When there's snow on the ground, I like to pretend I'm walking on clouds.
Despite the RBI’s inaction on interest rates, the market managed to post solid gains. This was largely due to firm trend across global markets. The snow may start melting though as Tuesday’s momentum may not continue today. The key indices could turn choppy after a slightly positive start. Volatility could be higher ahead of F&O expiry. Stock specific and sector centric action remains the order of the day. Satyam will remain in the limelight as the new board has appointed advisors in its desperate search for a strategic suitor. There is also the possibility that the final bidder could get waiver from SEBI on mandatory open offer.
On the global front, the Federal Reserve will make an announcement later today after its two-day meeting. There is not much it can do as interest rates have already been reduced to zero. But, what the FOMC says will be keenly followed. Meanwhile, the UK government has thrown in a lifeline for its ailing auto sector. In the US, the Obama regime is pulling out all stops to push through its ambitious stimulus package. Its clearance may provide some fillip, though it may not have a lasting impact on the markets.
Among the top companies announcing results today, ONGC will post 13.5% drop in sales and 5.7% in PAT. Gail India will announce 35.8% rise in topline and 78.8% jump in the bottomline.
Key Results: Abbott India, ABG Shipyard, Ansal Infra, Asahi India, Ashok Leyland, Avaya Global, Balaji Tele, Bank of Maharashtra, BGR Energy, Bharat Bijli, Blue Dart, CESC, Chambal Fertilizers, Dabur India, EID Parry, Escorts, Gail India, Gammon India, Hindustan Motors, HPCL, HDIL, IBN 18, India Cements, Indo Rama, Ispat Industries, J&K Bank, JSW Steel, LMW, Matrix Labs, Max India, NALCO, NMDC, ONGC, Orchid Corp, Power Grid Corp, Shree Cement, Tata Chemicals, Tata Communications, Tata Steel, Thermax, Torrent Pharma and United Phosphorus.
US stocks ended higher on Tuesday, with the Nasdaq and the S&P 500 index rising for the third-straight session, as some of the quarterly earnings did not turn out to be as terrible as many had expected. The latest stock gains occurred despite gloomy economic reports on home prices, employment and consumer confidence - and a slew of disappointing earnings. But, Monday's surprisingly positive data on existing home sales continued to provide some relief.
On Tuesday, major stock indexes kept moving in and out of positive territory before closing with modest gains. Health care, financials and IT paced the gains, while telecom services and consumer discretionary shares lagged. The S&P 500 and the Nasdaq had closed higher on Friday, while the Dow closed off its lows.
Investors seemed to welcome results that were not as weak as expected from American Express, Texas Instruments and others. And, Timothy Geithner's approval as Treasury Secretary seemed to boost confidence that the Obama administration's $825bn stimulus package could get passed soon.
The Fed will end its two-day policy-setting meeting with an announcement expected on Wednesday afternoon. The central bank is expected to keep short-term interest rates near zero, where it set them at its last meeting. However, as always, the statement that accompanies the decision will be closely scrutinized.
The negative news on the employment front continued on Tuesday, as companies across the economic spectrum announced more than 10,000 job cuts. On Monday, all three major gauges managed to close higher, despite companies announcing more than 71,000 job cuts.
Dow component American Express reported lower sales and earnings late on Monday that narrowly missed expectations. However, the so-called "whisper" number was much worse and investors seemed relieved that AmEx's results were not weaker. Shares gained 9.7%.
Texas Instruments reported a smaller-than-expected drop in quarterly profit after the close on Monday and also said it was cutting 3,400 jobs. Its shares gained 3.7% on Tuesday.
A number of steel companies reported results as well. US Steel reported higher fourth-quarter earnings and warned that first-quarter revenue would miss forecasts. But investors focused on the earnings and shares rose almost 7%.
Steel Dynamics reported better-than-expected fourth-quarter results and said most of its divisions should see profits in 2009, thanks partly to the proposed economic stimulus plan. Shares jumped 15%.
DuPont reported a wider quarterly loss that was worse than expected and also cut its 2009 earnings forecast. Shares ended little changed.
Verizon Communications reported higher quarterly sales and earnings, but said that growth in its mobile phone business slowed and traditional land line customers continued to drop out. Verizon also warned that pension and other retirement costs would hurt earnings in 2009. Shares fell 3.3%.
Delta Air Lines reported a steeper quarterly loss due to costs associated with its merger with Northwest and bad fuel hedges. But the world's largest air carrier said that lower fuel costs and downsizing would enable it to earn profits in 2009. Shares tumbled 20%.
Home prices in 20 major cities plunged at a record annual pace in November, falling to levels not seen since 2004, according to a report released on Tuesday.
A separate report showed that consumer confidence fell to an all-time low in January. The Conference Board, a research group, said its consumer index fell to 37.7 from a revised 38.6 in December, missing economists' forecasts. It was the lowest level on record since the group began tracking confidence in 1967.
A government report showed that unemployment spiked in all 50 states and the District of Columbia in December, as companies cut thousands of positions in the wake of the recession.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 2.54% from 2.63% on Monday as investors pulled money out of the safe-haven investment. Treasury prices and yields move in opposite directions. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates were mixed. The 3-month Libor rate held steady at 1.18%. Overnight Libor fell to 0.22% from 0.23% on Monday. Libor is a bank-to-bank lending rate.
US light crude oil for March delivery fell $4.15 to settle at $41.58 a barrel on the New York Mercantile Exchange. Gasoline prices fell two-tenths of a cent to a national average of $1.84 a gallon.
The dollar fell versus the euro and yen. COMEX gold for April delivery fell $9.30 to settle at $901.40 an ounce.
After the close, Yahoo reported quarterly sales and earnings that topped estimates. Including charges, the company reported a loss. Shares gained 4% in extended-hours trading.
Earnings are due on Wednesday morning from Dow component AT&T and financial company Wells Fargo. AT&T is expected to have earned 65 cents per share versus 71 cents a year ago. Wells Fargo is expected to report earnings of 33 cents per share, versus 41 cents a year ago.
European shares inched higher in a choppy session on Tuesday. The pan-European Dow Jones Stoxx 600 index gained 0.1% to 188.31, although it was lower for much of the session. Germany's DAX 30 index declined 0.1% to 4,323.42, while the French CAC-40 index finished flat at 2,954.53 and the UK's FTSE 100 index closed down 0.4% at 4,194.41.
Bulls staged a strong comeback on Tuesday after an extended weekend. Firm cues from the overseas markets coupled with buying witnessed in the metals’, power and IT stocks.
However, from thereon it was a see-saw ride key indices witnessed knee jerk reaction and slipped from its day’s high post the RBI’s decision on the monetary policy.
As the day progressed, amid volatile trades markets staged a V-shaped recovery led by all round buying in scrips across the sectors. Finally, the BSE benchmark Sensex advanced 334 points to close at 9,008 and the Nifty gained 92 points to close at 2,771.
Among the 30-components of Sensex, 28 stocks ended in the green and only 2 stocks ended in the negative terrain. Among the major gainers in the Sensex were Reliance Industries, Infosys, Bharti, ICICI Bank and HDFC. ONGC and L&T were among the major laggards.
Shares of Oracle Financial rallied by over 15% to Rs566 after third-quarter group profit rose almost threefold.
Net income for the three months ended Dec. 31 rose to Rs2.64bn from Rs1.07bn a year ago and revenue rose 29% to Rs8.01bn from Rs6.2bn. The scrip touched an intra-day high of Rs596 and a low of Rs468 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Satyam rallied by over 21% to Rs47 after L&T announced that it may lift its holding to 15% in Satyam as it expects the value to increase.
While there could be value erosion in Satyam in the near term, the stock will rise since the government is keen to rescue the company, Chairman A.M. Naik said.
A 15% stake is the threshold set by SEBI for a mandatory offer to buy 20% more from minority holders. L&T had earlier raised its holding in Satyam Computers to 12% from 4%.
Shares of L&T were down by 0.5% to Rs638 after hitting an intra-day high of Rs660 and a low of Rs605 and has recorded volumes of over 12,00,000 shares on NSE.
Petron Engineering edged lower by 0.2% to Rs68 after the company announced that it won order worth Rs97.8mn. The scrip touched an intra-day high of Rs70 and a low of Rs66.
Shares of Glenmark declined by over 7% to Rs188 after the company announced that its Q3 net profit fell 71% to Rs814.3mn and net sales fell 14% to Rs5.81bn. The scrip touched an intra-day high of Rs215 and a low of Rs185 and recorded volumes of over 6,00,000 shares on BSE.
Shares of NTPC advanced by 6% to Rs190 after the company plans to invest Rs62.3bn in a 1,000MW project in northern India.
The board of directors approved the spending for the third phase of the Rihand Super Thermal Power Project in the state of Uttar Pradesh. The scrip touched an intra-day high of Rs191 and a low of Rs179 and recorded volumes of over 2,00,000 shares on BSE.
Shares of UCO Bank gained by 1% to Rs27.8 after reports stated that it plans to cut lending rates by 50bps. The scrip touched an intra-day high of Rs28.6 and a low of Rs27.6 and recorded volumes of over 2,00,000 shares on BSE.
Bulls would wish to carry the momentum to the next trading session. However, trading might turn more volatile ahead of Thursday’s F&O expiry.