Uncertainty will always be part of the taking charge process.
As bulls take charge of the proceedings at start, investors will try to grapple with concerns on valuations. India has always commanded a premium; some more head room is always there. How much is anybody’s guess! The budget could play some role in shaping the roadmap for the economy and markets. Hopefully, the FM will not disappoint this time. A major concern right now is on inflation. Crude oil has crossed $80 per barrel. Key inflation barometers are hovering between 15-20%.
The start of the year wasn’t bad for the bulls across world markets. Strong manufacturing data and favourable comments from Fed officials did the trick. Back home too, the Government is no mood to reverse the fiscal stimulus as yet. Even the monetary tightening is not expected to be aggressive. Possible near-term trigger could come from India Inc’s report card. The critical factor would be the outlook for FY11.
Today, we expect another positive opening on the back of overnight rally on Wall Street, but the mood could turn a little sour later in the day. European markets too posted smart gains. However, Asian markets are mixed. The opening gains could be limited as profit booking is likely to set in sooner than later.
FIIs were net buyers in the cash segment on Monday at Rs6.13bn on a provisional basis. The local funds were net buyers of Rs23.3bn, according to figures published on the NSE's web site. This is primarily due to the Reliance Industries' treasury share sale. In the F&O segment, the foreign funds were net sellers at Rs505.4mn. As per the SEBI figures, FIIs were net buyers of Rs8.34bn in the cash segment on Thursday (Dec. 31).
US stocks kicked off the new year on a strong note on Monday after a report showed manufacturing activity is picking up and the weak dollar propelled commodity prices and stocks.
The Dow Jones Industrial Average rallied 156 points, or 1.5%. The S&P 500 index rose 18 points, or 1.6%. The Nasdaq Composite gained 39 points, or 1.7%. All three major gauges closed at 15-month highs.
The first few trading sessions of a new year are typically positive and the advance has to sustain for several more days on strong trading volume before one can convincingly say that the rally has recharged.
Stocks fell on Thursday in a thinly traded session on the last day of 2009. All financial markets were closed on Friday in observance of New Year's Day. The last month of 2009 saw stocks churning in a narrow range, managing modest gains. The market lost some momentum in November and December. That slowdown coincided with the dollar beginning to firm up.
A tumultuous 2009 ended with substantial gains. The S&P 500 gained 23.4%, the Dow industrials gained 18.8% and the Nasdaq composite gained 44%. Stocks are up even more substantially since bottoming in March at the height of the financial market crisis. After closing at a 12-year low on March 9, the Dow gained 59% and the S&P 500 gained 65% through year end. After closing at a 6-year low on the same date, the Nasdaq gained 79%.
In the day's main economic report, the Institute for Supply Management's manufacturing index rose to 55.9 in December from 53.6 in November, signifying a wider expansion in the sector. Economists thought it would rise to 54.3.
Stronger manufacturing reports were also released in Asia as well as Europe, adding to bets that the global manufacturing sector is recovering.
A separate report from the US government showed that construction spending fell 0.6% in November versus forecasts for a drop of 0.5%. Spending fell 0.5% in October.
Swiss drugmaker Novartis AG plans to take control of Alcon by paying $38.5 billion to buy the 77% of the eye care products maker it doesn't already own. The deal involved Novartis buying out Nestle SA's 52% stake in Alcon for $28 billion in cash and then merging with Alcon to access the remaining 23% held by minority shareholders. Alcon shares fell nearly 6%.
Federal Reserve chairman Ben Bernanke said on Sunday that the central bank's decision to keep interest rates very low between 2002 and 2006 was appropriate and not the cause of the housing market bubble. He said that regulation would have been a better way to avert the collapse that led to the worst financial crisis since the Great Depression.
The dollar tumbled versus other major currencies. The weaker dollar gave a lift to dollar-traded commodities.
COMEX gold for February delivery settled up $22.10 to $1,118.30 an ounce. Gold closed at an all-time high of $1,218.30 an ounce earlier this month.
US light crude oil for February delivery gained $2.15 to settle at $81.51 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 3.81% from 3.84% late on Thursday.
European stocks began the new year higher. After finishing 2009 with a 29% return - the best since 1999 - the pan-European Dow Jones Stoxx 600 rose 1.6% to 257.31. The index wasn't calculated on Thursday, when markets in Britain, France and some other European countries were only open for a half day.
Germany's benchmark DAX index gained 1.5% to 6,048.30 to recapture the 6,000 mark, the French CAC 40 index rose 2% to 4,013.97 to cross the 4,000 threshold and the UK's FTSE 100 index added 1.6% to 5,500.34.
The start to trading may have been advanced by an hour, but the extended hours had no major impact on volume; may be a few traders and investors are still in a holiday mood. Nevertheless, the very first day of trading saw the Indian markets carrying forward the previous year’s momentum.
The NSE Nifty index managed to close at a 19-month high on account of impressive sales performance by the Auto, Cement and Steel companies. The upswing was supported by a firm start to equity markets across Europe, lifting the sentiment on Dalal Street.
The BSE Sensex gained 94 points to end at 17,559 after touching a high of 17,583 and a low of 17,378. The NSE Nifty advanced 31 points to end at 5,232.
Equity markets in Asia were mixed, the Nikkei in Japan was up 1%, while Australia's S&P/ASX ended flat. However, the Shanghai SE Composite fell 1% and Hang Seng index in Hong Kong was down 0.3%.
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 1%. The FTSE in the UK was up 0.5%.
Coming back to India, among the BSE sectoral indices, the Consumer Durables index was the top gainer, adding 2%, followed by the Metal index that was up 2% and the BSE Auto index was up 2%. Even the BSE Mid-Cap index gained 1.6% while the BSE Small-Cap index was up 1.5%.
Among the 30-components of Sensex, 23 stocks ended in the positive terrain and 7 ended in the red. ACC, JP Associates, M&M, Tata Motors and Grasim were among the top gainers.
On the other hand, among the major losers were NTPC, Reliance Industries, Bharti Airtel and Maruti.
Outside the frontline indices, the big gainers in the broader market were RCF, Chambal Fert, GTL Infra, Gujarat NRE Coke and Ultratech Cement. On the other hand, losers included Central Bank, Torrent Power, PFC and Container Corp.
Reliance Industries shares hogged the limelight on the first day of the year after the company sold treasury shares worth Rs25.75bn.
About 25.91mn equity shares or 0.78% of the company changed hands in multiple block deals on the BSE and NSE at an average price of Rs1035 per share. Reliance Industries last year had raised US$658mn through treasury sale.
Shares of Reliance Industries ended lower by 1.2% to end at Rs1075, the stock had hit an intra-day low of Rs1022 in the early trades.
Pantaloon Retail announced that the board has decided the Transfer of Value Retail Business of the Company to its wholly owned subsidiary, "Future Value Retail Ltd." (FVRL) with all its assets, rights, liabilities / obligations of all nature and kind, along with its employees related to Value Retail Business on a going concern basis through agreements and such other modes as may be deemed expedient with effect from January 01, 2010.
The Value Retail Business would commence with effect from January 01, 2010 in Future Value Retail Ltd.
The scrip gained 1.5% to end at 388, it opened at Rs387 it touched an intra-day high of Rs394 and a low of Rs378 and recorded volumes of over 53,000 shares on BSE.
Marico announced that it entered into Malaysian hair styling market through the acquisition of the brand code 10 from Colgate-Palmolive company. The deal for an undisclosed consideration envisages the acquisition of the Brand Code 10 and related IPR by Marico Malaysia Sdn Bhd, a wholly owned subsidiary of Marico Middle East FZE. The Code 10 range comprises hair creams and hair gels.
Shares of Marico erased early gains and ended lower by 0.7% to end at Rs102. The scrip opened at Rs104.45 it touched an intra-day high of Rs105.50 and a low of Rs101.8 and recorded volumes of over 0.24mn shares on BSE.
On the other hand, shares of Colgate advanced 4.2% to end at Rs686. The scrip opened at Rs665 it touched an intra-day high of Rs690 and a low of Rs657 and recorded volumes of over 0.34mn shares on BSE.
Bharat Forge announced the commissioning of its new fully integrated Ring Rolling Facility at its Centre for Advanced Manufacturing at Baramati. The facility was inaugurated by Dr. Albert Hieronimus, President & CEO, Bosch Rexroth AG.
Shares of Bharat Forge advanced by 1.4% to end at Rs275. The scrip opened at Rs272 it touched an intra-day high of Rs277 and a low of Rs270 and recorded volumes of over 0.14mn shares on BSE.
Welspun-Gujarat Stahl announced that the board of directors decided not to pursue the Scheme of Arrangement in the nature of demerger and transfer of plate cum coil mill division of the Company in to a subsidiary Company.
The stock gained 2.3% to end at Rs276, it opened at Rs270 it touched an intra-day high of Rs277.5 and a low of Rs270 and recorded volumes of over 0.39mn shares on BSE.
Suzlon shares erased early gains and end at flat at Rs89.90. The company won repeat orders from ITC Limited for two new projects totaling 27MW in Karnataka and Maharashtra. The scrip opened at Rs91.95 it touched an intra-day high of Rs91.95 and a low of Rs89.25 and recorded volumes of over 6.5mn shares on BSE.