We can be hurt, but not knocked down – Ratan Tata.
India's twin towers (of terror) - The Taj and The Trident Oberoi - are back in business. It not only underlines the city's resilient spirit but also epitomises the nation's new-found confidence, which has seen it withstand several tragedies in the past few years. It is this courage of conviction that will stand India in good stead in the next couple of years, as it battles a crippling global recession and domestic slowdown.
The bulls too have been more or less back in business over the past couple of weeks. They will hope to be at peace during the Christmas week. But Asian markets are pretty mixed this morning. US stock benchmarks too ended mixed on Friday while European markets declined marginally. The start today may be flat at best. Wild swings will be the order of this week due to derivative settlement and lower volume.
The Government and regulators have played their roles in perking up market sentiment by unleashing a string of fiscal as well as monetary steps. More such measures are in the offing over the next few weeks, as inflation has cooled off substantially and is set to fall further. Banks have also started cutting rates, which spells good news for both consumers as well as corporates. The rupee has strengthened against the dollar and even the elusive FII money is also finding its way into the markets. Other macro-economic factors, however, are yet to show any signs of improvement. The market may find it a bit tough to build on the recent gains if these data points continue to be weak.
Keep an eye on the political front with general elections lined up for April-May. Global trends and news will of course have a major bearing on the market's near-term as well as long-term direction. There is always a possibility of some NAV prop-up which could drive select stocks higher; that may happen next week. We expect the bulls to maintain their hold on the market for a while before a fresh round of selling hits world markets. Volatility may inch higher ahead of Wednesday's F&O expiry (a day earlier due to Christmas holiday on Thursday).
US market may also turn more volatile as many market participants may choose to extend their Christmas holidays. US markets will close early on Wednesday and will remain closed on Thursday. Financial markets across the globe may witness less trading activity this week. The Indian markets too will remain shut on Thursday.
FIIs were net buyers of Rs3.78bn (provisional) in the cash segment on Thursday while the local institutions poured in Rs4.1bn. In the F&O segment, the foreign funds were net buyers at Rs3.47bn. On Thursday, FIIs were net sellers at Rs542mn in the cash segment. Mutual Funds too pulled out Rs1.81bn on the same day.
US stocks ended mixed on Friday with the blue chip Dow Jones Industrial Average slipping marginally, while the broader market barometer S&P 500 index and technology-laden Nasdaq Composite index posting moderate gains.
The Dow was down by 25.88 points or 0.3% to end at 8579.11, while the S&P added nearly 0.3% to 887.88, and the Nasdaq closed 0.75% higher at 1564.32. The Russell 2000 Index of small US companies climbed 1.5%.
About three stocks gained for every two that fell on the New York Stock Exchange.
Energy, IT and financials paced the gains that stretched to include all but two of the S&P 500 index's 10 industry groups.
The US stocks opened sharply higher, but the rally was short-lived, as investors remained nervous about the state of the world's largest economy.
The Dow erased a 182-point advance as Citigroup slid 5.5% after its debt ratings were cut, while Exxon Mobil and Chevron retreated almost 3% as oil tumbled below US$33 a barrel.
US stocks advanced for a second straight week after President George W. Bush announced a US$17.4bn rescue plan for the troubled automakers. The Dow was off about 0.6% for the week, while the S&P 500 gained 1% and the Nasdaq rose 1.5%.
GM shares rallied 23% as Bush announced US$13.4 billion in emergency loans for the largest U.S. automaker and rival Chrysler. Ford Motor jumped 3.9%, while car-parts supplier ArvinMeritor climbed 5.9%.
Friday's session was particularly volatile due to options expirations - a quarterly event called "quadruple witching." Light trading volume also contributed to volatility.
Stocks slumped on Monday but the market rallied on Tuesday after the Fed lowered its key interest rate to a range between 0% and 0.25%. The Fed also reaffirmed its plans to use more unconventional methods to try and get the economy back on track.
The Treasuries rallied with the yield on the benchmark 10-year note and the 30-year note both falling to historic lows.
Stocks slumped anew on Wednesday after Morgan Stanley reported a USUS$2.3bn loss. The effects of quadruple witching were apparent on Thursday as investors rushed to reconcile positions ahead of the options expiration. Stocks seesawed for most of the day before falling sharply in the final hour of trade.
"Allowing the US auto industry to collapse is not a responsible course of action," said President Bush in a nationally televised address in the morning, when he unveiled the White House's plan to bail out the troubled Detroit industry.
Speaking in New York on Thursday night, Treasury Secretary Henry Paulson said he felt a rescue of the ailing car industry should not have been left to the White House. "I did not want to be making this argument - I felt something should be done by Congress," Paulson said.
Yet in light of the fragile state of the economy, it would seem to be an imprudent risk to allow the industry to collapse, he said.
The banking sector was also in focus after Standard & Poor's cut its credit rating or outlook on 12 major international firms, citing ongoing woes in the industry amid deepening troubles in the global economy.
Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley and Wells Fargo were downgraded or had a banking division downgraded.
Recent government support for the financial services industry is helpful, the economic environment remains challenging and banks can expect "lower profitability levels and significantly higher loan losses in the medium term, the rating agency said.
Shares of Weyerhaeuser Co. fell 9.5% after the paper and building products giant cut its quarterly dividend and costs in response to a slowdown in business.
Shares of Research In Motion (RIM) jumped 11.4% after the smart phone maker surprised investors with a better-than-expected forecast for the fourth quarter.
Oracle shares also advanced after the software giant posted a small drop in second-quarter profits that nonetheless cheered investors who had worried about a sharper slowdown given the global recession.
In other company news, Japanese electronic company Panasonic said that it would acquire its rival Sanyo for up to US$9bn.
Light, sweet crude for January delivery fell US$2.35 to settle at US$33.87 a barrel on the New York Mercantile Exchange. The January contract, which expired on Friday, dropped nearly US$4 to settle below US$37 a barrel in the previous session.
Crude for February delivery rose 58 cents to US$42.25 a barrel.
Prices for US Treasury bonds fell after a big rally in the previous sessions. The yield on the benchmark 10-year note rose to 2.12% from a historic low of 2.07% on Thursday. The 30-year long bond retreated, with a yield of 2.55%.
The dollar rose against the euro to trade at US$1.3838 in afternoon trading. The greenback rose against Japan's yen after the Bank of Japan cut a key interest rate to 0.1% from 0.3%. Gold for February delivery dropped US$23.20 to settle at US$837.4 an ounce.
Shares of oil producers weighed on Europe on Friday, but most stocks came off their session lows after the US stepped up efforts to support the economy with a plan to bail out Detroit's beleaguered automakers.
The pan-European Dow Jones Stoxx 600 index stayed in the red, down 0.5% at 196.32, as losses for oil producers kept the pressure on.
The UK's FTSE 100 index fell 1% to 4,286.93, while Germany's DAX 30 index declined 1.3% to 4,696.70 and the French CAC-40 index was off 0.3% at 3,225.90.
A volatile market ended the day on a flat note, however, managed to hold above the 10k levels. It was the realty stocks which were in the limelight followed by the auto and the Pharma stocks. Finally, the BSE benchmark Sensex ended at 10,099 adding 23 points and the NSE Nifty index ended at 3,07 adding 16 points.
Market breath was positive, 1,481 stocks advanced against 1,036 declines, while, 79 stocks remained unchanged.
Among the 30-components of Sensex, the big gainers were DLF (10%), JP Associates (6%), M&M (4.2%) and Sterlite Ind (4.2%). On the other hand, major losers were Satyam (4%) and ONGC (3.2%).
Shares of C&C Construction rallied by over 6% to Rs214 after the company announced that it won order worth Rs7.81bn in Bihar. The scrip touched an intra-day high of Rs219 and a low of Rs208 and recorded volumes of over 2,000 shares on BSE.
Shares of Wockhardt Pharma surged by over 3.2% to Rs107 after reports stated that the company was looking for potential buyers for its French subsidiary Negma laboratories to repay debt to investors. The scrip touched an intra-day high of Rs109 and a low of Rs103 and recorded volumes of over 1,00,000 shares on BSE.
Shares of DLF surged by over 10% to Rs308 after the company announced that it unveiled its retail plans and aims for a targets of US$1bn revenue in five years.
Reports also stating that the company was planning to add five new international brands to its existing portfolio of its subsidiary DLF brands. The scrip touched an intra-day high of Rs314 and a low of Rs274 and recorded volumes of over 2,00,00,000 shares on BSE.
Shares of Suzlon Energy ended lower by 0.5% to Rs58. The company announced that it is in talks to sell a 5% stake to Carlyle Group for about US$100mn, stated reports. The scrip touched an intra-day high of Rs62 and a low of Rs57 and recorded volumes of over 5,00,00,000 shares on BSE.
KEC International advanced by 5% to Rs149 after the company announced that it secured Rs880mn order from Barki Tojik, national electricity company of Tajikistan. The scrip touched an intra-day high of Rs149 and a low of Rs142 and recorded volumes of over 1,00,000 shares on NSE.
The bulls will hope to Jingle all the way in this Christmas-shortened week. Having said that, the euphoria may prove to be short lived and the markets could turn lower again on concerns about a weakening global economic outlook. In the Indian market, we have the F&O expiry which could well show gains for the month.
The Government may drop more hints on its next round of stimulus package, which is also likely to include more rate reductions.