The man who has confidence in himself gains the confidence of others.
The bulls are likely to gain in confidence, now that the confidence motion has been won by the UPA, that too with an unexpectedly wide margin. And, we are saying this despite the four-day rally, which has seen the Sensex gain 1500 points. To add to the delight and elation of the bulls (and the Government), global cues are quite encouraging. Crude oil has come off the boil again after a potential storm missed oil facilities off the US coast. Lower oil prices has lifted the mood across global equity markets, except Europe where key indices declined. As a result, we expect a gap-up opening, and another solid day for the bulls.
The improvement in the mood may last for a few more days, provided oil prices retreat further, global markets hold and inflation cools down. On the flip side, the market could turn lower again on any fresh negative news. One must add here that the last four days of rally has been driven mainly by short-covering by bears. Also, FIIs have turned net sellers again in the last two days after pumping over Rs10bn in the two days of last week. The monsoon has been quite bad over western and southern parts of the country. This could spoil the party for the Government and the markets.
Next week, the RBI will undertake quarterly review of its annual monetary policy. Most experts see another round of tightening by the central bank to tame the inflation monster. The Government might also unveil a few more steps to check spiraling prices. This could potentially check the market's ascent, as could any unfavourable global events. We will also have the F&O expiry next week, which could make the market volatile. On the whole though, we are in for a short-term rebound, which could take the Nifty up a few hundred points. But, one must not get carried away and start buying aggressively.
On Monday, we had said "bulls and bears will make way for the horses (read MPs). More than market trading it would be horse trading or the result of the trust vote that markets will keenly watch". Media reports have been suggesting that brazen poaching is being pursued to swing the result of the confidence motion. Some of these shocking 'cash for vote' developments came to light in the Lok Sabha yesterday, with the three BJP MPs accusing SP of bribing them. The shady and sordid episode took much of the shine off the UPA's surprisingly comfortable victory.
A whole host of companies that will benefit from the Indo-US nuclear deal will see some positive action today. These include the likes of L&T, HCC, BHEL, NTPC, Tata Power, Reliance Power, Areva T&D, Alstom Projects, Siemens and ABB. The ADAG group shares may also extend their recent gains. Sesa Goa is likely to rise after announcing strong results.
Key Results Today: Aztecsoft, Crompton Greaves, Gujarat Industries Power, Infotech Enterprises, J Kumar Infraprojects, Lakshmi Machine Works, MMTC, M&M Financial, Mastek, Patni, Pidilite, Renuka Sugar, SEL Manufacturing, Sterlite Technologies and Zee Entertainment.
FIIs were net sellers of Rs5.97bn (provisional) in the cash segment on Tuesday. The local institutions pumped in Rs2.62bn. In the F&O segment, the foreign funds were net sellers of Rs3.91bn. On Monday, FIIs were net sellers of Rs1.12bn in the cash segment. Mutual funds were net sellers of Rs2bn.
Asian markets are mostly up this morning. The MSCI Asia Pacific Index gained 1.1% to 134.41 as of 10:30 a.m. in Tokyo, taking its three-day rally to 4.1%. About six stocks gained for each that declined today. Japan's Nikkei 225 Stock Average climbed 0.9% to 13,306.90.
US stocks staged a late-day rally on Tuesday, as falling oil prices overshadowed grim quarterly financial reports. Wachovia Corp. led the turnaround among financial shares after the large regional bank said it would not sell stock to raise capital.
The Dow Jones Industrial Average closed up 135 points or 1.2% at 11,602.50. The S&P 500 gained 17 points, or 1.4%, to 1,277 and has climbed 5.1% from an almost three-year low on July 15. The Nasdaq Composite Index climbed 24.43 points, or 1.1%, to 2,303.96.
Market breadth was positive. Three stocks rose for each that fell on the New York Stock Exchange.
US stocks fell right at the open of the trading day in reaction to a slew of disappointing quarterly financial reports from Wachovia, US Airways, United Airlines' parent company UAL Corp. and shipping carrier UPS. But by midmorning, crude oil prices plunged more than $5 per barrel, leading all three major indexes higher.
Adding further support were comments by Treasury Secretary Henry Paulson urging Congress to back a plan to support troubled mortgage finance giants Fannie Mae and Freddie Mac.
Oil prices closed at the lowest point since June 5, as a perceived decline in US demand again took hold and worries subsided that a storm would disrupt production in the Gulf of Mexico. Light, sweet crude for August delivery settled down $3.09 at $127.95 a barrel. Starting Wednesday, the September contract will be actively traded.
In currency trading, the dollar was up against both the 15-nation euro and the Japanese yen. In the bond market, Treasury prices sank, sending the yield for the 10-year benchmark note up to 4.10% from 4.03% late on Monday. COMEX gold for August delivery fell $15.20 to $948.50.
After the close, Yahoo reported earnings and revenue that fell short of expectations. Still, shares of the company fell more than 1% in regular trading.
Stocks in Europe dropped on the back of a sales warning by Vodafone and lower-than-expected profit by Ericsson. The pan-European Dow Jones Stoxx 600 retreated 0.5% to 280.89. UK's FTSE 100 closed down 0.7% at 5,364.10, while the French CAC 40 finished flat at 4,327.26 and Germany's DAX 30 reversed earlier losses to gain 0.3% to 6,442.79.
Defy weakness in the global markets, Indian equities continued their northbound journey. Taking into consideration today’s rally, the benchmark Sensex has gained by over 1,500 points in last four trading sessions on hopes that UPA will win the trust vote in parliament. Broad-based buying was seen in sectors such as steel, power, infra and banking stocks among the major gainers. Buying was also seen in Mid-cap and Small-cap stocks.
Among the 30-Sensex stocks, ITC, ICICI Bank, BHEL and R Com were among the major gainers. Whereas, Bharti, DLF, Maruti and JP Associates were among the notable losers. Finally, the BSE 30-share Sensex added 254 points to close at 14,104 and NSE Nifty advanced 80 points to 4240.
ADAG group rallied on hopes that government will remain in power with the support of Samajwadi Party. There is speculation that ADAG group may benefit from the promoters close ties with senior leadership of SP. RNRL, was up by 8% to Rs74, Reliance Capital was up by 8% to Rs1,177 and R Com gained b y over 5% to Rs471.
IT stocks closed higher following a sharp decline in stock prices over last couple of weeks. Wipro surged by 6% to Rs395, Educomp was up by 4% to Rs3,035, TCS advanced by 2% to Rs832 and HCL Tech was up by 4% to Rs205.
SAIL surged by over 7% to Rs134 after the company posted a net profit of Rs18.351bn for the quarter ended June 30, 2008 as compared to Rs15.251bn for the quarter ended June 30, 2007. Total Income increased from Rs83.464bn for the quarter ended June 30, 2007 to Rs114.219bn for the quarter ended June 30, 2008.
Maruti fell by over 9% to Rs588 after the company announced its Q1 results with net profit at Rs4,653mn, down by 6.8%. Concerns of margin pressure saw the stock touching day’s low of Rs585.
RIL is scouting for oil storages abroad to market the huge volume of clean products from its new refinery (BS)
Unitech is looking to venture into the general insurance sector (BS)
Ranbaxy gets clean chit in UK price rigging case (ET)
Reliance Petroleum to start production ahead of schedule (ET)
Tata Power to develop Hydel project in Bhutan (BL)
Patni Computers is eyeing companies in product engineering space (BL)
Pantaloon Retail plans major expansion in Tamil Nadu (BL)
RIL and Reliance Power bid for the same fossil-fuel reserves (DNA)
Dr Reddy’s bets big on drug discovery (BS)
Piramal Healthcare inks marketing deal with US-based firm, BioElectronics, to market the latter’s pain management equipment, Actipatch (ET)
JP Morgan Chase buys 33% stake in SPV of Alok Infrastructure, a realty subsidiary of Alok Industries (ET)
Exide Industries expects to double its supplies to automobile makers in FY10 to 5mn units (BS)
Land issues has delayed the proposed Jharkand plants of JSW Steel and Jindal Steel and Power (DNA)
Concor to set up 15 air freight stations to diversify its services and become a multimodal logistics service provider (DNA)
Hotel Leela enters into a marketing pact with US-based Preferred Hotel Group to increase its brand awareness and plans to invest US$500mn to add seven hotels in three years (DNA)
Info Edge to buy 40% stake in New Delhi-based education content developer, Applect Learning Systems, for Rs65mn (DNA)
Arvind Mills plans to float a new retail chain that will house six of its key premium brands under one roof (DNA)
NOCIL plans to increase its turnover to Rs10bn by 2012 and double its market share from 4% to 8% (DNA)
NIIT Tech is eyeing companies in the travel and insurance verticals to accelerate revenue growth (DNA)
Dalmia Cements is setting-up greenfield plants of upto 10mn tons capacity (BS)
Kamath Hotels is planning a pan-India presence for its ecotel brand The Orchid (DNA)
JK Synthetics to sell acrylic plant in Jhalawar (ET)
Kingfisher Airlines is all set to fly international locations in September (FE)
Economic Front Page
FM revises FY08 growth rate from 8.7% to 9.1% (BS)
Petroleum Ministry seeks oil bonds worth Rs506bn to partly compensate PSUs (ET)
Met coke prices treble in six months as China curbs output by 72% to control pollution before the Olympic Games (BS)
DG Shipping allows foreign flag vessels that are more than 25 years old to operate in Indian waters (DNA).