Nothing’s better than the wind to your back, the sun in front of you…
After a year of headwinds, the bulls got some tailwind as the New Year brought some cheer with the key indices rising three days in a row. The Sensex and the Nifty closed above key psychological levels, aided by strong buying by FIIs as well as local institutions. Some short covering also propelled Monday's strong gains. The Fiscal Stimulus Package II and RBI's aggressive monetary easing have heightened hopes for a better year ahead. More fiscal measures could be announced in the Vote-On-Account next month to ensure a faster economic recovery.
The undertone has definitely improved a notch or two, so we hope. The optimism stems from the belief that India is better placed than most economies, and global funds may find it hard to resist. A big concern is the health of India Inc. In this context, the upcoming results will prove to be a litmus test and set the tone for the months ahead. Among the other events to watch out would be the shift in regime in the US.
Today, we see the market opening flat to slightly positive. There may be some cooling at higher levels. On the whole, we expect some choppiness after the recent spurt.
Foreign and domestic funds were net buyers (provisional) in the cash segment on Monday, at Rs4.7bn and Rs2.2bn, respectively. In the F&O segment, FIIs were net buyers of Rs11.5bn. Foreign funds were net buyers of Rs1.14bn in the cash segment on Friday. Mutual Funds were net buyers of Rs722mn on Friday.
US stocks fell for the first time in four sessions on Monday, with investors taking some profit after last week's rally amid another dismal month for the beleaguered auto industry.
After closing at an eight-week high Friday, the Dow Jones Industrial Average, shed 81.8 points, or 0.9%, to end at 8,952.89.
Twenty-two of the Dow's 30 components closed in the red, with shares of J.P. Morgan Chase slumping 6.7% after Deutsche Bank cut its estimates on the bank. Verizon Communications also weighed on the blue-chip index, its shares losing 6.2% in the wake of its downgrade by Bernstein Research.
The S&P 500 index lost 4.35 points, or 0.5%, to settle at 927.45, with telecommunication services, health care and financials fronting sector declines. The energy sector fared the best, with shares including Consol Energy fronting the gains, up 8.5%.
The Nasdaq Composite index declined 4.18 points, or 0.3%, to 1,628.03, with tech stocks dipping. Apple shares rose after CEO Steve Jobs acknowledged health problems but said he would stay on as the company's chief executive.
Apple shares gained 4.2% after Jobs said that he is undergoing treatment for a hormone imbalance that has caused him to lose weight. Jobs made his comments in an open letter to the Apple community.
Separately, Tyson Foods said CEO dick Bond has stepped down from his post at the big meat producer. Tyson shares fell 6%.
On Capitol Hill, President-elect Barack Obama was meeting with congressional leaders of both parties as he tries to shore up support for his economic-stimulus package and about $300bn in tax cuts.
Also, a House panel held a hearing on the Bernard Madoff scandal, which cost investors an estimated $50bn.
While the major US gauges were lower, the broader market was higher, with winners topping losers on the New York Stock Exchange. On the Nasdaq, winners and losers were roughly even. Market breadth was mixed.
November construction spending held up better than had been expected. Spending fell 0.6% versus forecasts for a drop of 1.4%. Spending fell 0.4% in the previous month.
The US automakers reported disappointing December sales. Ford Motor said sales fell 32% in the month, a slightly narrower loss than what analysts had been expecting. General Motors said sales fell 31% in December, also slightly narrower than what analysts had forecast.
Toyota reported that sales fell 37% in the month, while Chrysler reported sales fell 53%.
Treasury prices tumbled, raising the corresponding yield on the benchmark 10-year note to 2.47% from 2.37% on Friday. 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 rose to 1.42% from 1.41% Friday, a 4-1/2-year low. Overnight Libor held steady at 0.12%. Libor is a key bank lending rate.
The dollar gained versus the euro and yen.
US light crude oil for February delivery rose $2.47 to settle at $48.81 a barrel on the New York Mercantile Exchange. COMEX gold for February delivery fell $21.70 to settle at $857.80 an ounce.
Gasoline prices rose 1.4 cents to a national average of $1.672 a gallon, according to a survey of credit-card swipes released Monday by motorist group AAA.
On Tuesday, the Institute for Supply Management releases its survey of the services sector of the economy. The December index is expected to have dipped to 37.0 from 37.3 in November, remaining deep in recessionary territory.
The government's November factory orders report is due around the same time. Orders are expected to have fallen 2.6% after having fallen 5.1% in October.
The November pending home sales index is also due in the morning, while the afternoon brings the release of the minutes from the last Federal Reserve monetary policy meeting in December.
On Friday, the Labor Department is expected to report a decline of 500,000 jobs in December, which would translate into a loss of more than 2 million jobs for 2008.
European shares extended the new year's winning streak on Monday. The pan-European Dow Jones Stoxx 600 index rose 2.1% to close at 208.69, bringing gains for the first two trading sessions of 2009 to almost 5%. The Stoxx 600 index fell 46% in 2008, its worst year on record.
Other national indexes in Europe traded more in a lackluster fashion, with Germany's DAX 30 index gaining 0.2% to close at 4.983.99, the UK's FTSE 100 index up 0.4% at 4,579.64 and the French CAC-40 index up 0.3% at 3,359.92.
Markets extended gains for third straight trading session in the year as bulls were in complete control over the bourses. Firm cues from the international equity markets further boosted the sentiments on Dalal Street. Buying was witnessed in the metals’, oil & gas, banking and capital goods stocks which saw the NSE Nifty and the BSE Sensex end above the 3,100 and the 10,200 mark. However, the realty and the FMCG stocks witnessed some offloading.
Finally, the BSE benchmark Sensex ended at 10,275 surging 317 points and the NSE Nifty index ended at 3,121 up 74 points.
Among the BSE Sectoral indices BSE Metal index (up 6.2%), BSE Oil & Gas index (up 5.5%) and BSE Bankex index (up 3.5%). On the other hand BSE Realty index slipped 0.7% and the BSE FMCG index (down 0.5%).
Market breath was positive, 1,661 stocks advanced against 878 declines, while, 74 stocks remained unchanged.
Among the 30-components of Sensex, 23 stocks were in the positive terrain and only 7 stocks ended in the red.
Shares of GTL Ltd surged by over 5% to Rs217 after the company announced that it plans to consider share buyback on January 15, 2009. The scrip touched an intra-day high of Rs228 and a low of Rs206 and recorded volumes of over 1,00,000 shares on BSE.
Ahluwalia Contracts was locked at 5% upper circuit to Rs33.7 after the company announced that it won order worth Rs3.94bn. The scrip touched an intra-day high of Rs33.7 and a low of Rs33.7 and recorded volumes of over 55,000 shares on BSE.
Satyam Computer slipped by 6% to Rs166. According to reports, the company is exploring a merger with HCL Technologies and MindTree. HCL, with whom discussions are on for a cash-less merger. The scrip touched an intra-day high of Rs181 and a low of Rs161 and recorded volumes of over 1,00,00,000 shares on BSE.
Shares of Emami ended lower by 3% to Rs218. According to reports, the company plans to hive off Zandu Chemicals, a subsidiary of Zandu Pharma. The scrip touched an intra-day high of Rs230 and a low of Rs202 and recorded volumes of over 4,000 shares on BSE.
After surging past the 3100 levels, markets would carry forward the momentum atleast in the morning trades on Tuesday. However, profit booking at higher levels cannot be ruled out.