Remember, we all stumble, every one of us. That's why it's a comfort to go hand in hand.
The market has moved much ahead of the earnings and the economy. With a slew of positive news flow, the bulls have managed to comfortably move ahead hand in hand. However, after briefly kissing the 16k mark, the BSE Sensex softened due to some profit booking. Local and overseas funds, however, remained net buyers.
Global cues today are mixed. Stock benchmarks in the US gained modestly while the ones in Europe closed lower. Asian markets this morning appear to be a bit sluggish. A mildly positive start is in the offing, while the day as a whole might turn out to be choppy again. The key indices will face resistance at higher levels.
Liquidity is acting like steroids for the bulls as of now, keeping the overall mood upbeat. After a while though, the market will need things beyond money to sustain the upswing. The key indices have doubled from the lows of last October. But, growth in corporate profits hasn’t kept pace with the rally. The worst of the global recession and the financial meltdown may well be behind us.
FIIs were net buyers of Rs2.19bn in the cash segment on Tuesday on a provisional basis while the local funds too pumped in Rs2.53bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs1.21bn. On Monday, the foreign funds were net buyers of Rs4.76bn in the cash segment. With this, their net purchases of Indian stocks have crossed $7.5bn year-to-date. Mutual Funds were also net buyers of Rs1.43bn on Monday.
US stocks ended slightly higher on Tuesday after a choppy session as a better-than-expected housing market report spurred investors to extend the recent rally, leaving Wall Street at more than nine-month highs.
The Dow Jones Industrial Average added 33 points, or 0.4%, to 9320.19, ending at its highest point since Nov. 4. The S&P 500 index gained 3 points, or 0.3%, at 1005.65, also ending at the highest point since November. The Nasdaq rose 3 points, or 0.1%, to 2011.31, ending at its highest point since Oct. 1.
US stocks gained on Monday and Tuesday, starting off August on solid footing after the best July for the Dow and S&P 500 in two decades. Gains were driven by relief that the quarterly profit reports were generally better than expected and on continuing hopes that the economy is stabilizing.
Investors are not willing to accept low-yielding investments such as bonds. As a result, demand for better returns should keep lifting stocks. The S&P 500 now stands 48% above the closing lows from March 9, a 12-year bottom. After such a big rally, stocks are always going to be vulnerable to some pullback before moving higher again. US stocks will continue to rise through the summer though. There is still money waiting on the sidelines. With improving economic numbers and some of the stimulus efforts starting to work, quite a few investors feel like they have missed the rally. That will continue to support the market after a slight correction.
The day's economic news was mixed, with a housing report showing improvement and a consumer income and spending report showing weakness.
The pending home sales index, from the National Association of Realtors, rose 3.6% in June versus forecasts for a rise of 0.7%. It was the fifth straight month of gain, the first time that's happened since 2003. Pending home sales rose a revised 0.8% in the previous month.
Personal income fell 1.3% in June, the Commerce Department reported Tuesday morning. That was worse than the 1% decline economists were expecting, and much worse than the previous month, when income surged on government stimulus efforts. Personal spending rose 0.4% in June, after a 0.1% increase in May. Economists thought it would rise 0.3%.
A separate report showed that consumer bankruptcies soared 34% to a more than 3-1/2 year high versus a year ago, according to a report from the American Bankruptcy Institute.
One day after US automakers reported July auto sales that improved from June levels, Toyota Motor reported a smaller-than-expected quarterly loss and said it expects smaller losses for the full year.
Homebuilder DR Horton reported a fiscal third-quarter loss that was narrower than what analysts were expecting.
Swiss bank UBS reported a big quarterly loss that was worse than what analysts were expecting, as wealthy clients took a step back amid an ongoing tax dispute with the US.
Dow component Caterpillar rallied 6% after the company's CEO reaffirmed the company's 2009 profit forecast, according to reports. He also outlined different scenarios for how the company might perform next year based on how long the recession stretches on.
PepsiCo said it will buy its bottlers in a cash-and-stock deal worth $7.8 billion, improving on an earlier $6 billion bid. Shares gained 5.1%.
After the close on Tuesday, Dow component Kraft Foods reported higher quarterly earnings that topped estimates and also lifted its 2009 earnings forecast.
US light crude oil for September delivery fell 16 cents to settle at $70.42 a barrel on the New York Mercantile Exchange. Oil prices have been climbing of late on bets that a global economic recovery will increase demand for raw materials.
COMEX gold for December delivery rose $10.90 to settle at $969.70 an ounce.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 3.68% from 3.63% late on Monday.
In currency trading, the dollar gained versus the euro and the Japanese yen.
Wednesday brings a number of economic reports, including the July reading on private-sector employment from payroll services firm ADP and the Institute for Supply Management's services sector index. Dow component Procter & Gamble reports quarterly results in the morning.
European shares retreated, with financial firms and miners among the worst performers in a broad-based decline. The pan-European Dow Jones Stoxx 600 index fell 0.3% to 227.70, after reaching its highest closing level since Nov. 4 on Monday. Of the 15 Stoxx 600 index segments, only technology, media and utilities sectors traded higher.
The UK's FTSE 100 index declined 0.2% to 4,671.37, while Germany's DAX index fell 0.2% to 5,417.02 and the French CAC-40 index slipped fractionally to 3,476.37.
After being through a rollercoaster ride for more than a year, the BSE Sensex today managed to cross the sweet 16,000 mark. However, the market failed to build on the positive start, and soon turned into red amid mixed regional markets. The Indian markets ended lower for the first time in four trading sessions on concerns about rich valuations. Some market experts are of the view that the market may have risen too far, too fast.
Traders and investors preferred to book some profits at higher levels. Telecom, Power and Pharma stocks witnessed some selling pressure. Even the Mid-Cap and the Small-Cap stocks cooled off after the recent spurt. Cues from the International markets were favoring the bears as the Asian and European markets lost some ground.
Meanwhile, Japan's Nomura Holdings has downgraded developing-nation stocks to underweight from overweight in its recommended portfolio because valuations look stretched. The rally in emerging-market stocks has pushed valuations to 17.8 times companies reported earnings for the past 12 months, the highest level since the MSCI index peaked in October 2007. That exceeds the ratio of 17.2 for the S&P 500.
Finally, the BSE Sensex slipped 93 points or 0.6% at 15,831 after touching a high of 16,002 and a low of 15,699. The index opened at 15,940 against the previous close of 15,924. The NSE Nifty fell 31 points or 0.7% to shut shop at 4,681.
In Asia, the Nikkei in Japan ended flat at 10,375 while Australia's S&P/ASX ended higher by 1% at 4,309. The Hang Seng index in Hong Kong ended flat at 20,796. Shanghai index in China gained ended marginally higher by 0.2% at 3,471.
In Europe, stocks were trading lower. The FTSE in the UK was down 0.8%. The DAX was down 0.8% and the CAC 40 was down 0.7%.
Coming back to India, among the BSE sectoral indices, the Teck index was the top loser, losing 1.4%, followed by the Pharma index that was down 1.3%. The BSE Power index down 1.2% and the BSE Realty index was down 1.2%.
The BSE Mid-Cap index slipped 0.2% and the BSE Small-Cap index ended marginally higher by 0.3%.
Within the Sensex, the major losers were Tata Power, ONGC, Reliance Infra, Bharti, RCom and JP Associates. Among the major gainers were Hindalco, HUL, Tata Motors, Reliance Industries and Maruti.
Outside the frontline indices, the top losers included Adani Ent, Biocon, HCC, Yes Bank, Mphasis and Sintex Industries.
Among the big gainers in the broader market were India Cement, Videocon Industries, Castrol India, Max India and UCO Bank.
The S&P downgraded Tata Motors to ‘B’; outlook negative. Standard & Poor's Ratings Services had lowered its long term corporate credit rating on Tata Motors Ltd. to 'B' from 'B+'. The outlook is negative. At the same time, Standard & Poor's lowered the issue rating on the company's senior unsecured notes to 'B' from 'B+'. Both ratings were removed from CreditWatch, where they were placed with negative implications on Dec. 18, 2009, and refreshed in March 2009.
The stock ended higher by 2.7% at Rs443 after hitting an intra-day high of Rs468 and an intra-day low of Rs434 recording volumes of over 3.9mn shares.
Punj Lloyd raised US$140mn in share sale to institutions on Tuesday. The shares were sold for Rs240.2 each which was at a 5% discount on the previous close on Monday. The deal was arranged by Citigroup and IDFC-SSKI, stated reports.
The stock ended lower by 4.7% at Rs241. The stock had opened at Rs254 and made an intra-day high of Rs256 and a low of Rs238. Total traded volumes stood at 2.8mn shares.
IRB Infrastructure won order from the Maharashtra Industrial Development Corporation ('MIDC') for Design, Built, Finance & Operation of Greenfield Airport in Sindhudurg District, Maharashtra.
Shares of IRB Infrastructure over 9% to Rs199. The stock opened at Rs186 and made an intra-day high of Rs202 and a low of Rs184. Total traded volumes stood at 2mn shares.
Shares of NTPC erased gains and ended lower by 0.3% to Rs215.7. Reports stated that the company announced a decision to diversify beyond fossil fuels. The company has set itself a target of raising its total capacity to 75,000 MW by 2017.
In three years, the company plans to increase its coal-based capacity from the current 25,000 Mw to 40,000 Mw, and further to 53,000 Mw by 2017..
Shares of PVR were locked at 10% upper circuit at Rs111.25 after ~499,960 shares, or 2.2% of its equity shares changed hands in a single transaction on the BSE. The stock opened at Rs101 and made an intra-day high of Rs111.05 and a low of Rs100.20. Total traded volumes stood at 0.85mn shares.