Kilometers are shorter than miles. Save gas, take your next trip in kilometers.
After rising for 13 straight weeks, will the market run out of gas? That’s the question uppermost on the minds of most market players. The start could be a bit soft given the weakness in Asian benchmarks. US stocks too couldn’t cash in on the positive jobs report on Friday, though the Dow did manage to hold above its 200 DMA. Nifty level to watch out for is 4650.
The rally could slow over the next few days and the market may turn sideways. Event-based action will continue in the near term. The bulls do have miles to go, but they may prefer a short nap before that!
What India needs is a union budget that will accelerate economic growth while maintaining fiscal discipline. It is going to be a tall order for Pranab Mukherjee. Of course, a few IPOs of state-owned companies and stake sales in others will help the Centre further slippages on the fiscal front.
Reports say SEBI has asked Finance Ministry to reduce STT gradually. This might help market sentimentally. For now its just a proposal.
For those who swear by technical charts, it is noteworthy that the Dow is above its 200 DMA of 8723 as of Friday’s close. The next crucial resistance for the Dow is around 9000-9200. Back home, the Nifty managed to cross 4600, albeit briefly. It could find some resistance around 4650. The index is likely to move in a broad range of 4450-4650. A strong uptrend could be in store if the 100 DMA crosses 200 DMA.
Despite concerns about the market being overheated, the liquidity deluge could continue to power the current rally even as fundamentally stocks appear to be expensive. Barring exports, most economic indicators are showing signs of a gradual upturn. Globally, crucial data points are underscoring a widely held view that the worst of the recession is over.
FIIs were net buyers in the cash segment on Friday at Rs8.32bn while the local institutions pulled out Rs4.8bn. In the F&O segment, the foreign funds were net buyers at Rs11.73bn. On Thursday, FIIs were net buyers at Rs6.7bn in the cash segment. Mutual Funds were net sellers at Rs4.03bn on the same day.
Some buzz doing the rounds on Infosys besides reports of setting up unit in Brazil. More on it when we have something more concrete. Meanwhile, Wal-Mart Stores has shortlisted TCS, Infosys and Wipro, for an outsourcing contract worth up to $500mn, says a report.
German chemical major Lanxess AG is believed to be close to acquiring India's Gwalior Chemical Industries Ltd. Talks are said to be in an advanced stage at the moment but an official announcement could be made this week. On Monday, the German major is holding a press conference in Mumbai to announce its Asia growth strategy.
US stocks ended nearly unchanged on Friday after a volatile start, as a surprisingly strong monthly jobs report was countered by concerns that higher borrowing costs could derail the tentative economic recovery.
Traders also appeared to be worried about potential threat from inflation going forward, as the government has been pumping money at a rapid clip over the past several months to revive economic growth.
The Dow Jones Industrial Average added 13 points, or 0.1%, to 8,763.13, trimming its yearly decline to less than 0.2%. The S&P 500 index lost 2 points or 0.3%, to close at 940.09. It is up 4.1% in 2009.
The S&P 500 rallied 2.3% last week, extending a three-month rally that lifted the index by 39%. The broader market barometer has advanced for the past three weeks as reports on home sales, durable goods orders and consumer confidence beat economists’ forecasts.
The Nasdaq Composite index ended near unchanged, at 1,849.42.
Off 12-year lows since early March, the Dow has now gained in 11 of the last 13 weeks, adding 32.2%. That is the Dow's best 13-week run since the period ending November 1982, according to Dow Jones market data.
About nine stocks dropped for every seven that rose on the New York Stock Exchange.
In the day's main economic report, the Labour Department said that US companies cut about 345,000 jobs from their payrolls in May. The reading surpassed economists expectations of another 520,000 job cuts. Employers cut a revised 504,000 jobs in April.
According to a separate survey, the unemployment rate rose to 9.4%, a 26-year high, from 8.9% in April. Economists were expecting it to rise to 9.2%.
Experts remain divided on whether the worst is over for the US labor market. In particular, the bankruptcy filings of Chrysler and General Motors (GM) could result in more job losses over the next few months.
Speculation that the government had underestimated the drop in jobs last month later pushed the S&P 500 down about 1.8% from its intraday peak. But, the rumor was denied by the Labor Secretary Hilda Solis, helping spur a 1.4% rebound in the benchmark before it turned lower again due to weakness in banks and commodity shares.
Federal funds futures contracts on the Chicago Board of Trade show a 70% probability that the American central bank will hike its target rate for overnight bank borrowing to at least 0.5% by November after the US economy shed the fewest jobs in May in eight months. The odds of a rate hike were at 27% on Thursday.
After the close on Friday, it was announced that an appeals court ruling has cleared the way for Chrysler to exit bankruptcy, probably Monday afternoon. The ruling set aside an Indiana pension fund's objections and allows Chrysler to sell a majority of its assets to a new company to be called the Chrysler Group. The new company will be owned primarily by a United Auto Workers union trust, Italian automaker Fiat and the US government.
Meanwhile, GM said that it will sell its Saturn brand to car dealership operator Penske Automotive Group. Earlier this week, GM sold its Hummer line to China's Sichuan Tengzhong, a machinery company. The sales are part of GM's plan to sell its four "non-core" US brands, including Pontiac and Saab.
Separately, GM will reportedly help finance private equity firm Platinum Equity's purchase of bankrupt auto parts supplier Delphi Corp. Friday was GM's last day as a Dow component. On Monday, it will be swapped with tech leader Cisco Systems.
The Federal Deposit Insurance Corp. (FDIC) is reportedly looking to shake up Citi's management, putting CEO Vikram Pandit's job at risk. The financial firm has received billions in government aid and was also recently told to raise US$5.5bn as a result of the government stress tests.
Friday was Citi's last day as a Dow component. On Monday, it will be replaced by insurance firm Travelers.
Rio Tinto has dropped its US$19.5bn merger with Chinese company Chinalco, and has instead decided to form a joint venture with rival BHP Billiton. Rio also announced the launch of a heavily discounted rights issue to raise about US$15.2 billion in gross proceeds.
Shares of Rio shot up 10.3% while BHP Billiton shares also rose, up 6.8% in London dealings.
Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.83% from 3.71%. The yield on benchmark 10-year notes, which influence rates on mortgages and other consumer loans, has climbed more than 1% since the Fed announced its program to purchase long-term Treasuries in March.
Federal Reserve's policy makers next meet June 23-24 and may consider whether to increase their planned purchases of US$1.45 trillion of housing-related debt and US$300bn of long-term Treasuries.
In currency trading, the dollar gained versus the euro and yen. The dollar index, which measures the performance of the greenback against a basket of currencies, reached 80.701, up from 79.446 on Thursday. It had reached a high of 88.105 in early March. Since then, the dollar has dropped nearly 9%.
For the week, the dollar index has gained 1.4%, its best week since early April. The euro has lost 1% against the US currency. The dollar also had its best week since February versus the yen, adding 2.7%.
US light crude oil for July delivery fell 37 cents to settle at US$68.44 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery slipped US$19.70 to settle at US$962.60 an ounce.
Better-than-expected US jobs report coupled with Rio's move to scrap a deal with Chinalco sent European stock benchmarks higher on Friday.
The pan-European Dow Jones Stoxx 600 index climbed 0.7% to 210.97, snapping a three-session losing streak.
The commodities-oriented FTSE 100 index rose 1.2% to 4,438.56 in London, while the French CAC-40 index gained 0.8% to 3,339.05 and Germany's DAX 30 index was up 0.2% at 5,077.03.
Indian markets resumed its up run after ending on a flat note in the past coupled of trading session. Falling inflation and UPA’s reassurance of maintaining high economic growth with low inflation lifted the sentiment on Dalal Street.
All round buying was witnessed with the Realty, Capital, Goods, Power, mid-cap and the small-cap among the major gainers.
The Sensex gained 137 points or 0.9% to end at 15,007 after touching a high of 15,026 and a low of 14,599. The index had opened at 14,755 against the previous close of 14,871.
The NSE Nifty added 40 points or 0.9% to shut shop at 4,570.
Among the BSE Sectoral indices BSE Capital Goods index was the top gainer surging 3.3%, followed by the BSE Realty index up 3%, BSE Pharma index up 2.5%, BSE Power index up 2.1% and BSE PSU index up 1.7%.
Shares of Tata Motors gained by 2% to Rs369 after reports stated that the company has secured an order to supply 4,689 buses for the JNNRUM project. The scrip touched an intra-day high of Rs374 and a low of Rs352 and recorded volumes of over 0.9m shares on BSE.
Shares of GVK Power gained by 2% to Rs48 following the company’s announcement that it is planning to raise Rs25bn via the QIP route. The scrip touched an intra-day high of Rs50.4 and a low of Rs47 and recorded volumes of over 20.2mn shares on BSE.
Shares of Union Bank gained by 1% to Rs217 following reports that the company was eying business of Rs3trillion in FY10. The scrip touched an intra-day high of Rs220 and a low of Rs212 and recorded volumes of over 64,000 shares on BSE.
Shares of Pantaloon Retail advanced by 1% to Rs322. According to reports the company has delayed its restructuring plan as it awaits a favorable FDI policy. The scrip touched an intra-day high of Rs330 and a low of Rs309 and recorded volumes of over 0.2mn shares on BSE.
Shares of Network 18 surged by over 3.5% to Rs160. The company announced that it would raise Rs1.2bn through preferential allotment of shares to Asian private equity firm SAIF Partners, stated reports. The scrip touched an intra-day high of Rs166.8 and a low of Rs145 and recorded volumes of over 0.3mn shares on BSE.
With the BSE Sensex closing above the 15000 levels for the first time since September 2008, the bulls would look to capitalize and build on to further gain ground. However, one cannot rule out profit booking as Friday being the last trading session of the week, traders and investors would look to lock in some gains.