Happiness is not the absence of problems but the ability to deal with them.
The bulls seem to be a happy lot; they don’t have many issues to deal with for now (except perhaps a round of profit-booking soon). The good news is that money is still flowing into Indian stocks, both from overseas and local investors. Risk appetite seems to be intact despite some worries on valuations and uncertainty over the prospects for the year. So far we’ve not got any real bad news from any corner of the world.
If the current positive trend persists, the Nifty can comfortably pierce the 5300 milestone today. Beyond that it could face resistance at 5310 and 5360. The bull camp is talking about levels of 5500-5600 in the medium term, provided there are no nasty surprises. But, this is just the beginning of 2010.
A subdued recovery in matured economies could possibly drag the market down. Dollar’s movement is another key variable that might swing the pendulum either way. For now though it looks like policymakers are likely to maintain status quo on various stimulus steps. Any unwinding of stimulus measures would be done in a gradual manner.
Another bout of weakness in the dollar lent further support to commodities and the global equity rally on Tuesday. But, the US currency turned higher against the euro and pared declines against other rivals, after a steep drop in pending home sales fueled demand for the greenback as a safe-haven currency.
The dollar index, which tracks the US currency against a trade-weighted basket of six major rivals, rose to 77.63, up from 77.503 late on Monday and 77.34 earlier in the session. The greenback had initially extended session losses after reports showed a bigger-than-expected gain in factory orders in November.
Meanwhile, copper dipped on Tuesday after hitting a 16-month high in the previous session, but crude oil maintained its upward momentum and sugar prices extended their record-breaking run. Surge in risk appetite and renewed hopes on an economic recovery was also in play.
Ratings agencies cut their views for Iceland, after the country's president vetoed legislation that would have repaid the UK and the Netherlands for bailing out depositors of a failed Icelandic bank, potentially imperiling rescue loans for the embattled country.
US stocks ended nearly flat after a choppy session as investors considered a volatile dollar, a slew of auto sales and reports on pending home sales and factory orders. The Dow Jones Industrial Average lost 12 points, or 0.1%. The S&P 500 index added 3 points, or 0.3%. The Nasdaq was barely changed.
After the three leading indexes climbed to fresh 15-month highs on Monday, a weak dollar on Tuesday initially gave a push to dollar-traded commodities and select stocks that do business overseas. But the dollar turned mixed by the late afternoon, diluting its impact.
A late-session advance in the influential banking sector helped the market find its footing late in the session, with the KBW Bank index adding 2.2%.
US stocks had a strong year, in which the broad S&P 500 managed to gain over 23% despite touching a more than 12-year low in March. Between that March 9 low point and year end, the S&P 500 gained 65%.
The trend in 2010 will likely remain up, but that the gainers will be a more selective bunch than last year, when most areas of the market advanced. There is still a lot of money on the sidelines, which could make way into the market if corporate earnings are good.
Homebuyers signed 16% fewer sales contracts in November than in December, according to a National Association of Realtors report released in the morning. Economists had expected the report to show that pending home sales fell 2% in November after rising for 9 straight months. Still, sales were up 15.5% from November 2008.
The November setback reflected the near-expiration of the government's first-time homebuyers tax credit. Buyers jumped in when the credit was expected to expire on Nov. 30. But once it was announced that it was being extended through June, the buying frenzy lost momentum.
Another report showed that factory orders increased by 1.1% in November after climbing 0.8% in October. Economists thought orders would grow by 0.5%.
A third report showed that severe unemployment worsened in big cities in November. The government reported that 17 of 372 metropolitan areas surveyed had unemployment rates of at least 15% in November up from 15 areas in October.
Kraft Foods sweetened its $16.4 billion hostile takeover offer for British chocolate maker Cadbury, providing a partial cash-alternative to its already announced deal. The funding would come from Kraft's sale of its frozen pizza business to Swiss food company Nestle for $3.7 billion in cash, a deal announced early on Tuesday.
Separately, Nestle said that it won't bid for Cadbury. But Berkshire Hathaway, the conglomerate run by influential investor Warren Buffett and Kraft's largest shareholder, said that it is voting "no" on Kraft's request to issue as many as 370 million shares to help finance the bid for Cadbury.
Berkshire said that allowing this would essentially be giving Kraft a blank check.
Kraft extended its deadline for the Cadbury offer to Feb. 2. Kraft shares rallied nearly 5%.
Google released its Nexus One smartphone, the first mobile device entirely designed by the company. Previously, Google had designed mobile software such as Google Maps and also released its Android operating system.
Also, Apple said on Tuesday that the number of iPhone applications downloaded from its App store has topped 3 billion. Late on Monday, a Wall Street Journal report said that Apple will ship its much-anticipated tablet computer in March, following a January unveiling.
US automakers reported improved December sales at the end of their worst year in decades.
Ford Motor's US sales jumped 34% in December versus a year ago and over 50% versus the previous month. But Ford's sales for the full year fell 15%. Rival General Motors said that sales fell 6% in December versus a year ago, but said that sales rose 38% from November. For the full year, GM said that sales fell 30%.
Among other companies reporting, Chrysler said that sales in December fell 4% versus a year ago and up 36% from November. Chrysler also dropped 36% for the year and sold fewer than a million vehicles, its worst year since the early 1960s.
The dollar gained versus the euro and fell against the yen.
COMEX gold for February delivery gained 40 cents to settle at $1,118.70 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.
US light crude oil for February delivery rose 26 cents to settle at $81.77 a barrel on the New York Mercantile Exchange, the highest close since October 2008.
Treasury prices rose, lowering the yield on the 10-year note to 3.75% from 3.82% late on Monday.
European stocks ended a choppy session virtually unchanged, giving up early gains as Cadbury fell in the wake of Nestle's decision to take itself out of the running for the UK chocolate maker. After a 1.8% gain in the first trading session of the year on Monday, the pan-European Dow Jones Stoxx 600 finished the day down 0.06 point at 257.59.
Novartis shares fell for a second day, losing 1.8%, following the company's $39 billion plan to buy the rest of Alcon it didn't already own.
The UK's FTSE 100 climbed 0.4% to close at 5,522.50, as the Royal Bank of Scotland jumped 10.3% to rally for a second day and as Barclays gained 6.3%.
Bulls extended gains on Tuesday ending on a new closing high. The rally was led by metals and realty stocks. The Mid-Cap and the Small-Cap stocks also healthy attracted buying. Strong manufacturing data, favorable comments from Fed officials and overnight gains in the US and Asia had an overall positive effect.
The BSE Sensex advanced 128 points to end at 17,686 after touching a high of 17,729 and a low of 17,578. The Nifty advanced 46 points to end at 5,278.
Equity markets in Asia were positive. The Nikkei in Japan was up 0.25%, while Australia's S&P/ASX ended higher by 1%. The Shanghai SE Composite gained 1.25% and Hang Seng index in Hong Kong was up 2%.
In Europe, stocks were trading flat. The DAX in Germany was down 0.2% and the CAC 40 index in France was down 0.2%. The FTSE in the UK was flat.
Coming back to India, among the BSE sectoral indices, the Metals index was the top gainer, adding 4%, followed by the Realty index that was up 1.2% and the BSE Teck index was up 1%. Even the BSE Mid-Cap index gained 1.2% while the BSE Small-Cap index was up 1%.
Among the 30-components of Sensex, 23 stocks ended in the positive terrain and 7 ended in the red. Hindalco, JP Associates, Sterlite Industries, RCom and Grasim were among the top gainers.
On the other hand, among the major losers were Maruti, Tata Motors, ACC, NTPC and Reliance Industries.
Outside the frontline indices, the big gainers in the broader market were MTNL, Gujarat NRE Coke, SCI, CESC and Tata Communication. On the other hand, losers included Videocon Ind, Central Bank, Fortis Health and Indian Hotels.
Bharti Airtel's US$300mn initial investment proposal for acquiring 70% stake in Warid has been approved by the Bangladesh telecom regulator.
Chairman Zia Ahmed of Bangladesh Telecommunication Regulatory Commission (BTRC) was quoted as saying "We have approved Bharti Airtel's plan to buy the Warid stake".
"We hope Airtel investment would cross US$1bn within the next few years," Ahmed said. He further added, "Whatever price Airtel is going to pay for Warid stake, as per law, 5.5% of the deal amount must go to BTRC".
Shares of Bharti Airtel gained by 1.6% to end at Rs330. The scrip opened at Rs325 it touched an intra-day high of Rs332 and a low of Rs325 and recorded volumes of over 1mn shares on BSE.
Maruti Suzuki announced that it plans to create a new segment with the launch of its new 7 seater family car, MD & CEO, Shinzo Nakanishi was quoted as saying. The company showcased its new MPV Multi Purpose Vehicle at the auto show in Delhi.
Nakanishi said that Maruti Suzuki hopes to maintain sales growth in calendar 2010 despite rising raw material costs, inflation and the rise of the yen against the rupee.
"This is not an easy job this year with so many new cars being launched," he said, when asked if Maruti will be able to maintain its 50% market share. "We have to make preparations for this," he added.
Separately, the company’s finance head Ajay Seth was quoted as saying that Maruti Suzuki will decide later this month on a proposal to expand capacity.
The company has cash reserves of Rs50bn and will utilize that for the expansion, he said. Maruti has no plans to take loans, Seth said.
Maruti Suzuki expects sales this fiscal year (FY10) to reach a record 1 million units, Nakanishi said in New Delhi today.
Shares of Dr. Reddy’s Labs surged by over 3% to end at Rs1177 after the company along with Rheoscience announced that their Balaglitazone diabetes drug has met its primary target in the first of its phase 3 clinical trials.
Balaglitazone reduced blood glucose levels over a period of time in the study conducted on 409 patients, D. Reddy’s said in a statement.
Opto Circuits announced that Eurocor GmbH the Company's wholly owned subsidiary has received the CE (Communite European) Mark approval for marketing and sale of its novel Drug Eluting Stent-Taxcor Plus in world markets (sans US and Japan).
Taxcor Plus is on a Cobalt Chromium platform with Stent struts of 0.0025", which is one of the thinnest struts available in the industry. The stent is coated with Paclitaxel (1 pg/mm 2).
The stock shot up by over 4.5% to end at Rs237. The scrip opened at Rs230 it touched an intra-day high of Rs239 and a low of Rs228 and recorded volumes of over 0.46mn shares on BSE.
Shares of Sadbhav Engineering advanced by over 2% to end at Rs1235 after the company announced that it won project worth Rs13.50bn of "4 laning of Rohtak to Panipat Section of NH-71A from km 0.000 (Km 63.30 of NH-10) to km 80.858 (Km 83.50 of NH-1) in the state of Haryana on BOT basis under NHDP Phase-III." from The General Manager (Tech)-P&H, National Highways Authority of India (Ministry of Road Transport and Highways) G-5&6, Sector-10, Dwarka, New Delhi-110075.
The Concession Period of the project is 25 (Twenty Five) years inclusive of construction period of 910 Nine Hundred Ten) days from Appointed Date.
Shares of Viceroy Hotels were locked at 10% upper circuit at Rs54.35 after the company announced that the board of directors will meet on January 07, 2010, to consider and approve the raising of long term resources for the company
through issue of fresh equity shares.
To consider and approve the additional sanctions of Rs1.13bn to part finance the Bangalore Hotel Project from Syndicate Bank, Canara Bank, IDBI Bank, Allahabad bank and Lakshmivilas Bank and authorise the MD to execute the necessary loan agreements and also to consider the proposal to re-structure the Company's hotel assets.