Winners make a habit of manufacturing their own positive expectations in advance of the event.
Good morning. The Sensex has doubled in the shortest period in two decades. India Inc. seems to be in the pink of health, if the advance tax numbers are any indication. Fed chairman Ben Bernanke says the recession in the US is "very likely" over. Dollar remains weak amid a persistent bias towards risky assets. Commodities too are flaring up. To top it all, Warren Buffett says he is buying equities.
Banks led from the front as far as advance tax numbers and stock gains are concerned. There is also talk of the RBI raising the cap on securities held under the HTM category to help banks avoid MTM losses. RBI chief D. Subbarao says he will maintain the expansionary monetary policy till the recovery is "secured".
Expect another higher start, bolstered by firm global cues and potentially benign local economic conditions. As long as the FIIs keep the money taps open, the bulls can dance a little longer.
The biggest challenge for the RBI now is to plan an exit strategy. Similar concerns may be giving sleepless nights to central bankers around the globe. Hopefully, the G20 Summit will throw some light on this crucial matter.
US stocks ended at their highest level of the year on Tuesday after a stronger-than-expected retail sales report and comments from Federal Reserve chairman Ben Bernanke helped bolster optimism that the worst is behind us.
The Dow Jones Industrial Average gained 57 points, or 0.6%, at 9,683.41, ending at its highest point since last Oct. 6. The S&P 500 index rose 3 points, or 0.3%, at 1,052.63, ending at its highest point since Oct. 6. The Nasdaq Composite index climbed 11 points, or 0.5%, at 2,102.64, closing at its highest point since Sept. 26.
US stocks were choppy early in the morning but managed some gains in the afternoon on the back of encouraging remarks about the economy by Bernanke.
Stocks plummeted in the six months after the collapse of Lehman Brothers, culminating in the S&P 500 and Dow bottoming out at 12-year lows and the Nasdaq hitting a more than six-year low on March 9. Since March, the Dow has gained 47%, the S&P 500 gained 55% and the Nasdaq composite has gained 65%.
Year-over-year, the major US indexes are still down, with the Dow and S&P 500 roughly where they stood in early October of last year and the Nasdaq where it stood about a week earlier, in late September.
Financial, industrial and select commodity stocks led the advance on Tuesday. Other than a little selling in the first few days of September, US stocks have been extending the 2009 run.
The feeling of being left out among some of the investors sitting on the sidelines could continue to support the advance on every dip and is likely to keep doing so in the weeks ahead.
Speaking at the Brookings Institution in Washington, Bernanke said that the recession is "very likely over," but that the pace of the recovery will be moderate next year and that it will still feel like a weak economy for some time.
August retail sales rose 2.7%, the Commerce Department reported, reflecting the impact of the government's Cash for Clunkers auto stimulus program. Even without auto sales, the retail numbers were strong, suggesting consumer sentiment is improving. The rise surprised economists who were looking for an advance of 1.9%.
The Producer Price Index (PPI), a measure of wholesale inflation, rose 1.7% in August after falling 0.9% in July. Economists thought it would rise 0.8%. The so-called Core PPI, which strips out volatile food and energy prices, rose 0.2% after falling 0.1% in July. Economists thought it would rise 0.1%.
The Empire State index, a regional read on manufacturing, rose to 18.8 in September, topping forecasts for a rise to 15. The index stood at 12 in August.
July business inventories fell 1% after falling 1.1% previously. Economists thought it would fall 0.9%.
Citigroup wants US Treasury to sell off part of its roughly 34% stake in the financial firm, according to published reports. Citi is also looking to issue new shares to the public as part of a multibillion-dollar stock offering. Since the collapse of Lehman Bros. last year, the government has poured $45 billion into Citi and agreed to share losses on a big piece of the bank's bad assets. Citi shares fell 9%.
Best Buy reported weaker quarterly earnings that missed analysts' forecasts on higher revenue. The company also said that sales at stores open a year or more fell 3.9% in the fiscal second quarter.
The company's forecast was mixed. Best Buy lifted its fiscal 2010 earnings outlook to a range of $2.70 to $3 per share, but that means the midpoint of $2.75 is short of analysts' current forecast for earnings of $2.76 per share.
The electronics retailer also said it expects total revenue of $48 billion to $49 billion, versus analysts' forecasts for $47.8 billion. Best Buy shares fell 5%.
The dollar fell versus other major currencies, resuming its decline against the yen and euro. The falling greenback boosted dollar-traded commodities.
US light crude oil for October delivery rose $2.07 to settle at $70.93 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $5.20 to settle at $1006.30 an ounce.
Treasury prices fell, raising the yield on the benchmark 10-year note to 3.45% from 3.42% late on Monday.
The Consumer Price index, a measure of consumer inflation, is due on Wednesday morning. August capacity utilization and industrial production are also due in the morning, along with the weekly oil inventory report.
European shares continued their advance as better-than-expected US retail sales fuelled hopes of a sustainable recovery in the global economy. The pan-European Dow Jones Stoxx 600 index added 0.2% to 241.36 in a choppy session.
After making small gains early in the session, stocks were pulled lower after a gauge of sentiment among German finance professionals rose in September, but at a slower pace than forecast. However, gains resumed in the afternoon following data that showed U.S. retail sales.
Germany's DAX index rose 0.2% to 5,628.98, while the French CAC-40 index gained 0.6% to 3,752.21 and the UK's FTSE 100 index advanced 0.5% to 5,042.13.The NSE Nifty index got a new fillip in its run to the 5000 mark as impressive advance tax numbers by India Inc lifted the sentiment all over. After taking a breather in the previous trading session, the Indian markets were back on track outperforming majority of the international equity markets on Tuesday.
The Realty, Metal and banking stocks led from the front, even the Mid-Cap and the Small-cap stocks participated in the upswing.
The banking stocks hogged the limelight on the back of strong advance tax collections for the Q2 of the financial year.
Public sector major, SBI paid a remarkable Rs18.32bn in the Q2 of 2009-10 as against Rs10.68bn in the corresponding period last year.
Other public sector banks like Bank of India paid Rs4.7bn as compared to Rs2.3bn translating in to increase of 104%, Bank of Baroda paid Rs4.12bn compared to Rs2.55bn and Central Bank of India paid Rs730mn.
On the other hand, Private sector banks like Yes Bank paid Rs580mn as against Rs330mn in the corresponding period last year a rise of 75%.
The BSE Sensex gained 240 points or 1.5% at 16,454 after touching a high of 16,477 and a low of 16,255. The index opened at 16,255 against the previous close of 16,214. The NSE Nifty gained 84 points to shut shop at 4,892.
In Asia, the Nikkei in Japan ended flat at 10,217 while Australia's S&P/ASX ended higher by 0.2% at 4,540. The Hang Seng index was flat at 20,866. However, Shanghai SE Composite in China gained by 0.2% at 3,033.
In Europe, stocks were mixed. The FTSE in the UK was flat, The DAX in Germany was up 0.2% and the CAC 40 index in France was flat.
Coming back to India, among the BSE sectoral indices, the Realty index was the top gainer, gaining 4%, followed by the Metal index that was up 3.7%. The BSE Bankex index up 2.6% and the BSE Auto index was up 2.3%.
The BSE Mid-Cap index gained 2% and the BSE Small-Cap index added 1.3%.
Among the 30-components of Sensex, 27 stocks ended in the positive terrain and ONGC, Bharti and Hindustan Unilever ended in the red. Among the major gainers were DLF, Hero Honda, Sterlite, Hindalco, JP Associates and RCom.
Outside the frontline indices, the big gainers in the broader market were Indian Bank, Areva, Bank of India, Cummins India and IDBI Bank. On the other hand, losers included Spice Tele, MMTC, Fortis Health and Bosch.
Shares of Jindal Steel & Power surged by over 7% to end at Rs619. The stock opened at Rs585 and made an intra-day high of Rs630 and a low of Rs580. Total traded volumes stood at 3.06mn shares.
Jindal Power Ltd, part of Jindal Steel and Power Ltd, is planning to raise about Rs40bn from the primary market to partly fund its 2,400 Mw superthermal power project in Chhattisgarh, according to a report. The company already has a 1,000-Mw pithead merchant power plant in Chhattisgarh, report stated.
The company will invest Rs134bn for the new project coming up at Raigarh. It is talking with a slew of banks to raise Rs100bn as debt for the project, report added.
Shares of Natco Pharma were locked at 20% upper circuit at Rs123 after the company said that the U.S. FDA has accepted an abbreviated new drug application filed by its partner Mylan Inc.
Glatiramer Acetate Injection, a generic version of Teva Pharmaceutical Industries Ltd.’s Copaxone treatment for multiple sclerosis, was accepted for review by U.S. regulators.
Shares of GAIL ended higher by 2% to Rs361 after the company announced that it has signed a MoU along with Kerala State Industrial Development Corporation Limited for Natural Gas Infrastructure and City Gas Distribution in Thiruvananthpuram.
The stock opened at Rs354 and made an intra-day high of Rs363 and a low of Rs352. Total traded volumes stood at 0.75mn shares.
Shares of Alstom Projects gained by 2.5% to Rs522 after the company signed a contract worth EUR30mn with Companhia de Geracao Termica de Energia Eletrica for the retrofit of units 3 and 4 of the Presidente Medici III coal fired power plant near Candiota city, Brazil.
Alstom's scope of contract involves the design, manufacture, dismantlement and erection of upgraded components at the boilers of the two 160 MW units. The plant modifications will be implemented in the first half of 2011.
Toyota Group acquired 1.5% stake for an amount of Rs190mn in Tube Investments of India from the open market on Monday. Toyota Tsusho Corp, Japan bought ~2.7mn shares at an average price of Rs70.77/share. While, Elara Capital PLC (DR) sold ~2.6mn shares in the market at Rs70.8/share.
Tube Investments MD L Ramkumar said, "We believe it was taken in the market as a portfolio investment. We are trying to confirm it. Our assumption is that both of us are in the auto segment, so they must have taken it. We are supplying to Toyota’s vendors in India and to their dealers overseas."
Shares of Tube Investments gained by 2% to end at Rs66. The stock opened at Rs65.85 and made an intra-day high of Rs67.20 and a low of Rs64.25. Total traded volumes stood at 0.33mn shares.