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Friday, January 15, 2010

Steady start likely

Success is steady progress toward one's personal goals.

Two straight days of gains means that the NSE Nifty is yet again staring at 5300. Global cues are supportive though not by a great deal. A positive start is what we are looking for. A slew of big results are lined up and could swing the sentiment either way though we don’t see any nasty surprise.

It remains to be seen whether the Nifty manages to close above 5300, which in recent past has proved to be a tough barrier to break. If it does that it could head for 5350-5400 in the near term. On the downside support is at 5200. The bias remains cautiously optimistic but volatility will persist.

Inflation is a big worry and could play spoilsport. Though a CRR hike has already been discounted there are fears that the central bank may also turn hawkish as far as policy rates are concerned. In the long run, the Government needs to overcome supply side constraints to contain prices. Monetary policy has a limited role to play in bringing down inflation.

Results Today: Axis Bank, Balaji Tele, DCB, Escorts, Finolex Cables, HDFC Bank, IDBI Bank, IndusInd Bank, NIIT Tech, Shree Renuka Sugars, TCS and UCO Bank.

We expect TCS to post 3.2% QoQ growth in PAT. HDFC Bank is projected to report ~19% YoY jump in bottomline. Axis Bank is likely to report 2.3% YoY rise in PAT.

FIIs were net sellers in the cash segment on Thursday at Rs3.12bn on a provisional basis. The local funds were net buyers of Rs5.29bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs2.54bn. As per the SEBI figures, FIIs were net sellers of Rs435mn in the cash segment on Monday.

US stocks rose on Thursday, led by technology shares. The Dow Jones Industrial Average added 30 points, or 0.3%. The S&P 500 index added 3 points, or 0.2%. Both closed at the highest point since Oct. 1, 2008. The Nasdaq Composite rose 9 points, or 0.4%, ending at the highest point since Sept. 3, 2008.

After the close, Dow component Intel said it earned 40 cents per share in the fourth quarter on sales of $10.6 billion. Both earnings and sales trounced estimates and marked a sharp improvement from the previous year. The stock gained 2% in extended-hours trading.

Overall S&P 500 earnings are expected to have risen more than 200% from the previous year, the worst quarter in Thomson's history. JPMorgan Chase is due to report results Friday morning. The financial behemoth is expected to have earned 66 cents per share on revenue of $27 billion.

Stocks ended higher on Wednesday, with the Dow closing at a 15-month high. After a weak start Thursday, stocks turned higher, despite the day's mixed economic news.

Retail sales fell 0.3% in December, the government reported Thursday. The report was a surprise to economists who were expecting sales to have risen 0.5%, according to a consensus of economists. Sales rose a revised 1.8% in November.

Retail sales excluding autos fell 0.2% in December after rising 1.9% in the previous month. Economists thought they would rise 0.3%.

The National Retail Federation said holiday sales for the November-December period rose 1.1%, a better showing than the retail group's forecast of a 1% decline.

The number of Americans filing new claims for unemployment rose last week to 444,000 from 433,000 in the previous week. Economists thought claims would rise to 437,000.

Continuing claims, a measure of Americans who have been receiving benefits for a week or more, fell to 4.596 million from 4.807 million in the previous week. Economists thought claims would fall to 4.750 million.

November business inventories rose 0.4% after rising 0.4% in the previous month. Economists thought claims the increase would be 0.3%.

President Obama proposed a plan to tax companies that took bailout funds, legislation he says is necessary to make sure the banks return the money they accepted in full.

The dollar fell against the euro and gained versus the yen.

COMEX gold for February delivery rose $6.20 to settle at $1,143 an ounce. Gold closed at an all-time high of $1,218.30 an ounce last month.

US light crude oil for February delivery fell 26 cents to settle at $79.39 a barrel on the New York Mercantile Exchange.

Treasury prices rallied, lowering the yield on the 10-year note to 3.73% from 3.79% late on Wednesday.

European shares held on to small gains to close slightly higher, boosted by miners, while signs remained of a patchy global economic recovery.

The pan-European Dow Jones Stoxx 600 index rose 0.7% to close at 258.84, the second straight day of gains for the index.

Miners and metal stocks were one of the key supports for the index.

German DAX index rose 0.4% to close at 5,988.88, the French CAC-40 index advanced 0.4% to end at 4,015.77. The U.K. FTSE 100 index settled 0.5% higher at 5,498.20, helped by the mining sector gains.

A day after snapping a four-day losing streak, the Indian market extended gains for a second straight trading session on Thursday. Firm global cues helped the key indices start off with healthy gains, although there was an intra-day blip where the BSE Sensex slipped slightly on account of profit booking. However, as the day progressed, the bulls regained the lost composure. Strength in index heavyweights like Reliance Industries, ONGC and Infosys ensured there were no further hiccups. Wipro was one of the star performers of the day.

India’s inflation, as measured by the wholesale price index (WPI), stood at 7.31% for December 2009 as compared to 4.78% for the previous month. Inflation was at 6.15% during the corresponding month of the previous year.

Inflation for Food Articles rose to 3.11% in December 2009 as compared to 2.70% in the same period last year. Non-Food Articles inflation rose to 0.48% from 0.12% in December 2008 and Minerals inflation was at -0.06% versus -0.03% in December 2008.

The BSE Sensex advanced 75 points to end at 17,584 after touching a high of 17,628 and a low of 17,532. The Nifty added 25 points to end at 5,260.

Equity markets in Asia ended in the green. The Nikkei in Japan was up 1.6%, while Australia's S&P/ASX ended higher by 0.6%. The Shanghai SE Composite was up 1.6% and Hang Seng index in Hong Kong was flat.

In Europe, stocks were trading higher as well. The DAX in Germany was up 0.6% and the CAC 40 index in France was up 0.6%. The FTSE in the UK was up 0.6%.

Coming back to India, among the BSE sectoral indices, the Oil & Gas index was the top gainer, adding 2.3%, followed by the Consumer Durables index that was up 2% and the BSE PSU index was up 0.9%. The BSE Mid-Cap index advanced 1% while BSE Small-Cap index added 1.2%.

Among the 30-components of Sensex, 15 stocks ended in the negative terrain and 15 ended in the green. RCom, Wipro, ONGC, Reliance Industries, BHEL and Sterlite Industries were among the top gainers.

On the other hand, HUL, Tata Power, Hero Honda, Reliance Infra and DLF were among the top losers.

Outside the frontline indices, the big gainers in the broader market were Sterline Bio, Koutons Retail, TTML, REC and Federal Bank. On the other hand, losers included Sintex Ind, Madras Cem, PTC and Renuka Sugar.

Wipro Ltd.’s founders, including Chairman of the company Azim Premji are reportedly planning to sell a part of their shares and are planning a US$1bn sponsored American depositary receipts (ADR) issue. Citigroup, Credit Suisse, Morgan Stanley and Goldman Sachs may manage Wipro’s ADR offer, reports added.

The stock surged by 3.5% to end at Rs741, it opened at Rs715.5 touching an intra-day high of Rs752 and a low of Rs705 and recorded volumes of over 1mn shares on BSE.

The Securities and Exchange Board of India has reportedly cleared the draft share-sale document filed by Reliance Infratel Ltd. Shares of Reliance Communication surged by over 4% to end at Rs183. The scrip opened at Rs177 it touched an intra-day high of Rs184 and a low of Rs175 and recorded volumes of over 2.6mn shares on BSE.

Usha Martin plans to raise Rs5bn by selling shares to large investors. The company is planning to sell shares for at least Rs85.9 per share. The sale would be managed by Equirus Capital Pvt.

Shares of Usha Martin gained by 2% to end at Rs89. The scrip opened at Rs88.9 it touched an intra-day high of Rs90 and a low of Rs85.30 and recorded volumes of over 0.8mn shares on BSE.

Shares of Sasken Communication shot up by over 3% to end at Rs201 after Reliance Capital Trustee acquired nearly 0.31mn shares of the company at an average price of Rs185 on January 13, 2010. While, Nortel Networks Mauritius Ltd was the seller for the same. The scrip opened at Rs199.5 it touched an intra-day high of Rs206.8 and a low of Rs199.4 and recorded volumes of over 0.98mn shares on BSE.

Shares of Punjab Chemicals added 1.5% to end at Rs180 after the board of directors approved to raise Rs2bn by various routes from domestic and international markets. The company would raise the amount by issue of securities or foreign currency convertible bonds (FCCBs) from the domestic or international markets.

Era Infra announced that the company in association with OJSC-SIBMOST, has bagged the prestigious orders from NHAI for an estimated cost Rs16.59bn. Shares of ERA Infra gained by 2.5% to end at Rs210. The scrip opened at Rs206 it touched an intra-day high of Rs213 and a low of Rs206 and recorded volumes of over 0.52mn shares on BSE.