To impress others we must be earnest; to amuse them, it is only necessary to be kindly and fanciful.
The result season is well underway but to some extent, it is Infosys' results which is awaited with earnest. The importance of Infosys earnings though seems to have ebbed over the past few quarters given the slightly dim prospects for the industry. IT firms will have to make changes in their business models and that could result in more spending and relatively less earning for some time. Telecom shares will be in action today with the DoT issuing LoIs and spectrum to new and existing players. Idea, RCOM, Bharti Airtel, Tata Tele (M) and Spice Communications have gained in some way or the other. We expect a positive opening. The direction after that will hinge on Infosys.
The rupee's unprecedented rise against the dollar coupled with factors such as rising wage inflation, high attrition rates and fears of a recession in the US have hit software firms. There is also uncertainty over whether the current tax sops to the industry will continue. In short, the IT industry has lost some of its charm among the investor community. Market expectations from Infosys and other software firms have tapered off vis-a-vis historical trends. As a result, there is a case for a positive surprise from software firms this time round. Some of these shares have been seeing heightened activity of late. If Infosys and others manage to surpass market expectations, there could be a rally in IT shares, and consequently in the market as well. However, the euphoria may not last long and IT stocks may once again get relegated to the background.
Broadly, the market has turned extremely choppy in the past few sessions with small-cap and mid-cap shares bearing the brunt of the sell-off. Traded volume and turnover have been down in the last two days. Results and Reliance Power IPO may have a lot to do with it. Market breadth has turned negative. Trend in global markets is also not decisive, given the concerns over the fate of the US economy and its implications for the world markets. Wall Street has bounced back in the last two days, but one has to see whether it can sustain this rally. The month-end Fed meet will be critical. For the Indian market, the RBI's quarterly policy review will also be of significance. Although chances of a domestic rate cut are slim, there may be an indication from the RBI that it is ready to loosen up a bit. That will be good news for the market, especially for banks.
US stocks advanced on Thursday after Federal Reserve Chairman Ben. Bernanke hinted that the central bank could cut rates more aggressively to keep the engine of global economic growth from derailing.
The leading stock benchmarks also rallied amid market speculation that Bank of America Corp. is in talks to acquire Countrywide Financial Corp., the largest US mortgage company. Countrywide shares climbed the most since at least 1982.
JPMorgan Chase, Wells Fargo and Citigroup led financial firms to the biggest gain in a month as traders increased bets that the Fed will reduce its benchmark lending rate by a half point when it meets on Jan. 30.
The Standard & Poor's 500 Index added 11 points, or 0.8%, to 1,420.33 after falling earlier by 1%. The Dow Jones Industrial Average gained 118 points, or 0.9%, to 12,853.09. The Nasdaq Composite Index rose 14 points, or 0.6%, to 2,488.52.
Two stocks rose for every one that fell on the New York Stock Exchange.
Stocks seesawed on both sides of unchanged throughout the session, before spiking in the last hour on reports of a possible deal brewing between the beleaguered Countrywide Financial and Bank of America.
Delta Air Lines shares surged on merger talk as well.
Stocks had fallen earlier after Capital One Financial's profit warning stoked fresh worries about the credit crisis and weak retail sales raised alarm about consumer spending.
Afternoon comments from Bernanke also helped investor sentiment, although stocks were volatile after his speech. The Fed chief acknowledged that the economic outlook in 2008 has weakened, but reiterated that he doesn't think the economy will fall into a recession this year.
"In light of the recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary," Bernanke said. "We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks."
American Express is likely to be active on Friday. After the close of trade, the company said it expects lower profit through 2008 because of slower spending and missed credit card payments. Shares slumped 7% in extended-hours trading.
Treasury prices slumped, as investors pulled money out of government debt and put it into stocks. The selloff lifted the yield on the 10-year note to 3.88 percent, from 3.82% late on Wednesday. In currency trading, the dollar fell versus the yen and euro.
US light crude oil for February delivery fell $1.96 to settle at $93.71 a barrel on the New York Mercantile Exchange. COMEX gold for February delivery rose $11.90 to settle at $893.60 an ounce.
European shares closed at a 16-month low as the Bank of England decided not to cut rates and the European Central Bank suggested it was willing to tighten. The pan-European Dow Jones Stoxx 600 index fell 1% to 345.38. The UK's FTSE 100 fell 0.8% to 6,222.70, while the French CAC-40 lost 0.6% at 5,400.43 and the German DAX 30 dropped 0.9% to 7,713.09.
In the emerging markets, the Bovespa in Brazil advanced 1.3% to 63,515 while the IPC index in Mexico was up 2.35% at 29,069. The RTS index in Russia gained 0.45% at 2306 and the ISE National-30 index in Turkey was down 0.8% at 65,678.
Asian markets were trading mixed this morning. While the Nikkei in Tokyo fell by 115 points to 14,772 and the Hang Seng in Hong Kong climbed 245 points to 27,476. The Kospi in Seoul while the Shanghai Composite in China added 20 points to 5477 and the Taiex in Taiwan advanced 75 points to 8132.
All eyes on Infy!
After trading in positive terrain and touching another all time highs in the early trades, markets erased all its intra-day gains as bulls were unable to sustain their gains. Markets took a nose dive in late trades as Sensex fell over 500 points and Nifty index dropped over 200 points from its days high. The fall was mainly triggered by a sell-off in the Mid-Cap and the Small-Cap stocks’; selling was also witnessed in the Metal, FMCG and the Realty stocks. Even the sugar stocks which were in the limelight in the previous trading session witnessed some profit booking.
Finally, 30-share Sensex closed at 20,582 slipping 287 points and Nifty ended at 6,156 down 115 points.
Surana Industries was down 6.3% to Rs310. The company acquired 49% in Indonesian coalmine according to reports. The scrip touched an intra-day high of Rs363 and a low of Rs305 and recorded volumes of over 78,000 shares on NSE.
L&T lost 3% to Rs4211. Reports stated that the company announced that it secured order worth Rs20bn. The scrip touched an intra-day high of Rs4389 and a low of Rs4185 and recorded volumes of over 5,00,000 shares on NSE.
Hindustan Zinc was down 2% to Rs781. The company announced that the company raised zinc prices by 3.2% per ton. The scrip touched an intra-day high of Rs809 and a low of Rs767 and recorded volumes of over 1,00,000 shares on NSE.
IOC lost 5% to Rs683. The company announced that it would spend $509mn on distribution next fiscal and also plans 1,000 low-cost outlets in year starting April. The scrip touched an intra-day high of Rs728 and a low of Rs650 and recorded volumes of over 7,00,000 shares on NSE.
Bajaj Auto slipped 1.2% to Rs2512. Reports stated that the company is looking at acquiring a car company to break into the higher segments of the market and plans an electric car launch for Europe with Austrian mobike maker. The scrip touched an intra-day high of Rs2619 and a low of Rs2500 and recorded volumes of over 92,000 shares on NSE.
Jindal Steel declined 3.8% to Rs15,117. According to media reports the company would file for Jindal Power IPO in 2-3 months. The scrip touched an intra-day high of Rs16,295 and a low of Rs14,900 and recorded volumes of over 14,000 shares on NSE.
Everonn Systems dropped 4% to Rs1015. The board of directors of the company would consider raising funds on January 18, 2008. The scrip touched an intra-day high of Rs1112 and a low of Rs1008 and recorded volumes of over 1,00,000 shares on NSE.
Unitech edged higher by 0.3% to Rs517 after the company said that its office trust plans offer its units for subscription. The scrip touched an intra-day high of Rs534 and a low of Rs512 and recorded volumes of over 37,00,000 shares on NSE.
Bharti Shipyard dipped 1.5% to Rs795. The company announced that it would set up green filed shipyard at Usgaon near Dabhol project. The scrip touched an intra-day high of Rs835 and a low of Rs780 and recorded volumes of over 73,000 shares on NSE.
What the FIIs are doing
FIIs were net sellers of Rs2.5bn (provisional) in the cash segment on Thursday while the local institutions were net buyers of just Rs3.89bn. In the F&O segment, foreign funds were net buyers of Rs6.64bn.
On Wednesday, FIIs were net buyers of Rs2.75bn in the cash segment. Mutual Funds were net sellers of Rs2.01bn on the same day.
News Snippets:
Tata Motors launches its small car ‘Nano’ priced at Rs1 lac ex-showroom. (ET)
L&T has bagged Rs35.6bn order to construct residential and commercial buildings across the country. (ET)
Wipro Infotech wins a nine-year business transformation contract worth Rs24bn from Aircel. (BL)
Unitech gets regulatory approval to raise US$700mn through a public offer in the Singapore Stock Exchange. (ET)
SBI and ICICI Bank apply to the monetary authority of Singapore for a qualified full banking (QFB) license. (BS)
SBI Life Insurance plans to hit capital market by March 2009. (ET)
RIL reveals an extensive rig hiring plan to exploit the potential of its exploratory blocks. (FE)
GAIL signs a pact with Coal India to set-up a coal gasification project for production of a gas used to make fertilizers. (BL)
Wockhardt to mull de-merging its new drug R&D unit. (BS)
BPCL plans to raise Rs30bn through an IPO of Bharat Oman Refineries in next 3-4 months. (DNA)
L&T gets Tamil Nadu Government nod to set-up an integrated shipyard. (BL)
Amtek Auto is closing to acquiring companies in US and Europe. (DNA)
Bajaj Auto to invest Rs3bn to raise its holdings in KTM Power Sports to 25% from 14.5% currently. (DNA)
Bharati Shipyard plans to set-up a greenfield shipyard at Usgaon near the Dabhol port. (DNA)
Strides Arcolab has stopped operations of its loss-making US plant where it manufactured soft gelatin capsules. (ET)
Gati ties up with Air India to lease five cargo planes. (FE)
IRB Infrastructure Developers wins the contract to develop the fifth phase of NHDP at an estimated cost of Rs125bn. (BS)
Rolta plans to acquire a US firm offering business software services. (FE)
Granules India expects to get approval from European regulatory authorities for its new tablet facility. (BL)
Sterlite Technologies, a company promoted by Vedanta Group, may soon foray in the niche market of semiconductor manufacturing. (ET)
The DoT has issued LoIs to Unitech, Datacom, S Tel, Swan Connect Communications, Shipping Stop Dot Com, Idea, Tata Tele and Shyam Telelink. (ET)
DoT has cleared applications from Idea, Vodafone Essar and Aircel for granting 2G spectrum. (ET)
CBDT introduces new schemes to extend 100% deduction on profits derived by the activity of developing or operating an industrial park. (BL)
Indian Railways loadings register an 8% yoy growth for April-December 2007. (BL)