Money grows on the tree of persistence.
The bulls have been persistent against most odds thanks to global cues. Better quarterly numbers have aided the bulls. The gains seem to be more of a narrow rally in recent times. We expect an extension of last week’s advance, at least at start. The indices are fast approaching levels where high resistance is likely in the absence of fresh ‘good news’ and valuation concerns. As usual, earnings, monsoon and global factors will drive the sentiment. RIL, RNRL and other stocks linked to the gas dispute will be in focus as the Supreme Court kicks off its hearing in the controversial case.
Though a week of rains have brought some relief from the sweltering heat. Lack of rains in the northern hinterland, which contributes heavily to the kharif output remains a worry. An overall deficient monsoon could hurt India’s GDP prospects. And, though we have enough stockpiles, food inflation could rear its ugly head. A rebound in global commodity prices is the last thing we need. A bloated fiscal deficit and its proposed monetisation (though the FM denies it) could make matters worse. Gold could be a good investment though.
Results Today: BASF India, Ciba India, Essar Oil, GTL Infra, IDFC, JSW Steel, Merck, Mindtree, Peninsula Land, Sterlite Technologies, TRF and Triveni Engineering.
FIIs were net buyers of Rs1.42bn in the cash segment on Friday on a provisional basis while the local funds pulled out Rs5.35bn, according to figures published on the NSE web site. In the F&O segment, the foreign funds were net buyers at Rs845.7mn.
On Thursday, the foreign funds were net buyers in the cash segment at Rs2.92bn, as per SEBI data. With this, their net investment in Indian stocks this year has crossed the $6bn mark or nearly Rs300bn. Mutual Funds were net buyers of Rs1.46bn in the cash segment on Thursday.
Asian stocks were mostly up this morning, led by commodity and technology shares, after oil and metal prices gained and US housing starts unexpectedly rose.
The MSCI Asia Pacific (ex-Japan) Index added 1.4% to 103.98 as of 9:51 a.m. in Hong Kong. Japan is closed for a holiday. The regional index has rallied 24% in the past three months amid optimism stimulus policies around the world will revive the global economy.
Australia’s S&P/ASX Index gained 1.2%. New Zealand’s NZX 50 Index rose 0.4%, while South Korea’s Kospi Index climbed 1.7%. The Hang Seng in Hong Kong was up 2.8%.
The yen fell to a two-week low against the euro on speculation that European and US earnings this week will show that the global recession is easing, reducing demand for the Japanese currency as a refuge.
The yen weakened against all of the 16 most-active currencies. The dollar fell to the lowest level in more than two weeks versus the euro on speculation that New-York- based commercial lender CIT Group Inc. is moving closer to avoiding bankruptcy, reducing the appeal of safer assets such as the US currency.
US stocks closed higher on Friday, buoyed by encouraging results from the likes of IBM and Bank of America. IBM's improved outlook lifted the Dow Jones Industrial Average, but the broader market struggled as investors showed fatigue after a strong week.
The Dow gained 32 points, or 0.4%, to end at 8,743.94. The S&P 500 index ended just below unchanged at 940.38 and the Nasdaq Composite index ended just above the breakeven point, at 1,886.61.
The major stock indices fluctuated through the session as investors weighed the better-than-expected financial results with some reluctance after the run-up. Stocks ended higher for the week. It was the Dow and S&P 500's first up week - and the Nasdaq's second - in the past five.
US stocks rose on Thursday after JPMorgan Chase reported a better-than-expected quarterly profit. JPMorgan joined Intel and Goldman Sachs, both of which reported better-than-expected financial results earlier in the week.
Stocks have risen in the first big week of quarterly financial reports, following four down weeks on Wall Street. The broad S&P 500 gained 7% for the week, recovering almost all that it lost in the previous four weeks.
Dow component Bank of America reported a profit of 33 cents per share, down from 72 cents a year ago, but five cents more than what analysts were expecting. Shares lost 2%.
Citigroup reported a second-quarter profit of 49 cents per share, surprising analysts who were looking for a loss of 37 cents, on average. Citigroup lost 55 cents per share a year ago. Shares ended little changed.
CIT Group bounced 71% on reports that it is in talks with JPMorgan Chase and Goldman Sachs as it tries to avoid a bankruptcy filing. Shares fell 71% on Thursday after the small business lender said it won't receive a government bailout, raising fears that the company could collapse.
CIT helps fund as many as 1 million small businesses, but a collapse of the company is not seen as a risk to the broad financial system.
IBM reported higher quarterly earnings late on Thursday that topped estimates on lower revenue that missed forecasts. The IT leader also said that full-year earnings would come in at $9.70 per share versus a forecast of $9.20 per share. Shares gained 4%.
Google reported higher quarterly earnings late on Thursday that topped estimates, largely due to cost cutting. The Internet search leader also reported tepid revenue growth because of slowing ad sales. Shares fell 2.8%.
Dow component GE reported earnings of 26 cents per share, versus forecasts for 23 cents per share. GE lost 54 cents a year ago. Shares fell 6% on Friday.
June housing starts rose to a 582,000 unit annualized rate from a revised 562,000 in May. Economists had forecast starts would come in at a 530,000 unit annualized rate.
Building permits, which measure builder confidence, rose to a 563,000 unit annualized rate in June versus a revised 518,000 unit rate in May. Economists had expected a 524,000 unit rate.
Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.64% from 3.57% on Thursday.
In currency trading, the dollar gained against the euro and the Japanese yen.
US light crude oil for August delivery rose $1.54 to settle at $63.56 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery rose $2.10 to settle at 937.50 an ounce.
European shares advanced on Friday. The pan-European Dow Jones Stoxx 600 index climbed 0.4% to 210.67, a level not seen since the start of the month to stretch weekly gains to about 7%.
UBS European equity strategists upgraded their 2009 year-end equity market target on Friday, citing a turn in the earnings cycle. UBS upped its FTSE Eurofirst 300 target to 1,000 from 900, which is above Friday's 871.05.
Germany's DAX index was up 0.4% at 4,978.40, unable to hold a momentary period above the 5,000 level during the trading day. The French CAC-40 index rose 0.6% to 3,218.46 and the UK's FTSE 100 index gained 0.6% at 4,388.75.
The Sensex surged by 495 points or 3.5% to end at 14,745 after touching a high of 14,800 and a low of 14,325. The index had opened at 14,325 against the previous close of 14,250.
The NSE Nifty shot up by 143 points or 3.3% to shut shop at 4,375.
Asian markets ended in the positive terrain. The Nikkei in Japan gained 0.5% at 9,395, Australia's S&P/ASX ended higher by 0.2% at 4,000. The Hang Seng index rose by 2.5% to 18,805.
In Europe, stocks were trading in the green. The FTSE in the UK was up 0.8% at 4,397. The DAX rose 1% at 5,000 and the CAC 40 gained 0.8% at 3,225.
Coming back to India, among the BSE sectoral indices, the BSE Auto index was the top gainer, surging by an impressive 5.5%, followed by the BSE Bankex index that was up 5%. The BSE Realty index rose 4.4% and BSE Teck index was up 4.4%.
The BSE Mid-Cap index jumped 2.5% and the BSE Small-Cap index rose 2.6%.
Within the Sensex, the major gainers were Reliance Infra, M&M, JP Associates, ICICI Bank, Tata Motors, Hero Honda, Hindalco and ITC. Among the major losers were, Sterlite, NTPC and Reliance Industries.
Outside the frontline indices, the top gainers included HCL Tech, Exide Ind, Petronet LNG, NMDC, Fortis Health, Rolta and Max India.
Among the big losers in the broader market were Biocon, Opto Circuit, Glaxo, Piramal Health, Nestle and Marico.