Fear sets in!
FEAR is an acronym in the English language for "False Evidence Appearing Real"
After being bullish so far, is it time for investors to get bull-ied? Besides fear of a CRR hike, (which remains a rumor till it is done) investors at large could get a little perturbed by the latest threat that World Trade Center in Mumbai would be destroyed by the outlawed militant group Lashkar-e- Taiba. But then life goes on and investors and non-investors especially in Mumbai have manage to shrug off all such threats and attacks in the past.
Back to the markets, though the Nifty managed to carve out a new record for itself, the BSE Sensex is struggling to cover the distance of a few hundred points to create a new milestone. If FIIs inflows remain strong the Sensex will also hit a new all-time high sooner or later. Having said that we would like to reiterate that these are only statistical events and they should rather focus on their own investments.
Today, we expect the market to open on a subdued note given the weakness in the US and Asian markets. The usual intra-day swings will continue to keep investors on tenterhooks. The action will continue to be more stock specific and outside the key indexes. As a result, small-cap and mid-cap shares may remain in the limelight.
On Wednesday, the market suddenly tanked late in the afternoon amid grapevine that the RBI may go for another CRR hike to tackle the relentless inflow of foreign capital. This coincided with reports that the monsoon would be delayed. Whether that will indeed be the case only time will tell. If another tightening measure from the central bank does materialise that could prove to be the trigger for some kind of a correction.
Other than a possible negative surprise from the RBI one should also be weary of rising oil prices, an overheated Chinese economy and a downturn in the US. Inflation and its fallout on the local interest rates will also continue to cast a spell on the market.
The derivative contracts in the underlying NAGARFERT, ARVINDMILL, IFCI and PARSVNATH have crossed 95% of the market-wide position limit and are currently in the ban period.
NIIT Tech, Divi's Labs and Universal Cables could gain after announcing strong results. Opto Circuits' Board will meet today to consider issue of warrants to promoters, and issue of securities on a preferential basis to strategic investors. Bharat Seats' Board will today to fix and announce the record date for a 5:1 stock split and 1:1 bonus. Compact Disc India has announced that it will co-produce 90 minutes, 3D Animation, family-oriented feature film 'GoaaaaaL' with Motion Pixel Corporation, a leading Los Angles based Hollywood production company. Shares of Temptation Foods were up yesterday amid market talk that it may acquire HLL's marine products business.
US shares ended lower on Wednesday for the first time in four days after former Federal Reserve Chairman Alan Greenspan said he fears a dramatic contraction for Chinese stocks. Greenspan, speaking by satellite to a conference in Madrid, said a rally that boosted China's benchmark CSI 300 Index by 90% this year is unsustainable.
Shares reversed early gains that sent the S&P 500 above its 2000 record for a third day. McDonald's, Intel and IBM posted the steepest declines in the Dow Jones Industrial Average, while technology shares led the Standard & Poor's 500 Index's retreat.
The Dow dropped 14.3 points, or 0.1%, to 13,525.65 after earlier reaching a record. The S&P 500 lost 1.84 points, or 0.1%, to 1522.28 after rising as high as 1532.43, five points above its March 2000 record close. The Nasdaq Composite Index declined 10.97 points, or 0.4%, to 2577.05.
US light crude oil for July delivery rose 27 cents to settle at $65.78 a barrel on the New York Mercantile Exchange. Prices rose as US naval action in the Middle East overshadowed a US report showing higher refinery activity. The front-month contract was trading 11 cents higher at $65.88 a barrel in extended trading in Asia.
COMEX gold for June delivery rose $2.70 to settle at $662.60 an ounce. Treasury prices inched lower, raising the yield on the 10-year note to 4.85% from 4.83% late on Monday. In currency trading, the dollar fell versus the euro and the yen.
European shares closed higher. The pan-European Dow Jones Stoxx 600 index added 0.8% to stand at 396.53. The index hit a high of 396.61 in the session, a level not seen since September 2000. Around the region, other indexes were making progress, with the U.K.'s FTSE 100 closed up 0.2% at 6,616.40, the German DAX Xetra 30 advanced 1% at 7,735.88 and the French CAC-40 ended 0.5% higher at 6,120.20.
In the emerging markets, the Ibovespa in Brazil shed 0.8% to 51,812 while the IPC index in Mexico rose 0.2% to 30,869 and the RTS index in Russia plunged 2.4% to 1815.
Asian markets are mostly in the red this morning following Greenspan's warning on the Chinese equities. The Shanghai Composite Index, which tracks shares listed on the larger of China's two stock exchanges, is up 56% year to date.
The Morgan Stanley Capital International Asia-Pacific Index dropped after nearing a record. The MSCI index lost 0.2% to 149.57 at 11:01 a.m. in Tokyo, halting a three-day, 1.8% advance.
Benchmarks fell in Singapore and Malaysia and rose elsewhere in the region. Markets in Hong Kong and South Korea are closed for holidays today.
BHP Billiton followed metal prices lower. A measure of six metals traded on the London Metal Exchange (LME), including copper and zinc, fell 1.6% overnight. Copper dropped 0.8%, zinc slid 1.6% and nickel slumped 4.2%. Earlier BHP had risen 2% amid reports that the mining giant was in talks with Alcan.
Bulls snaps five day rally
Markets ended on a weak note as Met department announced that monsoon would delay by 3-4 days further selling pressure in the frontline stocks like Tata Motors, ONGC, Reliance Industries and SBI. BSE Metal index was the major gainer as the index nearly outperformed the key indices by 1% led by gains in Tata Steel. Others like Auto, Oil & Gas, FMCG and Banking stocks dragged the markets lower.
Reliance Capital lost over 5% to Rs965 on profit booking after rallying over last few trading sessions. McDowell also witnessed profit booking as the scrip was down by 6% to Rs1169. However, Raj Telefilm rallied by over 10% to Rs318 and SKF India jumped by over 11% to Rs318. Finally, the 30-share Sensex ended lower by 90 points to close at 14363. NSE-50 Nifty lost 31 points to close at 4246.
Karur Vysya Bank slipped by 0.8% to Rs287. The company announced that they would pay dividend of Rs10 a share. The scrip touched intra- high of Rs280 and a low of Rs289 and has recorded volumes of over 1,0,000 shares on NSE.
Bata India surged nearly 5% to Rs178 on reports that Reliance Retail Ltd, a unit of India's second-most valuable company, may form an alliance with the company to sell products in each other's outlets. The scrip touched intra- high of Rs190 and a low of Rs173 and recorded volumes of over 20,00,000 shares on NSE.
Tata Tea pared its gains towards the end on back of profit booking the scrip was down by 0.5% to Rs908. Reports state the company is considering various options with regard to its 30% stake in Glaceau. The scrip touched intra- high of Rs949 and a low of Rs886 and recorded volumes of over 6,00,000 shares on NSE.
KS Oils edged higher by 0.3% to Rs413 after the company announced that they would split each share into 10 and raise $100mn in overseas securities sale. The scrip touched intra-day of Rs428 and a low of Rs406 and recorded volumes of over 2,00,000 shares on NSE.
Oil refinery stocks also pared its intra-day gains as selling pressure dragged the stocks lower. IOC was flat at Rs502, BPCL fell by 1.5% to Rs384 and HPCL edged lower by 0.4% to Rs299.
Pharma stocks also were on the receiving end. Ranbaxy dropped by over 2.5% to Rs389, Dr Reddy’s Lab was down 1.1% to Rs655, Lupin fell 1% to Rs708 and Sun Pharma edged lower by 0.3% to Rs1087.
Capital Good stocks stood firm in a weak market. BHEL was up 1.3% to Rs2713, Thermax gained by 1.8% to Rs457, SKF India rallied by over 11% to Rs477 and Praj Industries added .7% to Rs503.
Metal stocks also recorded smart gains led by gains in the index heavy weight Tata Steel, the scrip surged nearly 5% to Rs659, JSW Steel was up by 0.3% to Rs621 and Maharashtra Seamless added 0.4% to Rs572
Insider Trades:
Development Credit Bank Limited: 1) Morgan Stanley & Co. International Plc A/C Morgan Stanley Mauritius Co. Ltd. 2) Morgan Stanley & Co. International Plc A/C Morgan Stanley Investment Mauritius Ltd. has purchased from open market 876691 equity shares of Development Credit Bank Limited on 18th May, 2007
Sectoral Movement:
BSE Oil & Gas index was the major loser and lost 1.15%, BSE Auto index (down 1.08%), BSE FMCG index (down 1.19%) and BSE Technology index (down 0.88%) were among the other major losers. However, BSE Metal index gained 1%.
Volume Toppers:
RNRL, Idea, SAIL, RPL, DCB, Pochiraju Industries, BRFL, Unitech, Centurion Bank, Reliance Energy, ITC, HLL, Inox Leisure, Gujarat NRE
Upper Circuit:
PSTL, Sparsh BPO, Raj Tele, Tanla, Global Broadcast, Goderej Industries, Mefcom Agro, Tripex Overseas, MLL and Heritage Food
Delivery Delight:
BEML, BHEL, Bombay Dyeing, Cadila Healthcare, Hero Honda Motors, HLL, HDFC, Jindal Steel & Power, MTNL, M&M, UTI Bank and VSNL.
Abnormal Delivery:
APIL, Balaji Telefilms, Bharat Forge, MPhasis BFL, Reliance Capital, Colgate-Palmolive, Aurobindo Pharma, India Cements, Wipro, CEAT and LIC Housing Finance Ltd.
Stock Futures with largest increases in OI:
BRFL, IOC, Shree Cement, Ansal Property, reliance Energy, Sesa Goa, United Spirits and matrix labs
Stock Futures with Decreases in OI:
Educomp Solutions, Indian Bank, Nagarjuna Construction, Bombay Dyeing, Kotak Bank, Zee Telefilms, Financial Technology and VSNL
Results Today:
Bombay Dyeing, BPCL, Banswara Syntex, Centurion Bank of Punjab, Gokaldas Exports, Majestic Auto, Sangam India, SpiceJet,
Results Corner:
PNB Q4 profit at Rs2.38bn (down 17%) and Q4 revenue at Rs37.13bn (up 26%)
Brokers Recommendations:
Crompton Greaves – Outperformer from Enam with target of Rs280
Tata Steel – Buy from Merrill Lynch with target of Rs800
Long Term investment:
REL
Major News Headlines:
Divi’s Lab recommends stock split from face value of Rs10 to Rs2 each
NIIT Tech declares 1:2 bonus; recommends dividend of Rs6.50 per share
Govt stake may be cut to 51% in PNB
KS Oils announces 10:1 stock split; to raise $100mn overseas
Rel Com cuts call rates to middle east by 36%
Karur Vysya Bank to pay dividend of Rs10 a share
BEML forms JV with Midwest Granite for mining
NDTV to raise Rs4bn by selling securities, may consider acquisitions and partnerships