You know a dream is like a river, ever changing as it flows.
And a dreamer's just a vessel that must follow where it goes.
Even as the bulls are enjoying their winning streak, it’s more than a dream come true for Democratic Senator Barak Obama. The American public are just about to finish voting for a new president, and indications show a clear lead for Obama over his Republican rival John McCain. It's not as if Obama is a magician who will remove all the pain. The fact that the uncertainty over the US presidential election will soon be over seems to have bolstered the sentiment across the globe.
On Tuesday, we wondered how long the current rebound in global stocks last given the weak economic outlook? Well, for the time being the bulls are all set to continue the momentum even today. The biggest factor is the big gains made by US and other world markets overnight. Asian markets too have opened sharply higher this morning.
Coming to the broader market, there could be some cooling, if not today than over the next few days, after the recent bounce back. Remain guarded even though the ongoing rally may prompt some to reckon that the worst is over. Put higher trading stop losses and ride the brief rally for now.
For India, the outcome of the US election won't make much of a difference, though there are some concerns over Obama's stance on IT outsourcing. Software shares were the biggest laggards on Tuesday despite the broad-based rally. History shows that the Indian IT industry has largely been unaffected by any political backlash in the US. Don’t be surprised if much of what Obama says just turns out to be political rhetoric in an election year.
Banks will continue to be in focus as private banks' heads are set to meet the Finance Secretary today to discuss the liquidity situation and possibility of easing lending rates. On Tuesday, the Finance Minister held a meeting with the heads of PSU banks, and many nationalised banks have already indicated that they will trim lending rates in a few days' time. Much of Tuesday's advance could be attributed to this announcement by the Finance Minister.
FIIs were net sellers of Rs156.1mn (provisional) in the cash segment on Tuesday while the local institutions pulled out Rs1.74bn. In the F&O segment, the foreign funds were net buyers at Rs6.64bn. On Monday, FIIs were net buyers of Rs7.62bn in the cash segment.
US stocks surged on Tuesday even as voting began across America to decide who will win the race to the White House. Early indications on electoral votes show Democrat Barack Obama well ahead of his Republican rival John McCain.
After surging as much as 330 points, the Dow Jones Industrial Average ended at 9,625.28, up 305.45 points, or 3.3% from the last close. All but one of the blue-chip index's 30 components posted gains. The Dow's sole laggard was Hewlett-Packard (down 1%).
The S&P 500 rose 39.44 points, or 4.1%, to 1,005.74, for its first close above 1,000 since Oct. 13. The Nasdaq Composite index added 53.79 points, or 3.1%, to 1,780.12.
Energy, financials and materials paced the gains among the S&P 500's 10 industry groups. Healthcare and utilities proved to be the session's weakest performing sectors.
Market breadth was positive. Volume on the New York Stock Exchange topped 1.3bn, and advancers topped decliners about 4 to 1. On the Nasdaq, more than 937mn shares exchanged hands, and advancers passed decliners nearly 2 to 1.
Financial stocks got a boost from a Wall Street Journal report that the Treasury might buy stakes in a broader range of financial firms, including bond insurers and specialty finance firms such as General Electric's GE Capital Unit and CIT Group.
The Treasury has already used a chunk of the US$700bn rescue fund to buy stakes in troubled banks.
Financial markets tend to hate uncertainty and hence is getting some relief that the election is finally here. The rally over the last week and on Tuesday may also be signaling that the US market is factoring in a victory for Obama.
Some market observers say US stocks will likely get a boost regardless of who wins. That is because both candidates represent a new administration and both will have to deal with the battered economy.
The dollar fell against the euro and gained against the yen. COMEX gold for December delivery climbed US$30.50 to settle at US$757.30 an ounce.
US light crude oil for December delivery rose US$6.62 to settle at US$70.53 a barrel on the New York Mercantile Exchange.
Gasoline prices fell another 2.4 cents to a national average of US$2.391 a gallon. This marks the 48th consecutive day of decline. During that same time period, prices dropped by US$1.46 a gallon, or 37.9%.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.76% from 3.91% late on Monday.
The London interbank offered rate fell sharply. Three-month Libor denominated in US dollars fell to 2.706% from 2.859% on Monday. That is the lowest level since June 9. One-month Libor fell to 2.177% from 2.358% on Monday, to the lowest level since November 2004.
The overnight Libor, a key interbank lending rate, falling to 0.38% from 0.39% on Monday, according to Dow Jones.
European stocks rose further on Tuesday, as American voters went to the polls to select a new president and as Morgan Stanley gave an upbeat assessment of the prospects for global equities.
The pan-European Dow Jones Stoxx 600 index climbed 4.5% to 233.50, the first time the index has managed to gain for six straight sessions this year.
The French CAC-40 index climbed 4.6% to 3,691.09, while Germany's DAX 30 index rose 5% to 5,278.04 and the UK's FTSE 100 index jumped 4.4% to 4,639.50.
Markets opened lower on Tuesday, after rallying for four straight trading sessions. However, bulls not only staged a strong come back but further gained ground to end the day with smart gains. The rally was led by the rate sensitive stocks for the after FM P Chidambaram said that all PSU banks agreed to cut lending rates by 75bps.
However, the IT stocks among the top losers as the rupee appreciated 1.5%. The currency advanced for a fifth day after SEBI data showed that global funds bought the most Indian stocks in two months on Oct. 31. Rupee was the biggest gainer of the 10 most-traded Asian currencies, according to the reports.
The BSE benchmark Sensex surged 293 points or 2.8% to close 10,631 and the NSE Nifty index was up 98 points to close at 3,142.
Among the 30-components of Sensex, 24 stocks were in the positive terrain and 6 stocks ended in the red. ICICI Bank, ITC, SBI, ONGC and Bharti Airtel were among the major gainers. On the other hand, Infosys, Satyam, TCS and Wipro were among the major laggards.
Shares of TTML surged over 7% to Rs15.1 after report stated that Israel’s Ceragon Networks has inked an agreement with the company for wireless backhaul solutions. The stock hit an intra-day high of Rs15.3 and a low of Rs13.7 and recorded volumes of over 2,00,000 shares on BSE.
Shares of ACC lost ground after the company announced that its sales fell 3.4% last month. The company sold 1.7mn tons of cement in October, compared with 1.76mn tons a year earlier. The stock ended at Rs506 lower by 1% after hitting an intra-day high of Rs515 and a low of Rs488 and recorded volumes of over 1,00,000 shares on BSE.
Shares of UCO Bank gained after reports stated that it is targeting a net interest margin of 2% for the year to March 2009 and plans to cut its prime lending rate by 50bps to 13.5%.
The company has reportedly said that they have meeting on November 10 to revise interest rates. The scrip ended at Rs31.9 gaining 4% touching an intra-day high of Rs32 and a low of Rs29 and recorded volumes of over 9,00,000 shares on BSE.
Shares of EPIC Energy gained after the company announced that it received a contract to conduct Investment Grade Energy Audit for ten Government Buildings in Arunachal Pradesh from the Arunachal Pradesh Energy Development Agency.The scrip ended 2% higher to Rs87 hitting an intra-day high of Rs87.5 and a low of Rs85.
Shares of Tata Steel advanced after report stated that it has commenced work on new blast furnace for 10mn ton capacity at Jamshedpur Works. The stock rose over 6% to Rs239 hitting an intra-day high of Rs245 and a low of Rs215 and recorded volumes of over 39,00,00 shares on BSE.
Shares of KEC International rallied by over 10% to Rs130.7 after the company announced that it secured three orders worth Rs2.2bn. The scrip touched an intra-day high of Rs130.7 and a low of Rs122 and recorded volumes of over 6,00,000 shares on BSE.
Can the bulls sustain the current tempo? That is the big question worrying most players after the recent spurt. While the main indices could advance a little more in the near term, investors are still skeptical about a sustained turnaround. That is because considerable amount of headwinds still persist, both on the local as well as global front.
RIL shuts five of its seven polyester and petrochemicals units at Patalganga near Mumbai (BS)
NTPC set to achieve an additional power generation capacity of 22.4GW targeted under the 11th plan period (FE)
US FDA warns Sun Pharma’s US arm, Caraco Pharma, over quality control issues (ET)
Axon Board to vote in favour of HCL Tech (BS)
Lehman Brothers sell stake in DLF Assets to Symphony Capital Partners (BS)
Infosys and Satyam called to re-tender for Telstra deal (DNA)
Tata Teleservices launches CDMA operations in Assam at an investment of Rs1bn (BS)
Moody reaffirms ICICI Bank UK’s financial strength rating (ET)
GAIL sings an agreement with Himachal Pradesh Government for extension of gas pipeline (ET)
DLF ties-up with Luxottica Group, an Italian eyewear brand, to foray into Indian retail market (DNA)
Suzlon Energy seeks new payment schedule for RE Power buy (BS)
Ispat Industries cuts prices of steel products by up to Rs5,500/ton (ET)
GMR Infra is close to acquiring Indonesia-based PT Barasentosa Lestari coal mine for over US$100mn (ET)
Tata Communications announces the expansion of its global MPLS services into key South-East Asian destinations (ET)
Ambuja Cement registers a 4% decline in dispatches in October 2008 to 1.42mn tons (BL)
Kingfisher Airlines defaults on lease rentals for four jets (ET)
Omaxe offloads 51% stake in its budget home arm, Nahil. (DNA)
India Cements may relocate its proposed 2mtpa plant in Himachal Pradesh (BS)
Parsvnath Developers puts its retail plan on hold (DNA)
Dish TV adds 5.3 lakh customers in Q2 FY09 (ET)
Maytas Infra wins an order worth Rs390mn from JSW Steel (BL)
Balaji Telefilms plans to enter into the broadcasting industry by launching a TV channel (ET)
Himatsingka Seide is planning to aggressively enhance its retail presence (BS)
Zylog receives Board approval to acquire two US-based companies (ET)
Aksh Optifibre intends to increase its IPTV subscriber base to 40,000 by 2008-end (DNA)
Economic Front Page
Government is looking at cutting petrol prices by up to Rs2/litre (ET)
Finance ministry clears an additional Rs520bn fertiliser subsidy for October-December 2008 (DNA)
Various PSU Banks are considering rate cuts (ET)
Finance Ministry defers plan to allow only those companies with 25% minimum public ownership to stay listed (ET)
Government to levy a one-time charge for spectrum above 6.2MHz in addition to the license fees and also raise the annual usage charges (BS)
RBI is likely to announce relaxations in norms governing NPAs in the infrastructure sector (ET)
Government mulls core sector status for realty sector (FE)
Government may take more steps to help the Indian aviation industry (BS)
UP Sugar mills challenges the recently announced SAP for sugarcane in Allahabad High Court (BS)
Karnataka sugar factories seek tax waiver of Rs1.32bn (BS)
Various private sector banks set to join rate cut race (BS)
STT collections till October 2008 dip 1.6% yoy to Rs37.22bn (FE)
FDI norms in defense production may ease (DNA)