"Life is a festival only to the wise." Ralph Waldo Emerson.
Happy Janmashtami. The bull camp appears to have regained its winning ways just as the festive spirits are beginning to escalate here in India. The start promises to be good given the cheerful mood across the globe following encouraging reports on manufacturing output – first in China and then in the US. While people in India form human pyramids to reach a high-hanging pot of butter and break it, the bulls too will team up to help the Nifty break past 5500.
The crucial thing to watch out for is whether the Nifty can sustain above 5500. Just recently it crossed 5500 but failed to extend its ascent. Bulls are of course hoping this time things might be different. But, the precarious and uncertain global situation could continue to play spoilsport every now and then. All eyes are on Friday’s US monthly payroll data, which could swing the sentiment either ways, at least in the immediately short term. The fact that global data points are not consistent will make world markets that much more volatile.
Back home, the Government has revised GDP data (based on expenditures) at market prices to show even better growth. However, if the latest batch of reports are any indication, we could see some softening in India as well. The overall GDP number for FY11 will be fairly robust. The big challenge will be how to tackle an apparent slowdown in key regions like the US, China and euro-zone. Inflation of course continues to be a big issue, and the RBI is likely to continue hiking rates to try and contain it.
FIIs were net buyers of Rs3.59bn in the cash segment on Wednesday (provisionally), according to the NSE web site. Local funds were net buyers of Rs1.68bn. In the F&O segment, the foreign funds were net buyers at Rs6.82bn. FIIs were net buyers of Rs5.38bn in the cash segment on Tuesday. Mutual Funds were net sellers at Rs3.52bn on the same day.
Telecom shares might continue to hog limelight as they have received 3G spectrum from the Government. Auto stocks may also remain in the spotlight after reporting strong monthly sales. Companies with exposure to insurance could see some action as the new ULIP regime kicked off from Wednesday.
Reliance has increased its stake in EIH from 14.2% to 14.8%. Promoters of Bajaj Auto have hiked their stake in the company. TCS' UK arm has bought Unisys Insurance Services, in lieu of which the company has received business worth £250mn for six years. Reliance Broadcast Network plans to raise Rs4bn through a preferential issue.
Compucom Software's board will consider issue of preferential shares to promoters and others besides a QIP on Sept. 9. Unity Infraprojects has bagged a couple of projects from Maharashtra. Aegis Logistics' Board has approved a stock split and plans to raise Rs1bn by way of preferential allotment or a QIP. NALCO is considering selling stake in its $3.9 billion aluminium project in Indonesia in lieu of acquiring equity in coal mines in the island country. JSW Energy has commissioned commercial operation of the first unit of 300 MW of the 1,200-MW (4x300 MW) thermal power project at Jaigad, Ratnagiri district of Maharashtra.
US stocks started September with a bang after a dismal August, as investors welcomed a surprising increase in manufacturing output at home and in China. In the process, Wall Street ignored slightly bearish reading on private payrolls, construction spending and weak auto sales.
The Dow Jones Industrial Average rose 254.75 points, or 2.5%, to 10,269.47, with all 30 of its components tallying gains.
The S&P 500 Index gained 30.96 points, or 3%, to 1,080.29, with the industrial and consumer-discretionary sectors pacing the rise among its 10 industry groups.
The Nasdaq Composite Index climbed 62.81 points, or 3%, to end at 2,176.84.
For every stock on the decline, six rose on the New York Stock Exchange, where 1.2 billion shares traded.
The major US indices had ended Tuesday's session unchanged, closing out a lackluster August.
The dollar fell against the euro and the British pound, but rose versus the Japanese yen.
Currency trading volume around the world has hit $4 trillion a day, a 20% jump compared to 2007, said the Bank of International Settlement.
Oil futures for October delivery rose $2.08 to $74.03 a barrel.
Gold for December delivery fell $2.20 to $1,248.10 an ounce.
The yield on the 10-year Treasury note rose to 2.58% from 2.48% late on Tuesday.
The Institute for Supply Management reported that its index of factory activity rose to 56.3 last month from 55.5 the prior month. Economists were expecting the index to edge lower. Readings above 50 signal growth.
The manufacturing data boosted industrial names and companies in the materials sector.
Meanwhile, payroll processing firm ADP reported that employers cut 10,000 jobs in August. Economists were expecting private sector employers to add 13,000 jobs during the month, after adding 37,000 in July.
A separate report showed that planned job cuts plummeted to a 10-year low in August, as employers shed 34,768, down 17% from the previous month, according to outplacement firm Challenger, Gray & Christmas.
The reports come two days before the government's monthly report on jobs and unemployment on Friday. Economists expect the government to report that the economy lost 120,000 jobs in August, after employers cut payrolls by 131,000 in July. The unemployment rate is expected to edge up to 9.6% from 9.5%.
Other reports on Wednesday included construction spending, which fell 1% in July, versus a forecasted 0.7% decline.
While the improvement in manufacturing allayed some concerns about the US economy, Wall Street remains vulnerable given the uncertain outlook for growth.
The focus could shift to jobs on Thursday morning when the government's weekly report on initial claims for jobless benefits comes out. Investors will also absorb the latest readings on factory orders and pending home sales shortly after the market opens.
General Motors, Ford Motor and Toyota all reported disappointing sales, kicking off what is expected to be the worst August for industry-wide auto sales in 27 years. The drop in auto sales is partly a result of tough comparisons to the Cash for Clunkers program of last summer.
Shares of Burger King Holdings jumped 14%, following a report that the fast food chain is considering a possible sale to buyout firms. The Wall Street Journal reported that that private equity firms that have expressed interest in buying Burger King include Britain's 3G Capital Group.
Apple's stock was up 2.8% as the company held its annual music-themed special event. CEO Steve Jobs unveiled its newest range of iPods and advances in the iTunes music store.
Shares of BP climbed 3.7% as the oil giant said it has agreed to sell its interests in ethylene and polyethylene production in Malaysia to government-owned Petronas for $363 million in cash.
European stocks rallied on the back of positive data on manufacturing output in the US and China, assuaging some concerns on the ongoing economic recovery in the global economy.
The Stoxx Europe 600 index advanced 2.7% to end at 258.19 points.
The Institute for Supply Management (ISM) in the US reported that its manufacturing index rose to 56.3% in August from 55.5% in July. The data was better than expected, since economists had projected a decline.
China's manufacturing activity expanded in August, according to two separate surveys released on Wednesday. Also, Australia's economy grew more than expected in the second quarter.
The French CAC 40 index was the top gainer, surging 3.8% to 3,623.84. The UK's FTSE 100 index rose 2.7% to 5,366.41. The benchmark indexes in Italy, Spain and Denmark all gained more than 3%. Sweden's OMX Stockholm 30 index soared 3.7%.
Shares of French media and communications giant Vivendi surged after the group said its full-year earnings outlook has improved and its adjusted second-quarter earnings beat forecasts.
Cement producers in Europe got a boost after Cheuvreux upgraded the sector, lifting both Holcim and Lafarge to outperform from underperform. Shares of Holcim gained 3.2% in Zurich and those of Lafarge rallied 5.5% in Paris.
In Germany, shares of Heidelberg Cement jumped 5.9%, as Cheuvreux reiterated its outperform rating on the stock.