"If the facts don't fit the theory, change the facts.”
It’s been a dream run for Dhoni and his talented bunch of cricketers in the T20 World Cup. The same holds true for the bulls on the bourses of late. Just like not many expected the 'Men In Blue' to win the first T20 Word Championship, fewer were willing to bet on the Sensex being close to 17k so fast after last month's global carnage.
The rules of the game changed, and the bulls and men in blue were fast to adapt to the situation. Thanks partly to the timely action of central banks across the world, and also because of the strong visibility in India's economic growth, FIIs are back with a bang. In the past three days since the impending Fed announcement, the foreign funds have poured in $1.23bn into Indian stocks. And, we are just talking about the cash market here. The interest rate differential between the US and India has clearly revived interest of global investors in high-yielding assets like Indian shares. This may continue if the Fed decides to cut rates again.
In the immediate future, we expect the current momentum to lift the Sensex past 17k and the Nifty past the 5k mark. However, the slight weakness in markets in the US and Asia could play spoilsport. Also, there could be some profit booking after the nearly non-stop surge since late August. The F&O expiry and news of possible SEBI inquiry in the trading of certain scrips in the past few days could also stop the bulls the bulls in their tracks, albeit temporarily. From today till Oct. 9, we will have a change in market timings due to the sun outage. History suggests that the market tends to be lackluster during this period. It remains to be seen if this trend persists or the bulls will also make new history, a la Dhoni & Co.
We would advise investors to remain positive though the market may see some softness after the recent spurt. A lot of stocks have rallied ahead of fundamentals purely on momentum and possible 'stage-management' by vested interests. One should lock in gains in these scrips and re-enter at lower levels. Quite a few scrips have also underperformed despite the sharp pullback from last month's lows. Investors holding these laggards may also exit these counters at every rally. Being stock specific at all times is the right strategy to avoid a hit on returns.
US shares slipped on Monday owing to profit booking following last week's Federal Reserve inspired rally. Investors were also cautious ahead of a string of key economic reports due later in the week.
Citigroup, Bank of America and JPMorgan Chase declined after the IMF said credit markets may not normalize soon. Exxon Mobil led energy companies to the first drop in 10 days after crude prices decreased. An index of homebuilders in the S&P dropped to the lowest since May 2003 before data this week on home sales and earnings reports from a couple of industry players.
The S&P 500 fell 8 points, or 0.5%, to 1517.73. The Dow Jones Industrial Average lost 61 points, or 0.4%, to 13,759.06. The Nasdaq Composite Index slipped 3 points, or 0.1%, to 2,667.95.
After the close, home improvement retailer Lowe's warned that fiscal 2007 earnings will come in at the low end or slightly below its prior guidance of $1.97 to $2.01 per share. Lowe's shares fell 4% in extended-hours trading and dragged down rival Home Depot by 2%.
Tuesday brings the September consumer confidence and August existing home sales reports shortly after the start of trade. Reports are also due on consumer confidence, housing, durable goods orders and personal income and spending.
GM was active after the auto major's US factory employees staged their first nationwide strike in 37 years after the company failed to reach a new labor agreement with the United Auto Workers. However, union leaders said they were willing to resume talks. GM stock had risen as much as 3% in the morning but gave up those gains by the afternoon.
Treasury prices ended the session little changed, with the yield on the 10-year note at 4.62% from late on Friday. COMEX gold for December delivery rose 40 cents to settle at $739.30 an ounce. In currency trading, the dollar fell to a new record low against the euro and also slipped against the yen.
US light crude oil for November delivery lost 67 cents to $80.95 a barrel on the New York Mercantile Exchange. Last week, the October contract settled at a record high of $83.32.
European shares traded mixed as strength in mining stocks offset the lingering worries about the effect of the credit market turmoil on financial institutions such as Deutsche Bank and Northern Rock.
The pan-European Dow Jones Stoxx 600 index rose 0.1% to 376.97. The UK's commodities-heavy FTSE 100 closed up 0.1% at 6,465.90, while the French CAC-40 slipped 0.1% to 5,692.49 and the German DAX 30 inched down 0.1% to 7,787.92.
In the emerging markets the scene was mixed. The Bovespa in Brazil was up 1.6% at 58,719 while the IPC index in Mexico shed 0.1% to 30,543. The RTS index in Russia gained 0.8% at 2042 and the ISE National-30 in Turkey dropped 0.7% at 67,966.
Asian markets are down marginally this morning. The Nikkei in Tokyo was down 23 points at 16,289 while the Hang Seng in Hong Kong rose 30 points to 26,582. The Hang Seng was down 0.7% in early minutes of trading. The Straits Times in Singapore advanced 7 points to 3645.
Markets hit new peak for a second day in a row with the Reliance pack leading the rally yet again. Firm global cues coupled with strong buying momentum in the scrip’s across the sectors lifted the markets to hit their respective all time highs. Even the turnover was at its all time high registering a whooping 1.06 lakhs crore. Finally, BSE 30-share benchmark Sensex ended 281 points higher to close at 16845. NSE Nifty surged 93 points to close at 4931.
Reliance stocks continued their dream run. RNRL surged by over 22% to Rs93, RPL gained 8% to Rs167, Reliance Industries advanced by 3.5% to Rs2363, RIIL was frozen at 10% to Rs1149.05, REL advanced by 8% to Rs1091 and Reliance Capital added 2% to Rs1572.
JSW Steel gained by 2% to Rs740 after reports stated that the company has planned increasing US pipe output by 75% to 0.35mn ton next year and may increase to 0.5mn ton by March 2009. The scrip touched an intra-day high of Rs40 and a low of Rs724 and recorded volumes of over 2,00,000 shares on NSE.
Himachal Futuristic was locked at 20% upper circuit to Rs24.45 following reports that the company has launched subscriber tariff based on per second basis. The scrip touched an intra-day high of Rs24.45 and a low of Rs20 and recorded volumes of over 4,00,00,000 shares on NSE.
Usha Martin advanced 2.3% to Rs53 on reports that the group has acquired UK based BPO Company Converso. The acquisition is expected to bring synergies in customer care and billing solutions between Ushacomm, Eppixcomm and Converso. The scrip touched an intra-day high of Rs54 and a low of Rs52 and recorded volumes of over 1,00,000 shares on NSE.
IFCI rose by over 20% to Rs98 before bidders for the company is announced. The scrip touched an intra-day high of Rs99 and a low of Rs83 and recorded volumes of over 14,00,00,000 shares on NSE.
DLF surged by over 4.5% to Rs781 following reports that the company has emerged as the highest bidder at Rs66bn for setting up Tidel-II, the second IT and ITES SEZ in Chennai. The scrip has touched an intra-day high of Rs785 and a low of Rs747 and recorded volumes of over 3,00,00,000 shares on NSE.
Auto stocks raced ahead. TVS Motors surged by over 2.3% to Rs72, Hero Honda advanced by 4% to Rs769, Tata Motors gained by 1% to Rs744 and M&M added 1.2% to Rs783.
Capital Good stocks also were on the move led by gains in index heavyweight BHEL, the scrip surged by over 2% to Rs2009, L&T advanced over 4% to Rs2900, Punj Lloyd was up by 0.2% to Rs313.
Banking stocks ended higher on back of gains in the index heavyweights, ICICI Bank surged by over 3% to Rs998, SBI advanced by 1.6% to Rs1830 and HDFC Bank gained 2.7% to Rs1354. Andhra Bank, PNB and Bank of Baroda were the major gainers among the Mid-Cap stocks.
After a bounce back in previous trading session IT stocks yet again lost ground as India's rupee rose to a nine-year high, the rupee rose 0.2% to 39.82 per dollar the highest since May 1998. Infosys slipped by over 3.5% to Rs1761, TCS was down by 1.2% to Rs1005, Satyam Computer dropped by 2.7% to Rs407 and Patni lost 2.2% to Rs453.
Consumer Durable stocks also had a quite session. Titan Industries was down 0.6% to Rs1462, Videocon Industries slipped 0.5% to Rs366.
Stocks in News:
IOC plans to invest Rs450bn over the next 5 years to enhance its refining capacity to 80 mn tones per annum.
UBS Global Real Estate plans to launch a $1bn fund for India. The company has tied up with K Raheja Group to finance various projects.
ONGC will invest $150mn over next seven years in Burma for exploration. The company has been awarded 100% participating interest by the Myanmar Government.
Essar Shipping & Logistics Ltd. has placed an order for 6 supramax bulk carriers at an investment of $210mn with ABG Shipyard Ltd.
RNRL is planning a up to 20% stake sale in its coal based methane business.
Reliance Retail in talks with US based GAP for a franchisee agreement.
Syndicate Bank plans a FPO of 80mn shares by end of the fiscal year.
Tata Power to pick up 15% stake in power exchange to be set up by NCDEX and NTPC.
ICICI Bank and HDFC have cut rates on loans for cars and homes, respectively.
GAIL has announced its plan to explore options for strategic co-operation with BPCL for petrochem and E&P activities.
HCC, in joint venture with Alpine Mayreder and Samsung Corp has bagged a prestigious contract worth Rs7.7bn from DMRC.
Fund Activity:
FIIs were net buyers of Rs11.9bn (provisional) in the cash segment on Monday and the local institutions pulled out Rs6.7bn. In the F&O segment, foreign funds were net buyers of Rs5.08bn.
On Friday, FIIs were net buyers to the tune of Rs9.24bn in the cash segment. Mutual Funds were net buyers of Rs1.29bn on the same day.
Major Bulk Deals:
Deutsche MF has sold Madhucon Projects; Lehman Bros has bought Mastek while HSBC Global has sold it; ABN AMRO Bank has sold PSL; Emerging Market has picked up Ruchi Soya while Goldman Sachs has sold the stock; Motilal Oswal has purchased Selan Exploration; Reliance Capital has bought SKF India while HSBC Financial has sold it; Reliance MF has picked up Subhash Projects while Deutsche Securities has sold it; Goldman Sachs has sold Visa Steel Lotus Global has purchased Vyapar Industries.
Upper Circuit:
Bag Films, Gremac Infrastructure, RIIL, Goldstone Tech, GMR Industries, Himachal Futuristic, Accel Frontline, Action Finance, Silverline Technologies, Ruby Mills, Jai Corp, Prakash Industries, IID Forgings.
Lower Circuit:
SSI, Bombay Burmah, Dhanalakshmi Bank.