A mind troubled by doubt cannot focus on the course to victory.
Troubled minds may have found some calm as strong buying from FIIs helped propel the key indices to a 15-month high. The rally came on higher volume and turnover with positive breadth. Firm global markets got a boost from heightened M&A action. Encouraging remarks from G20 leaders over the weekend added support. We won’t blame you for thinking that a rise was anticipated as Oil India IPO opens. The worry would be how long can it last?
We expect a cautious opening with no cues from Wall Street and a mixed Asian markets. The bulls may just manage to push indices a little further if FIIs and global markets help. Taking some money off the table and waiting for further clarity on the global economy, local factors and corporate health won't be a bad idea.
Stocks have doubled in six months. Given the mismatch between valuations and fundamentals, further gains could be difficult to come by. Economic reports and earnings have raised optimism that the worst is over. There might yet be another crisis if the real issues that need to be tackled are overlooked especially the one relating to global imbalances. Back home, we need to overcome a deficient monsoon, high fiscal deficit, possible spike in inflation and hardening of interest rates.
FIIs were net buyers of Rs10.6bn in the cash segment on Monday on a provisional basis while the local funds pumped in Rs1.5bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs18.26bn. On Friday, FIIs were net sellers of Rs569mn in the cash segment.
Meanwhile, gold futures briefly touched a six-month high of US$1,000 per ounce in Globex electronic trading in Tokyo on Tuesday before easing below the four-figure milestone. It marked the first time a front-month Gold futures contract has reached that level since late February this year. The December contract added 0.2% to US$998.20 an ounce in New York at 9:32 a.m. in Singapore. Spot gold traded at US$995.85 an ounce.
The euro traded near a one-week high against the dollar before a report forecast to show industrial production in Germany rose in July. The dollar was close to its lowest level in a year versus Australia’s dollar on speculation that Federal Reserve officials will this week signal that the American central bank will keep borrowing costs low, boosting demand for so-called dollar carry trades. The US currency also fell for the first time in four days versus the yen after the United Nations said that the US currency’s role in international trade should be reduced.
International media reports say that regulators have agreed on tough new rules for banks would force many in Europe to raise tens of billions of euros in capital in coming months. The rules will force banks to substantially improve the quality and extent of the capital buffers they hold to absorb shocks. At least half of the capital cushion of banks must comprise common equity and retained earnings under measures agreed by the powerful Basel committee of central bank governors and bank regulators, according to reports.
Former Federal Reserve Chairman Alan Greenspan says that American banks should be forced to hold more capital on their balance sheets, reinforcing a weekend push by finance chiefs from the Group of 20 nations. "Capital requirements even during non-crisis periods have to have a larger buffer," the 83-year-old former policy maker says.
Asian shares are trading mixed. Hong Kong's Hang Seng Index traded 0.2% higher at 20,662.23 in early action. But in mainland China, metals-related shares pressured the Shanghai Composite, which fell by 1.4%.
Banks in Japan fell after central bank figures showed that the country’s lending growth slowed. Technology and commodity companies advanced as computer memory prices and metal prices rose.
The MSCI Asia Pacific Index rose 0.1% to 114.33 as of 10:57 a.m. in Tokyo, with about eight stocks declining for every seven that rose. The index has climbed 62% from a more than five-year low on March 9 on speculation that stimulus measures worldwide will revive the global economy.
European shares gained sharply on Monday after Kraft Foods made an unsolicited bid for Cadbury and ignited hopes that a revival of merger-and-acquisitions activity will form another stepping stone on the way to a recovery.
The pan-European Dow Jones Stoxx 600 index rose 1.4% to 237.01, the third straight day of gains for the index. The UK's FTSE 100 index rose 1.7% to 4,933.18, while the German DAX index gained 1.5% to 5,463.51 and the French CAC-40 index was up 1.5% at 3,652.83.
US equity markets were shut on Monday for the Labor Day holiday.
On Friday, US stocks rose amid low volume ahead of the Labor Day weekend, as investors focused on the positives in a mixed report on the labor market. However, all the three major stock indexes ended the week lower.
The Dow Jones Industrial Average gained 96 points, or 1%, to 9,441.27. The S&P 500 index added 13 points, or 1.3%, to 1,016.40. The Nasdaq Composite index advanced 35 points, or 1.8%, to 2,018.78.
On the whole, the jobs report was okay, suggesting moderation in job losses. But the market is saturated with good news and is starting to show fatigue after a 50% rally in the S&P 500 since early March.
Stocks tumbled in the first three sessions of this week as investors worried about the health of the US economy. There was a late-session advance on Thursday as some of the bank and technology shares that slumped earlier in the week bounced back.
American employers cut 216,000 jobs from their payrolls in August, the Labor Department reported, after paring a revised 276,000 jobs in July. The month brought the smallest number of job cuts since August 2008. Economists had forecast 230,000 job cuts.
The unemployment rate, generated by a separate survey, rose to 9.7% from 9.4%, a 26-year high. Economists had expected unemployment to rise to 9.5%. Unemployment is expected to hit 10% by the end of the year or early 2010, even as the US economy is starting to recover.
It was a Magical Monday wasn’t it? The Sensex gained more than 300 points to end above the 16k and the Nifty too closed at 52-week high surpassing its previous 4740 hurdle. Couple of weeks back, market was in a limbo given the global uncertainties and technical resistance; however against all odds bulls have shown their strength to push themselves beyond 2009 highs.
Market has finally broken above its trading range after consolidating for nearly 3 months. The 4750 levels which was a crucial resistance for the Nifty has been taken out quite convincingly, the index has breached the double top on the daily charts indicating a break out. In addition revival in monsoon and firm global cues also lifted the sentiment on Dalal-Street.
Short covering emerged once the 4750 levels were breached lifting the Nifty to hit new 2009 highs. The rally was led by action seen in the index heavyweights like Tata Motors, RCom, ICICI Bank and Sterlite Industries.
The BSE Sensex surged 327 points or 2% at 16,016 after touching a high of 16,035 and a low of 15,793. The index opened at 15,793 against the previous close of 15,689. The NSE Nifty surged 102 points to shut shop at 4,783.
In Asia, the Nikkei in Japan gained by 1.3% at 10,320 while Australia's S&P/ASX ended higher by 0.5% at 4,454. The Hang Seng index in Hong Kong surged 1.5% at 20,629. Shanghai index in China was up by 0.6% at 2,881.
In Europe, stocks were in the green. The FTSE in the UK was up 1.4%, The DAX in Germany was up 1.5% and the CAC 40 index in France was up 1.4%.
Coming back to India, among the BSE sectoral indices, the Realty index was the top gainer, surging 5.5%, followed by the Metal index that was up 4%. The BSE Bankex index up 3.1% and the BSE Capital Goods index was up 3%.
The BSE Mid-Cap index gained 2.3% and the BSE Small-Cap index gained by 3%.
Among the 30-components of Sensex, 28 stocks ended in the green and only ITC and M&M ended in the negative terrain. Among the major gainers were Tata Motors, Reliance Communication, ICICI Bank, JP Associates and Sterlite Industries.
Outside the frontline indices, the big gainers in the broader market were Bhushan Steel, REI Agro, GMDC, Sun TV, Welspun Gujarat and IRB Infra. On the other hand, losers included Shriram Transport, PFC, Ackruti, Mphasis and Pantaloon Retail.
Shares of IOC shot up by over 9% to end at Rs673 after the company announced that it planned to give free shares to investors. The company will consider issuing free shares in a board meeting scheduled for September 13.
The stock opened at Rs641 and made an intra-day high of Rs682 and a low of Rs635. Total traded volumes stood at 0.58mn shares.
Shares of Uttam Galva Steels were locked at 10% upper circuit at Rs125.05 after the company announced a "co-promotion agreement" that will entitle ArcelorMittal to become a co-promoter in the company. Uttam Galva will allow ArcelorMittal to acquire shares in the company through an open offer.
Following this, both ArcelorMittal and the current promoters of Uttam Galva will be equal partners in the company. The process of joint partnership will be done in three stages. At the first stage, ArcelorMittal will purchase a 5% stake for Rs696mn at Rs120 a share.
Subsequently, the Mittals will make an open offer to purchase a 30% stake at the same price paid to the promoters for the 5% stake, valuing the company at Rs13.84bn. In case the open offer gets poor investor response, the Miglanis, Uttam Galva’s promoters, will sell part of their stake to make up the difference.
Shares of Maytas Infra were locked at 5% upper circuit at Rs143.85 after ~1.7mn shares, or 2.9% of its equity, changed hands in 10 transactions. On September 3, 2009 ~2.67mn equity shares or 4.5% of its equity, change hands in eight transactions.
~4.37mn shares or 7.4% equity of the company has changed hands in last three trading sessions. The stock opened at Rs143.8 and made an intra-day high of Rs143.8 and a low of Rs138.05. Total traded volumes stood at 2.3mn shares.
Shares of Tata Steel surged by over 3% to Rs441.8 after it completed Aug’09 by showing a significant increase in its hot metal, crude steel and saleable steel production over the corresponding month of last year.
Tata Steel's August domestic steel sales rose 25% from a year earlier to 492000 tons. The strong performance came on the back of an 81% jump in sales of long products, used in construction, from a year earlier.
Shares of Petron Engineering were frozen at 20% upper circuit at Rs154.25 after the company announced that it won order worth Rs374.5mn from Madras Cement for mechanical fabrication and erection works for 5000 TPD line - 2 cement projects at Ariyalur. The stock opened at Rs130 and made an intra-day high of Rs154 and a low of Rs127.3. Total traded volumes stood at 48,000 shares.
Shares of HEG surged by 4% to Rs262 after the company announced that it plans to raise Rs1.5bn via placement of debt. The stock opened at Rs255 and made an intra-day high of Rs265 and a low of Rs255. Total traded volumes stood at 15,000 shares.
Suven Life Sciences were locked at 5% upper circuit at Rs29.05 after the company announced that its drug discovery collaboration in central nervous system disorder with Eli Lilly has yielded a positive outcome with lead declaration leading to a milestone payment to the company from the US drug major.
The milestone was achieved with the identification and selection of a first lead compound to be advanced into Lead Optimization Phase of preclinical development.