Give your stress wings and let it fly away. ~Terri Guillemets.
World markets will get their first chance to react to the results of bank stress tests in Europe. The first reaction across the globe would be that of a relief. And, therefore we expect our market to open higher. Bulls are likely to hold on to the advantage and the NSE Nifty could pierce 5500 shortly, if not today.
That only a handful of lesser known European banks failed the so-called stress tests may bolster the sentiment further. Only 7 of the 91 banks failed the tests. What’s more, none of the big names are in that list. But, only time will tell whether these tests were comprehensive enough to gauge the banks’ solvency; in case of another downturn.
US stocks rose on Friday. Asian markets are up though they haven’t had a run-away rally as such. Back home, the major concern is inflation. A good monsoon seems to be underway and might soften prices. Still, the RBI is expected to jack up rates by at least 25 bps on Tuesday.
Results Today: Bharat Forge, Blue Star, Century Textiles, Dabur India, Dena Bank, Essar Oil, DQ Entertainment, Gateway Distriparks, GSK Pharma, Granules India, HSIL, Mahindra Holidays, Maharashtra Sealmess, NTPC, Nelco, Peninsula Land, Sterlite, TAJ GVK Hotels, Tata Elxsi, Tech Mahindra, Union Bank, Uniphos Enterprise, United Phosphorus and WWIL.
FIIs were net buyers of Rs7.11bn in the cash segment on Friday (provisionally), according to the NSE web site. Local funds were net sellers of Rs1bn. In the F&O segment, they were net buyers at Rs15.45bn. On Thursday, the FIIs were net buyers of Rs1.88bn in the cash segment. Mutual Funds were net sellers at Rs2.98bn on the same day.
US stocks closed higher on Friday with all the main indices registering solid weekly gains, as investors welcomed a report showing resilience of the European banks, easing concerns over the health of the debt-plagued region.
The euro rallied after most of the big European banks cleared the so-called stress tests. Only seven out of the 91 banks failed. Also boosting the sentiment on Wall Street were the results from a few influential companies such as Microsoft, Ford, Verizon and American Express.
The Dow Jones Industrial Average rose 102 points, or 1%, to end at 10,424.62. The Standard & Poor's 500 Index breached the psychologically significant 1,100 level for the first time this month, to end up 0.8%, or 8.99 points, at 1102.66. The Nasdaq Composite Index advanced 23.58 points or 1.1% to close at 2269.47.
The Dow gained 3.2% last week while the S&P 500 was up 3.6% during the week. The Nasdaq climbed 4.2% in the week and narrowly made it to the positive territory for the year.
The Dow is now within shouting distance of breaking even for the year, after having been in danger of falling into a bear market just a month ago.
US light crude oil for September delivery fell 30 cents to settle at $79 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery fell $6.40 to $1,189.20 an ounce.
Treasury prices fell as stocks rose and investors pulled money out of the safety of government debt. The slide lifted the yield on the 10-year note to 2.99% from 2.93% late Thursday.
Market breadth was positive and volume was light.
US stocks struggled in the morning as investors weighed mixed earnings ahead of the release of the bank stress test results in Europe. But the release of the test results seemed to assuage concerns over Europe’s banking sector.
The test of 91 banks showed that all but 7 banks would be able to withstand pressure in case there is a double dip recession. However, the tests didn't show how banks holding sovereign bonds might react if a particular country defaulted on its debt.
US-listed shares of Spanish banks edged lower, while shares of some other European banks rose on Wall Street.
Ford reported better-than-expected quarterly sales and earnings that reversed its operating loss from a year ago. Shares gained 5.2%.
After the close on Thursday, Microsoft reported higher quarterly sales and earnings that topped estimates, thanks to strong sales of its Windows 7 and an improved personal computer market. Shares ended flat.
GE shares gained after it announced its first dividend increase in more than a year. The company also said that it will restart stock buybacks this quarter after nearly two years. GE's shares ended up 3.3%.
Genzyme shares jumped 15% after reports suggested that France's Sanofi-Aventis has made an informal acquisition approach to the biotech drug maker.
Verizon Communications shares jumped after the telecom giant's earnings excluding charges beat analysts' forecasts.
American Express shares rose after the credit-card company's second-quarter profit nearly tripled, beating analysts' estimates.
McDonald's shares dropped despite a 12% rise in its second-quarter earnings, as the fast-food giant's chief operator officer said "we all look forward to better economic times, but we're just not seeing it yet."
On Thursday, Amazon.com reported quarterly sales and earnings that rose from a year ago, but missed some analysts' projections. Shares fell as much as 11% in pre-market trading and 9% in the morning, but cut losses to 1% by the close.
European shares extended the week’s gains on Friday amid reports that only 7 out of the region’s 91 banks failed the long-awaited stress tests.
The Stoxx Europe 600 index ended 0.6% higher at 255.97, up for the fourth straight session. It added 3.2% over the week.
Banks gained this week but ended broadly flat on Friday. Metal futures and miners advanced.
The French CAC-40 index ended up 0.2% at 3,607.05, the German DAX index advanced 0.4% to 6,166.34 and the U.K. FTSE 100 index ended flat at 5,312.62.
Sentiment in Europe was also ably supported by better-than-expected readings on Germany’s Ifo business confidence report and an encouraging report on UK GDP.
Ericsson shares dropped after the firm reported a second-quarter net profit that fell short of market expectations, as sales declined 8% on supply issues and component shortages.
Shares of Akzo Nobel rose after the Dutch paints-and-coatings company's second-quarter net profit rose to 273 million euros ($353.1 million), from €155 million in the same period a year ago, beating analyst forecasts.
Adidas shares were up after the German sportswear maker released preliminary data for its first-half performance, which it said was materially above market expectations.
Revenue rose 19% to €2.9 billion in the second quarter, while net income reached €26 million, up from €9 million last year.