% to boost sales and counter the impact of rising interest rates. M&M dropped 3% to Rs726, Maruti was down by 1% to Rs1025 and Tata Motors slipped 2% to Rs764.
Profit booking was also witnessed in the Banking stocks. SBI declined by over 4% to Rs1781, ICICI Bank fell 1.5% to Rs1021 and PNB dropped 3.5% to Rs505. However, HDFC Bank edged higher by 0.3% to Rs1407.
Stocks in News:
Reliance Retail has bagged an exclusive marketing and distribution deal with Apple for standalone iStores.
Reliance Industries has sought a three year drilling holiday from exploring nine NELP fields due to shortage of drilling rigs.
ICICI Bank has received approval from the RBI for setting up of 425 branches and 2,500 ATMs.
HDFC has hiked its stake in its asset management JV with Standard Life by 10% for a sum of Rs1.8bn.
Tata Steel will raise Rs96.5bn via rights issue in the ratio of one for every five shares at a price of Rs300 per share.
Tata Steel plans to raise Rs54.8bn through issue of convertible preference shares to partly finance its Corus acquisition.
Accenture and Wipro are in the race for acquiring non-US BPO business of Dell.
Dr Reddy Laboratories is planning to launch its biosimilar drugs in Europe by 2010.
JSW group is foraying into cement business by setting up two plants in Karnataka and Andhra Pradesh with a combined capacity of 3mn tons and investment of Rs12bn.
BHEL has bagged an Rs3.9bn order from Rashtriya Ispat Nigam for expansion of its power plant.
Praj Industries is setting up a fully integrated ethanol production plant for Tata Chemicals at Nanded.
Praj Industries has inked an agreement with the Department of Agriculture, Philippines to promote energy crops and technology for production of biofuels.
Dish TV is planning to raise Rs11bn through a combination of debt and equity.
Suzlon Energy has won a contract for 400-MW turbine with a US company.
UCO Bank is planning a follow-on public offer to raise Rs2-2.5bn in H1 CY08 and also plans to raise Rs2bn in tier-II bonds by March 2008.
Sintex Industries is close to acquiring composites business in Europe or US for ~US$120mn likely to be announced in November.
Nippon Steel may pick up a 10% stake in Gangotri Iron and Steel Co through a preferential issue at Rs80-85 per share.
Vodafone plans to invest US$2bn annually in India to expand its mobile services.
As per a policy drafted by the Rural Development Ministry, developers of SEZs may have to return 10% of the land acquired from farmers after development.
According to the Commerce Department, exports from the country for FY08 could fall short of the annual target by US$20bn at US$140bn.
M&A norms for the telecom industry are likely to be tightened so that the market share of operators post merger or acquisition does not exceed 30%.
The Government may cut duties to avoid petrol price hike.
Fund Activity:
FIIs were net buyers of Rs14.6bn (provisional) in the cash segment on Monday while the local institutions pulled out Rs1.43bn. In the F&O segment, foreign funds were net sellers at Rs13.05bn.
FII and Mutual Fund data for Friday's session is not yet available from market regulator SEBI.
Major Bulk Deals:
Kotak Mahindra Investments has bought Autoline Industries; Goldman Sachs has sold Mangalore Chemicals; Morgan Stanley has picked up Mercator Lines; Deutsche Securities has purchased S Kumars Nationwide while Deutsche Bank has sold the stock; Morgan Stanley has bought Vakrangee Software. Upper Circuit:
RIIL, Usher Agro, Victoria mills and Jai Corp
Lower Circuit:
Ruby Mills, Karutari Networks, Silverline Technologies, Prakash Industries and Tanla