It's not the voting that's democracy; it's the counting.
The bulls have turned dictators and continue to count their gains. A dour forecast from Infosys didn’t seem to bother them as the Sensex surpassed 11,000. The Nifty is closing in on 3,500. The small and mid-cap shares continued to outperform their frontline peers. Volume and turnover saw a welcome jump. FIIs extended their buying binge, though reports say this may be inflated on account of outdated currency rate used by SEBI. Still, there is no denying that the undertone has improved over the past few weeks.
How far can this rebound go, especially if there is no incremental good news on the global economy and financial sector? For India, there is the added ‘X’ factor – elections, which kicks off today. There is yet no clarity on which formation will get the throne at the Centre. An unexpected verdict could spoil the party for bulls. For today, the outlook is largely positive. With Asian stocks are off their highs post release of Chinese Q1 GDP data (6.1% growth vs 10.6%), don’t be surprised if some cooling does take place.
US blue chip stocks ended a choppy session up on Wednesday by surging higher into the close, with financials pacing the gains. Blue chips rallied late, supporting the broader market, after a Federal Reserve report on the world's largest economy added to hopes that the pace of the slowdown is easing. An unclear outlook from chip titan Intel late on Tuesday kept technology space subdued.
The Dow Jones Industrial Average gained 109 points, or 1.4%, to 8,029.62. The S&P 500 index gained 10 points, or 1.3%, to 852.06. The Nasdaq Composite index finished unchanged at 1,626.80.
US stocks roiled on Monday and fell on Tuesday in a choppy start to the week following a five-week rally. The advance has been driven by bets that the pace of the recession is slowing. A Federal Reserve report released on Wednesday afternoon added to those bets. The Fed's "Beige Book" periodic reading on the economy showed that overall activity stayed weak or got worse. But five of the 12 districts showed a slowdown in the pace of decline and a few more districts showed certain parts of the economy were stabilizing.
In five weeks, the Dow gained 22%, its biggest consecutive five-week run on a percentage basis since 1933, when it gained 31%. The run up followed a rout that left the Dow and S&P 500 at 12-year lows and the Nasdaq at 6-year lows.
Other economic reports continued to support hopes that the US economy is getting closer to finding its footing. A report on consumer prices showed inflation remains a non-issue as a result of the recession. Another report showed that New York-area manufacturing weakened at a slower pace in April than in March.
The Consumer Price Index (CPI), the Labor Department's key measure of inflation, fell 0.1% in March after rising 0.4% in February. Economists thought it would rise 0.1%. The so-called Core CPI, which strips out volatile food and energy prices, rose 0.2% after climbing 0.2% in the previous month. Economists predicted it would rise 0.1%. CPI fell 0.4% over the last year, the first year-over-year decline since August 1955.
Industrial production fell 1.5% in March, after falling a revised 1.5% in February. Economists thought it would drop 0.9%. Capacity utilization fell to 69.3% from 70.3% in the prior month as against expectations of a fall to 69.6%.
Another report, the New York Empire State index on manufacturing activity, improved to negative 14.7 in April from negative 38.2 in March, surprising economists who were looking for a smaller improvement to negative 35.
After the market close on Tuesday, Intel reported weaker quarterly sales and earnings that nevertheless topped expectations. The company declined to give a current-quarter forecast, but Intel's CEO said that PC sales bottomed in the first quarter. Shares fell 2.4% on Wednesday.
EBay said late on Tuesday that it plans to spin off its Skype Internet telephone unit in an initial public offering next year. Shares were little changed on Wednesday.
Swiss banking giant UBS warned that it would post a big quarterly loss and cut almost 9,000 more jobs. Shares were little changed.
Treasury prices dipped, raising the yield on the benchmark 10-year note to 2.79% from 2.78% on Tuesday.
In currency trading, the dollar fell versus the euro and gained against the yen.
US light crude oil for May delivery fell 16 cents to settle at $49.25 a barrel on the New York Mercantile Exchange. Prices dropped after a government report showed weekly supplies rose more than double what was expected.
COMEX gold for June delivery rose $1.50 to settle at $893.50 an ounce.
March reports on housing starts and building permits are due from the government before the start of trading on Thursday. The weekly jobless claims report is also due before the open. The Philadelphia Fed index, a regional read on manufacturing, is due shortly after the open.
On the quarterly results front, JPMorgan Chase and Nokia report profits before the opening bell. Google reports after the close.
Indian market extended gains to eight straight trading session on Wednesday. Unabated buying in the interest rate sensitive stocks, Pharma, metals and the cement stocks lifted the BSE Sensex to end above the 11,000 mark. NSE Nifty also ended above the 200 DMA with huge turnover. The Mid-Cap and the Small-Cap indices outperformed the benchmark indices. The BSE Mid-Cap index rose 4% and Small-Cap index added 5.3%.
The BSE Sensex rallied 317 points to close at 11,284 and the NSE Nifty ended 101 points higher at 3,484.
Among the 30-components of Sensex, 22 stocks ended in positive terrain and 7 stocks ended in the red. Tata Motors, DLF, BHEL, Reliance Infra, Ranbaxy and ICICI Bank were among the major gainers. Among the top losers were Infosys, TCS, HDFC Bank and Tata Power.
Shares of Bhushan Steel surged 2.2% to Rs429 after reports stated that the company has hiked its Orrisa plant capacity to 2.5mtpa. The scrip touched an intra-day high of Rs452 and a low of Rs422 and recorded volumes of over 0.18mn shares on BSE.
Shares of DCW Ltd surged by over 7% to Rs11.1 after the company announced that it commenced sale of it's surplus power from the company's 2 x 25 MW Coal based Captive Co Generation Plant situated at Sahupuram in Tamilnadu to Tamil Nadu Electricity Board.
The supply commenced on April 09, 2009 and the agreement is for supply of power till May 31, 2009 for the time being.
Akruti was locked at 5% lower circuit to Rs491. The board of directors of the company announced that they would meet on May 08, 2009 to consider spilt of the equity shares of the company having a face value of Rs10 per share.
Shares of Infosys recovered from its intra-day low and ended at Rs1370 down by 2.7%. The stock sharply slipped after the IT bellwether announced Q4 FY09 net profit of Rs16.13bn versus Rs16.41bn in the previous quarter, translating into a sequential drop of 1.7% in Rupee terms. Revenue for the fourth quarter is down 2.6% QoQ at Rs56.35bn as against Rs57.86bn in Q3 FY09.
Shares of CMC Ltd shot up by over 51% to Rs571 after the company’s fourth-quarter consolidated net profit rose 60% from a year earlier to Rs384.5mn.The scrip touched an intra-day high of Rs627 and a low of Rs398 and recorded volumes of over 0.53mn shares on BSE.
Shares of Rolta India rallied by over 7% to Rs110 after the company announced the renewal of its partnership with Intergraph® Corp; the leading global provider of engineering and geospatial software. The scrip touched an intra-day high of Rs122 and a low of Rs99 and recorded volumes of over 10.6mn shares on BSE.
With the NSE Nifty managing to close above the 200DMA, bulls will look to extend gains on Thursday. However, after a long upswing, profit taking and selling at higher levels cannot be ruled out. Trading cautiously is advised.