If you wait to do everything until you're sure it's right, you'll probably never do much of anything.”
The bulls would most likely extend Friday’s gains on firm global trend. A positive opening on Monday is more than a welcome sign. The next few days and perhaps weeks will see hectic action. A number of key events are lined up, both locally as well as globally. The Congress and the BJP have kicked off the campaigns for the upcoming Lok Sabha polls. The Government is also busy preparing the vote-on-account, which may include fresh measures to stimulate the economy. According to a business news channel, the Government is set to announce FY09 GDP data today.
The IIP data for December will be out on Thursday. The barometer for the manufacturing sector should stay in the positive zone for the second month after dipping in the red in October.
The US Senate is set to vote on Obama regime’s new stimulus plan on Tuesday. A revamped bank rescue package is also slated for the same day. Global equities could rally if these two events pass off without much trouble. However, one should not get carried away with any big advance. It would be prudent to sell into any rally. The earnings season is yet to wind up in the US and rest of the world. Any negative surprise could spook the sentiment.
Piramal Healthcare could be in focus amid takeover news, though the company had denied a move to sell out. Kingfisher Airlines might also hog the limelight amid news that the company is looking for fund infusion of about Rs20bn through strategic investors. Cement stocks could gain amid news of an impending price hike.
Hopes for a quick passage of president Obama's economic-stimulus plan in the senate coupled with optimism about the new version of the bank bailout plan countered unease following a downbeat jobs report.
The Dow Jones Industrial Average jumped 217.52 points, or 2.7%, to end at 8,280.59, while the S&P 500 index rose 22.75 points, or 2.7%, to close at 868.60. The Nasdaq Composite index added 45.47 points, or 2.9%, to finish at 1,591.71.
All three major gauges ended higher for the week as well, ending a four-session losing streak. The Dow was up 3.5% for the week while the S&P 500 surged 5.2%, and the Nasdaq shot up 7.8%.
Other possible congressional action prompted the Standard & Poor's Index Services to cut its projected dividend rate on the S&P 500 index." Due to recent events, including potential congressional action that might limit dividend payments, we are reducing the indicated dividend rate on the S&P 500," Howard Silverblatt, senior index analyst at S&P was quoted as saying.
Standard & Poor's Index Services said that it expects S&P 500 dividends to decline 13.3% in 2009, the worst yearly drop since 1942, when dividends fell 16.9%. Standard & Poor's now expects USUS$214.66bn in dividend payments for S&P 500 companies in 2009, compared to USUS$247.9bn last year.
If anything, the poor January jobs report - which showed a loss of nearly 600,000 jobs - added to the optimism about the stimulus package, by inciting a sense of urgency in lawmakers and investors.
Investors were relieved that although the employment report was bad, it wasn't as bad as some had been fearing.
The Senate was working to cut down the size of President Obama's US$900bn stimulus package, after a different version of the plan won party-line approval in the House last week. Reports said a vote could happen over the weekend.
Banking shares rallied for the second session as investors looked to Tuesday's announcement on how the government will use the remaining US$350bn of the Treasury's Troubled Asset Relief Program (TARP).
Treasury Secretary Tim Geithner is expected to speak on Tuesday about how the plan to use the rest of the TARP money. Plans in discussion include the creation of a so-called "bad bank" that would let the government take bad assets off bank balance sheets.
Reports also say that the Obama administration could temporarily suspend or alter the "mark-to-market" accounting rule, which would mean the government could buy the assets at a price that is below market rate, but not at fire sale prices.
US companies cut 598,000 jobs in January, as the recession continued to ravage corporate profits and spark massive layoffs. It was the worst month of job losses in 34 years, surpassing the 540,000 job cuts economists were expecting.
The unemployment rate, generated by a separate survey, rose to 7.6% from 7.2% the previous month, topping forecasts for a rise to 7.5%. The unemployment rate is at its highest since September 1992.
The report also showed that 2.6mn people have been out of work for at least six months, the largest number of long-term unemployed since 1983.
Treasury prices slumped, raising the yield on the benchmark 10-year note to 2.98% from 2.89% on Thursday.
Lending rates were mixed. The 3-month Libor rate held steady at 1.24%, unchanged from on Thursday. The overnight Libor rate slipped to 0.31% from 0.32% Thursday. Libor is a bank lending rate.
US light crude oil for March delivery fell US$1 to settle at US$40.17 a barrel on the New York Mercantile Exchange. Gasoline prices rose three-tenths of a cent to a national average of US$1.91 a gallon.
The dollar was mixed, falling against the euro and rising against the yen. COMEX gold for April delivery rose 10 cents to settle at US$914.30 an ounce.
European shares advanced on Friday. The pan-European Dow Jones Stoxx 600 index climbed 2.1% to 198.53, led by banks and oil majors. The UK's FTSE 100 index closed up 1.5% at 4,291.87, while Germany's DAX 30 index climbed 3% to 4,644.63 and the French CAC-40 index advanced 1.8% to 3,122.79.
Markets ended with an upbeat on Friday with the benchmark index closing at 9,300 and the Nifty shutting shop above the 2,800 mark. The rally was mainly on account of firm cues from the overseas equity markets. The oil & gas, metal and banking stocks were in demand also the mid-cap and the small-cap stocks hogged the limelight. Finally, the Sensex surged 209 points to close at 9,300 and the Nifty advanced 63 points to close at 2,843.
Among the 30-components of Sensex, 28 stocks ended in the positive terrain and only 2 stocks ended in the red. The major gainers in the Sensex were Ranbaxy, Grasim, Tata Motors, ICICI Bank, Reliance Industries and TCS.
On the other hand the major laggards were Hindustan Unilever and DLF.
Shares of Tata Motors surged by over 4% to Rs137 after the company said that three quarters of its purchases have been paid immediately through an arrangement with banks. The scrip touched an intra-day high of Rs139 and a low of Rs132 and recorded volumes of over shares 6,00,000 on BSE.
Maytas Infra was locked at 5% lower circuit to Rs57.1. The company announced that it issued a legal notice to Vedanta Aluminum alleging fraudulent and illegal encashment of two bank guarantees valued at Rs640mn. The scrip touched an intra-day high of Rs57.1 and a low of Rs57.1 and recorded volumes of over 6,000 shares on BSE.
Shares of JSW Steel surged by over 7% to Rs210 after the company announced that production of crude steel increased by 41% to 321,000 tons in January. The scrip touched an intra-day high of Rs213 and a low of Rs199 and recorded volumes of over 2,00,000 shares on BSE.
Shares of Satyam Computer surged by over 2% to Rs47 after the board of directors f the company announced that they appointed A S Murty as Chief Executive Officer, effective immediately.
The Board has also appointed Homi Khusrokhan and Partho Datta as Special Advisors, to assist in Management and Finance areas, respectively. The scrip touched an intra-day high of Rs49.5 and a low of Rs46 and recorded volumes of over 16,00,000 shares on BSE.
Shares of Kingfisher Airlines advanced by 1% to Rs32. The company deferred its first delivery of the Airbus SAS A380 double-decker to 2014 from 2012. The scrip touched an intra-day high of Rs34 and a low of Rs32 and recorded volumes of over 81,000 shares on BSE.