Waiting is a trap. There will always be reasons to wait. The truth is, there are only two things in life, reasons and results, and reasons simply don't count.
We’ve had enough of reasons for gains and pains over the last couple of months. The day of reckoning has come corporates in general and Infosys and the IT sector in particular. Infosys results are slightly lower than India Infoline’s expectations. The political storm has blown over, for the time being at least. We expect a negative opening on the back of poor numbers from Infosys and expectations of similar earnings reports from other software biggies.
Software stocks fell out of favour with investors after the rupee started accelerating versus the dollar. The inevitable happened, and most IT firms, barring TCS to an extent, announced poor Q1 results and weak outlook. So, not much is expected this quarter either, though Q2 may be somewhat better than Q1. Sequential (QoQ) growth is not expected to be too exciting.
What remains to be seen is whether IT companies announce any improvement in the guidance for the whole year. But, with the rupee rise continuing unabated one may be asking too much from software firms. The hope will be when companies like Infosys would be able to increase their rates in January when most deals are renegotiated.
IT stocks have been laggards this year in contrast to the sharp rally witnessed in the old economy pack and the market as a whole. Having said that there has been some rally in these shares over the past few days. Any further bad news could lead to a fall. Even otherwise, these stocks may be ripe for a correction along with the market.
Coming to the broader market, there is no major change in the sentiment. The dollar deluge continues into the booming stock market. The political storm has blown over, for the time being at least. We expect a positive opening on the back of a firm trend across Asia. The movement later in the day will hinge on Infosys results and the management talk though there is no major threat to the overall momentum.
DLF's Board of Directors will meet today to consider fund raising plans, global acquisitions, participation into the proposed IPO of DLF Offices Trust in Singapore and investment in various development projects in India and abroad.
Among the companies announcing their results are Mastek, Idea Cellular, Abhishek Industries, Container Corp. and Solar Explosives.
The Dow Jones Industrial Average slipped on Wednesday, a day after hitting an all-time high. But, the Nasdaq Composite index managed to buck the trend, ending at its highest level in more than six years.
Alcoa declined the most in a week after sales slipped 3.2%. Monsanto fell after its loss widened on lower-than-expected sales. Boeing posted its steepest drop since August after saying it needs six more months to finish building its new 787 Dreamliners.
The Standard & Poor's 500 Index lost 3 points, or 0.2%, to 1,562.47 after climbing to a record yesterday. The Dow fell 86 points, or 0.6%, to 14,078.69. The Nasdaq added 8 points, or 0.3%, to 2,811.61.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by a narrow margin on volume of 1.16 billion shares. On the Nasdaq, decliners beat advancers 8 to 7 on volume of 1.96 billion shares.
In economic news, a government report showed that August wholesale inventories rose a smaller-than-expected 0.1% after rising 0.2% in July.
Treasury prices fell, raising the yield on the benchmark 10-year note to 4.65% from 4.64% late on Tuesday. COMEX gold for December delivery rose $2.90 to settle at $746 an ounce.
US light crude oil for November delivery rose $1.04 to settle at $81.30 a barrel on the New York Mercantile Exchange.
European shares closed higher as strength in the mining sector offset some weakness from oil and gas companies. The pan-European Dow Jones Stoxx 600 index gained 0.1% at 388.23. The UK's FTSE 100 closed up 0.2% at 6,633.00 and the German DAX 30 rose 0.1% to 7,986.57. The French CAC-40 dipped 0.4% to 5,838.49.
In the emerging markets, the Bovespa in Brazil was down 0.6% at 63,197 while the IPC index in Mexico gained 1% at 32,129. The RTS index in Russia added 0.1% at 2143 and the ISE National-30 index in Turkey fell 0.9% to 73,206.
Asian markets rose this morning, led by raw-materials producers and shipping companies, on speculation that global demand for commodities will be able to weather a slowdown in the US economy.
The Nikkei in Tokyo advanced 35 points to 17,212 while the Hang Seng in Hong Kong climbed 270 points to 28,839. The Kospi in Seoul added 3 points to 2044 and the Straits Times in Singapore gained 60 points at 3874.
The Morgan Stanley Capital International Asia Pacific Index rose 0.1% to 167.98 as of 10:49 a.m. in Tokyo, after a two-day, 1.3% rally that lifted the index to a record. Indices of shipping lines and miners were the biggest contributors to the measure's advance today.
The Philippines was the only market to decline in the region.
Another mile stone was achieved as yet again Indian bourses recorded a new all time high close. After hitting the 18,700 mark key indices faced stiff resistance as selling pressure in the FMCG and select Consumer Durable stocks dragged the benchmark index below the 18,700 mark.
Among the BSE sectoral indices, BSE Capita Good index (up 4.3%), BSE IT index (up 3.2%) and BSE Metal index (up 2.5%). However, BSE FMCG index lost 0.20%.
Finally, BSE 30-share benchmark Sensex ended 378 points higher to close at 18,658. NSE Nifty jumped 114 points to close at 5,441.
SBI surged by over 2% to Rs1923 after reports stated that the company would likely get approval for right issue. The scrip touched an intra-day high of Rs1957 and a low of Rs1860 and recorded volumes of over 9,00,000 shares on NSE.
Tata Motors gained by 1.3% to Rs806 after reports stated that the company is firming up plans to launch new cars in 2007-08 and is likely to unveil a new multi-utility vehicle during 2007 and the company has also announced hike in commercial vehicle prices. The scrip touched an intra-day high of Rs818 and a low of Rs773 and recorded volumes of over 11,00,000 shares on NSE.
Lupin gained by 0.5% to Rs588 after the company announced that it acquired
Sun Pharma edged lower by 0.5% to Rs920. The company announced that they have secured US FDA approval to market Trileptal tablets. The scrip touched an intra-day high of Rs941 and a low of Rs918 and recorded volumes of over 2,00,000 shares on NSE.
Metal stocks were among the major gainers. Jindal Steel rallied by over 10% to Rs7414, Hindalco advanced by 3. 7% to Rs170, SAIL was up by 3% to Rs212 and Sterlite Industries added 2% to Rs833.
Sugar stocks were in momentum after the government announced that they would subsidies loans to the sugar mills and make blending of 5% ethanol mandatory. Renuka Sugar jumped over 11% to Rs814, Bajaj Hindusthan surged by over 8% to Rs170 and Balrampur Chini advanced over 5% to Rs75.
Capital Good stocks were the star performers. The index was up by over 4%. BHEL, surged over 4% to Rs2326, L&T rose over 6.5% to Rs3372, ABB gained 1.3% to Rs1397 and Punj Lloyd has added 6.5% to Rs337.
Stocks in News:
ICICI and SBI cut interest rates on new home and retail loans by 50-100 basis points.
RIL set to receive formal approval from the government for its KG basin gas pricing formula.
IOC is in talks with RIL for exploration of latter’s oil block in East Timor.
M&M group has announced its foray into retail market with a chain of premium lifestyle stores.
Tata Steel plans to build its own jetty at Haldia river front for an investment of Rs1bn.
Bharti Airtel plans to divest a majority stake in its tower arm Bharti Infratel.
Power Grid Corporation plans a capex of Rs165bn for its transmission projects.
Patni Computer Systems acquired IPR from UK-based Carphone.
Tata Power to invest Rs60bn to generate 1,300MW in Jharkhand.
Power Finance to raise Rs100bn from domestic market in second half of the current financial year.
IDFC Private Equity, a wholly owned subsidiary of IDFC is expected to raise $700mn.
Glenmark Pharmaceuticals to raise funds worth $150mn through the issue of shares and other financial instruments in domestic and International markets.
The Hero Group plans to foray into light electric cargo vehicles through its joint venture with UK-based Ultra Motors.
Jai Corp to invest Rs10bn for its Mumbai SEZ and Rewas Port.
The Rupee hit a new nine year high of 39.31 on Wednesday.
The IMF has cut its estimates for global growth to 4.8%, a cut 0.4% of form its previous estimate.
TRAI panel allows GSM, CDMA work within same license.
The Election Commission announces two phase elections by year end in Gujarat and Himachal Pradesh.
The RBI has recommended a ban on incremental or fresh issuance of Participatory Notes (PN) to overseas investors.
GSM cellular subscriber base increased 3.8% to 153mn, with Bharti Airtel adding 2.06mn mobile users and a market share of 31.8%
September Auto sales skid with two-wheelers, heavy commercial vehicles and three wheelers recording a negative growth.
Fund Activity:
FIIs were net buyers of Rs14.62bn (provisional) in the cash segment on Wednesday while the local institutions pulled out Rs6.97bn. In the F&O segment, foreign funds were net buyers at Rs1.2bn.
FIIs were net buyers of Rs19.51bn in the cash segment on Tuesday.
Major Bulk Deals:
Upper Circuit:
RIIL, Zandu Pharma, Tourism Finance, Evinix, GTC Industies, Usher Agro, Victoria Mills, Swan Mills, IID Forgings, Jai Corp.
Lower Circuit:
Malu Paper and Lloyds Metal.