“No stock is worth your tears, but once you find one that is, it won't make you cry”
While the bond market shed tears on Tuesday following the CRR hike, the equity markets tanked and bounced back in no time. Those gains could be wiped out at open today, as global markets have taken a fresh tumble, thanks to the lingering concerns over the subprime mortgages and credit markets in the US. Oil prices too are very close to their previous highs, both in London and New York on the back of persistent supply worries. As a result, the sentiment will once again take a nosedive at least in the early session.
The market is likely to remain highly volatile in the near term, driven primarily by the global factors, even as local fundamentals remain strong. The key factor to watch will be the trend in FII inflows. If there is a reversal in foreign capital flows towards emerging markets due to the US woes, it will reflect in India too. It would be prudent to avoid fresh buying at this juncture due to the current uncertainty. One has to endure the short-term pain and ride out the temporary bearish phase. Book profits at every rally and trade with stop losses to avert a major crack in your portfolio.
Banks will remain in the limelight in the aftermath of the first quarter review of the annual monetary policy. Sugar shares may be under pressure amid no sign of the pall of gloom dying down. PSU oil companies could fall as crude oil prices are ruling very close to record levels. TVS Motor is likely to be in action amid reports that the company is planning to launch as many as 11 new models by April 2008.
Indian Hotels could gain as the company has reported good set of numbers for the first quarter. It is also planning to raise funds for expansion, including a Rights Issue. SpiceJet might attract some attention amid reports that Ryanair is likely to pick up 20-25% stake in the Indian low-cost carrier.
Shares of Everonn Systems will get listed today. The IPO of the education solutions company was subscribed 131 times. The company has fixed the issue price at Rs140 per share. The stock may get frozen at the upper circuit at opening bell itself.
US stocks tumbled anew on Tuesday amid continuing worries over credit markets and subprime mortgages. The Dow Jones Industrial Average dropped nearly 150 points. The Standard & Poor's 500 Index posted its biggest monthly decline in three years.
The Dow Jones erased a gain of 140 points and eventually slipped by 146.32 points, or 1.1%, to 13,211.99. The S&P 500 shed 18.64 points, or 1.3%, to 1455.27. The Nasdaq Composite Index slumped 37 points, or 1.4%, to 2546.27.
American Home Mortgage Investment Corp. said it doesn't have cash to fund new loans. The news sent shares of American Home Mortgage plummeting 89% and renewed worries about the scope of the recent subprime mortgage mess and fanned credit market worries.
Lehman Brothers, Bear Stearns and Goldman Sachs led the brokerage industry to a 10-month low because the prospect of American Home liquidating assets threatened to depress the value of mortgage securities.
Oil prices in New York climbed to a one-year high above $78 a barrel. Oil prices finished at an all-time high, climbing $1.38 to $78.21 a barrel. Tuesday's closing price is also very close to oil's all-time trading high of $78.40, set in July 2006. The front-month contract was quoting 35 cents lower at $77.86 a barrel.
Bonds prices climbed as investors sought shelter in Treasurys, lowering the yield on the 10-year note to 4.74% down from 4.8% late on Monday. The dollar edged higher versus the euro and was lower against the yen. COMEX gold for December gained $2.70 to $679.30 an ounce.
Apple shares slumped 6.8% amid speculation that the company is cutting production of either iPod or the iPhone, perhaps by as much as 50%.
On the economic front, Wall Street received some relatively encouraging numbers, including a tame inflation reading in the June personal spending and income report. Consumer confidence rose to its highest level in nearly six years, comfortably beating forecasts.
However, construction spending showed a surprise decline and business activity in the Midwest grew slower-than-expected.
Dow Jones' Bancroft family members, who own a 32% stake in the Wall Street Journal publisher, agreed to back News Corp.'s $5bn offer. Dow Jones shares finished over 11% higher.
European shares posted their best one-day advance since mid-March. The pan-European Dow Jones Stoxx 600 index gained 2.2% to 380.87. The UK's FTSE 100 jumped 2.5% to 6,360.10, the German DAX 30 surged 1.7% to 7,584.14 and the French CAC-40 advanced 1.9% to 5,751.08.
Brazilian and Mexican equities fell. In Brazil, the benchmark Bovespa index fell 381 points, or 0.7%, to end at 54,191.26, after moving as high as 55,662 during the session. The IPC index in Mexico posted a loss of 241 points, or 0.8%, at 30,659.66. Argentina's Merval fell 6 points, or 0.3%, to 2,180.25. Chile's IPSA, meanwhile, edged up 4 points, or 0.1%, at 3,340.43. Russia's RTS index surged 1.7% to 1993.
Most Asian markets are deeply in the red this morning. The Nikkei in Tokyo was down 193 points at 17,055 while the Hang Seng in Hong Kong dived 311 points to 22,873. The Kospi in Seoul was down 40 points at 1893 and the Straits Times in Singapore shed 67 points at 3480.
The Morgan Stanley Capital International Asia Pacific Index declined 1.1% to 154.31 at 11:32 a.m. in Tokyo, ending a two-day, 1% gain. Nine of its 10 industry groups fell. All Asian markets open for trading slid.
Bulls fought back as Sensex posted its fifth straight monthly gains. Markets once again followed the cues from firm Asian and European markets boosting both the key indices to bounce back. After a small blip of RBI decision of raising CRR by 50 bps to 7% from 6.50, bulls bounced back shrugging off the hike as the heavy front liners like RIL, L&T, BHEL, SBI and ICICI Bank lifted the benchmark Sensex almost by 300points and NSE Nifty almost 90points.
All the key sectoral indices ended in green. BSE Auto, Bankex and Realty indexes erased all its intra-day losses. TV Today, Voltamp, PTC India were some of the star performers among the mid-Cap index. Finally, BSE 30-share Sensex surged 290 points to close at 15550 hitting an intra-day high of 15568 and a low of 15224. NSE-50 Nifty added 88 points to close at 4528 touching an in intra-day high of 4434 and a low of 4432.
Reliance Industries gained by 2.4% to Rs1893. Reports have stated that the prime minister's economic advisory council is examining the formula for pricing the gas it plans to extract from India's east coast The scrip touched an intra-day high of Rs1901 and a low of Rs1833 and recorded volumes of over 22,00,000 shares on NSE.
Tata Steel advanced by 1.6% to Rs656 as the company announced that it has raised the size of a convertible securities sale to shareholders by 38%, seeking to use the additional funds to part-finance its $12.9 billion purchase of Corus Group Plc. The scrip touched an intra-day high of Rs659 and a low of Rs642 and recorded volumes of over 18,00,000 shares on NSE.
Speciality steel maker Mukand surged by over 4% to Rs84 as reports stated that the Bajaj Group firm may offer equity stake to auto component manufacturer, Bosch India. The scrip touched an intra-day high of Rs86 and a low of Rs83 and recorded volumes of over 1,00,000 shares on NSE.
Ranbaxy spurred by over 3.5% to Rs390 after the company yesterday announced that it would sell Authorized Version of Generic Isoptin in US. The scrip touched an intra-day high of Rs392 and a low of Rs379 and recorded volumes of over 17,00,000 shares on NSE.
BHEL surged by 5% to Rs1728 after the company Q1 net profit rose 22% to Rs2.89bn and revenue gained 23.7% to Rs34.4bn. The scrip touched an intra-day high of Rs1740 and a low of Rs1607 and recorded volumes of over 18,00,000 shares on NSE.
REL continued its upward trend as the company won bid for sasan power project, the scrip was up by over 2% to Rs793 touching an intra-day high of Rs874 and a low of Rs781 and recorded volumes of over 48,00,000 shares on NSE.
Jet Airways edged higher by 0.5% to Rs726 after the company announced its Q1 result with net profit at Rs308.8mn against loss of Rs449.8mn and revenue at Rs18.07bn (up 11%). The scrip touched an intra-day high of Rs735 and a low of Rs705 and recorded volumes of over 1,00,000 shares on NSE.
FMCG stocks also ended on a strong note led by gains in the heavyweight ITC as the scrip was up by over 2% to Rs171, Colgate gained by 6.5% to Rs411 and McDowell added 4.5% to Rs1376. However, Hindustan Unilever declined on back of profit booking; the scrip was down by 1 % to Rs206.
Banking stocks erased its intra-day losses led by gains in SBI as the scrip rose 3% to Rs1623, HDFC Bank advanced by 2.7% to Rs1200 and ICICI Bank added 0.6% to Rs927. PNB, Bank of Baroda and OBC were the major gainers among the Mid-Cap stocks.
Auto stocks were in reverse gear after the Central Bank’s announcement. M&M was down by 3% to Rs728, Hero Honda declined 1.7% to Rs674 and Tata Motors declined 1.2% to Rs699. However, Bajaj Auto surged by over 2.6% to Rs2354 and Ashok Leyland gained 1% to Rs37
Realty stocks reversed all its intra-day losses. DLF was up 1.4% to Rs612, Unitech surged by 4% to Rs558, Parsvnath gained 0.7% to Rs357 and Sobha added 3.3% to Rs982.
Fund Activity:
FIIs were net buyers of Rs346.3mn (provisional) in the cash segment on Tuesday. Local institutions too were net buyers at Rs3.48bn. In the F&O segment, FIIs were net buyers at Rs13.06bn. On Monday, FIIs pulled out Rs1.5bn from the cash segment.
Major bulk Deals:
Franklin Templeton MF has picked up EMCO; Jpmsl Ac Copthall Mauritius has bought McDowell Holdings; BNP Paribas has purchased Milk Food while Jpmsl Ac Copthall Mauritius has sold the stock; Kotak Securities has picked up Parry Agro.
Lower Circuit:
Easun Reyrolle and BF Utilities.
Upper Circuit:
Dhanlakshmi Bank, Jai Corp, United Breweries, TV Today, Marksons, Ganesh Forgings, Voltamp Transformers, Prism
Cement, Yashraj Containers, Anant Raj Industries, Godawari Powers, Nirlon and IID Forgings.
Delivery Delight (Rising Price & Rising Delivery):
Amtek Auto, Bongaigaon Refinery, Essar Steel, HCC, Prism Cement, Tata Power and Varun Shipping.
Abnormal Delivery:
ACC, NIIT, Bharati Shipyard, Aurobindo Pharma, Rajesh Exports, Nicholas Piramal and BEML.
Major News & Announcements:
Tata Motors Q1 net profit at Rs4.67bn (up 22.2%), net sales at Rs60.57bn (up 5.3%)
NTPC forms JV with Singareni Collaries
Hindalco Q1 profit flat at Rs6.03bn, total income at Rs48.03bn (up 10%)
Kesoram Industries Q1 net profit at Rs806.8mn (up 27.2%), net sales at Rs7.81bn (up 41%)
Cadila Q1 profit atRs739mn (up 26.5%), net sales at Rs5.72bn (up 28.2%)
Man Industries to split each shares into two and to raise FII limit to 49%
Jindal Saw Q1 profit at Rs820.5mn (up 98%), net sales at Rs12.86bn (up 34%)
Amtek Auto Q4 profit at Rs631.4mn (up 48%), net sales at Rs2.83bn (up 30%)
Israel Chemicals form Venture with Zuari Industries
Godrej Consumer Board approves raising Rs4bn
IVRCL Infrastructure Q1 profit at Rs259.3mn (up 19.3%), net sales at Rs6.77bn (up 58.5%)
Satyam signs two contracts with FIFA
Welspun Gujarat may bid for pipeline orders in Russia, Canada.