Seems Bounce a While
When there is no peril in the fight there is no glory in the triumph.
The bulls of course may be knowing this axiom, for they have fought back quite well after the August meltdown and the P-Note scare last month. The rebound that we hoped for didn't materialise yesterday. The local bulls developed cold feet amid renewed worries over the subprime mortgage contagion in the US and its fallout on the global markets. However, there is a chance that the bulls might just have enough stamina in them to stage a comeback today. The overall trend will remain choppy as FII inflows have slowed in the past few days and fresh bad news pours in from the US housing and financial sectors.
Traded volume may be lower as most players are in a holiday mood ahead of an extended weekend on account of Diwali. Select stock centric, and in some case sector specific action will continue to be the order of the day. Investors should do well to remain on guard amid heightened volatility and lack of clear direction. But, that's just for the near term. There is no change in the positive outlook over the longer term period. So, one should prepare oneself to ride the secular bull run in the Indian market. Today, we expect a higher opening as Asian markets have bounced back from yesterday's big fall.
Hotel stocks will gain as a financial daily reports that the Government is likely to give 5-year income-tax holiday to star and budget hotels. Bajaj Auto will be in action post its tie-up with Austria-based KTM. M&M is another stock to keep an eye on as it is believed to be the frontrunner for acquiring Italy's gear maker Metalcastello. Unitech and Orissa Sponge will attract attention amid reports that the realty major's promoters are close to buying a 40% stake in the company as a backward integration plan. Biocon may perk up on acquisition news. TIL (formerly Tractors India) might advance as a pink paper reports that Enam Capital has bought nearly 12% in the Kolkata-based company.
Eicher Motors may rise amid reports that it is in talks with various players for strategic partnership for heavy commercial vehicles. Power companies like Torrent, Reliance Energy and Tata Power will extend their rally amid news that they are bidding for the 2,000 MW project in Gujarat. Dawn Mills is expected to be in the limelight after a business daily reports that Standard Chartered close to buying two lakh square feet of space in the Lower Parel, Mumbai-based mill. Glenmark Pharma and SKF India could gain ahead of some announcements expected tomorrow.
US stocks fell to the lowest in two weeks after Citigroup said it will report as much as $11bn in additional writedowns, heightening concern that financial companies face more losses tied to subprime home loans.
The largest US bank by assets tumbled for the fifth straight day after it said the charges will cut profit by as much as $7bn. Morgan Stanley, Merrill Lynch and Goldman Sachs also dropped on speculation securities firms will post more writedowns on top of the $40bn announced in the past four months.
Home Depot and Lowe's led an index of retailers to the lowest in a year after Deutsche Bank Securities said the housing slump will hurt profits through 2008.
The S&P 500 Index slid 7 points, or 0.5%, to 1,502.17, its lowest since Oct. 19. The Dow Jones Industrial Average lost 52 points or 0.4%, to 13,543.4. The Nasdaq dropped 15 points, or 0.5%, to 2,795.18.
Market breadth was negative on Wall Street. About three stocks dropped for every one that rose. Financial firms also led benchmark indexes lower in Europe and Asia.
On the economic front, a reading on the service sector of the economy came in stronger than expected.
Oil prices fell. Light, sweet crude for December delivery lost $1.95 to settle at $93.98 a barrel on the New York Mercantile Exchange.
Gold prices kept rising after climbing to their highest level in nearly 28 years Friday. COMEX gold for December added $2.30 to $810.80 an ounce.
Treasury prices edged higher, lowering the yield on the benchmark 10-year note to 4.3%, down from 4.32% late on Friday. The dollar gained versus the euro and retreated against the yen.
European shares declined for the third straight session. The broader pan-European Stoxx 600 index fell 0.7% to 377.39, with miners down as gold prices slipped. Germany's DAX 30 lost 0.5% to 7,807.55 and the French CAC-40 slid 0.6% to 5,684.62. The UK's FTSE 100 was hit especially hard, closing down 1.1% at 6,461.40.
In emerging markets, the Bovespa in Brazil shed 1.7% to 62,959 while the IPC index in Mexico slumped 2.1% to 30,157. The RTS index in Russia dropped 0.4% to 2228 and the ISE National-30 in Turkey was down 1.8% to 70,982.
Asian stocks rose this morning for the first time in three days, led by Japanese consumer lenders after Goldman Sachs advised investors to buy Acom and Takefuji Corp.
MSCI's regional index gained 0.6% to 166.52 as of 11:13 a.m. in Tokyo, after sliding 3.9% in the previous two sessions. Financial shares were the biggest contributor to the advance.
Japan's Nikkei 225 Stock Average gained 0.5% to 16,353.93, while the broader Topix index climbed 0.9%. Benchmarks in other markets open for trading advanced except New Zealand.
Acom, Japan's second-largest consumer-finance company, posted the biggest advance on the Morgan Stanley Capital International Asia Pacific Index. Mitsubishi UFJ Financial, Japan's biggest publicly traded bank and a shareholder in Acom, advanced for the first time in four days.
Gold trading near a 27-year high helped lift Newcrest Mining, Australia's largest miner of the precious metal. Hyundai Steel, South Korea's No. 2 steel maker, rose to its highest in three weeks after reporting increased earnings. Westfield Group climbed following an unexpected pickup in U.S. services industries expansion.
MARKET....
Momentum Bounce back
A weak opening ended with a negative close as shaky cues from the Asian and the European markets coupled with selling pressure in the Banking, Oil & Gas and IT stocks dragged the key indices lower.
Markets further lost ground in the second half as selling intensified, however managed to recoup towards the end with benchmark Sensex slipping 385 points to close at 19,590 and Nifty lost 85 points lower at 5,847.
Hotel Leela rallied by over 8.5% to Rs50 after reports stated that Blackstone, US-based PE, may invest Rs50bn in the company. The scrip touched an intra-day high of Rs55 and a low of Rs47 and recorded volumes of over 62,00,000 shares on NSE.
Jet Airways advanced 1% to Rs830 after the nation's largest domestic carrier announced on November. 2 that they would raise the fuel surcharge by Rs150 on all types of fares. The fuel surcharge would be raised to Rs1,350 per ticket. The scrip touched an intra-day high of Rs846 and a low of Rs822 and recorded volumes of over 59,000 shares on NSE.
M&M was down by 1.4% to Rs744. The company on November 2 announced that India's largest maker of sport-utility vehicles and Navistar International Corp., a U.S. truck-maker, agreed to spend $90mn in the next five years to make truck engines in India. The scrip touched an intra-day high of Rs754 and a low of Rs736 and recorded volumes of over 8,00,000 shares on NSE.
Hindustan Zinc slipped 2.6% to Rs861. The company announced that they have lowered prices of zinc and raised prices of lead. Zinc prices were cut by 2.9% to Rs127,300 per metric ton. Lead prices were raised by 0.3%, to Rs160,900 per ton. The scrip touched an intra-day high of Rs884 and a low of Rs855 and recorded volumes of over 76,000 shares on NSE.
Power Grid advanced 2% to Rs152 after reports stated that the company secured Rs42bn mega transmission project. The scrip touched an intra-day high of Rs155 and a low of Rs148 and recorded volumes of over 21,00,000 shares on NSE.
Raymond was up 4.2% to Rs369 after the Board of Directors of the company announced that they would consider selling warrants to founders. The scrip touched an intra-day high of Rs381 and a low of Rs351 and recorded volumes of over 3,00,000 shares on NSE.
Jindal Drilling surged by over 5.5% to Rs1101 after the company announced that they have secured Rs103cr contract. The scrip touched an intra-day high of Rs1190 and a low of Rs1060 and recorded volumes of over 11,000 shares on NSE.
Reliance Communication slipped 1% to Rs777. The company formed an Internet TV partnership with Microsoft. The scrip touched an intra-day high of Rs799 and a low of Rs762 and recorded volumes of over 90,00,000 shares on NSE.
Jyoti Structures gained 2% to Rs284 after the company on Monday announced that they have formed a Joint Venture Company, Jyoti Structures Africa (Pty) Ltd. in Johannesburg, South Africa to participate in the transmission line markets of Southern Africa. The scrip touched an intra-day high of Rs293 and a low of Rs279 and recorded volumes of over 78,000 shares on NSE.
