The nice part about being a pessimist is that you are constantly being either proven right or pleasantly surprised.
The recent fall may have erased half of the pull-back engineered by the bulls since mid-July lows, and the Sensex may have come close to breaching the 14,000 mark. But, the good thing for the bulls is that inflation has surprisingly fallen, while the F&O indicators are positive and global cues too are encouraging. It will be an icing on the cake if the first-quarter GDP numbers - to be released today - turn out to be equally good. Expectations are that the GDP growth slipped in the April-June quarter to around 8% from 8.8% in the previous two quarters. In the first quarter of last fiscal, the GDP growth stood at 9.2%. A better reading than this will surely lift the spirits on the street after a fairly downbeat week so far.
Meanwhile, the F&O expiry picked up on Thursday afternoon after an unusually slow start. At 75%, the rollover in August Nifty futures was much higher than the 67% average in the past three months, though in absolute terms it was a little lower. September Nifty futures contracts witnessed strong build up and the premium too increased. This indicates that traders are bit more positive on the new series. The 4200 put has seen healthy build up as well. So, this level could turn out to be the key one for the market's near-term direction. Rollovers in single stock futures have also been quite good at 85%. The stage may be set for another intermediate uptrend, if global cues remain positive and there are no blips on the macro-economic front either.
FIIs were net sellers of Rs1.87bn (provisional) in the cash segment on Thursday. Local institutions were net buyers of Rs3.9bn. In the F&O segment, the foreign funds were net buyers of Rs199.7mn. On Wednesday, the foreign funds were net buyers of Rs2.8bn in the cash segment. Mutual Funds were net buyers of Rs14mn on the same day.
The Finance Minister early this morning launched the currency futures on the NSE. He is scheduled to meet senior SEBI officials and the trustees of AMCs. Gillette India, P&G Health & Hygiene, SpiceJet and Shyam Telecom will announce their results today.
Asian markets are mostly up this morning, with benchmarks in Tokyo and Hong Kong leading from the front in the wake of the strong gains posed by their US counterparts overnight.
A regional benchmark index is set to log its first weekly advance in five weeks on optimism that economic growth in the US and Japan won't falter. The MSCI Asia Pacific Index is up 1.3% to 124.15 as of 10:30 a.m. in Tokyo as all 10 industry groups advanced. The benchmark index is poised to rise 2.1% this week, halting a four-week, 8.5% decline. Gains this week trimmed the index's August slump to 6.2%. It is down 21% this year.
US stocks surged on Thursday after the government said that the world's biggest economy grew at a much faster pace in the second quarter than what was previously forecast. Also, oil prices cooled off yet again after crossing the $120 per barrel mark on fears that tropical storm Gustav could hit oil production facilities in the Gulf of Mexico. Oil prices fell as traders bet that the Bush administration would release supplies from the Strategic Petroleum Reserve.
The S&P 500 gained 19.02 points, or 1.5%, to 1,300.68, capping its biggest three-day advance in a month. The Dow Jones Industrial Average increased 212.67 points, or 1.9%, to 11,715.18. The Nasdaq Composite Index added 29.18 points or 1.2% to end at 2,411.64.
Market breadth was positive and volume was light, with many Wall Street pros taking off early ahead of the long Labor Day holiday weekend. More than five stocks rose for each that fell on the New York Stock Exchange.
Stocks gained modestly in the morning, as the GDP report was countered by a spike in oil prices. The turnaround in fuel prices brought back investors, and sent Wall Street to its best levels of the session.
Leading the charge was the financial sector, which has now risen for three sessions in a row. MBIA led a rally in financial shares after the largest bond insurer agreed to reinsure municipal bonds for Financial Guaranty Insurance Co.
Fannie Mae and Freddie Mac have risen for six sessions in a row, as fears that they are set to be taken over by the government seem to have dwindled.
The market also reacted positively to better economic data. Second-quarter GDP increased by a 3.3% annualized rate. The revised reading improved on the initial report of 1.9% and topped expectations for a growth rate of 2.7%.
It was the best reading since the third quarter of 2007, and showed a marked improvement from the sluggish 0.9% pace in the first quarter.
However, the growth was largely due to a spike in exports due to a weak dollar and economic stimulus. So, as global growth continues to slip and the dollar strengthens further, US exports will slow and the trade effect will dissipate.
A separate government report showed that the number of Americans filing new claims for unemployment fell for the third week in a row, meeting expectations.
US light sweet crude oil for October delivery fell $2.56 to settle at $115.59 a barrel on the New York Mercantile Exchange. Retail gas prices continued to drop overnight, extending the recent downward trend. Gas prices are down 11% from all-time highs hit in mid-July.
In the bond market, Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.78% from 3.76% late on Wednesday. The dollar gained, versus the euro and the yen. COMEX gold for December delivery rose $3.20 to settle at $837.20 an ounce.
After the close, Dell reported earnings that fell from a year ago and missed forecasts on sales that rose from a year ago and topped forecasts.
European shares rebounded, helped by banks extending gains following some positive news on growth in the US economy. The pan-European Dow Jones Stoxx 600 rose 1.4% to 287.21. The French CAC-40 gained 2% to 4,461.49, while the UK's FTSE 100 closed up 1.3% at 5,601.20 and Germany's DAX 30 advanced 1.6% to 6,420.54.
In the emerging markets, Brazil's Bovespa was up 1.55% at 56,382 while Mexico's IPC index rose 1.2% to 26,444. The RTS index in Russia rallied 4.1% to 1653 and the ISE National-30 index in Turkey was up 1.3% to 49,720.
Inflation, GDP to drive sentiments
It was third straight trading session of losses for Indian stock markets. Once again after starting at days high key indices were unable to hold on as traders and investors preferred to book profits at every high. Also, F&O expiry, inflation figures to be announced later in the day weighed on market sentiments.
All the BSE Sectoral indices ended in the red, BSE Oil & Gas index (down 2.5%), BSE Capital Goods index (down 2.2%) and BSE Metal index (down 1.8%) were among the top losers. Even the Mid-Cap and the Small-Cap indexes witnessed offloading, the BSE Mid-Cap index fell 1.3% and the Small-Cap index lost 1.1%.
Among the 30-components of Sensex, 25 stocks were in red and only 5 stocks were in green. Reliance Industries, L&T, ICICI Bank, HDFC and BHEL were among the major laggards. On the other hand, bucking the negative trend were, Satyam, Tata Power and Ranbaxy.
Finally, the benchmark Sensex lost 248 points to close at 14,048 and Nifty ended 78 points lower to close at 4,214.
In the overall market, 900 stocks advanced and 1,719 stocks declined. Whereas, 95 stocks were unchanged.
Shares of Great Offshore gained by over 5% to Rs480 after Great Offshore (International) Ltd., a wholly owned subsidiary of the company took delivery of a high end modern Anchor Handling Tug cum Supply Vessel (AHTSV). The vessel is currently performing spot charter at around USD 47,000 a day for Murphy Oil, in Malaysia. The scrip touched an intra-day high of Rs491 and a low of Rs460 and recorded volumes of over 6,00,000 shares on BSE.
Shares of Akruti City rallied by over 8% to Rs895 after reports stated that the company would launch the country’s first robotic parking system. This project would be developed on Bhulabhai Desai Road, South Mumbai. The company has spent Rs250mn in developing this system stated reports.
This project is being done on a public private partnership with the Brihanmumbai Municipal Corporation. The scrip touched an intra-day high of Rs923 and a low of Rs805 and recorded volumes of over 10,00,000 shares on BSE.
Shares of MLL slipped by 1.2% to Rs76. Reports stated that the company plans to acquire a 50mn tons coal mine in Indonesia. The company is evaluating acquisition options, in terms of quality of coal, coupled with the necessary infrastructure needed to transport this product.
Mercator may invest around Rs2-3bn for the acquisition, the report stated. The scrip touched an intra-day high of Rs78.5 and a low of Rs76.5 and recorded volumes of over 7,00,000 shares on BSE.
Sterlite Technologies gained by 2.5% to Rs178 after the company announced that it won contract from Power Grid Corporation of India (PGCIL), Jaypee Powergrid Ltd Ltd, Rajasthan Rajya Vidyut Prasaran Nigam Ltd (RRVPNL), India and Ethiopian Electric Power Corporation (EEPCo), Ethiopia.
The contracts, which are for Sterlite's ACSR Moose & AAAC power conductors, are worth a total of Rs2.78bn. The scrip touched an intra-day high of Rs181 and a low of Rs174 and recorded volumes of over 1,00,000 shares on BSE.
Shares of DLF declined after Goldman Sachs Group Inc. cut its rating to ``sell'' on concern that property prices would further drop by year end. Goldman Sachs Group Inc cut the price target for DLF by 21% to Rs406. The stock has dropped almost 57% this year, compared with the 30% decline in the Sensex. The scrip ended at Rs468 down by over 2% touching an intra-day high of Rs482 and a low of Rs460 and recorded volumes of over 17,00,000 shares on BSE.
Bharti Airtel plans to roll-out IPTV and DTH service simultaneously before this year end. (ET)
Tech Mahindra to acquire 17% stake in UK based Servista. (ET)
Jai Corp may foray into city gas and LPG distribution. (ET)
Reliance Industries gets approval from DGH to transfer KG assets to four unlisted subsidiaries. (ET)
CIPLA to invest Rs8bn for its SEZ in Indore. (FE)
Wipro plans to spend nearly Rs15bn during this fiscal on infrastructure development. (BL)
Siemens has commenced operation at Aurnagabad transformer plant. (BL)
Marksans Pharma is looking to acquire a US based generic pharma company. (BL)
Sterlite Technologies secures order worth Rs2.78bn for supplying power transmission conductors. (BL)
Petrobras eyes a stake in OVL’s two oil and gas asset in Brazil. (ET)
MRF seeks government approval for developing aviation tyres. (BL)
Ispat Industries plans to set-up a power plant at Dolvi complex. (BL)
PTC India Financial Service, a subsidiary of PTC India enters into an agreement for picking up minority stake in 189MW project coming up in Tamil Nadu. (BL)
Gitanjali Gems drops the plan to buy US based jewellery company White-Hall. (ET)
Great Offshore arm acquires high-end tug vessel. (BL)
Wipro may buy German SAP AG service provider. (BS)
Dishman Pharma plans to invest Rs5bn for its two upcoming SEZs. (BS)
Sun Pharma may face legal battles in its attempt to take over Taro Pharmaceuticals. (BS)
BPCL subsidiary to invest US$75mn in Mozambique to buy 10% stake in oil block. (BS)
Ispat Industries may pick up 40% stake in iron-ore and coking coal mining company in Brazil. (BS)
IFC to extend US$60mn credit facility to Kotak Bank for lending to SMEs. (BS)
Power Grid to spend Rs550bn in next five years to increase capacity to 37,000MW from current 17,000MW. (DNA)
Mascon Global to raise US$150mn in overseas market. (DNA)
Nector Life Sciences to raise US$2.5mn through issue of convertible warrants. (DNA)
Economy Front page
Inflation for the week ended Aug16 was at 12.40% from 12.63% a week ago. (ET)
CDMA operators too would have to bid for 3G radio frequency, says Telecom Minister. (ET)
Power ministry recommends allocation of coal block on first priority for 23 thermal power projects with total capacity of 13,010MW. (FE)
Cement prices fall in north India by Rs5-10 per 50kg bag as supply improves. (ET)
SEBI amends new DIP norms to reduce the timeline for right issue. (ET)
GSM and CDMA service providers seek approval from finance ministry to raise money through ECB. (BS)