The only limit to our realization of tomorrow will be our doubts of today.
Most doubts on the Stimulus Package II have finally ended. The Government has announced a slew of fresh measures, aimed at putting the Indian economy back on high growth path. The RBI too has joined the effort with aggressive rate cuts. We expect the market to respond positively today. What will help the bulls is that the global markets too are witnessing buoyancy. Taken together, these two factors can take the market (read Nifty) higher by a couple of hundred points. Later in the month, the quarterly results may spoil the party, especially if there is any major negative surprise. In any case, the intermediate uptrend may run out of gas after a while in the absence of fresh catalysts. In this context, the trend in FII flows will play a crucial role. Buying support from local funds will be more than welcome.
Today, the market will open higher due to strength across global markets. Investors should consider booking profits at every given opportunity, as the recent spurt doesn’t suggest end of the bear phase as yet. At the same time, downside risks have also eased, pointing to a rangebound trading in the short to medium term. One may undertake long-term purchases once there is clear evidence of a turn around.
Foreign and domestic funds were net buyers on Friday at Rs1.21bn and Rs2.38bn, respectively, according to provisional data from the NSE. In the F&O segment, FIIs were net buyers of Rs4.16bn. Mutual Funds were net buyers of Rs453mn on Thursday.
US stocks ended sharply higher on Friday, with the Dow Jones Industrial Average closing above 9,000 for the first time since November, as investors put behind what was the worst year in several decades.
Expectations for another big stimulus package, once the Barack Obama led regime takes over the reigns at the White House in about three weeks' time, helped the key stock benchmarks extend week's gains.
General Motors (GM) received its first cash infusion from the government and rising oil prices lifted energy shares. After the close of trading, Chrysler said it has received a $4bn initial loan from the federal government.
The Dow climbed 258.3 points, or 2.9%, to 9,034.69. All of the Dow's 30 components closed Friday in the green. The gains left the blue-chip index up more than 500 points, or 6.1%, for the week.
The S&P 500 jumped 28.55 points, or 3.2% to 931.8, capping its first three-day gain in five weeks and best start to a year since 2003. The broader market indicator gained 6.8% during the truncated week.
The technology-led Nasdaq Composite surged 55.18 points, or 3.5%, to finish at 1,632.21, a level that left it up 6.7% for the week.
The Russell 2000 Index of small US companies advanced 1.3%.
Wednesday brought a positive end to one of the worst years on record. The Dow lost 33.8% in the year, the third worst in its history, following a drop of 52.7% in 1931.
The S&P declined nearly 38.5%, its worst yearly performance since an earlier version of the broad stock index lost 47% in 1931. The earlier incarnation had 90 US stocks in it.
For the Nasdaq, 2008's loss of 40.5% is the tech-fueled index's worst ever, going back to its inception in 1971.
All US financial markets were closed Thursday for New Year's Day.
Market breadth was positive. Volume was thin, with many investors apparently still on break. About 7.2 billion shares changed hands on all U.S. exchanges, 29 percent fewer than the three-month daily average as trading slowed at the end of the holiday-shortened week.
Wall Street analysts are cautiously optimistic that the US market will recover in 2009. However, the extent of any recovery will depend on a variety of factors, including what kind of economic stimulus package the new Congress approves - and the depth of the recession.
At the same time, investors should not assume that the trend is now going to be up for most of the year. There is no reason why stocks could not rally for a while and then retreat, making new bear market lows.
Crude-oil futures rose to three-week highs, gaining nearly 4% on concerns that Russia's cutting off natural gas to the Ukraine could impact European energy supplies. Crude for February delivery ended up US$1.74, or 3.9%, to stand at US$46.34 a barrel on the New York Mercantile Exchange.
The dollar rose after a report showed manufacturing in Europe had slowed, but the greenback scaled back gains after the weak US manufacturing report. The dollar index, which tracks the currency against major rivals, edged up to 81.87 from 81.17 a day earlier.
Gold futures fell, as a stronger US dollar reduced the metal's appeal as an alternative investment, with the contract for February delivery declining US$4.80 to end at US$879.50 an ounce.
Treasury prices tumbled, raising the corresponding yield on the benchmark 10-year note to 2.37% from 2.24% on Wednesday. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates were mixed. The 3-month Libor rate slipped to a 4-1/2-year low of 1.41% Friday from 1.42% on Wednesday, according to Dow Jones. Overnight Libor slipped to 0.12% from 0.14%. Libor is a key bank lending rate.
Gasoline prices rose 0.8 cents to a national average of US$1.626 a gallon, according to a survey of credit-card swipes released Friday by motorist group AAA.
The US manufacturing sector continues to weaken, according to the latest reports. The Institute for Supply Management's (ISM) manufacturing index fell to a 28-year low in December, declining more than what economists had been expecting.
GM, the largest US automaker, rallied 14% after receiving US$4bn in rescue loans from the Treasury to help the company avoid collapse. Exxon Mobil and Chevron Corp. led an index of energy producers to a sixth straight advance.
Starwood Hotels & Resorts Worldwide Inc. jumped 16% on takeover speculation after agreeing to notify one of its largest investors of any offers.
Time Warner Cable and Viacom have reached a new programming deal that will keep 19 Viacom cable channels on TWC's network.
In other news, Bank of America has completed its acquisition of Merrill Lynch. Wells Fargo has completed its purchase of Wachovia.
This week brings a slew of economic reports in the US, covering retail sales, auto sales, factory orders and construction spending ahead of the big December employment report due on Friday.
Markets extended gains to second straight trading session on Friday ending the week on a positive note. Markets surged ahead of the second stimulus package to be announced later in the day. The interest rate sensitive stocks were in momentum throughout the day. Also the fertilizer stocks witnessed huge build up in open interest. Further on, a smart start to equity markets across Europe lifted the sentiments on D-Street.
The BSE benchmark Sensex ended at 9,958 adding 54 points and the NSE Nifty index ended at 3,046 up 13 points.
Among the BSE Sectoral indices BSE Consumer Durable index (up 2.5%), BSE Realty index (up 2%) and BSE Bankex index (up 2%). On the other hand BSE IT index (down 1.2%) and BSE Teck index (down 1%).
Market breath was positive, 1,697 stocks advanced against 824 declines, while, 78 stocks remained unchanged.
Among the 30-components of Sensex, 18 stocks were in the green and 12 stocks ended in the negative terrain. Bharti, Infosys, HUL and Satyam were the big losers. On the other hand, Reliance HDFC and ICICI Bank were the big gainers.
Shares of RCom advanced by 2% to Rs250 after the company announced that the launch of GSM-based cellular services in 14 circles with a capex of Rs100bn. The scrip touched an intra-day high of Rs254 and a low of Rs243 and recorded volumes of over 38,00,000 shares on BSE.
Shares of Hotel Leela surged by over 4% to Rs20 after reports stated that the company would be opening three new hotels in India this year.
The company is planning to open a hotel in Gurgaon, near capital New Delhi, this month and one in the northern city of Udaipur shortly, added reports. The scrip touched an intra-day high of Rs21 and a low of Rs20 and recorded volumes of over 5,00,000 shares on BSE.
Shares of Punj Lloyd surged by over 3% to Rs158 after the company announced that its Singapore based subsidiary has received Rs1.5bn order from ExxonMobil. The scrip touched an intra-day high of Rs162 and a low of Rs154 and recorded volumes of over 23,00,000 shares on BSE.
Shares of Shipping Corporation advanced by 4% to Rs87 after reports stated that the company plans to invest around US$3bn for acquiring 40 ships to double its tonnage capacity to around 10mn dwt by 2015. The scrip touched an intra-day high of Rs88 and a low of Rs82 and recorded volumes of over 2,00,000 shares on BSE.
With rate cuts and other additional measures announced bulls would carry forward the momentum atleast in the opening trades on Monday. However, one should not get carried away in this swing but wisely use the opurtunity to exit and book some profits.