The earth has grown old with its burden of care, But at Christmas it always is young.
While the bulls are eating Christmas cakes, the bears seem to be eating humble pie as the Nifty ended well above 5100 and is now eyeing a new high for 2009. Wednesday’s sudden surge would have taken many by surprise. We reiterate that further short covering is not ruled out ahead of the F&O expiry. Also, some long build-up may take place amid signs that the economy and India Inc. may do better.
But clearly, any rise will not be sustainable in the absence of incremental good news – local as well as global. Rich valuations and concerns on an impending reversal in stimulus steps are among the major headwinds. One should not get carried away by any sharp swings in the near term as the market remains in a consolidation phase. Today we expect a higher opening. Asian markets are mostly up. US market got a boost from technology space, though the blue chips closed flat. European shares hit 14-month high. With several holidays on the horizon, the market could yet again turn choppy and clueless.
FIIs were net buyers in the cash segment on Wednesday at Rs7.7bn on a provisional basis. The local funds were net sellers of Rs130.2mn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs17.7bn. FIIs were net buyers of Rs2.25bn in the cash segment on Tuesday. Mutual Funds were net sellers of Rs1.74bn on the same day.
US stocks managed modest gains on Wednesday, closing higher for a fourth day, as strength in technology shares and commodities offset concerns about the housing market.
The Dow Jones Industrial Average closed virtually flat at 10,466.44. The S&P 500 index gained about 2 points, or 0.2%, at 1,120.59. Both indexes are within range of fresh 14-month highs. The Nasdaq Composite index rose 17 points, or 0.7%, at 2,269.64, closing at a fresh 15-month high.
Stocks slid in early trading after the government said that sales of new homes unexpectedly plunged in November. A separate report showed that personal incomes and spending both rose at a slower-than-expected pace last month. But a survey of consumer sentiment rose to a three-month high. The market regained ground in the afternoon as a rally in the oil market helped boost shares of energy producers and industrial companies.
Oil prices surged nearly 3% after government data showed the nation's supplies of crude fell last week. Gold also rose as the dollar softened against rival currencies. Bond prices were mixed.
Technology stocks continued to rally, led by eBay and Yahoo. Bank stocks also took a hit.
Market volume was light with many investors away for the Christmas holiday. The stock exchange will close early on Thursday and will remain shut on Friday.
Stocks have been in a limbo as investors look to protect gains for the year. The market has rallied broadly since March on the back of a series of stimulus measures to combat the worst recession in several decades.
For the year, the major indexes are all on track to post double-digit percentage gains. The Dow has gained over 19% so far this year, while the S&P 500 is up about 24% year to date. The Nasdaq has been the best performer of the year, climbing about 44%.
The CBOE Volatility Index, or VIX, edged higher after sliding below 20 for the first time since August 2008 on Tuesday. The so-called fear index was up 0.4% to 19.63. The gauge hit an all-time high of 77 in October 2008. But it has been declining since March as financial markets around the world have charged higher.
The Commerce Department said that new home sales posted the biggest decline since April. Sales fell 11% last month to an annual rate of 355,000 units from a downwardly revised 400,000 units in October. Economists had expected the rate to rise to 438,000.
Analysts said that the drop in sales was due largely to the expected Nov. 30 expiration of a popular $8,000 tax credit for first time homebuyers. The credit was later extended to April 30, 2010.
Another Commerce Department report showed that personal income climbed by 0.4%, or $49.7 billion, in November, after an upwardly revised 0.3% rise in October. That was the biggest gain since May, when it rose 1.5%. The figure was still below a consensus estimate of a 0.5% rise.
Spending by individuals rose 0.5% last month, or $47.9 billion, below analysts' expectations of a 0.7% hike. Personal spending was up 0.6% in October.
Separately, the Reuters/University of Michigan Surveys of Consumers said that the final December reading on the index of consumer sentiment was 72.5, the highest since September. That was up from 67.4 in November and 60.1 a year ago.
The dollar was mixed against the major international currencies: slipping against the euro and the yen but remaining flat against the pound.
Crude oil for February delivery rose $2.27 to settle at $76.67 a barrel.
Gold for February delivery rose $7.30 to settle at $1,094.00 per ounce, after sliding more than $20 in the prior two sessions.
European shares notched 14-month highs, paced by banks and miners. The pan-European Dow Jones Stoxx 600 index ended the last full trading session before Christmas with a gain of 0.3% to close at 251.90, after setting a session high of 252.95.
Wednesday's advance took the index over its previous 2009 closing high of 251.34 set on Nov. 16 and back to levels not seen since October 2008. Including a 2% gain made in the first two sessions of the week as traders count down to the Christmas break and the end of the year, the index is up by 27% year-to-date.
The UK's FTSE 100 index rose 0.8% to settle at 5,372.38 while Germany's DAX index climbed 0.2% to end at 5,957.44 and the French CAC-40 index closed 0.3% higher at 3,910.75.
With only a couple of days to go for the Christmas, how can the Santa Claus be far behind! So, the festive cheer that was missing from the markets for the past several days finally came to life today. The spurt came on strong volume and turnover, indicating that traders may have chosen to rollover F&O positions ahead of the long weekend. In that context, some part of today’s rally could be attributed to short covering.
Apparently, the short sellers got squeezed as the morning’s advance gathered pace in the afternoon. The Finance Minister reiterated that the Indian economy can grow by well over 7%. He also said that the Government will not withdraw the fiscal stimulus before the Budget. At the same time, he expressed concern on inflation and fiscal deficit. Global markets too remained firm, though India clearly outperformed rest of the world.
The BSE Sensex surged 539 points to end at 17,231 after touching a high of 17,252 and a low of 16,735. The NSE Nifty advanced 156 points to end at 5,144.
In Asia, the Nikkei in Japan was up 2%, while Australia's S&P/ASX ended higher by 0.7%. However, the Shanghai SE Composite gained 0.7% and Hang Seng index in Hong Kong was up 1.1%.
In Europe, stocks were trading in the green. The DAX in Germany was up 0.8% and the CAC 40 index in France was up 0.7%. The FTSE in the UK was up 0.8%.
Coming back to India, among the BSE sectoral indices, the Metal index was the top gainer, adding 4%, followed by the Oil & Gas index that was up 3.5% and the BSE Power index was up 3.5%. Even the BSE Mid-Cap index gained 1.5% while the BSE Small-Cap index was up 1.5%.
All the 30-components of Sensex ended in the positive terrain led by Hindalco, NTPC, Sterlite, Reliance Industries, Tata Steel and ICICI Bank.
Outside the frontline indices, the big gainers in the broader market were Gujarat NRE, Praj Industries, Century Tex, Oracle Fin and BEML. On the other hand, losers included Bajaj Holdings, Corp Bank, Piramal Health and REI Agro.
Shares of Sun Pharma advanced by 2.3% to end at Rs1538 as reports stated that the company is getting greater support, to acquire Israeli drug major Taro Pharmaceutical, from independent advisory firms like Glass, Lewis & Co. who has recommended a vote against the proposals of the Taro board at the AGM.
Shares of Shriram EPC erased gains and edged higher by 0.3% to end at Rs220. The stock had hit intra-day high of Rs229.6 after the company announced that it won order worth Rs1.56bn. The scrip opened at Rs224 recorded volumes of over 17,000 shares on BSE.
Shares of Shree Ashtavinayak surged by over 4.5% to end at Rs75 after the company announced that the board of directors will meet on December 23, 2009, to decide upon the opening date of its proposed GDR Issue upto US$72mn.
The scrip opened at Rs72.5 it touched an intra-day high of Rs75.4 and a low of Rs69.50 and recorded volumes of over 1.9mn shares on BSE.
Shares of Adhunik Metaliks shot up by over 11% to end at Rs107 after the company announced that IDFC Project Equity Fund was planning to invest Rs2.5bn in Adhunik Metaliks Ltd's power subsidiary Adhunik Power and Natural Resources Ltd. The scrip opened at Rs97.7 it touched an intra-day high of Rs113 and a low of Rs97.50 and recorded volumes of over 3mn shares on BSE.
Shares of JK Tyre surged over 9% to end at Rs163 as the company is reportedly exploring possibilities to acquire a company in the South East Asian region.
"We are looking at various opportunities, including acquisitions in the South East Asian region but nothing has been decided yet," JK Tyre & Industries Vice Chairman and MD Raghupati Singhania.
The process is at a very initial stage and the company would proceed slowly, he added.
"Right now we are not interested in any American firm as we have already made inroads into that market. We are looking at other markets," Singhania said.