A nano change in sentiment!
The more difficult the problem, the greater the challenge in working it out.
After an arduous six-year drive, the Tata Nano has finally found some stability and will hopefully roll on smoothly. Ratan Tata’s engineering marvel could potentially turn out to be a game-changing product. However, some teething troubles are a given. Whether it is a boon or a bane for Tata Motors only time will tell.
The bulls too are driving ahead as markets globally seem to be on overdrive. The latest catalyst powering the global rally is the US government’s plan to buy banks’ soured assets and get credit flowing again. The news was out early on Monday morning, sending stocks in Asia and Europe sharply higher. The Wall Street followed the global trend with the key indices there up 6-7%.
The fact that the US news was already discounted yesterday leaves limited scope for the Indian market to react to the Wall Street rally. Still, we will see the key indices building on the recent momentum. Banking shares are likely to be among the leading gainers.
Remember, except for the current half-hearted sentiment, things haven’t changed dramatically. The upside appears limited. Check your fuel before planning a long drive.
FIIs were net buyers in the cash segment on Monday at Rs3.76bn while the local institutions too poured in a similar amount. In the F&O segment, the foreign funds were net buyers at Rs5.02bn. On Friday, FIIs were net buyers of Rs494mn. Mutual Funds were net sellers of Rs1.6bn on the same day.
US stocks soared on Monday, spurred on by the Treasury Department's proposed new plan that will enable banks to get rid of their rotten assets and revive the comatose credit markets. An encouraging report on existing home sales added fuel to the fire.
The Dow Jones Industrial Average surged 497 points, its biggest one-day point gain since Nov. 21. The gain was equivalent to 6.8%, which was the biggest one-day percentage gain since Oct. 28. The blue-chip barometer ended at 7,775.86.
The S&P 500 index shot up 54 points, its best one-day point gain since Nov. 13. The percentage gain of 7.1% was the best since Oct. 28. It closed at 822.92.
The Nasdaq Composite index jumped 99 points or 6.8% to 1,555.77 for the best one-day point and percentage gain since Oct. 2.
US stocks have gained for the past two weeks, notwithstanding the reversals on Thursday and Friday. But that retreat gave investors an opportunity to jump back in Monday, with bank shares leading the advance.
Since tumbling to 12-year lows two weeks ago, the S&P 500 has now rallied 18% as of Monday's close, blasting through 800, a key resistance level that analysts have been watching.
Treasury rolled out its long-awaited plan to purge bank balance sheets of as much as $1 trillion in sour assets that are limiting lending and prolonging the recession. The government will commit $75 billion to $100 billion of taxpayer money to launch the "Public-Private Investment Program," which seeks to create a market for that bad debt.
The government plans to run auctions between the banks looking to unload the bad assets and the investors looking to buy them. The Federal Reserve and the Federal Deposit Insurance Corp. (FDIC) will be involved.
Last week, the Federal Reserve announced it was pumping another trillion into the economy to try to get credit flowing.
Existing home sales rose 5.1% in February, according to the National Association of Realtors. Sales rose at a seasonally-adjusted 4.72 million unit annual rate versus a 4.49 million unit annual rate in January. Economists had expected sales to dip to a 4.45 million unit rate.
Suncor Energy, Canada's No. 2 oil company, said that it will buy rival Petro-Canada for $14.86 billion to create the country's biggest energy company. Suncor shares lost 1.8% and Petro shares gained 23%.
In other deal news, an Abu Dhabi fund, Aabar Investments, bought a 9.1% stake in German carmaker Daimler in a $2.67 billion deal announced late Sunday.
Treasury prices dipped, raising the yield on the benchmark 10-year note to 2.64%, up from 2.63% late on Friday.
Lending rates were little changed. The 3-month Libor rate held steady at 1.22%, unchanged from late Friday, while the overnight Libor rate rose to 0.29% from 0.28% Friday. Libor is a bank-to-bank lending rate.
In currency trading, the dollar gained versus the euro and the yen.
US light crude oil for May delivery gained $1.73 to settle at $53.80 a barrel on the New York Mercantile Exchange.
COMEX gold for May delivery fell $3.60 to settle at 953.80 an ounce.
Across the Atlantic, European stocks continued last week's advance. The market closed near the day's highs. The pan-European Dow Jones Stoxx 600 index rose 3% to 177.73.
The UK's. FTSE 100 rose 2.9% to 3,952.81, while Germany's DAX 30 added 2.7% to 4,176.37, and the French CAC 40 gained 2.8% to 2,869.57.
Heading into Monday's session, the FTSE 100 was up 8.8%, the DAX 30 had gained 11% and the CAC 40 had advanced 8.2% over a two-week period.
Indian market ended with stellar gains on Monday with huge turnover. Exchanges recorded its highest turnover ~72,000cr since September 2008. After a bright start, key indices gained momentum as the day progressed.
Unabated buying in the banking, oil & gas and metals stocks lifted the BSE Sensex and the NSE Nifty t close above the 9,400 and 2900 levels respectively.
Finally, the BSE Sensex surged 457 points to close at 9,424 and the NSE Nifty surged 132 at 2,939.
Among the 30-components of Sensex, 29 stocks ended in positive terrain and only DLF ended in the red. Ranbaxy, Tata Steel, Hindalco, HDFC, Reliance Infra, Reliance Industries and ICICI Bank were among the top gainers.
Among the BSE Sectoral indices BSE Bankex index was the top gainer, the index surged 7%. Among the other major gainers were BSE Oil & Gas index (up 7%), BSE Metals index (up 6.5%) and BSE PSU index (up 4.5%).
Market breath was positive, 1,613 stocks advanced against 920 declines, while, 109 stocks remained unchanged.
Shares of Tata Motors surged over 3% to Rs166 after hitting an intra-day high of Rs173 and a low of Rs164 and recorded volumes of over 2.7mn shares on BSE.
The Nano would come in three versions -- standard and two deluxe models with air conditioning.
After the launch in Mumbai, Nano would be displayed at the company's dealerships from the first week of April, while the bookings would start from the following week.
Shares of Infosys surged by over 2.5% to Rs1330 after reports stated that the company may bag IT project from government which would run on transaction based pricing model. The scrip touched an intra-day high of Rs1340 and a low of Rs1300 and recorded volumes of over 0.15mn shares on BSE.
Shares of Sun Pharma advanced by 4% to Rs1082 after reports stated that the company would extend the offer to acquire the remaining stake in Taro to April 3. The scrip touched an intra-day high of Rs1091 and a low of Rs1029 and recorded volumes of over 21,000 shares on BSE.
BGR Energy Systems signed up credit lines to fund its working capital requirements for execution of EPC contract for 2 x 600 MW Thermal Power Project at Kalisindh of Rajasthan Rajya Vidyut Utpadan Nigam Ltd (RRVUNL).
The Company has estimated its fund based and non fund based working capital facilities at Rs38.5bn and mandated IDBI Bank Ltd to arrange the financing facilities.
Shares of BGR surged by 5% to Rs128 after hitting an intra-day high of Rs130 and a low of Rs118 and recorded volumes of over 0.15mn shares on BSE.
The board of directors of Hikal Ltd would meet on March 25, 2009 for considering a proposal for merger of Hikal Pharmaceuticals Ltd, a wholly owned subsidiary of the Company, with itself pursuant to a Scheme of Arrangement and all matters related and incidental thereto.
Shares of Hikal surged by over 7% to Rs169 after hitting an intra-day high of Rs178 and a low of Rs157 and recorded volumes of over 6,000 shares on BSE.
Shares of Subhash Projects surged by over 14% to Rs53 after hitting an intra-day high of Rs54.9 and a low of Rs47 and recorded volumes of over 4mn shares on BSE.
Bulls would look to carry on the momentum, however, there could be wild swings ahead of F&O expiry. Also, some resistance is likely at higher levels as investors could turn cautious ahead of an eventful April. We will have to contend with earnings, elections and RBI policy next month.