An optimist is a person who sees a green light everywhere, while a pessimist sees only the red stoplight. . . The truly wise person is colorblind.
It wouldn’t be a bad idea to turn colour blind for a few days in the run up to the Budget. But, with the southwest monsoon gradually picking up, the so-called green shoots theory might gain further credence. A good rainfall will go a long way in enhancing the growth prospects for the Indian economy. The icing on the cake will be a balanced budget with equal emphasis on social welfare programmes and crucial economic reforms. As of now, nobody’s willing to bet what the broad contours of the budget will be.
Friday’s big gains were a bit of a surprise, thanks partly to a shift in the way NSE calculates market-cap and weightages of 50 Nifty stocks. Net buying from both, foreign and local funds was pretty good. Today, we expect the market to open on a cautious note due to a subdued trend in Asian markets. Given the big event risk, we would advice you to exercise restraint and take a call only after the budget.
Hold all your cards close to chest till next Monday when the Union Budget is out. This seems to be the right approach if one goes by the recent experience during the Lok Sabha elections. Stunned by the surprisingly decisive verdict for the UPA, the market witnessed euphoric, but historic rally. Of late there is a feeling that the post-election celebration was a little premature. As a result, the market has struggled for direction amid uncertainty over Government’s policy roadmap and anxiety over the global situation.
Results Today: Ajmera Realty, Anant Raj Industries, Apollo Hospitals, Dredging Corporation, Gujarat Alkalies, Orchid Chemicals and TV18.
US stock benchmarks closed mixed on Friday, with the technology space clearly outperforming the blue chips and the broader market. The Standard & Poor's 500 Index suffered the first two-week decline since March. The Dow Jones Industrial Average too closed lower for the second week in a row. The Nasdaq Composite index managed to post slim gains for the week.
Shares of Exxon Mobil and Tesoro declined as crude oil futures lost 1.5% to USUS$69.16 per barrel. The dollar dropped after China's central bank reiterated a call for a new global reserve currency. Shares of Palm and Accenture rose after their earnings exceeded expectations and Micron Technology dropped on a wider loss.
Wall Street was subdued after the personal savings rate climbed to 6.9% in May, the highest level since December 1993. This fueled concerns that consumers in the world's largest economy were turning cautious. Any slowdown in consumer spending in the US could adversely affect the nascent economic recovery process.
The Dow fell 34 points, or 0.4% to end at 8438.39, while the S&P 500 index finished virtually unchanged at 918.90 and the Nasdaq gained 8 points, or 0.5% to 1838.22.
For the week, the Dow industrial average lost 101.34 points, or 1.2%. With two session left in the second quarter, the Dow is up 829.47 points, or 11%, which would be its first up quarter in over a year and a half.
The S&P 500 lost 2.33 points, or 0.3% during the week. So far for the second quarter, the S&P 500 is up 121.03 points, or 15%. The Nasdaq rose 10.75 points, or 0.6%, for the week, now up 14 of the last 16 weeks.
For the second quarter, the Nasdaq has gained 309.63 points, or 20%. If it can hold the gain it will be the tech-laden index's highest quarterly percentage advance in six years.
US stocks had bounced back on Thursday, after sliding for most of the week. But they failed to capitalise on those gains on Friday.
The S&P 500 is up by 40% since early March. Bets that the US economy is closer to stabilising gave the rally some fuel, but a mixed batch of recent reports has caused worries that the stock market advance has run way ahead of any material change in fundamentals.
The growing caution gained currency after a government report showed that personal income surged, but so did savings, as consumers decided to tighten their purse strings rather than spend. Consumer spending accounts for two-thirds of the US economy.
May personal income rose 1.4%, the Commerce Department reported. Economists had forecast a gain of just 0.3% after climbing a revised 0.7% in April. But the gain in personal spending was more modest, the government said. Spending rose 0.3% in May, in line with forecasts, after falling 0.1% in April.
Personal saving as a percentage of income rose to 6.9% in May from 5.6% in April. The rate was the highest level in more than 15 years. The PCE deflator, the report's inflation component, showed that pricing pressures remain benign. PCE rose 0.1% after rising 0.3% in April, versus forecasts for a rise of 0.2%.
A separate report from the University of Michigan showed that consumer sentiment rose to 70.8 in June from an earlier reading of 68.7. Economists had forecast that it would increase to 69.
KB Home reported a narrower fiscal second-quarter loss that was worse than expected. The homebuilder also said that it sees signs that certain negative trends are moderating. Shares plunged 9%.
Homebuilder Lennar reported a big drop in fiscal second-quarter sales and earnings versus a year ago, but said that new home sales and orders picked up versus the first quarter.
In other company news, Palm reported a narrower-than-expected fiscal fourth-quarter loss late on Thursday, due partly to strong demand for its new Pre smartphone. Shares rallied nearly 16%.
Gold touched a two-week high and marked its first weekly gain since May as the dollar weakened and LIBOR touched a record low in London, increasing the metal’s appeal as an alternative investment.
The three-month London interbank offered rate, or LIBOR, slipped below 0.6% for the first time. The dollar-based rate peaked at 4.82% on Oct. 10 in the aftermath of the Lehman Brothers fiasco.
Gold futures for August delivery rose US$1.50, or 0.2%, to US$941 an ounce on the New York Mercantile Exchange’s Comex division, after earlier touching US$949, the highest since June 12. The 0.5% weekly gain was the first since May 29. The four-day rally was the longest in five weeks.
In London, bullion for immediate delivery gained US$1.34, or 0.1%, to US$940.59 an ounce at 8:17 p.m. local time. The metal slipped to US$942 an ounce in the afternoon fixing in London, the price used by some mining companies to sell their output, from US$943 this morning.
Crude oil and gasoline tumbled after the government said the savings rate climbed to the highest level in more than 15 years and as US stocks slipped. US light crude oil for August delivery settled down US$1.07 to US$69.16 a barrel on the New York Mercantile Exchange.
The August contract declined 1.2% this week. Oil prices in New York have increased 55% this year. Gasoline for July delivery declined 2.42 cents, or 1.3%, to end the session at US$1.8741 a gallon in New York.
In currency trading, the dollar fell versus the euro and the yen. The dollar dropped against most of its major counterparts after China repeated its call for a supranational currency delinked from sovereign nations.
The greenback was headed for its biggest weekly loss against the euro in four weeks after the People’s Bank of China said the IMF should manage more of members’ foreign-exchange reserves.
Treasury prices were little changed, with the yield on the benchmark 10-year note at 3.54%, nearly unchanged from Thursday. The yield touched 3.492, the lowest level since June 1. Treasuries rose for a second day amid easing worries over inflation, bolstering expectations that the Fed will keep rates near zero through the year.
A rally in Treasuries this week pushed the yield on the benchmark 10-year note down the most since December, lowering expected returns. The PCE deflator, a price gauge tied to consumer spending patterns, registered the smallest gain since records began in 1959.
The BSE Sensex surged 419 points or 3% to end at 14,764 after touching a high of 14,782 and a low of 14,374. The index had opened at 14,374 against the previous close of 14,346.
The NSE Nifty surged 134 points or 3.1% to shut shop at 4,375.
Asia markets ended in the green, the Hang Seng index gained 2% at 18,600, Australia's S&P/ASX ended higher by 1.2% to 3,903. Nikkei index added 1% at 9,877.
Elsewhere in the Europe, stocks were trading with gains. The FTSE index was up 0.6% at 4,272. The DAX index was up 0.6% at 4,825. CAC 40 index gained 0.3% at 3,168.
Coming back to India, among the BSE Sectoral indices BSE Bankex index was the top gainer surging 4.4%, followed by the BSE Capital Goods index up 4.3%, BSE Consumer Durable index up 3.5% and BSE IT index up 3.2%.
Even the BSE Mid-Cap index ended higher by 2.3% and BSE Small-Cap index added 2%.
However, the BSE Phrama index slipped 1.5%.
In the Sensex, the major gainers were, ICICI Bank, Sterlite, L&T, TCS, Infosys, RCom, Reliance Industries, BHEL, Maruti and SBI.
On the other hand, major losers were Sun Pharma, Ranbaxy, Tata Steel and M&M.
Among the big gainers in the broader market were IVRCL Infra, Sintex Industries, Torrent Power, LITL, IFCI, Nagarjuna Const and Akruty City.
Outside the frontline indices, the top losers included Lupin, TTML, Corp Bank, Moser Baer, Idea and EKC.
Shares of Sun Pharma slumped by over 12% after reports stated that the U.S. authorities seized generic drugs made by Caraco Pharmaceutical Laboratories Ltd (US subsidiary of Sun Pharma). They are investigating potential claims against Caraco Pharma, concerning possible securities violations related to public statements made by the company. Sun Pharmaceutical owns 76% of Caraco’s stock.
According to reports, the seizure was on account of Caraco's constant failure to meet the FDA's current Good Manufacturing Practice requirements, which assure the quality of manufactured drugs.
Through the seizure, it seeks to immediately stop the company from further distributing drugs until there is assurance that the company complies with good manufacturing requirements.
Shares of J Kumar were locked at 5% upper circuit to Rs99.90 after the company announced that it won two orders worth Rs85.6mn. The scrip touched an intra-day high of Rs99.9 and a low of Rs98.3 and recorded volumes of over 18,000 shares on NSE.
Shares of Areva T&D advanced by 2% to Rs339 after the company announced that it secured Rs12bn order from JSPL for a power project. The scrip touched an intra-day high of Rs351 and a low of Rs335 and recorded volumes of over 0.3mn shares on BSE.