The market is likely to edge lower tracking subdued to weak global markets. In recent months, domestic bourses have closely tracked global equities. The key economic data that will be released today is February 2007 industrial production. Though the market may drift lower today, stock-specific buying may continue based on Q4 results expectations.
Asian stocks fell on Thursday (12 April), with Japan's Nikkei nursing one of the biggest declines as technology shares slid, dented by concern about the economic outlook for the United States and a rise in oil prices. Minutes of the US Federal Reserve's March meeting, released on Wednesday, hinted at the need for further interest rate increases in the United States to fight inflation. Japan’s Nikkei was down 1.09%. Key benchmark indices in Hong Kong, Singapore, and Taiwan were down by between 0.02% to 0.55%.
US stocks fell on Wednesday as markets faced up to the reality that the Federal Reserve might raise interest rates again to quash inflation. The Dow Jones industrial average fell 89.23 points, or 0.71 percent, to 12,484.62. The Standard & Poor's 500 Index slid 9.52 points, or 0.66 percent, to 1,438.87. The Nasdaq Composite Index lost 18.30 points, or 0.74 percent, to 2,459.31.
Rising US interest rates do not bode well for emerging markets as higher US rates may lure cash out of emerging markets.
Meanwhile, market estimates of India’s February 2007 industrial production growth range from 9% to nearly 14%. Industrial production had risen 10.9% in January 2007, lower than a 12.5% growth in December 2006. The data is expected at about 12:00 IST today.
The immediate trigger for the market is Q4 March 2007 results. Overall Q4 results are expected to be strong. More important that Q4 results is what the company managements say about the outlook for the current financial year (FY 2008). Citigroup expects overall corporate earnings growth to moderate to 15-16 percent in the current and next year, while FY 2007 (year ended 31 March 2007) could be the fifth straight year of 25-30 percent earnings growth.
IT bellwether Infosys kickstarts the earnings season on Friday 13 April. The rupee’s sharp surge in late-March 2007 - early April 2007 against the US dollar and mixed reports from the US economy, have raised concerns that the FY 2008 guidance by Infosys may turn out conservative. Infosys unveils full year guidance at the beginning of the financial year along with Q4 March results
FIIs have resumed buying ahead of the corporate earnings season. Their net inflow totaled Rs 1539.50 crore three trading sessions from 5 April to 10 April. As per provisional data, FIIs were net sellers to the tune of Rs 70 crore on Wednesday 11 April.
FIIs were net buyers to the tune of Rs 149 crore in index-based futures on Wednesday. They were net buyers to the tune of Rs 91 crore in individual stock futures on that day.
NYMEX crude for May delivery was down 14 cents at $61.87 in Asian trading on Thursday amid lingering concern of a potential supply crunch this summer. The rising concern over fuel stocks came against the backdrop of tensions between the United States and oil exporter Iran, and production cuts by OPEC.
US Stocks end lower with Dow sinking 102 points at one point as Fed minutes highlight inflation and slims rate cuts hopes
It was a dismal day on Wall Street today and US Market had to be satisfied with its eight-straight day gains as US stocks were slammed today by minutes from the 20-21 March FOMC meeting. It slashed all hopes of a rate cut in the summer and on the contrary, spoke of tightening policies to curb inflation. The Dow was down as much as 102 points before recovering partly before going to close. IMF cutting the economic forecast for US economic growth and National Association of Realtors saying that existing home prices are down in 2007 just added further salt to injury.
25 out of 30 stocks closed lower on Wednesday. For the day (11 April, Wednesday) the Dow Jones Industrial Average closed lower by 89.23 points at 12484.62, Nasdaq lower by 18.3 points at 2459.31 and S&P 500 lower by 9.52 points at 1438.87. Citigroup, IBM, Honeywell and Boeing were the main Dow laggards. Alcoa, Mc Donalds and Johnson & Johnson were some of the few stocks that closed higher for the day.
All 10 economic sectors closed lower for the day paced by a 1% decline in Telecom. But market was more influentially impacted by a pullback in the rate-sensitive and heavily-weighted Financials sector. The weekly energy inventory report saying gasoline supplies fell for 9th consecutive week and drop was more than expectation also took its toll on broader market.
While most of the nine-page report of the 20-21 March FOMC meeting brought few surprises, the minutes stating that "further policy firming might be necessary," even if offset by economic concerns, showed that there was no chance of a rate cut.
Prior to that, market tried to find some comfort from remarks from Fed Chairman Ben Bernanke. Even though Bernanke recently made no comments on current economic conditions or monetary policy, he said that a "light regulatory touch'' on hedge funds is largely justified and seems to have "worked well" and this appeared to please investors.
NAR sees median U.S. existing home prices down in 2007; Citigroup falters on job cut report; IMF cuts US growth forecast
When market opened in the morning, stocks opened under pressure after the International Monetary Fund cut its outlook for global growth, while a drop in gasoline supplies briefly boosted crude oil prices. International Monetary Fund cut its forecast for U.S. economic growth this year by almost a full percentage point to 2.2%, the weakest in five years, citing a weaker housing market than previously estimated.
Alcoa’s better-than-expected report was not having a broad impact on the market. The absence of leadership from Financials and Tech, the two most heavily-weighted economic sectors, also acted as an overhanging factor. Sellers remained in complete control of the morning's action with all 10 sectors trading lower.
On top of it, National Association of Realtors said it sees median U.S. existing home prices down 0.7% in 2007, the first decline in nearly 40 years, versus a 1% rise in 2006 worsened situation further. This led to homebuilding stocks plunging. Situation worsened as KB Home CEO said that he sees housing market getting worse before better.
Market toiled for entire day slipping by 102 points both in morning and afternoon sessions. Stocks were succumbing to selling efforts before the 2:00 ET release of the FOMC minutes.
Among major blue chips, Citigroup fell 1.2% to $51.8 after the bank said it was cutting 17,000 jobs worldwide in a bid to save $4.6 billion a year by 2009. Alcoa shares rose 0.5% after it beat Wall Street expectations after market closed yesterday.
In the broad market for equities, 1.569 billion shares traded on the New York Stock Exchange while 1.976 billion shares exchanged hands on the Nasdaq stock market. Declining issues outpaced gainers by 11 to 5 on the NYSE and by 19 to 10 on the Nasdaq.
Crude-oil futures for light sweet crude for May delivery closed at $62.01/barrel (higher by $0.12/barrel or 0.2%) on the New York Mercantile Exchange. Crude prices were almost steady throughout the day today. Prices eked up marginally after today’s Energy Dept Inventory report showed that gasoline stockpiles plunged 5.5 million barrels to 199.7 million barrels last week, much more than expected drawdown (1.5 million) and also the biggest drop since 22 Aug, 2003.
After today’s close, Genentech and RIMM came out with earnings report. While Genetech surpassed expectation, RIMM missed on both topline and bottomline fronts. For tomorrow, other than a few earnings report, on the economic front, Initial Claims and Import/Export Prices will be released at 8:30 ET