Wednesday, January 19, 2011

Market ends choppy trading session lower

High volatility was witnessed in late trade as the key benchmark trimmed losses after sliding to fresh intraday lows. Index heavyweights Reliance Industries extended losses in late trade. IT and capital goods stocks declined. FMCG and consumer durables stocks reversed initial gains. Bajaj Auto gained in volatile trade after Q3 result. The BSE 30-share Sensex was provisionally down 94.73 points or 0.5%, off close to 170 points from the day's high and up close to 100 points from the day's low.

The BSE Sensex provisionally closed below the psychological 19,000 mark, having alternatively moved above and below that mark earlier in the day. The 50-unit S&P CNX Nifty provisionally settled below 5,700 level. The market breadth turned negative compared with strong breadth earlier in the day.

Stocks were volatile. The market slipped into the red after a firm start. The market moved into positive zone after hitting fresh intraday low in morning trade. The Sensex moved between gains and losses in mid-morning trade. The market firmed up in early afternoon trade. The market held positive zone in afternoon trade. The market reversed direction after a sudden slide in mid-afternoon trade. The Sensex later trimmed losses after hitting a fresh intraday low. High volatility was witnessed in late trade as the key benchmark trimmed losses after sliding to fresh intraday lows

Prime Minister Manmohan Singh will reportedly reshuffle his cabinet on Wednesday in a mid-term effort to refresh a coalition government snared by corruption scandals and year-high food inflation as it faces key state elections.

K.C. Chakrabarty, a Reserve Bank of India deputy governor, said on Wednesday that inflation was in a difficult situation but manageable.

European stock markets reversed initial gains on Wednesday as profit taking emerged after a recent surge. The key benchmark indices in France and UK shed by between 0.13% to 0.28%. Germany's DAX rose 0.08%.

Asian stock markets were mostly higher Wednesday, with many technology shares rising around the region after upbeat results from Apple and International Business Machines. The key benchmark indices in China, Hong Kong, Japan, South Korea, and Taiwan rose by between 0.36% to 1.86%. However, Singapore's Straits Times fell 0.23% and Indonesia's Jakarta Composite fell 0.88%.

US stocks shook off concerns on Tuesday, 18 January 2011, surrounding Apple Inc, which was hit by news of Chief Executive Steve Jobs' medical leave, helped by strong earnings for the iPhone and iPad maker whose share rose more than 4 percent in extended trade. Optimism about earnings has helped bolster US stocks in recent weeks, fuelling hopes that the world's No.1 economy could return to a sustainable recovery path.

Trading in US index futures indicated a flat opening of US stocks on Wednesday, 19 January 2011.

Back home, the initial Q3 earnings have been a mixed bag. After disappointing Q3 results from IT bellwether Infosys, which also gave a muted guidance for Q4 March 2011, IT giant TCS reported stronger-than-expected results. Housing finance major HDFC came out with decent Q3 results, which also showed asset quality remain strong. Engineering & construction major L&T expects revenue growth to remain strong over the medium term on a healthy order book. The company also said while it is facing a substantial increase in the cost of raw materials such as steel and copper, margins are expected to remain healthy. Private sector bank Axis Bank has reported strong Q3 results, with asset quality remaining healthy.

On the macro front, high food prices have raised fears of aggressive hike in policy rates by the central bank in 2011. As per a poll by Capital Market, economists widely expect 25 basis points increase each in repo rate and reverse repo rate at 25 January 2010 policy review. Reserve Bank of India governor Duvvuri Subbarao said on Monday, 17 January 2011, that the country is facing surging inflation and that the RBI needs to calibrate monetary policy in order to manage inflation and also support growth.

The wholesale price index (WPI) rose an annual 8.43% in December 2010 on higher food prices, government data showed on Friday, 14 January 2011. The annual reading for October 2010 was revised upwards to 9.12% from 8.58%. Rising food and commodity prices are major challenges facing the government, Finance Minister Pranab Mukherjee said on Friday, 14 January 2011. Finance Secretary Ashok Chawla said on Monday, 17 January 2011, inflation is expected to ease to around 6.5% by end-March 2011.

As per provisional figures, the BSE 30-share Sensex was down 94.73 points or 0.5% to 18,997.32. The index rose 75.01 points at the day's high of 19,167.06 in early afternoon trade. The index fell 193.49 points at the day's low of 18,898.56 in late trade.

The S&P CNX Nifty was down 24.90 points or 0.44% at 5,699.15 as per provisional figures.

The BSE Mid-Cap index rose 0.27%. The BSE Small-Cap index gained 0.17%. Both these indices outperformed the Sensex.

The market breadth, indicating the health of the market, turned negative. On BSE, 1,450 shares declined while 1,419 shares advanced. A total of 112 shares remained unchanged. The breadth was strong earlier in the day.

Among the 30-member Sensex pack, 21 declined while the rest rose.

BSE clocked turnover of Rs. 3463 crore, higher than Rs. 3055.47 crore on Tuesday, 18 January 2011.

Rest Here:

High-speed rail is a fast way to waste taxpayer money

Where can the new Congress start cutting spending? Here's one obvious answer: high-speed rail. The Obama administration is sending billions of stimulus dollars around the country for rail projects that make no sense and that, if they are ever built, will be a drag on taxpayers indefinitely.

When incoming Govs. Scott Walker of Wisconsin and John Kasich of Ohio canceled high-speed rail projects, Transportation Secretary Ray LaHood refused to let them spend the dollars on other forms of transportation and sent the funds instead to California and other states.

Walker argued that Wisconsin didn't need $810 billion for a 78-mile line between Madison and Milwaukee because there's already a transportation artery -- Interstate 94 -- that enables people to get from one city to the other in a little more than an hour (I once drove that route to have dinner in Milwaukee).

Kasich's rationale? "They tried to give us $400 million to build a high-speed train that goes 39 miles an hour." Train boosters countered that its
top speed was 79 miles per hour -- about the same as many drivers on Interstate 71.

High-speed rail may sound like a good idea. It works, and reportedly even makes a profit, in Japan and France. If they can do it, why can't we?

A look at some proposed projects gives the answer. Take the $2.7 billion, 84-mile line connecting Orlando and Tampa that incoming Florida Gov. Rick Scott is mulling over.

It would connect two highly decentralized metro areas that are already connected by Interstate 4. Urban scholar Wendell Cox, writing for the Reason Foundation, found that just about any door-to-door trip between the two metro areas would actually take longer by train than by auto, and would cost more. Why would any business traveler take the train?

As for tourists headed for Orlando's theme parks, there is already a convenient rental car operation, with some of the nation's lowest rates, at the Orlando airport. Why would parents get on a train, pay a separate fare for each kid and then rent a car at the station when you could more easily get one at the airport?

As Cox points out, cost estimates for the Florida train seem underestimated and the ridership estimates seem wildly inflated. If he's even partially right, Florida taxpayers will be paying billions for this white elephant over the years.

Other projects seem just as iffy. California is spending $4.3 billion on a 65-mile stretch of track between Corcoran and Borden in the Central Valley, which is supposed to be part of an 800-mile network connecting San Diego and Sacramento. Its projected cost was $32 billion in 2008 and $42 billion in 2009, suggesting a certain lack of precision.

Or consider the $1.1 billion track improvement on the Chicago-St.Louis line in Illinois. It would reduce travel time between the cities by 48 minutes, but the trip would still take more than four and a half hours at an average speed of 62 miles per hour.

None of these high-speed projects are really high-speed. Japan has bullet trains that average 171 miles per hour, France's TGV averages 149 miles per hour. At such speeds you can travel faster door-to-door by train than by plane over distances up to 500 miles.

In contrast, Amtrak's Acela from Baltimore to Washington averages 84 miles per hour and the Orlando-Tampa train would average 101 miles per hour. That makes the train uncompetitive with planes on trips of more than 300 miles.

Now take a look at your map and see how many major metro areas with densely concentrated central business districts and large numbers of business travelers are within 300 miles of each other.

The answer is not very many outside of the Northeast Corridor between Washington and Boston. Our geography is different from France's or Japan's.

Moreover, to achieve the speed of French and Japanese high-speed rail, you need dedicated track so you don't have to slow down for freight trains. To get dedicated track, you need a central government that is willing and able to ignore environmental protests and not-in-my-backyard activists. Japan and France have such governments. We don't.

So we are spending billions on high-speed rail that isn't really high-speed, that will serve largely affluent business travelers and that will need taxpayer subsidies forever. This should be a no-brainer for a Congress bent on cutting spending.

Read more at the Washington Examiner: