The only thing wealth does for some people is to make them worry about losing it.
Booking some profits today may help you budget your Diwali well in advance. Why go through the anxiety of where the indices would be on Diwali and spoil your festive spirit. The finance minister has often expressed his worry about the skyrocketing market. He’s in Mumbai today and don’t be surprised if the frenzied media gets a byte from him which could bite off some points from the indices.
We’ve had enough fireworks on the bourses so far. With SEBI delivering its final verdict on P-Notes and global markets rallying across the board, the stage looks set for the bulls to lift the Sensex beyond 20k mark before Diwali. The Sensex needs 750-odd points to reach the new milestone. Going by the recent past, where it has scored 1,000 points in just four days 20k could well be conquered shortly. Come to think of it, this can even happen in a single day.
The bulls don't need to look too far. This morning, the Hang Seng in Hong Kong was up over 1,000 points before retracing a little. The rest of Asia is also in a buoyant mood, fired by Friday's rally in US stocks. All Indian ADRs rallied on Friday. So, we are in for a big-bang opening to the week, as bulls are likely to tighten their stranglehold on the market despite the P-Note scare. A good opening should give you better opportunities to take some profit home.
Among the major areas of concern are record high oil prices (above $92 per barrel), unwinding on the part of the FIIs to comply with new SEBI rules, slowdown in fresh overseas inflows, possibility of another CRR hike and the X factor like a major conflict in the Middle East.
The RBI's mid-term review tomorrow is a big event for the local market. Given the deluge of overseas capital flows and the unrelenting rise in the rupee, the central bank may go in for another tightening measure. Key interest rates will be left unchanged and the target for GDP growth and inflation will also be maintained. On Wednesday, the Fed will declare its decision on interest rates and give its assessment of the US economy, particularly the housing sector. Most experts and the market are predicting a 25 bps cut in the fed funds rate. Though unlikely, a wider cut may cheer up global markets.
Back home, results will continue to pour in and will be watched keenly, though most of the positives on this count are already in the price. As far as fund flows are concerned, there is no real threat to the long-term 'India Shining' story. As a result, foreign investors looking to maximise returns will find a way to meet the new regulations and invest in Indian stocks. Though we mentioned book profits at start, long term investors, who don’t need immediate cash for Diwali can stay invested and ride the bull market. A few hiccups are bound to take place along the way, but that’s just part of the game.
Technology led to a broader rally on Wall Street on Friday, as Microsoft's upbeat earnings and Countrywide's optimistic outlook overshadowed worries over a weakening dollar and surging commodity prices. Growing optimism that the Federal Reserve will probably cut interest rates next week added to the day's gains.
The Dow Jones Industrial Average rallied 134 points or 1% to 13,806 on Friday, taking its weekly advance to 2.1%. The S&P 500 index gained 20 points to 1,535 and rose 2.3% on the week. But most of the gains were seen in the tech-heavy Nasdaq Composite index, which rallied 1.9% to 2,804 Friday for a weekly gain of 2.9%.
Following further evidence of weakness in the housing sector, and after the warnings from multinationals and financials, the market is now pricing in 100% odds that the Fed will cut rates by a quarter-percentage point at the end of its two-day meeting on Wednesday. Odds that the central bank will announce a half a point cut, as it did on Sept.18, remained under 20%.
US light crude oil for December delivery rose $1.40 to $91.86 a barrel on the New York Mercantile Exchange. Crude reached a record $92.22 in Asia trading overnight. COMEX gold for December delivery rose $16.50 to settle at $787.50 an ounce.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 4.39% from 4.38% late on Thursday. In currency trading, the dollar fell versus the euro and the yen.
European stocks gained ground on Friday. The pan-European Dow Jones Stoxx 600 index rose 0.6% at 383.93. The commodity-heavy UK's FTSE 100 closed up 1.3% at 6,661.30, while the German DAX 30 increased 0.2% to 7,949.17 and the French CAC-40 advanced 0.6% to 5,794.87.
Brazilian equities hit a record high. Mexican stocks recovered from losses following the central bank's increase of its key interest rate. Argentina's Merval hit a record as well, rising 2% to 2,327.15 ahead of the country's presidential election on Sunday. Chilean stocks rose by 0.8% to 3,496.18. In Sao Paulo, the Bovespa closed up 3.1% at 64,275.58 while the Mexico's IPC erased an earlier decline to end up 0.8% at 32,136.76.
Asian stocks rallied this morning on the back of strong corporate earnings and higher commodity prices. BHP Billiton paced gains among mining stocks. Mitsubishi UFJ Financial Group led banks higher after a forecast from Countrywide Financial, the largest US mortgage lender, boosted speculation that the worst may be over from the subprime mortgage mess.
The Morgan Stanley Capital International Asia-Pacific Index gained 1.1% to 169.96 as of 9:35 a.m. in Tokyo, with all 10 of its industry groups advancing. The Nikkei 225 Stock Average rose 1% to 16,675.26. The Hang Seng in Hong Kong surged by 900 points to 31,306. South Korea's Kospi index gained 1.3%. Key stock indexes in all Asian markets open for trading in the region rose, except New Zealand, which was little changed.
Bulls eye 20k before Diwali
Markets ended with sharp gains as benchmark Sensex advanced over 450 points and Nifty index gained over 130 points. After a choppy start, key indices constantly gained momentum throughout the session as all round buying across the bourses lifted Sensex to cross its previous all time highs of 19,199.
Finally, Sensex closed at a new high of 19,243 surging 472 points and NSE Nifty rose 133 points to close at 5,702.
Tata Steel marginally slipped 0.2% to Rs987. The company announced its Q2 result with net profit at Rs11.91 (up 8.1%). The scrip has touched an intra-day high of Rs1048 and a low of Rs966 and has recorded volumes of over 56,00,000 shares on NSE.
I-Flex advanced 3.2% to Rs1586 after the company announced its Q2 result with net profit at Rs765.8mn and net sales at Rs4.35bn. The scrip has touched an intra-day high of Rs1640 and a low of Rs1550 and has recorded volumes of over 1,00,000 shares on NSE.
Kotak Bank surged by over 5% to Rs1027 after the company announced that their Q2 net profit rose 159% to Rs2.41bn. The scrip touched an intra-day high of Rs1052 and a low of Rs982 and recorded volumes of over 12,00,000 shares on NSE.
BHEL surged by over 6% to Rs2431 after the company announced that they have set up Thermal power project in Tamil Nadu. The scrip touched an intra-day high of Rs2448 and a low of Rs2290 and recorded volumes of over 14,00,000 shares on NSE.
Dr. Reddy’s Lab gained 1% to Rs617. The company announced that their performance in September 2007 quarter was affected due to a sharp decline in revenues from its German subsidiary Betapharm. The scrip touched an intra-day high of Rs625 and a low of Rs604 and recorded volumes of over 4,00,000 shares on NSE.
Gail India surged by over 3% to Rs407 after reports stated that the company is likely to partner with China Gas in developing coal bed methane in Mongolia. The scrip has touched an intra-day high of Rs420 and a low of Rs396 and recorded volumes of over 10,00,000 shares on NSE.
Stocks in News:
L&T would build two new ports at a total cost of Rs30bn on the west and east coast and a third shipyard; to float US$1bn infrastructure fund
ONGC plans an IPO of ONGC Petro-additions, the SPV formed for its Rs135bn petrochemical complex at Dahej in Gujarat
BHEL and Tamil Nadu Electricity Board to set up JV for two 800MW supercritical power projects in the state at a cost of Rs85bn
HPCL to formalize its Rs25bn term sheet agreement with Reliance Industries for gas supply from KG-D6 block to its Mumbai and Vizag refineries
Jetlite, the low cost carrier arm of Jet Airways, has applied for permission to fly to seven destinations in the Gulf
Delhi International Airport shortlists nine hotel and real estate chains to develop 45 acres of commercial land near international terminal; ITC, Indian Hotels and L&T are in the fray
Power Grid Corporation, in concert with Citadel Holdings, may acquire 10% in Philippines National Transmission Corp
BSNL to hire cellular towers from private players to roll out faster and cheaper services
MTNL may get ILD license by end of the year
Reliance Industries plans to cut LPG production at Jamnagar from 2.3mn tons pa to 1.6mn tons pa from middle of next year
Reliance Industries is likely to acquire some manufacturing facilities from Arvind Mills, mainly in the denim segment
Nagarjuna Fertilizers and Chemicals has decided to set up two ready-to-use fertilizer granule units in West Bengal
NTPC plans to diversify into hydroelectric generation and coal mining is likely to be delayed due to environment and land acquisition issues
Bajaj Auto has sold 65,000 units of its 125 cc DTS-Si bike XCD within the first 50 days of its launch
The Government is likely to take a decision on SBI's proposed rights issue in the next fortnight
Further capital controls are likely, if required, to curb rising capital inflows, says finance minister
Auction of spectrum or telecom license would be the optimal way to process nearly 600 applications to roll out telecom services, according to DoT
Consumer durables goods sector is expected to grow at 12% in 2007-08, according to a Ficci survey
According to CII-E&Y Textile and Apparel Report 2007, the Indian domestic and export markets for textile and apparel are expected to grow at 6.5% and 12% CAGR
Fund Activity:
FIIs were net sellers of Rs12.37bn (provisional) in the cash segment on Friday and the local institutions bought shares worth Rs9.66bn.
In the F&O segment, foreign funds were net buyers at Rs14.91bn.
On Thursday, FIIs pumped in Rs2.13bn in the cash segment. Mutual Funds were also net buyers of Rs7.12bn.