The market is expected to remain cautious on Tuesday, as selling is likely to continue in stocks amid political uncertainty and slowing Chinese demand. A technical bounce during the day is likely but may be used by many as an opportunity to sell again.
The Exit Polls after the second phase of polling covering over half the Lok Sabha constituencies on Monday showed the Bharatiya Janata Party-led National Democratic Alliance (NDA) losing steam and predicted a hung Parliament.
There could be some amount of bargain hunting in select heavily battered stocks at lower levels.
The inflow from foreign institutional investors (FIIs) was an unimpressive Rs 25.20 crore on Friday (30 April). Nevertheless, the inflow though tiny was much better coming in after an heavy outflow of Rs 332.30 crore on Thursday (29 April), which was the biggest daily outflow by FIIs in months. Earlier, a bout of heavy inflow from FIIs was witnessed on 19 April (Rs 693 crore), 22 April (Rs 955 crore) and 23 April 2004 (Rs 381 crore).
US stocks rallied on Monday, bouncing back after last week's declines, as investors geared up for Tuesday's Federal Reserve meeting. The Nasdaq composite (up 18.50 points to 1938.72) jumped about 1%, while the Dow Jones industrial average (up 88.points 40 to 10314.00) rose about 0.9%.
Back home, selling in Old Economy – notably commodities – stocks dragged the market lower once again on Monday amid concerns about political uncertainty and fears of slowing of Chinese demand. Stocks of PSUs also lost sharply amid political uncertainty. Last-minute recovery in heavyweights failed to lift the market in the positive zone. Yet, down nearly 150 points at one point, the 30-share BSE Sensitive Index (Sensex) eventually ended with a loss of 70.10 points, or 1.24%, at 5,584.99.
From a recent high of 5,979.25 touched on 23 April 2004, the Sensex has already shed 394.26 points on selling pressure.
Weakness was observed across major European and Asian markets. Apprehensions regarding rise in interest rates that is likely to slow down the recovery process weighed heavy on investor sentiment. Also, there were concerns over the proposed slowing down of the Chinese economy. The Chinese administration's plans of cooling off the high levels of economic growth in the country rendered the commodity stocks fall steadily. This is because China has, over the past few years, been one of the largest consumers of commodities in the world. Any effort of slowing down this consumption process is likely to have a negative effect on the prices of commodities globally.
Markets across the globe are also awaiting the outcome of the meeting of the US Federal Reserve, which would set the stage for a rate rise. It is anticipated that the US central bank will keep interest rates which are at 46-year low of 1% unchanged on Tuesday. Market men are, however, awaiting the post-meeting statement of the Fed which is likely to free the Fed's hand for an eventual action.
Meanwhile, the trend in the quarterly results has been encouraging so far. Out of the 854 companies’ results that are available with capitalmarket.com, aggregate results of 840 comparable companies indicates a 52.70% growth in net profit at Rs 10,199 crore, on a 17.80% rise in sales to Rs 105,035 crore.
STOCK NEWS 4 APRIL
Stocks of commodities like steel, aluminium and copper may continue to decline amid concerns over the proposed slowing down of the Chinese economy. The Chinese administration's plans of cooling off the high levels of economic growth in the country has resulted in the commodity stocks losing steadily in the last few sessions. This is because China has, over the past few years, been one of the largest consumers of commodities in the world. Any effort of slowing down this consumption process is likely to have a negative effect on the prices of commodities globally.
Tech stocks may gain ground following recent hardening of US dollar against the Indian rupee. The rupee has lost some of its recent gains in the last few sessions amid slowing foreign portfolio investments amid the political uncertainty and fresh supply of dollar in the currency market. The dollar rose 50 paise or 1.1% against the rupee in the intra-day trading on Monday, touching 45.01 – a five-week high.
Kotak Mahindra Bank may gain ground on reports that the US-based International Finance Corp (IFC) is likely to invest in the new-generation private sector bank, even as it cuts exposure in Centurion Bank and Global Trust Bank to 3% and 4.2% respectively.
Cement stocks may gain ground on reports that cement makers are set for a big-ticket growth, buoyed by a strong surge in demand, especially in northern and western regions on the eve of elections. Cement despatches by leading companies in April have increased between 14.1% and 22.4%. L&T topped the list with a 22.4% growth in despatches. The Aditya Birla flagship Grasim has recorded a 20.48% in its despatches, while Gujarat Ambuja Cements' despatches have risen 18%. ACC recorded a 14.1% growth in its despatches for April.
Wockhardt may gain ground on reports that the company has received approval from the Drug Controller General of India (DCGI) to conduct phase I clinical trials on an anti-bacterial new chemical entity (NCE) for treating respiratory infections. Wockhardt had filed two investigational new drug applications (INDAs) for clinical trials of the oral and intravenous forms of WCK 1152, the code name for the NCE.
ICICI Bank may ease after the Reserve Bank of India (RBI) said on Monday that foreign funds cannot make fresh purchases of ICICI Bank's shares without its approval, as their holdings had reached a trigger limit of 47% of its paid-up capital.
TVS Motor Co may ease after the company announced on Monday that its sales in April 2004 fell 19.6% to 46,881 motorcycles from 58,291 a year earlier. The company also sold 15,172 light scooters and 18,979 mopeds in April, up from 9,880 light scooters and 16,576 mopeds in the same month last year. Total vehicle sales were down 4.4% to 81,032 units from 84,747.
Wipro may see some action after the Anglo-Dutch oil giant Royal Dutch/Shell said on Monday that it had awarded an outsourcing deal to Indian software services exporter and US software major IBM. The company has reportedly signed a master of services agreement with IBM and Wipro.
Century Enka announced improved Q4 results on Monday. For quarter ended 31 March 2004, the company posted a net profit of Rs 19.71 crore (Rs 12.70 crore) on total income of Rs 222.06 crore (Rs 183.07 crore). For year ended 31 March 2004, the company’s net profit stood at Rs 57 crore (Rs 58.09 crore) on total income of Rs 812.91 crore (Rs 755.91 crore).
Bhushan Steel and Strips announced Q4 and FY 2003-04 results on Monday. For quarter ended 31 March 2004, the company posted a net profit of Rs 34.44 crore (Rs 23.17 crore) on net sales of Rs 523.74 crore (Rs 342.87 crore). For year ended 31 March 2004, the company posted a net profit of Rs 90.30 crore (Rs 55.05 crore) on sales of Rs 1,577.40 crore (Rs 1,134.48 crore). The company declared 10% dividend of FY 2003-04. |
