While we stop to think, we often miss our opportunity.
The bulls may look forward to inflating their gains for now as the market is set to continue its recent ascent. We expect another positive start and a firm close, unless global cues give way. Some short-covering is likely on account of F&O expiry. Traded volumes too have picked up this week, which is a healthy sign. Still, one has to stay rooted to the ground, as the market could face a few bumps in the coming month.
There are some signs of recovery in economic activity. Inflation is all set to move into sub-zero territory, though partly it is a statistical magic. Consumer inflation is still pretty high at around 7-8%. For a day you can stop thinking and ride the upmove with stop losses to protect your downside.
A few good economic reports in the US have added fizz to the recent rally across global markets. Wall Street and world markets have also welcomed the latest bank bailout plan by the Obama regime. Add to that encouraging commentary from top global banks, and you have a pretty good platform for the bulls to exploit. But be careful as the bottoming process is going to take time.
FIIs were net buyers in the cash segment on Wednesday at Rs3.48bn while the local institutions poured Rs89.2mn. In the F&O segment, the foreign funds were net buyers at Rs3.41bn. On Tuesday, FIIs were net buyers of Rs6.99bn. Mutual Funds were net buyers of Rs1.25bn on the same day.
US stocks ended higher on Wednesday after a fairly volatile session, spurred by positive reports on new home sales and durable goods orders. The advance sputtered out through most of the afternoon. A late-session jump in financial stocks and technology shares helped markets finish higher.
The Dow Jones Industrial Average rose 90 points, or 1.2%, to 7,749.81. The S&P 500 index rose 7 points, or 0.9%, to 813.88. The Nasdaq Composite index advanced 12 points, or 0.8%, to 1,528.95.
US stocks have rebounded 20% since March 9, when the Dow and S&P 500 hit roughly 12-year lows. They have been rallying on optimism that the economy and financial markets are getting closer to stabilising. In addition, many stocks have been hammered out of shape and look attractive.
Bank of America, JPMorgan Chase and Wells Fargo ended higher after a shaky afternoon. Citigroup cut some losses. The KBW Bank sector index rose 5%, erasing a drop of over 5%.
February new home sales rose at an annual unit rate of 337,000 versus a revised 322,000 in the previous month. Sales were expected to rise at a 300,000 unit annual rate, according to a consensus of forecasts.
An earlier report showed that durable goods orders rose 3.4% in February after falling 5.2% in the previous month. Economists had forecast a fall of 2.5%. Durable goods orders, excluding transportation, rose 3.9% after falling 5.9% in January. Economists had predicted a decline of 2%.
Also, a report from the UCLA Anderson School of Management showed that real domestic product growth is on track to see quarterly growth in 2010 and 2011, although not in 2009.
On Tuesday, Federal Reserve Chairman Ben Bernanke and Secretary Geithner testified about the government's $180bn bailout of AIG. They said that AIG demonstrates the need for the government to have broader power over non-bank financial institutions.
Geithner again made his case for broader powers to regulate flailing companies on Wednesday. In a speech in New York, the Treasury Secretary said that the country should never again have to provide a massive bailout or risk seeing a collapse of the financial system.
President Barack Obama, in a primetime news conference on Tuesday, said that it is because of a lack of authority that the AIG situation has gotten worse. Obama also defended his $3.6 trillion 2010 federal budget, which he said is inseparable from the overall strategy for economic recovery.
Congressional committees began debating the budget on Wednesday, with a final budget not expected until at least next fall. On Monday, the Treasury Department introduced its plan to purge bank balance sheets of up to $1 trillion in bad assets that are limiting lending and prolonging the recession.
Last week, the Federal Reserve announced it was pumping another trillion into the economy to try to get credit flowing, including $300 billion to buy long-term Treasurys. The N.Y. Fed Bank began buying the securities on Wednesday.
Treasury prices tumbled, raising the yield on the benchmark 10-year note to 2.79% from 2.70% on Tuesday.
Lending rates were unchanged. The 3-month Libor rate held steady at 1.23%, where it stood Monday, while the overnight Libor rate held steady at 0.29%. Libor is a bank-to-bank lending rate.
In currency trading, the dollar fell against the euro and the yen, recovering from bigger morning losses that followed comments from Geithner.
Crude futures dropped from their highest level in nearly four months as data showed US crude inventories rose more than expected as petroleum demand fell. US light crude oil for May delivery fell $1.21 to settle at $52.77 a barrel. Over the last three months, oil futures have surged 49%.
COMEX gold for May delivery rose $12 to settle at $936.70 an ounce.
On Thursday, the House Financial Services Committee holds a hearing on regulatory reform, with Treasury Secretary Tim Geithner due to testify. Economic reports include readings on weekly jobless claims and gross domestic product growth.
The number of Americans filing new claims for unemployment is expected to have risen to 650,000 from 646,000 the previous week, economists estimate. Continuing claims, a measure of people who have been receiving unemployment for a week or more, will also be in focus. Last week, continuing claims hit an all-time high of 5.473 million.
Fourth-quarter GDP in the US is expected to have shrunk by a 6.6% annual rate versus the previous reading of a 6.2% rate. The 6.2% rate was a 26-year low. Best Buy and homebuilder Lennar report quarterly results before the start of trading.
European stocks edged higher on Wednesday, as gains in the oil and food sectors helped offset losses in Siemens and a dip in a key sentiment gauge in Germany. Major stock indexes spent much of the day meandering between positive and negative territory.
The pan-European Dow Jones Stoxx 600 index rose 0.3% to 178.82, while the French CAC 40 index rose 0.7% to 2,893.45 and the German DAX 30 index gained 0.9% to 4,223.29. The UK's FTSE 100 index, however, lost 0.3% to 3,900.25.
A highly volatile session ended with smart gains ahead of the F&O expiry on Thursday. The BSE benchmark Sensex swung almost 280 points and the NSE Nifty index gyrated 70 points from their highs and lows. The interest rate sensitive stocks led from the front followed by the oil & gas, metals and capital goods stocks. Finally, the BSE Sensex surged 196 points to close at 9,667 and the NSE Nifty was up 45 points at 2,984.
Among the 30-components of Sensex, 22 stocks ended in positive terrain and 8 stocks ended in the red. JP Associates, Sterlite, DLF, Reliance Infra, Tata Power and Reliance Industries were among the top gainers.
On the other hand, NTPC, Bharti, ONGC, HUL and Tata Motors were among the major losers.
Shares of Idea gained by 3% to Rs48.7 after reports stated that the company has forayed into global long distance business. The scrip touched an intra-day high of Rs49 and a low of Rs46.7 and recorded volumes of over 0.7mn shares on BSE.
Shares of Bombay Rayon surged by over 5% to Rs146 after reports stated that the board of directors approved raising of Rs3.3bn through a preferential allotment of 18mn shares at Rs185 each. The scrip touched an intra-day high of Rs147.7 and a low of Rs136.8 and has recorded volumes of over 1.1mn shares on NSE.
Shares of Crompton Greaves dropped sharply for a second day in a row after reports stated that JP Morgan Chase & Co said the company’s proposed acquisition of 41% stake in Avantha Power appeared to be expensive.
The stock declined by over 13% to Rs106 after hitting an intra-day high of Rs119 and a low of Rs99.7 and recorded volumes of over 10.2mn shares on BSE.
Shares of DLF gained by 6% to Rs176 after reports stated that the company plans to book ~Rs20bn revenue from sale of 4.5mn sq ft of commercial space to the group company, DAL. The scrip touched an intra-day high of Rs178 and a low of Rs164 and recorded volumes of over 6.6mn shares on BSE.
Shares of Gail India advanced by over 3.5% to Rs234 after the company announced that it signed an agreement with Ministry of Petroleum. The company has announced that it has set a target to transport 94.8mn cubic meters per day of gas in the year starting April.
It was a surprise rally on Wednesday, however, the NSE Nifty index faces crucial hurdle i.e. the 3000 levels which it has failed to sustain above convincingly. Adding to the woes would be high volatility on account of F&O expiry. The global markets would also be closely watched for cues in the early trades. So one can expect a day of wild gyrations.