Every man is free to rise as far as he's able or willing, but the degree to which he thinks determines the degree to which he'll rise.
After 12 years, RIL has decided to reward its shareholders with a generous 1:1 bonus. The recent treasury stock sale by RIL had raised some concerns on valuations. It’s a no-brainer that the stock will open higher. The key indices will naturally benefit from a firm RIL as the stock is an index heavyweight. According to Prayesh Jain, Research Analyst at India Infoline "the market would be positively surprised by the announcement of 1:1 bonus issue by Reliance Industries after 12 years". Last time around, the stock reacted by rising 3%. We expect the stock to open strong and sustain at higher levels in the near term. The move is to boost up investor confidence, which had slackened on back of pending litigations with RNRL and NTPC. The stock underperformed Sensex by 8% over the last three months and by about 5% YTD.
While the market will open higher, the overall mood will be determined by the trend in global markets. Most players are keenly awaiting the latest batch of quarterly numbers to take a broader call. Since valuations are not cheap, exercise some restraint. Even if earnings season turns out to be a strong one, spend some time weighing the risk-reward ratio. Expect volatility with a positive bias.
IT stocks will remain in the spotlight due to a 12% gain in the Indian Rupee since March. Infosys will come out with its Q2 earnings tomorrow. What the Infy management says on the IT business environment will be eagerly followed. The market will also look for an update on the company’s annual guidance.
NTPC is likely to attract attention as the Government might go for a stake sale in the public sector power utility through the follow-on offer route in January.
Inflation will be announced today and is expected to gain further ground as prices are set to firm up across segments. To make the matters worse, the high base effect of last year has started ebbing. A higher than expected spike in inflation could force the hands of the RBI. The central bank could at least signal a change in its stance later this month.
Meanwhile, bank credit growth remains sluggish at 13% year-on-year as against the RBI’s annual target of 20%.
FIIs turned net buyers in the cash segment on Wednesday at Rs6.34bn on a provisional basis. The local funds were also net buyers of Rs3.02bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs8.02bn. On Tuesday, FIIs were net buyers of Rs314mn in the cash segment. The net FII investments in Indian stocks this year have crossed $12.6bn.
The Bank of England (BOE) and the European Central Bank (ECB) will review their monetary policy later today.
US stocks closed nearly unchanged on Wednesday after a choppy session, with blue chips weaker and technology a bit higher as a two-day advance petered out amid a mixed dollar, lower oil prices and some jitters at the start of the quarterly financial reporting period.
The Dow Jones Industrial Average fell 6 points, or 0.1%, to 9,725.58. The S&P 500 index rose 3 points, or 0.3%, to 1,057.58 and the Nasdaq Composite index gained 7 points, or 0.7%, to 2,110.33.
Banks climbed on an analyst upgrade of Bank of America and Wells Fargo’s plan to boost credit-card rates. Goldman Sachs upgraded the biggest US banks to "attractive" from "neutral" on Oct. 5, saying that share prices don’t reflect prospects for earnings growth.
US stocks had risen on Monday and Tuesday, with the broad S&P 500 gaining just short of 3%, recovering most of what it had lost in the previous two weeks. But the rally ran into some resistance on Wednesday as the dollar turned mixed and investors looked to the start of the third-quarter financial reporting period.
Analysts expect third-quarter profits to have fallen around 24% versus a year ago, with the heaviest percentage losses expected in the materials, energy and industrials' sectors.
Dow component Alcoa kicked off the quarterly earnings season after the close, reporting quarterly earnings and revenue that fell from a year ago but surpassed analysts' estimates. While it was a positive omen, investors are likely going to remain on edge until the end of the month.
Alcoa shares had jumped before beginning the third-quarter earnings season.
Financials are expected to post the best results of any sector, as they had suffered heavily in the third quarter of 2008. The sector is expected to see earnings growth of 59%. The broad S&P 500 is expected to see a drop in profits for the ninth quarter in a row.
Any small selloff will be greeted with renewed buying interest. Also, as the end of the year draws nearer, hedge funds and portfolio managers will have to turn more cash into investments. That could give the market a year-end boost.
Since bottoming at a 12-year low on March 9, the S&P 500 has gained 56%, and the Dow has gained 49% as of Tuesday's close. After hitting a six-year low, the Nasdaq has gained nearly 68%.
Gold prices extended their record-breaking run for a second session as the dollar remained under pressure while crude oil prices rose ahead of the latest US weekly inventories data. COMEX gold for December delivery rose $4.70 to settle at $1,044.40 an ounce after ending the previous session at a record $1,039.70. The previous record close of $1,020.20 was set two weeks ago.
The dollar gained versus the euro and fell against the yen, reversing its recent slide against a basket of currencies.
US light crude oil for November delivery fell $1.31 to settle at $69.57 a barrel on the New York Mercantile Exchange.
Treasury prices rallied, lowering the yield on the 10-year note to 3.19% from 3.25% late on Tuesday.
European shares struggled to build on sharp gains made in the previous session. After shooting up 2.2% on Tuesday, the pan-European Dow Jones Stoxx 600 index closed 0.3% lower at 240.35. The UK's FTSE 100 index fell 0.6% to 5,108.90, while Germany's DAX index slipped 0.3% to 5,640.75 and the French CAC-40 index slipped 0.4% to 3,756.41.
After enjoying a classic turnaround on Tuesday, Indian markets yet again lost ground with the BSE Sensex closing below the 17,000 and the NSE Nifty ending below the 5,000 levels. As expected, markets started off on a promising note on Wednesday tracking overnight gains in the US and the Asian markets.
However, a sudden bout of selling in IT and the telecom stocks dragged the markets lower. Technically, an important aspect which comes to notice is that the NSE Nifty has closed below the 13DMA for the first time since September 3, 2009. However, unless the index closes above the 4960-70 levels long position would not be a problem.
On Wednesday, the BSE Sensex slipped 151 points at 16,806 after touching a high of 17,120 and a low of 16,764. The index opened at 17,069 against the previous close of 17,958. The NSE Nifty lost 41 points to shut shop at 4,985.
Post market hours on Wednesday, Reliance Industries announced issue of Bonus shares in the ratio of one equity share of Rs. 10/- each fully paid up for every one equity share of Rs. 10/- each of the Company.
In Asia, the Nikkei in Japan was up 1.1%, while Australia's S&P/ASX ended higher by 2.2% at 4,695. Shanghai SE Composite in China gained 1% and Hang Seng index in Hong Kong was up 2.1%.
In Europe, stocks were in the positive terrain. The FTSE in the UK was up 0.2%, The DAX in Germany was up 0.3% and the CAC 40 index in France was up 0.3%.
Coming back to India, among the BSE sectoral indices, the IT index was the top loser, shedding 2.6%, followed by the Teck index that was down 2% and the BSE Oil & gas index was down 2%.
Among the major gainers were, BSE Consumer Durable index gained 4.5%, BSE Metal index up 2.3% and BSE Pharma index gained 1.4%.
The BSE Mid-Cap index gained 1.5% and the BSE Small-Cap index was up 0.4%.
Among the 30-components of Sensex, 20 stocks ended in the red and 10 ended in the positive terrain. Among the major laggards were Wipro, Maruti, TCS, SBI and Infosys.
On the other hand, Sterlite, JP Associates, Hindalco, BHEL and Tata Steel were among the major gainers.
Outside the frontline indices, the big losers in the broader market were Mphasis, Rolta, HCL Tech, Sun TV and Godrej Industries. On the other hand, gainers included Piramal Healthcare, Yes Bank, Titan and Canara Bank.
Shares of Aban Offshore ended lower by 0.5% to Rs1610. The stock rose to hit an intra-day high of Rs1659 after media reports stated that the company is looking to raise Rs20-25bn through a QIP which is reportedly to open in the month of November.
Reports also stated that the promoters are willing to dilute 20-22% equity stake at Rs1900-1950 per share.
The stock opened at Rs1645 and made an intra-day low of Rs1594. Total traded volumes stood at 0.5mn shares.
Shares of ABG Shipyard fell by 3.5% to Rs212 after reports stated that the IT department has raided the company on possibility of tax evasions. The Income Tax dept began raiding ABG Shipyard in Mumbai and Surat.
The stock opened at Rs229 and made an intra-day high of Rs229 and a low of Rs201. Total traded volumes stood at 0.44mn shares.
Shares of Omnitech Solutions shot up by over 3% to Rs143 after media reports stated that the company is exploring various options for fund raising. Further, the Omnitech is also looking for acquiring a company in the US and UK.
The stock opened at Rs144 and made an intra-day high of Rs154 and a low of Rs140. Total traded volumes stood at 1.2mn shares.
Shares of KS Oils edged higher by 0.2% to Rs68 after the company announced that it has acquired an additional 53,000 acres of land for development of Palm Oil Plantations in Indonesia through its Wholly owned Subsidiary at Singapore K S Natural Resources Pte. Ltd.
The Funding will be through internal accruals and debt at subsidiary level. The total funds required for the new project would be around Rs3.8bn over the next three years.
Shares Raymond gained by 0.4% to Rs196 after the company plans to spend Rs1bn on 300 new retail stores along with its franchise partners.
The company plans to increase the number of outlets to 800 by March 2011 from 500 by tapping smaller towns and cities, Chairman Gautam Singhania was quoted as saying.
"Instead of people coming to cities to buy our products, we aim to get closer to our consumers," he said.
Shares of Jindal Saw erased early gains and ended up by only 2% at Rs715. The stock rose to an intra-day high of Rs733 after the company announced that the board of directors would meet on October 15, 2009 to consider stock split.
The stock opened at Rs709 and made an intra-day high of Rs734 and a low of Rs706. Total traded volumes stood at 0.4mn shares.
Shares of Zenotech Labs were locked at 20% upper circuit to Rs125.90 after Securities Appellate Tribunal (SAT) asked Daiichi to make Zenotech offer at Rs160 per share, media reports stated.
The open offer was delayed after the SAT requested Daiichi Sankyo to put the offer on hold because of a petition by one or more minority shareholders of Zenotech about the price of the offer. The initial Daiichi Sankyo offer was to buy each Zenotech shares for Rs113.62.
The purpose of Daiichi Sankyo's tender offer for Zenotech shares is mainly to meet the regulatory law which requires Daiichi Sankyo to hold an open offer for Zenotech shares after buying the controlling stake in Ranbaxy