Counting the cost and paying the price aren't things to think about any more. All that matters is value - James Hilton.
The hungry bulls will look at lapping up whatever comes their way. Value and rationale could take a backseat. The scary rollercoaster ride of the previous few sessions will take a break, as risk aversion has subsided somewhat after China dismissed a report saying it was mulling paring its holding of European bonds. This helped spark a world-wide rally in equities and commodities. The euro too rebounded while gold dipped and the VIX – Wall Street’s fear gauge – dropped below 30 after surging past 44 not too long ago.
After long, we have a bright morning to start with as we stare at a gap-up opening and hopefully another day of solid gains. Asian markets are upbeat following the overnight bounce in the US as well as European markets. Still, it would be foolhardy to take the recent pull-back in stocks as a decisive turnaround and start buying aggressively. The problems in Europe and other advanced economies have not vanished. So, one expects the volatility to persist for some time to come owing to uncertainty about the global picture.
What we are witnessing lately is more of a relief rally from the lows hit in the current intermediate downtrend. This advance has to sustain for a while to restore investor confidence. Also, FIIs - who have been net sellers for quite some time - have to resume their buying spree. Even prior to the current falls, the Indian market had struggled to break out of a range. We have to see whether this time is different and the key indices will head higher after dust settles on the euro-zone debt crisis.
For India the prospects appear really good. The next big trigger will come from monsoon and hopefully raingods will be kind this year. The Government will announce GDP figures for the January-March quarter as well as for the full year on Monday. Reports suggest a sharp bounce back from the same period last year. Consensus estimates are pointing to 8-8.5% kind of a number for Q4. For the whole year, the GDP may just beat the official forecast of 7.2%.
One has to keep a close watch on how the monsoon begins and progresses in the weeks and months ahead. Last year was pretty bad for the agriculture sector. So, naturally everybody is keeping its fingers crossed and is praying for a normal monsoon season.
Among the stocks, Areva T&D could be in focus on the announcement of an open offer by its parent. SCI will be another stock that could rally on speculation of disinvestment and a bonus as well. Apollo Hospitals and Emami boards will discuss a stock split today.
Indian markets ended near day’s high on Thursday as bears ran for cover during the last hour of trade owing to a strong bull charge. Intense short covering was seen in the NSE Nifty, which not only sustained above the crucial 4950 level but also closed above 5000. With this, the main indices have now recovered heavy losses suffered in Tuesday’s session. Today’s rebound was led by strength in Banking, Auto and Oil & Gas stocks, which lifted the Nifty above its 200-day DMA of 4999.
"Sentiment across the world got a fillip after the Chinese government dismissed reports that it was considering paring down its holdings of eurozone bonds", says Amar Ambani, Vice President Research IIFL. The State Administration of Foreign Exchange (SAFE) said that China will not change the direction of its diversification strategy. The euro rallied and US stock futures surged on China’s reassurance that it was not selling euro-denominated debt.
Finally, the BSE 30-share Sensex surged 279 points at 16,666 and NSE Nifty advanced 86 points at 5,003.
Markets in Asia ended in the green; the Nikkei in Japan advanced by 1.3%, Australia's S&P/ASX gained by 1.7%, while the Hang Seng index in Hong Kong rose 1.2% and Shanghai SE Composite gained 1.5%.
European indices were trading in the green as well, the DAX in Germany was up 2.3%, the CAC 40 index in France was up 2.4% and the FTSE in the UK was up 2%.
All the BSE sectoral indices ended in the green, BSE Banking index was the top gainer, the index was up 2.5%, followed by BSE Auto index was up 2.1% and BSE Oil & Gas index was up 2%. Even the BSE Mid-Cap index ended higher by 1% and the Small-Cap index gained 0.8%.
Outside the frontline indices, the big gainers in the broader market were Areva T&D, REI Agro, Apollo Hosp, Fortis Health and LITL. On the other hand, losers included Adani Ent, Max India, Piramal Health and Koutons.