New scrips in futures, new future in scrips
Year's end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us.
For those in the market, Wisdom and experience comes with a high price or huge loss. As the sun sets on calendar year 2006, the bulls have reason to celebrate and a day’s movement need not hold much weight. For today, the outlook is one of cautious optimism as global markets are mixed and the bulls will be eager to break into a party to ring in the new year.
The last derivative settlement of the year 2006 went off smoothly, with market-wide rollover at nearly 84%, and Nifty rollover at 75%. This is much higher than last month. Also, the Nifty January futures closed yesterday at an 18-point premium to the underlying Spot Nifty. The cost of carry has also gone up for the market as a whole as well as for the Nifty. This indicates that the bulls are willing to hold long positions at a much higher cost. However, a much sharper increase in the cost of carry will mean that the market is getting into overbought territory. That will be the time to cash out. One will have to keep a close eye on the F&O segment today, as the NSE will add 26 new scrips in its derivative segment.
The market has rebounded smartly in the last few sessions after the sudden and steep crash earlier this month. Over the next few days, the trend is likely to be volatile as investors await latest quarterly results and the budget. Also, the strategy adopted by FIIs in the new year will have a bearing on the near-term direction of the market.
The long-term outlook for India remains strong due to the stupendous economic growth in the last four years. However, valuations also have to be taken into account while making investment decisions. On this count, India is clearly the most expensive among the emerging markets. As a result, there could be some correction once the Sensex and the Nifty breach the 14k and 4k mark again.
FIIs were net sellers of Rs10.22bn (provisional) in the cash segment yesterday. In the F&O segment, they pumped in Rs2.47bn. On Wednesday, they withdrew Rs3.68bn from the cash segment, taking their net outflow for the month to Rs26.18bn. Mutual Funds were net buyers of Rs3.91bn on the same day.
The shares of Nissan Copper will get listed on the stock exchanges today.
Core Projects is likely to gain as it reportedly close to a couple of acquisitions in the US.
Reliance Communications could be in the thick of things as the company has officially admitted to having an interest in buying Hutchison Telecom International's stake in Hutch Essar.
Cement prices are likely to rise further due to a tight demand-supply mismatch notwithstanding the massive investments announced by domestic producers on capacity build-up, says a financial daily. Prices in Mumbai have risen by Rs5-10 to Rs235-240 per 50 kg bag in the last couple of months and are expected to go up further by Rs15-20 to Rs260 per bag.
Select sugar stocks were in momentum yesterday after the Government allowed sugar producers to sell 4.1mn metric tons of the sweetener in the domestic market in the first Quarter of 2007 as production is expected to reach a record.
US shares closed lower on Thursday amid light trading on Thursday as negative news from Apple and rising bond yields offset upbeat economic news.
The Dow Jones fell by 9 points to 12,501.52. The blue chip index had ended the previous session above 12,500 for the first time. The broader S&P 500 was down 2 points to 1,424.73 and the Nasdaq dropped 5 points to 2,425.57.
The S&P 500 and the Nasdaq would log annual gains for the fourth year in a row. For the Dow, it will be the third in the last four years. The blue-chip average saw a slight decline in 2005.
US financial markets were closed on Monday for Christmas and will be closed next Monday for New Year's Day. The market is also likely to be closed next Tuesday to honor former President Gerald Ford, who died Tuesday night.
The Federal Reserve said late on Thursday that it delayed the release of the minutes from its December policy meeting to Wednesday from Tuesday. Other economic reports due Tuesday include the December ISM index, a national read on manufacturing.
US light crude oil for February delivery rose 19 cents to settle at $60.53 per barrel on the New York Mercantile Exchange. The price of oil fluctuated after the weekly energy inventory report showed a big decline in oil reserves and a jump in gasoline stockpiles. The front-month contract was trading 22 cents lower at $60.31 a barrel in extended trading in Asia.
Treasury prices slumped on encouraging economic reports, raising the yield on the benchmark 10-year note to 4.68% from 4.65% late on Wednesday. COMEX gold rose $6.60 to settle at $636.90. In currency trading, the dollar fell versus the euro and rose against the yen.
Among the Indian ADRs, Patni was up 1.9%, Tata Motors shed 1.8%, Dr. Reddy's gained 1.1%, HDFC Bank climbed 2.9% and ICICI Bank rose 2.7%.
European stocks struggled to find direction and closed virtually unchanged. The German DAX Xetra 30 closed flat at 6,611.81. The French CAC 40 slipped 0.1% to finish at 5,533.36, and the UK-based FTSE 100 lost 0.1% to 6,240.90.
In the emerging markets, the Bovespa in Brazil was down 0.1% to 44,473 while the IPC index in Mexico gained 0.4% to 26,295 and the RTS index in Russia surged by over 2% to 1910.
Asian stocks were set to complete the fourth consecutive year of gains on Friday. Exporters such as Canon rose after better-than-expected US consumer confidence and home sales reports.
The Morgan Stanley Capital International Asia-Pacific Index rose 0.3% to 140.64 at 10:29 a.m. in Tokyo. Japan's Nikkei 225 Stock Average gained 0.3% to 17,274.97. The Hang Seng in Hong Kong fell by 55 points to 19,946.
All markets in the region advanced. Japan, Australia and New Zealand will have shortened trading hours in the last trading day of 2006. Indonesia and South Korea are closed.
MSCI's regional index has risen 15% this year. Four years of gains in Asia is the longest winning streak since the measure was launched in 1988. The benchmark has climbed 21% since its low for the year on June 13, as oil prices fell from record high and the US Federal Reserve stopped raising interest rates.
Insider Trades:
AIA Engineering Limited: HDFC Trustee Company Limited A/C - HDFC MF Monthly Income Plan - Long Term Plan has purchased from open market 35540 equity shares of AIA Engineering Limited on 21-DEC-2006.
Market Volumes:
The turnover on NSE was up by 41% to Rs99.67bn. BSE Pharma index was the major loser and lost 0.89%. BSE Capital Good index (down 0.60%), BSE Oil & Gas index (down 0.49%) and BSE Consumer Durable index (down 0.14%) were among the other major gainers. However, BSE FMCG index gained 0.51%.
Volume Toppers:
Ashok Leyland, R Com, Hindalco, Indiabulls, NTPC, TTML, Century Textile, Gujarat Ambuja, Tata Steel, MTNL, SAIL, Balrampur Chini, Indian Hotel, IVRCL Infrastructure, Tech Mahindra and Parsvnath Developers.
Delivery Delight:
Adlabs Films, Alok Industries, Arvind Mills, Ashok Leyland, Bajaj Hindustan, Bank of India, Balrampur Chini Mills, BPCL, Century Textiles, Grasim Industries, Gujarat Ambuja Cements, HDFC Bank, HCL Technologies, Hero Honda, Jaiprakash Associates, Reliance Capital, Zee Telefilms, TCS and Tata Tea.
Upper Circuit Filters:
Flex Industries, Texmaco Ltd, Renuka Sugar, AIA Engineering, Educomp Solution, Phoenix Mill, Nesco, Anant Raj Industries and Prajay Engineering.
Brokers Recommendations:
SREI Infrastructure Finance - Buy from Emkay with a price target of Rs70
Cadila - Buy from Angel Broking with price target of Rs335
Long Term Investment:
TCS
Major News Headlines:
Bajaj Hindusthan Q4 net at Rs382mn; gross sales at Rs3.88bn (up 31%)
Hindustan Constructions bags order worth Rs2.5bn
Ranbaxy Group inks pact with Aegon for Insurance, AMC biz
Thermax to set up plant in China
NTPC to sign deal for Sri Lanka project on Friday
Reliance Communication unveils mega plans for FLAG