What does not destroy me, makes me stronger.
India seems to be going from strength to strength, not just on the economic front but also in defence. It has entered a global elite club by launching its first indigenously made nuclear submarine, INS Arihant (which means destroyer of enemies). The bulls of course have been decimating the bears over the past couple of weeks. Given the healthy state of global markets and strong earnings, one shouldn’t be surprised if the current rally lasts another 10-20%.
The next crucial technical level to keep an eye on in the short term is 4700 on the Nifty. A breach of this level could propel the index past 5000. On the downside, support is likely to come in at around 4350-4400. We expect a positive start today, but the gains could be restricted by some pressure on index heavyweight Reliance Industries, whose Q1 results fell short of consensus estimates.
A lot of other big results came in during the weekend and some more are on their way. We also have to contend with the F&O expiry. Before that, the RBI will announce its quarterly policy review tomorrow. The markets do not expect the central bank to tinker with rates, but regulators and markets rarely think alike. The best approach is to wait and watch. In any case, most of the monetary and fiscal measures have been announced. The fear now is will the liquidity deluge and the government's massive borrowing programme fuel inflation going ahead? If it does, how that will impact the economy, India Inc. and the markets.
Results Today: Areva, Ashok Leyland, Balrampur Chini, BOB, BOI, Blue Star, Cadila, Castrol, Century Textiles, Chennai Petro, Dabur, EIH, Escorts, Finolex Industries, GSK Pharma, Glenmark, Gujarat Alkalies, Hinduja Ventures, Jindal Saw, Karnataka Bank, LMW, MRF, Morepen Labs, NTPC, Punj Lloyd, RCF, SpiceJet, Tata Motors, Tata Tele and Titan.
FIIs were net buyers of Rs6.63bn in the cash segment on Friday on a provisional basis while the local funds pulled out Rs2.06bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs332.2mn.
On Thursday, the foreign funds were net buyers in the cash segment at Rs2.6bn, as per SEBI data. With this, their net investment in Indian stocks this year has crossed Rs300bn or ($6bn). Mutual Funds were net buyers of Rs7.42bn in the cash segment on Friday.
Blue chip stocks and the broader market extended gains on Wall Street on Friday, but technology shares succumbed to selling pressure after software major Microsoft and Amazon.com posted disappointing results.
The Dow Jones Industrial Average logged it's best two-week rally since 2000, spurred by gains in energy producers after crude oil climbed. Sentiment also received a boost after Federal Reserve chairman Ben Bernanke said the central bank is withdrawing measures taken to end the financial crisis.
The Dow gained 23.95 points, or 0.26%, to end at 9093.24. For the week, the blue chip benchmark rose nearly 4%, marking its best two-week performance since March 2000. On Thursday, the Dow surpassed 9,000 for the first time since January. It has surged 12% since July 10.
The Standard & Poor's 500 (S&P) index added 2.97 points, or 0.30%, to shut shop at 979.26. For the week, the broader market barometer was up 4.1%. The Nasdaq Composite Index lost 7.64 points, or 0.39%, to close at 1965.96, its first fall in 13 sessions. For the week, the tech-heavy index gained 4.2%.
US stocks erased early losses on Friday, as energy companies rebounded from their lows, and Bernanke’s comments pushed the S&P 500 to its intraday peak. He told the House Financial Services Committee that the Fed’s emergency lending programs are diminishing in size.
US mutual funds received US$1.5bn of net inflows last week, the second-highest amount since February 2008, according to AMG Data Services in Arcata, California. The S&P 500 has surged 45% since March 9.
Shares of Exxon Mobil and ConocoPhillips advanced as oil and natural gas prices extended their weekly gain. Crude oil for September delivery added 1.3% in New York after falling 1%. Natural gas futures expiring next month climbed 4.1%.
Chubb Corp. shares jumped 6.5%, leading insurers higher, after raising its 2009 forecast. Chubb, the insurer of high-end homes and corporate boards, added 6.5%. Its second-quarter profit beat analysts’ estimates, and the company raised its 2009 forecast.
Microsoft and Amazon.com retreated more than 7% after quarterly results missed estimates.
Microsoft shares fell 8.3% after the software giant tumbled after it reported a profit fall and sales slide that left the Windows maker's topline over USUS$1bn short of analyst estimates. Microsoft reported a 29% drop in fiscal fourth-quarter earnings and posted sales that missed analysts’ estimates. Per share profit, excluding some items was 36 cents, missing the average forecast by 2.4%.
Amazon.com, which had climbed on Thursday following news of an acquisition, slumped 7.9%, as falling sales of videogames and consoles contributed to its weaker than expected second-quarter North American revenue growth. Its low prices and free-shipping offers have started to eat into profit, according to some analysts.
Coffee chain operator Starbucks surged mid-week after swinging to a fiscal third-quarter profit. For the week, the company's shares surged 19% but on Friday shares closed down 4 cents to 17.22.
Black & Decker shares gained 10%, after second-quarter earnings from the tool and home improvement products company beat Wall Street expectations.
Broadcom stock lost 6.8% after the chip maker's second-quarter profit plunged 90% as the company posted a double-digit revenue decline. However, the company issued a current-quarter revenue forecast that was above analysts' forecasts.
Confidence among US consumers fell in July for the first time in five months, as mounting unemployment and depressed wages shook households. The Reuters/University of Michigan final index of consumer sentiment decreased to 66, better than forecast, from 70.8 in June. A preliminary reading was 64.6.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.66% from 3.67% on Thursday.
COMEX gold for August delivery fell US$1.70 to settle at US$953.80 an ounce.
Better-than-expected results and a few promising economic reports lifted stocks last week, leaving the Dow and S&P 500 at more than eight-month highs and the Nasdaq at a more than nine-month high. But after such a run, investors turned a bit cautious on Friday, particularly after a few earnings reports missed the mark.
The belief that corporate profits are improving has helped Wall Street resume the advance after a mostly flat May and weak June. However, for the current momentum to sustain in the longer run there has to be continuous flow of good news on the economy and earnings.
European shares ended lower on Friday, breaking a nine-day rally, after Ericsson and Syngenta posted earnings that missed analysts’ estimates and the UK economy registered a steeper-than-expected drop in the second quarter GDP.
The pan-European Dow Jones Stoxx 600 index fell 0.1% to close at 219.67, ending a nine-session winning streak. The benchmark index for European equities gained 4.3% this week, extending its rally since July 10 to 11%.
European markets had started the day on a weak note but managed to push back into positive territory before resuming the southward journey. National benchmark indexes declined in 11 of the 18 western European markets.
The UK's FTSE 100 index managed to hold on to gains to close 0.4% higher at 4,576.61. Germany's DAX index fell 0.3% to end at 5,229.36 and the French CAC-40 index slipped 0.2% to 3,366.45.
The BSE Sensex surged by 148 points or 1% to end at 14,379 after touching a high of 15,418 and a low of 15,168. The index opened at 15,272 against the previous close of 15,231. The NSE Nifty surged by 40 points or 0.9% to shut shop at 4,564.
In Asia, the Nikkei in Japan gained 1.5% to end at 9,944, while Australia's S&P/ASX ended higher by 0.6% at 4,089. The Hang Seng index in Hong Kong advanced by 0.8% to end at 19,982.
In Europe, stocks were trading in the green. The FTSE in the UK was up 0.8% at 4,596. The DAX was up 0.8% at 5,287 and the CAC 40 was up 0.8% at 3,399.
Coming back to India, among the BSE sectoral indices, the Auto index was the top gainer, gaining 5%, followed by the Realty index that was up 4.2%. The BSE Metal index up 2.3% and the BSE Consumer Durables index was up 2%.
The BSE Mid-Cap index advanced 1.6% and the BSE Small-Cap index rose 1.8%.
Within the Sensex, the major gainers were Tata Motors, DLF, Maruti, Tata Steel, JP Associates, Hero Honda, Hindalco and HUL. Among the major losers were, Sun Pharma, HDFC, SBI and Reliance Industries.
Outside the frontline indices, the top losers included Bharat Forge, Ashok Leyland, Videocon Ind, United Phos, LITL and Exide Ind.
Among the big losers in the broader market were Max India, Union Bank, Shriram Trans, Jai Corp, Bank of India, Madras Cement and PNB.
For the week,The top gainers: The top gainers in the BSE Sensex were DLF (up 18.4%), Tata Motors (up 18.1%), Maruti Suzuki (up 16.7%), Tata Steel (up 12.8%) and Hindalco (up 11.3%).
The Top Losers: The top losers in the BSE Sensex were HDFC (down 4.3%), Ambuja Cements (down 3.1%) and BHEL (down 0.7%).
The Realty Sector (up 13.3%): The top gainers in the real estate space were Parsvnath (up 31%), DLF (up 18.4%), Anant Raj Indus (up 18.2%), Omaxe (up 16.6%), Ansal Props (up 16.5%), Unitech (up 14.4%) and Ackruti City (up 7.3%).