It is by going down into the abyss that we recover the treasures of life. Where you stumble, there lies your treasure.
Make no mistake. We very well know that the bears stole the limelight on Wednesday. And, we are not talking of the recovery expected this morning either. Just to flash back, the Sensex had plunged to its 52-week low (below 9000) this day last year. The benchmark BSE index rose to a high of 14,724 points on Feb 9 this year. A new high continues to evade the Sensex though the Nifty has already made a new peak. The bulls have something to cheer about this morning, buoyed by the heartening performance on Wall Street and firm trend across Asia.
Strong reading on retail sales and a positive assessment of the US economy in the Fed's "Beige Book" report brought some hopes that there could be some relief (in thought) on the interest-rate front. However, one needs to temper the euphoria, as China's Premier Wen Jiabao says monetary policy needs a moderate tightening' to prevent the Chinese economy from overheating, suggesting the central bank may raise interest rates. Also, there are concerns that interest rates will go up in key economies of UK, Japan, EU and India over the next few months.
The Bank of Japan begins a two-day policy meeting today. Though it is unlikely to jack up its key rate, most economists do expect a hike sometime later this year, as the world's second largest economy stages a comeback from years of stagnation.
What is encouraging though is that the last reported FII figure from SEBI for Tuesday shows overseas investors as net buyers of Rs5.45bn in the cash segment. But, they were net sellers of Rs2.94bn yesterday, according to the provisional data from the NSE. In the F&O segment, foreign funds were net sellers of Rs11.6bn yesterday.
Considering the multitude of factors, we expect the market to open higher this morning, but things will remain volatile. We expect select large cap stocks to advance while the small- and mid-cap shares may not see a big jump. IT shares will continue to hog the limelight amid a volatile trend in the currency markets. Lots of stock-centric action is expected. ICICI Bank will be in focus as it launches its mega follow-on public offer today.
US stocks rallied on Wednesday, with the Dow Jones Industrial Average clocking its best one-day gain of 2007. The bond market rallied and a government report on retail sales exceeded economists' estimates.
The Federal Reserve, citing its so-called Beige Book report, said that the world's largest economy is growing without stoking inflation. Bond yields fell from a five-year high.
The Dow Jones Industrial Average jumped by 187 points or 1.4% to close at 13,482.35. The S&P 500 added 22.67 points, or 1.5%, to finish at 1515.67, its biggest rally since March. The Nasdaq Composite Index advanced 32.54 points, or 1.3%, to end at 2582.31.
Retail sales in the US rose 1.4% in May, the most in more than a year. Economists expected a gain of 0.6%.
The 10-year Treasury yield fell 9 basis points to 5.21%. The yield on the 10-year note - which impacts mortgage rates and other consumer loans - briefly touched 5.32% in electronic trading yesterday, its highest point since 2002 and above the Fed's current target for its key short-term interest rate, 5.25%.
COMEX gold for August delivery fell $0.40 to settle at $652.70 an ounce. In currency trading, the dollar gained modestly versus the euro and rallied against the yen, following the retail sales report. Crude oil rose 91 cents to $66.26 a barrel following a government report showing a smaller-than-expected gain in US supplies of the motor fuel last week.
The US government said on Wednesday that China's yuan was undervalued and that it continues to push for it to gain. However, it added that China was not manipulating its currency to benefit its trade.
Across the Atlantic, European stocks weakened. The pan-European Dow Jones Stoxx 600 index declined 0.5% to 387.11. The UK's FTSE 100 closed down 0.7% at 6,520.40, while the German DAX Xetra 30 dropped 0.4% to 7,678.26 and the French CAC-40 lost 0.7% at 5,898.16.
In the emerging markets, the Ibovespa in Brazil surged 2.3% to 52,993 while the IPC index in Mexico gained 0.9% to 31,884 and the RTS index in Russia was up 0.5% at 1806.
Asian stocks rebounded from a two-week low after US retail sales rose more than expected and the Federal Reserve said that the world's biggest economy was growing without stoking inflation. Toyota and Samsung led exporters higher. BHP Billiton paced gains among mining companies after metals prices climbed.
The Morgan Stanley Capital International Asia-Pacific Index added 0.7% to 150.51 as of 10:56 a.m. in Tokyo, ending a two-day, 0.9% decline sparked by a gain in bond yields. The stock benchmark yesterday fell to the lowest since May 30.
Japan's Nikkei 225 Stock Average added 0.7% to 17,848.99. Japanese exporters including Sony also rose after the yen weakened to the lowest against the dollar since 2002, increasing the value of their dollar-denominated sales. China's CSI 300 Index opened lower. All other Asian benchmarks gained.
Yet another volatile session ended in deep red, the key indices constantly lost ground as the session progressed led by fall in the Capital Good, Oil & Gas and Banking stocks. The Technology stocks also witnessed selling pressure. However, Select Consumer Durable and Pharma stocks held on to its gains.
The BSE Mid-Cap and the small cap index which managed to hold on to their gains till mid afternoon also pared its gains as both the key indices also ended in red. The index heavy weights like SBI, L&T, ACC and HLL were the major losers dragging the benchmark index below the 14000mark. Finally, the 30-share Sensex slipped 127 points to close at 14003. NSE-50 Nifty was down by 42 points to close at 4113.
HDFC Bank edged higher by 0.2% to Rs1089. The company announced its plans to sell shares overseas in July. The scrip touched intra-day high of Rs1090 and a low of Rs1074 and recorded volumes of over 3,00,000 shares on NSE.
ICICI Bank edged lower by 0.6% to Rs913. The company announced that to raise Rs87.5bn selling shares. The scrip touched intra-day high of Rs936 and a low of Rs910 and recorded volumes of over 12,00,000 shares on NSE.
Reliance Industries slipped 1.4% to Rs1675. The company announced that they would use GAIL pipelines to sell 50% of Gas output. The scrip touched intra-day high of Rs1709 and a low of Rs1670 and recorded volumes of over 22,00,000 shares on NSE.
IMP Power surged by over 4% to Rs127 after the company secured export order worth $1mn. The scrip touched intra-day high of Rs133 and a low of Rs121 and recorded volumes of over 30,000 shares on NSE.
Select Pharma stocks managed to hold on to their gains. Dr Reddy’s lab surged by 2.8% to Rs627, Divi’s Lab gained 1.4% to Rs5285, Cadila advanced 0.8% to Rs341 and Lupin added 0.5% to Rs673.
Oil & Gas stocks also ended lower. Oil exploration major and heavy weight Reliance Industries was down by over 1.4% to Rs1675. Oil Refinery stocks slipped led by BPCL as the scrip was down by 3.4% to Rs334 and HPCL lost 2.8% to Rs269.
Selling pressure also dragged the Banking stocks lower. SBI declined 3.2% to Rs1290, PNB slipped by 1.5% to Rs486 and ICICI Bank edged lower by 0.6% to Rs913 and HDFC Bank slipped 0.5% to Rs1082. Bank of India, OBC Corp Bank were the major loser among the Mid-Cap stocks.
Results Today: Insider Trades: Autoline Industries Ltd: Merrill Lynch Capital Mkts Espana SA SV has purchased from open market 25223 equity shares of Autoline Industries Ltd on 8th June, 2007. McDowell Holdings Limited: FMR Corp & Fidelity International Ltd has sold in open market 467908 equity shares of McDowell Holdings Limited on 5th June, 2007. Lower Circuit: Ruby Mills, Bag Films, Teledata Informatics, Tanla and Raj Tele. Upper Circuit: Sical Logistics, Prime Focus, Simplex Infrastructure, IKF Technology, Yashraj Securities, Swan Mills and Garware Offshore. Delivery Delight (Rising Price & Rising Delivery): Arvind Mills, BASF, Bhushan Steels, Cipla, Dabur, Dr Reddys Lab, Eicher Motors, Gitanjali Gems, HCL Tech, Indian Hotels, Nestle, ONGC, Satyam Computer, Tamil Nadu Newsprint and Titan. Abnormal Delivery: Wipro, Glenmark, Amtek Auto, GDL, UltraTech Cement, RPL, KPIT Cummins, Hexaware Tech and D S Kulkarni. Major Bulk Deals: Lehman-Cayman has sold 3i Infotech, HSBC has sold Ambika Cotton and Nestle, Lotus Global has sold AMD Metplast, Bear Stearns has sold Bombay Rayon, Lehman Bros and Lotus Global have bought Gremac Infra, Deutsche Securities has sold Shree Renuka Sugars, Deutsche India, Prudential ICICI MF and Citigroup have picked up Time Technoplast. News Headlines: HDFC Bank plans to sell shares overseas in July Simplex Infrastructures gets two overseas orders worth Rs10.05bn Commerce Minister Kamal Nath to ask Finance Ministry for relief to exporters Indian Sugar Exim wins contract to export 2 lakh tons Sugar Reliance to use GAIL pipelines to sell 50% of Gas output ICICI Bank to raise Rs87.5bn selling shares and to reserve 5% stock for existing shareholders IMP Power gets export order worth $1mn Wipro and EMC announce Global Strategic Infrastructure alliance Bihar tubes to consider buying Apollo Metalex |