"Earth provides enough to satisfy every man's need, but not every man's greed." – Mahatma Gandhi.
Whether one should be greedy at this stage is a BIG question after such a stunning rally. We’ve come a long way in a year. The journey from the brink of Great Depression has been spectacular. The moot point is where do we go from here?
The fact that so many people have missed the rally could ensure that the bulls maintain an upper hand. They will be aided by the flaring risk appetite and ample liquidity. But, can the earnings catch up with the bull run?
The real test will be when the stimulus is reversed. Inflation could be another party pooper. Valuations are definitely not cheap, though historic peak is still some way away. The question is whether one should wait for that long to realise one’s folly.
Today, we expect a soft opening as world markets are not particularly gung-ho. A long weekend is ahead of us before earnings start to roll in. There might be some consolidation and any fall is not likely to be too big.
We feel the market needs to pause to reflect the ground reality, which is that earnings growth may not be able to match the performance on the bourses. The economic recovery will be painfully slow. Though overall data points from across the globe have been encouraging, the real growth driven by increasing demand is yet to materialise.
Use the six and a half month rally to cleanse your portfolios. Get out of weak stocks and hold on to the ones with sound fundamentals. One could also consider locking in some profits and then waiting for some correction to resume purchases.
A word on the Bharti-MTN deal now. The land where India's father of the nation Mahatma Gandhi began his long and arduous political journey has dealt a blow to Bharti Airtel’s ambition of creating a mega telecom titan. The multi-billion-dollar cross border deal has been laid low by South African government's insistence on a dual listing for the merged entity, something which the Indian government could not facilitate.
Whether a dead deal is good for Bharti Airtel or no only time will tell. It could zero in on some other inorganic growth opportunity in some other corner of the world or it might altogether drop the idea of M&As. Right now its wait and watch. One also needs to see whether the Indian government is willing to amend its rules and laws to enable an increasingly ambitious India Inc. to realise its global dream.
Auto and cement stocks will be in the limelight as they release their monthly sales numbers. Both are expected to have maintained the recent scorching pace.
FIIs were net buyers of Rs10.75bn in the cash segment on Wednesday on a provisional basis. The local funds were net buyers of Rs1.59bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs3.04bn. On Tuesday, FIIs were net buyers of Rs11.02bn in the cash segment. The net FII investments in Indian stocks this year have crossed $12bn.
US stocks closed lower for a second successive day on Wednesday, as weaker-than-expected reports on manufacturing and the jobs market prompted investors to lock in some gains. But the key US stock indices ended the month and the quarter on an upbeat note.
The Dow Jones Industrial Average fell 30 points, or 0.3%, to 9,712.28. The S&P 500 index lost 3 points, or 0.3%, to 1,057.08. The Nasdaq Composite index lost just over 1 point, or 0.1%, to 2,122.42.
US stocks were volatile throughout the session as investors considered the economic news, a weaker dollar and a 6% spike in oil prices. End-of-quarter portfolio rebalancing may have also contributed to the choppiness.
Wednesday was the last day of the third quarter, during which the Dow, S&P 500 and Nasdaq all gained just over 15%. US stocks had slipped on Tuesday after a drop in consumer confidence added to worries about the sustainability of an economic recovery.
Since bottoming at a 12-year low March 9, the S&P 500 has gained just shy of 57%, and the Dow has gained around 49% (as of Tuesday's close). After hitting a six-year low, the Nasdaq has gained nearly 68%.
Bank of America said after the close that CEO and president Ken Lewis is retiring on Dec. 31 after 40 years with the company.
Also after the close, General Motors (GM) said that it is shutting down its Saturn division after a deal to sell it to Penske Automotive Group fell apart.
The Chicago PMI fell to 46.1 in September from 50 in August. Economists thought it would rise to 52. A reading below 50 signifies contraction in the manufacturing sector.
Another report showed that employers in the private sector cut 254,000 jobs from their payrolls in September after cutting a revised 277,000 jobs in August. Economists expected 200,000 job cuts.
The report, from payroll services firm ADP, is a lead up to Thursday's reading on announced jobs cuts and Friday's bigger government employment report.
Another report showed that the GDP shrank at a 0.7% annual rate in the second quarter versus the initially reported 1% and the 1.2% rate forecast by economists.
CIT Group sank 45% on worries that it may not be able to avoid bankruptcy after all. The lender's shares had rallied on Tuesday on reports that it was negotiating a new credit facility that could total $10 billion.
On Wednesday, the Wall Street Journal said that CIT was negotiating a deal with its creditors that would give control of the company to bondholders and wipe out common shareholders. That sent shares tumbling.
Among other movers, shares of Discovery Laboratories surged 22.5% on renewed hopes that its treatment for certain respiratory illnesses affecting premature infants might get approval. The drug, Surfaxin, has already been rejected four times by the FDA. But on Wednesday, Discovery said that the FDA has agreed to its proposed plan for addressing those concerns.
The dollar fell versus the euro and yen, resuming the selloff that has pushed the US currency to one-year lows against a basket of currencies over the last few weeks.
US light crude oil for October delivery rose $3.90 to settle at $70.61 a barrel on the New York Mercantile Exchange after the government reported a surprise drop in inventories.
COMEX gold for December delivery rose $14.90 to settle at $1009.30 an ounce. Gold closed at a record high of $1,020.20 two weeks ago.
Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.30% from 3.29% late on Tuesday.
Earnings and economic news helped European stocks post one of their best quarters for years in the third quarter of 2009. Overall, the pan-European Dow Jones Stoxx 600 index climbed 17.7% in the quarter, marking the best three-month performance in percentage terms for almost ten years. Only 2.7% of that gain was made in September.
Indian markets ended in the green extending gains for second straight trading session. The strong upswing was seen despite overnight losses on Wall Street and weak cues from the Asian markets.
The opening moments of today’s session was indeed dominated more by Oil Indias listing. However, as the day progressed the buying spree spread all over Dalal-Street. Bulls were on a roll led by the banking, Auto, Capital Goods and Metal stocks. Even the Mid-Cap and the Small-Cap stocks were in demand.
However, the FMCG and select Consumer Durables stocks were under selling pressure.
Heavyweights like SBI, ICICI Bank, Maruti and M&M lifted the Sensex and Nifty to end at new 52-week high.
The BSE Sensex surged 274 points or 1.6% at 17,126 after touching a high of 17,143 and a low of 16,868. The index opened at 16,868 against the previous close of 16,853. The NSE Nifty added 77 points to shut shop at 5,084.
In Asia, the Nikkei in Japan was up 0.3%, while Australia's S&P/ASX ended lower by 0.2% at 4,743. Shanghai SE Composite in China was up by 0.9% at 2,779. However, the Hang Seng index in Hong Kong ended lower by 0.3% at 20,955.
In Europe, stocks were in the green. The FTSE in the UK was up 0.6%, The DAX in Germany was up 0.5% and the CAC 40 index in France added 0.6%.
Coming back to India, among the BSE sectoral indices, the Bankex index was the top gainer, adding 3.7%, followed by the Auto index that was up 2% and the BSE Capital Goods index was up 1.8%.
Among the major losers were, BSE FMCG index down 0.5% and BSE Consumer Durable index marginally down 0.3%.
The BSE Mid-Cap index gained 1% and the BSE Small-Cap index was up 1%.
Among the 30-components of Sensex, 26 stocks ended in the green and 4 ended in the negative terrain. Among the major gainers were SBI, ICICI Bank, Maruti, M&M, Sterlite and Wipro.
On the other hand, ONGC, ITC, Grasim and Bharti Airtel were among the major laggards.
Outside the frontline indices, the big gainers in the broader market were Central Bank, Bhushan Steel, BEL, OBC, IOB and UCO Bank. On the other hand, losers included REI Agro, Marico, GSPL, MRPL and Dabur.
Shares of Oil India which began trading on the Indian bourses at Rs1,105 per share finally ended recording healthy gains. The stock surged to end at Rs1140 translating into a premium of 8.5%
The initial public offer of Oil India had received robust response, it got subscribed nearly 31 times, generating demand for shares worth over Rs855.76bn.
The portion reserved for qualified institutional buyers got subscribed 54 times, while the non-institutional and retail investors bid for 9.77 times and 114 times respectively of the shares on offer.
Shares of Wockhordt Pharma shot up by over 7.5% to Rs194 after the company received tentative approval from the US FDA for marketing the 0.4mg capsules of Tamsulosin Hydrochloride, which is used for treating Benign Prostatic Hyperplasia (BPH or non-cancerous enlargement of prostate).
Tamsulosin is the generic name for the brand Flomax, marketed in the United States by Boehringer Ingeiheirn. The patent on this product will expire on April 27. 2010 and Wockhardt will launch the product immediately thereafter.
The stock opened at Rs184 and made an intra-day high of Rs197 and a low of Rs183. Total traded volumes stood at 0.3mn shares.
BHEL won an order worth Rs2.7bn for a 120 MW Cogeneration Power Plant, to be set up at Grodno in Belarus, has been received from Grodnoenergo, which is a state enterprise of Republic of Belarus.
Shares of BHEL gained by 2.3% to Rs2325. The stock opened at Rs2279 and made an intra-day high of Rs2334 and a low of Rs2279. Total traded volumes stood at 0.14mn shares.
Shares of L&T gained by 2.2% to Rs1683 after reports stated that the company was planning to raise US$600mn from institutions through equity issuance. Reports also stated that the company has developed expertise to manufacture nuclear power plants of 3,000-4,000MW says Chairman, AM Naik.
Reliance Communications & Microsoft have entered into a strategic partnership to offer Windows Mobile Solution on Reliance’s wireless networks.
According to this agreement, Microsoft will offer its productivity solutions to Reliance customers including push email support, chat, photo-sharing, content back-up and other applications.
Shares of RCom gained 3% to end at Rs308. The stock opened at Rs300 and made an intra-day high of Rs310 and a low of Rs299. Total traded volumes stood at 2.4mn shares.
Siemens bagged two orders from Power Grid Corporation of India Ltd amounting to Rs3.6bn for turnkey 756KV substations each at Gaya in Bihar and Ranchi in Jharkhand. The projects will be commissioned in 27 months.
Shares of Siemens edged higher by 0.5% to Rs557. The stock opened at Rs555 and made an intra-day high of Rs561 and a low of Rs550. Total traded volumes stood at 0.14mn shares.
HCC signed a MoU with the international engineering and project management company AMEC plc (AMEC) to jointly explore the application of consulting and EPC services for the establishment of nuclear power plants in India.
The stock gained 1% to end at Rs131.5, it opened at Rs131 and made an intra-day high of Rs133 and a low of Rs128. Total traded volumes stood at 1.7mn shares.