People choose the paths that grant them the greatest rewards for the least amount of effort.- David Shore.
After two highly insipid sessions, a mildly positive start is in the offing. But it will take a lot of effort for the Nifty to surpass 5500 before the F&O expiry next week. A strong worldwide rally is among the only triggers to get to that mark. As investors digest a spate of earnings (both local and global), things might not change as fast as the bulls would want them to. Right now all the focus is on earnings. After that, the attention will once again turn to the economic fundamentals.
US stocks staged a smart comeback overnight. Rumours that the Federal Reserve is considering additional steps to bolster bank lending is said to be one of the triggers for that rebound. Federal Reserve chairman Ben S. Bernanke is testifying before Congress later today. Stocks in Europe closed down. Asian markets are trading mostly higher though Chinese stocks are subdued. Early gains may not sustain unless world markets advance further. Avoid taking undue risks and keep a closer watch on result-oriented stocks.
Results Today: Aditya Birla Money, Alstom Projects, Bajaj Auto Finance, Bajaj Finserv, Birla Corp, Century Ply, Engineers India, Esab India, Indiabulls Power, Ingersoll Rand India, J Kumar Infra, Karur Vysya Bank, Kotak Mahindra Bank, KPIT Cummins, Mastek, Monsanto India, NIIT, Orchid Chem, Persistent Systems, Pidilite Industries, REC, Sangam India, Thermax, TVS Motor, UB, UB Holdings and Yes Bank.
FIIs were net buyers of Rs2.97bn in the cash segment on Tuesday (provisionally), according to the NSE web site. Local funds were net sellers of Rs1.04bn. In the F&O segment, they were net buyers at Rs758.8mn. On Monday, the FIIs were net buyers of Rs2.04bn in the cash segment.
US stocks closed marginally higher, with the Dow Jones Industrial Average recovering from another intraday triple-digit loss, led by energy and metal shares.
The Dow rose 73.53 points, or 0.7%, to 10,229.96. The index earlier fell triple digits to a session low of 10,007.76.
Twenty-three of the index's 30 components ended higher.
For every stock on the decline four rose on the New York Stock Exchange, where 1.1 billion shares traded hands.
US stocks plunged at the open and struggled for most of the morning as investors digested a big drop in quarterly earnings from Goldman Sachs and a lower profit outlook from Johnson & Johnson. Weaker-than-expected revenues from IBM also weighed on the market.
But the undertone improved in the afternoon on market talk that the Federal Reserve is considering additional steps to encourage bank lending. The talk involves the idea that the central bank would stop paying interest on reserves where it is currently paying 0.25%.
Energy stocks firmed up a bit with the price of oil going up and that gave the market a little lift.
The S&P 500 Index rose 12.23 points, or 1.1%, to 1,083.48, with natural-resource firms and energy companies leading gains.
The Nasdaq Composite Index climbed 24.26 points, or 1.1%, to 2,222.49.
The dollar was up against the euro, the British pound and the Japanese yen.
US light crude oil for August delivery edged up 78 cents to settle at $75.53 a barrel. The September contract, which becomes active on Wednesday, rose 85 cents to $77.75 a barrel.
COMEX gold's August contract rose $10 to $1,192.20 per ounce.
Treasury prices rose, pushing the yield on the 10-year note down to 2.93% from 2.96% late on Monday.
IBM shares fell 2.5%, after it reported results late on Monday that revealed soft service bookings contributing to a disappointing revenue number.
Johnson & Johnson reduced its outlook for the year, citing a series of product recalls.
Shortly after the market closed, Apple reported its best quarterly results on record due to strong Macintosh sales and overwhelming demand for its iPad device. Apple said that sales rose to a record $15.7 billion in the most recent quarter, up 61% from the same period last year. Net income rose to $3.25 billion, up 78% from a year ago. Shares of Apple continued to rally, gaining 4% in extended trading.
Also after the close, Yahoo said that its second-quarter net income rose 51% versus the same period last year. The Internet company said sales rose 2% to $1.6 billion, which beat analysts' forecast of $1.16 billion. But shares fell nearly 5% in extended trading.
Investors have been focused on quarterly results, with over 120 companies due to report this week.
Goldman Sachs said that profit fell 82% in the second quarter to $613 million, due to a slowdown in the bank's trading business. Results were also hurt by a bonus tax in the United Kingdom and the $550 million settlement Goldman reached with the Securities and Exchange Commission. Shares gained about 2%.
Johnson & Johnson fell more than 2% after the company lowered its full-year earnings estimate to a range between $4.65 to $4.75 a share, compared with earlier guidance of $4.80 to $4.90 a share. For the second quarter, J&J said it earnings rose 7% to $1.23 a share from $1.15 a share in the same period last year.
J&J also said that it has received a grand jury subpoena and is cooperating with a federal investigation stemming from multiple recalls of its popular non-prescription drugs.
As of Friday, estimated share-weighted earnings for the S&P 500 for the second quarter stood at $185 billion, above the prior's $182.6 billion, according to Thomson Reuters. Of the 48 S&P 500 companies that had reported at the end of last week, two-thirds topped analysts' expectations, 13% reported results in line with projections and 13% reported results beneath estimates, says Thomson Reuters.
After the market closed, BP announced plans to sell $7 billion worth of assets to Apache Corp. The sale of assets in the United States, Canada and Egypt is part of a plan to raise money to cover costs related to the oil spill in the Gulf of Mexico.
Harley-Davidson soared over 13% after the motorcycle maker said it earned 59 cents a share, versus expectations for 41 cents a share.
Shares of Toyota fell 1.4% after the automaker said it was cooperating with a subpoena from a U.S. federal grand jury for documents related to steering problems in its vehicles.
Housing starts fell to their lowest level of the year in June, down 5% to an annual rate of 549,000.
But building permits showed surprising strength, climbing 2.1% to an annual rate of 586,000.
Economists had expected starts to come in at an annual rate of 575,000, according to consensus estimates. Building permits were forecast have dipped to an annual rate of 572,000.
Separately, a monthly report from the Labor Department showed that unemployment eased in more than half of U.S. states in June. A total of 39 states and the District of Columbia posted unemployment rate decreases in June, while jobless rates rose in five states and remained unchanged in six states.
European shares finished broadly lower though the regional benchmark managed to end in the positive zone, thanks to strength in miners. Auto and telecom stocks declined on concerns that a weak earnings season might signal another recession.
The Stoxx Europe 600 index rose 0.1% to close at 246.35. The gauge had given up 3.8% over the prior four sessions.
The German DAX index dropped 0.7% to end at 5,967.49, while the French CAC-40 index fell 0.5% to close at 3,468.02 and the UK's FTSE 100 index finished 0.2% lower at 5,139.46.
Vodafone is scheduled to update investors on its quarterly trading performance on Friday. Shares of Vodafone fell 1.2% after ING lowered its rating to hold from buy.
Shares of Cable & Wireless dropped 17.4%. The company said that major programs and business lines performed broadly in line with management's plan for the fiscal first quarter but that non-contracted spending in the U.K. public sector has slowed very significantly.
Nokia shares rose 2.2% after a report that the mobile-phone maker plans to replace Chief Executive Olli-Pekka Kallasvuo. The Wall Street Journal reported that Nokia's board is supposed to make a decision by the end of the month.
Irish low-cost airline Ryanair Holdings shares rose 1.8%. The company said first-quarter net profit fell to 93.7 million euros, down from €123.0 million in the year-ago period, hit by airport closures related to volcanic ash plumes, but operating revenue climbed to €869.8 million from €774.7 million euros.
Indian stocks ended in the negative terrain for the second straight trading session as a sudden sell-off in Europe spooked sentiment in the last half an hour.
Benchmark indices kicked off the day on a steady note with the NSE Nifty breaching the 5400 and the Sensex surpassing 18,000. However, the upswing was short lived and the key indices began losing ground in the afternoon, before eventually slipping into red by the close.
"Sentiment was hit after the European markets turned sharply down in reaction to a drop in US stock futures. Weaker-than-expected results from IBM after the close of trading on Monday raised some concerns about corporate earnings in the US", says Amar Ambani, Vice President, Research IIFL.
Finally, the Sensex ended at 17,878, losing 50 points while the Nifty shed 33 points to shut shop at 5,353.
However, stocks in Asia finished broadly higher led by China's benchmark index which surged for the second successive session amid speculation that Beijing may not be as aggressive in reining in massive bank credit and an overheated property market.
Among the BSE sectoral indices, the BSE Pharma index was top loser; the index lost 1%, followed by BSE Auto index was down 0.7% and BSE Banking index was down 0.5%. Among the top gainers were BSE Realty index it gained 1.3% and BSE Metal index was up 0.2%.
Even the Mid-Cap index and the Small-cap index marginally slipped 0.3% each.
Outside the frontline indices, the big losers in the broader market were Divis Labs, Renuka Sugars, Neyveli Lignite, Ashok Leyland and EKC. On the other hand, gainers included Madras Cem, LITL, GVK Power, Central Bank and Sun TV.