October opportunity, buy for next Diwali
Most successful people have not achieved their distinction by having some new talent or opportunity presented to them. They have developed the opportunity that was at hand.
We’ve had enough of fireworks in September and October so far. So why worry about where the indices will be this Diwali? Today, we see another weak opening on the back of a sharp fall across global markets, sparked by Friday's big fall in US stocks, apart from of course the worries over the P-Note imbroglio. Opportunities will be available in plenty this week. Those who have the money can buy sound counters for the medium to long term. Fears of a lower circuit could be laid to rest as SEBI is reportedly investigating Wednesday’s crash when the indices were frozen for an hour amid extremely low volumes.
We expect the intra-day volatility to continue with a negative bias. The anxiety over the P-Note issue will continue at least till Thursday when SEBI will take a final call on the matter. There is hope that the market regulator will soften its stance just a little bit. It is also proposing to ease rules for hasten the registration process for overseas investors. In fact, it is expected to make the registration process public. SEBI chairman M. Damodaran is also holding a video conference with FIIs to clear the air over the P-Note issue. So, expect more statements on the P-Note issue through Thursday.
Plus, we have the meeting of the Congress-Left panel on the Indo-US nuclear deal. The communists are upping the ante and have asked the Government to make a formal announcement on the deal. Unofficially speaking, the deal is headed for cold storage, which is bad news for the country. What's worse, having tasted blood, the Left is likely to step up its resistance to a slew of big-ticket reforms over the next 18 months. Next week, we will have the RBI's mid-term review on Oct. 30. No rate cuts are expected, due to excess liquidity and higher consumer price inflation. The Federal Reserve will also announce its decision on interest rates the next day. Though most on Wall Street expect another rate cut from Ben Bernanke & Co., a school of thought believes he may not oblige.
Havells India could see some action amid reports that private equity major Warburg Pincus will pick up an 11.2% stake in the electrical equipment and power distribution company for $110mn. Patni Computer may attract some attention as a financial daily says its proposed stake sale is back on track. Sun Pharma may gain after US drug major Wyeth decided to issue a covenant 'not-to-sue' to the Indian company for preventing the latter from seeking an approval for launching a generic version of its anti-depressant Effexor XR.
Record high oil prices, weak corporate earnings and more trouble for the financial sector sent US stocks sliding on Friday, even as Wall Street marked the 20th anniversary of the 1987 market crash. Weak earnings from blue chip titans - Caterpillar, Honeywell and 3M - revived worries about the health of the world's largest economy amid a continuing slump in the embattled housing sector.
The Dow Jones Industrial Average tumbled after Caterpillar said the US economy will be near to, or even in, recession next year. Several industries it serves already are in recession, it said. The grim comments from bellwether Caterpillar helped drag down the shares of other big industrial companies and sparked a shift from stocks to the relative safety of treasury bonds.
The Dow lost 367 points and closed at the lowest since the Fed cut its benchmark lending rate Sept. 18. The S&P 500 Index slipped 39 points, or 2.6%, to 1,500.63. The Dow declined 2.6% to 13,522.02. The Nasdaq slid 74 points, or 2.7%, to 2,725.16. It was the worst percentage drop for the Dow and the S&P 500 since Aug 9.
The fall pushed benchmark indexes to their biggest weekly loss since July. The S&P 500 fell 3.9% this week and the Dow lost 4.1%. The Nasdaq declined 2.9%. The Dow suffered its third-biggest point loss of the year, its worst since the steep sell-off in early August in the midst of the credit and mortgage market mess.
The decline brought back memories of events in October 1987, when the US stock market plunged on Oct. 16 (a Friday), before collapsing the following Monday. On Oct. 19, 1987, the Dow fell 22.6% or 508 points in a single day. It was the second biggest market crash in Wall Street's history.
US light crude oil for November delivery fell 87 cents to settle at US$88.60 a barrel on the New York Mercantile Exchange. Oil briefly hit a record of US$90.07 a barrel in electronic trading.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.39% from 4.49% late on Thursday. Two-year Treasury notes rallied the most since September 2001 as investors sought the safety of government debt. COMEX gold for December delivery fell 30 cents to settle at US$768.40 an ounce.
European shares declined on Friday. The pan-European Dow Jones Stoxx 600 index fell 0.6% to 381.15. The UK's FTSE 100 closed down 1.2% at 6,527.90, the German DAX 30 lost 0.5% at 7,884.12 and the French CAC-40 shed 0.5% to 5,740.48.
Latin American stocks tumbled on Friday. The IPC index in Mexico City dropped 3.1% to 31,823.40. The Bovespa in Sao Paulo dropped 3.6% to 61,016.86. Chile's IPSA fell 0.8% to 3,414.02, and Argentina's Merval fell 1.5% to end at 2,236.87.
Asian stocks fell the most in two months this morning amid renewed concerns that credit-market losses will slow economic growth. Toyota slumped to a 14-month low after the yen climbed against the dollar. BHP Billiton and Posco declined after G7 finance ministers said widening credit-market losses may stunt economic expansion.
HOW MARKET FARED
Worries galore for bulls!
It was one of those days, in fact one of those weeks which investors and traders would not like to bear in mind as the Participatory notes issue kept the markets jittery for third straight session. Friday’s session was another highly volatile one as benchmark Sensex gyrated over 800 points in intra-day and NSE Nifty over 250 points.
Even better than expected Inflation figures that declined to a five year low was unable to spurt up the sentiments on Friday. India's inflation for the week ended October 6, 2007 fell to 3.07% from 3.26% in the week ended September 29, the lowest level since October 19, 2002, when it was at 3.01%.
Among the BSE sectoral indices, BSE IT index was the only gainer adding 0.21%. Other like Capital Good, Realty and FMCG index were down over 2.5% each. Even the Mid-Cap and the Small-Cap indexes were down over 2.5% each.
Finally, the benchmark Sensex dropped 438 points to close at 17,559 and NSE Nifty slipped 135 points to close at 5,215.
Tata Motors was down 0.3% to Rs781. Reports stated that the company entered into a strategic partnership with Jamna Auto as per which the latter would buy one of the Tata Motors shut units in Jamshedpur to make critical parts for CVs and SUVs. The scrip touched an intra-day high of Rs791 and a low of Rs760 and recorded volumes of over 2,00,000 shares on NSE.
TCS lost 1% to Rs1106. The company announced that they won the biggest ever Indian IT outsourcing deal worth US$1.2bn from the Dutch media and marketing information provider The Nielsen Company. The scrip touched an intra-day high of Rs1151 and a low of Rs1080 and recorded volumes of over 2,00,000 shares on NSE.
Rcom advanced by 2.3% to Rs727 after DOT granted GSM technology to the company in its existing license areas. The scrip touched an intra-day high of Rs748 and a low of R691 and recorded volumes of over 57,00,000 shares on NSE.
Accentia Technology slipped 1.1% to Rs231. The company announced that it is considering acquisition in billing claims. The scrip touched an intra-day high of Rs243 and a low of Rs224 and recorded volumes of over 11,00,000 shares on NSE.
Kirloskar Oil dropped by over 5.5% to Rs353. The company announced that they may restructure Auto components division. The scrip touched an intra-day high of Rs370 and a low of Rs315 and recorded volumes of over 67,000 shares on NSE.
Ashapura Minechem slipped 2.2% to Rs254. The company announced that they would consider free share plan. The scrip touched an intra-day high of Rs267 and a low of Rs240 and recorded volumes of over 57,000 shares on NSE.
Capital Good stocks continued to be on the receiving end. ABB slipped over 6% to Rs1410, Siemens lost by over 2.8% to Rs1603 and Punj Lloyd dropped 7.1% to Rs344.
IT stocks recorded smart gains as rupee pared gains. The currency declined for the fourth day on concern of overseas investment rules to be set next week will restrain capital inflows into the markets. It bellwether Infosys advanced 1% to Rs1908, Wipro edged higher by 0.8% to Rs500, and Patni added 3% to Rs440.
