To win without risk is to triumph without glory.
Risk appetite seems to be alive and kicking despite a brief scare that was sparked by the Dubai debt crisis. Experts feel the crisis over the Dubai World debt default is not as serious as feared initially and will be mostly contained. For India, the big sentiment booster has come in the form of the Q2 GDP growth data. Monthly auto sales have only reinforced a growing view that the Indian economy is in a pink of health.
However, not all is hunky dory. Some concerns remain over high fiscal deficit, spiraling inflation, anemic loan growth, shrinking exports and subdued tax collections. Valuations are not cheap. Loose monetary policy could soon be history and the fiscal stimulus too might be gradually withdrawn. Global recovery may also stall in the absence of emergency fire fighting steps.
In short, one must tread cautiously though the bias is positive. Today, we expect a steady start which might pick up if the Nifty crosses 5140. Some resistance is expected near 5200 and support will kick in at around 5000.
The Dubai fiasco is nowhere as close to the western financial meltdown that sent the global economy into a tailspin. Dubai and Abu Dhabi stocks were hammered for a second day on Tuesday even as Dubai World said it was in talks to restructure $26bn worth of debt.
Continued safe haven buying and persistent weakness in the dollar sent gold to another record high, taking the bullion’s advance since January to 36%. Gold futures climb to a fresh record above $1,200 an ounce.
Meanwhile, the purchasing managers’ data from both the US and the UK manufacturing sectors both disappointed.
US stocks rallied on Tuesday as worries about Dubai's debt problems eased, gold hit a record above $1,200 and GE and Comcast moved closer to a deal on NBC Universal. The Dow Jones Industrial Average touched a 14-month high, as Chinese manufacturing grew at the fastest pace in five years and Dubai World said it was in talks to restructure less than half its debt.
The Dow added 127 points, or 1.2%, closing at the highest point since Oct. 2, 2008. The S&P 500 index gained 13 points, or 1.2%, and closed just short of a 14-month high. The Nasdaq Composite index rose 31 points, or 1.5%, and remained short of a 14-month high hit a week ago.
Bets that Dubai's debt problems won't have a major impact on US institutions lifted stocks late on Monday and through Tuesday's session. Stocks also reacted to the day's better-than-expected economic readings on construction spending and pending home sales.
The weak dollar also played a role in the day's advance, boosting commodity prices and stocks.
The momentum is likely to keep stocks firm or even push them higher through year-end, despite the already substantial run up since the March lows. Since bottoming at a 12-year low March 9, the Dow has gained nearly 60%, the S&P 500 has gained 64% and the Nasdaq has gained 72%.
AIG said that it is wiping out $25 billion of its government debt by selling stakes in two of its life insurance subsidiaries to the Federal Reserve Bank of New York. Shares gained 8.6%.
General Electric (GE) has reportedly reached a deal to buy Vivendi SA's 20% stake in NBC Universal for about $5.8 billion, moving GE closer to its goal of partnering with Comcast to create one of the largest US media companies.
GE is looking to sell a 51% stake in NBC Universal to Comcast, while retaining a 49% stake in the company that is valued at around $30 billion.
Dubai World, the city-state's main investment arm, said that it is in talks to restructure $26 billion in debt, cooling worries that it might go into default and wipe out the investment of its creditors.
Global markets slumped last week after the Dubai government asked to defer payments for at least six months on $60 billion in debt owed by Dubai World and Nakheel, its real estate arm.
Major US automakers reported sales in November that met or topped expectations. But any improvements year-over-year were easy, given the dismal results in November 2008. On a monthly basis, sales slumped from October levels.
GM reported a 1.8% drop in November sales from a year ago, versus forecasts for a drop of 1.3%. But sales were down 15% from October levels. Ford Motor's sales were little changed from a year ago and down 10% from October.
The November manufacturing index from the Institute for Supply Management fell to 53.6 from 55.7 in October, surprising economists who were looking for ISM to fall to 55. However, any reading over 50 implies expansion in the sector.
Pending home sales rose 3.7% in October, the ninth monthly increase in a row, according to a National Association of Realtors report released Tuesday. Pending home sales were expected to have fallen 1% after rising 6% previously.
Construction spending in October was unchanged, the government reported. Spending fell 1.6% in September and was expected to have fallen 0.5% in October, according to analysts' estimates.
The dollar fell versus the euro and gained against the yen.
US light crude oil for January delivery rose $1.47 to $78.75 a barrel on the New York Mercantile Exchange.
Treasury prices tumbled, raising the yield on the 10-year note to 3.27%, from 3.20% late on Monday.
COMEX gold for December delivery rallied $18 to settle at $1,199.10 an ounce, after rising as high as $1,202.70. It's the first time the precious metal has ever traded at this level.
European shares kicked off the final month of the year with gains on fading worries about the potential impact of Dubai's debt woes on the global economy. The pan-European Dow Jones Stoxx 600 index added 2.7% to close at 245.58 in a move led by cyclical plays.
The index, however, is still below the close of 247.96 recorded before news was released that Dubai World requested a six-month suspension of its debt payments. Dubai World is now in talks to restructure some of that debt.
The UK's FTSE 100 index rose 2.3% to settle at 5,312.17. Germany's DAX index climbed 2.7% to close at 5,776.61, and the French CAC-40 index gained 2.6% to end at 3,775.74.
Indian markets wiped out the 3.2% decline it witnessed in the past week as bulls cheered stronger than anticipated GDP growth data. Bulls dominated the proceedings on the bourses, extending gains to a second straight session.
Today’s strong run could be attributed to firm cues from the global equity markets. Global stocks rose as the Bank of Japan introduced measures to revive lending and Asian economic data signaled a recovery. The yen fell the most in a month on speculation that the central bank will intervene to curb gains.
In addition, the accelerating monthly auto sales numbers lifted sentiment.
Interest rate sensitive stocks were in demand with the Realty and the Auto stocks among the top gainers. Pharma and Oil & Gas stocks also ended with smart gains. Mid-Cap and the Small-Cap stocks too attracted some buying.
The BSE Sensex surged 272 points at 17,198 after touching a high of 17,218 and a low of 16,967. The index opened at 17,218 against the previous close of 16,926. The NSE Nifty was up 89 points to shut shop at 5,122.
In Asia, the Nikkei in Japan was up 2.5%, while Australia's S&P/ASX ended higher by 0.4%. Shanghai SE Composite in China gained 1.2% and Hang Seng index in Hong Kong was up 1.3%.
In Europe, stocks were in the green. The FTSE in the UK was up 1.7%, The DAX in Germany was up 2% and the CAC 40 index in France gained 2%.
Coming back to India, among the BSE sectoral indices, the realty index was the top gainer, adding 6%, followed by the Auto index that was up 3% and the BSE Pharma index was up 2.5%.
The BSE Mid-Cap index gained 1.7% and the BSE Small-Cap index was up 2.1%.
Among the 30-components of Sensex, 27 stocks ended in the green and only HUL, BHEL and ONGC ended in the negative terrain. Among the major gainers were Tata Motors, Sun Pharma, DLF, M&M, Reliance Industries and Sterlite.
Outside the frontline indices, the big gainers in the broader market were Jet Airways, JP Hydro, Yes Bank, Moser Baer and United Phos. On the other hand, losers included Jain Irrigation, Shriram Transport and Marico.
Stocks like Kiri Dyes, Omnitech, Ksera sera, Deep Industries and Noida Toll Bridge were among the other notable gainers.
Mahindra & Mahindra sold 22,587 vehicles in November, compared with 11,515 registering a growth of 96% on a yoy basis. Shares of M&M gained by 5% to Rs1078, the scrip opened at Rs1036 it touched an intra-day high of Rs1090 and a low of Rs1035 and has recorded volumes of over 0.25mn shares on BSE.
Maruti Suzuki sold a total of 87,807 vehicles in November 2009. This includes 11,448 units of exports. The company had sold 47,704 vehicles in the domestic market in November 2008. November 2008 was exceptionally low sales month, due to impact of economic slowdown.
The 60.1% domestic sales growth in November 2009 is calculated on a low base of November 2008 when the industry was in the midst of worst ever slowdown.
The stock gained 1.7% to Rs1588. It opened at Rs1580 hitting an intra-day high of Rs1608 and intra-day low of Rs1568 recording volumes of 0.17mn on BSE.
TVS Motor posted 23% growth in November 2009, registering total two wheeler sales of 120,844 units against 98,402 units in the corresponding period of the previous year.
Domestic sales of the company witnessed a quantum increase in sales positing growth of 38% recording 106,836 units in November 2009 as against 77,491 in the corresponding period of the previous year.
The stock gained 0.5% to Rs57.45. It opened at Rs58 hitting an intra-day high of Rs58.5 and intra-day low of Rs57 recording volumes of 0.28mn on BSE.
Sterlite Technologies received over Rs6bn in new contracts for its telecom and power products, from prominent incumbents in India and Africa.
Based on the delivery schedules required by its clients, over 30% of the cumulative contract value would be executed within FY10 and the balance within H1 FY11. The total order book of the company stands at ~Rs20.50bn as on November 30, 2009.
Shares of Sterlite Technologies shot up by over 5% to Rs326. The scrip opened at Rs310 it touched an intra-day high of Rs334 and a low of Rs310 and recorded volumes of over 0.4mn shares on BSE.
Peninsula Land secured a receipt of Rs2.75bn from Alok Realtors Private Limited in connection with sale of 6.41 lacs sq. ft. at Peninsula Business Park. The Company has received a further sum of Rs1.6bn from Alok Realtors Private Limited for the said sale at Peninsula Business Park.
Till date, Peninsula Land Limited has received a sum of Rs6.25bn against the total deal consideration of Rs11bn. As on date, the total cash equivalent with Peninsula Land Limited is Rs6.85bn.
Shares of Peninsula Land gained by 4.5% to Rs81. The scrip opened at Rs78.8 it touched an intra-day high of Rs82.65 and a low of Rs78.50 and recorded volumes of over 0.17mn shares on BSE.
Jubilant Organosys, through its subsidiary Jubilant Biosys in Bangalore announced that its 4 year old research collaboration with Eli Lilly has successfully delivered multiple discovery milestone and pre-clinical candidates, resulting in a 5 year extension and expanded portfolio collaboration.
Under the terms of the new 5 year agreement Jubilant will receive research funding and success-based discovery and development milestones.
Shares of Jubilant Org gained 3% to Rs310. The scrip opened at Rs305 it touched an intra-day high of Rs317 and a low of Rs298 and recorded volumes of over 0.35mn shares on BSE.