Where observation is concerned, chance favors only the prepared mind - Louis Pasteur.
Be prepared for wild swings yet again and chances are you could get what you want at your price. With politics likely to dominate the headlines and the market movements coupled with anxiety over the contagion in the US subprime mortgages, the bulls and traders are in for a tough time. The Left parties have lobbed the ball in the Government's (read Congress') court over the Indo-US nuclear deal. It is now for the Government to announce its next move. Just like the mess in the US housing market, nobody has a clue what lies ahead. The moot question is who will blink first?
The Left parties have made it clear they will not budge. So, it obviously has to be the Government who has to take a step back. The uncertainty will continue to haunt the market for a while, which is not good for the bulls. As a result, we may see lot of fluctuations in the market over the next few days till the political storm subsides.
At the same time, we have to continue to keep one eye on the global markets and the developments in the US economy. The crisis there is still not over and going ahead we could get some more bad news from that front. So, it will be prudent for one to remain guarded and be selective in buying shares, which should be done at lower levels and that too in quality scrips only. Today, we expect another day of wild swings after a cautious to lower opening.
ABG Shipyard could gain as a financial daily reports that it is set to buy Western India Shipyard for Rs2bn. Mercator Lines is also likely to be in action as it considers an IPO of its Singapore subsidiary. Tata Steel and Essar Steel might attract some attention as Egypt has shortlisted the two Indian steel makers for building a $3bn plant in the north African country. Gillette India, P&G, Paradyne Infotech and Kalindee Rail Nirman will declare their results today.
Cairn India is likely to advance as it has reportedly received government approval for transporting its Rajasthan crude to Gujarat coast through a pipeline. Bajaj Auto plans to halt production of two wheelers at its four decade old Akurdi plant in Pune, in September. The plant made 350,000 vehicles in 2006 and 50,000 in 2007. Production could be shifted to the company's Waluj facility.
Shree Renuka Sugars could rise as it has completed the acquisition of the Ethanol plant of Dhanuka Petro-Chem located at Khopoli, Maharashtra. The company has also set up a wholly owned subsidiary in Sharjah International Free Zone for its overseas investments. ORG Informatics has signed an agreement with Belgacom NV/SA to acquire Belgacom's satellite based business. The acquisition will involve all the customer contacts and assets.
The Nasdaq slipped and the broader market struggled after remarks by CEO of troubled mortgage lender Countrywide Financial stoked worries about the ongoing turmoil in the credit and mortgage markets.
Countrywide Financial CEO Angelo Mozilo said the housing slump may slow consumer spending and lead to an economic contraction.
The Standard & Poor's 500 Index lost 1.57 points, or 0.1%, to 1,462.5. The Dow Jones Industrial Average ended unchanged at 13,235.88. The Nasdaq Composite Index slipped 11 points, or 0.4%, to 2,541.70.
Financial shares contributed the most to the drop after the Federal Reserve said outstanding US commercial paper fell 4.2% last week, the biggest decline in at least seven years. Commercial paper backed by assets led the fall as buyers fled debt linked to subprime mortgages.
US stocks had risen in the morning after Bank of America said it was making a $2bn investment in Countrywide Financial. But the advance was short-lived, and stocks turned lower in the afternoon.
Also adding to worries was news that the Fed injected $17.5bn in temporary reserves into the banking system.
But, losses were limited as energy producers rallied after the price of crude oil rose for a second day. About five stocks fell for every three that gained on the New York Stock Exchange.
In the Treasury market, the 10-year note ended little changed to yield about 4.64%. In currency trading, the dollar slipped versus the euro and rose versus the yen. COMEX gold for December delivery fell 30 cents to settle at $668.40 an ounce.
US light crude oil for October delivery rose 57 cents to settle at $69.83 a barrel on the New York Mercantile Exchange.
European shares closed slightly higher marking their fifth winning session in a row. The pan-European Dow Jones Stoxx 600 index rose 0.2% to 369.33. The German DAX 30 closed up 0.2% at 7,511.96 and the French CAC-40 added 0.1% to 5,523.33. The UK's FTSE 100 closed up 0.01% at 6,196.90.
Major Latin American markets closed higher. Brazil's Bovespa index erased losses after Moody's lifted the ratings on the government's foreign-and local-currency bond ratings to Ba1 from Ba2.
Mexico's IPC ended up 0.7% at 29,459.82 and Argentina's Merval rose 1.5% to 2,038.29. Chilean stocks, however, shed 0.1% at 3,206.79. In other emerging markets, the RTS index in Russia gained 0.6% at 1864 while the ISE National 30 index in Turkey rose 1.17% to 59,320.
Most Asian markets were down this morning between 0.3% to 1%. The Nikkei was down 53 points at 16,262 while the Hang Seng in Hong Kong fell 230 points at 22,736. The Kospi in Seoul dropped 20 points to 1778 and the Straits Times in Singapore slipped 36 points to 3334.
Political uncertainty had the better of the bulls on the Indian bourses today, and for a change the market players forgot about the crisis in the US subprime mortgage market and the turmoil in the global credit markets. The bulls ran for cover even as the CPI (M) asserted their pre-eminent position as the key allies of the Congress-led coalition Government. After a highly choppy day of trade, the key indices ended in the red despite a firm trend across global markets. The benchmark BSE Sensex closed at 14,163, down 85 points or 0.6% from the last close after touching a high of 14,554 and a low as 14,128.
Ambuja Cement gained by 2% to Rs132 after Holcim announced that it further purchased 3.9% of the company for $220mn at Rs154 per share and to further bid for 20% of Ambuja Cement. The scrip touched an intra-day high of Rs154 and a low of Rs131 and recorded volumes of over 1,00,00,000 shares on NSE.
L&T pared its gains however managed to end with marginal gains 0.3% to Rs2396 after the company announced that they have secured order worth $70mn. The scrip touched an intra-day high of Rs2468 and a low of Rs2360 and recorded volumes of over 13,00,000 shares on NSE.
Satyam Computer advanced by 1.3% to Rs422 after India's fourth- largest computer-services provider won a three year contract from KPN, a European telecommunications provider. The scrip touched an intra-day high of Rs429 and a low of Rs419 and recorded volumes of over 29,00,000 shares on NSE.
VSNL declined by 1% to Rs378. Reports stated that India's largest provider of overseas calls lost a tax appeal of as much as Rs10bn. The scrip touched an intra-day high of Rs395 and a low of Rs364 and recorded volumes of over 3,00,000 shares on NSE.
Hindustan Zinc slipped 2.7% to Rs676.The company announced that they have cut Zinc prices by Rs6,000. The scrip touched an intra-day high of Rs719 and a low of Rs670 and recorded volumes of 56,000 over shares on NSE.
After being on the receiving end in the previous trading session, select Realty stocks bounced back. Sobha gained 1.4% to Rs745, Ansal infrastructure advanced 2.2% to Rs252. However, DLF slipped 0.5% to Rs555, Akruti was up by 1.2% to Rs475 and Parsvnath lost 2.5% to Rs269.
FMCG stocks ended with smart gains as the index gained 1.1%. ITC gained 1.3% to Rs160, Tata Tea advanced 1% to Rs676, HLL was up by 0.6% to Rs197 and McDowell added 3% to Rs1302.
IT stocks also ended higher led by gains in the index heavy weights like Infosys, the scrip gained 1.2% to Rs1811, Satyam Computer rose 1.3% to Rs422, Financial Technology added 0.8% to Rs2032.
Cement stocks recorded smart gains after Holcim announced that it further purchased 3.9% of Ambuja Cement at a premium price of Rs154 compared to yesterday's close of Rs130.2, the scrip rose 2.04% to Rs132, ACC surged by 2.1% to Rs972, Kesoram Industries was up by 2% to Rs429 and Grasim added 0.8% to Rs2751.
Banking stocks witnessed selling pressure. SBI lost by over 3% to Rs1414, ICICI Bank was down by 2.5% to Rs824 and HDFC Bank slipped 1.6% to Rs1100. OBC, Corp Bank and Canara Bank were the major losers among the Mid-cap stocks.
Select Metal stocks also pared their gains. Tata Steel lost 1.7% to Rs559, SAIL was down by 0.5% to Rs141, Hindalco ended flat at Rs139. However, National Aluminum added 1.4% to Rs255.Fund Activity:
FIIs were net buyers of Rs2.75bn (provisional) in the cash segment on Thursday and the local institutions pumped in Rs5.31bn. In the F&O segment, FIIs were net buyers at Rs9.49bn. On Wednesday, foreign funds pulled out Rs6.68bn from the cash segment. Mutual Funds were net buyers at Rs228mn on the same day.
Major Bulk Deals:
Sundram BNP Paribas has picked up Emkay Shares; CLSA Mauritius has sold Mahindra
Gesco; Sundaram MF has sold Royal Orchid Hotels; Prabhudas Lilladhar has purchased
SEL Manufacturing; Morgan Stanley has bought Shree Ram while UBS Securities has
sold the stock; Deutsche Securities has picked up Standard Industries while Bear
Stearns has sold it.
Lower Circuit:
LML, Atlanta, EC Network, Jaybharat Textile, Balasore Alloys, IOL Broadband, Anant
Raj Industries, Era Construction and Bag Films.
Upper Circuit:
Prism Cement, Kothari Products and Prakash Industries.
Delivery Delight (Rising Price & Rising Delivery):
Andhra Bank, Bank of Maharashtra, Birla Corp, ITC and Mahindra Gesco.
Abnormal Delivery:
GNFC, Hero Honda, ICICI Bank, Bajaj Auto and IDBI.
Major News & Announcements:
Govt to review fuel prices on Sept. 1: Oil Minister
Reliance Capital buys 26% of Victory transformer for Rs750mn
Accentia Technologies buys Thunga Software in all cash deal
Cairn gets right to buy land for pipeline – Reports
Grindwell Norton to sell stake in Lincoln Helios for Rs1bn
ICSA secures order worth Rs186mn
Standard Chartered to buy 49% stake in UTI Securities
L&T secures order worth $70mn
ITD Cementation secures Rs8.93bn order
Myanmar awards 3 deep water blocks to ONGC – Reports
Holcim buys 3.9% in Ambuja Cement for $220mn at Rs154 per share
Holcim announces open offer to buy another 20% in Ambuja Cements at Rs154/share
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