Only those who will risk going too far can possibly find out how far one can go." T.S. Eliot.
At the very outset let us be assured that the bulls are going to have a blast this morning; risk appetite seems to have improved further. And, this we are saying despite the disappointments over the IIP report and Infosys results. There is more good news around today than bad news. So, make the most of it.
Aluminium giant Alcoa and chip titan Intel have come out with stellar results. Car maker BMW has raised its outlook. Singapore's Q2 GDP growth beat estimates while the Bank of Japan is likely to boost its economic forecast. Also, the Greek government successfully raised money by tapping the bond market.
The monthly inflation data could play spoilsport but we reckon the markets are resilient and may just be able to hold their own. Whether the rally has enough steam to go farther will hinge on the earnings forecasts (both in India and abroad) and news flow out of Europe and elsewhere. Last but not the least, fund flows will have a bearing on the market.
The NSE Nifty is likely to cross 5450 in early trades and could take a shot at 5500 shortly, provided the global situation remains healthy and earnings don't disappoint. On the way up, the level to look for is 5530 while support is likely to kick in around 5300 and 5200 in case of a small correction.
Going into the second week of July global equity markets were staging a modest recovery, but the uncertainty continues over a range of issues, starting from the euro-zone debt crisis to the slowdown in China. So, Money Market and US Bond Funds saw big inflows even as most equity fund groups struggled to attract significant amounts of fresh money, according to EPFR Global.
Emerging Markets Bond and Global Emerging Markets (GEM) Equity Funds posted solid inflows. Overall, EPFR Global-tracked bond funds absorbed another $3.64 billion and Money Market Funds a 78-week high of $33.5 billion while equity funds posted combined net redemptions of $11.25 billion.
Results Today: HDFC, Infotech Enterprises, TTK Prestige, South Indian Bank, Stone India and ZF Steering.
US stocks surged on Tuesday, in line with a global rally, as investors welcomed strong earnings from Alcoa even as a Greek government bond auction saw encouraging response. A stronger euro bolstered risk tolerance across the world. So, crude oil and commodities advanced while the dollar index dipped.
The Dow Jones Industrial Average climbed 146.75 points, or 1.4%, to end at 10,363.02, about 65 points away from where the blue-chip average started the year. All but one of the index's 30 components tallied gains.
After the close, Intel Corp. said it swung to profit in the second quarter, as sales jumped 34% compared to the same period last year, blowing past Wall Street's estimates. It was the company's best quarter ever, reflecting strong demand from business customers.
Down nearly 1%, pharmaceutical giant Pfizer was the only laggard among the Dow's 30 components, falling after California's highest court reinstated a lawsuit in which retail pharmacies accused it and other drug makers of conspiring to set drug prices artificially high.
The S&P 500 Index rose 16.59 points, or 1.5%, to 1,095.34, with finance and natural-resource companies pacing the gains that extended to include all 10 of the index's industry groups. The Nasdaq Composite Index jumped 43.67 points, or 2%, to 2,242.03.
For every stock falling, nearly eight were rising on the New York Stock Exchange, where more than 756 million shares traded hands.
The euro gained versus the dollar, posting a two-month high in intra-day trade. The greenback also fell versus the Japanese yen.
US light crude oil for August delivery rose $2.29 to settle at $77.15 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery gained $12.60 to settle at $1,213.50 an ounce.
Treasury prices fell, raising the yield on the 10-year note to 3.11% from 3.05% late on Tuesday.
Aluminum giant Alcoa reported higher quarterly sales and earnings that topped estimates late on Monday, beginning the quarterly reporting period on a positive note. The Dow component also estimated that aluminum demand would rise by 12% this year, versus the previous forecast for a rise of 10%.
Also after the close on Monday, railroad operator CSX reported higher-than-expected quarterly sales and earnings. However, shares fell on Tuesday.
Profits for S&P 500 companies are expected to have risen about 27% in the second quarter versus a year ago, while revenue is expected to have jumped 9%. But investors are more interested in knowing what companies say about the second half of the year.
Worries about the European debt crisis, possible slowdown in China and the US sent major Wall Street indices down over 15% in two months. But in the last week stocks have rebounded, with the major gauges jumping 5% last week to post the biggest weekly gains in a year.
The trade balance widened to $42.3 billion in May from $40.3 billion in April, surprising economists who thought it would narrow to $39.5 billion, according to economists.
The US government ran up a budget deficit of $68 billion in June, the Treasury Department announced. That was slightly lower than the $70 billion loss analysts had predicted, according to consensus forecasts.
Moody's cut Portugal's debt rating two notches to A1 with a stable outlook. The rating is still investment grade; however, the agency says that it expects the country's outlook is likely to remain relatively weak.
Investors shrugged off Portugal's downgrade after Greece staged a successful auction of its government debt, raising about $2 billion to repay some of the country's outstanding loans.
That news boosted European markets and sent the euro to a fresh two-month high against the dollar.
Shares of AIG surged about 6% after reports said that the troubled insurance giant board plans to meet on Wednesday to discuss a public offering of its Asian life insurance division, AIA. A sale or public offering of that unit is a crucial part of AIG's strategy to raise funds by divesting divisions of its company to pay back the $102 billion it owes US taxpayers.
European shares had another day of strong gains, rising for a sixth consecutive session after Alcoa announced better-than-expected earnings and BMW raised its earnings outlook. A successful bond auction by the Greek government and reports of less stringent bank capital rules also supported sentiment.
The Stoxx Europe 600 index rose 1.9% to finish at 255.99, its sixth consecutive daily rise.
Reports suggested that France and Germany are leading an effort to water those rules down. There is talk that the Basel rules are being re-discussed and will probably become less stringent.
Greek banks gained ground after the Greek government managed to sell 1.625 billion euros ($2 billion) of 26-week bills in its first move into the debt market since tapping a joint European Union-International Monetary Fund rescue plan. National Bank of Greece shares rose 4% and the Greek ASE Composite index jumped 2.6% to 1,567.48.
However, Portugal's PSI 20 index rose just 0.1% to 7,312.59, lagging much of the rest of Europe, after Moody's Investor Service downgrading Portugal's bond ratings two notches to A1 from Aa2 earlier in the session.
The UK's FTSE 100 index rose 2% to close at 5,271.02, the French CAC-40 index added 2% to settle at 3,637.76 and the German DAX index finished 1.9% higher at 6,191.13.
BMW shares surged 8.3% after the luxury automaker hiked its 2010 and second-quarter earnings view.
"For the full year, the company expects sales volumes to rise by around 10% to more than 1.4 million units. In addition to the recovery of the worldwide markets, strong demand for new models such as the BMW 5 Series and BMW X1 has had a positive impact on the business development," BMW said.
BP shares rose 2.9% after the UK oil giant said that following installation of a capping stack, a well integrity test will begin on the MC252 well in the Gulf of Mexico.