Every great and commanding movement in the annals of the world is a triumph of enthusiasm.
Happy Diwali,
The festival of lights is here and a subdued start need not dampen your spirit. In hindsight, the rally of the first two trading days of the week may have come a little too soon. We say this because the market appears to have lost some steam just on the eve of Diwali. The traditional Mahurat session will hopefully see much more enthusiasm. We’ve got over a nightmare of sorts. Just a year ago things looked so grim in the wake of the financial turmoil when equities and commodities tumbled and all that soared was risk aversion. Markets around the globe hit multi-year lows and tested new lows again in March.
But since then, risk appetite has come back strongly as the global economy and financial markets started seeing signs of recovery. The pace of the seven-month rally has been ferocious. There is no denying that a small reversal is imminent and overdue. The timing and intensity of the same is anybody’s guess. Don’t panic in case of a small sell-off. If anything, that should see more bulls joining the party. Today, we expect a subdued start due to uncertain global cues and another choppy session.
The quarterly earnings season is likely to determine whether stocks keep moving higher. The early results have so far been good. What the market is looking for is the classical revenue driven boost in the bottomline and there are some signs the same is starting to reflect in corporate financial numbers. If this trend continues, it would help assuage concerns on rich valuations. Also, economic and business conditions are improving faster than anticipated. Google CEO Eric Schmidt says that the worst of the recession is over.
In another upbeat development, emerging market equity fund inflows surged in the second week of October, EPFR Global says. Global Emerging Market equity funds received a net $2.1bn and Emerging Europe, Middle East and Africa managers got $358mn, the biggest inflows this year, EPFR says. Asia ex-Japan funds received $823mn.
Among the leading concern right now is on inflation and its fallout on interest rates. But, that will take time to play out. Meanwhile, crude oil is headed for its third straight weekly gain after jumping more than 3% on Thursday on an unexpected plunge in US gasoline and distillate stocks. One should take comfort in the fact that policymakers across the world are unlikely to reverse the extraordinary stimulus measures unleashed to counter the Great Recession.
Treasury Secretary Timothy Geithner says that the United States will likely avoid a prolonged slump thanks to its stimulus efforts, but policy makers must refrain from applying the brakes too soon.
Results Today: Aarvee Denim, BASF India, Ciba India, GTL Infra, IBN18, Monsanto India, Prime Focus, TCS, TV18 and UltraTech Cement.
FIIs were net buyers in the cash segment on Thursday at Rs7.52bn on a provisional basis. The local funds were net sellers at Rs4.4bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs275.3mn. On Wednesday, the foreign funds were net buyers of Rs15.82bn in the cash segment. Their net investments in Indian stocks this year has crossed $13.3bn. Mutual Funds were net sellers at Rs140mn on Wednesday.
On Wall Street, the Dow Jones Industrial Average made another one-year high as energy shares gained after crude oil climbed to a one-year high, helping the market reverse an early drop triggered by earnings at Citigroup and Goldman Sachs that disappointed some investors.
The Dow gained 47 points, or 0.5%, at 10,062.94, closing above 10,000 for the second session in a row. The Dow is currently at its highest point since Oct. 3, 2008, when it closed at 10,325.38. The S&P 500 index edged up 4 points, or 0.4%, to 1,096.56 and the Nasdaq ended just about flat.
Weakness in financial shares weighed on US stocks through the early afternoon. But a 3% spike in oil prices caused energy stocks to rise late in the session, with Dow stocks Chevron and Exxon Mobil among the big gainers.
After the close, Google reported a third-quarter profit that topped estimates, sending shares 2% higher. Google CEO Eric Schmidt said in a statement that "we believe the worst of the recession is behind us and we now feel comfortable investing heavily in our future."
Also after the close, Dow component IBM reported higher quarterly earnings that topped estimates and lower quarterly revenue that topped estimates. Looking forward, the company said it expects full-year 2009 earnings of at least $9.85 per share versus its previous forecast of $9.70 per share.
Strong quarterly results from JPMorgan Chase and Intel helped fuel a big advance on Wall Street on Wednesday, pushing the Dow to close above 10,000 for the first time in over a year. But stronger-than-expected results from Citi and Goldman had less impact on Thursday.
Goldman Sachs reported a $3.2 billion quarterly profit, thanks to strength in its trading business, which has recovered this year. The financial behemoth reported quarterly revenue and earnings that rose from a year ago and topped estimates. The company's CEO said the strong quarter was due to signs of stabilization and growth across a variety of sectors.
Citigroup reported a quarterly loss due to the ongoing impact of the credit crisis. But the loss was narrower than analysts had been expecting.
On Wednesday, JPMorgan Chase said it earned $3.6 billion in the quarter, also due to strength in its investment business.
On the economic front, the morning brought a mix of economic news, with readings on consumer inflation, jobs and manufacturing all in the mix.
The Consumer Price index (CPI) rose 0.2% in September, after rising 0.4% in August. The rise was in line with a consensus of economists. The so-called core CPI, which strips out volatile food and energy, rose 0.2% after rising 0.1% in August. Economists thought it would rise 0.1%.
Around 514,000 people filed new claims for unemployment last week, down from a revised 524,000 in the previous week. Economists expected 520,000 new claims. Continuing claims, a measure of those who have been receiving benefits for a week or more, fell to 5.992 million from 6.067 million in the previous week, versus forecasts for a smaller drop to 6 million.
Two regional manufacturing reports were also released. The Philadelphia Fed index dipped to 11.5 in October from 14.1 in the previous month, versus forecasts for a smaller slide to 12.
The Empire State Manufacturing Index, which measures activity in the New York region, rose to 34.57 in October from 18.88 in September. Economists thought it would fall to 17.25.
Treasury prices fell, boosting the yield on the 10-year note to 3.46% from 3.42% late on Wednesday.
The dollar fell versus the euro and gained against the yen, turning mixed after its recent across-the-board weakness versus a basket of currencies.
US light crude oil for November delivery rose $2.41 to $77.59 a barrel on the New York Mercantile Exchange, following the morning's weekly inventories report from the government. Oil prices ended the previous session at the highest level in a year.
COMEX gold for December delivery fell $14.90 to $1,049.00 an ounce. Gold has been hitting record highs almost daily in response to a weak US dollar and ongoing concerns about inflationary pressures.
Friday brings the October consumer sentiment index from the University of Michigan and government readings on September industrial production and capacity utilization. Dow stocks Bank of America and General Electric are both expected to report results before the start of trading.
European shares edged higher. But uncertainly over earnings capped upside after Nokia and Citigroup posted a loss and Goldman Sachs results failed to inspire investors. The pan-European Dow Jones Stoxx 600 index finished with a rise of 0.1% to 247.32, to hit a fresh 11-month high.
Germany's DAX index lost 0.4% to 5,837.90, while the French CAC-40 index made a fractional gain to 3,883.83 and the UK's FTSE 100 index shed 0.4% to 5,237.89.
Indian markets ended nearly unchanged after a choppy session on Thursday as investors and traders were reluctant to take more bets after strong two-day rally. Even global markets were a little subdued despite the Dow Jones Industrial Average crossing the 10,000 mark after a year. On the commodity side, Gold prices also lost some shine; the precious metal lost nearly 2%.
Coming back to equities, the good thing is that the NSE Nifty index has managed to close above the 5100 mark for the second day in a row. The Metals, Power and the Banking stocks were among the major gainers. On the other hand, major laggards were Telecom and the IT stocks.
Finally, the BSE Sensex fell 36 points at 17,195 after touching a high of 17,350 and a low of 17,092. The index opened at 17,274 against the previous close of 17,231. The NSE Nifty was down 9 points to shut shop at 5,108.
In Asia, the Nikkei in Japan surged 1.7% to 10,238, while Australia's S&P/ASX ended higher by 0.7% at 4,859. Shanghai SE Composite in China gained 0.3% and Hang Seng index in Hong Kong was up 0.6% to end at 21,999.
In Europe, stocks were in the flat. The FTSE in the UK was down 0.2%, The DAX in Germany was flat at 5,853 and the CAC 40 index in France added 0.1%.
Coming back to India, among the BSE sectoral indices, the Bankex index was the top gainer, adding 1.6%, followed by the Metal index that was up 1.5% and the BSE Power index was up 0.5%.
Even the BSE Mid-Cap index advanced 0.5% and the BSE Small-Cap index was up 0.9%.
Among the 30-components of Sensex, 12 stocks ended in the green and 18 ended in the negative terrain. Among the major gainers were, SBI, Tata Power, Sterlite Industries, ICICI Bank and HDFC Bank.
On the other hand, Bharti, Sun Pharma, Reliance Infra, Infosys and TCS were among the major losers.
Outside the frontline indices, the big gainers in the broader market were Sun TV, EIH Ltd, United Spirits, Bank of India and Yes Bank. On the other hand, losers included M&M Finance, Thermax, LITL and Rolta.
The Wholesale Price Index for All Commodities for the week ended October 3, 2009 declined by 0.5% to 241.9 from 243 for the previous week. The annual rate of inflation stood at 0.92% for the week ended October 3, 2009 as compared to 0.7% for the previous week ended September 26/, 2009 and 11.49% during the corresponding week ended October 4, 2008 of the previous year.
Euro Multivision, the Compact disc maker finally ended at Rs53 as against its issue price of Rs75 per share. Translating in to a discount of of 29%. The stock had opened at Rs70 on the BSE.
The company has offered 88 lakh shares with an issue price of Rs75 per share raising around Rs660mn through the offer. The proceeds would be used to raise resources for the company’s photovoltaic solar cell manufacturing unit in an SEZ at Bhachau in Gujarat’s Kutch district.
The company intends to foray into solar energy space. The plant, being built at a cost of Rs 178.03 crore, will have a capacity of 40 MW per year.
Aditya Birla Nuvo is reportedly planning to spin off its financial services business consisting asset management, insurance, stockbroking and distribution to a wholly-owned subsidiary.
The company plans to restructure the business in three phases. In the first phase, various subsidiaries of AB Nuvo in the financial sector and the company’s equity stakes in Insurance and Mutual Fund JV's will be transferred to Aditya Birla Financial Services (ABFS), stated reports
In the second phase, ABFS will be renamed as Aditya Birla Capital and finally, there will be divestment of a minority stake to financial investors.
Shares of Aditya Birla Nuvo gained by 1.4% to Rs978. The stock opened at Rs984 and made an intra-day high of Rs1003 and a low of Rs970. Total traded volumes stood at 80,000 shares.
Shares of United Spirits have shot up by over 4% to Rs965 after the company commenced a process to raise as much as US$350mn by selling shares to large investors after efforts to sell a stake to private equity firms and Diageo failed.
The stock opened at Rs939 and made an intra-day high of Rs976 and a low of Rs925. Total traded volumes stood at 0.52mn shares.
New Delhi Television Ltd, through its subsidiary NDTV Networks BV, has agreed with NBC Universal to buy back NBC Universal's 26 percent stake in its subsidiary NDTV Networks Plc, to further consolidate its position.
NDTV Group and NBC Universal had, in May 2008, entered into a strategic partnership for an effective indirect 26% stake in NDTV Networks Plc, the holding Company of the non-news business of the Group.
Shares of NDTV gained by 1.6% to Rs160. The stock opened at Rs159 and made an intra-day high of Rs166 and a low of Rs158. Total traded volumes stood at 0.14mn shares.
Hindalco Industries announced that the board of directors approved raising of investment limit of Foreign Institutional Investors (FIIs) to 40% subject to the necessary approval of the Shareholders of the Company.
Board has also approved raising of long term finance by way of QIP/GDR and / or other Securities with or without Green Shoe Option upto Rs29bn instead of earlier approval of Rs24bn.
The Company has called an Extra Ordinary General Meeting on November 17, 2009 for the purpose of approval of the aforesaid items.
Shares of Hindalco edged lower by 0.3% to Rs135. The stock opened at Rs137.5 and made an intra-day high of Rs138 and a low of Rs133. Total traded volumes stood at 2.6mn shares.
UCO Bank posted a net profit of Rs2.08bn for the quarter ended September 30, 2009 as compared to Rs1.5bn for the quarter ended September 30, 2008 an increase of 38% YoY.
Total Income has increased from Rs21.8bn for the quarter ended September 30, 2008 to Rs26bn for the quarter ended September 30, 2009.
Shares of UCO Bank advanced by 0.7% to Rs56. The stock opened at Rs56.8 and made an intra-day high of Rs57.7 and a low of Rs55.5. Total traded volumes stood at 1.8mn shares.
Suven Life Sciences announced that their clinical candidate SUVN-502 for Alzheimer's Disease secured several product patents granted at all the key market countries; India (218438), Mexico (257091), South Africa (2005/4043), Singapore (113104), New Zealand (540840), Korea (10-2005-7009512), Eurasia (011320), Australia (2003237599) and Europe (1581492).
The granted Product Patent for SUVN-502 in all the countries is valid until June 2023.
Shares of Suven Life Science surged over 4.5% to end at Rs30.4. The stock opened at Rs29.7 and made an intra-day high of Rs30.45 and a low of Rs29.6. Total traded volumes stood at 0.14mn shares.
Polaris Software announced that it has signed a Definitive Agreement with Laser Soft and its Principal Shareholders to acquire 100% equity shares of Laser Soft subject to the regulatory approvals. The value of the deal is about Rs520mn all in cash, linked to performance.
Shares of Polaris edged higher by 0.3% to Rs148. The stock opened at Rs149 and made an intra-day high of Rs151 and a low of Rs146. Total traded volumes stood at 0.26mn shares.