One may know how to gain a victory, and know not how to use it.
The bulls are indeed on seventh heaven as the September series came to a happy close with a 7% gain in the major indices. Foreign funds continue to pour money into Indian equities while the local funds don’t appear to be all that excited. The market is likely to remain sideways with mostly a positive bias and its trajectory will hinge on FII inflows and external environment. Results and RBI’s monetary policy are the two big events to watch out for next month.
Meanwhile, inflation is slowly making its way back, with WPI inflation climbing more than expected. Consumer prices are much higher. Inflation is considered bad for equities as it hurts consumer spending and erodes corporate profitability. But for an economy like India 4-5% inflation should not be a big issue. For the time being it may not have a major impact on market sentiment.
Today, we expect a lower start as most global markets are in the red. We have two back-to-back extended weekends. This has the potential to make the market choppy but also gives you a chance to relax.
FIIs were net buyers of Rs10.61bn in the cash segment on Thursday on a provisional basis. The local funds pulled out Rs6.17bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs3.66bn. On Wednesday, FIIs were net buyers of Rs18.33bn in the cash segment. The net FII investments in Indian stocks this year have crossed $10.9bn. Mutual Funds were net buyers of Rs1.09bn on Wednesday.
US stocks ended lower on Thursday, falling for the second straight session, as sales of existing homes unexpectedly slumped and the Federal Reserve said that it will cut the size of two programs meant to bolster credit markets.
Weak commodity prices too gave investors a reason to sell into a rally that has pushed the major indices to one-year highs.
The Dow Jones Industrial Average lost 41 points, or 0.4%, to 9,707.44. The S&P 500 index fell 10 points, or 1%, to 1,050.78. The Nasdaq Composite index declined 24 points, or 1.1%, 2,107.61. Declines were broad based, with 2 out of every 3 Dow stocks sliding.
US stocks gained early after the Labor Department reported that jobless claims fell for the third week in a row. But the market erased those gains after the housing report. A slide in oil and gold shares on the back of a stronger dollar dragged on commodity stocks.
Stocks had pulled back on Wednesday from almost one-year highs after the Federal Reserve kept interest rates unchanged and essentially maintained its recent economic outlook. A week ago, Fed chief Ben Bernanke said the recession was very likely over, but the labor market still has a long way to go.
The Fed policymakers said on Thursday it was winding down a couple of emergency programs in the wake of an improving economy. The central bank is cutting back the amount of money available to banks under the Term Auction Facility, a short-term loan program. The Fed is also pulling back on a program that lets investment banks trade bad debt for safe Treasury debt.
The major indexes ended Tuesday's session at the highest levels since just after the collapse of Lehman Brothers last September. Since bottoming at a 12-year low March 9, the S&P 500 has gained 56.8% and the Dow has gained 48.9%, as of Thursday's close. After hitting a six-year low, the Nasdaq has gained 68%.
The stock advance was driven by signs that the economy is slowly starting to recover, fueled by extraordinary amounts of fiscal and monetary stimulus.
Existing home sales fell to a seasonally adjusted 5.1 million unit rate in August from a 5.24 million unit rate in July, according to a report from the National Association of Realtors. Economists forecast that sales would rise to a 5.3 million unit rate in the month.
A report from the Labor Department showed weekly jobless claims fell for the third week in a row. The number of Americans filing new claims for unemployment fell to 530,000 last week from a revised 551,000 in the prior week. Economists thought claims would rise by 5,000. Continuing claims, a measure of Americans who have been receiving benefits for a week or more, fell to 6,138,000 from 6,261,000 in the previous week. Economists expected a rise.
Shares of A123 Systems surged as much as 56.6% from their initial pricing, before trimming the gain to just over 50% at the close. The company, one of a small group of electric-car battery makers, raised $380 million in an initial public offering on Wednesday that priced above forecasts.
A123 was one of 5 companies that went public on Thursday, the biggest day for the IPO market since Nov. 15, 2007, when 6 debuted. Among the other debuts, online pharmacy Vitacost.com was little changed and asset management firm Artio Global Investors added 4.8%.
Two REITs also debuted. Apollo Commercial Real Estate Finance fell 7.5% and Colony Financial fell 2.5%.
Three more IPOs are due by the end of the week and eight over the next two weeks.
This could be seen as another indicator of a broader economic recovery. Alternately, it could mean that companies are running out of financing options.
Rite Aid reported its ninth consecutive quarterly loss, although the results were not as weak as analysts had expected. However, the drugstore chain also said it would see a wider fiscal-year loss than it initially thought because of falling sales. Shares fell 12.3%.
Chelsea Therapeutics tumbled 60% after its experimental drug to treat a neurological disorder showed disappointing results in a late-stage trial.
The Group of 20 leading developed and emerging countries kicked off another major summit in Pittsburgh to discuss financial reforms in the wake of the global financial market collapse. It is the third such meeting, following earlier events in April and last November.
The dollar gained versus the euro and the yen. The greenback has repeatedly hit one-year lows against a basket of currencies over the last few weeks.
US light crude oil for October delivery fell $3.08 to settle at $65.98 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery fell $15.50 to settle at $998.90 an ounce. Gold closed at a record high of $1,020.20 last week.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.38% from 3.41% late on Wednesday.
Friday brings government reports on new home sales and durable goods orders, as well as the University of Michigan's September consumer sentiment index.
European shares closed sharply lower. The pan-European Dow Jones Stoxx 600 index slumped 1.9% to 240.15, with stocks reversing stride after a report showing the first decline in US existing home sales in five months.
Germany's DAX index fell 1.7% to 5,065.21, while the French CAC 40 index dropped 1.7% to 3,758.36 and the UK's FTSE 100 index dipped 1.2% to 5,079.27.
After taking a breather in the previous trading session, the Indian markets resumed their uptrend on last day of F&O expiry. The Bulls greeted the September series a good BUY with the NSE Nifty clocking in almost 9% gains during the series.
Today’s session showed strength in the current upmove, the NSE Nifty found strong support at 4900 levels, near its 13 DMA. Markets started off the day on a pessimistic note tracking weak cues from the US and the Asian markets. However as the day progressed, key indices gradually recovered led by index heavyweights like HDFC, ICICI Bank, L&T and Bharti.
The BSE Sensex recovered almost ~290 points and the NSE Nifty has recouped 80 points from their respective day’s low.
The BSE Sensex gained 62 points or 0.4% at 16,781 after touching a high of 16,834 and a low of 16,494. The index opened at 16,634 against the previous close of 16,719. The NSE Nifty gained 16 points to shut shop at 4,986.
In Asia, the Nikkei in Japan was up 1.6%, while Australia's S&P/ASX ended lower by 0.6% at 4,701. Shanghai SE Composite in China gained by 0.3% at 2,853. However, the Hang Seng index in Hong Kong ended lower 2.5% at 21,050.
In Europe, stocks were in the red. The FTSE in the UK was down 0.2%, The DAX in Germany was down 0.3% and the CAC 40 index in France fell 0.3%.
Coming back to India, among the BSE sectoral indices, the Bankex index was the top gainer, adding 1.5%, followed by the Pharma index that was up 1%. The BSE FMCG index gained 0.8% and the BSE Realty index was up 0.7%.
The BSE Mid-Cap index gained 0.8% and the BSE Small-Cap index was up 0.5%.
Among the 30-components of Sensex, 18 stocks ended in the green and 12 ended in the negative terrain. Among the major gainers were HDFC, HDFC Bank, Wipro, RCom, NTPC and ICICI Bank.
On the other hand, Hindalco, Infosys, Hero Honda, Tata Steel and ACC were among the major laggards.
Outside the frontline indices, the big gainers in the broader market were UCO Bank, Gujarat NRE, REI Agro, CESC and Torrent Power. On the other hand, losers included LIC Housing Fin, GMDC, Federal Bank and SCI.
The annual rate of inflation, stood at 0.37% for the week ended September 12, 2009 as compared to 0.12% for the previous week ended September 05, 2009 and 12.42% during the corresponding week ended September 13, 2008 of the previous year. The Wholesale Price Index for 'All Commodities' for the week ended September 12, 2009 rose by 0.2% to 242.6 from 242.0 for the previous week. The government announced that it revised inflation in week to July 18 to -0.54% as against -1.54%.
Shares of Jet Airways edged lower by 0.3% to end at Rs311. Reports stated that the Airliner has sought the government’s permission to sell shares to overseas investors to avoid loan defaults and violation of debt covenants.
The company cannot afford to have a financial crisis impacting its operations, which may have negative cascading effect in terms of sustenance of 13,000 employees, besides defaulting on payment obligations and violating the covenants prescribed by the various lenders," the company said in a letter to the Foreign Investment Promotion Board (FIPB).
Shares of AIA Engineering advanced by over 2.5% to Rs283 after Genesis acquired 4.68% equity stake in the company.
~4.1mn equity shares of the company were transacted on the BSE at an average price of Rs280 a piece. Financial investor SNM Investment was the seller and it sold its entire stake which it held in the company for 10 years.
Larsen & Toubro received an order valued over Rs20bn from GMR Energy Limited, a GMR Group company, for setting up a 2 x 384 MW gas based power plant at Vemagiri, near Rajamundry, Andhra Pradesh on a lumpsum turnkey basis. L&T’s scope includes design, detailed engineering, supply, installation and commissioning of the plant on a turnkey basis.
L&T gained 1.5% to end at Rs1657. The stock opened at Rs1624 and made an intra-day high of Rs1669 and a low of Rs1613. Total traded volumes stood at 0.35mn shares.
Shares of Orbit Corp gained by 2% to Rs244 after kuwait INV Authority- Kuwait INV - fund 205 acquired ~0.61mn shares of the company at an average price of Rs232.64 per share on NSE. The stock opened at Rs236 and made an intra-day high of Rs251 and a low of Rs235. Total traded volumes stood at 1.2mn shares.
Shares of Kingfisher Airlines gained by 5% to Rs53 after reports stated that the company plans to raise up to US$175mn before March 2010 via rights issue and GDR. The stock opened at Rs50.90 and made an intra-day high of Rs53 and a low of Rs50. Total traded volumes stood at 3.8mn shares.