Technical bounce back likely
Benchmark Sensex fell by over 4% posting its second biggest single day point fall and Nifty index registered its biggest single day point fall. Following a fall in overseas markets, key indices extended its losing streak to the third straight trading session as it was a day of heavy selling across the sectors with Metal, Realty and Oil & gas stocks being among the major losers.
Finally, the 30-share Sensex fell 769 points to close at 19,261 and the Nifty index dipped nearly 5% to close at 5,777.
Cummins India edged lower 0.3% to Rs404. Reports stated that the company would source US$2bn worth of auto components from domestic vendors by 2009-10, double the current years’ target. The scrip touched an intra-day high of Rs416 and a low of Rs404 and recorded volumes of over 3,00,000 shares on NSE.
Power Grid dropped 6% to Rs137. According to reports the company secured government approval to procure US$1.6bn loan from World Bank and Asian Development Bank. The scrip touched an intra-day high of Rs147 and a low of Rs135 and recorded volumes of over 1,00,00,000 shares on NSE.
NTPC lost over 7% to Rs228. According to reports the company planned to set up imported coal based power projects on the country’s coast. The scrip touched an intra-day high of Rs246 and a low of Rs225 and recorded volumes of over 75,00,000 shares on NSE.
L&T declined 2.3% to Rs4078. Reports stated that the company shortlisted three locations for its next shipyards for which the company will invest Rs20bn. The scrip touched an intra-day high of Rs4246 and a low of Rs4050 and recorded volumes of over 7,00,000 shares on NSE.
Petron Engineering surged by over 6.5% to Rs401 after the company announced that it secured orders worth Rs988.7mn. The scrip touched an intra-day high of Rs414 and a low of Rs375 and recorded volumes of over 26,000 shares on NSE.
Networth was up 2% to Rs187 after the company declared that it sold Rs498mn stake to investors. The scrip touched an intra-day high of Rs192.65 and a low of Rs183 and recorded volumes of over 83,000 shares on NSE.
ABG Shipyard surged by over 5% to Rs893. The company announced that it secured orders worth Rs10bn. The scrip touched an intra-day high of Rs985 and a low of Rs950 and recorded volumes of over 1,00,000 shares on NSE.
Dire Straits…sultans of swing set in
The same old fears and the same old crimes, we haven't changed since ancient times. - Dire Straits, Iron Hand
Bears rocked the street on Monday as bulls were taken aback by the sudden and sharp reversal in their fortunes. (We are sure you all saw it coming!) Weak global markets, talk of expensive valuations, indifferent trend in FII flows and lack of major local catalysts exacerbated the fall. According to the provisional figures, foreign funds were big-time sellers in both, the cash as well as F&O segments. Market breadth was negative, with even the small-cap and mid-cap shares tumbling like nine pins. Traded volume spiked up, which is even worse on a bad day. In short, it was a Bear Maul. So can the bulls bounce back and resume their buying spree?
With the US shares tumbling overnight and markets across the world falling in line, one may be tempted to say that the bears will have an upper hand today as well. And, with the FIIs selling heavily the bulls will have their task cut out. However, there is a silver lining in the dark clouds. Markets across Asia, led by the Hang Seng in Hong Kong, have rebounded from a weak start. We expect a similar trend to play out in our market as well, with a slightly lower beginning and a bounce back later. The near-term outlook is still as hazy as the weather in most parts of North India. There is no getting away from the intra-day swings as bulls and bears will keep asking each other, Where do you think you’re going?
Marg Constructions says its 100% subsidiary is establishing a Multi Service SEZ at Seekinakuppam in Tamil Nadu. This is adjacent and contiguous to the Light Engineering SEZ which has already been notified by the Government.
Shiv Vani Oil & Gas Exploration Services has bagged contracts from Oil India for charter hire of 4 (four) rigs of 1500 HP / 2000 HP for a period of two years at various locations. The contract value is Rs2.6bn.
Macmillan India has now completed the acquisition of 80% stake in Frank Brothers & Co. (Publishers) Ltd., with an option to acquire the balance shareholding by March 31, 2009 at a mutually agreed valuation. This acquisition will enable the company to gain a leadership position in educational publishing in India.
US stocks slumped on Monday, as investors remained on the sidelines amid persistent worries about the state of the US economy. Technology shares were the hardest hit, as concerns over economic growth overshadowed a fresh spate of M&A deals.
Exxon Mobil and Freeport-McMoRan Copper declined on slumping fuel and metals prices. Micron Technology fell the most in 11 weeks after an analyst forecast a wider loss. Caterpillar slid to the lowest since Nov. 27 after Morgan Stanley said construction-equipment sales will slow next year.
The Dow Jones Industrial Average sank 173 points, or 1.3%, to 13,167.2, marking its first back-to-back drops of more than 100 points since Aug. 15. The Standard & Poor's 500 Index slipped 22 points, or 1.5%, to 1,445.9. The Nasdaq Composite Index lost 61 points, or 2.3%, to 2,574.46.
Market breadth was negative. Five stocks dropped for every one that rose on the New York Stock Exchange. Benchmark indexes in Asia and Europe retreated.
The Fed offered $20bn in 28-day credit through an auction. The series of auctions are part of the central bank's ongoing efforts to ease tension in the credit markets. Last week, the Fed also cut interest rates for the third time in a row since September in a bid to boost liquidity and stave off the risks of a recession.
But investors are worried that the Fed may have to stop cutting rates, particularly if inflationary pressures keep rising. Former Fed Chairman Alan Greenspan said over the weekend that the US economy is at a risk of stagflation - an environment of rising prices and slowing growth.
Monday's economic news was mixed on Wall Street. The New York Empire State index fell to 10.3 in December from 27.4 in November, a steeper-than-expected decline in the regional manufacturing read. The third-quarter current-account deficit narrowed more than expected. Homebuilder sentiment in December remained at a record low for the third straight month.
Ingersoll-Rand said it will buy Trane for $10.1bn, to create one of the largest air conditioner manufacturers in the world. Ingersoll-Rand shares fell 11%, while Trane shares jumped nearly 22%.
Aon said it will sell two insurance units for $2.75bn in separate all-cash deals. Aon shares gained 1%. Loews said its board has approved a spinoff of cigarette marker Lorillard. Loews shares gained over 2%.
National Oilwell Varco said it will buy oil drilling gear maker Grant Prideco for $7.37bn in cash and stock. National Oilwell shares fell 8.6% and Grant Prideco shares rose 13.6%.
Treasury prices rose as investors sought safety in government debt, lowering the yield on the 10-year note to 4.14% from 4.24% late on Thursday. In currency trading, the dollar gained versus the euro and slipped against the yen.
US light crude oil for January delivery fell 64 cents to settle at $90.63 a barrel on the New York Mercantile Exchange. COMEX gold for February delivery rose $1.30 to settle at $799.30 an ounce.
European shares ended sharply lower. The pan-European Dow Jones Stoxx 600 index declined 1.8% to 380.83. Germany's DAX 30 dropped 1.5% to 7,825.44, while the French CAC-40 lost 1.6% to 5,514.88 and the UK's FTSE 100 fell 1.9% to 6,277.80.
In the emerging markets, the Bovespa in Brazil tumbled 4.2% while the IPC index in Mexico plummeted 3.4% to 28,968. The RTS index in Russia was down 0.8% at 2251 and the ISE National-30 index in Turkey slipped 2.5% to 68,204.
A few key Asian markets recovered smartly from a weak start. The Hang Seng is now up 94 points at 26,690 after being as low as 26,093. It had opened at 26,515 against the last close of 26,596. The Nikkei was down 117 points at 15,132, while the Kospi in Seoul was up 5 points at 1845.
The MSCI Asia Pacific Index was down 0.6% at 151.43 as of 10:14 a.m. in Tokyo, adding to a four-day, 7.9% drop and set for its lowest close since Sept. 18.
Separately, reports say that the Bank of Japan is likely to keep its benchmark interest rates unchanged this week due to weak economic conditions, low business sentiment and slowdown in the US economy. Governor Toshihiko Fukui and his colleagues will leave the benchmark overnight lending rate at 0.5% on Dec. 20. |
