Expect a sideways movement in the bourses
As expected, correction has set in after the markets attempted and failed to make a new 24-month high. Throughout the morning session, the index was up but slipped in afternoon trading. The BSE Sensex was down 121 points (down 0.68%) to 17,590 and the Nifty was down by 40 points (down 0.76%) to 5,262.
Asian stocks rose on Tuesday after a report showed that US consumers continued to spend last month. The key benchmark indices in Hong Kong, Japan, South Korea, Taiwan, China and Singapore rose by 0.15% to 1.01%. However, Indonesia's Jakarta Composite fell 0.13%.
European shares edged up higher on Tuesday, tracking gains in the United States and Japan. The Dow Jones Industrial Average rose 45.5 points (up 0.42%) to end at 10,896. The S&P 500 inched up 6.6 points (up 0.57%) to 1,173. The Nasdaq Composite Index gained 9.2 points (up 0.39%) to close at 2,404.
Japan’s industrial production fell in February and the unemployment rate held at its lowest level since March 2009. Factory output fell 0.9% in February from a month earlier and the unemployment rate was at 4.9%. China said that the reason for the trade imbalance with the US should not be only traced from the yuan’s exchange rate and expressed its interest in discussing this issue.
US data released yesterday on personal spending was encouraging as figures rose for the fifth consecutive month in February. A Fed policymaker said that the current interest rate is appropriate given the unemployment figures. Romania and Hungary cut interest rates to fresh lows on Monday as monetary policymakers looked to support growth in response to an improved assessment of market risk in central and eastern Europe. Fitch said that it is almost certain that India will continue tightening its monetary policy. Foreign institutional investors were on a buying spree yesterday as they turned out to be net purchasers of Rs1,062 crore.
Domestic institutional buyers also were active yesterday buying stocks worth Rs270 crore. The rupee rose to a near 19-month high on continuing capital flows and weakness of the dollar. IL&FS Transportation Network (up 6.1%) was listed today. Japan's Daiichi Sankyo, which owns 64% stake in Ranbaxy Laboratories (down 1%), has reportedly firmed up plans to delist and is finalising the modalities.
Sundaram Finance Group (up 2.9%) will quit the general insurance venture, Royal Sundaram Alliance Insurance Company. Cholamandalam DBS Finance’s (up 0.11%) board has approved raising up to Rs200 crore via unsecured non-convertible debentures on a private placement basis. DBS has announced its exit from the company by selling the stake back to Cholamandalam. SKIL Infrastructure and SKIL Shipyard Holdings have launched an offer to buy 13.31 crore shares, or 20% equity capital, of Pipavav Shipyard (up 1.5%), at Rs61.50 a share. The offer will open on 21 May 2010 and will close on 9 June 2010. Nava Bharat Projects—a venture of Nava Bharat Ventures (up 1%)—has achieved financial closure of Rs970 crore for two thermal power plants. The plants, which will be coal-fired, are of 150MW each and will be set up in Andhra Pradesh. Colgate Palmolive’s (down 0.41%) board has approved the merger of CC Healthcare Products Private Limited with itself from 1st April. Yesterday, the company, which had 75% stake in CC Healthcare, said that it had acquired the remaining 25% stake for Rs69.10 lakh. IT stocks were down after the rupee almost touched a 19-month high. We expect the market to move sideways.