A cynic is not merely one who reads bitter lessons from the past but is one who is prematurely disappointed in the future.
The bulls kept their momentum on Monday after flirting in negative zone briefly. But, after three successive days of gains we may see some softening in the main stock indices. The Sensex and the Nifty have rallied about 10% during this period. The bulls may run out of luck as US stocks snapped a four-day advance overnight, led by a sell-off in technology shares. However, stocks gained in Europe on some positive comments from UK bank Barclays. Asian indices, barring Singapore, are mostly in the green this morning. As a result, the market will open flat and may turn lackluster later in the day. The indices may resume its northward journey after a breather if global equities hold firm.
Much will depend on the newsflow and advanced tax number may be discussed extensively for lack of other news. Any fresh bad news may mar the tempo. Fed policymakers are holding a two-day meeting starting today. With interest rates already low, investors are expecting Fed officials to shed light on the potential for quantitative easing. The next big event will be the quarterly earnings. It will throw up both positive as well as negative surprises. Till then investors may remain cautious.
FIIs were net sellers in the cash segment on Monday at Rs1.02bn while the local institutions pumped in close to Rs2.53bn. In the F&O segment, the foreign funds were net buyers at Rs7.14bn. On Friday, FIIs were net buyers of Rs1.91bn. Mutual Funds were net buyers of Rs6.25bn on the same day.
US stocks closed lower on Monday after four straight days of gains as weakness in technology space countered continued strength in bank shares.
The Dow Jones Industrial Average lost 7 points, or 0.1%, to 7,216.97. The S&P 500 index slipped 2.7 points, or 0.4%, to 753.89. The Nasdaq Composite index tumbled 27 points, or 1.9%, to 1,404.02.
Stocks had gained through the early afternoon on a jump in bank shares and some upbeat comments from Federal Reserve chairman Ben Bernanke. But the advance lost steam late in the afternoon, with investors pulling back after four sessions of gains last week.
Stocks rallied last week, bouncing back after the Dow and S&P 500 hit 12-year lows. The week was Wall Street's best since last November, as the Dow gained 9%, the S&P 500 rose 10.7% and the Nasdaq added 10.6%.
British bank Barclays joined the chorus of top global lenders saying that it had a good start to the year. Citigroup, JPMorgan Chase, Bank of America and Deutsche Bank all said similar things last week. But after rallying through the early afternoon, bank stocks ended mixed.
Speaking on CBS's "60 Minutes" this weekend, Fed chief Bernanke said that the recession will probably end this year if the government is successful in stabilizing the flailing banking system.
The Fed is meeting Tuesday and Wednesday to discuss interest rates, with an announcement expected Wednesday afternoon. The central bank is expected to hold the fed funds rate, its key short-term interest rate, essentially at zero. However, the Fed could announce that it's going to start buying long-term US Treasurys after saying it was prepared to do so at its last few meetings.
President Obama said he will try to block millions in bonuses paid to AIG executives, which were given even as the company received $170 billion in federal bailout money. On Wednesday AIG CEO Edward Liddy will go before a House panel investigating the government's involvement in the troubled insurer.
The president, along with Treasury Secretary Timothy Geithner, also announced new efforts to increase loans for small businesses.
Finance ministers of the Group of 20 industrialized nations meeting over the weekend promised to do whatever is necessary to fix the global economy and repair the shaky banking system. The group also backed increased support for emerging markets.
But the group remained wary of a US proposal for a broader coordinated government spending plan to stimulate global economies. A summit of the group's national leaders is scheduled in London on April 2.
Industrial production continued to decline last month, as the recession wore on. The government said production fell by a seasonally adjusted 1.4% in February versus forecasts for a fall of 1.3%. Production fell 1.9% in the previous month.
Capacity utilization, a measure of factory output, fell to 70.9% from 71.9% in January. Economists thought it would fall to 71%.
The NY Empire State index, a key regional manufacturing report, fell to a record low of negative 38.2 in March from negative 34.7 in February.
Treasury prices inched lower, raising the yield on the benchmark 10-year note to 2.95% from 2.90% on Friday.
Lending rates were little changed. The 3-month Libor rate fell to 1.31% from 1.32% Friday, while the overnight Libor rate held at 0.33%. Libor is a bank-to-bank lending rate.
In currency trading, the dollar fell versus the euro and gained against the yen.
US light crude oil for April delivery rose $1.10 to settle at $47.35 a barrel on Monday.
COMEX gold for April delivery fell $8.10 to settle at $922 an ounce.
A rally in European stocks stretched into a second week, as Barclays and other banks paced a strong advance on Monday. After registering its strongest weekly performance since November, the pan-European Dow Jones Stoxx 600 rose a further 2.7% to 173.19.
On the London Stock Exchange, advancers led decliners by nearly a 2-to-1 margin. The French CAC 40 index climbed 3.2% to 2,791.66, while the UK's FTSE 100 index rose 2.9% to 3,863.99 and Germany's DAX 30 index gained 2.3% to 4,044.54.
Indian markets ended the week on a high as Friday the 13th turned out to be lucky for bulls. Both the key indices, the NSE Nifty and the BSE Sensex ended above the 2,700 and 8,700 mark respectively. Markets continued to catch up with the global indices in style. The US, Asian and European markets recorded smart gains and continued to extend gains.
The metals, banking and IT stocks were in demand also the mid-cap and the small-cap stocks attracted buying interest. The BSE Sensex surged 412 points to close at 8,756 and the NSE Nifty rose 101 at 2,719.
Among the 30-components of Sensex, 28 stocks ended in positive terrain and only 2 stocks ended in the red. Reliance Industries, Infosys, ICICI Bank, HDFC and L&T were among the major gainers. NTPC and Sun Pharma were among the major losers.
Shares of Dr. Reddy’s Labs advanced by 3.3% to Rs412 after the company won a U.S. court ruling that bolsters its bid to sell a copy of AstraZeneca Plc’s Prilosec heartburn drug without a prescription. The scrip touched an intra-day high of Rs425 and a low of Rs406 and recorded volumes of over 62,000 shares on BSE.
Shares of Strides Arcolab rallied by over 7% to Rs70 after the company announced that it terminated 'License and Supply Agreement' with KV Pharmaceutical Company, USA, due to the recent developments at KV Pharm which included recall of their products, regulatory actions, filing of a series of class actions by shareholders etc. The scrip touched an intra-day high of Rs76 and a low of Rs66 and recorded volumes of over 0.2mn shares on BSE.
Shares of Tata Steel gained by 7% to Rs166. According to reports, the company has held informal talks with bankers on restructuring debt at the Corus Group Ltd.
The parent company may ask its U.K. business, which owns Corus, to amend covenants on about 3bn pounds in loans for the acquisition added reports. The scrip touched an intra-day high of Rs167 and a low of Rs157 and recorded volumes of over 3.2mn shares on BSE.
Shares of Reliance Industries further gained by 6% to Rs1232 as the company is reportedly said to start producing gas from its field off India’s east coast by mid-April.
Reliance will start gas output from eight wells in the field, which may produce 5mn cubic meters a day, output may rise to 40mn cubic meters a day by August and peak at 120mn cubic meters a day,
The scrip touched an intra-day high of Rs1294 and a low of Rs1212 and recorded volumes of over 1.4mn shares on BSE.
Shares of SRF gained by 0.6% to Rs71 after the company announced that it restarted its polymerization, spinning lines at Tamil Nadu plant. The scrip touched an intra-day high of Rs72.9 and a low of Rs70 and recorded volumes of over 0.1mn shares on BSE.
Shares of SBI surged by over 4% to Rs953 after LIC raised its stake in the bank by 2.12% to 9.16% through open market.
LIC acquired 13.46mn shares between November and March. The scrip touched an intra-day high of Rs955 and a low of Rs922 and recorded volumes of over 0.9mn shares on BSE.
The headwinds remain in place and it won’t take long for the mood to change from good to bad and then from bad to worse. How we wish we are wrong! Hate to sound so pessimistic at the end of a short and sweet happy week. But then we need to remind you, short spurts coinciding with some positive news keeps happening in a bear market.