Present Rally Might Not Sustain for Long

Most of the markets have look to be in extremely oversold zone. I think at present a small infusion of liquidity can raise the market, but somehow market will find it difficult to sustain gains. Present rally may fade by April but in the second half of 2008 it will be more durable.

The only reason with US to take some breath is strong exports due to dollar devaluation.US Consumer Confidence is down sharply and will remain subdued for the next few months. The housing market is in a bad shape. The default rate may go up to 20%. However, most of the US sub-prime write downs have already been accounted for. But anyhow, the uptick in the off shoring market turns out to be a positive for India.

Though food and energy prices are driving inflation and core inflation is not as high, but then also inflation over 7% will be bad and market may not be prepared for that Moreover, the impact of earnings season will also be key market sentiment driver.

So on whole growth has moderated but that has happened from very high levels. However, growth divergence will persist and will continue to bring FII money into India. In Asian Markets downside risk is limited but in shorter we can see this rally fading away soon.

Scrips for Week Ahead

For 31.02.2008 - 04.02.2008


1. JK Cements.

2. Nagarjuna Construction Company.

3. Venkys India.

4. Abott India.

5. MSK Projects.

Some Relief: Brings Reason to Smile & Opportunity for All

After a long time there is some relief and investors have a reason to smile as the market moved upwards for four continuous trading sessions in the last week. On Tuesday (March 25, 2008) the market even witnessed 900 point plus gains-its second highest single day upward movement-largely because of the positive US market triggers. Significantly the recent rally has been more broad-based where even mid-caps and small-caps moved up. In addition, on Wednesday (March 26, 2008) while the Sensex was down by 130 points, the broader market was quite resilient. BSE-500, CNX Mid-cap, Nifty Junior and BSE Small-cap indices closed either flat or even higher. Do these developments indicate that the worst is over for the market? Are we being too optimistic to call it the end of the bear run?

Many of the reasons that caused indices to plunge are yet to show up in actual numbers. Barring the sub-prime losses that continue to singe banks and securities firms, other concerns have not yet demonstrated its impact in actual numbers. The US slowdown is still in the works and corporate earning outlook in the US continues to be mixed.

What are the other concerns? Rise in global commodities' price and inflation are becoming bigger worries worldwide. The price rise in commodities is putting pressure on inflation and at the same time, reduction in interest rates is very essential for consistent growth.

Even India's WPI-based inflation is now nearing six per cent and things are going to worsen as the Sixth Pay Commission may result in higher inflationary pressures. Therefore, this rules out any reduction in interest rates, which is crucial to maintain high growth rates. Even finance minister P Chidambaram concurs the fact that global slowdown may impact the growth of Indian economy. On the domestic front, advance tax collections have been strong even while industrial production seems to have slowed down and some brokerages have lowered the GDP growth estimates for the next fiscal to less than eight percent. So this does not show a clear picture at least in the near-term. But as stock markets are always ahead of the real economy, probably much of the bad news is already priced in.

But everything is not grim for the market and the economy. There has been a great deal of FII buying in the last three days. FIIs have been net buyers to the tune of Rs 2206.60 crore. Although earlier FIIs were net sellers in the Indian market, it was not because the high valuations but it was because of the urgent need for liquidity to bail out their parent companies suffering from the sub-prime losses in the US. A section of the analyst community also believes that as the price of crude has gone up substantially even the petro-dollar will provide the desired liquidity to global financial markets.

Even mutual funds have considerable cash and this could be around 7-8 per cent of their total asset under management. Along with this, expect large inflows in tax saving mutual fund schemes and insurance related savings by the end of March as the financial year is coming to an end. All these funds are expected to come into the market and could provide considerable liquidity and help the Indian market to surge.

As usual predicting market is difficult and it is tough to pin-point the level at which the market will find its bottom. True, we can predict a range. It maybe reasonable to assume markets have substantially discounted the ill effects of the US financial meltdown. Still the near-term direction of the market depends on global cues and events. I believe that the market unlikely to go below the 14000 level but any bad news on global and domestic funds will further push the market to the 11500 level.

At the current level investors can look at investing systematically with an investment time frame of about two to three years. Given the extent of sell off, the market may take some time to consolidate, unlike in the earlier pull backs where the recovery was quick.

On the corporate front, Tata Group has again signed a land-mark deal. Group Company Tata Motors has entered into a MoU with Ford to purchase iconic brands Jaguar and Land Rover (JLR) for $2.3 billion. The response to the deal has been mixed from the analyst community. While some of them have put a buy recommendation on Tata Motors, some others find the deal negative for Tata Motors at a first glance. Whatever may be the impact in the near-term; the deal is surely going to benefit the company in the long-term.

Regarding the market those who are already invested, remain invested at the current level. Those who have not participated in the market or are under-invested; this is the time to participate in a systematic manner, thereby eliminating the need to time the market. For the short-term traders I still advise them to take every rally as a selling opportunity.

Source: Flash News Vol 23-No.48

Indices Drifted to Settle Lower

Key indices drifted in and out of the positive terrain today to settle lower. The frontline indices ended in red but the broader markets continued to outperform closing in green.

Sector wise, metals posted modest gains whereas the banking pack was a laggard. Selling Pressure was also seen in power and oil stocks. Select realty and metal stocks were attracting buying interest.

Asian markets paused today after some good sessions of trade, and ended mixed.The Sensex closed down 130.66 points or 0.81% at 16086.83, and the Nifty down 48.65 points or 1.00% at 4828.85.

Biggest index losers were ICICI Bank (down 4.54%), Hindustan Unilever (4.37%), Bharti Airtel (4.24%), BHEL (3.51%) and Jaiprakash Associates (3.47%). Major gainers comprised Tata Steel (up 3.79%), HDFC (3.48%), ITC (2.09%), Infosys Technologies (0.49%) and Satyam Computer (0.47%). Across BSE, around 1837 shares advanced against 1,159 declines, while on NSE, there were 804 gainers and 430 losers.


Market Snapshot

• Sensex, Nifty end in the red amid volatile day of trade

• Small-cap Index outperforms all other major indices

• Sensex ends down 131 pts at 16087; Nifty down 48 pts at 4829

• CNX Midcap Index up 0.745, BSE Small-cap Index up 2.12%

• Index Gainers; Tata Steel up 3.4%, Idea up 3.3%, HDFC up 2.9%

• Index Losers; Nalco down 5.5%, HUL, ICICI Bank down 4%, Bharti down 3.6%

• Realty & IT stocks gain the most

• Realty stocks: Purvanakara up 22%, Orbit up 20%, IBREL up 10%

• Midcap IT: KPIT Cummins up 22%, Mastek up 14.5%, Firstsource up 10.5%

• Other gainers; Guj NRE Coke up 10.8%, Yes Bank up 13%, GHCL up 13%, India Infoline up 9.2%

• NSE Advance Decline at 2:1

Has The Time to Get Back arrived?

Markets rallied yesterday showing absolute strength. Experts attribute this rally to the positive news flow from the US and from FIIs.

This is also because some regain in investors and traders confidence on market. Markets were at bottom with 14,500 to 15,000 levels and 4,500 for the Nifty.

If the positive path continues and markets show stability over the next few weeks, more strength will come in. As post the March cleans up of balance sheets, April will see more money being pumped into markets.

Where to Invest and Where to NOT?

But despite the good news, it is a tricky call to buy in this market. This is because, markets have seen very erratic movements and depending upon the news flow; market could react even negatively to anything that comes by from the overseas market. But on an overall basis, I think that the first hint of positive news flow will bring back the liquidity waiting at corner, because most people are waiting for some stability and financial year end. So overall we are positive, but then also some negative news can bring negative energy with it in market.

There is strong visibility of earnings in sectors like capital goods, telecoms, FMCG but for people who are interested in investing for the longer term. With the short term perspective people could go for select pharma stocks. One can also look at some IT stocks and the metal space where stocks have taken a beating over the last few trading sessions. Any how one should refrain from investing in Banks and Real State stocks.

Cues From Global Peers: Let Sensex Breach Sweet 16

... Sensex registers Second Biggest Gain in Its History


The pull-back in Indian equities strengthened on Tuesday, with the Sensex registering its second biggest gain in absolute terms in a day, breaching some important psychological levels.

Sensex has breached 16,000 mark while the Nifty closed above 4850 levels. Both, Sensex and Nifty were up 6% each. Heavy buying was seen in scrips across sectors, Realty, banks and IT stocks were amongst the major gainers.

Bombay Stock Exchange’s Sensex closed 959 points or 6.27 per cent higher at 16,248.10. The index rose to a high of 16,255.03 intraday. National Stock Exchange’s Nifty finished, 285 points or 6.17 per cent higher at 4894.30, near its intraday high of 4896.80.

The broader markets also followed the suit, the midcap index closed with a bump of 6.7% at 6,198.65 and BSE Small cap Index ended 5.28 per cent up at 7,317.34.

The cues from global peers were encouraging as most of the Asian markets ended in green, as US market picked up another triple-digit gain yesterday with the Dow gaining 187 points.

Jaiprakash Associates (up 17.47%), DLF (14.86%), Reliance Energy (12.09%), HDFC (9.9%) and Wipro (9.59%) were the biggest index gainers.

Falling Stocks Increase the Debt Burden - INDIA

$4.7 bn worth of bonds yet to be cashed in have a conversion price 40% higher than the current stock price

Indian companies that raised money through Foreign Currency Convertible Bonds (FCCBs), a quasi-equity instrument, could well be staring a huge debt burden in the face because their stocks have fallen well below the level at which this debt would have been converted into equity.

An analysis of Bloomberg data reveals that the outstanding amount on all Indian FCCB issues—bonds that haven’t already been convert-ed into equity—is to the tune of $17.7 billion (Rs71,685 crore). Of this, $4.7 billion worth of bonds have a conversion price that is at least 40% higher than the current traded price of the stock.

If these bonds actually end up as debt, it would come as a rude shock for the firms. They have to pay interest on the bonds and may even have to resort to fresh borrowings in order to repay bond holders. It will also affect their debt-equity ratio and leveraging power.

It is still early to gauge the extent of impact; most bonds mature after 2011 and market situation can change. However, it is too early to gauge the extent of impact on Indian firms’ balance sheets as in most cases

MeltDown in Indian Market pulls Current Prices below Conversion Prices

The meltdown in the Indian stock market this year, induced by global bearishness following the subprime crisis in the US, has resulted in pulling down the current market price of the shares of some Indian FCCB issuers way below the bonds’ conversion price.

FCCBs are debt instruments, issued normally in dollars, with an option to convert them to equity at a pre-determined price. The convertible bonds, which help companies raise foreign currency funds at attractive rates, have largely been zero-coupon bonds, where the interest payment is due on the maturity of the bonds. As a result, there is no cash outflow from the issuing company either towards interest payments or for repayment of principal.

FCCBs are usually priced at a premium of 30-70% over the prevailing market price of the share and the option holder converts the bonds to equity if the stock price exceeds the conversion price. If the market price of the stock does not exceed the option price, the holders will not opt for equity conversion and the issuer will have to redeem the debt.

Although these instruments are treated as debt on the balance sheet, the assumption at the time of issue is clearly that the bonds will get converted into equity and no payments need be made by the issuer towards redemption. In fact, corporations usually do not even show the pro-rata interest charge on account of FCCBs in their profit and loss statement. FCCB holders normally convert their holdings when a company’s shares are trading at a hefty premium to the conversion price. Else, they prefer to hold on to the bonds till maturity and earn interest income, which would be about 35% of the original investment for a bond with a 6% yield and a five-year tenure. It’s only when they are assured that the return on the shares will be much higher than the interest earned on the bonds, that they convert FCCBs into equity.

Some of these issuers could be in a difficult situation as they may not be capable of raising additional debt to repay FCCB holders (if the bonds are not converted). Some companies, then, could even collapse under the weight of their outstanding debt.

Harshad Shaped Indian Market... ?

In 1992, a man drove to State Bank of India headquarters in his glistening new Toyota Lexus, which had just been launched in the international market. Obviously, the owner had paid a fortune to import the car. A few days later, the news media reported that around Rs 6 billion (149.418 million USD)* worth of government securities were missing from SBI.

Investigating agencies, pressed into service to uncover the facts behind the missing securities, discovered that the unaccounted securities were just the tip of an iceberg. Deeper investigations revealed that the shortfall in securities was not only in SBI but in other national and foreign banks and financial institutions as well. It became apparent the securities scam ran into more than Rs 35 billion (871.605 million USD)*. The man behind the news that shook the market’s financial foundations was Harshad Mehta.

This huge suck-off almost took the wind out of the financial reforms introduced only a year ago.

In fallout of this massive con game, the stock market crashed 40 per cent and wiped off more than Rs 1 lakh crore in two months. This unexampled securities swindle exposed the underlying loopholes in monitoring, banking and capital market processes and the vulnerability of the country’s economic structure. A slew of plug-in measures were initiated.

Market regulatory bodies National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) were set up; badla was banned; and online trading was started.

Thanks to the scam, the Indian capital market today stands completely revamped and is now among the world’s best regulated markets. Another redeeming feature of the scam was that a lot of investors joined the stock market. In fact, Harshad Mehta can take pride that several new investors to exposure in the market, egged on by the man who for them had emerged as cult figure.

DS

* 1 USD = 40.1558045 INR

Source: Dalal Street Investment Journal, Vol XXIII No. 7; p105

Todays Statistics

Today market had a mix reaction, with benchmark indices managing a positive close but the midcap and smallcap index closing in red. Most of the buying was seen in select largecap IT and bank. Breadth was negative and the advance:decline was at 1:6. Nifty closed today above 4600 and Sensex was above 15300. On the other side, BSE Midcap and smallcap index were down over 3.5%.

Sensex closed up 294.57 points or 1.96% at 15289.40, and the Nifty up 35.90 points or 0.78% at 4609.85.

About 678 shares have advanced, 2329 shares declined, and 53 scripts were unchange.

The BSE Midcap Index ended at 5,805.53 down 2.7%.

The BSE Smallcap Index ended at 6,950.12 down 3.7%.

The BSE Bankex closed at 7,785.05 up 3%. ICICI Bank, HDFC, HDFC Bank, Centurion bank, Axis, IOB closed in green.

The BSE Capital Goods Index closed at 13,368.34 up 1%. Larsen, Jyoti Structure, BHEL, Siemens, ABB closed higher.

The BSE Auto Index closed at 4,404.48 up 0.1%. Apollo Tyres, Escorts, Ashok Leyland, Hind Motors closed higher.

The BSE Metal Index closed at 12,787.61 down 5%. Hindalco, Sterlite, Nalco, SAIL, JSW Steel, Jindal Steel, Jindal Stainless, Hind Zinc closed higher.

The BSE FMCG Index closed up 0.6% at 2,142.40. Colgate, ITC, Nestle, Dabur ended higher

BSE Oil and Gas Index closed at 9,730.91 up 0.1%. BPCL, HPCL, IOC, Reliance Natura, GAIL ended higher.

The BSE IT Index was at 3,450.39 up 2.5%. HCL Tech, Wipro, Infosys, Tech mahindra, TCS, closed higher.

The NSE cash turnover was at Rs 10796.34 crore and the NSE F&O turnover was at Rs 42610.26 crore. The BSE cash turnover was Rs 4670.59 crore. Total market wide turnover was at Rs 58077.19 crore.

Source: www.moneycontrol.com

Dalal Street Smiles

Over the years we have seen that the bonding of the Indian stock market with the rest of the markets in the world, especially the US market, is undeniably strong and lasting. Whatever be the news–good or bad–in the US market will leave an impact on the Indian.

The market was struggling under the selling pressure for more than a month and it is a ridiculous to call it a "correction". Indeed market was looking up for some oxygen to breath. Life Saver was the announcement by the US Federal Reserve on Tuesday (March 18) to cut the interest rate by 75 basis points to bring it down to 2.25 per cent, it gave market a much required push up. And not only Indian but markets across the world began to see some green.

The BSE too reacted positively and after a long slit the Sensex is rising. However in post Uncertainty Rules I have mentioned that the 75 basis point cut that the US Fed would announce had already been discounted and the impact could be minimal.

The fuel to bring back life in the market was not just the US rate cut alone. The good news also came from two largest securities firms: Goldman Sachs and Lehman Brothers. They reported results better than what was expected. (Rather I say lower losses than the estimates.) This was enough to see the US stocks rallying the most in a single day in the last five years.

The better than expected results from Lehman and Goldman were taken very positively after Bear Stearns was almost on the verge of liquidation and JP Morgan Chase decided to buy the shares of Bear Stearns at almost one tenth of its price. Lehman was a close contender.

So is this the end of soreness for Indian investors? I doubt. But it is certain that in the near-term we see cat bouncing a little bit more.

The rate cut is also sending indications that the US Fed is trying its best to sentimentally support the market. Let us see how far it will be successful in the long run.

At present my feelings are that we have got a bit of a bounce in our hands. This is good news for investors and traders but unfortunately due to festival of colors and Eid Indian markets are closed for a long weekend holiday (starting March 20) and will return to trading only on Monday (March 24). So if this global rally remains same or strengthens over the next 2 days, then at least Indian market will not be able to react to it. And in the current scenario when these sort of positive things are expected to volatile, Indian markets can loss significantly in comparison to other markets.

Now, what should investors do at current situation? Strategically speaking, I think, one should sell in this kind of a rally rather than buy. I believe that while long-term investors should either stay away from the markets or buy 'Blue Chips’ in a staggered manner, short-term investors can take advantage of every rise in the market as an opportunity to exit. Because there are certain factors, which are worrying me, if I go ahead.

First, India's higher dependence on the global markets will keep causing pain in a global financial market sell-off;

Second, higher inflation rate is inversely proportion to higher growth rate. Hence yielding earnings risk.

In addition, if Indian market is compared with other emerging markets, it is still up by six per cent since its August 2007 low; whereas several other markets are trading below their earlier lower levels. Therefore, now or then, we will rally with others.

FIIs are still the net sellers in the market for the year (Thanks to new FII and FDI norms), as well as for the last week owing to the hefty selling by BSMA (investing arm of Bear and Stearns).

Most bothering stuff in the market at present is the Investors Confidence than anything else. The market has lost a major trust and it will take a some time to recover.

Only factors that could create some positive impact on the market is good corporate earnings which are looked at as an immediate domestic factor influencing the market. The advance tax payments for the final quarter have shown a good upward rising slope on the curve, indicating that earnings for the January-March period could be strong.

These results may be of some help to the markets in the short-run, but if the growth is not sustained then it will soon lead the curve into negative direction. It is true that the sudden and sharp fall has made valuations of companies more attractive and therefore presents an opportunity for long term investments and capital gains. The P/E ratio of the Sensex has reduced from a high of 28.57x to 19.16x. However, that is not to say that there are no more downside risks in the near-to-medium term. No one knows, yet, if the worst of the US sub-prime crisis is behind us. Many of the analysts still believe that there is more to come.

The uncertainty in the market is expected to stay, and hence it is a cautious strategy for long-term investors either to stay away or buy in a spread over a period of time manner. On the other hand short-term investors should take every climb in the market as an opportunity to exit.

Scrips I will Invest in:

On monday when markets will open, I am planning to invest on following scrips:

1. CEAT
2. Cairn India
3.Sterling Int
4. ANG Auto

Sturdy Global Cues Leads Market to Open Strong

The markets have opened on a strong note mirroring phenomenal rally in US markets as FOMC cut the Fed funds and discount rates by 75 bps. Asian markets are also supported this rally. All BSE indices are trading higher. Power, banking, telecom and capital goods stocks are the star performers in morning trade. Market breadth is very positive, NSE advance:decline ratio of 13:1. Midcap and Small cap stocks have seen strong bounce back.

At 9:56 am IST, the Sensex was up 632 points at 15465 and the Nifty up 165 points at 4698. CNX Midcap gained by 241 points at 6,102.

SBI, Bharti Airtel, PNB, Tata Power, SAIL, L&T, RPL and RNRL were the major gainers.

The BSE Realty, Bankex, Power and Capital Goods indices were up nearly 4-6%. Oil & Gas, Metal, IT and Teck indices jumped over 3%.

Asian markets were trading firm. Hong Kong's Hang Seng added 3.61% or 772.85 points at 22,157.46. Japan's Nikkei gained 3.23% or 386.06 points at 12,350.22. Taiwan's Taiwan Weighted rose 2.04% or 164.32 points at 8,222.14. Singapore's Straits Times rose 2.05% or 58.15 points at 2,891.73. South Korea's Seoul Composite advanced 2.51% or 39.92 points at 1,628.67.

Wall Street ran up their biggest one-day gains in more than five years following that interest rate cut. The rally was led by financials. FOMC cut the Fed funds and discount rates by 75 bps; Fed funds rate now at 2.25% and the discount rate now at 2.50%. Dow added 420.41 points, or 3.51%, at 12,392.66. The Standard & Poor's 500 index gained 54.14 points, or 4.24%, at 1,330.74, and the Nasdaq composite index advanced 91.25 points, or 4.19%, to 2,268.26.

Market cues:

• Fed cuts Fed Funds Rate by 75 bps, discount rate by 75 bps
• FIIs net sell $ 156.8 m in equity
• MFs net sell Rs 100.5 cr in equity
• NSE F&O Open Interest down Rs 387 cr at Rs 63,949 cr

F&O cues:

• Futures Open Interest down by Rs 1,208 crore and Options Open Interest up by Rs 821 crore
• Nifty Mar Futures shed 44 lakh shares in Open Interest
• Nifty April Futures add 20 lakh shares in Open Interest
• Nifty Mar at 15-point premium, April at 2-point premium
• Nifty Open Interest Put-Call ratio at 0.83 Vs 0.85
• Nifty Puts add 4.8 lakh shares in Open Interest
• Nifty Calls add 11 lakh shares in Open Interest
• Nifty 4400 Put adds 3.3 lakh shares in Open Interest
• Nifty 4250 Put adds 2.3 lakh shares in Open Interest
• Nifty 4300 Put adds 1.2 lakh shares in Open Interest
• Nifty 4700 Call adds 4.2 lakh shares in Open Interest
• Nifty 4800 Call adds 2.2 lakh shares in Open Interest
• Stock Futures shed 1.3 cr shares in Open Interest
  

Source: http://moneycontrol.com/india/news/local-markets/mkts-open-strong-mirroring-sturdy-global-cues/10/00/330874

Markets ranged amid volatility: Bank, metal down

The markets opened flat after the sun outage on account of lack of buying in scrips. The markets have been volatilie in a tight range. It is flat for frontline indices but broader markets continue to trade lower. Bank, metal, realty stocks are among the top laggards on the indices. Selective buying is seen in energy stocks. Market breadth is negative. On the global front, Asian markets are trading mixed.

At 12:35 hrs IST, the Sensex is up 46.06 points or 0.31% at 14850, and the Nifty up 22 points or 0.1% at 4508.10.

About 771 shares have advanced, 2199 shares declined, and 85 shares are unchanged.

BPCL, Nalco, Satyam, Bharti Airtel, BHEL were among the top gainers on the indices.

Sterlite Ind was down over 8%, JP Associates, HDFC Bank, Tata Steel down over 4% each, HDFC, HCL Tech and M&M were among the other losers on boures.

JP Associates, Axis Bank, RNRL, Indiabulls Real Estate an ICICI Bank were most active shares.

Companies have paid advance taxes for the quarter ended March 2008. Mukesh Ambani's Reliance Industries paid Rs 443 crore versus Rs 118 crore YoY.

• Reliance Pays Rs 443 Cr Vs Rs 118 Cr (YoY)
• Tata Steel Pays Rs 300 Cr Vs Rs 350 Cr (YoY)
• Tata Motors Pays Rs 75 Cr Vs Rs 190 Cr (YoY)
• TCS Pays Rs 115 Cr Vs Rs 20 Cr (YoY)
• Indian Hotel Pays Rs 44 Cr Vs Rs 2 Cr (YoY)
• M&M Pays Rs 116 Cr Vs Rs 83 Cr (YoY)
• L&T Pays Rs 170 Cr Vs Rs 80 Cr (YoY)
• ICICI Bank Pays Rs 250 Cr Vs Rs 125 Cr (YoY)
• HDFC Bank Pays Rs 250 Cr Vs Rs 165 Cr (YoY)
• Bank Of India Pays Rs 191 Cr Vs Rs 150 Cr (YoY)
• Union Bank Pays Rs 130 Cr Vs Rs 100 Cr (YoY)
• Central Bank Pays Rs 220 Cr Vs Nil (YoY)
• Ambuja Cem Pays Rs 175 Cr Vs Rs 100 Cr (YoY)
• MRPL Pays Rs 100 Cr Vs Rs 20 Cr (YoY)

Mar 18, 13:11

Last Price Change

BSE 14878.08 68.59 0.46%

NSE 4537.95 34.85 0.77%.

source:http://www.moneycontrol.com/india/news/local-markets/mkts-slip-midcaps-bank-metal-realty-down/12/32/330694

Markets Tumble: Sensex Tests 15000

Markets Caught in Global Meltdown Storm; Sensex Tests 15K

Markets opened with a big gap down following negative global cues. All the Asian markets were trading with big losses as the Dollar tumbled to 97 against the Yen after the Fed lowered discount rate by 25 bps to 3.25%. On Friday the US markets tumbled after Bear Stearns announced that its liquidity had deteriorated severely. JP Morgan is to buy Bear Stearns at $2/share; this is less than a 10th of its value last week.

The Sensex is down 951.03 points or 6.03% at 14,809.49 (the second biggest meltdown in its life time) and Nifty down by 5.11% or 242.70 points at 4503.10. The Benchmark indices, both midcap and smallcap are down around 7% with midcap closing at 6,124.35 and small cap ending at 7,522.23 , thus cutting 459.10 and 557.27 respectively. Sensex crashed below the 15000 mark today and ended near the lowest point, that is lowest since August 2007 and Nifty hit lowest close since September 2007. The NSE advance:decline ratio was 1:17. Banks, metal and realty stocks have been hammered the most. The Bankex was down 9% at 7,569.16, followed by Realty down by 7.86% at 71,06.53, cutting 606.30 today and Metal Index down around 7.5% at 13,725.52.

Indices Watch

This data was last updated on Monday, March 17, 2008 4:45:15 PM IST
Index	Open	High	Low	Current Value	Previous Close	Change(Pts)	Change(%)
SENSEX	15,326.93	15,326.93	14,738.27	14,809.49	15,760.52	-951.03	-6.03
MIDCAP	6,505.19	6,505.19	6,105.23	6,124.35	6,583.45	-459.10	-6.97
SMLCAP	8,021.87	8,021.87	7,510.35	7,522.23	8,079.50	-557.27	-6.90
BSE-100	8,111.19	8,111.19	7,800.81	7,832.98	8,355.75	-522.77	-6.26
BSE-200	1,907.53	1,907.53	1,830.92	1,838.26	1,962.76	-124.50	-6.34
BSE-500	6,092.29	6,092.29	5,837.53	5,859.51	6,260.84	-401.33	-6.41
BSE Sectoral Indices
AUTO	4,469.47	4,469.47	4,309.12	4,329.46	4,539.07	-209.61	-4.62
BANKEX	8,004.41	8,004.41	7,511.47	7,569.16	8,323.09	-753.93	-9.06
CD	3,949.60	3,949.60	3,574.22	3,638.56	4,028.80	-390.24	-9.69
CG	13,098.03	13,134.81	12,673.16	12,706.31	13,579.94	-873.63	-6.43
FMCG	2,148.77	2,167.37	2,107.34	2,119.60	2,189.31	-69.71	-3.18
HC	3,773.79	3,773.79	3,606.83	3,621.90	3,820.64	-198.74	-5.20
IT	3,334.62	3,358.27	3,280.57	3,297.71	3,406.55	-108.84	-3.20
METAL	14,415.06	14,415.06	13,636.60	13,725.52	14,844.87	-1,119.35	-7.54
OIL&GAS	10,045.72	10,077.06	9,766.89	9,801.86	10,354.81	-552.95	-5.34
POWER	3,038.19	3,053.64	2,962.26	2,973.68	3,149.48	-175.80	-5.58
PSU	7,356.35	7,356.35	7,121.77	7,153.44	7,527.22	-373.78	-4.97
REALTY	7,325.70	7,364.92	7,052.65	7,106.53	7,712.83	-606.30	-7.86
TECk	2,845.18	2,845.18	2,793.14	2,812.68	2,918.16	-105.48	-3.61
BSE Dollex Indices
DOLLEX-30	3,112.39	3,112.39	2,964.62	2,978.58	3,200.83	-222.25	-6.94
DOLLEX-100	2,075.44	2,075.44	1,976.95	1,985.10	2,138.28	-153.18	-7.16
DOLLEX-200	785.51	785.51	746.78	749.75	808.36	-58.61	-7.

_{source:http://www.bseindia.com/mktlive/mktwatch.asp on 17.03.2008 at
16:44:05 GMT}

Peter Morgan of HSBC feels that the market is expecting the Fed to cut rates by 75 bps tomorrow. Morgan sees a prolonged period of relatively weak growth in the US markets.

Shankar Sharma of First Global said investors need to be cognizant of changing market conditions. "The global bull market that started in 2003 seems to have ended. There is no point looking at Sensex PEs as one is not getting value stocks to buy."

Vetri Subramaniam, CIO-PMS, Motilal Oswal Securities, sees a little bit more volatility, hopefully on the upside in the next few months as compared to the last two. He also believes there are few tough policy decisions waiting to happen in terms of growth, interest rates and inflation.

Jyotivardhan Jaipuria, Head-Research, DSP ML, thinks markets are headed lower, but will probably move a bit higher before moving to new lows. He also believes commodity prices, food inflation and high money supply are the next problems on the list to be addressed.

James Glassman, Senior Economist at JP Morgan Chase Bank feels that the Fed's discount rate cut may be a small part of a bigger package. "Personally, I think a half a point rate cut is possible, is likely, even though the market was looking for something bigger."

Paul Parambi of Kotak Mahindra Bank feels that large institutions and investors are looking at markets other than the US. Capital can come into India, if the corporates deliver numbers, he told CNBC-TV18. If there is a Bear Stearns-like situation with other investment banks, there could be serious problem, he said.

So should investors be bottom fishing, and more importantly, what should they look at picking up now? Or should investors look at cashing out, and if so, what should they look at selling?