It is better to look ahead and prepare than to look back and regret.
We’ve come a long way forward in every sense. Funds flush with cash are offering psychological support at the moment. The fear of being left out is compelling many to step in even at higher levels, lest they under-perform. Since the advance in early March, the markets haven’t had a meaningful correction. Though the overall mood is upbeat, there is some skepticism about the sustainability of the rally. OIL India’s IPO has got subscribed 31 times.
We expect a flat to slightly positive start. IIP data will be out today. According to the Commerce Minister, it grew by 7%. This is respectable given the circumstances. Exports too are showing signs of bottoming out. FDI inflows in July were pretty good. Rains in the last phase have been better. The big worry is on the inflation front, and its fallout on interest rates.
US stocks have risen for the past four sessions. A key European index has gained for six straight days. Most markets around the world are trading at a year’s high amid persistent optimism about the prospects for the global economy. Some pullback is not ruled out but the same may not be all that debilitating. There is lot of money waiting on sidelines to support the market at lower levels.
The RBI Governor has already warned of rates hardening on account of an impending spike in inflation. The Government is doing whatever it can to boost consumption and pump-prime the economy. It has increased the Dearness Allowance for state employees by 5% and has announced a subsidy of 1% on home loans of up to Rs10 lakh.
Of course, these freebies come with a cost. The Government’s already precarious finances may take further hit. The Centre and the RBI has an uphill task managing the massive borrowings and mitigate an adverse impact on markets and the economy.
Globally, the markets appear to be on a firm ground. A slew of data has been unleashed by the Chinese government today. China’s industrial production grew at a faster pace in August and new bank lending unexpectedly increased. Money supply rose by a record. Steel production in China jumped 22% to a record in August.
In Japan, last quarter's economic growth got unexpectedly revised downward, as capital expenditure was less than earlier thought. In the US, the trade deficit widened in July and imports gained by a record 4.7%.
Meanwhile, the bidding war for Asarco has intensified further with Sterlite raising its bid to $2.56bn versus rival Grupo Mexico’s offer of $2.47bn. It must be noted that a US bankruptcy court has backed Grupo Mexico’s bid.
US stocks climbed on Thursday, with the major indices ending at the highest point in nearly a year, spurred by a strong response to a debt auction and Procter & Gamble's improved forecast.
The Dow Jones Industrial Average gained 80 points, or 0.8%, at 9,627.48, closing at the highest point since last Oct. 6. The S&P 500 index rose 11 points, or 1%, at 1,044.14, closing at the highest point since Oct. 6. The Nasdaq Composite added 24 points, or 1.2%, at 2,084.02, closing at the highest point since Sept. 26.
All three major indexes have now risen for five consecutive sessions, extending the six-month old stock market advance. Since bottoming March 9 at a 12-year low, the S&P 500 has risen 54%.
While the gains so far in September have pushed the S&P 500, Nasdaq and Dow to fresh highs, the advance has been pretty tepid. More than a reaction to any specific news of the day, the rallying of late has been momentum driven.
Stocks got an extra jolt after Treasury's auction of $12 billion in reopened 30-year bonds generated better-than-expected demand. The US is relying on debt auctions to help offset the deficit.
The number of Americans filing new claims for unemployment fell by 26,000 last week to 550,000, according to a Labor Department report released Thursday. That surprised economists who expected 560,000 new claims.
Continuing claims, which measure the number of Americans who have been receiving benefits for a week or more, showed a surprise drop to 6,080,000 from 6,234,000 in the previous week.
The US trade gap widened to $32 billion in July from $27.5 in June, according to the Commerce Department. Economists thought it would narrow to $27.3 billion.
Foreclosure filings in August dropped 0.5% from July, according to RealtyTrac, an online marketer of foreclosed properties. The number of homes repossessed from borrowers fell by 12.7% in August.
Treasury Secretary Timothy Geithner, speaking before the Congressional Oversight Panel, said that the focus is shifting from rescuing the economy to preparing for growth. He also said it isn't likely that more bank bailout money will be needed.
President Obama outlined his health care plan before a joint session of Congress on Wednesday night. The plan, which could cost as much as $1 trillion over a ten-year period, includes requiring all Americans to have health care.
Dow component Procter & Gamble said that it expects sales to improve in the next quarter, sending shares 4.2% higher. The maker of Tide, Crest and other consumer products said sales in the fiscal second quarter should rise 1% to 4%. Current-quarter sales are expected to be flat to down 3%. Also, in the current quarter, P&G said it still expects earnings per share of 95 cents to $1. Analysts are expecting a profit of 97 cents per share.
Chip maker Texas Instruments said it expects to report a bigger profit in the third quarter than it previously forecast. TI said it will earn between 37 cents and 41 cents per share versus its earlier forecast of 29 cents to 39 cents per share. The company expects sales in a range of $2.73 billion to $2.87 billion, versus its earlier forecast of $2.5 billion to $2.8 billion. Shares were barely changed.
Monsanto said it expects 2010 earnings in a range that is well below analysts' estimates, due in part to an excess of herbicide supply. The world's leading seed maker said it expects fiscal 2010 earnings per share of $3.10 to $3.30. Analysts currently expect earnings of $4.10. Shares fell 5%.
General Motors is selling a major stake in its European Opel division to a consortium led by Canadian auto supplied Magna.
The dollar resumed its slide against other major currencies, falling to a fresh seven-month low against the yen and a nearly 12-month low versus the euro.
The weak dollar has boosted oil, gold and other dollar-traded commodity prices. Those prices have also been on the rise on bets of a global economy recovery. US light crude oil for October delivery rose 63 cents to settle at $71.94 a barrel on the New York Mercantile Exchange, seesawing after the government's weekly oil inventories report.
COMEX gold for December delivery fell 30 cents to $996.80 an ounce, after topping the key $1,000 level during the day for the third session in a row.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.35% from 3.47% late on Wednesday, following the results of the auction. Wednesday's auction of $20 billion of ten-year notes saw solid demand as well.
Friday brings the September consumer sentiment index from the University of Michigan, the July wholesale inventories report from the Commerce Department and August import and export prices. The August Treasury budget is due in the afternoon.
European shares ended mixed. After closing with a 0.9% advance on Wednesday, the Dow Jones Stoxx 600 set a fresh 2009 high in early trading but then weakened to end up 0.15% at 240.44. The pan-European index has risen approximately 54% since hitting a multi-year low in March.
The UK's FTSE 100 index declined 0.3% to end at 4,987.68 following an as-expected decision from the Bank of England to keep interest rates on hold. See full story. The French CAC-40 index lost 0.05% to 3,705.87 while the German DAX index traded up to 5,595.For the third straight day, the NSE Nifty managed to hold on to the 4800 levels. The current rally seems to be running out of steam as the benchmark indices are witnessing selling at higher levels. Traders and investors preferred to book some profits as the Nifty inched closer to the 4900 mark.
Strong inflows from overseas investors, supported by some local buying have been driving the market up. But, today the market players chose to take a step back amid persistent headwinds like sluggish loan growth, subdued tax receipts, drought, rising inflation and interest rates. Even globally, there are worries such as tepid consumer spending, high unemployment and hardening commodity prices.
India’s inflation for the week ended August 29 stood at -0.12% as against -0.21% in the previous week. Market expected inflation to come in at -0.09%. The government announced that it revised inflation in week to July 4 to -0.75% as against -1.21%.
Among the index heavyweights, Reliance Industries seemed to be under some pressure after a 10% rally in the past two trading sessions. Among the other major laggards were the Automakers like Hero Honda and Maruti. Even the Realty and the Consumer Durables stocks were offloaded.
Finally, the BSE Sensex gained 33 points or 0.2% at 16,216 after touching a high of 16,434 and a low of 16,166. The index opened at 16,295 against the previous close of 16,183. The NSE Nifty ended flat to shut shop at 4,819.
In Asia, the Nikkei in Japan gained by 2% at 10,513 while Australia's S&P/ASX ended higher by 1.1% at 4,570. The Hang Seng index in Hong Kong gained 1% at 21,069. However, Shanghai SE Composite in China fell by 0.8% at 2,924.
In Europe, stocks were in the red. The FTSE in the UK was down 0.5%, The DAX in Germany was flat and the CAC 40 index in France was down 0.5%.
Coming back to India, among the BSE sectoral indices, the Metal index was the top gainer, gaining 1.2%, followed by the Bankex index that was up 1%. The BSE Pharma index up 0.8% and the BSE IT index was up 0.8%.
However, BSE Realty index was down 2.2% and BSE Consumer Durables index was down 1.5%. The BSE Mid-Cap index fell 0.2% and the BSE Small-Cap index fell by 0.8%.
Among the 30-components of Sensex, 14 stocks ended in the green and 16 ended in the negative terrain. Among the major gainers were ICICI Bank, Sterlite, Tata Steel, Infosys and Bharti Airtel.
On the other hand, DLF, Hero Honda, JP Associates, Hindalco and M&M were among the major laggards.
Outside the frontline indices, the big gainers in the broader market were Spice Torrent Power, Central Bank, Jubilant Org, Gujarat NRE and Thermax. On the other hand, losers included BEML, KSK Energy, Spice Tele, P&G and Bhushan Steel.
Shares of UTV Software erased early gains and ended in the red, The stock slipped 0.8% to end at Rs481.7. The stock hit an intra-day high of Rs508 after Bloomberg and the promoters of UTV announced that they will collaborate on a television channel to deliver unsurpassed real-time business, economic and political news to households across India.
In the next month, the business news channel UTVi will be re-branded as Bloomberg-UTV. For the first time UTVi's local newsgathering, production and distribution expertise combine with the deep financial news capabilities and global reach of Bloomberg to broadcast news and information for and about the Indian market. India's TV viewers will have access to the BLOOMBERG TELEVISION(R) network global feed, supported by 145 BLOOMBERG NEWS(R) bureaus around the world.
BHEL secured an order for the manufacture and supply of 150 electric locomotives has been placed on BHEL by Indian Railways. The stock gained by 1.2% to Rs2263. The stock opened at Rs2252 and made an intra-day high of Rs2290 and a low of Rs2250. Total traded volumes stood at 0.16mn shares.
L&T bags repeat order for Nuclear Power Projects Larsen & Toubro, has won a repeat order for design, manufacture and supply of four steam generators for 700 MWe Pressurized Heavy Water Reactors (PHWR) for Rajasthan Atomic Pwer Plant (RAPP)- 7 and 8 from the Nuclear Power Corporation of India Limited (NPCIL). These will be the largest steam generators built in India so far. In a nuclear power plant, the steam generators are most critical equipment that require a long lead time.
Shares of L&T ended flat at Rs1601. The stock opened at Rs1620 and made an intra-day high of Rs1627 and a low of Rs1582. Total traded volumes stood at 0.3mn shares.
Hedge Funds, DE Shaw and Citadel Investment Group in the US have filed a winding up petition against Venus Remedies dragging the stocks down by over 7% to hit a low of Rs258. Total traded quantity on the counter was mere 51,000 shares on the NSE.
Both the hedge funds have filed a petition against the company for a default on a Foreign Currency Convertible bond. Both the hedge funds had subscribed to the US$12mn FCCB issue of Venus in May 2006. The bonds came up for redemption on May 2, 2009, but the company has failed to pay investors.
According to reports, The Bank of New York Mellon, the custodian has filed the case in the Punjab and Harayana High Court in Chandigarh. Investors have also sought the courts intervention to stop the company from paying any dividends. The case is likely to come up for hearing in the month of October, reports added.
Venus Remedies plunged by over 8% to end at Rs258. Total traded quantity on the counter was mere 35,000 shares on the BSE. It hit an intra-day high of Rs273 and a low of Rs254.
Omaxe announced that M/s Rivaj Infratech Pvt Ltd, a subsidiary of the company has entered into MoU with Bulandshahar Development Authority for the development of Hi-Tech Township in Bulandshahar, Uttar Pradesh on a proposed area of 3601.19 Acres.
The proposed Hi-Tech Township is well connected to Delhi, located in NCR Region adjoining Greater Noida adjacent to proposed Eastern Peripheral Expressway and North-East Railway Freight Corridor and will have estimated revenues of over Rs75bn and is to be executed in Phases over a period of 5 to 7 years.
Shares of Omaxe surged by over 3% to Rs120. The stock opened at Rs119 and made an intra-day high of Rs126 and a low of Rs118. Total traded volumes stood at 0.5mn shares.