When the moon is not full, the stars shine more brightly.
The market may well rebound after Tuesday's pounding. At such times, beaten down stocks will suddenly have the wow factor, especially when the indices are in the green. Resist the temptation. We reiterate our warning that the pullback may not last long. Remain extremely cautious in this market whether one is trading or investing.
Reports state a few operators and even some promoters may be in trouble due to margin calls. As any rebound sets in you will hear news trickling in from all over regarding political adjustments, corporate developments and planetary movements. The sun has been refusing to shine on the bulls who now hope the new moon gives them a new lease of life.
While the Indian bulls suffered a neck squeeze on Tuesday, the Dow for the third consecutive session flirted with what is considered bear market territory. Thankfully, it managed to close in the green.
On the whole, global markets are mixed. US stocks logged modest gains, while markets in Europe took a beating. Key Asian markets are in the red this morning. Crude remains above $142 per dollar.
Barring the occasional short-covering led bump-ups, the bulls may not get anything to cheer about in the near term. The political uncertainty and worsening macro-economic outlook will continue to cloud the sentiment. Quarterly results are the next big event. But, even that may not lead to any significant rebound.
FIIs were net buyers of Rs2.09bn (provisional) in the cash segment on Tuesday while the local institutions poured in Rs1.62bn. In the F&O segment, foreign funds were net buyers of Rs683.2mn.
On Monday, FIIs were net sellers of Rs2.27bn in the cash segment. With this, they have pulled out $6.36bn from the Indian market this year.
Mumbai-based real estate firm Akruti City declare its results today.
Asian stocks are mixed this morning. While the Nikkei in Tokyo, the Hang Seng in Hong Kong and the Kospi in Seoul are all down, markets in China, Taiwan and Singapore are marginally up.
The MSCI Asia Pacific Index lost 0.5% to 135.27 at 10:35 a.m. in Tokyo, adding to a 5.9% drop in the past nine days. More than two stocks fell for each that gained, while seven of the index's 10 industry groups declined. The measure is trading at its lowest since March 20.
Japan's Nikkei 225 Stock Average sank 1.3% to 13,228.93. The index is set for a 10th straight day of declines, its longest losing streak in 43 years. South Korea's Kospi index lost 1.7%.
US stocks managed to notch up moderate gains after a weak opening. General Motors' June sales were a tad better than expected, while oil prices came off earlier highs. Financial shares also regained some ground, with Lehman Brothers bouncing back after tumbling on Monday.
All the main indices were volatile throughout the session, turning positive in the late morning after a report showed a surprise pick up in manufacturing activity. The market then slid again in the early afternoon as the banking sector slumped.
The Dow and the Nasdaq both briefly fell to levels that meet the technical definition of a bear market before bouncing back a little. A bear market is defined as a drop of at least 20% off the recent highs.
The Dow climbed 32.25 points, or 0.3%, to 11,382.26, erasing earlier declines that sent the 30-stock gauge into a bear market for a third day. The S &P 500 Index added 4.91 points, or 0.4%, to 1,284.91. The Nasdaq Composite advanced 11.99 points, or 0.5%, to 2,304.97.
GM reported an 18% drop in its US sales in June versus a year ago. The figure was well short of the 25% decline analysts had been looking for. Ford reported 28% fall in its June sales.
Market breadth was negative. On the New York Stock Exchange, losers topped winners nine to seven on volume of 1.64bn shares. On the Nasdaq, decliners beat advancers four to three on volume of 2.67bn shares.
US light crude for August delivery rose 97 cents to settle at $140.97 a barrel on the New York Mercantile Exchange, an all-time closing high. The front-month contract moved close to the all-time trading record of $143.67 hit Monday before trimming gains.
The national average price for a gallon of regular unleaded gas rose to a record $4.087 from a record $4.086 the previous day, according to AAA.
In currency trading, the dollar fell versus the euro and the yen. In the bond market, Treasury prices fell, raising the yield on the benchmark 10-year note to 4% from 3.97% late on Monday. COMEX gold for August delivery rose $16.20 to settle at $944.50 an ounce.
Lehman Brothers shares rose as investors considered rumours that the investment bank may need to put itself up for sale and that too at a discount. Such concerns sent the stock plunging Monday, but Lehman Brothers bounced back after Morgan Stanley started coverage of the stock with an "outperform" rating.
American Express gained after UBS upgraded it to "neutral" from "sell".
CIT Group rallied on news it is selling its home lending business the mobile home mortgage business. UBS shares slipped after the company said it will reshuffle its board following big subprime mortgage losses.
The Institute for Supply Management said its manufacturing index rose to 50.2 in June beating forecasts for a slide to 48.6, according to a consensus of economists. A reading above 50 implies expansion, while one below implies a contraction in the sector.
However, the report also showed a big jump in the prices manufacturers pay for raw materials, reflecting the run up in oil prices and other inflationary pressures
Thursday's two key events are the latest interest rate decision from the European Central Bank (ECB) and the June employment report. Current expectations are for the ECB to raise rates and for employers to have cut 60,000 jobs from their payrolls. A positive surprise could lift the sagging mood, though.
Wednesday brings the June reading private sector employment report from payroll services firm ADP. The May factory orders report and the weekly crude oil inventories report will also be out today.
European shares started the new month and quarter on a weak note. The pan-European Dow Jones Stoxx 600 index dropped 2.2% to 283.01 in its biggest one-day fall since March 17. The index is now back at levels last seen at the end of 2005.
The UK's FTSE 100 closed down 2.6% at 5,479.90, while Germany's DAX 30 slid 1.6% to 6,315.94 and the French CAC-40 dropped 2.1% to 4,341.21.
In the emerging markets, the Bovespa in Brazil slid 2.5% to 63,396 while the IPC index in Mexico was down 0.6% at 29,221. The RTS index in Russia dropped 2.6% to 2242 while the ISE National-30 index in Turkey plunged 5.9% to 39,772.
Bulls pray for some respite
It was the third straight day of losses for the Indian bourses with the benchmark Index slipping to its lowest since April 5, 2007 led by spiraling crude oil prices and rising interest rates. Crude Oil rose, extending this year's 48% gain, after reports stated that Israel was increasingly likely to attack Iran this year, which could threaten supplies from the Middle East.
The interest rate sensitive stocks were among the major laggards. ICICI Bank, DLF, SBI, Reliance Industries and HDFC were among the major losers. Even the Mid-Cap and the Small-Cap stocks were badly battered, with both the indices slipping over 4% each.
Finally, the BSE benchmark Sensex lost 557 points to close at 12,904 and the Nifty index lost 143 points to close at 4,896.
ABB plunged by over 5% to Rs769. The company announced that it won Rs3.12bn power order for Delhi Airport. The scrip touched an intra-day high of Rs813 and a low of Rs755 and recorded volumes of over 77,000 shares on BSE.
Ambuja Cement dropped by 3% to Rs72. The company announced its sales rose 5% at 1.46mn tons a year ago. The scrip touched an intra-day high of Rs76 and a low of Rs70 and recorded volumes of over 3,00,000 shares on BSE.
HCC dropped by over 9.5% to Rs72. The company announced that it secured an order worth Rs3.4bn from National Highway Authority of India (NHAI), New Delhi, to construct the 4.4 km elevated six lane highway at Badrapur on National Highway 2 (Mathura Road) near Delhi on BOT basis. The scrip touched an intra-day high of Rs80 and a low of Rs71 and recorded volumes of over 8,00,000 shares on BSE.
BGR Energy declined by over 4% to close at Rs221. The Company announced that it secured EPC contract worth rs31bn for the 1x 600 MW from Tamil Nadu Electricity Board. This project is an expansion of the existing 4x 210 MW thermal power project of TNEB at Mettur.
The scope of work consists of Design, Engineering, Supply of Boiler. StreamTurbine, Generator and complete Balance of plant equipments inclusive of all mechanical, electrical instrumentation & control sytems and civil, structural and architectural works, necessary for putting into commercial operation on Engineering, Procurement and Construction (EPC) basis.
The scrip touched an intra-day high of Rs238 and a low of Rs210 and recorded volumes of over 1,00,000 shares on BSE.
Tata Motors slipped by over 4% to Rs408. The company announced that it sold 46,339 vehicles in May as compared to 42,558 vehicles in May 2007 translating into a growth of 8.9% over the same period last year.
The company sold 42,916 vehicles in the domestic market compared to 38,255 vehicles sold in the corresponding month a year earlier. Exports fell by 20% to 3,423 vehicles in May compared to 4,303 vehicles in the same month last year. The scrip has touched an intra-day high of Rs428 and a low of Rs405 and has recorded volumes of over 1,00,000 shares on BSE.
Bajaj Auto was down by a percent to end at Rs446. The company said that its motorcycle sales grew by 8% in June at 175,903 units, while total two-wheeler sales rose by 7% to 177,112. Three-wheeler sales for the month were down 14% at 19,629 units.
Total two and three-wheeler sales were up 5% at 196,741 units last month. Exports surged 33% in June to 64,878 units.
TVS Motor dropped by over 7% to Rs24. The company posted a 2% growth in total two wheeler sales at 109,082 units for June as against 107,177 units sold in the corresponding period of the previous year.
During the month, the company's motorcycle sales grew by 9% to 51,409 units versus 47,380 units sold in June 2007.
Maruti Suzuki fell by over 8% to Rs568. The company announced that it sold a total of 61,247 vehicles in June as against 59,917 units sold in the same month last year, representing an increase of 2.2%. While, domestic sales rose by a mere 0.7% to 56,411 exports jumped 23.5% to 4,836.
CERC may give transmission license to Reliance Infrastructure’s subsidiary (FE)
ONGC arm shortlisted by the Iraq Government to develop its oil fields (BS)
Tata Motors hikes CV prices by 3% (BL)
RNRL, Rio Tinto and Essar amongst 17 companies to submit EOI to develop Coal India mines (BL)
HDFC Bank increases PLR by 75bps to 16% (BS)
TCS announces capex of Rs44.7bn for this fiscal (FE)
SBI likely to increase home loan rate (FE)
Amtek Auto is in race to acquire Frankfurt-based KSM Castings in a deal worth Rs17bn (ET)
Tata Motors expects to start manufacturing Nano at its Singur facility in the fourth quarter (ET)
DLF to develop 8 shopping malls under leasing format in the metros this fiscal (BL)
BHEL wins contract in Syria worth Rs20.8bn (BL)
Tata arm to develop, lease out centres to TCS (BL)
Two manufacturing units of Ranbaxy under US FDA scanner for selling medicines in the US (ET)
Supreme Court stays reclamation of sea by Adanis for SEZ (DNA)
Taro Pharma to consider Sun Pharma’s offer by July 14th (FE)
BGR Energy get Rs31bn contract from Tamil Nadu Electricity Board (BL)
GTL Infra is in talks with Essar Telecom Infra for a possible merger (DNA)
ABB bags order worth Rs3.1bn from IGIA, Delhi (DNA)
HCC wins order of Rs3.4bn from NHAI (FE)
Bank of Baroda plans to expand overseas operations by opening ten new branches and offices abroad (FE)
Onmobile buys French firm, Telisma, for Euro11mn (ET)
DHL is eyeing a bigger share of the logistics business in the Saarc region (ET)
Subhash Projects is entering urban infrastructure space through airports, metro rail and freight corridor projects (DNA)
Deewan Housing hikes retail PLR by 50 bps (FE)
Karuturi Global may sell part of its stake in its Ethiopian subsidiary (ET)
Prithvi Information plans to acquire three US-based companies in next six months (DNA)
Economic Front Page
FM says fiscal deficit to not cross 2.5% of GDP in FY09 (ET)
Export growth falls to 13% yoy in May as compared to 31.5% yoy in April (ET)
Steel companies to hold prices in July (BL)
Cement prices likely to increase by 3/bag in Mumbai, Gujarat and southern markets from next week (ET)
Communications and IT Ministry has fixed a reserve price for Rs22.6bn for the upcoming auction of 3G spectrum (ET)