Keep high aspirations, moderate expectations, and small needs.
The earnings season is underway and the Alcoa numbers seem to have bolstered the sentiment, and heightened the expectations. Having said that, the markets around the world still have to deal with a lot of earnings. They are looking for further evidence of recovery and what better source to get it than earnings. There are bound to be some disappointments just as there will be positive surprises. Take each day as it comes and don’t jump the gun and end up making a wrong move.
Though equities in the US and European markets advanced on Alcoa results, Asian markets are mixed. Chinese stocks are up sharply as trading resumed after a week-long holiday.
Infosys has come out with its Q2 FY10 financial results. The IT bellwether has reported a net profit of Rs15.4bn as against Rs15.27bn in the quarter ended June 30. The revenue for the reporting quarter is Rs55.85bn versus Rs54.72bn in the previous quarter. Operating profit margin for the second quarter stood at 34.6 compared to 34.1% in the April-June quarter.
India Infoline Research was expecting Infosys to report 2-3% QoQ growth in topline and 3-4% rise in the bottomline.
A rising rupee could take some shine off the Infy stock and other software shares.
We expect a flat to slightly positive start after the Infosys results. The market is expected to be volatile in the short term as it awaits more signs of improvement on the economic front, both here as well as overseas, through the prism of quarterly results. It is not prudent to take a broad call on the market’s direction depending on a day’s news or a week’s news or even a month’s news. One has to constantly monitor developments and remain highly alert to the emerging situation.
Meanwhile, the Federal Reserve Chairman Ben S. Bernanke says that the American central bank will be prepared to tighten monetary policy when the outlook for the economy has improved sufficiently. The dollar rose against the yen for the first time in five days after the Bernanke remarks. Central banks in the UK and Europe have continued with a policy of ultra-low interest rates on the one-year anniversary of coordinated global interest-rate cuts.
Rising industrial production and a rebound in US employment will push stocks higher around the world, according to Absolute Strategy Research Ltd., a London- based firm that told clients to buy shares in March this year.
Shares of Pipavav Shipyard will list today.
FIIs were net sellers in the cash segment on Thursday at Rs3.76bn on a provisional basis. The local funds pulled out Rs208.3mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs3.09bn. On Wednesday, FIIs were net buyers of Rs7.73bn in the cash segment. The net FII investments in Indian stocks this year have crossed $12.8bn.
US stocks rose on Thursday, with the major indexes flirting with 2009 highs, after Dow component Alcoa posted better-than-expected earnings and a report showed an unexpected drop in jobless claims.
Gold climbed to a record as the dollar weakened to the lowest level in almost 14 months against six major trading partners.
The Dow Jones Industrial Average gained 61 points, or 0.6% at 9,786.87. The S&P 500 index was up 8 points, or 0.8% at 1,065.48, and the Nasdaq Composite climbed 14 points, or 0.6% to 2,123.93.
US stocks had ended mixed on Wednesday as the previous two-day rally lost steam. Stocks steadily moved higher as the session wore on, with the Dow briefly posting triple-digit gains, as 21 of 30 components rose.
Alcoa reported quarterly earnings and revenue that dropped from a year ago, but handily beat estimates. Shares rallied in extended-hours trading on Wednesday and also gained 2% on Thursday.
Third-quarter S&P 500 earnings as a whole are expected to decline more than 20% from a year ago, with materials, energy and industrials leading the decline. That means S&P 500 earnings will have slumped for nine straight quarters, the longest streak since earnings tracker Thomson began calculating the numbers.
Investors are looking to see if individual companies are starting to see any earnings growth, beyond the impact of cost-cutting. In the second quarter, more than 70% of companies reported results that topped estimates, due to reducing costs. But few companies reported sales growth or revenue that topped estimates.
Around 521,000 Americans filed new claims for unemployment last week versus forecasts for 540,000, the Labor Department reported. The number was the lowest in more than 9 months. Around 554,000 Americans filed unemployment claims in the previous week.
Continuing claims, a measure of those who have been receiving benefits for a week or more, fell to 6.040 million from 6.112 million the previous week.
The Commerce Department said that wholesale inventories fell 1.3% in August versus forecasts for a drop of 1%. Inventories fell 1.6% in the previous month.
The dollar fell versus the euro and yen, extending its recent slide against a basket of currencies.
US light crude oil for November delivery rose $2.12 to settle at $71.69 a barrel on the New York Mercantile Exchange.
Gold closed at a record $1,056.30 an ounce and hit an electronic trading high of $1,062.70. This was the third straight record high for the precious metal.
Treasury prices tumbled, raising the yield on the 10-year note to 3.24% from 3.18% late on Wednesday.
European shares finished higher with metals stocks leading the gains as investors greeted the strong set of financial results that Alcoa reported. Additionally, two of the region's major central banks maintained status quo on interest rates.
The pan-European Dow Jones Stoxx 600 index climbed 1.3% to close at 243.44 in a broad-based move to the upside.
Germany's DAX index climbed 1.3% to end at 5,716.54 and the French CAC-40 index jumped 1.3% to finish at 3,806.81, while the UK's FTSE 100 index closed at 5,154.64, up 0.9%.
Thursday turned out to be an absolute choppy day which ended on a flat note. The index heavyweight Reliance industries which announced a 1:1 bonus issue on Wednesday surged in the early trades however as the day progressed the stock ended almost flat. The move which was meant to boost up investor confidence failed to inspire the bulls.
IT stocks were under the pressure as the Indian Rupee gained 12% since March. On the other hand the telecom stocks continue to remain under the bear attack on account of per second payment.
The BSE Sensex gained 37 points at 16,843 after touching a high of 16,998 and a low of 16,775. The index opened at 16,908 against the previous close of 16,806. The NSE Nifty was up 16 points to shut shop at 5,002.
In Asia, the Nikkei in Japan was up 0.4%, while Australia's S&P/ASX ended higher by 1.5% at 4,768. Shanghai SE Composite in China gained 1% and Hang Seng index in Hong Kong was up 1.2%.
In Europe, stocks were in the positive terrain. The FTSE in the UK was up 0.7%, The DAX in Germany was up 1.2% and the CAC 40 index in France was up 1.2%.
Coming back to India, among the BSE sectoral indices, the Realty index was the top gainer, adding 2%, followed by the FMCG index that was up 2% and the BSE Auto index was up 1.7%.
Among the major losers were, BSE Teck index was down 3%, BSE IT index down 2% and BSE Capital Goods index fell 0.2%.
The BSE Mid-Cap index gained 0.8% and the BSE Small-Cap index was up 0.2%.
Among the 30-components of Sensex, 22 stocks ended in the green and only 8 ended in the negative terrain. Reliance Industries, ITC, Tata Steel, ONGC and Reliance Infra were among the major gainers.
On the other hand, among the major laggards were Bharti, Infosys, L&T, RCom and TCS.
Outside the frontline indices, the big losers in the broader market were Piramal Health, Sintex Ind, Max India, HCL Tech and United Phos. On the other hand, gainers included GE Shipping, Oracle Fin, Ashok Leyland and Videocon Ind.
Shares of Reliance Industries gained marginally by 1% at Rs2119. On Wednesday post market hours the company announced Bonus shares in the ratio of one equity share of Rs10/- each fully paid up for every one equity share of Rs10/- each of the Company.
Further, the Board declared a dividend of Rs13 per fully paid-up equity share of Rs10/- each.
Shares of Tata Motors gained by 5% to Rs587 after reports stated that the company is expected to produce around 40,000 Nanos this fiscal and increase it four-fold to over 170,000 units during FY11.
The stock opened at Rs565 and made an intra-day high of Rs600 and a low of Rs560. Total traded volumes stood at 1.6mn shares.
Jaguar Land Rover owned by Tata Motors announced that it arranged a US$278mn loan from the SBI.
The company has now completed 500mn pounds of new financing this year, including a US$90mn export-financing facility with ABC International Bank, it said today in a statement.
"We are pleased our funding plans are progressing and appreciate the confidence shown by our banking partners," Kenneth Gregor, chief financial officer of Jaguar Land Rover, said in the statement.
The government plans to sell 5% in NTPC Ltd, through a follow-on public offering in the month of January, 2010 stated reports.
The proposal is likely to come up for approval by the Cabinet Committee on Economic Affairs at its meeting on today, reports added. At current market price, the government will fetch Rs85bn, stated reports.
Shares of NTPC gained 1.4% to Rs212. The stock opened at Rs211 and made an intra-day high of Rs213 and a low of Rs210. Total traded volumes stood at 0.59mn shares.
GlaxoSmithKline Plc may purchase a 5% stake in Dr. Reddy’s by buying stock. Glaxo, may buy 20% of the family holding company’s 23.2% controlling stake, for an investment of about US$165mn, report stated.
Shares of Dr Reddy’s Labs gained by 3% to Rs976. The stock opened at Rs955 and made an intra-day high of Rs981 and a low of Rs931. Total traded volumes stood at 0.1mn shares.
Hindustan Zinc reduces Zinc prices by Rs1200 per ton. While prices of Lead prices were cut by Rs3,800.
Shares of Hindustan Zinc gained by 2.5% to Rs838. The stock opened at Rs834 and made an intra-day high of Rs846 and a low of Rs828. Total traded volumes stood at 64,000 shares.
Welspun Gujarat Stahl Rohren successfully upsizes its Foreign Currency Convertible Bonds offering for an amount of US$20mn, taking the total to US$150mn. JP Morgan has acted as the sole book- runner to the transaction.
Shares of Welspun Gujarat Stahl Rohren gained by 2% to end at Rs273.30. The stock opened at Rs273 and made an intra-day high of Rs281 and a low of Rs270. Total traded volumes stood at 1.9mn shares.
Shares of Plethico Pharma locked at 10% upper circuit to Rs287.20. The stock opened at Rs265 and made an intra-day high of Rs287.2 and a low of Rs260. Total traded volumes stood at 67,000 shares.
According to a report released on Thursday, "After 4-5 quarters of lacklustre performance, Plethico Pharma, a major nutraceuticals and OTC player, is set for accelerated growth as recessionary pressures ease and consumer spends recover globally. We estimate 63% growth in core earnings in CY09, followed by sustainable CAGR close to 20% over CY09-11.
There could be further upside to our estimates from better operating leverage, faster penetration of foreign markets by Natrol brands and higher offtake by Russian pharmacies through the Tricon deal. Plethico’s stock is trading at a significant 40-50% discount to peers and we expect this discount to narrow as earnings growth accelerates. We initiate coverage with a BUY rating and a target price of Rs440".
EdServ announced that it won a contract as Associate Training Provider (ATP) of Apex Hitech Institute, part of Ministry of Labour and Employment, Government of India, whereby the Company becomes authorised to provide MES training across India.
Apex Hitech Institute, set up with assistance from the World Bank under Directorate General of Employment and Training (DGE&T), aims to provide training to youth to better their employability by MES programme using a wide range of courses across a host of job domains.
Based on this new relationship, EdServ will train unemployed and under-employed youth aged 14 years and upwards who have dropped out of schools and colleges for various reasons that include affordability and employment needs. Subsequent to EdServ's training, these students will get assessed and certified by DGE&T.
Shares of EdServ also were locked at 5% upper circuit at Rs166.7. The stock opened at Rs166.7 and made an intra-day high of Rs166.7 and a low of Rs162.25. Total traded volumes stood at 0.26mn shares.