Real strength is not just a condition of one's muscle, but a tenderness in one's spirit.
The bulls are in high spirits flexing their muscles as equities continue to remain on a roll globally. Hopes of a sustained economic rebound remain notwithstanding the fact that stocks are looking pricey. Inflation is not a near-term concern in the US and other advanced countries. Even in China, inflation remains a distant worry. However, in India it already is giving some sleepless nights to the RBI and the Government. The coming few months will be a big litmus test for the RBI and the Centre. Hopefully, they will come out with flying colours.
Apart from inflation, other worries seem to be ebbing. Recent reports on GDP, industrial output, tax collections and even exports suggest there could be some positive surprises on the economic front. The advance tax numbers also point to a healthy quarterly performance by India Inc. Liquidity is not an issue for now, as FIIs continue to be upbeat.
So, the short story is that the momentum is with the bulls for now. Today, we expect another higher opening. The fact that the market has rallied so much does leave scope for a slight reversal anytime now.
FIIs were net buyers of Rs11.05bn in the cash segment on Wednesday on a provisional basis while the local funds pumped in Rs1.43bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs7.74bn. On Tuesday, FIIs were net buyers of Rs8.86bn in the cash segment. The net FII investments in Indian stocks this year have crossed $9bn. Mutual Funds were net buyers of Rs981mn on Tuesday.
There is no stopping the bulls on Wall Street, as US stocks gained yet again on Wednesday, pushing the main stock indices to its highest level in a year. A rise in industrial production and a spike in commodity prices fueled the advance.
The Dow Jones Industrial Average climbed 108 points or 1.1%, at 9,791.71, closing at the highest point since Oct. 6, 2008. The S&P 500 index rose 16 points or 1.5%, at 1,068.76, closing at its highest point since Oct. 3 of last year. The Nasdaq Composite index gained 30 points or 1.5%, at 2,133.15 and was on track to close at its highest point since Sept. 26, 2008.
The major US indexes have now gained for 8 of the last 9 sessions.
Stock gains Wednesday were broad based, with 24 of 30 Dow components rising. The Dow's financial shares gained too. A variety of bank shares rallied, with the KBW Bank index rising 4%.
The combination of improving economic news and fiscal and monetary stimulus has helped boost US stocks over the last six months. Since bottoming at a 12-year low in March, the Dow has gained 47% and the S&P 500 has gained 55%. Since bottoming at a 6-year low, the Nasdaq has gained 65%.
With the exception of a 7% pullback in late June and early July that preceded the start of the second-quarter earnings, the market has essentially been on the upswing for months, with occasional periods of sideways movements.
The current rally could hit resistance in November when a number of the government stimulus programs peter out.
Industrial production gained 0.8% in August after rising 1% in the previous month. Economists thought it would rise 0.6%. Capacity utilization rose to 69.6% from a revised 69% previously. Economists expected no change.
The Consumer Price index (CPI), a measure of consumer inflation, rose 0.4% in August versus forecasts for a rise of 0.3%. There was no change the previous month. So-called core CPI, which strips out volatile food and energy prices, rose 0.1% after rising 0.1% in the previous month.
Verizon Communications slipped 2% after UBS downgraded it to "neutral" from "buy," according to published reports.
Adobe shares fell around 6% after the software maker said late on Tuesday it was buying e-commerce firm Omniture for about $1.8 billion.
Anheuser-Busch InBev, the maker of Bud beer, began trading on Wednesday on the New York Stock Exchange 10 months after it was bought by Belgian brewer InBev. Shares gained 2%.
The dollar fell versus other major currencies, hitting a 9-month low against the euro and a 7-month low against the yen. The falling greenback boosted dollar-traded commodities including oil and gold.
US light crude oil for October delivery rose $1.58 to settle at $72.51 a barrel on the New York Mercantile Exchange. In addition to the impact from the weak dollar, crude oil prices were also reacting to the government's weekly inventories report, which showed crude supplies fell more than expected in the latest week.
COMEX gold for December delivery rose $13.90 to settle at $1020.20 an ounce, a record high.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.43% from 3.45% late on Tuesday.
Volume was higher than in recent days, in part because of the impact of the quarterly options expiration Friday. Stock index futures and options, and individual stock futures and options all expire at the same time. That can create volatility in the days leading up to the expiration and the day of the expiration.
After the close, Oracle reported weaker quarterly revenue that missed forecasts. The software maker's quarterly earnings of 30 cents per share were in line with forecasts. Shares slipped in extended-hours trading.
European shares rose for the ninth time in the past 10 sessions. The pan-European Dow Jones Stoxx 600 index climbed 1.3% to 244.57, closing at its highest level since Oct. 6.
The UK's FTSE 100 index rose 1.6% to 5,124.13, while the German DAX index rose 1.3% to 5,700.26 and the French CAC-40 index advanced 1.6% to 3,813.79.It was indeed a good day for bulls on Wednesday as the NSE Nifty inched closer to the 5,000 mark. Firm cues from the international markets coupled with impressive advance tax numbers helped the markets extend gains for second straight day.
In addition, Fed Chairman Ben Bernanke’s comment on recession in the US stating that it is "very likely" over and to top it all, Warren Buffett said he is buying equities further boosted sentiment all over.
Coming back to domestic markets, the upswing was driven by buying witnessed in the metals, banking, realty and auto stocks. Even the broader markets i.e. the mid-cap and the small-cap stocks attracted buying.
The BSE Sensex advanced 222 points or 1.4% at 16,677 after touching a high of 16,700 and a low of 16,498. The index opened at 16,498 against the previous close of 16,454. The NSE Nifty surged 66 points to shut shop at 4,958.
In Asia, the Nikkei in Japan gained by 0.6% at 10,270 while Australia's S&P/ASX ended higher by 2.5% at 4,650. The Hang Seng index in Hong Kong gained 2.5% at 21,402. However, Shanghai SE Composite in China fell by 1.2% at 2,999.
In Europe, stocks were in the green. The FTSE in the UK was up 1.5%, The DAX in Germany was up 1.1% and the CAC 40 index in France gained 1.5%.
Coming back to India, among the BSE sectoral indices, the Metal index was the top gainer, gaining 4.3%, followed by the Consumer Durables index that was up 2%. The BSE Bankex index up 2% and the BSE Auto index was up 2%.
The BSE Mid-Cap index gained 1.5% and the BSE Small-Cap index gained 1.1%.
Among the 30-components of Sensex, 24 stocks ended in the green and 6 ended in the negative terrain. Among the major gainers were Tata Steel, Tata Motors, Hindalco, SBI, ACC, Hero Honda and Sterlite.
On the other hand, Reliance Infra, HUL, Wipro and HDFC were among the major laggards.
Outside the frontline indices, the big gainers in the broader market were LIC Housing Fin, EIH Ltd, Indian Hotels, EKC and LITL. On the other hand, losers included Central Bank, Bank of India, Apollo Hosp, Gujarat NRE and Ackruti.
Shares of LIC Housing Finance surged by over 11% to Rs749 after the company announced that it raised US$135mn selling 10mn shares to institutional investors at an average price of Rs658 per share.
Citigroup Inc., Enam Securities Pvt., Kotak Mahindra Capital Co. and Nomura Holdings Inc. managed the sale.
The stock opened at Rs665 and made an intra-day high of Rs762 and a low of Rs665. Total traded volumes stood at 1.9mn shares.
Shares of Orchid Chemical sky rocketed by over 25% in a single trading session to end at Rs158 after the company announced that it has received approvals from the US FDA for its ANDAs for Piperacillin and Tazobactam for Injection. These approvals cover Orchid's generic equivalents in 2.25 g, 3.375 g and 4.5 g vial as well as 40.5 g (Pharmacy Bulk Package) dosage forms and strengths.
The US FDA has also determined that Orchid is a 'first applicant' for the products and has accordingly granted 180-day generic drug exclusively, under applicable provisions. Orchid would be launching this product in marketing and distribution partnership with Apotex in the US.
Shares of Elder Pharma recovered nearly 10% from its intra-day low and ended lower by 5% at Rs304. The stock fell to an intra-day low of Rs260 after media reports stated that The Serious Fraud Investigation Office (SFIO) has completed its year-old probe into alleged accounting irregularities in Elder Pharmaceuticals.
Reports stated that no action has been initiated, as of date, on the basis of the SFIO report.
There were also media reports stating that company is in preliminary talks with US based PE firm T A Associates to sell upto 20% stake. However, later the company clarified that the statement in the article "Elder promoters want to dilute up to 20% stake" is factually incorrect and misleading.
Shares of TVS Motors shot up by over 10% to Rs57.9 after the Supreme Court allowed the company to sell Flame motorcycle and referred the patent with Bajaj Auto to the Madras High Court Jurisdiction.
Meanwhile, Shares of Bajaj Auto came off it days high and ended up by only 1% at Rs1380. The stock hit an intra-day low of Rs1365 after the courts decision over the TVS motorcycle. The total volumes traded in Bajaj Auto was 56,000 shares on BSE
The hotel stocks were in demand after the Reserve Bank of India notified that hotels be taken out of the Real Estate Exposure for Banks to those entrepreneurs who themselves run these ventures. This new relaxation/incentive would enable hotels to avail larger credits at better interest rates, which would help to lower the overall cost of such hotel projects.
Secretary, Ministry of Tourism had actively taken up with the Ministry of Finance/Reserve Bank of India earlier this year, to accord infrastructure status to hotel projects, and provide fiscal amenities for creation of additional hotel room capacity to meet the surge in demand in the tourism sector.
Stocks like Indian Hotels surged by over 9% to end at Rs73.8, EIH Ltd advanced by over 10% at Rs131.45, Hotel Leela shot up by over 10% to Rs38.85, Taj GVK surged over 7% to end at Rs131.35 and Viceroy Hotels was locked at 5% upper circuit at Rs41.80.