The positive thinker sees the invisible, feels the intangible, and achieves the impossible.
The Federal Reserve is positive about the prospects of the US economy and has left key rates unchanged. It no longer sees any threat from deflation while inflation is likely to remain subdued for some time. We expect the key indices to open higher, spurred by the advance in most global markets. Volatility will remain elevated due to the F&O expiry. Since the immediate outlook is still a little murky, one should adopt a wait-n-watch approach. Stock centric action may continue though.
Meanwhile, the government has scalded down its monsoon forecast, from ‘near normal’, to ‘below normal’. There is no need to press the panic button as yet. In fact, if all things fall into place, including monsoon and budget, FY10 GDP growth could even spring a pleasant surprise. At present though, the market appears to be in no-man’s-land.
This trend may prevail till at least the budget. Earnings will also have some say for sure. Among the other key variables include: global cues and mood of the FIIs. Lately, the foreign funds have turned cautious. Local funds are having other plans.
Tata Steel, Unitech, Matrix Labs, Indiabulls Securities and Gulf Oil will declare their annual results today.
FIIs were net sellers in the cash segment on Wednesday at Rs7.92bn while the local institutions pumped in Rs7.28bn. In the F&O segment, the foreign funds were net buyers at Rs15.2bn. On Tuesday, FIIs were net sellers at Rs6.58bn in the cash segment. Mutual Funds were net buyers of Rs819mn on the same day.
Asian stock indices were on the rise with technology shares supporting in Tokyo and Seoul. But markets did not have much of a lead from Wall Street, and the much-awaited Fed statement turned out to be fairly benign, offering little clue as to when the US central bank might end its very low interest rates regime.
Separately, Berkshire Hathaway chairman Warren Buffett told a US business channel that he is having some trouble seeing the so-called "green shoots" of economic recovery in the US. Buffett said he had cataract surgery on his left eye about a month ago. He thought that might help, but he said it didn't.
"The risk of a collapse in the financial system has past, but we have not got the economy moving again," he said. The billionaire investor said the US may need a second economic stimulus package as unemployment is poised to continue rising.
On Wall Street, the Dow Jones Industrial Average marked its fourth straight loss on Wednesday. Dow component Boeing was a drag, while Oracle helped lift the tech sector. The Dow dropped 23.05 points, or 0.3%, to 8299.86, their first close below 8300 in a month. They now have fallen seven of the last eight sessions for a loss of 499.40 points, or 5.7%.
The Standard & Poor's 500-stock index rose 5.84 points, or 0.7%, to 900.94. The Nasdaq Composite Index gained 27.42, or 1.6%, to 1792.34, its biggest point and percent gain since June began.
The Nasdaq trimmed gains and the Dow dipped after the Fed kept a key short-term interest rate near zero, but said nothing about expanding a program meant to keep long-term rates from spiking.
US stocks rose from the opening bell through early afternoon on a better-than-expected reading on durable goods orders and Oracle's quarterly results and forecast. But the advance lost steam after the Fed announcement.
The US central bank opted to hold the fed funds rate, a key short-term bank lending rate, near zero, and said in its statement that the pace of economic contraction is slowing.
Stock have struggled over the last week on concerns that higher bond yields will undermine any stabilisation in the housing market. The three-month rally was fueled by bets the recession is starting to ease off. But stocks have retreated on worries that the advance was too premature.
Durable goods orders rose 1.8% in May, the government reported Wednesday morning. Economists thought orders would fall 0.9%. Orders rose a revised 1.8% in April as well.
May new home sales fell to a 342,000 annualized unit rate from 344,000 in April. Economists thought sales would rise to a 360,000 rate.
Oracle reported weaker quarterly sales and earnings that topped estimates, profit margins at a record high and software sales that fell less than expected. The business software maker also forecast first-quarter sales and earnings that are above analysts' forecasts. Shares jumped 7%.
Citigroup said it was boosting the base pay of its employees, but keeping total compensation unchanged, as it looks for ways to retain talent despite bonus limits imposed by Congress. Citi has received two government bailouts and one of the terms of the help is a limit on bonuses.
Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.68% from 3.63%.
US light crude oil for August delivery fell 57 cents to $68.67 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery rose $10.10 to $934.40 an ounce.
In currency trading, the dollar gained versus the euro and the yen.
European shares rose for the first time in three days. The pan-European Dow Jones Stoxx 600 index advanced 2.5% to 206.40, after closing lower in the previous two sessions. Germany's DAX index rose 2.7% to 4,836.01, the French CAC-40 index gained 2.2% to 3,184.76 and the U.K. FTSE 100 index climbed 1.2% to 4,279.98.
Markets ended with modest gains on Wednesday. After a sluggish start and a range bound first half, key indices perked up in the second half as the bulls stepped on the gas. Power, Capital Goods, Pharma and the Realty stocks stock led from the front. However banking stocks were under pressure. The Mid-Cap and the Small-Cap indices outperformed the benchmark indices.
The BSE Sensex gained by 93 points to end at 14,422 after touching a high of 14,480 and a low of 14,207. The index had opened at 14,376 against the previous close of 14,324. The NSE Nifty gained 46 points or 1% to shut shop at 4,293.
Among the BSE Sectoral indices BSE Power index was the top gainer gaining 2.8%, followed by the BSE Capital Goods index up 2.5%, BSE Pharma index up 2.3% and BSE Realty index up 2%. However, the BSE Bankex index ended in the red down 0.12%.
Even the BSE Mid-Cap index gained 2.3%, BSE Small-Cap index up 2.2%.
Shares of Educomp shot up by over 11% to Rs3427 after Pearson and Educomp announced that they have established a 50:50 joint venture to offer vocational and skills training in India. As part of the agreement, Pearson would acquire a 50% ownership stake in Educomp's existing vocational training business.
The joint venture will provide vocational training to students and professionals across a range of industries including financial services, retail and construction. It will have a focus on English language training, which is often critical to an individual's employment prospects. Training will be delivered both online and through Educomp's network of centres, using Pearson's educational content, technology and related services.
Shares of Bajaj Auto were in top gear, the stock surged by over 2.5% to Rs960 after the Reserve Bank permitted FIIs to purchase the shares of the company as their holding in Bajaj Auto has gone below the trigger limit of 24% following the company's demerger of two non-banking finance companies.
"The restriction placed on the purchase of shares of Bajaj Auto on behalf of FIIs may be treated as withdrawn," RBI said in a release.
Earlier, RBI had asked FIIs not to purchase any further shares in Bajaj Auto as their holding had touched 24 per cent.
Shares of ABB surged by over 4.5% to Rs754 after the company announced that it won orders worth Rs2.2bn from Tata Projects Ltd to provide power products and solutions for a super-critical coal-fired power plant under construction in the southern India state of Andhra Pradesh.
Shares of Nagarjuna Const advanced by over 3.5% to Rs125 after the company announced that the board would meet on June 29 to consider private placement.
Shares of Andrew Yule were locked at 5% upper circuit to end at Rs51.10 after reports stated that government has given approval to the company for its disinvestment program. The scrip touched an intra-day high of Rs51.10 and a low of Rs51.10 and has recorded volumes of over 7,000 shares on BSE.
Shares of Renaissance Jewelry further extended gains and rallied by over 7% to Rs49.9. The stock sky rocketed by over 58% in the last four trading sessions.
The stock hit an intra-day high of Rs54 and an intra-day low of Rs48. The total traded quantity on the counter had exceeded over 0.5mn equity shares as compared to 0.2mn shares traded on Tuesday and mere 58,000 shares on Monday.
Renaissance Jewelry had hit a 52-week high of Rs68.35 on June 23, 2008 and 52-week low of Rs18.15 on March 05, 2009.
Shares of Torrent Power rallied by over 16% to Rs164 on the back of unusual volumes witnessed in the counter. The stock has hit an intra-day high of Rs169 and an intra-day low of Rs141. The total traded quantity has exceeded the average of 20 days traded volumes. Total volumes traded were ~2.8mn equity shares on the NSE.
The stock had hit a 52-week high of Rs177 on June 12, 2009 and 52-week low of Rs50 on October 28, 2008.
The total traded quantity has exceeded the average of 20 days traded volumes. Total volumes traded were ~2.8mn equity shares on the NSE.