The world breaks everyone, and afterward, some are strong at the broken places.
After going through a topsy turvy ride for most part of November, stocks have begun the last month of the calendar year on a better note. Despite the nagging worries over the US housing sector and slowing FII inflows, the Sensex seems headed towards the 20k mark yet again. It needs another 260-odd points to reach the milestone. Given the bullish global cues this morning and renewed buying yesterday by the FIIs, it may well make new lifetime high today itself.
Over the past few weeks we have seen that the small- and mid-cap stocks have taken the limelight away from the large caps. Though the same trend may well continue for a while, one should not write off the frontline shares. Fresh buying may emerge in these scrips, especially today when world equity markets are smiling again.
There is a growing feeling that the Fed and the US Government will oblige the markets and will announce measures to bailout the ailing housing sector. If this indeed materialises, there is a strong case for a fresh rebound in equities across the world.
For the day you can ignore concerns of any unforeseen events, particularly in the US. The bulls will largely remain in command today. We see a gap-up opening and possibly a new high for the Sensex today or tomorrow.
US stocks rallied on Wednesday, with the Dow Jones rising by nearly 200 points, spurred by strong economic news and continuing bets that the Federal Reserve will cut interest rates again at its policy meeting next week.
Microsoft, Oracle and Intel led technology shares higher for the first time in four days on analyst reports that demand for computers and software will increase. Freddie Mac gained as the Treasury Department agreed on an agreement with lenders to stem subprime defaults by freezing rates.
AIG jumped after saying its investments linked to the housing market are manageable.
The Standard & Poor's 500 Index added 22 points, or 1.5%, to 1,485.01, the highest in a month. The Dow gained 196 points, or 1.5%, to 13,444.96. The Nasdaq Composite Index rose 47 points, or 1.8%, to 2,666.36.
Market breadth was positive. Four stocks gained for every one that fell on the New York Stock Exchange.
The Labor Department said worker productivity rose the most since 2003 in the third quarter while labor costs posted the biggest drop in four years. A report from ADP Employer Services showed companies last month added 189,000 jobs, more than triple the average forecast
October factory orders rose 0.5% from an upwardly revised 0.3% in the previous month, the government reported. However, the ISM index on the service sector fell to 54.1 in November from 55.8 in October. Economists had been looking for a reading of 55.
Thursday brings the latest interest-rate policy decisions from the Bank of England and the European Central Bank, as well as the US weekly jobless claims report.
Crude oil futures erased earlier gains and closed below $88 per barrel after the Organization of Petroleum Exporting Countries (OPEC) opted to keep production ceilings unchanged and crude inventories in the US fell to near two-year lows.
Treasury prices eased, boosting the yield on the 10-year to 3.94% from 3.89% late on Tuesday. In currency trading, the dollar gained versus the euro and the yen. COMEX gold for February delivery fell $3.70 to settle at $803.70 an ounce.
Across the Atlantic, stock benchmarks in Europe ended a two-session losing streak as shares of commodity firms rebounded and many economists predicted an imminent rate cut for the UK as well as Europe. The pan-European Dow Jones Stoxx 600 index climbed 1.7% to 369.60.
The UK's FTSE 100 posted its biggest one-day gain since August, up 2.8% at 6,493.80, while the German DAX 30 rose 1.7% to 7,944.77 and the French CAC-40 advanced 2% to 5,659.07.
The emerging markets also closed with solid gains. The Bovespa in Brazil jumped 2.3% to 64,927 while the IPC index in Mexico advanced 2.5% to 30,761. The RTS index in Russia gained 2.6% at 2262 and the ISE National-30 in Turkey surged 3.1% to 70,556.
Most Asian markets were trading strong this morning, gaining between 1-2%. The Nikkei was up 234 points to 15,842 while the Hang Seng in Hong Kong jumped 438 points to 29,783. The Kospi in Seoul gained 22 points to 1960 and the Straits Times in Singapore was up 42 points to 3602.
Samsung Electronics led gains among exporters after reports showed that US productivity and jobs rose. Mitsubishi UFJ Financial advanced among banks on expectations that US regulators and lenders have agreed on measures to contain subprime-mortgage losses that threaten global growth.
The MSCI Asia Pacific Index added 1.1% to 164.17 as of 10:15 a.m. in Tokyo, heading for its highest close since Nov. 7. Most other markets open in the region advanced.
Bulls closing in on 20k again
It was a strong session as bulls rebounded and ended the day with healthy gains, shrugging off weak cues from the US markets. After positing a strong start key indices turned range bound till the mid noon session. Although, bulls marched ahead as strong close in the Asian markets and firm cues from the European markets lifted the sentiments.
Mid-Cap steel stocks shined scrips like Uttam Galva, Sunflag Iron and Essar Steel were among the major gainers. Ispat Industries, Apar industries, Hindustan Motors and WWIL were among the stocks in limelight.
Finally, 30-share Sensex ended 208 points higher to close at 19,738 and Nifty closed at 5,943 adding 81 points.
HDFC ended flat at Rs2739 after the Indian mortgage lender partly owned by Citigroup Inc., announced loans grew at 28-29% in the last two months. The scrip touched an intra-day high of Rs2754 and a low of Rs2720 and recorded volumes of over 13,00,000 shares on NSE.
IOC surged by over 3% to Rs617 after the company announced that the crude oil in Cairn India’s Rajasthan block may be waxy, but it has found it to be sweet. The scrip touched an intra-day high of Rs632 and a low of Rs600 and recorded volumes of over 19,00,000 shares on NSE.
Gujarat Ambuja also ended flat at Rs154. Holcim increased its stake in the company to ~46% by buying 5% through an open offer. The scrip touched an intra-day high of Rs155 and a low of Rs152 and has recorded volumes of over 15,00,000 shares on NSE.
Sintex Industries marginally slipped by 0.2% to Rs454. Reports stated that the company is likely to raise over Rs18bn through issue of securities in Domestic as well as International Markets. The scrip touched an intra-day high of Rs463 and a low of Rs440 and recorded volumes of over 1,00,000 shares on NSE.
Bajaj Auto gained 1.5% to Rs2803 after reports stated that the company is considering picking up majority stake in Austria KTM. The scrip touched an intra-day high of Rs2825 and a low of Rs2740 and recorded volumes of over 2,00,000 shares on NSE.
REL marginally slipped 0.5% to Rs1889. Reports stated that the company would raise funds through FCCBs at a premium to current market rates. The scrip touched an intra-day high of Rs1925 and a low of Rs1875 and recorded volumes of over 17,00,000 shares on NSE.
Indian Hotel gained 4.5% to Rs143 after Ginger Hotel a chain of The Indian Hotel Company earmarked an investment of Rs220cr by March 2008. The scrip touched an intra-day high of Rs144 and a low of Rs137 and recorded volumes of over 23,00,000 shares on NSE.
Pharma stocks were back in action amid reports stated that Government plans to cap trade margins on all medicines sold in the country. Divi’s lab surged by over 8.5% to Rs1793, Nicholas Pharma advanced 4% to Rs319, Pfizer rose over4.5% to Rs708 and Glenmark Pharma added 4.6% to Rs484.
What the FIIs are doing
FIIs were net buyers of Rs4.8bn (provisional) in the cash segment on Wednesday while the local institutions pumped in Rs1.6bn. In the F&O segment, foreign funds were net sellers of Rs12.05bn on the same day.
On Tuesday, FIIs were net buyers to the tune of Rs195mn in the cash segment. Mutual Funds were net sellers of Rs341mn on the same day.
Stocks in News:
Activists to boycott Novartis drugs and plan a nationwide campaign. (Mint)
Novartis to start selling four new cancer drugs by 2011. (BL)
Novartis withdraws Exelon patent suit against Sun Pharma. (BL)
Reliance Industries may make an acquisition in the energy sector for up to US$15bn. (Mint)
Reliance Industries plans solar power projects in Bengal, Rajasthan and Maharashtra. (FE)
Danone's stake in Avesthagen violates norms according to the FIPB. (FE)
Air Deccan forms consortium with Mumbai International Airport (MIAL), Rahejas and IDFC for developing four low cost airports in Karnataka. (FE)
Arunachal Pradesh Government scraps two hydel-power projects by NTPC. (FE)
Aegis Logistics to set up 300 auto LPG stations. (FE)
Reliance Retail in talks with the Essel group to set up outlets at Fun Republic mall across India. (FE)
Air Deccan and Kingfisher merger may take another 2-3 months. (BL)
Reliance Industries, Tata Chemicals, Bharti Enterprises’ Fieldfresh and Indian Oil are among several companies that have evinced interest in leasing closed sugar mills in Bihar. (BS)
Indivision Capital, the private equity arm of Future group, will buy 4.9% in Dish TV for Rs2.5bn. (BS)
Securities Appellate Tribunal (SAT) has kept the delisting of Essar Steel from the stock exchanges in abeyance. (ET)
Kuwait Petroleum and Reliance Industries have kicked off discussions for a mega joint venture across the oil and gas vertical. (ET)
ICICI group plans to mobilize US$8bn for private equity investments in India. (ET)
Tata Motors, M&M and private equity player, One Equity submitted their final bids for Jaguar and Land Rover. (ET)
Biocon to launch oral insulin drug by 2010. (ET)
Glenmark Pharma plans to acquire a distribution and marketing company in Indonesia. (ET)
Post Citi Venture Capital picking up 7% stake in Shiv-Vani Oil for Rs1bn Merrill Lynch and GMO also purchase minority stakes. (ET)
Unitech plans to hive off its retail business as a separate company which may be listed at a later date. (ET)
Railways hike freight charges for iron ore exports by increasing the surcharge to 60% per ton. (BL)
The Government will obtain parliament's approval on the Indo-US nuclear deal after the process of implementing the agreement is complete. (BS)
The Government is likely to announce a new fertilizer policy within one month. (BS)
The Government asks airlines to either deposit tax component or refund the same to the customers in case of cancellation. (ET)
RBI allows banks to give ailing sugar companies a second chance to restructure their loans. (ET).