I believe that banking institutions are more dangerous to our liberties than standing armies- Thomas Jefferson.
The bulls banked on the government and for a change they can deposit their worries somewhere. The US markets welcomed the current regime's rescue effort to rid banking giant Citigroup of its ills and avert a major worldwide catastrophe. For a second successive session, US stocks rallied, as president-in-waiting Barack Obama officially announced his economic team. The twin bit of good news had a soothing effect across global equity markets, with European stocks joining the bull party.
Meanwhile, Finance minister P Chidambaram has asked the country to perish the thought of recession and cherish hopes of a rebound by the middle of next year.After Monday's zig-zag action amid low volume and turnover, the market is ripe for a bounce, at least early on in the morning trades. As far as India is concerned, what is badly needed is a reversal in FII outflows and further improvement in macro-economic fundamentals. Talking of economics, weekly inflation data is due on Thursday and Q2 GDP figures on Friday. Till then, we expect the market to be volatile, with a slightly positive bias. With US markets closed on Thursday expect local operators to get active too.
Emerging markets too notched up pretty decent gains, with the Bovespa in Brazil surging over 9% and Russian stocks rising more than 7%. The global rally in equities also seemed to rub off on commodities, with crude oil climbing 9% and gold rallying hitting a five-week high. It remains to be seen though, whether the euphoria can be converted into a sustained year-end rally. For that to happen, we need an end to the almost daily dose of negative news from across the globe.
FIIs were net sellers of Rs5.6bn (provisional) in the cash segment on Monday while the local institutions pumped in Rs2.25bn. In the F&O segment, foreign funds were net sellers at Rs3.07bn. On Friday, FIIs were net sellers at Rs5.14bn in the cash segment. Mutual Funds net bought Indian shares worth Rs244mn.
Siemens, Balarampur Chini and Fedders Lloyd will announce their quarterly results today.
US stocks rallied for a second successive session on Monday, spurred by the announcement of a massive bailout plan for Citigroup and the unveiling of the crack economic team by president-elect Barack Obama.
The Dow Jones Industrial Average surged 397 points, or 4.9%, after having been up 552 points earlier in the afternoon. It ended at 8,443.39. The Standard & Poor's 500 index jumped 52 points or 6.4% to shut shop at 851.81 and the Nasdaq Composite index shot up 87 points or 6.3% to close at 1,472.02.
The US market had also rallied on Friday. The two-session gain of 891.10 points was the biggest two-session gain ever, according to Dow Jones. The percentage gain of 11.8% was the biggest two-session percentage gain since Oct. 1987.
The S&P 500 also saw its biggest two-session percentage gain since Oct. 1987, rising 13.2%. Its point gain was not significant statistically.
Obama held a press conference in the afternoon in which he formally nominated his economic team.
Naming New York Fed president Tim Geithner for Treasury Secretary and Harvard economist Lawrence Summers to run the National Economic Council, he urged his team to quickly develop recommendations for a recovery plan for "Wall Street and Main Street."
Over the weekend, Obama provided an outline of his recovery plan, including the creation of 2.5 million jobs over the next two years.
The financials led the bounce on the government's backstop for Citi. The $326bn plan to save the banking titan followed intense weekend negotiations that had the government backing as much as $306bn of the bank's troubled assets and taking charge of executive bonuses.
Citi shares surged 57.8% after losing more than 60% of its market capitalization last week.
Financials, telecom and consumer-discretionary shares fronted gains among all 10 of the S&P's industry groups.
Market breadth was positive. Volume on the New York Stock Exchange topped 2 billion, with advancers overtaking decliners roughly 9 to 1. On the Nasdaq, 1.1 billion shares traded, and advancers beat decliners roughly 3 to 1.
The US housing market continued to weaken, with sales of existing homes declining more than expected in October. The National Association of Realtors said sales fell to a 4.98 million unit annual pace in the month from a revised 5.14 million unit pace in September. Economists thought sales would decline to a 5.05 million unit rate.
US light crude oil for January delivery rose $4.57 to settle at $54.50 a barrel on the New York Mercantile Exchange.
The dollar fell versus the euro and gained against the yen. COMEX gold for January delivery rallied $27.80 to settle at $819.90 an ounce.
Gasoline prices continued to slump to 3-1/2 year lows, with gas down 2.1 cents to a national average of $1.908 a gallon. Gasoline prices have been dropping for over two months. In that time, prices have lost $1.95 a gallon, or over 50%.
Treasury prices plunged, raising the yield on the benchmark 10-year note to 3.34% from 3.19% on Friday. Last week, the 2-year, 10-year and 30-year government bonds all hit the lowest levels since the Federal Reserve started keeping records in 1962.
The yield on the 3-month Treasury bill slipped to 0.01% from 0.02% on Friday, not far from 68-year lows of zero. The 3-month - seen as the safest place to put money in the short term - last hit these levels in September as investor panic peaked.
The low yield means nervous investors would rather preserve their money despite no interest rather than risk the stock market.
Lending rates rose a bit. The 3-month Libor rate rose to 2.17% from 2.16% on Friday, while overnight Libor rose to 0.8% from 0.7% Friday. Libor is a key bank lending rate.
After the close, Hewlett-Packard reported better-than-expected sales and revenue and forecast upbeat fiscal 2009 profit, matching the company's pre-announcement from Nov. 18.
Tuesday brings the release of the third-quarter GDP and the November Consumer Confidence report.
Across the Atlantic, UK stocks finish with a flourish, with the FTSE 100 in London sky-rocketing 372 points or nearly 10% to end at 4,152.96.
Alistair Darling, the chancellor of the exchequer, said that the UK faced an unprecedented global crisis as he delivered his pre-Budget report. "These are extraordinarily challenging times for the global economy,” he told the House of Commons.
Darling said that he wanted the UK to be well-positioned to benefit from the return to growth of the world economy. He insisted however that the global financial crisis had originated in the US, and that this had exacerbated an economic slowdown that was already underway.
European shares rallied to one of their best one-day performance ever. The pan-European Dow Jones Stoxx 600 index rallied 8.4% to 197.51, after hitting a fresh five-year low on Friday. It was the second-best single-session performance on record.
The French CAC-40 index shot up 10.1% to 3,172.11 and Germany's DAX 30 index jumped 1.3% to 4,554.33.
It was flat end to a highly volatile session on the first day of the week. Indian market opened with negative gap down however, after extending losses in the opening trades, key indices reversed all its early losses mainly on the back of short covering. The index, however, were unable to hold on to their gains and slipped back into red.
The BSE benchmark Sensex gyrated over 300 points and the NSE Nifty index swung over 100 points in intra-day. The BSE benchmark Sensex lost 51 points or 0.5% to close 8,863 and the NSE Nifty index was up 14 points to close at 2,708.
Among the 30-components of Sensex, 17 stocks were in the negative terrain and 13 stocks ended in the red.
Market breath was weak, 1,376 stocks declined against 1,065 advances, while, 74 stocks remained unchanged.
Among the BSE Sectoral indices BSE Realty index (down 3.7%), BSE Bankex index (down 3.1%), BSE Consumer Durable index (down 2.3%) and BSE Metal index (down 1.5%). Even the Mid-Cap and the Small-Cap indices lost 0.5% each.
However, among the major gainers were BSE Power index (up 2%), BSE Oil & Gas index (up 1.3%) and BSE FMCG index (up 1%).
Shares of Hindustan Unilever edged higher by 0.3% to Rs235. According to media reports 2.5mn shares of the company changed hands on NSE at an average price of Rs235 per share. The scrip touched an intra-day high of Rs236 and a low of Rs234 and recorded volumes of over 4,00,000 shares on BSE.
Shares of SBI slipped 3% to Rs1147 after the company announced that it has signed a JV agreement with Insurance Australia Group, to form a JV company which would be engaged in General Insurance business in India.
SBI would hold 74% and IAG would hold 26% of the equity in the new company. The scrip touched an intra-day high of Rs1222 and a low of Rs1115 and recorded volumes of over 19,00,000 shares on BSE.
Shares of Bharti Airtel gained by 2.7% to Rs636 after reports stated that DoT would allot spectrum to the company in 10 days. The scrip touched an intra-day high of Rs645 and a low of Rs598 and recorded volumes of over 8,00,000 shares on BSE.
Shares of Monnet Ispat surged by over 5.5% to close at Rs145 after the company announced that it would buyback 7.41% of paid-up share capital at price not exceeding Rs300/ share. The scrip touched an intra-day high of Rs156 and a low of Rs131 and recorded volumes of over 73,000 shares on BSE.