A minute's success pays the failure of years.
The market seems to be paying heavily ever since the start of the year and success is nowhere in sight. The mini-Santa Claus rally that started sometime in late November was over before Christmas as investors remain nervous about weak economic conditions, both in India as well as abroad. The fear is that things may get worse over the next few months, as consumers and companies alike cut spending plans.
For the day, we see a sleepy start. There is no clear direction, but a steeper than expected fall in inflation could perk up the sentiment, as it did last Friday. Select heavyweights may be propped up to make the markets look good. Still, one cannot afford to go overboard, as things like additional dose of fiscal and monetary stimulus have already been discounted. Traded volume will remain low across the globe, with many participants choosing to extend the Christmas vacation. Asian markets are pretty mixed this morning, with the Nikkei in Tokyo up over 1%. Others are marginally up or down. Hong Kong markets are shut for Christmas.
The results for the next few couple of quarters will be crucial, as they will show the real impact of the financial meltdown and sluggish growth. The most critical factor will be how fast the frozen credit markets and global economy rebound from the current slump. Its a given that the recovery will be slow and painful.
India is better placed than others due to the dominance of domestic factors in its GDP. The Government and the RBI have already taken various steps to pump-prime the economy. More are due over the next few days. Though these measures may take time to work their magic, eventually things will improve. What is uncertain is the timing of the recovery. Apart from corporate earnings and global issues, politics will also have some bearing on the sentiment in the next few months, as we head for the general elections sometime in April or May. FIIs too need to resume their shopping spree in emerging markets like India. One also needs to take into account the growing tension between India and Pakistan.
FIIs were net sellers of Rs1.44bn (provisional) in the cash segment on Wednesday while the local institutions poured in Rs6.14bn. In the F&O segment, the foreign funds were net sellers at Rs6.83bn. On Tuesday, FIIs were net sellers at Rs2.71bn in the cash segment. Mutual Funds were net sellers at Rs1.03bn.
US stocks close a truncated session up on Wednesday, with the key indices logging gains for the first time in three days after reports showed that consumer spending and orders for durable goods topped economists’ forecasts.
The New York Stock Exchange closed early, ahead of the Christmas holiday. Most world markets were shut on Thursday.
The Dow Jones Industrial Average gained 49 points, or 0.6% to end at 8,468, with 22 of its 30 components trading higher. The Nasdaq Composite rose 3 points, or 0.2%, to 1,524. The S&P 500 rose nearly 5 points, or 0.6%, to 868.
About 3.63bn shares changed hands in the US, the least since Dec. 26, 2003.
The Dow is down 500 points since its Dec. 16 close of 8,924. The blue-chip average is down 36% for the year to date, while the broad S&P 500 has lost 40%, and the Nasdaq has fallen 42%.
Trading has been light through the week with many investors on vacation. In addition, to light participation, many investors have closed their books for the year and are not planning to make any large moves until 2009.
Eight of the S&P's 10 sectors advanced, led by a 1.3% gain in financials, a 1% rise among industrials, and a 0.9% gain in consumer staples. Energy fell 1%.
Bucking the trend among financials, CIT Group shares slumped 10%, reversing from the prior day, after the financial company announced the results of an exchange offer.
Shares of General Motors (GM) hit hard this week, led the blue-chip gains, up 8%. Automotive rival Toyota said its domestic production dropped 27.2% in November from a year earlier to 288,138 vehicles, the fourth straight monthly decrease.
Banking stocks advanced with Citigroup adding nearly 4% and Bank of America up more than 5%.
Energy shares were among the weak points in the broad market as crude-oil futures tumbled 9% to end at US$35.35 a barrel, their lowest close since April 2004. Traders focused on higher stockpiles at Cushing, Okla., the delivery point used for the benchmark crude contract.
Shares of Wal-Mart Stores added 0.3%. The world's largest retailer said late on Tuesday it will settle 63 wage-and-hour class-action lawsuits, some of which have been pending against the company over the last several years.
The shares of other retailers such as JC Penney and Best Buy also rose in the broad market.
Before the opening bell, the Labor Department said that weekly claims for unemployment benefits rose more than expected. New jobless claims rose to 586,000 in the week ended Dec. 20. That is an increase of 30,000 from the previous week's revised figure of 556,000, and is more than the 558,000 total forecast by economists. Wednesday's report revealed the highest number of jobless claims since Nov. 1982, when initial filings hit 612,000.
The Commerce Department said both personal income and spending decreased in November. Personal income dipped 0.2% after a modest 0.3% increase in October. The reading was expected to be flat. Personal spending fell 0.6% versus a decline of 1% the month before. But the figure was better than the 0.8% decline that economists were expecting.
New orders of durable manufactured goods fell for the fourth month in a row, according to the Census Bureau. Durable goods orders fell 1% to US$1.9bn in November. Excluding orders related to transportation, new orders increased 1.2%.
Still, the decline was not as sharp as had been expected. Economists had forecast durable goods orders to sink 3.1% after plummeting 6.2% in October - the biggest decline since 2006.
Applications for home loans and refinancing activity surged last week, according to the Mortgage Bankers Association. The MBA's overall Market Composite Index, a measure of mortgage loan application volume, shot up 48% on a seasonally adjusted basis for the week ending Dec. 19.
The benchmark 10-year note fell, while its yield held steady at 2.17%. The 10-year yield dipped below 3% in November for the first time since the note was first issued in 1962.
The 3-month Libor rate held steady at 1.47%. The overnight Libor edged up to 0.15% from 0.12% on Tuesday. Libor is a key bank lending rate.
US light crude oil for February delivery was down US$1.32 at US$37.64 a barrel in New York. Crude prices fell sharply after the government reported an unexpected decline in crude inventories.
Gasoline prices fell overnight to a national average of US$1.655 from US$1.659 a gallon.
The dollar fell versus the euro and the yen. COMEX gold for February delivery was up US$11.30 to US$849.60 an ounce.
European shares ended lower on Wednesday in a short session ahead of a two-day break. The UK's FTSE 100 index fell 0.9% to 4,216.59, while the French CAC-40 index was down 0.4% at 3,116.21. Markets in Germany were closed for the holiday.
Amsterdam's AEX index fell 1% to 241.90, with shares of lender Fortis down 5.8%. The Dutch bank said that it has recorded a loss of 295 million euros ($412.1mn) related to currency transactions.
AstraZeneca shares fell 3% after the drug major said it has received a letter from the US Food and Drug Administration asking for additional information for its supplemental new drug application for Seroquel XR tablets.
Shares of chocolate maker Cadbury slipped 0.25%. It has conditionally agreed to sell its Schweppes Beverages business in Australia to Asahi Breweries for 550 million pounds ($811.8mn).
Seems like Santa has skipped Dalal Street, as there were no holiday cheers ahead of Christmas. Not only in India, but there was no cheer in equity markets across the world. The Santa Clause rally further lost steam as worries abound over the deepening global recession in its adverse impact on earnings.
The BSE benchmark Sensex ended at 9,590 losing 95 points and the NSE Nifty index ended at 2,916 losing 71 points.
Barring the BSE Bankex index all the other major indices ended in the red with BSE Realty index (down 5%), BSE Auto index (down 2%), BSE Teck index (down 2%) and BSE Metal index (down 2%).
Market breath was weak, 1,497 stocks declined against 920 advances, while, 92 stocks remained unchanged.
Aurobindo Pharma surged by over 3% to Rs155 after the company announced that the company has received approval for Terbinafine Tablets from Health Canada.The scrip touched an intra-day high of Rs158 and a low of Rs147 and recorded volumes of over 53,000 shares on BSE.
Shares of Satyam rebounded sharply from a low of Rs114 finally losing over 4% to Rs134. Reports stated that the World Bank barred the company from doing business with it. The company was banned by the World Bank from doing business with it for eight years for reasons relating to staff benefits and lack of documentation.
The scrip touched an intra-day high of Rs139 and a low of Rs114 and recorded volumes of over 4,00,00,000 shares on BSE.
Shares of PBA Infrastructure surged by over 5% to Rs29 after winning two contracts worth about Rs480mn. The company won construction orders worth Rs289.8mn from Maharashtra Industrial Development Corp. and Rs189.8mn from the Mumbai Metropolitan Region Development Authority. The scrip touched an intra-day high of Rs32.5 and a low of Rs29 and recorded volumes of over 36,000 shares on BSE.
In Asia...
Asian markets dropped for fourth straight trading session as a drop in the U.S. house prices and a slump in confidence among Japanese manufacturers stoked concern recessions in the world’s largest economies are deepening.
In Europe...
Equity markets acros Europe were also down, FTSE 100 index was down by a percent, the CAC 40 index was down 0.7% and the DAX index declined fell half a percent.