Don't CRRy over spilled milk
Things are seldom what they seem, skim milk masquerades as cream.
We won't debate on whether the actual headline should be spilled milk or split milk. In hindsight everything can be reversed. What one needs is insight, which is the transfer point between hindsight and foresight. And, in the midst of all this market drama, don't lose sight of your portfolio.
Coming to the market, the first reaction on a day after a big crash is that the market should bounce back. Global cues are positive, but they were also encouraging yesterday, and still the Indian market was perhaps the only one in the world that collapsed like a pack of cards. Its the sentiment that is key in our market. At the moment it is not particularly strong. It will take time for the market to settle down. How much time only time will tell. Our obvious advice is to be highly alert and just stay on the sidelines and wait for a clear trend.
One thing that could lift the spirits is the provisional figure on FII transactions for the cash segment. According to the NSE web site, foreign funds were net buyers of Rs3.34bn yesterday. In the derivative segment, they were net sellers to the tune of Rs13.84bn. On Friday, they pulled out Rs1.53bn from the cash segment. Mutual Funds were net buyers of Rs738.9mn on the same day.
All the euphoria of the past five months appeared to have vanished in a jiffy. It took just one day of sharp correction to push the bulls to the wall. On Friday morning, we had mentioned - Time to unwind. Last week's fall, especially on Friday gave some indications. In the past it has been seen that whenever the market falls sharply on Friday, there is every chance of it cracking on Monday. But, the bulls have failed to learn from their past mistakes, and bears have taken advantage of that folly. The non-stop advance since July coupled with the surge in open interest in the F&O segment and the slowdown in FII inflows were enough indications of things to come. Still, the bulls chose to ignore them.
In the overseas markets, US stocks were marginally up on Monday, as investors preferred to remain cautious ahead of the Federal Reserve's meeting on interest rates. The Dow Jones was up 20.99 at 12,328.48 while the broader S&P 500 gained 3.20 to 1,413.04, and the tech-fueled Nasdaq advanced 5.50 to 2,442.86. At one point in the session, the 30-share Dow briefly eclipsed its record closing high of 12,342.56, reached Nov. 17, before backing off.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.52% from 4.55% late on Friday. The dollar fell against the euro but rose versus the yen. Gold prices climbed $3.80 to $634.80 an ounce.
Oil prices sank on strong inventory expectations. US light crude for January delivery fell 81 cents to settle at $61.22 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 2 cents lower at $61.24 per barrel in extended trading in Asia.
Among the Indian ADRs, Patni shed 1.9%, VSNL has tumbled 5.2%, Infy has lost 1.1%, Wipro dropped 3%, Satyam gave up 2.1%, Tata Motors dived 1.9%, HDFC Bank slumped 2.5%, ICICI Bank slid 2.3% and MTNL was down 1.7%.
In the emerging markets, the Bovespa in Brazil was up 0.7% at 43,297 while the RTS index in Russia dropped 0.65% to 1838, and the IPC index of Mexico gained 0.3% at 25,828.
Asian stocks rose this morning, led by Sony and Toyota after the yen weakened against the dollar and the euro, boosting the value of exports. Samsung and Singapore Airlines gained after crude oil prices dropped the most in a week. Woodside Petroleum and Inpex Holdings led oil stocks down.
The Morgan Stanley Capital International Asia-Pacific Index advanced 0.7% to 137.27 as of 10:55 p.m. in Tokyo. Markets elsewhere rose, except in Taiwan and the Philippines. Singapore's benchmark was set for a record.
Japan's Nikkei 225 Stock Average added 151 points to 16,679, while the Hang Seng in Hong Kong fell 17 points to 18,906. South Korea's Kospi declined 6 points, while the Straits Times was up 10 points at 2898.
Shares of LG.Philips LCD fell after the company said that it was part of an industry investigation by antitrust officials.
Major Bulk Deals:
Bear Stearns has bought Crew BOS while Macquarie Bank has sold the stock; CLSA Mauritius has purchased Indiabulls from the promoters - Sameer Gehlaut and Rajiv Rattan; Blackstone Asia has picked up Indotech Transformers; Fidelity MF has bought Mcnally Bharat; Bear Stearns has purchased Paramount Communications; Merrill Lynch has picked up SpiceJet.
Insider Trades:
Surana Telecom Ltd: Devendra Surana, Director has purchased from open market 88020 equity shares of Surana Telecom Ltd from 25th November to 7th December, 2006.
Market Volumes:
The turnover on NSE was up by 23.6% to Rs93.44bn. BSE Bank index was the major loser and lost 6.43%. BSE Metal index (down 4%), BSE PSU index (down 3.88%), BSE Consumer Durable index (down 3.18%) and BSE Auto index (down 2.76%) were among the other major losers.
Volume Toppers:
IVRCL Infrastructure, Indiabulls, Tata Steel, SAIL, Polaris, R Com, IDBI, Gujarat Ambuja, Reliance Industries, India Cements, ITC, Parsvnath Developers, HLL, Hindalco, Unitech, Ashok Leyland, Satyam Computer and Lanco Infratech.
Delivery Delight:
Bharat Electronics, Godrej Industries and Thermax.
Brokers Recommendations:
ABB – Overweight from JP Morgan
Reliance Industries – Out performer from ENAM
ICICI Bank - Outperform at Credit Suisse
Long Term Investment:
BHEL
Major News Headlines:
BRFL approves hike in FIIs limit upto 40%
Swiss Re to acquire 26% in TTK Healthcare Services
CCS Infotech wins orders worth Rs6mn from BSNL
CSN raises offer for Corus to 515 pence
Jet Airways to start flights to US, China next year
Tata Motors' ratings raised to BB+ by S&P
Hexaware ties up with Fluensee for RFID technology
Aurobindo Pharma bags MEB Netherlands nod for Simvastatin