There are two ways of exerting one's strength: one is pushing down, the other is pulling up.
After struggling for direction for two days, the market seems to be delicately poised with bias still mostly negative. Initial indicators point to a pull at start due to fresh losses across the globe. The Dow has hit a six-year low. Though European stocks closed flat, they were actually up slightly earlier. Asian markets are all in the red this morning. The remaining day will see usual push and pull among the bulls and bears with lower volume. Meanwhile, oil prices have spiked and gold has taken a slight breather even as it remains among the most sought after asset class globally.
After threatening to break down earlier in the week, the market now needs a trigger(s) to make its next move. With inflation at a 13-month low, there is every chance that the RBI may go for another round of monetary easing. The central bank governor has indicated his willingness to do so. The question is not if, but when and by how much will the RBI cut policy rates. The markets and India Inc will definitely welcome another rate cut. But then, will it be enough to entice the bulls? That’s the big question. We have a long weekend to think it over.
FIIs were net sellers in the cash segment on Thursday at Rs3.63bn while the local institutions pumped in Rs1.08bn. In the F&O segment, the foreign funds were net buyers at Rs4.26bn. On Wednesday, FIIs were net sellers in the cash segment at Rs4.34bn. Mutual Funds were net sellers at Rs1.07bn on the same day.
US stocks slipped on Thursday, with the Dow Jones Industrial Average touching a six-year low after Hewlett-Packard cut its profit forecast and concerns about rising credit-card defaults dragged financial shares to the lowest level since 1995.
The Dow slid 89 points, or 1.2%, to 7,465..95, closing at the lowest point since Oct. 9, 2002, the low of the last bear market. It had dropped as low as 7,447.55 during the session.
The Standard & Poor's 500 index lost 9.5 points, or 1.2%, to 778.94, ending at its lowest point since Nov. 20. That sets the index just above the so-called bear market lows hit in November.
The Nasdaq Composite index shed 25 points or 1.7%, to finish at 1,442.82. Technology has held up better than the rest of the market and the Nasdaq stands almost 10% above its Nov. 20 close.
The Dow has now broken through the so-called bear market lows of late November. And, some analysts say that the major indices have done enough damage on the technical side in the last few days that they are at risk of falling a lot more.
Stocks are likely to continue drifting lower through the first half of the year, as there is no big catalyst looming to change Wall Street's momentum. The Obama administration has introduced or modified a number of new plans as part of efforts to steady the ship. But the market reaction has been muted at best.
The number of Americans filing new claims for unemployment held steady last week at 627,000, versus forecasts for a drop to 620,000. But the number of Americans continuing to file claims rose to a record 4,987,000.
Wholesale inflation prices advanced more than expected last month, partly as a result of higher energy costs. The Producer Price Index (PPI) rose 0.8% after falling 1.9% in December. Economists had forecast an increase of 0.3%.
The so-called core PPI, which strips out volatile food and energy prices, rose 0.4% after rising 0.2% in December. Economists had estimated a gain of just 0.1%.
The Philadelphia Fed index, a regional reading on manufacturing, fell to minus 41.3 from minus 24.3 in January. Economists thought it would dip to minus 25. It was the lowest reading since 1990, according to High Frequency Economics.
On the upside, the index of leading economic indicators, issued by the Conference Board, rose 0.4% in January from a revised 0.2% in December. Economists thought it would rise 0.1%.
Hewlett-Packard (HP) reported lower earnings that met analysts' estimates on higher revenue that missed estimates in a report released late on Wednesday. The company also gave a forecast for current-quarter results that is short of forecasts. HP shares fell nearly 8%.
Sprint Nextel reported a quarterly loss and said 1.3 million subscribers ditched its mobile phone service. But the loss narrowed from a year earlier and was smaller than analysts had expected. Revenue fell from the prior year and was shy of expectations. Investors focused on the positive and the stock rose 20%.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.81% from 2.75% on Wednesday. Treasury prices and yields move in opposite directions.
Lending rates were little changed. The 3-month Libor rate was 1.25%, unchanged from Wednesday. The overnight Libor rate fell to 0.29% from 0.30% Wednesday. Libor is a bank lending rate.
US light crude oil for March delivery settled up $4.86 to $39.48 a barrel on the New York Mercantile Exchange. Prices spiked after the government said that crude supplies fell last week for the first time in two months.
Gasoline prices decreased eight-tenths of a cent to a national average of $1.949 a gallon.
The dollar fell against the euro and gained against the yen. COMEX gold for April delivery fell $1.70 to settle at $976.50 an ounce.
Friday brings a key report on consumer prices and quarterly results from JC Penney and Lowe's.
European shares clung near the year's lows on Thursday. The pan-European Dow Jones Stoxx 600 index finished the day pretty much where it started, up a fraction of a percentage point to 183.39.
Germany's DAX 30 index climbed 0.2% to 4,215.21, while the French CAC-40 index fell 0.1% to 2,872.60 and the UK's FTSE 100 index rose 0.3% to 4,018.37.
Markets ended on a flat note for the second straight trading session on Thursday. Key indices started with slight positive gains but were unable to build on to it on account of lack of follow up buying. Even, better than expected inflation figures had a minimal impact on the market sentiments. Inflation dropped to 3.92% for week ended Feb 7 against expectation of 4.01%.
Finally, the BSE Sensex gained 27 points to close at 9,042 and the NSE Nifty gained 13 points at 2,789.
Among the 30-components of Sensex, 18 stocks ended in positive terrain and 12 stocks ended in the red. The top gainers in the Sensex were, Wipro, Grasim, Infosys, Maruti Reliance Infra, HDFC and M&M. On the other hand, the major losers were Hindalco, ACC, ICICI Bank, L&T, DLF and SBI.
Shares of Orchid Chemicals gained by 1% to Rs70.5 after reports stated that the company plans to raise overseas debt via ECB to buy back FCCBs. The scrip touched an intra-day high of Rs72 and a low of Rs69 and recorded volumes of over 35,000 shares on BSE.
Shares of SpiceJet surged higher by 2.5% at Rs15.1 after reports stated that the company was open for equity dilution to foreign airlines if the government permits overseas companies to pick up stake in local carriers. The scrip touched an intra-day high of Rs15.7 and a low of Rs15 and recorded volumes of over 10,00,000 shares on BSE.
Shares of TRF Ltd surged by over 3% to Rs238 after the company announced that it received an order worth Rs997.4mn from Andhra Pradesh Power Generation Corporation Ltd (A Govt. of A.P. Undertaking, for setting up the Coal Handing Plant for its Rayalaseema Thermal Power Project, Stage-III, Unit - 5 (1 X 210 MW). The scrip touched an intra-day high of Rs257 and a low of Rs236 and recorded volumes of over 3,000 shares on BSE.
The IT sector staged a strong comeback as stocks witnessed some value buying after slipping sharply in the past few trading session. Tech Mahindra rallied by over 12%, Wipro rose over 5.5%, Infosys advanced 2.5% and TCS advanced by 2%.
Shares of Suzlon Energy surged by over 3% to Rs43 after the company announced that REpower, a subsidiary of Suzlon, won an order worth nearly EURO 2bn. The scrip touched an intra-day high of Rs43.9 and a low of Rs42.6 and recorded volumes of over 81,00,000 shares on BSE.
Shares of Tata Motors gained by 1.1% to Rs134 after the company announced that it has entered into an agreement with Central Bank of India for financing its range of passenger vehicles. The scrip touched an intra-day high of Rs136 and a low of Rs131 and recorded volumes of over 28,00,000 shares on BSE.
Market direction might continue to be indecisive in the coming days. There is no clear direction until we get fresh news-flow (bad or good) either locally or globally.