14K milestone…Fuel is efficiency
Is fuel efficiency really what we need most desperately? I say that what we really need is a car that can be shot when it breaks down.
If there is plenty of fuel at your disposal, chances are, you will ignore the fuel efficiency factor for some time. For today, we see another positive opening, owing to firm global markets . The bulls have been running for quite some now without taking any major breaks. If they've shifted to reverse gear for a day, they are back on top gear the next day overall zooming in one direction, which is north. The closer target for the driver is the 14K mark. Remember, its just a milestone on the way and not a destination. The bulls have managed to do this simply because of the relentless inflows from foreign funds. Cumulative FII investment into the equity market has crossed $50bn since their entry back in early 1990s . This year, FIIs have pumped in close to $8.8bn, with $2bn coming in the month of November. Last year, overseas investors had poured in $10.7bn, with $2bn coming in December. So, if the bulls are to carve out yet another record, foreign funds will have to bring in another $2bn this month.
That may be asking for too much, with the Sensex trading at 18 times one-year forward earnings. Valuations are not cheap, not at least in the large caps. But then, stock market is all about future expectations of earnings growth. From that perspective, India appears to be on a strong wicket. The GDP numbers have been pretty robust, so have been the corporate earnings. No foreign investor of repute can afford to ignore India, given the growth dynamics for the next few years. There may be a few blips here and there. But, on the whole the India story is still too compelling to be overlooked.
The market rise, as long as it happens, would be purely on the back of the strong liquidity factor. Also, equity markets across the world have done well this year as commodity prices have softened and monetary tightening in key markets has not been too harsh. The trend may continue for a while. The only concern is on the weakness of the dollar and the volatile oil prices.
The month of December has been quite positive for the Indian bulls. The Sensex has given negative returns only five times since 1979 in the last month of a calendar year. Another interesting trend has been that the key indices rise in the first half of December, only to give up some of the gains in the second half due to the holiday factor, and anxiety over the upcoming quarterly results in January. The same trend may continue this year as well. The market will advance in the next couple of weeks and will turn a little bit cautious ahead of the Christmas, quarterly results and of course the Union Budget.
Tata Motors should continue to attract attention due to the Singur controversy. One thing to note is that its ADR has gone up sharply in the last couple of days. Adani Enterprise could gain amid reports that Reliance Industries is acquiring Adani Retail, which has a major presence in Gujarat. Nagarjuna Fertilizers is another stock to watch out for, as the Tatas are reportedly eyeing a stake in its subsidiary, Nagarjuna Oil Corp. One should also keep an eye on Maruti as it launches the new Zen today.
US shares closed higher on Monday as a spate of merger and acquisitions offset the weakness surrounding Pfizer. The S&P 500 hit a fresh six-year high, as investors welcomed a fall in oil prices.
The tech-fueled Nasdaq jumped by 35 points or nearly 1.5% to 2,448.39. The Dow Jones rose by 89 points or 0.7% to 12,283.85. It could have been higher were it not for Pfizer. The drop in Pfizer stock cut almost 24 points off of the blue chip index's advance. The S &P 500 gained 12 points or 0.9% to 1,409.12, closing at its highest point since Nov. 7, 2000.
The rally came despite a big drop in Pfizer, one of 30 stocks in the Dow industrials. The No. 1 drugmaker's stock slumped on news that it had abruptly halted development of a key new drug meant to treat heart disease because a study resulted in an unexpected number of deaths.
US light crude oil for January delivery fell 99 cents to settle at $62.44 a barrel on the New York Mercantile Exchange. The front-month contract was quoting 22 cents higher at $62.66 per barrel in extended trading in Asia this morning.
The dollar recovered some after hitting a 20-month low versus the euro last week. The greenback also inched higher versus the yen. Treasury prices crept higher, lowering the yield on the benchmark 10-year note to 4.42% from 4.43% late on Friday. COMEX gold rose 30 cents to settle at $650.90 an ounce.
Among the Indian ADRs, VSNL rose 1.6%, Infy climbed 2.7%, Wipro was up 1.9%, Satyam advanced 1.7%, Tata Motors surged 4.7% and MTNL added 1.2%.
European shares advanced. The German DAX Xetra 30 closed 0.9% higher at 6,295.23. The French CAC 40 rose 0.8% to 5,296.08, while the UK's FTSE 100 advanced 0.5% to 6,050.40 and the pan-European Dow Jones Stoxx 600 climbed 0.7% to 351.59.
Emerging markets too closed higher. The Bovespa in Brazil soared 3.2% to 42,654 while the IPC index in Mexico rose by nearly 1% to 25,207 and the RTS index of Russia climbed 0.6% to 1791.
Asian stocks rose this morning after oil prices slid the most in two weeks. Exports such as Samsung Electronics led the gains. Energy-related shares, including Inpex Holdings declined along with crude prices.
The Morgan Stanley Capital International Asia Pacific Index gained 0.2% to 136.79 at 10:55 a.m. in Tokyo. All markets open for trading in Asia rose. Thailand is shut for a holiday.
Japan's Nikkei 225 Stock Average rose 34 points to 16,337 while the Hang Seng in Hong Kong surged by 231 points to 18,934. The Kospi in Seoul was almost flat at 1429, the Straits Times in Singapore advanced 24 points to 2875 and the Taiex in Taiwan gained 21 points to 7668.
Market Volumes:
The turnover on NSE was up by 7.9% to Rs88.55bn. BSE Capital Good index was the major gainer and gained 2.17%. BSE Consumer Durable index (1.86%), BSE Auto index ( 0.79%) and BSE Metal index (0.61%) were among the major gainers. However, Bank index (0.53%) was among the major losers.
Volume Toppers:
Balrampur Chini, IVRCL Infrastructure, IDBI, Lanco Infrastructure, R Com, ITC, NTPC, Unitech, Tata motors, Arvind Mills, Dhampur Sugar, Indian Hotel, SAIL, Hindalco, Torrent Power and Ashok Leyland.
Delivery Delight:
ABB, AIA Engineering, ACC, Bajaj Hindustan, Balrampur Chini, Bata India, BEML, Dr Reddys Laboratories, Dwarikesh Sugar, Era Constructions, GTC Industries, Larsen & Toubro, Maharashtra Seamless, NTPC, Patni Computer, Punjab National Bank, Reliance Capital, Sterlite Industries, Tata Motors, Tata Power, Tata Tea, Titan Industries, Welspun Gujarat and Uttam Sugar.
Brokers Recommendations:
ICICI Bank – Hold from ASK RJ
Long Term Investment:
L&T
Major News Headlines:
Tata Steel sets up JV with NYK Line for a shipping company
Marico to sell 2.9mn shares to some investors at Rs522
Opto Circuit to buy medical Equipment company in Europe
Pratibha Industries secures Rs245mn contract
Rajesh Exports in equal venture with Fossil INC.
ICSA India Board to consider plan to start unit in Singapore
JSW Steel cuts hot rolled steel prices by Rs500per ton to Rs26,000 a ton
Ganesh Housing signs MoU with Gujarat Govt for development of IT and ITES SEZs
Action Construction to set up subsidiary in Cyprus