Wall Street ends mixed; Dow down 27 points

The US markets reversed early losses led by financials, after Goldman posted strong first quarter profit.

Financial stocks had been among the session's worst performing sectors in the first few minutes of action, falling as much as 2.7% as traders took profits following the strong gains that financials registered late last week. However, buyers provided support by buying the dip in financials.

The market was also buzzing about President Barack Obama's press conference on the economy later today. The president is expected to talk about government's recession-busting actions.

However, earlier in the session, shares of General Motors tumbled 16% as the treasury department instructed the auto maker to prepare for a bankruptcy filing by first June deadline. Also Read - How ADRs performed

The Dow Jones Industrial Average slipped 25.57 points, or 0.3%, to 8,057.81. The S&P 500 Index was up 2.17 points, or 0.3%, to 858.73, and the Nasdaq Composite Index rose 0.77 points, or 0.1%, to 1,653.31.

Richard Bove, Financial Strategist, Rochdale Securities said, “The reason numbers are good is because their core business, which is trading did extraordinarily well. You had a whole series of things working in Goldman’s favour. The competition is gone away; all of the firms are no longer in business. Goldman has pricing power because there are so few competitors, or weaker competitors, Goldman has doubled the price of transaction in the first quarter."

In Commodities

Crude prices slipped below USD 50/bbl mark, extending yesterday's 4.2 percent loss, after the international energy agency forecasted that 2009 demand may slump to the lowest level in five years amid the global economic recession.

Copper climbed to the highest in almost six months in London, pacing an advance in industrial metals, as investors sought to catch up on gains made in shanghai and New York.

Futures in China and the US advanced after the Chinese government said it is considering additional stimulus measures to spur economic growth. Government plans to spur growth in the US, Europe, Japan and China helped trigger a 58 percent rally in London prices this year.

Thanks to http://www.moneycontrol.com

Mkt to bottom at 8,800-9,800: ICICI Securities

Pankaj Pandey, Head - Research, ICICI Securities said he expects the markets to bottom at about 8,800-9,800. Going forward, Pandey does not see earnings driving the markets.

He feels investors should have a portfolio of about 40% in equities, about 20-25% in cash and the balance in fixed deposits. Pandey is bullish on PNB, Axis Bank, Indian Overseas Bank, PNB, NTPC, Power Grid, Infosys and Satyam.

Here is a verbatim transcript of the exclusive interview with Pankaj Pandey on CNBC-TV18. Also watch the accompanying video.


Q: What exactly are you advising investors at this juncture? Do you think that we may be at least close to the last 5-10% of the bottom?

A: We expect market to bottom at 8,800-9,800. After breaking the 10,000 level, from an eight-year cycle perspective we expect, about 55-58% correction. So we feel that we are closer to the bottom range. We advise investors to have a portfolio of about 40% in equities, about 20-25% in cash and the balance in FD.

Q: What have you set your eye on this results season?

A: Results, I think have more or less been a mixed bag across the sectors. second quarter may not have a significant bearing on the market because global cues continue to be bad. Going forward as well, we don’t expect results to drive the markets.

Globally as a thumb rule, I think, contraction of about 10% in US GDP can happen. Whether that happens over a period of three quarters or six quarters remains to be seen. So, we anticipate that nothing major is likely to happen until the second half of 2009. A survey by The Economist says that about three quarters is the most moderate view in terms of the contraction in GDP and probably the most pessimistic view is about 18 months.

Read more............. http://www.moneycontrol.com/

Market crash: Tips to cut losses

THE market's blows are only getting harder.

The bad news is that the worst may not be over yet. Amidst all this turbulence, only one thing can save you: The right advice.

Here’s how you can limit the damage, straight from wealth's experts.

Scenario 1: I invested in the markets for the short term; what should I do now?
Right now, the markets are driven by global sentiment. And, financial planner Arvind Rao reckons that it may take up to the fourth quarter of 2009 for the global market to pull up. On the domestic front too, things may look brighter only in the third or fourth quarter of 2009. "This is mainly because of the huge input costs and high interest rates as of now, " he says.

In such a scenario, you have 2 options:
Option 1: If you are hard pressed for money, you have no choice but to withdraw.

PV Subramanyam, financial domain trainer, says, “If you need money soon, say in a year or two, it is better to sell now even if that means booking losses. There’s no way of predicting how the markets would behave.”

Option 2: Sandeep Shanbhag, investment expert and Director, Wonderland Consultants, says, “If you initially invested for the short term but can weather the storm, then wait, provided you have fundamentally good stocks. However, if you need funds, then exit as early as possible and treat this as a mistake not to be repeated.”

Caution: Do not play the markets on a short term basis simply because of the looming uncertainty.

Read more...... www.Moneycontrol.com

RBI cuts CRR by 150 bps

In an anticipated move, the Reserve Bank of India, or RBI, has cut the cash reserve ratio, or CRR, by 150 basis points to 7.5% with effect from tomorrow in a bid to infuse liquidity into the markets.

On October 6, the RBI had cut the CRR by 50 bps to 8.5%. Today's 150-bps cut includes October 11's cut. The cut will inject liquidity into the system to the tune of Rs 60,000 crore.

Nilesh Shah of Envision Capital said, “The CRR cut is definitely a positive move, which is going to soothe some liquidity fears. The stock market also needs liquidity and this (the rate cut) will help to some extent. Whether this is going to help us beyond a day or beyond an intra-day basis is something that remains to be seen.”

“Directionally, the CRR cut is a positive move that helps the banking system, helps the overall economy and will probably help the market in short-term or intra-day,” Shah added.

The announcement came close on the heels of a sharp fall of over 1,000 points on the Sensex on Friday morning amid cues from falling global markets. Soon after the announcement, the Sensex recovered a bit, before falling again later.

Udayan Mukherjee, Managing Editor, CNBC-TV18, said, “The announcement will get gobbled up, or maybe prompt or induce a bit of short covering with the market going up.”

Mukherjee said that it was a welcome move but added he didn’t see it affecting the stock market substantially. “Of course, it aids the money market and injects a bit of liquidity to the system — 150 bps is a fairly meaningful chunk of money coming in,” he said, adding that from a stock-market perspective, the cut would produce some kind of positive sentiment for a short while, "but the problems of the stock market are different."

Finance Minister P Chidambaram also issued a statement on the CRR cut and welcomed the RBI's decision.

source: http://www.moneycontrol.com