A correction may be setting in
Moneylife Digital Team 08 April 2010

As suggested yesterday, the market was under pressure today. It will continue to remain under pressure

The market was down today on weak cues from Asian bourses. The Sensex fell 255 points (1.4%) to close at 17,714 and the Nifty closed 70 points lower (1.3%) to 5,304.

The market touched the intra-day high during early morning trade. However, it pared gains soon and was on a downtrend throughout the day. Asian stocks fell for the first time in six days on Thursday after Japanese machinery orders unexpectedly dropped and US consumer credit slumped more than expected.

Key benchmark indices in China, Hong Kong, Singapore, Taiwan, Indonesia, and Japan fell by 0.28% to 1.92%. South Korea’s Seoul Composite rose 0.42%. US stocks slipped on Wednesday after a senior Federal Reserve member said that policy makers should start raising rates to 1%. The Dow Jones fell 72.47 points (0.86%) to 10,897.52. The Nasdaq declined 5.65 points (0.23%) to 2,431.16 and the S&P 500 fell 6.99 points (0.59%) to 1,182.45. European markets were down on fresh worries about the debt situation in Greece.

However, the Fed chairman said that the central bank is not thinking of any interest rate tightening now. The European Central Bank said that it will keep the interest rate at 1% to ease the financial crisis in Greece. The World Bank has said that it has lent a record $100 billion as financial support to developing nations over the past 18 months to help them recover from the economic crisis. It had stepped up lending in July 2008 at the request of member countries as demand from developing countries increased in the face of a worsening world recession and sharp drop in global trade.

Closer home, the food price index accelerated for the second straight session. The index rose 17.7%, which is higher than an annual rise of 16.35% in the previous week. The fuel price index rose by an annual 12.71% which is below the annual rise of 12.75% in the previous week. Foreign institutional investors were net buyers on Tuesday of Rs338 crore. Domestic institutional buyers were net sellers of Rs23 crore. The rupee was on a high on reports of a possible revaluation of the yuan and the buying of dollars by banks ahead of the 3G auction. 

Bajaj Auto (down 0.1%) will distance itself from the parent brand Bajaj and will make motorbikes and rear-engine three-wheelers. Metal stocks declined as the LMEX—an index of six metals—traded down on the London Metal Exchange. The government plans to sell 20% stake in SAIL (down 7.1%) in two phases. The first sale of 10% is expected to bring in Rs8,000 crore. MphasiS has signed a pact to acquire 100% stake in Fortify Infrastructure Services in an all-cash deal. Bank and financial stocks were down today as investors opted to stay away from these counters ahead of the RBI policy meeting.

Oil exploration stocks were down as crude prices fell by almost $1 on the New York Mercantile Exchange on Wednesday. Elecon Engineering (up 1.6%) has received two orders aggregating Rs88 crore for the designing, manufacturing, supplying and commissioning of material handling equipment and gear boxes. While it received a Rs47.8-crore order from Jindal Steel & Power, another contract worth Rs40.55 crore was received from L&T. Mahindra & Mahindra (down 1.1%) has raised the price of its utility vehicle due to increase in input costs. The price of its flagship ‘Scorpio’ sport utility vehicle has risen by Rs10,300 to Rs17,500, that of the ‘Bolero’ by Rs26,100 and ‘Xylo’ prices have gone up by between Rs15,300 and Rs15,900.

Like we said yesterday, the market will continue to remain under pressure. Global cues may weaken over the next week. Indian corporate results for the last fiscal will be keenly watched, and these figures will decide the long-term course of local bourses.

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