A hard fall means a high bounce... if you're made of the right material.
Even if your stock is of the right material, the current situation may delay the bounce you expect. Keep the faith if you've done your homework well. Fresh set of bad news on the fallout of the turmoil in the US mortgage and credit markets hit the bulls hard in the yesterday. The current standoff between the UPA and the Left threatens the stability of the Government. In short, the market has global and domestic worries to factor in and these are not good times for the bulls.
The near-term direction of the market remains uncertain. FIIs have been selling heavily for the past few weeks and are unlikely to resume their big buying spree anytime soon. At the same time local funds, which are flush with cash, are snapping up battered stocks. Short-term traders will continue to be the worst hit if the current situation doesn't change much while long-term players should grab the opportunity with both hands.
We see a mixed opening today given the lack of clear signals from the global markets and uncertainty over both the global credit crunch and the fate of the Congress-led coalition. A bounce after Tuesday's crash is on the cards, but don't think its the end of worries. Use the gains to lighten positions and hold on to stocks which will eventually bounce higher at a later date.
We visited Kesoram Industries (KIL) and maintain a buy recommendation with a target price of Rs562. A visit note will be mailed to you later in the day.
Jet Airways could gain amid reports that it is all set to fly to three new international destinations. North India based real estate majors like DLF, Unitech and Omaxe could advance as a financial daily reports that the Government is working on a plan to free up 30,000 acres of disputed land in the NCR region. Siemens might attract some attention as its German parent plans to double the size of Indian operations in the next three years. Birla Kennametal will consider a stock split today. Himatsingka Seide's Board will meet on August 22, to consider preferential issue of warrants to promoters.
The Nasdaq and S&P 500 index rose on Tuesday, even as Federal Reserve Chairman Ben Bernanke, Senator Christopher Dodd and Treasury Secretary Henry Paulson met to discuss the problems in the financial markets. However, the Dow Jones Industrial Average declined marginally.
The S&P 500 closed nearly flat, up 1.57 points, or 0.1%, to 1,447.12. The Dow Jones slipped 30.49 points, or 0.2%, to 13,090.86. The Nasdaq Composite Index climbed 12.71 points, or 0.5%, to 2,521.3. About six stocks rose for every five that fell on the New York Stock Exchange.
US stocks had slipped in the morning amid ongoing worries about problems in the credit and mortgage markets, but managed to stabilise in the afternoon, with the Nasdaq managing an small gain. At the same time, Treasury prices rallied for a second session in a classic flight-to-safety move.
Senate Banking Committee leader Dodd said that Fed chief Bernanke had pledged to use all the tools at his disposal to keep markets working, Reuters reported. The Fed has been infusing billions into the banking system in recent days as a means of trying to keep the liquidity moving. On Monday, it added $3.75bn.
Last week, the Fed cut its largely symbolic discount rate - which affects banks and other lenders - by 50 basis points to 5.75%. The move raised hopes that it may cut the more widely-watched fed funds rate - which affects consumer loans - at the Sept. 18 policy meeting.
But, Fed President Jeffrey Lacker said that recent market problems alone are not sufficient to justify a rate cut. Lacker is not a voting member of the policy-setting committee this year.
Troubled lender Countrywide Financial found some relief on reports that billionaire investor Warren Buffett's Berkshire Hathaway may be seeking to buy parts of the company. Shares jumped 10%.
Treasury prices gained, after turning flat at midday. The advance lowered the benchmark 10-year note yield to 4.59% down from 4.63% late on Monday. In currency trading, the dollar slipped versus the yen and inched higher versus the euro. COMEX gold for December delivery fell 30 cents to $666.20 an ounce.
US light crude oil for September delivery fell $1.65 to settle at $69.47 a barrel on the New York Mercantile Exchange.
European shares closed slightly higher in a choppy session. The pan-European Dow Jones Stoxx 600 index, which wobbled between gains and losses through the session, closed a fraction of a percentage point higher at 362.39. The UK's FTSE 100 rose 0.1% to 6,086.10, the German DAX 30 gained 0.2% at 7,424.75 and the French CAC-40 added 0.4% to 5,418.78.
In emerging markets, the Bovespa in Brazil gained 1.2% at 49,815 while the IPC index in Mexico rose 0.4% to 28,568. But, the RTS index in Russia tumbled 1.7% and the ISE National 30 index in Turkey was down 2.1% at 56,443.
Asian markets are trading mixed. While the Hang Seng in Hong Kong up sharply and the Nikkei in Tokyo losing some ground.
Sensex tumbled over 400 points as uncertain political situations dampened the sentiments of the traders. All round selling in scrip’s across the sectors dragged the BSE Sensex to close below the 14k mark for the first time since 15th May. RIL, ICICI Bank and IT bellwether Infosys led the down fall. However, volumes rose as turnover in cash segment rose 20.2% and in F&O segment rose 13.7%.
All the key sectoral indices ended in deep red led by Bank and Realty index as both lost over 4% each. Even the Mid-Cap and the Small Cap indices fell over 3.5% each.
Among the Mid-Cap losers Sun TV, Punj Lloyd and Divi’s Lab were the major losers each losing over 9%. However, Patni, JP Hydro were the star performers of the day as they held out in a falling market. Finally, the BSE 30-share Sensex closed at 13,398 dropping 438. NSE Nifty lost 134 points to close at 4074.
Reliance Industries lost nearly 3% to Rs1746. According to reports,
BHEL slipped 1.2%to Rs1590. The company announced that they have secured order worth Rs65bn and would set up 2 power projects of 1,000MW each. The scrip touched an intra-day high of Rs1651 and a low of Rs1570 and recorded volumes of over 14,00,000 shares on NSE.
Central Bank of
Dolphine Offshore dropped by over 4% to Rs217. The company declared that they have secured $8.5mn contract from Punj Lloyd. The scrip touched an intra-day high of Rs237 and a low of Rs216 and recorded volumes of over 9,000 shares on NSE.
Reliance Communication declined over 4.5% to Rs484. The company denied report of talks with Maxis for stake. The scrip touched an intra-day high of Rs513 and a low of Rs472 and has recorded volumes of over 52,00,000 shares on NSE.
Metal stocks were badly beaten up Tata Steel dropped by over 4% to Rs546, Nalco was down by over 4.2% to Rs248, Hindalco declined by 4% to Rs136 and Sterlite Industries declined 3.5% to Rs543
Auto stocks also were ion reverse gear led by fall in the index heavyweight M&M slipped by over 4.5% to Rs614, Bajaj Auto declined by 3.5% to Rs2185, Tata Motors was down by 2.5% to Rs634, Maruti dropped 2% to Rs767.
Capital Good stocks also were trading lower on back of selling pressure. Punj Lloyd dropped by 8.6% to Rs239; L&T was down by 1.8% to Rs2306 and Gammon
IT stocks continued to be under pressure as Wipro declined by 4.7% to Rs446, Infosys slipped by 3.7% to Rs1761 and Satyam Computer lost 3.8% to Rs416. HCL Tech, Mphasis BFL and Polaris were the major losers among the Mid-Cap stocks.
Banking stocks also ended lower on back of heavy selling pressure. ICICI Bank slipped by 5% to Rs829, SBI was down by 5.5% to Rs1463. Others like Bank of India, Canara Bank and OBC are the major gainers among the Mid-Cap stocks.
Fund Activity:
FIIs were net sellers of Rs1.38bn (provisional) in the cash segment on Tuesday and the local institutions pumped in Rs8.27bn. In the F&O segment, FIIs were net sellers at Rs3.92bn. On Friday, foreign funds pulled out Rs32.43bn from the cash segment and on Monday they were net buyers at Rs928mn.
Major Bulk Deals:
Religare Securities has picked up Alfa Transformers; Citigroup Global and Fidelity have bought Central Bank; HSBC Financial has purchased Centurion Bank of Punjab; Merrill Lynch has bought Chambal Fertilizers; Merrill Lynch has picked up Prakash Industries; Prabhudas Lilladhar and Lotus Global have have purchased SEL Manufacturing while Credit Suisse (Singapore) has sold the stock.
Lower Circuit:
Godrej Industries, Atlanta, LML, Zuari Industries, Radha Madhav, Aarti Industries, Goldstone Tech, Jai Corp, Ganesh Forgings, Prism Cement, GTC Industries, ETC Network, Hind Oil Explorations, XL Tele, IOL Broadband, Era Construction, Taneja Aerospace, Swan Mills, Nirlon and Shaw Wallace.
Upper Circuit:
Sujana Tower and Carol Info.
Delivery Delight (Rising Price & Rising Delivery):
Dabur, EKC, Kirloskar Electric, Patni and Rolta.
Abnormal Delivery:
Grasim, Bank of India, ABB, Sesa Goa and MTNL.
Major News & Announcements:
Infosys to set up unit in Monterrey, Mexico
DLF secures Durgapur township project
Jindal Saw to sell minority stake held in US cos
JSW Steel to set up Benificiation plant for Rs8.5bn
RCom denies report of talks with Maxis for a stake
Dolphin Offshore secures $8.5mn contract from Punj Lloyd
UB may buy stake from existing investors in Deccan Aviation - says Vijay Mallya
Gayatri Projects Board to consider raising FII limit to 49% on Aug 28
Exide Industries Board to consider rights issue on Aug 28
BHEL gets order worth Rs65bn from DVC
Public sector oil company employees call off strike after meeting Deora.