What lies behind us and what lies before us are tiny matters compared to what lies within us.
It’s no tiny matter that the market has run this far. Today, we expect a flat start though. Mixed global cues, uncertain external environment and Thursday’s F&O expiry could stop the bulls in their tracks momentarily. What the Fed policymakers say at the end of a two-day meeting later today (US time) will have some bearing in the short-term. All in all, there could be some added volatility at least this week.
Caution has been thrown to the winds for now. Concerns about the six-month rally having been too fast and too furious have been blown away by strong FII inflows. In fact, their net investment into Indian stocks this year has crossed $10bn. Last year, they had pulled out $13bn. That is history now. What matters is the present, and at the moment it doesn't appear to be anywhere near as tense as it was post Lehman Brothers' implosion.
Contrary to some skepticism, the green shoots do appear to have weathered the storm(s). Though the pace of growth is slow, one shouldn’t be complaining too much when one looks at the situation a year ago. A big question is whether the ascent will continue or will it meet with any sort of resistance.
The current bull-run is bound to be tested in the days, weeks and months ahead. Inflation will be the biggest challenge, along with hardening interest rates. Before the bad news starts trickling in, the market may get some good news in the form of another round of encouraging quarterly results.
What will happen when governments and central banks start reversing their stimulus measures? Will the liquidity that is fueling the frenzied rush toward risky assets continue unabated? How will the markets, companies and individuals react when this happens? Will there be another twist in the tale? There are some tough questions that needs to be answered.
US stocks rallied on Tuesday after a choppy morning, with the Dow, S&P 500 and Nasdaq all hitting one-year highs. The Dow Jones Industrial Average rose 0.5% to end at 9,829.87 - its highest point since Oct. 6, 2008. The S&P 500 index added 0.7%, ending at 1,071.66 - its highest point since Oct. 3, 2008. The Nasdaq Composite index gained 0.4% to end at 2,146.30 - its highest point since Sept. 26, 2008.
US stocks have notched up one-year highs repeatedly over the past two weeks, with the Nasdaq ending Monday's session at its highest level since shortly after the collapse of Lehman Brothers a year ago. The slow, steady move up is creating anxiety among a few investors who have missed the six-month rally, which in turn is drawing more money into the market at every dip. Despite calls for a September slide, investors continue to use declines as an opportunity to get back in.
Stocks have also benefited from the weakness of the US dollar versus other major currencies. Dollar-traded commodities and corresponding commodity stocks tend to rise when the greenback weakens. In addition, the weaker dollar impacts the stocks of companies that have a strong presence overseas.
Since bottoming at a 12-year low March 9, the S&P 500 has gained 57.4% and the Dow has gained 49%, as of Monday's close. After hitting a six-year low, the Nasdaq has gained 68.5%. Stocks have risen during those 6-1/2 months on signs that the US economy has stopped worsening. Unprecedented amounts of fiscal and monetary stimulus have also lent good support.
Dow gainers were fairly broad based, with 20 of 30 issues rising. A number of financial stocks gained. The KBW Bank sector index gained 2.3%.
Citigroup rose 5% after Singapore sovereign wealth fund GIC said it sold half of its stake in the company. GIC had bought a 9% stake in Citigroup at its lows and opted to cash in on the recent market rally to earn $1.6 billion.
The Federal Reserve concludes its two-day policy meeting on Wednesday. The central bank is expected to hold short-term interest rates unchanged at levels near zero. Investors will also look to the central bank's statement for clarity on how they see the economic outlook. Fed chief Ben Bernanke said last week that the recession is likely over, but the labor market still has a long way to go. Investors will also be looking to see if they say anything about how the Fed policymakers plan to wind down programs that pumped trillions into the economy to cushion the blow of the recession.
Also Wednesday, Treasury Secretary Timothy Geithner is set to testify before the House Financial Services committee on regulatory reform.
July home prices rose 0.3%, according to a report from the Federal Housing Finance Agency (FHFA) released shortly after the start of trading. That was short of forecasts for a rise of 0.5%. Home prices rose a revised 0.1% in June.
US light crude oil for October delivery rose $1.84 to settle at $71.55 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $10.60 to settle at $1,015.50 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 3.46% from 3.48% late on Monday.Indian markets extended its winning streak to 12th straight trading session on Tuesday. It was another momentous day as the NSE Nifty closed above the 5,000 mark for the first time since May 22, 2008.
After starting off on a cautious note, markets gained momentum defying weak cues from the Asian markets. The upswing was led by the Auto, Realty and the FMCG stocks. Even Mid-Cap and the Small-Cap stocks were in demand. However, towards fag end oil & gas stocks like Reliance Industries, ONGC and Gail India turned out be party poopers as the stocks witnessed some offloading.
The BSE Sensex gained 145 points or 0.9% at 16,886 after touching a high of 16,943 and a low of 16,763. The index opened at 16,805 against the previous close of 16,741. The NSE Nifty gained 44 points to shut shop at 5,020.
In Asia, the Nikkei in Japan was shut while Australia's S&P/ASX ended lower by 0.4% at 4,663. Shanghai SE Composite in China fell by 2.2% at 2,897. However, the Hang Seng index in Hong Kong ended up 1% at 21,701.
In Europe, stocks were in the green. The FTSE in the UK was up 0.9%, The DAX in Germany was up 1.2% and the CAC 40 index in France gained 0.8%.
Coming back to India, among the BSE sectoral indices, the IT index was the top gainer, gaining 2%, followed by the FMCG index that was up 1.6%. The BSE Realty index up 1% and the BSE Auto index was up 1%.
The BSE Mid-Cap index gained 0.8% and the BSE Small-Cap index added by 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 HDFC, TCS, Tata Motors, ITC, Infosys, HDFC Bank and SBI.
On the other hand, Bharti, JP Associates, Hindalco and ONGC were among the major laggards.
Outside the frontline indices, the big gainers in the broader market were P&G, Moser Baer, LIC Housing, Mphasis, TTML and Alstom Projects. On the other hand, losers included Bharat Forge, Jubilant Org, Concor, Madras Cement and Divis Bank.
Shares of Reliance Industries ended flat at Rs2096. Reports stated that the company is looking at acquiring the assets either partly or fully of the bankrupt Dutch petrochemicals company LyondellBasell.
According to reports, Reliance Industries could make a cash payment of US$3.25bn to LyondellBasell's vendors for the deal. LyondellBasell is in the process of putting together a rights offering to provide the company with additional liquidity after it emerges from Chapter 11 bankruptcy, reports added.
LyondellBasel, which filed for bankruptcy on 6 January 2009, filed its Chapter 11 reorganisation plans with bankruptcy court in New York on 18 September 2009.
Shares of Tata Motors gained by 2.5% to Rs614 after report stated that its wholly-owned subsidiary received loan of Rs788mn from the UK government for its Rs1.97bn electric car programme. The stock opened at Rs597 and made an intra-day high of Rs621 and a low of Rs597. Total traded volumes stood at 1.4mn shares.
The board of directors of Reliance Communications approved the proposal by Reliance Infratel Ltd, a subsidiary company, a part of Reliance Anil Dhirubhai Ambani Group, to undertake an IPO of equity shares of the company. The Net Issue will constitute 10.0% of the post-Issue paid-up equity capital of the Company. The draft red herring prospectus for the said IPO will be filed by Reliance Infratel Ltd with SEBI shortly.
Reliance Infratel Ltd. is one of the leading passive telecommunication infrastructure providers in India. Shares of RCom gained by 0.5% to Rs307. The stock opened at Rs307 and made an intra-day high of Rs311 and a low of Rs302. Total traded volumes stood at 2.5mn shares.
Shares of Gateway Distriparks shot up by over 6.5% to Rs119 after reports stated that Blackstone is set to buy a 25% stake in Gateway Rail Freight Ltd, the container train services unit of Gateway Distriparks, for Rs2.5bn. The stock opened at Rs115 and made an intra-day high of Rs124 and a low of Rs114. Total traded volumes stood at 0.26mn shares.
Kingfisher Airlines may sell stock to existing shareholders to raise US$80mn-100mn. The company may also sell GDR for fund raising. The airline plans to raise funds for reducing debt.
Shares of Kingfisher Airlines ended flat at Rs51.95 The stock opened at Rs52.70 and made an intra-day high of Rs54.50 and a low of Rs51. Total traded volumes stood at 3.4mn shares.
GAIL signed two contracts for sourcing of natural gas from PY-1 field for supply to a power plant in Tamil Nadu here. A long term Gas Sale Contract (GSC) for the PY-1 gas supplies was signed between GAIL and HOEC.
Shares of GAIL ended lower by 0.5% to Rs348, while, Hindustan Oil marginally gained by 0.2% to end at Rs351.7.
Shares of Allcargo Global shot up by over 7% to end at Rs887 after reports stated that Blackstone Group LP will raise its stake in the company.
Allcargo Global will issue 1.51mn warrants to Blackstone Group LP that are convertible as of September 26, 2009 to equity at Rs934 per share, increasing holding by 6.8%.
Blackstone would have a 17.25% stake in Allcargo Global after the conversion, according to reports.