We must expect reverses, even defeats. They are sent to teach us wisdom and prudence, to call forth greater energies, and to prevent our falling into greater disasters.
A disaster seems to have been averted at Satyam Computer. The IT major has decided to drop the proposed acquisition of two promoter group companies - Maytas Properties and Maytas Infra, which is Satyam spelt in reverse. The reverse also has a reverse side and the Satyam management (involved in the deal) has taken heed of the screams of investors.
The bulls may continue the recent run of good form today as well following the Federal Reserve's move to slash interest rates to near zero level. US shares ended sharply higher on the central bank's promise to do more in order to check the economic slump. The Dow gained 4.2% while the Nasdaq and the S&P 500 rallied well over 5%. European stocks too closed higher while Asian indices this morning too are on a strong wicket. Given the backdrop of a worldwide rally and resumption in FII inflows, we see the Indian market opening firm today. Having said that, Tuesday's advance came on lower volume and turnover. Buying from foreign funds was negligible while local institutions were marginal net sellers. The key indices could take a pause after rising sharply over the past few sessions.
US stocks rallied on Tuesday after the Federal Reserve cut its key interest rate to almost zero and said that it expects to keep rates near the unprecedented low level for some time to come.
The Fed also said it would buy large amounts of debt and securities to flood the financial system with money. The US central bank's campaign to save the US economy involves an array of new economic measures to stimulate spending.
Climbing nearly 400 points in the wake of the Fed decision, the Dow Jones Industrial Average closed at 8,924.14, up 359.61 points, or 4.2%. All of the Dow's 30 components posted gains, fronted by the blue-chip index's financials. Citigroup gained 11.2%, while JPMorgan Chase climbed 13%.
The S&P 500 Index gained 44.61 points, or 5.1%, to 913.18, with financials, telecom services and consumer-discretionary sectors leading gains that included all 10 of the index's industry groups.
Leading the rise among the S&P's financials, XL Capital climbed 26.9%, while shares of Genworth Financial rose 24.6%. The insurer last week said that it would acquire a large community bank in Minnesota, giving it access to a potential government investment.
The technology-laden Nasdaq Composite Index advanced 81.55 points, or 5.4%, to 1,589.89.
Goldman Sachs reported its first quarterly loss since going public in 1999. The investment bank said it lost US$2.1 billion, or US$4.97 a share, versus a profit of US$3.2 billion, or US$7.01 a share, a year ago. Results were worse than expected. Despite the report, shares gained 14%.
Best Buy reported weaker earnings versus a year ago that nonetheless beat forecasts and stronger sales versus a year ago that also topped expectations. The retailer said it may have to announce more layoffs and slow its new U.S. store openings. Shares gained almost 18%.
In other news, the government could announce a plan to help the troubled automakers as soon as Wednesday. The Bush administration said last week that it would consider offering General Motors and Chrysler bridge loans from the US$700 billion bailout fund Congress set aside for Wall Street.
Housing starts and building permits fell to record lows in November, the latest sign that the market has not yet reached bottom. Housing starts plunged more than 19% to an annual rate of 625,000 in November, the Commerce Department reported, while building permits slipped to an annual rate of 616,000. Both results were worse than what economists had expected.
Another report showed weaker consumer inflation than had been expected. The Consumer Price Index (CPI) fell 1.7% in November, after sliding 1% in the previous month. Economists thought CPI would fall 1.3%. The so-called core CPI, which strips out volatile food and energy prices, was flat versus forecasts for it to rise 0.1%. Core CPI dropped 0.1% in the previous month.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.28% from 2.50% on Monday. The 10-year yield dipped below 3% in November for the first time since the note was first issued in 1962.
Lending rates improved. The 3-month Libor rate slipped to 1.85% from 1.87% Monday, according to Bloomberg. The overnight Libor rate edged up to 0.16% from a record low of 0.12%. Libor is a key bank lending rate.
The dollar fell to an 8-week low versus the euro and hovered near a 13-year low against the yen.
US light crude oil for January delivery fell 91 cents to settle at US$43.60 a barrel after rallying in the morning on bets that OPEC will cut output during its meeting in Algeria on Wednesday. COMEX gold for February delivery gained US$6.20 to US$842.70 an ounce.
Gasoline prices rose one-tenth of a cent to a national average of US$1.661 a gallon, according to a survey of credit-card swipes released Tuesday by motorist group AAA. It was only the third increase in the last 90 days.
European shares ended a volatile session in positive territory on Tuesday, with drugmakers and telecom stocks pacing gains. The pan-European Dow Jones Stoxx 600 index rose 0.8% to close at 199.01 after swinging between gains and losses through the session.
Germany's DAX 30 index rose 1.6% to close at 4,729.91, while the French CAC-40 index advanced 2.1% to finish at 3,251.66 and the UK's FTSE 100 index climbed 0.7% to end the session at 4,309.08.
The BSE benchmark Sensex extended gains on Tuesday hitting the 10,000 mark after 22 sessions towards the fag end of trading session.
The banking and the realty stocks were among the major gainers on anticipation of the US Fed cutting interest rate in its policy meeting tonight. Also the IT stocks bounced back led by HCL Tech, Infosys and TCS. The BSE benchmark Sensex finally ended at 9,976 adding 144 points and the NSE Nifty index ended 3,041 adding 60 points.
The oil & gas, Pharma, IT and realty stocks were in demand. While, the metals and select capital goods stocks were under pressure.
Market breath was positive, 1,860 stocks advanced against 654 declines, while, 66 stocks remained unchanged.
Among the 30-components of Sensex, 20 stocks ended in the green and 9 stocks ended in the negative terrain, the big gainers were ONGC (7%), Grasim (6.2%), ACC (5.5%) and HDFC Bank (5.2%).
On the other hand, major losers were Sterlite Industries (7%), HDFC (4.1%), Reliance Infra (2.5%), RCom (2.1%) and DLF (1.3%).
Shares of Alok Industries gained by 3% to Rs19 after the company announced that it is in talks with PE funds to sell stake in its retail arm and two of its Mumbai realty projects. The scrip touched an intra-day high of Rs19.7 and a low of Rs18.4 and recorded volumes of over 4,00,000 shares on BSE.
Shares of SRF Ltd surged by over 8% to Rs81 after reports stated that the company has acquired engineering plastics business and industrial yarn business from its group company SRF Polymers for Rs1.5bn. The scrip touched an intra-day high of Rs81.8 and a low of Rs73 and recorded volumes of over 1,00,000 shares on BSE.
PTC India rallied by over 5% to Rs70 after reports stated that the company is set to tie up with power generation companies in a bid to diversify its business. The scrip touched an intra-day high of Rs72.9 and a low of Rs61 and recorded volumes of over 99,00,000 shares on BSE.
Shares of Corporation Bank gained by 1.5% to Rs184 after the company announced that it has raised upper tier-II bonds (Series (I) (1)) for Rs3bn. The scrip touched an intra-day high of Rs188 and a low of Rs180 and recorded volumes of over 9,00,000 shares on BSE.
With the FED to announce its decision on interest rates and also consumer price data to be released in the US, market players would keep a close eye on the overnight developments. It remains to be seen whether the current momentum can be sustained, as the bulls still lack conviction.