Global Selling...
Unfortunately for the bulls, they can't ignore what has been happening in the US and other parts of the world. Though the bulls had a blast in the run up to Diwali, fresh turbulence in the global markets ensured that there were no fireworks when it mattered the most i.e. during the main Diwali week. As it turned out, the Sensex lost over 1,000 points last week (including the mahurat trading). So, Samvat 2063 ended with a whimper, though the Indian market (represented by the Sensex) had another spectacular year for the bulls. The new year has begun on a disappointing note, with the global markets deeply in the red, thanks to the resurfacing of the US sub-prime mess.
The news coming from Wall Street has not been good at all in the past couple of weeks. Top US banks have revealed more losses linked to the collapse of the housing sector. The dollar's downward spiral against major currencies has accelerated, fueling renewed concerns about the unwinding of the yen carry trade. This morning in Tokyo, the yen rose to a one-and-a-half-year high against the dollar as a slump in Asian stocks prompted investors to cut holdings of higher-yielding assets bought with money borrowed in Japan.
Asian stocks declined for a third day with the Nikkei 225 Average in Tokyo hitting a 52-week low of 15,139.26 in the morning session and the Hang Seng plunging by over a 1,000 points. Stock benchmarks slid in other Asian markets open for trading. China's CSI 300 Index slumped after the government ordered banks to increase their reserves to 13.5% of deposits, up from 13%. The move comes as the government seeks to cool an economy that expanded 11.5% in the third quarter.
In Friday's trading on Wall Street, the Standard & Poor's 500 Index slumped 1.4% after Wachovia Corp. announced losses on subprime-related investments, while Bank of America and JPMorgan Chase also said their earnings may suffer. After huge swings in either direction, the Dow Jones Industrial Average finished last week down 4%, and the S&P 500 ended down 3.7%. The Nasdaq Composite index was hit the hardest last week, finishing the week down 6.5%. Meanwhile, gold lifted further above $800 an ounce to its highest levels since 1980, and crude-oil briefly breached $98 a barrel, as the dollar plunged.
Federal Reserve Chairman Ben Bernanke said on Thursday that economic growth would slow noticeably in the US in the coming months while rising oil costs would boost inflation pressures. This week, global investors will turn to the September pending home sales index, October retail sales, and regional manufacturing surveys for November, for the latest snapshot on the ailing US economy. Bad economic data may lift market odds that the Fed will continue lowering interest rates, although Bernanke's uncertainty last week in testimony to Congress left some investors confused.
Coming to the local market, we expect a weak opening amid a global meltdown. Add to it the sharp slowdown in FII inflows and lack of new triggers, and what one can infer is that the undertone has turned bearish for the time being. One should not venture into the market in the near term as there are more chances of the key indices going down than rising to new highs. Wait for a clear direction to emerge from the ongoing volatility. Stick to a stock centric approach and buy only for the long term i.e. more than six months and above.
Redington India could be in action as the company is in the process of acquiring Delhi based NBFC called Easyaccess Financial Services. The NBFC would be focusing on meeting the financial requirements in the IT industry.
European shares fell in volatile trading on Friday as worries about subprime exposure again rattled the banking sector. The pan-European Dow Jones Stoxx 600 index lost 1.6% at 367.57, on the back of big drops in the banking, insurance and technology sectors. The French CAC-40 slipped 1.9% to 5,524.18 and the UK's FTSE 100 closed down 1.2% at 6,304.90. However, the German DAX 30 managed to outperform, down just 0.1% at 7,812.40, supported by gains of 0.5% from retailer Metro.
In the emerging markets, the Bovespa in Brazil was up 1.2% at 64,320 while the IPC index in Mexico shed 0.5% to 29,158. The RTS index in Russia was down 1.1% at 2262 and the ISE National 30 index in Turkey slid 2.8% to 67,823.
In Asia this morning, stocks declined on concern losses related to US subprime mortgages will widen and as the dollar tumbled against the yen. Japan's Nintendo fell to the lowest since September on speculation the yen's gain will erode profit. HSBC Holdings dropped in Hong Kong after the Daily Telegraph said the bank will announce $1 billion of bad debts stemming from its US mortgage business.
The Morgan Stanley Capital International Asia Pacific Index dropped 2.5% to 158.70 as of 12:12 a.m. in Tokyo, set for the lowest close since Sept. 26. Japan's Topix index, which was set for its lowest close since Oct. 31, 2005, fell 2.4%.
MARKET...
Bulls Back
The struggled continued for fourth straight trading session as bulls look to have gone on holiday. Weak negative cues from the US and the Asian markets dragged the key indices to open with negative bias as the session progressed key indices further lost ground as selling pressure in the index heavyweights like ICICI Bank, ONGC, SBI and Reliance Communication.
All the BSE sectoral indices ended on the receiving end with BSE Bankex and BSE Realty index being among the major losers.
Finally, benchmark Sensex lost 217 points to close at 19,072. NSE Nifty fell 72 points at 5,710.
M&M slipped 1.6% to Rs754. The company announced that they revised its interest to bid for Ford brands. The scrip has touched an intra-day high of Rs765 and a low of Rs746 and has recorded volumes of over 3,00,000 shares on NSE.
Maruti Suzuki edged lower by 0.5% to Rs994. The company yesterday announced that they secured order from multinational fleet operator Orix for 300 units of Versa. The scrip has touched an intra-day high of Rs1010 and a low of Rs961 and has recorded volumes of over 4,00,000 shares on NSE.
Bharati Shipyard marginally gained 0.4% to Rs709 after the company announced that they bagged an order worth Rs2.1bn from Germany based Opieolok Bereederungs to build two vessels. The scrip has touched an intra-day high of Rs720 and a low of Rs685 and has recorded volumes of over 14,000 shares on NSE.
IOC advanced 1.8% to Rs512 as reports stated that the company is in talks with various African countries to buy stakes in discovered oil and gas blocks. The scrip has touched an intra-day high of Rs530 and a low of Rs496 and has recorded volumes of over 11,00,000 shares on NSE.
Biocon was up by over 4% to Rs592 as the company announced that they are seeking to buy companies in US and Europe to sell drugs in their territory. The scrip has touched an intra-day high of Rs602 and a low of Rs544 and has recorded volumes of over 2,00,000 shares on NSE.
Amtek Auto dropped by over 6.5% to Rs436. The company declared that they purchased UK firm Triplex-Kelton, for US$40mn. The scrip has touched an intra-day high of Rs498 and a low of Rs434 and has recorded volumes of over 1,00,000 shares on NSE.
Usha Martin slipped 1% to Rs98. Reports stated that the company announced to sell its subsidiary company, UM Cables to Manchester-based B3 Cable Solutions. The scrip has touched an intra-day high of Rs105 and a low of Rs97 and has recorded volumes of over 3,00,000 shares on NSE.
