It isn't so much trouble to get rich as it is to tell when we have got rich.
We expect another strong opening, on the back of rally across global markets, led by Wall Street. The undertone for the morning remains upbeat, but we do not rule out some cooling following the staggering advance in the past few weeks. And guess what, in recent memory, the sun outage season was more than sunshine for the bulls as the bears got burnt by the heat.
Dhirubhai's legacy of wealth creation is known. But Mukesh Ambani has reportedly increased his wealth by roughly Rs4mn every single minute in recent months, thanks to surging stock prices of his company. He is reportedly close to becoming the richest Indian if another 5% appreciation is seen in his stocks. Anil Ambani and KP Singh of DLF are following behind with a gap.
But how much has your portfolio moved? After yesterday's breathtaking rally that catapulted the Sensex well above the 18,000 mark - much to the surprise of most market participants - there is already talk of 20k before Diwali. Forget about who’s richest and where the Sensex is headed. As we mentioned yesterday, protect yourself and don’t worry if you are under-performing temporarily. Better to lose notional profit than real money.
Going by the mood the bulls are in the 20k target doesn't look too steep. Especially, if the foreign funds continue to pump money at the pace at which they have been doing ever since the Fed rate cuts. The temporary tempering of rhetoric by the Congress and the Left has added fuel to the fire. What's more, if the two parties can burry the hatchet at a crucial meeting scheduled for Oct. 22, nothing like it. There could be more goodies coming the bulls' way this festival season, if the Fed decides to play Santa again, on Oct. 31.
Before that, the Bank of Japan is meeting tomorrow and is most likely to hold its line on interest rates given the sluggish growth in the world's second-largest economy and concerns on the US economy. This will add to the so-called "carry trades" and boost inflows to emerging markets like India.
The only party pooper could be Dr. Y.V. Reddy. What the RBI Governor does on Oct. 30 will have a bearing on the market. Given the unprecedented surge in overseas inflows and the consequent pressure on inflation could prompt another liquidity tightening move from the central bank. That could have some negative effect on the market sentiment.
One will also have to keep an eye on quarterly results and take a call accordingly. Though valuations are already way ahead of fundamentals, in a momentum market this doesn't really matter. Still, one has to be guarded, as the rise has come too fast and is also not broad based.
Reliance stocks (belonging to both the Ambani brothers) have been on fire, but when the tide turns, even they may not be able to withstand the sell-off if any.
Sugar shares are likely to do well after the Government announced a new set of relief measures to help the industry cope with the current downturn.
Bihar Tubes, Indo Wind Energy, PFC, South India Bank, Spice Tele and Supreme Industries will announce their results today.
iGate Global will be in focus as the company said that it has received a letter from its US parent, informing its intention to delist the shares from the stock exchanges in India. The company has also announced its Q2 results. The bottomline shows a surprising jump on the previous quarter though the sequential growth in the topline is more muted.
US stocks rallied on Tuesday, sending the Dow Jones Industrial Average and S&P 500 index to all-time highs, as investors breathed a sigh of relief that the minutes from the last Fed meeting fueled optimism for another interest rate cut by the end of the year.
The minutes from the last FOMC meeting allayed investors' concern that the US economy is heading for a recession.
Fed policy makers backed a decision to cut the benchmark lending rate by half a percentage point at the Sept. 18 meeting and said a decline in inflation will probably be sustained.
The S&P 500 added 12.57 points, or 0.8%, to 1,565.15. The Dow Jones increased 120.80 points, or 0.9%, to 14,164.53. The Nasdaq Composite Index rose 16.54 points, or 0.6%, to 2,803.91.
US shares drifted higher through the morning, flattened out in the early afternoon and then began to rise as investors digested the Fed minutes.
After the close, Alcoa reported results. The aluminum maker and Dow component reported earnings of 64 cents per share, up from 62 cents a year earlier and 2 cents short of forecasts. Revenue fell from a year ago, but met forecasts.
Market breadth was mixed. On the New York Stock Exchange, winners and losers were narrowly mixed on volume of 620 million shares. On the Nasdaq, decliners beat advancers four to three on volume of 1.13 billion shares.
Treasury prices fell after the minutes, raising the yield on the benchmark 10-year note to 4.65% from 4.64% late on Friday. In currency trading, the dollar rose against the euro and yen. COMEX gold for December rose $4.40 to settle at $743.10 an ounce.
US light crude oil for November delivery rose $1.24 to settle at $80.26 a barrel on the New York Mercantile Exchange after slumping $2.20 in the previous session.
European shares ended higher as well. The pan-European Dow Jones Stoxx 600 index rose 0.5% to 387.77. The UK's FTSE 100 closed up 1.1% at 6,615.40, the German DAX 30 advanced 0.1% to 7,980.44 and the French CAC-40 added 0.6% to 5,861.93.
In the emerging markets, the Bovespa in Brazil was up 1.4% to 63,549 while the IPC index in Mexico was flat at 31,801. The RTS index in Russia gained 0.5% to 2141 and the ISE National-30 index in Turkey surged by 3.3% to 73,885.
Asian markets extended their gains this morning. The Nikkei in Tokyo was up 35 points at 17,195 while the Hang Seng in Hong Kong jumped 380 points to 28,616. The Kospi in Seoul surged 20 points to 2034 and the Straits Times in Singapore added 15 points to 3880.
Honda paced gains among regional exporters. BHP Billiton advanced in tandem with metals and crude oil prices. DBS Group Holdings climbed after Singapore's economy grew faster than expected.
The Morgan Stanley Capital International Asia Pacific Index climbed 0.3% to 167.52 as of 10:26 a.m. in Tokyo, set for its highest close. Benchmarks in China, Australia and Singapore were also headed for records. Taiwan's market is closed today for a holiday.
Bulls on a new high
Mile stones after mile stones, every session seems to be a historical one as bulls continue its record breaking run. It was the second fastest 1,000 point rally in eight trading session. Earlier, the fastest 1,000 point rally was from 16k-17k completed in six session’s in September. FII invested $3.54bn in the cash market during the 17-18k journey and also recorded its highest intra-day gain ever.
Among the BSE sectoral indices, BSE Oil & Gas index (up 6.7%), BSE Realty index (up 5.1%) and BSE PSU index (up 4.5%).
Finally, BSE 30-share benchmark Sensex ended 788 points higher to close at 18,280. NSE Nifty jumped 242 points to close at 5,327.
Parvnath gained 6.3% to Rs369 after the company announced that they have secured approval for SEZ. The scrip touched an intra-day high of Rs373 and a low of Rs335 and recorded volumes of over 8,00,000 shares on NSE.
Petron Engineering spurred over 5.7% to Rs284 after the company announced that it has received order worth Rs13.5mn from Moser Baer. The scrip touched an intra-day high of Rs292 and a low of Rs256 and recorded volumes of over 38,000 shares on NSE.
IVRCL Infrastructure advanced 6% to Rs439 after the company announced that it secured Rs7.61bn contract. The scrip touched an intra-day high of Rs443 and a low of Rs392 and recorded volumes of over 12,00,000 shares on NSE.
Ganesh Housing slipped 1.1% to Rs472. The Company announced their plans to enter retail. The scrip touched an intra-day high of Rs499 and a low of Rs461 and recorded volumes of over 13, 000 shares on NSE.
BHEL advanced 2% to Rs2236 after the company announced that they won Rs3.9bn power plant order. The scrip touched an intra-day high of Rs2248 and a low of Rs2140 and recorded volumes of over 13,00,000 shares on NSE.
GTL Infrastructure spurred by over 5% to Rs37. The company announced that they may raise funds overseas selling securities. The scrip touched an intra-day high of Rs38 and a low of Rs33 and recorded volumes of over 16,00,000 shares on NSE.
Power stocks were among the major gainers. REL surged by over 11% to Rs1533, Tata Power spurred over 8.5% to Rs980, Powergrid gained over 6.5% to Rs101 and PFC advanced by 5.5% to Rs205.
Realty index was the top gainer, the index gained over 5%. Akruti rallied by over 10% to Rs814, DLF surged by over 3% to Rs865, Unitech jumped over 5.5% to Rs326 and Parsvnath was up 6.3% to Rs369.
IT index continued its bounce back despite rupee rose to highest since February 27, 1998. Wipro surged over 4% to Rs489, Satyam Computer advanced 3.5% to Rs471, Infosys was up 2.1% to Rs2047 and TCS added 1.5% to Rs1094.
Stocks in News:
State Bank of India (SBI) received government approval to raise capital up to Rs100bn by March 2008.
ONGC Mittal Energy Service Limited, a joint venture between ONGC and Mittal, has decided to suspend the operation of the overseas hydrocarbons trading and supply chain management joint venture.
L&T bags Rs6.9bn contract from IOC for setting up of its recovery units.
Reliance Energy Ltd bags Rs60bn deal to build 100 storey tower and a business centre in Manchirevulla, Hyderabad, with Sobha Developers being the other major partner with 23% stake.
DLF is close to signing a licensing deal with Italian luxury brand, Giorgio Armani, providing it the rights to retail and market the brand in the Indian sub-continent.
Tata Motors is firming up plans to launch new cars in 2007-08 and is likely to unveil a new multi-utility vehicle during 2007.
Tata Motors and M&M have announced hike in commercial vehicle prices and Ashok Leyland is expected to follow soon.
Wockhardt plans to triple its revenues from US by 2009 from Rs2bn, using both organically and inorganically routes.
Bharati Shipyard and Apeejay group are expected to announce a shipbuilding and repair unit in Orissa.
Gujarat State Petroleum Corporation has decided to call for fresh bids from global majors to sell up to 30% stake in Krishna Godavari Basin block.
Moser Baer plans to make an entry in to the consumer electronics segment by offering low end VCD and DVD players.
Mauritius based FIIs are expected to acquire 47% stake in the biotech arm of Intas Pharamceutical.
United Breweries will spend Rs10bn over the next 2-3 years on capacity expansion and upgrading its existing plants.
Cummins will up its KPIT stake to 14.9%.
Kavveri Telecom is expecting to get major Indian defense orders after the completion of test by 2010.
Advance tax collection from IT companies in September grew by 110% to Rs5.1bn and was up by 153.8% for April – September period.
Telecom commission decided against the auction of 2G spectrum and said that the country will continue with the existing subscriber base linked allocation of radio frequency.
Maharashtra faces load shedding with demand for power overshooting supply.
Cement dispatches were up by 10% in the first half of the year at 81mn tons.
The government will subsidise loans to the sugar mills and make blending of 5% ethanol mandatory.
The excise duty collection grew 7.2% yoy basis in September 2007 at Rs101.9bn and customs duty grew by 16.1% during April – September period to Rs484.8bn.
Government is unlikely to relax 5-yr rule for airlines to qualify for international operations.
Fund Activity:
FIIs were net buyers of Rs14.17bn (provisional) in the cash segment on Tuesday while the local institutions pulled out Rs5.29bn. In the F&O segment, foreign funds were net buyers at Rs8.39bn. FIIs were net buyers of Rs34.2bn in the cash segment on Monday.
Major Bulk Deals:
Bear Stearns has bought C&C Construction while Edelweiss has sold the stock; Emerging Capital Advisors has sold Evinix; Merrill Lynch has purchased Trans Freight Containers.Upper Circuit:
Ruby Mills, KEI Industries, Swan Mills, Yashraj Containers, Victoria Mills, RIIL, Usher Agro, XL Tele, Bombay Burmah, Jai Corp, Igate Global and Marksans.
Lower Circuit:
Rei Agro and IID Forgings