A rising tide lifts all boats.
Even as places like Mumbai brace for one of the highest tide, the bulls appear to be on a high of their own re-discovering their groove after a brief setback post budget. Indian stocks should manage to extend gains at the start. But, it’s not going to be a smooth sail ahead of the F&O expiry. If you wish to float around longer, hang on to your life-jackets by way of stop-loss. Some profit booking is not ruled out after the recent spurt.
Earnings so far have been better than expectations, both in India and overseas. The prospects for monsoon, which have been fluctuating, also appear to have brightened. FIIs have resumed their shopping spree after a short-lived lull. Those who went short after the budget are eating humble pie now. The primary market too is gradually beginning to claw its way back. India Inc. has been able to generate good bit of interest among investors through QIPs and GDRs.
Emerging market equity funds drew $2.6bn in the week ended July 22, the most since the period ended June 10. The VIX is back under 30, suggesting that investors are confident. But it remains above 20, a sign that investors are not overly exuberant.
Not all news is good though. Microsoft, American Express and Amazon.com’s earnings have missed Wall Street estimates. After briefly crossing the 20K mark, the Hang Seng slipped into red this morning. It is trading marginally up as of now.
Results Today: BGR Energy, Bharat Electronics, Bharat Forge, Bosch, CEAT, CESC, CRISIL, Emco, Eveready, GAIL, Geometric, Hindustan Motors, HCC, ICRA, Jet Airways, Mahindra Lifespaces, Ranbaxy, Redington, Reliance Industries, Shree Cement and Shriram Transport.
FIIs were net buyers of Rs5.1bn in the cash segment on Thursday on a provisional basis while the local funds pulled out Rs341.6mn, according to figures published on the NSE web site. In the F&O segment, the foreign funds were net buyers at Rs2.9bn.
On Wednesday, the foreign funds were net buyers in the cash segment at Rs1.45bn, as per SEBI data. Their net investment in Indian stocks this year has crossed Rs310bn ($6.42bn). Mutual Funds were net sellers of Rs2.85bn in the cash segment on Wednesday.
US stocks extended the recent rally, with the Dow Jones Industrial Average jumping 200 points and hitting its highest point since November, as investors welcomed better-than-expected quarterly results and home sales.
The S&P 500 climbed to the highest level since President Barack Obama was elected on Nov. 4, advancing 2.3% to 976.29. The Dow gained 188.03 points, or 2.1%, to 9,069.29, the highest since one session after Election Day. The Nasdaq Composite Index surged 2.5% to 1,973.60.
The Nasdaq has now closed higher for 12 consecutive sessions, its longest winning streak since January 1992.
US stocks have been advancing steadily for the last week-and-a-half, rebounding after a four week retreat, as better-than-expected corporate results have surprised investors. But, a few experts say cost cutting has largely driven the earnings growth, raising concerns about what the second-half economic growth is going to look like. Rising unemployment and its impact on cash-strapped consumer suggests that expectations for a second-half recovery are overdone.
Ford Motor reported a second-quarter profit due to its efforts to reduce debt. The automaker also reported an operating loss that was narrower than a year ago and smaller than forecast. Ford's drop in revenue was also narrower-than-expected. Shares gained 9.4%. Ford is the only US automaker that was not forced to declare bankruptcy last quarter, as a result of the slowdown in auto demand amid the recession.
Dow component AT&T reported quarterly sales and earnings that fell from a year ago but topped estimates. The telecom benefited from its exclusive contract with Apple, as strong iPhone sales boosted subscriber growth. AT&T shares gained 2.6%.
Fellow Dow component 3M reported weaker quarterly sales and earnings that topped estimates. 3M also lifted its forecast for full-year profit. Shares gained 7.4%.
In other corporate news, Bristol-Myers Squibb said late on Wednesday that it will buy biotech company Medarex for $2.4 billion. Amazon.com said on Wednesday it would buy online shoe retailer Zappos.com for $807 million.
In economic data, the number of Americans filing new claims for unemployment rose to 554,000 last week from 524,000 in the previous week, according to a Labor Department report. Economists had predicted claims would rise to 557,000.
June existing home sales rose to a 4.89 million unit annual rate from a revised 4.72 million unit rate in May, according to the National Association of Realtors. Sales were better than expected, with economists forecasting sales would rise to a 4.85 million annualized rate. The median home price continued to slide, falling 15.4% versus a year ago.
Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.66% from 3.54% on Wednesday.
In currency trading, the dollar gained against the euro and the Japanese yen.
US light crude oil for September delivery rose $1.76 to settle at $67.16 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery rose $1.50 to settle at $954.80 an ounce.
Microsoft and American Express should be active on Friday, after reporting quarterly results after the close of trading.
Microsoft reported weaker earnings that topped estimates and weaker revenue that missed estimates. The software bellwether said its results were due to weakness in the global PC and server markets.
American Express reported a big drop in earnings due to the cost of paying back the loan it received from the government last year. However, the earnings still managed to top analysts' forecasts.
Amazon.com shares lost 6.6% following price cuts that caused the online retailer’s revenue to miss projections.
Friday brings a revised consumer sentiment reading from the University of Michigan, but the report is not likely to move markets.
Across the Atlantic, European shares finished with its ninth straight day of gains, as investors cheered earnings news, including the latest results from banking giant Credit Suisse. The Dow Jones Stoxx 600 index climbed 1.9% to settle at 219.79. The index rose to levels not seen since last November this week.
The UK's FTSE 100 index rose 1.5% to close at 4,559.80, the German DAX index jumped 2.5% to finish at 5,247.28 and the French CAC-40 index climbed 2.1% to end at 3,373.72.
After having its share of darkness and choppiness on Wednesday, Indian markets rode the high tide on Dalal Street resuming their northward journey after pausing for a couple of days. All round buying in scrips across the sectors coupled with an impressive growth in the index of six core industries lifted the sentiment on Dalal Street.
The Index of Industrial Production (IIP), stood at 251.6 in June 2009 as against 236.3 in the same month last year, the Commerce & Industry Ministry said on Thursday. This represents a growth of 6.5% compared to a growth of 5.1% in June 2008.
The Realty, Consumer Goods and the Metals sectors were in the limelight even the Mid-Cap and the Small-cap stocks were in momentum.
The Sensex surged by 404 points or 2.7% to end at 15,248 after touching a high of 15,264.8 and a low of 14,997.7. The index had opened at 15,008 against the previous close of 14,843. The NSE Nifty surged by 130 points or 3% to shut shop at 4,529.
In Asia, the Nikkei in Japan gained 0.7% to end at 9,792, while Australia's S&P/ASX ended flat at 4,064. The Hang Seng index in Hong Kong advanced by 3% to end at 19,817.
In Europe, stocks were trading in the red. The FTSE in the UK was down 0.2% at 4,486. The DAX was down 0.2% at 5,112 and the CAC 40 slipped 0.5% at 3,290.
Coming back to India, among the BSE sectoral indices, the Realty index was the top gainer, gaining 5.6%, followed by the Metal index that was up 4.6%. The BSE Consumer Durables index up 4.5% and the BSE FMCG index was up 4%.
The BSE Mid-Cap index advanced 2.4% and the BSE Small-Cap index rose 2.2%.
Within the Sensex, the major gainers were DLF, Reliance Infra, Maruti, Hindalco, ITC, RCom, ACC and Sterlite. Among the major losers were, Bharti Airtel and ONGC.
Outside the frontline indices, the top losers included Pantaloon, Aban, Indian Bank, Glenmark, Rolta, Ispat Ind and Moser Baer.
Among the big losers in the broader market were Piramal Health, Union Bank, Thermax, MRPL, Zee Ent, Marico and GMDC.
Shares of ITC surged by over 5.5% to end at Rs230 after posting impressive quarterly numbers. The company posted a profit after tax of Rs8.78bn for the quarter ended June 30, 2009 as compared to Rs7.48bn for the quarter ended June 30, 2008. Thereby posting a rise of 17% YoY. Total income increased from Rs40.14bn for the quarter ended June 30, 2008 to Rs42.20bn for the quarter ended June 30, 2009.
Shares of Bharti Airtel slipped 1% to Rs814. The company posted a net profit of Rs26.48bn for the quarter ended June 30, 2009 as compared to Rs21.67bn for the quarter ended June 30, 2008. Thereby registering a growth of 22% YoY. Total Income has increased from Rs85.68bn for the quarter ended June 30, 2008 to Rs104.49bn for the quarter ended June 30, 2009.
Shares of Siemens ended higher by 2% to Rs471 after the company announced quarterly results posting a net profit after tax of Rs3370mn for the quarter ended June 30, 2009 as compared to Rs1694.2mn for the quarter ended June 30, 2008. Registering a growth of 99% YoY. Total Income increased from Rs18220.8mn for the quarter ended June 30, 2008 to Rs19254.6mn for the quarter ended June 30, 2009.
Shares of ACC rallied by over 6% to Rs854 after the company announced its Q2 net profit Before Tax at Rs6.82bn, marking an improvement of 83% from the same quarter in 2008. Profit After Tax for the quarter rose 85% from the second quarter of 2008 to Rs4.71bn.
Marico posted a net profit of Rs611.8mn for the quarter ended June 30, 2009 as compared to Rs386.9mn for the quarter ended June 30, 2008. The total income has increased from Rs4.9bn for the quarter ended June 30, 2008 to Rs 5.5bn for the quarter ended June 30, 2009.
The stock ended lower by 2% to Rs86 it had opened at Rs89 and made an intra-day high of Rs91 and a low of Rs85. Total traded volumes stood at 0.73mn shares.
Shares of Sun Pharma recovered smartly erasing early losses. The stock ended higher by 1.5% at 1274. The stock hit an intra-day low of Rs1158 after reports stated that Caraco Pharmaceuticals, the US arm of the company has been slapped with a class action suit in the US.
US-based law firm Izard LLP filed the case on behalf of some of Caraco’s shareholders in a Michigan court on July 17.
Shares of MRPL slipped by 3% to Rs82.3 after the company posted a net profit of Rs4.2bn posting a decline of 50% YoY as compared to Rs8.45bn for the quarter ended June 30, 2008. Total income decreased from Rs107.74bn for the quarter ended June 30, 2008 to Rs62.99bn for the quarter ended June 30, 2009.