Small cheer and great welcome makes a merry feast.
Bulls may be welcomed in style after a mixed week so far. The US market rallied overnight after two days of declines. Buoyed by the gains on Wall Street, stock benchmarks across Europe, Latin America and other emerging markets too ended higher. Asian markets have also opened up this morning. So, its quite natural that the Indian bulls will also resume their buying spree and lift the key indices close to their previous lifetime highs. Investors should do well to use the rally to exit weak stocks and move into better quality scrips or wait with cash for buying towards the end of the month. The big question is whether the merry feast will last beyond lunch time.
There is no panic as of now, with the market having bounced back smartly from late August. Still, with chances of the US economy slipping into a recession (or has it already done so?) growing by the day, one will have to keep oneself abreast with the global events. The standoff between the Congress and the Left also seems to continue, and various parties have already started preparing for the impending mid-term polls. We are all set for a good day ahead. The near-term outlook remains sluggish amid concerns about the economic downturn in the US and its wider global fallout, including that on India.
US stocks rallied the most this month on growing evidence that consumer spending was holding its own amid an economic slowdown and that corporate profit growth remained good.
General Motors posted the biggest advance in the Dow Jones Industrial Average after saying demand is strong. McDonald's climbed on sales that topped some analysts' expectations. Western Digital shares had its best gain in two weeks after the world's second-largest maker of hard-disk drives increased its profit forecast.
The Standard & Poor's 500 Index added 19.79 points, or 1.4%, to 1,471.49. The Dow surged 180.54 points, or 1.4%, to 13,308.39. The Nasdaq Composite Index rose 38.36 points, or 1.5%, to 2,597.47. Each index posted its biggest gain since Aug. 29.
Wall Street is betting that the Fed will lower the benchmark lending rate for the first time in four years to keep credit market losses from slowing economic growth. Fed fund futures contracts show a 72% chance the central bank will reduce its target rate for overnight bank lending by half a percentage point, up from 54% a week ago and down from 76% yesterday.
Speaking to the German central bank in Berlin, Fed chairman Ben Bernanke said the global saving glut was still helping to keep interest rates low, and borrowing costs may not rise much even if the pool of excess capital dwindles in coming decades. He didn't comment on interest rate policy or the economic outlook.
The National Association of Realtors reduced its home sales forecast for the ninth time this year and said the housing slump will extend into 2008. In other news, the July trade deficit narrowed to $59.2bn from an upwardly revised $59.4bn in the previous month. Economists expected a reading of $59bn.
Treasury prices fell, raising the yield on the 10-year note to 4.37% from 4.32% late on Monday. In currency trading, the dollar fell versus the euro and rose against the yen. COMEX gold for December delivery rose $8.90 to settle at $721.10 an ounce.
US light crude oil for October delivery rose 73 cents to settle at $78.22 a barrel on the New York Mercantile Exchange, an all-time high. OPEC agreed to boost its crude output by 500,000 barrels a day. The surprise move would take effect Nov. 1, the cartel said.
European stocks gained ground as hopes for US interest-rate cuts boosted some of the hardest-hit companies over the last month. The pan-European Dow Jones Stoxx 600 index rose 1.7% to 368.41. The UK's FTSE 100 closed up 2.4% at 6,280.70, while the German DAX 30 gained 1.1% to 7,457.90 and the French CAC 40 advanced 1.7% to 5,478.94.
Emerging markets too closed higher. The Bovespa in Brazil jumped 2.4% to 53,921 while the IPC index in Mexico gained 1% to 30,191. The RTS index in Russia added 0.7% to 1911 and the ISE National-30 index in Turkey climbed 1.6% to 61,949.
Most Asian markets were trading up this morning. The Nikkei in Tokyo advanced 56 points to 15,934 while the Hang Seng in Hong Kong shot up by 254 points to 24,206. The Straits Times in Singapore gained 21 points to 3516 while the Kospi in Seoul fell by 15 points to 1831.
The Morgan Stanley Capital International Asia-Pacific Index added 0.7% to 151.43 at 10:50 a.m. in Tokyo, with all 10 of the benchmark's industry groups advancing. Australia's S&P/ASX 200 Index rose 0.5%. South Korea and New Zealand were the only markets open for trading to decline.
Swinging market ended in red as benchmark Sensex swung nearly 200 points and Nifty swung over 50 points during the day. After opening with a positive bias key indices lost ground throughout the session as selling pressure in the IT and Auto stocks dragged the markets to close in negative territory. Mid-Cap and the Small-Cap indices also witnessed profit booking. On the other hand Power and Metal stocks were in demand. Finally, BSE 30-share benchmark Sensex slipped 54 points to close at 15542. NSE Nifty slipped 10 points at 4497.
Shares of Motilal Oswal Financial Services Ltd rose on debut. The scrip started trading at Rs938 on BSE against the issue price of Rs825 and finally ended on a premium of 18% at Rs973 touching an intra-day high of Rs997 and a low of Rs911 and recorded volumes of over 62,00,000 shares on NSE.
Idea gained by 1% to Rs123 after the local mobile-phone operator’s board approved a plan to put its wireless towers and other infrastructure into a separate company. The scrip touched an intra-day high of Rs125 and a low of Rs122 and recorded volumes of over 36,00,000 shares on NSE.
IFCI surged by over 5% to Rs77 following reports that Blackstone Group LP and Citigroup Inc. are among contenders to buy a 26% stake in IFCI. The scrip touched an intra-day high of Rs78 and a low of Rs75 and recorded volumes of over 7,00,00,000 shares on NSE.
Rallis spurred by over 3% to Rs325 following reports that the agrochemicals company belonging to the Tata group plans to bid for Japan's Arysta LifeScience Corp., the world's largest privately held crop-protection company. The scrip touched an intra-day high of Rs335 and a low of Rs320 and recorded volumes of over 11,000 shares on NSE.
Kinectic Engineering was frozen at 20% upper circuit following reports that the company has secured order from Tata Motors. The scrip touched an intra-day high of Rs138 and a low of Rs114 and recorded volumes of over 35,000 shares on NSE.
Gammon India after slipping nearly by 10% in the previous trading session ended 0.5% higher at Rs423. The stock yesterday fell following reports that the company faced criminal charges after a flyover being built by the company in the southern Indian city of Hyderabad collapsed. The scrip has touched an intra-day high of Rs439 and a low of Rs420 and recorded volumes of over 6,00,000 shares on NSE.
Rajesh Exports advanced by 2.5% to Rs698 amid reports that it is looking at buying jewellers in South India. The scrip touched an intra-day high of Rs709 and a low of Rs682 and recorded volumes of over 3,00,000 shares on NSE.
Cairn gained by 1.8% to Rs159 after the company announced that it has secured Government approval to build pipeline. The scrip touched an intra-day high of Rs161 and a low of Rs156 and recorded volumes of over 37,00,000 shares on NSE.
Power stocks sparked off. Suzlon surged by 3.8% to Rs1326, PFC was up by 2.2% to Rs195, NTPC gained 2.6% to Rs196 and APIL added 1.8% to Rs772.
IT stocks ended lower as rupee further strengthened against the USD. TCS was down by 2.2% to Rs1023, Infosys slipped by 2.6% to Rs1822, Wipro lost by 2% to Rs455 and Satyam Computer shed by 2% to Rs433.
Auto stocks were in reverse gear as selling pressure dragged them lower. Tata Motors slipped by 2% to Rs689; Maruti was down by 1.5% to Rs861, M&M slipped by 0.6% to Rs697 and TVS Motors declined by 2.5% to Rs71.
Banking stocks also were under pressure. SBI dropped by 1% to Rs1622, ICICI Bank was down by 1% to Rs901 and HDFC Bank edged lower by 0.7% to Rs1187. Bank of India, Bank of Baroda and Syndicate Bank were the major losers among the Mid-Cap stocks.
Global cues will again play an important role for the markets. The equity markets across the globe are now awaiting the outcome of the FED meet on September 18. Investors may well stay on the sidelines before the all-important announcement by Ben Bernanke. Also, one needs to be cautious with fresh concerns of inflation emerging from China. The ongoing consolidation will continue with intra-day gyrations and stock specific movement due to the lack of immediate triggers. Although stock specific activity will continue depending on the flow of news, the market is expected to consolidate at higher levels.
Stocks In News
Essel Propack could gain as a financial daily reports that it is in talks with Alcan for buying the latter's packaging unit. Hanung Toys might be another gainer amid reports that it has won a Rs6bn order from a Swedish company. Top IT companies may attract some attention as a newspaper report says they are among the suitors for bagging the $125mn deal from Dutch financial giant ING.
IDFC and Sintex Industries will advance as the RBI has increased the investment limit for FIIs in the two companies. General Atlantic has opted to exercise their conversion option of 1,055,570 preference shares into unregistered ADRs, represented by 10,555,700 equity shares @ Rs142.10 per share. General Atlantic had invested Rs 300 crores in Hexaware through a preferential allotment in early 2006.
Fund Activity:
FIIs were net buyers of Rs2.57bn (provisional) in the cash segment on Tuesday and the local institutions pulled out Rs4.45bn. In the F&O segment, foreign funds were net buyers of Rs4bn.
On Monday, FIIs were net sellers to the tune of Rs629mn in the cash segment. Mutual Funds were net sellers of Rs1.88bn on the same day.
Major Bulk Deals:
ABN Amro Bank has bought Deccan Chronicle while Fidelity Investment has sold it;
Macquarie Bank has sold GIC Housing Finance; Merrill Lynch has picked up GTC Industries; Blackstone Asia has sold HBL Power Systems; Morgan Stanley has purchased HTMT Global; Franklin Templeton MF and Goldman Sachs have bought
Motilal Oswal; CLSA Mauritius has sold OBC; Bear Stearns has sold Simplex Infra; Morgan Stanley has sold Sujana Tower; Sundaram MF has picked up Time Technoplast; Credit Suisse has purchased Vijaya Bank while Merrill Lynch and HSBC Financial have sold it.
Upper Circuit:
Usher Agro, ABG Heavy, Jayant Agro, Marksons, Kinetic Engineering, IID Forgings,
Shree Precoated, Time Techno, ION Exchange, Manali Petro.
Major News & Announcements:
SBI approves $800mn - $1bn loan to Tata Steel
RBI allows Foreign Funds to buy up to 74% in IDFC and Sintex
EKC to consider plan to sell Rs1bn of shares
Kinetic Engineering secures order from Tata Motors – Reports
Bhagyanagar Board to consider Preferential issue warrants
Sonata Software to spend Rs1bn to develop facility
Areva secures multimillion Euro contract
Wipro to make fresh investments in Mexico, says Premji
HCL Tech to offer IT Management service to Awalnet of Saudi Arabia
Classic Diamonds to open 4 outlets in UAE by 2007, ties up with retailer at UAE
Godawari Power board to consider raising funds on September 25
Venus Remedies secures approval to sell drug in Ukraine
Nagarjuna Construction secures order worth Rs2.72bn
Cairn gets Government approval to build pipeline