Every man serves a useful purpose: A miser, for example, makes a wonderful ancestor.
Weakness, volatility and four straight days of declines may have served some useful purpose for those picking stocks. The bulls would be looking to regain their composure today and triumph over the resurgent bears. And, with good global indicators, they may find the task less arduous. The injection of huge funds by the European Central bank (ECB) and steps taken by other western central banks to reign in the carnage in credit markets has helped prop up sentiment across global markets. The latest measures to restore confidence across global credit markets are in line with the concerted effort launched by leading central banks, led by the Federal Reserve, last week. But, despite the series of steps being taken to resolve the credit market crisis, it remains to be seen how effective they will prove in the long run. That perhaps explains why the western equity markets weren't quite on fire overnight.
Coming to our market, we expect the modest gains in the US and other markets to have a soothing effect on the sentiment. The market will remain choppy amid a fresh round of selling by the FIIs and lack of major local triggers. Small-cap and mid-cap shares will continue to hog the limelight, though there is a danger that the wild intra-day fluctuations may hurt some investors, especially the smaller ones. With very few trading days left in the month, and a few public holidays approaching, investors would do well to take a slightly longer term view. Shares of Jyothy Labs will be listed on the bourses today. The offer price has been fixed at Rs 690 per share. The stock is likely to shoot up on debut following a successful IPO, which was subscribed nearly 46 times.
Deccan Aviation may extend gains as the company's Board will today consider a report from consulting firm Accenture on the proposed merger with Kingfisher Airlines. IFCI will remain in the limelight as it may announce the name of the winning bidder. Reports suggest that the Sterlite-Morgan Stanley combine has emerged as the highest bidder, but negotiations are still on between the two camps on the stake sale process.
Dr. Reddy's could come under some stress amid reports that ICICI Venture and Citigroup Venture Capital are planning to sell their stake in the company's R&D outfit, Perlecan Pharma. Another stock to keep an eye on is Kopran. A financial daily says that the company's promoters and Clearwater Capital are planning to sell their 44% stake to a Mumbai-based unlisted pharma company.
Elder Pharma might attract some attention as it has entered into a licensing agreement with Italy-based research oriented biotech company GNOSIS SpA for marketing and distribution of an anti-arthritic product in India. Public sector fertilizer major RCF may gain amid reports that the company is planning to cash in on high real estate prices in Mumbai by developing a 200,000 sq. ft. commercial complex in Chembur.
HCL Technologies has announced a multi-year, multi service agreement with Merck & Co., Inc., expanding upon the existing relationship that began in 2004.
US stocks rose for the first time in three days on speculation that the European Central Bank's (ECB) injection of US$500bn into the financial system will help the world's largest economy combat the ongoing correction in the housing sector.
All 10 Standard & Poor's 500 Index industries ended higher. Fannie Mae and Freddie Mac, the two largest providers of funds for home loans, had the biggest and fourth-biggest advances in the gauge.
The S&P 500 gained 9 points, or 0.6%, to 1,454.98, bringing its gain for the year to 2.6%. The Dow Jones Industrial Average added 65 points, or 0.5%, to 13,232.47. The Nasdaq Composite Index added 22 points, or 0.8%, to 2,596.03.
Market breadth was positive. About 14 stocks rose for every five that dropped on the New York Stock Exchange.
Goldman Sachs reported higher quarterly sales and earnings that topped estimates, despite the credit crisis. Nonetheless, shares fell, as investors adopted a 'sell the news' approach.
Best Buy reported higher quarterly sales and earnings that came in ahead of estimates, thanks to extra shopping days in November and more store openings. However, the electronics retailer cautioned that December and fourth-quarter sales will be constrained. Shares slipped during the session but rallied near the close.
Adobe Systems reported higher quarterly sales and earnings that beat forecasts and said it plans to buy another 30mn shares next year in addition to the 20mn it already announced.
After the close, Palm reported a quarterly loss versus a profit a year ago and warned that it expects to post a loss of 14 cents to 16 cents in the current quarter, steeper than what analysts are expecting. Shares slumped 11% in after-hours trading.
Wednesday brings earnings from Morgan Stanley, the Mortgage Bankers' Association's latest mortgage purchases news and comments from Richmond Federal Reserve President Jeffrey Lacker.
In the day's economic news, housing construction and building permits dropped in November, according to a government report. The decline was smaller than what Wall Street economists had forecast.
The Federal Reserve proposed a much stricter set of rules for mortgage lenders as part of the central bank's effort to combat shady lending practices.
Treasury prices fell slightly, lowering the yield on the 10-year note to 4.12% from 4.14% late on Monday. In currency trading, the dollar slipped versus the euro and gained against the yen.
US light crude oil for January delivery fell 14 cents to settle at $90.49 a barrel on the New York Mercantile Exchange. COMEX gold for February delivery rose $8.10 to settle at $807.40 an ounce.
Shares in Europe ended virtually flat. The pan-European Dow Jones Stoxx 600 index closed with a loss of 0.1% to 360.42. The UK's FTSE 100 was virtually flat, closing at 6,279.30, while the German DAX 30 rose 0.3% to 7,850.74 and the French CAC-40 closed 0.1% higher at 5,509.37.
The mixed performance came on a day when the ECB allotted US$501bn to banks as part of a global effort to ease the tension in global credit markets.
Brazilian and Mexican stocks closed higher though. In Sao Paulo, the Bovespa climbed 2.1% to 61.096.28 while in Mexico City, the IPC ended 1% higher at 29,254.98. Chile's IPSA, however, shed 0.1% to 2,945.56 and Argentina's Merval index slipped 1.5 points to 2,125.67.
In other emerging markets, the RTS index in Russia was up 0.8% at 2269 while the ISE National-30 index in Turkey added 1.3% to 69,073.
Most Asian markets were trading higher. The Nikkei in Tokyo was nearly flat at 15,214 while the Hang Seng in Hong Kong rose 324 points to 27,057. The Kospi in Seoul gained 21 points to 1861 while the Straits Times in Singapore was up 36 points at 3405 and the Shanghai Composite in China was up 77 points at 4913.
Bulls look to regain control
Market opened with a positive gap in the early trades defying global cues, however couldn’t hold on to their gains and turned choppy. Thereafter, market witnessed wild intra-day swings as the benchmark Sensex which hit an intra-day high of 19,375.07 ended at 19,079 slipping over 290 points from day’s high. While the broader Nifty index slipped 34 points to close at 5,742.
Essar Oil surged by over 10% to Rs281 after the company announced that they would sell $2bn of securities to founders. The scrip has touched an intra-day high of Rs298 and a low of Rs255 and has recorded volumes of over 2,00,00,000 shares on NSE.
Air Deccan surged by over 11% to Rs316. According to reports the Government has refused UB Group’s request to consider Air Deccan and Kingfisher Airlines as one entity unless they are merged. The scrip touched an intra-day high of Rs320 and a low of Rs283 and recorded volumes of over 31,00,000 shares on NSE.
Ceat was down 1% to Rs205. According to reports the company is looking at states like Maharashtra, Gujarat, Tamil Nadu and Andhra Pradesh for setting up a greenfield radial plant. The scrip touched an intra-day high of Rs211 and a low of Rs201 and recorded volumes of over 93,000 shares on NSE.
SRF slipped 1.2% to Rs180. Reports stated that the company was planning to invest Rs2.6bn for setting up a Greenfield packaging film manufacturing plant and a captive win power turbine over the next two years. The scrip touched an intra-day high of Rs187 and a low of Rs176 and recorded volumes of over 12,00,000 shares on NSE.
ONGC gained 1.3% to Rs1150. According to reports the company is likely to face delay in production from KG basin as DGH requires more time for appraisal and conceptual development plan. The scrip touched an intra-day high of Rs1198 and a low of Rs1141 and recorded volumes of over 49,00,000 shares on NSE.
Reliance Communication edged lower by 0.5% to Rs714. According to reports the company would invest Rs8bn to toll out a telecom network - fixed and mobile - in Uganda. The scrip touched an intra-day high of Rs730 and a low of Rs710 and recorded volumes of over 43,00,000 shares on NSE.
Bajaj Auto gained 0.3% to Rs2800 after media reports stated that the Bombay High Court approved Bajaj Auto demerger plans and also stated that record date likely to be 2 months from date of order. The scrip touched an intra-day high of Rs2900 and a low of Rs2727 and recorded volumes of over 2,00,000 shares on NSE.
HDIL marginally slipped 1.2% to Rs953. Reports stated that the company plans to invest Rs10bn in setting up 150 theaters by FY09. The scrip touched an intra-day high of Rs992 and a low of Rs923 and recorded volumes of over 11,00,000 shares on NSE.
What the FIIs are doing
FIIs were net sellers of Rs27.36bn (provisional) in the cash segment on Tuesday while the local institutions pumped in Rs6.59bn. In the F&O segment, foreign funds were net sellers of Rs10.77bn on the same day.
On Monday, FIIs were net sellers of Rs10.99bn in the cash segment. Mutual Funds were net sellers of Rs1.99bn on the same day.
Stocks in News:
PowerGrid Corporation plans foray into entertainment business and is in talks with Zee Network for a JV. (BL)
Pfizer is short of clinical research staff as it is set to expand the number of trials done in India. (BL)
Royal Orchid would make an international foray with plans to develop a 150-room beach resort over a 30-acre property in Dar-es-Salaam, Tanzania. (BL)
JSW Steel looking at buying an ore mine in Latin America. (BL)
The hearing for US$400mn claim filed by Flag Telecom against VSNL would be decided by early 2008. (BL)
BEML expects to start producing medium speed rail coaches from 2008-09. (BL)
BEML expects Rs40bn order book by the end of the current financial year. (BS)
Wockhardt is conducting phase-II clinical trials of an anti-infective molecule WCK771. (BS)
Maruti has offered discounts ranging from Rs18,500 to Rs57,500 across models before January price hike. (BS)
Indian Oil Corporation has set aside US$3bn for overseas acquisition. (BS)
Jindal Power likely to invest over Rs50bn in adding another 1,320MW to its thermal power project in Chhattisgarh. (BS)
Voltas has entered the water treatment business. (BS)
The Bombay High Court has approved the demerger of Bajaj Auto into two separate entities. (BS)
Rallis India plans foray into newer specialty chemicals segment and will look at areas such as construction chemicals. (BS)
GTL Infra to invest $450-600mn over next three years for setting up telecom towers. (ET)
Glenmark to acquire multi generic front end US$15mn company in Europe. (ET)
REL plans to foray in to Africa, to bid for projects in 3 African countries. (ET)
HDFC has sought the approval of NHB to retain stake in HDFC Bank. (ET)
Spice Jet, Air Deccan to hike prices by around Rs500-1,000. (FE)
PSU banks to go on strike from February if proposed plan on consolidation and mergers is not withdrawn. (FE)
Farmers' association wants a removal of ban on wheat and rice futures. (BL)
Regulators agree to partially open the ECB window for NBFCs. (FE)
States to meet Prime Minister to take up new mineral policy. (FE)
The Government to ease norms governing airport construction, to allow new airports to come up within 150km of existing ones. (FE)
Maharashtra Government plans to invest in Co-Operative Sugar factories to reduce burden of loans. (FE).