No matter what side of the argument you are on, you always find people on your side that you wish were on the other.
Arguments and debates may continue on how genuine the turnaround has been. But what a difference a day makes! If Monday blues had the bulls running for cover, looks like Tuesday will witness a complete turnaround. We expect a higher start owing largely to the firm trend across global markets. The market could turn choppy though, as investors eagerly await the report card from India Inc. and Global Inc. The best strategy to beat the near-term blues would be to take each day as it comes, especially for companies announcing their results.
The underlying trend in the market is still positive despite some reversal in the last few sessions. The sentiment could be hurt by less than spectacular results and economic data. That is particularly the case after the kind of rally we have enjoyed over the past six and a half months. Other big event to watch will be the RBI’s half-yearly policy review. It is most likely to set the tone for the central bank’s moves on interest rates going ahead.
Monetary and economic management will be quite tough as the recovery is still nascent and fragile. Among the concerns for the RBI is the surge in liquidity. This could only add to the already heightened inflation woes. The erratic monsoon has not been helpful at all and could send food inflation spiraling out of control. A gaping fiscal deficit is another cause for worry. Among the positive aspects is an appreciating rupee, which could help the RBI contain imported inflation.
FIIs were net sellers of Rs3.1bn in the cash segment on Monday on a provisional basis. The local funds were net sellers of Rs5.67bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net sellers at Rs7.03bn. On Thursday, FIIs were net buyers of Rs13.72bn in the cash segment. The net FII investments in Indian stocks this year have crossed $12.7bn.
US stocks rebounded on Monday after two straight weeks of declines. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all gaining at least 1%. Investors used the recent sell-off as a chance to jump back into the market.
A better-than-expected reading on the services sector of the US economy and strong demand for Treasury's first bond auction of the week bolstered the broad-based gains.
The Dow rose 112 points, or 1.2%. The S&P 500 index gained 15 points, or 1.5% and the Nasdaq rose 20 points, or 1%.
Of the 30 Dow components, 25 gained.
Bank stocks led the advance with the KBW Banking index adding 3.2%.
A roughly seven-month-long rally hit a roadblock at the end of September, with stocks falling for two straight weeks, and the major US indices losing around 5%. The declines were driven by a series of weaker-than-expected economic reports. This was in stark contrast to a period of steadily improving economic news.
Since bottoming at a 12-year low March 9, the S&P 500 has gained 51.2%, and the Dow has gained 45% as of Monday's close. After hitting a six-year low, the Nasdaq has gained nearly 61%.
In the third quarter alone, the S&P 500 index and the Dow both jumped 15%, the best quarterly performance in a decade. The Nasdaq jumped 15.7%, its best quarterly performance since 2003.
Among stock movers, Brocade Communications rallied 18.8% in unusually active trading on reports that it has put itself up for sale. Both Hewlett-Packard and Oracle were cited as potential buyers, according to the Wall Street Journal.
The Institute for Supply Management's services sector index rose to 50.9 in September from 48.4 in August. Economists thought it would rise to 50.0.
The dollar tumbled versus the euro and the yen, resuming its recent plunge against a basket of currencies.
US light crude oil for October delivery rose 46 cents to $70.41 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $13.50 to settle at $1,017.80 an ounce. Gold closed at a record high of $1,020.20 two weeks ago.
Treasury prices fell late on Monday, with the yield on the 10-year note sticking at 3.22%. Treasury prices and yields move in opposite directions.
The government's sale of $7 billion in 10-year Treasury Inflation Protected Securities (TIPS) saw strong demand, a good sign at the start of a week that brings $78 billion in debt auctions.
The deluge of third-quarter earnings reports due in the week ahead will determine whether the selloff continues or proves to be an entry point for more buyers.
Alcoa unofficially begins the third-quarter reporting period in the US on Wednesday. The Dow aluminum maker is due to report a quarterly loss versus a profit a year ago, reflecting a weak materials sector. Overall, S&P 500 profits are expected to have dropped almost 25% from the third quarter of 2008.
Mineral extractors and telecoms helped European shares to advance for the first time in four sessions. In a session where the pan-European Dow Jones Stoxx 600 index was pretty volatile, the benchmark finished the session up 0.8% to 235.93, with every sector index also closing higher.
The UK's FTSE 100 index recaptured the 5,000 mark, rising 0.7% to 5,024.33. The German DAX index advanced 0.8% to 5,508.85 and the French CAC-40 index rose 0.7% to 3,675.01.
Indian market ended in the red snapping a three-day winning streak on Monday. Like the unexpected stormy weather which wrecked havoc in South and West India, a cold wave of selling in index heavyweights like Bharti Airtel, Reliance Industries and SBI dragged BSE Sensex to end below the 17,000 mark.
Selling was not only seen in India but also in the US and Asia after renowned economist Nouriel Roubini said commodities and stocks may drop in coming months as the gradual pace of the economic recovery disappoints investors. The real economy is barely recovering while markets are soaring, Roubini said.
The Realty, telecom and metals stocks were among the major losers. Even the Mid-Cap and the Small-Cap stocks witnessed some offloading dragging the markets in the last hour of the trading session.
The BSE Sensex slipped 268 points or 1.6% to end at 16,866 after touching a high of 17,062 and a low of 16,835. The index opened at 17,062 against the previous close of 17,134. The NSE Nifty fell 80 points or 1.6% to shut shop at 5,003.
In Asia, the Nikkei in Japan was down 0.6%, while Australia's S&P/ASX ended lower by 0.7% at 4,573. Shanghai SE Composite in China was closed on account of holiday However, Hang Seng index in Hong Kong were gained 0.3%.
In Europe, stocks were in the green. The FTSE in the UK was up 0.3%, The DAX in Germany was up 0.2% and the CAC 40 index in France was down 0.2%.
Coming back to India, among the BSE sectoral indices, the Realty index was the top loser, shedding 3.5%, followed by the Teck index that was down 2.7% and the BSE Metal index was down 2.3%. Even the BSE Mid-Cap index fell 1.6% and the BSE Small-Cap index was down 2.1%.
BSE FMCG index was the only gainer, adding 1.5% during the week.
Among the 30-components of Sensex, 23 stocks ended in the re and 7 ended in the positive terrain. Among the major laggards were Bharti Airtel, Grasim, Hindalco, RCom and DLF.
On the other hand, ITC, Sun Pharma, Reliance Infra and M&M were among the major gainers.
Outside the frontline indices, the big losers in the broader market were TTML, Aditya Birla, GTL Infra, Federal Bank and Andhra Bank. On the other hand, gainers included Koutons Retail, Jet Airways, BEL, IRB and Voltas.
Shares of Grasim Industries sank by over 7% to end at Rs2509 after the company announced that its cement business will be transferred to a subsidiary, Samruddhi Cement Ltd.
Shareholders in Grasim will get one share with a nominal value of Rs5 in the unlisted subsidiary for each share they hold. Samruddhi will propose merging with UltraTech Cement Ltd., which is a part of Aditya Birla.
While, shares of Ultratech Cement slipped by 5% to Rs804 after the company announced that its board will meet on Tuesday, October 6, 2009, to consider a merger with the cement unit of Grasim Industries.
Shares of Jet Airways shot up by over 13% to Rs377 as the company plans to invite global expressions of interest to lease out seven aircraft, the airline's private counterpart Jet Airways has initiated discussions with foreign carriers to lease out two of its wide-body airplanes, stated reports.
"We are in discussions with Oman Air and Etihad for leasing out two of our Boeing 777 aircraft," reports added.
Pratibha Industries secured a contract worth Rs247.2mn for "Supply of API Grade Pipes" from GAIL (India) Ltd. The contract involves 'Manufacture and Supply of 50 km. of Line Pipe of 24 inch diameter as per specification - API 5L, Gr X-70, PSL-2 for its Bawana Nangal Pipeline Project.
Shares of Pratibha Industries gained by 0.8% to Rs211. The stock opened at Rs210 and made an intra-day high of Rs220 and a low of Rs205. Total traded volumes stood at 39,000 shares.
Shares of ACC slipped by 1.6% to Rs814 after the company announced that sales of cement fell 2.4% last month. The company sold 1.63mn tons in the month of September, compared with 1.67mn tons a year earlier.
The stock opened at Rs820 and made an intra-day high of Rs820 and a low of Rs803. Total traded volumes stood at 59,000 shares.
Shares of Reliance Infrastructure have gained by 1% to Rs1216 after the company announced that it may sell shares in its power distribution and metro project units to the public and strategic partners.
Of the six subsidiaries formed as part of a demerger scheme, yet to be approved by the Bombay HC, the company plans to list at least the power distribution companies, Reliance Energy and Reliance Power Transmission, in addition to its Metro projects, stated reports.
The stock opened at Rs1190 and made an intra-day high of Rs1222 and a low of Rs1185. Total traded volumes stood at 0.28mn shares.
Shares of BHEL erased early gains and ended in the red. The stock was down 0.5% to end at Rs2339. The stock hit an intra-day high of Rs2389 after reports stated that the company plans to float a separate subsidiary company for power generation projects.
The company had committed 26% equity participation in multiple supercritical thermal power projects in Tamil Nadu, Karnataka and Maharashtra and is planning similar stakes for projects in Gujarat and MP.
Shares of Arvind Limited surged by over 3% to Rs40.10 after reports stated that the company plans to consolidate other verticals like garments and real estate. Sanjay Lalbhai, chairman and MD was quoted as saying that the company expects government clearances for its real estate projects in next four months.
The company is planning low cost as well as mid priced housing in Khatraj, Jetlaj, Santej and Ahmedabad. "We have around 2 million sq yards of properties coming up in areas like Santej, Khatraj, and Jetlaj, and another 3.5 lakh in Ahmedabad city.
At today's prices, we have a land bank of Rs 600-700 crore," Lalbhai added. By next year, Arvind Ltd. plans to expand its denim fabric manufacturing capacity by 10% to take it to 100mn metres by next year.