Those who have knowledge, don't predict. Those who predict, don't have knowledge – Lao Tzu
It’s tough to accurately predict the daily movement in any stock market. Down one day and up the next day, a perfect yo-yo pattern seems to appear on the bourses. The best way to tackle the current bouts of gyrations is to stick to your existing portfolio (we assume by now it is fundamentally sound) and focus on stocks that you wish to add. The dip from the lifetime high of 15,868.85 (struck on July 24) is a good opportunity for long-term investors to pick up quality scrips. For those with less patience, we are afraid its going to be a bumpy ride in the near term. Short-term traders should trade with strict stop losses, as there could be further selling at higher levels.
Though India is a domestic-centric economy, it cannot be immune to the global happenings. In any case, there is nothing new in the offing as far as the local economy is concerned. If anything, earnings growth seems to have peaked out, and there may be a slowdown in the GDP growth as well. There are no fresh triggers in the pipeline that could lift the indices higher. The only factor which could add a boost is FII inflows, which have turned volatile off late. Today, we expect a gap-up opening on the back of the overnight rally on Wall Street and firm opening in Asian markets. But, just as the market recovered towards the close of trade yesterday, the reverse cannot be ruled out today.
Wipro could be in the focus as it has announced the acquisition of US-based IT infrastructure outsourcing firm Infocrossing for $600mn in an all cash deal. TCS is also likely to attract buyers. The company's financial solutions division is bidding for over 150 financial product deals.
Solar Explosives will in the limelight as its Board will consider merger of Solar Industries with the company. Mphasis has announced its results for the first quarter. The IT firm has posted a 57% year-on-year growth in its consolidated net profit while revenues are up 34%.
US stocks rallied the most in four years, led by financial companies, on speculation that the government could come to the rescue amid the ongoing turbulence in the housing and credit markets.
Citigroup, American International Group and Bank of America helped the Standard & Poor's 500 Index and Dow Jones Industrial Average rebound from three weeks of declines. Wells Fargo rose the most in five years after saying it will buy back $1.7bn in shares.
Fannie Mae had its biggest gain in 20 years and Freddie Mac advanced the most since 2000 on expectations that regulators will relax restrictions on how much they can spend on home loans. P&G led an index of consumer shares to its biggest increase in five years on falling oil prices.
The S&P 500 rose 34.61 points, or 2.4%, to 1467.67. The Dow rallied 286.87 points, or 2.2%, to 13,468.78. The Nasdaq Composite Index added 36.08 points, or 1.4%, to 2547.33.
The yield on 10-year Treasury notes climbed more than 0.06% to 4.74%. The dollar rose versus the yen.
The Federal Open Market Committee will release its decision on interest rates today. Policy makers are widely expected to keep rates steady. Some investors and experts believe the Fed may indicate that risks to the US economy have escalated due to the current turmoil in credit market.
Crude oil prices fell the most in seven months in New York on concern that the world's largest economy will slow. Crude for September delivery declined $3.42 to $72.06 a barrel. The front-month contract was trading 35 cents down at $71.71 a barrel in extended trading in Asia.
Treasury prices retreated, raising the benchmark yield on the 10-year note rising to 4.73% from 4.69% late on Friday. The dollar gained against the euro and the yen. COMEX gold for December fell $1.10 to $683.30 an ounce.
American Home Mortgage, which shut shop on Aug. 3, filed for Chapter 11 bankruptcy protection, sending shares of the battered mortgage lender 36% lower after last week's steep decline.
Private equity firm Cerberus Capital Management named ex-Home Depot chief Robert Nardelli as Chrysler's chairman and chief executive officer.
European shares closed mostly lower. The German DAX 30 index closed up 0.1% at 7444.45. The UK's FTSE 100 lost 0.6% at 6,189.10. Elsewhere the French CAC-40 closed down 1.2% at 5,532.99 and the pan-European Dow Jones Stoxx 600 index dropped 0.9% to 368.72.
Brazilian and Mexican stocks erased losses to end slightly higher. In Sao Paulo, the Bovespa rose 0.5% to 53,091. In Mexico City, the IPC index rose 38 points, or 0.13%, to 29,709.32. In Santiago, the IPSA fell 1.8% to 3,254.90. The ISE National 30 index in Turkey was down 0.5% at 63,025 and the RTS index in Russia shed 1.3% to 1944.
Most Asian markets are up this morning. The Nikkei in Tokyo was up 20 points at 18,935 while the Hang Seng in Hong Kong jumped 164 points to 22,101. The Kospi in Seoul gained 11 points at 1865 while the Straits Times in Singapore advanced 33 points to 3342 and the Shanghai Composite in China rose 22 points to 4650.
An index of financial shares on the Morgan Stanley Capital International Asia-Pacific Index climbed 0.4%, the biggest gain among 10 industry groups. The MSCI regional index added 0.1% to 151.33 at 10:48 a.m. in Tokyo, after dropping 1% yesterday to touch the lowest since June 27. It is down 6.2% since closing at a record on July 24.
Markets ended on a weak note however managed to recoup partial losses towards the end led by gains in the heavyweights like SBI, ITC, TCS and Ranbaxy. However, ICICI Bank, Infosys, L&T and Reliance Industries were the major lagging movers in the Sensex index. European markets also recovered as DAX index was up 0.26% and FTSE 100 index recovered by 0.30% boosting the sentiments of the traders at home aiding the benchmark Sensex to recover 198points from its days low. Finally, BSE 30-share Sensex slipped 235 points to close at 14903. NSE-50 lost 62 points to close at 4339.
Punj Lloyd gained by 1% to Rs277 following reports that the company secured order worth Rs5.90bn from Bharat Oman Refinery. The scrip touched an intra-day high of Rs279 and a low of Rs263 and recorded volumes of over 16,00,000 shares on NSE.
Apollo Hospitals marginally gained by 0.3% to Rs512 as reports stated that India's biggest health-care company is planning an acquisition in the U.S. The scrip touched an intra-day high of Rs524 and a low of Rs489 and recorded volumes of over 30,000 shares on NSE.
Hindustan Zinc advanced by 1.2%to Rs725 after India's largest producer of zinc raised lead prices by 3.4% to Rs137,200 per metric ton. The scrip touched an intra-day high of Rs732 and a low of Rs694 and recorded volumes of over 1,00,000 shares on NSE.
IFCI surged over 5% to Rs63 after the company announced that it would invite bids from strategic investors. The scrip touched an intra-day high of Rs64 and a low of Rs58 and recorded volumes of over 11,00,00,000 shares on NSE.
SBI gained 2.8% to Rs1681. Reports sated that the Government is expected to fund the banking major's growth plans. The scrip touched an intra-day high of Rs1699 and a low of Rs1580 and recorded volumes of over 26,00,000 shares on NSE.
Metal stocks lost their shine on back of selling pressure. Hindalco slipped by 3% to Rs157, JSW Steel was down by 5% to Rs646, Sterlite Industries declined by 3% to Rs611. However, Nalco surged 3.1% to Rs259.
Auto stocks were in reverse gear led by fall in frontline stocks. Maruti was down by 3% to Rs824, Bajaj Auto slipped by 1.3% to Rs2299, TVS Motors edged lower by 0.8% to Rs56. However, M&M marginally gained 0.3% to Rs679.
Telecom stocks also ended lower. Reliance Communication plunged by over 3% to Rs531, Bharti Airterl was down by 1% to Rs866 and IDEA slipped by 2% to Rs123.
BSE Realty stocks were badly beaten up led by fall in the heavyweights. Unitech declined by over 3.2%to Rs520, DLF was down by 3.5% to Rs580, Sobha dropped by 3.5% to Rs835 and Akruti lost 5.8% to Rs518.
IT stocks continue the southwards journey led by fall in heavyweight Wipro was down by 2.7% to Rs457; Satyam Computer dropped by 2.3% to Rs461and Infosys declined 2.6% to Rs1865. Polaris, NIIT Ltd and Mphasis BFL were the major losers among the Mid-Cap stocks.
Fund Activity:
FIIs were net sellers of Rs1.43bn (provisional) in the cash segment on Friday. At the same time, local institutions were net buyers of Rs591mn. In the F&O segment, FIIs were net buyers at Rs17.73bn.
On Thursday, FIIs offloaded Rs4.19bn from the cash segment.
Major bulk Deals:
Capital Research and Management has picked up J&K Bank while Vontobel Funds Inc sold the stock; DSP Merrill Lynch Capital has sold India Infoline; Fin Brains Securities (India) has sold Simplex Projects.
Insider Trades:
Shringar Cinemas Limited: Balkrishna Shroff, Director bought from market has bought 10000 equity shares of Shringar Cinemas on 1st August 2007.
Lower Circuit:
Rama Pulp Paper and Balasore Alloy
Upper Circuit:
Goldstone Tech, Ganesh Forgings, Easun Reyrolle, Zuari Industries, Prism Cements, Era Constructions, Accentia Technologies, Maxwell Inds and Sulzer India.
Delivery Delight (Rising Price & Rising Delivery):
ABB, Alstom Projects, Ballarpur Industries, Dishman Pharma, ITC, Jaiprakash Associates, Mphasis BFL, Praj Industries, Punj Lloyd and Reliance Petroleum.
Abnormal Delivery:
Reliance Capital, Ultratech Cement, Unitech, Chennai Petro, SBI, Rolta, Reliance Industries, Hindalco, Tata Tea, Kesoram, GSK Pharma, Aurobindo Pharma and HDFC.
Major News & Announcements:
Inflation rate was 4.36% in week ended July 21 vs expectations of 4.37%
Govt approves FDI proposals worth Rs5.75bn
Apar Industries gets export order of Rs1.11bn
Govt allows TV 18 group to buy stake in MTV India for $50.5mn
Punj Lloyd form JV for Real Estate development
Infosys in multi-year services accord with Canadian Pacific
Parsvnath gets nod for Indore IT SEZ
Goldstone Technologies to foray into business intelligence