You can't drive straight on a twisting lane.
After swinging to positive beats for two days, the bulls have to adjust to the changing global tempo and may well end up adjusting to the twist and shout. While speed breakers just slow down the pace, the sharp twists catch many market drivers unawares.
The key indices have been pretty volatile in November. This yo-yo pattern has made life difficult for all category of investors, particularly the day traders. Predicting the movement of the market has become tougher The bulls and the bears will take their turns on the dance floor, each hoping it doesn’t get Dangerous.
What's worse for the bulls is that FIIs appear to have taken a backseat. Though local funds and other institutions like insurance companies may be acting as a counter force, their clout is relatively less effective for now. On the bright side our market has managed to hold its own despite negative news coming from global markets, especially the US, and the reversal of FII inflows. We haven't capitulated under the weight of bad news on the US economy and there is no panic like situation.
Today, we expect a lower opening, in line with the trend across global markets. Intra-day gyrations may increase ahead of Thursday's F&O expiry. The broader trend is still not clear. Stick to your strong counters and lighten positions in trading counters, unless you know something, which many others don’t.
Reports say SEBI has denied permission to Mundra Port to list in the F&O segment. Expect the stock to at least double on listing today. The offer price was fixed at Rs440 per share.
US stocks fell sharply after a volatile session as worries over the continuing pain in the financial sector offset upbeat signs about holiday shopping. Questions about government help for ailing mortgage-lender Countrywide Financial were cited for accelerating losses in late trading and leading bonds to rally.
Citigroup, Bank of America and JPMorgan Chase retreated after Goldman Sachs said HSBC faces $12bn in additional writedowns. Fannie Mae and Freddie Mac, the largest US mortgage-finance companies, tumbled after UBS said higher credit costs will cause earnings growth to slow. Target and Macy's led retailers lower on concern that consumers will spend less on holiday gifts.
The Standard & Poor's 500 Index dropped 33.48, or 2.3%, to 1,407.22, leaving the benchmark down 0.8% in 2007. The Dow Jones Industrial Average tumbled 237.44, or 1.8%, to 12,743.44, paring its gain for the year to 2.3%. The Nasdaq Composite Index lost 55.61, or 2.1%, to 2,540.99 and is up 5.2% in 2007.
Market breadth was negative. Almost six stocks fell for every one that rose on the New York Stock Exchange.
As of Monday's close, the Dow is down 10% from its October high and the S&P 500 is down 10.1%. The Nasdaq is off 11.1%.
The Fed's last scheduled policy meeting of the year is on Dec. 11 and many market observers feel the American central bankers will choose to cut the fed funds rate again, to help the world's biggest economy combat an impending recession. The fed funds rate currently stands at 4.5%. Fed watchers are split about whether the bank will cut the rate by a quarter or half percentage point, or possibly not at all.
Treasury prices jumped, lowering the yield on the benchmark 10-year note to 3.83% - the lowest level since June 2005 - from 4% late on Friday. In currency trading, the dollar dipped versus the euro, but held above the all-time low hit on Friday. The greenback fell versus the yen.
US light crude oil for January delivery fell 48 cents to settle at $97.70 on the New York Mercantile Exchange, erasing earlier gains. COMEX gold for December delivery settled at $826.50 an ounce, down from Friday's close.
European shares closed lower as well after a see-saw session. The pan-European Dow Jones Stoxx 600 index closed down 0.6% at 355.78. The UK's FTSE 100 ended 1.3% lower at 6,180.50, while the German DAX 30 fell 0.6% to 7,567.36 and the French CAC-40 lost 1.1% at 5,458.39.
Latin American stocks declined sharply. The main Sao Paulo stock index in Brazil ended 3.1% lower at 59,069. The benchmark last closed below the 60,000 level on Sept. 26. Mexico's IPC index gave up early gains to close with a 2.9% loss, ending at 27,883.01. Argentina's Merval index fell 1% to 2,190.82, and Chile's IPSA slid 1.7% to 3,060.63.
In other emerging markets, the RTS index in Russia was up 1.2% at 2177 and the ISE National-30 in Turkey gained 0.95% at 66,842.
Asian stock benchmarks have staged a remarkable comeback after a weak opening. The Nikkei is now up 153 points at 15,288 while the Hang Seng is down only 94 points at 27,532. The Kospi in Seoul was up 4 points at 1859.
The MSCI Asia Pacific Index declined 1.3% to 156.49 as of 9:36 a.m. in Tokyo, halting a two-day, 3% advance. Financial shares were the biggest drag among the benchmark's 10 industry groups. Toyota led a drop among regional exporters after the yen strengthened to the highest since June 2005 against the dollar.
Positive bias to continue
After opening with a positive gap, key indices managed to hold on to their gains throughout the session as bulls were all over the bourses. Positive cues form the regional markets and all round buying kept the momentum going. Metal stocks were in demand with others like Realty, Power and IT stocks following suit.
Among the 30-scrips of Sensex 28 stocks ended with positive gains while only 2 stocks ended in red. RIL, Bharti Airtel, HDFC Bank and L&T were among the major gainers and Banking heavyweight SBI and Tata Motor were among the major laggards.
Finally, 30-share Sensex surged 394 points to close at 19,247 and Nifty closed 123 points lower at 5,731.
Sterlite Industries gained 1.7% to Rs896. According to reports Supreme Court denied approval to the Rs40bn alumina refinery project of Sterlite Industries and Vedanta Alumina in Orissa. The scrip touched an intra-day high of Rs919 and a low of Rs881 and recorded volumes of over 21,00,000 shares on NSE.
BEML advanced 9% to Rs1775 after reports stated that the company would buy government owned mining equipment plant for Rs1bn. The scrip touched an intra-day high of Rs1849 and a low of Rs1650 and recorded volumes of over 85,000 shares on NSE.
Zydus Cadilla advanced 1.2% to Rs292 after reports stated that the company has planned to launch 100 generic drugs that are expected to go off patent in the next five years in US and
Balaji Telefilms rallied by over 12% to Rs376 after reports stated that they may offload 15% stake in its wholly owned motion pictures arm. The scrip touched an intra-day high of Rs388 and a low of Rs336 and recorded volumes of over 85,000 shares on NSE.
Vivimed Labs advanced 2.6% to Rs119 after the Board of Directors of the company declared that they would consider plan to sell shares/warrants. The scrip touched an intra-day high of Rs124 and a low of Rs118 and recorded volumes of over 40,000 shares on NSE.
Reliance Industries
Hexaware Technologies declined by over 17% to Rs73 after the company announced that Board of Directors appointed a special committee to conduct an internal investigation and make recommendations for changes to its foreign exchange management practices. This action is due to certain actively concealed and potentially fraudulent foreign exchange option transactions conducted by one official. The scrip touched an intra-day high of Rs90 and a low of Rs72 and recorded volumes of over 33,00,000 shares on NSE.
Power Grid gained 1% to Rs152 after the company announced that it signed Joint venture pact with REL. Power Grid to hold 26% while, REL to hold 74% in the venture. The scrip touched an intra-day high of Rs156 and a low of Rs151 and recorded volumes of over 1,00,00,000 shares on NSE.
REL advanced 4% to Rs1790. The company announced that they have sold 5,85,423 shares to overseas investors at Rs1,006.92 per share. The scrip touched an intra-day high of Rs1814 and a low of Rs1751 and recorded volumes of over 32,00,000 shares on NSE.
What the FIIs are doing
FIIs were net buyers of just Rs504mn (provisional) in the cash segment on Monday while the local institutions pumped in Rs2.74bn.
In the F&O segment, foreign funds were net buyers of Rs20.44bn yesterday.
On Friday, FIIs were net sellers to the tune of Rs1.73bn.
Stocks in News:
BSNL has applied for a nation-wide full-fledged CDMA license.
Chevron is considering options to raise its 5% stake in Reliance Petroleum.
The JSW group is planning to invest Rs400bn over the next three years in various steel and power projects.
NTPC Board has cleared investment proposals of Rs72.5bn.
Reliance Power is in talks with banks and financial institutions to raise Rs140bn debt for its Sasan project. It plans to invest US$1bn in overseas coal blocks.
Multiplex chains Adlabs, Inox and Shringar Cinemas are believed to be in talks with DLF’s multiplex venture DT Cinemas for equity partnership.
Ashok Leyland will launch hybrid CVs next year.
Tata Chemicals is planning a major foray into the wholesale retail business of fruits and vegetables through its JV with Ireland’s Total Produce.
Tata Steel may pick up a 35% stake in its newly formed Mozambique JV for Australian $100mn, subject to regulatory approvals.
JSW Energy plans to raise Rs30-50bn via an IPO by April 2008. The company plans to invest Rs120bn in the energy sector in the next three years.
IFCI Board will have to consider Rs9.2bn debt given by the Union Government while finalizing how much of debt it owes to banks will be converted to equity.
Parsvnath Developers is planning a consortium with Turkey based TAV Airports Holding and IL&FS to bid for Greater Noida Airport project.
Parsvnath Developers is in talks with international retail chains for joint venture.
Elder Pharmaceuticals plans to enter into CIS and European markets by launching eight drugs in women healthcare, wound care and nutraceutical segments.
Nitco Tiles is investing Rs1.5bn to expand its production capacity.
Ceat is to demerge its tyre and investment business into separate companies. Ceat will finalize plans to set up a new CV radial tyre plant by December-January.
Jharkhand Government has agreed to give iron ore mines of Ankua region for expansion of Tata Steel’s existing plant in Jamshedpur.
Union Bank expects its net interest margin to rise to 3% in the current fiscal from 2.56% in Q2 FY08.
Gas sales contracts signed by JV partners of Panna-Mukta and Tapti fields have come under petroleum ministry’s scanner for violating PSC norms.
Orchid Group of hotels is planning to invest over Rs10bn in next 18 months to set up seven 5-star hotels.
Siemens is in talks with Reliance Industries and L&T for a possible tie-up for the proposed Navi Mumbai International Airport.
Voltamp Transformers is considering setting up second manufacturing facility in Gujarat.
Punjab National Bank targets to recover Rs15-20bn NPAs by FY08.
Syndicate Bank plans to double its business in the Northern region to Rs45bn by FY08.
Dena Bank plans to cut bad loans and to bring down net non-performing assets to net advances ratio to ~1% by FY08 from ~2% in FY07.
Indiabulls plans to set up 30 hypermarkets across smaller cities in the next 15-18 months with an outlay of Rs15bn.
Malaysian car maker Proton is planning to enter Indian markets through small cars and sedans.
Supreme Court has sought environmental safeguards for Vedanta’s Alumina Refinery Project in Orissa.
Suzuki is planning to launch premium bikes between 125cc-175cc in India by April.
The Government is planning to introduce advance pricing arrangement as a part of changes in the country’s transfer pricing regulations.
Turkmenistan has offered preferential treatment to Indian companies for allocation of oil blocks.
The Union Cabinet has approved for accession to the Cape Town Covention/Protocol by India, which will help aviation companies to get cheaper credit and broaden their aircraft financing options.
Bulk Deals
Citigroup has bought Arshiya International; Prabhudas Liladhar has picked up Ashco Industries; HSBC Global has sold JK Cement; Lotus Global has sold Kashyap Tech; Merrill Lynch has purchased Marg Construction; Goldman Sachs has sold Sujana Tower; CLSA has picked up Vakrangee Software while Merrill Lynch has sold the stock.