Bear-hunt…Games bulls play!
When you soar like an eagle, you attract the hunters.
To put it mildly, the soaring markets did attract attention, which resulted in the indices freezing for the third time in recent years. The bulls survived a nerve-wrecking day of trading after SEBI's move to check unprecedented foreign capital inflows through P-Notes. Today, we see a higher opening as the bulls may look to hunt down the bears. A healthy trend across global markets would help them in engineering a comeback. Watch out for wild swings on the Reliance counter today.
United Breweries (UB) is likely to be in action after Carlsberg and Heineken indicated that they were in talks to form a consortium to bid for UK brewer Scottish & Newcastle (S&N). The British company has a 37.5% stake in UB along with Vijay Mallya. Shasun Chemicals will be another stock in the thick of things, amid reports that Reliance, Ranbaxy and Mylan Labs are vying for the company's API business.
Hindustan Construction is also likely to gain after a financial daily reported that Deutsche Bank has picked up a 5% stake in the company's Lavasa Project near Pune for Rs5bn. VBC Ferroy Alloys may also attract some attention amid reports that it holds around 115mn shares in Konaseema Gas Power, which is expected to come out with an IPO next year. Puravankara could also see a new high today.
Incidentally, two of the index circuits took place during the current Government's tenure and the first ever was when the Congress-led coalition surprisingly defeated the BJP-led NDA in April 2004. The Finance Minister and SEBI Chairman did their best to clarify their intent, though some on the street may not entirely be convinced by their justification.
Thankfully, their talk managed to sooth frayed nerves in the market, with the key indices bouncing back smartly by the end of trade. That doesn't mean that the storm has blown over. The risk of capital outflows and moderation in fresh inflows is very much there, as the Government seems determined to go ahead with the proposed move. But then so are many other issues like sub-prime, stretched valuation et al.
The breath-taking rally from the lows hit in August had been driven by strong FII inflows. Now, with this SEBI proposal, one has to keep a close eye on the daily trend in overseas investment. Any sustainable bad news on this front could spook the market. Having said that, given the compelling long-term growth story that India presents, not many can afford to stay away from the country. As a result, overseas portfolio capital will continue to pour into Indian stocks in the long run. Still, one has to be prepared for some hiccups as the latest SEBI move plays itself out. Any further downside should be used as an opportunity for medium to long-term investment.
Results Today: Hero Honda, Kirloskar Oil Engine, Trent, Reliance, Ranbaxy, ACC, SKF India, Garware Offshore, Wipro, Sona Koyo, Orchid Chem, Hikal, Hexaware, Petronet LNG, Biocon, GMR Infra, Great Offshore, Tanla, Omaxe and Motilal Oswal.
On Wall Street, the Standard & Poor's 500 Index rose for the first time in three days, after Intel, Yahoo! and JPMorgan Chase posted earnings that topped analysts' estimates. The Dow Jones Industrial Average cut losses at the end of a choppy session, as investors mulled upbeat earnings, mixed economic readings and record oil prices.
The Nasdaq Composite Index gained 29 points or 1%, to 2,792.67. The S&P 500 added 3 points, or 0.2%, to 1,541.24. The Dow slipped 20 points or 0.2%, to 13,892.54, dragged down by a 3.6% drop in United Technologies Corp. and a 3.2% slide in IBM.
After the close of trade, eBay reported sales and earnings that beat estimates and said that 2007 profits would top forecasts. Shares gained 5% in after-hours trading. Also, Washington Mutual reported weaker earnings that missed estimates, due partly to problems in the housing sector. The stock fell in after-hours trading.
Market breadth was negative. On the New York Stock Exchange, losers edged winners on volume of 1.42 billion shares. On the Nasdaq, decliners beat advancers by a slim margin on volume of 2.39 billion shares.
News that Turkey has approved military action in Iraq sent US light crude oil for November delivery to an all-time trading high of $89 a barrel - and caused stocks to slide in the afternoon. But the selling pressure eased up near the close as oil prices gave up gains and the Nasdaq bounced back.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.55% from 4.64% late on Tuesday. COMEX gold for December delivery rose 50 cents to settle at $762.50 an ounce.
Solid gains from the technology sector and a near-20% rise for shares of brewer Scottish & Newcastle lifted European shares. The pan-European Dow Jones Stoxx 600 index increased 0.6% to 386.23. The UK's FTSE 100 closed up 1% at 6,677.70, the German DAX 30 advanced 0.3% to 7,985.41 and the French CAC-40 added 0.8% to 5,818.18.
Scottish & Newcastle shares surged by 18.8%, after Carlsberg and Heineken said they are considering bidding together to buy the British brewer.
Latin American stocks closed higher as well. In Mexico City, the IPC ended up 1.5% to set a new closing record of 32,721.82. In Sao Paulo, the Bovespa surged 2.4% to finish at 63,193.67. In Chile, the IPSA rose 0.8% at 3,463.28. In Argentina, the Merval gained 0.2% at 2,246.21.
Asian stocks gained for the first time in three days. Hong Kong's Hang Seng Index rose above 30,000 for the first time after Beijing regulators said they may allow arbitrage between shares on the mainland and in the city. On the other hand, China's CSI 300 Index lost 2.4%.
The Morgan Stanley Capital International Asia-Pacific Index added 1% to 167.00 at 11:52 a.m. in Tokyo, halting a two- day, 2.1% slide. Financial stocks were the biggest contributor to the advance. China, Singapore, Indonesia and New Zealand were the only markets to decline.
Japan's Nikkei 225 Stock Average added 0.8% to 17,096.67, after dropping yesterday to a two-week low.
MARKET...
More swings likely
After rising from 18k to 19k mark in matter of four trading session’s benchmark Sensex crashed in the early trades of Wednesday hitting an intra-day low of 17,307.90 after SEBI proposed restraining investments by overseas funds to slow the rally in markets.
The stock exchanges were halted for an hour as both the key indices were locked to their maximum lower limits. The benchmark Sensex lost over 1,500 points and the Nifty shed by over 500 points.
However, after reopening markets gradually staged a come back following clarification from the Finance minister, P. Chidambaram that certain proposals from the market regulator was not to discourage overseas investors.
Finally, BSE 30-share benchmark Sensex ended 336 points or 1.8% lower to close at 18,715. NSE Nifty closed 108 points or 1.9% lower at 5,559.
IT stocks took the lead after Indian rupee strengthened again the USD. Index heavyweights like TCS, Infosys, Satyam Computer and Wipro were the major gainers lifting the markets from hell. Market turnover was also at all time high of Rs1.33 lakh crores.
TCS surged by over 2.5% to Rs1094 after the company announced its plans to hire 9,000 in Q3 with the full year target of recruiting 35,000 employees and also expects wage rises to stabilize by 2009. The scrip touched an intra-day high of Rs1115 and a low of Rs1000 and recorded volumes of over 17,00,000 shares on NSE.
Patni slipped 0.6% to Rs451. The company announced that they have entered in a $200mn strategic deal with Carphone warehouse. The scrip touched an intra-day high of Rs480 and a low of Rs425 and recorded volumes of over 4,00,000 shares on NSE.
Jet Airways slipped by 1% to Rs922. The company announced that it finalized an order for 20 numbers of next generation 737-800 Boeing aircrafts. The scrip touched an intra-day high of Rs926 and a low of Rs825 and recorded volumes of over 77,000 shares on NSE.
