As long as you derive inner help and comfort from anything, keep it - Mahatma Gandhi.
The bulls are getting inner help as well as external help. When you get nearly $2.8bn (cash segment only) in seven days, can the bulls remain subdued? That's what has happened in the past few sessions on the local bourses. In the wake of the Federal Reserve's better than expected rate cuts, equity markets across the world have been on fire. Indian indices in particular have set the market ablaze with a spectacular show. The Sensex and the Nifty have achieved new milestones. The bears are nowhere to be seen these days but expect them sooner rather than later. Though the undertone has changed for the better, a much needed healthy correction is more than warranted at this stage.
The upcoming results, especially that of the IT firms will be keenly watched. The guidance from the software companies will be crucial. The results from the old economy companies will also be important, for they will provide some clues on the state of the economy. We see the key indices being rangebound over the next few days, but with a positive bias. Most players will wait for the results to get out of the way before taking a fresh call on the market. Having said that, if the liquidity flow remains as strong as it is now, the bulls will rule the roost. Today, we expect a flat to slightly positive start and a choppy day. Trading volume may be lower given tomorrow's holiday and anxiety ahead of results.
US stocks slipped on Friday after some upbeat economic news and cautious comments from a Fed official tempered bets that the central bank will cut interest rates next month.
The Dow Jones Industrial Average lost 0.1% on the session - but gained 4.1% on the month. The broader S&P 500 dropped 0.3% but gained 3.6% in September. The tech-fueled Nasdaq Composite fell 0.3% on the session and gained 4.1% on the month.
The major indices also ended a tumultuous third quarter with gains. For the quarter, the Dow gained 3.7%, the S&P 500 added 1.6% and the Nasdaq added 3.8%.
Weighing on investor confidence was a better-than-expected reading on consumer spending in August, which surprised many investors.
While the report included a tame inflation reading that is favored by the Federal Reserve, it reduced expectations that the central bank would continue to cut interest rates at its next policy meeting in October.
Comments from St. Louis Fed President William Poole, a voting member of the 2007 FOMC, also fueled those expectations.
Supporting that view was a better-than-expected Chicago PMI reading - a key index of regional business activity - and a surprisingly strong August construction spending report.
That contrasted with the University of Michigan's consumer sentiment reading for September, which came in weaker than expected.
US light crude for November lost $1.28 to settle at $81.60 a barrel on the New York Mercantile Exchange. COMEX gold for December delivery jumped $10.10 to settle at $750.
Treasury prices fell, raising the yield on the 10-year note to 4.58% from 4.56% late on Thursday. In currency trading, the dollar fell versus the euro and also dipped versus other major currencies.
European shares ended the third quarter on a mixed note, as some better-than-expected US economic data and gains from Alcatel-Lucent helped offset food-sector weakness tied to a warning from sugar firm Tate & Lyle.
The pan-European Dow Jones Stoxx 600 index inched down less than a fraction of a percentage point to 377.72. The benchmark logged a loss of about 4% from its 393.70 close on June 29.
The German DAX 30 rose 0.1% to close the week at 7,861.51, but the French CAC-40 lost 0.3% at 5,715.69 and the UK's FTSE 100 declined 0.3% to 6,466.80.
In the emerging markets, the Bovespa in Brazil lost 1% to 60,465 while the IPC index in Mexico was down 0.8% at 30,296. The RTS index in Russia rose 0.4% to 2071 and the ISE National-30 index in Turkey shed 0.8% at 68,547.
Asian stocks rose this morning, leaving a regional benchmark set for a third straight record, after Japan's business sentiment unexpectedly held near a two-year high.
Sony led gains among Japanese exporters, while industrial robotics maker Fanuc advanced after the Bank of Japan's quarterly Tankan survey showed companies are raising projections for spending, sales and profits.
Mitsubishi UFJ Financial surged on its first day of trading after a one-week suspension as the bank split its stock and lowered its minimum trading lot, making the shares more affordable.
Posco led South Korea's Kospi index to a two-month high after announcing price increases. Telekom Malaysia Bhd jumped the most in seven years after the company said it plans to spin off its mobile-phone units.
The Morgan Stanley Capital International Asia-Pacific Index added 0.6% to 164.23 as of 10:54 a.m. in Tokyo, with all 10 industry groups posting gains.
Japan's Nikkei 225 Stock Average added 0.4%. Stock benchmarks advanced elsewhere in the region. Markets in Hong Kong and China are shut for holidays.
Markets likely to consolidate
The benchmark Sensex today rose to its eighth consecutive record, with ICICI Bank Ltd. and Tata Steel Ltd. leading from the front. NSE Nifty also rose to its new record high sustaining above the 5kmark. Better than expected inflation figures further boosted the sentiments on D-Street. Inflation rate was 3.23% in week ended September 15, against expectation of 3.45%. Finally, BSE 30-share benchmark Sensex ended 140 points higher to close at 17,291. NSE Nifty added 20 points to close at 5,021.
Reliance Energy was the pick of the day, the scrip was the top gainer among the Sensex stocks adding over 8% to finally close at Rs1205 also hitting its 52-week high. Reports stated that the company planned to sell shares in its generating unit for the first time. The scrip has touched an intra-day high of Rs1222 and a low of Rs1128 and has recorded volumes of over 67,00,000 shares on NSE.
IFCI surged by over 7% to Rs99 on reports that the company short listed eight bidders for sale of 26% stake including a consortia led by Wilbur Ross and Shinsei Bank The scrip touched an intra-day high of Rs102 and a low of Rs95 and recorded volumes of over 7,00,00,000 shares on NSE.
DLF gained by 2.8% to Rs762 after reports stated that the nation's biggest real estate developer may ally with AT&T Inc. and Singapore Telecommunications Ltd. for its proposed mobile-phone services venture in India. The scrip touched an intra-day high of Rs7667 and a low of Rs745 and recorded volumes of over 9,00,000 shares on NSE.
SAIL advanced by 3% to Rs207 on reports that the company would sign a Rs9.7bn MoU with Indian Railways, NMDC and Chattisgarh government to lay 235km of railway lines connecting iron ore mines to its steel plants. The scrip touched an intra-day high of Rs209 and a low of Rs203 and recorded volumes of over 1,00,00,000 shares on NSE.
Gayatri Projects ended flat at Rs319. The company announced that they would raise investment limit of foreign funds. The scrip touched an intra-day high of Rs327 and a low of Rs318 and recorded volumes of over 1,00,000 shares on NSE.
United Breweries marginally gained 0.8% to Rs381. The company announced that they would raise Rs4.25bn via rights issue. The scrip touched an intra-day high of Rs396 and a low of Rs376 and recorded volumes of over 59,000 shares on NSE.
Oil & Gas stocks were on the receiving end. BPCL slipped by 1.6% to Rs357, HPCL was down by 2% to Rs266. Oil exploration stocks also ended lower. Reliance Industries lost 1% to Rs2298.
IT stocks also witnessed some selling pressure. Infosys was down by 1.2% to Rs1892, TCS edged lower by 0.4% to Rs1060 and HCL Tech slipped 2% to Rs300. However, Satyam gained 1% to Rs446.
Bullish outlook on the sector and rising prices of metal boosted the metal stocks on Dalal Street. Tata Steel surged by over 7% to Rs850, JSW Steel advanced by 4% to Rs852, SAIL was up by 3% to Rs207 and Hindalco added 4.8% to Rs172.
Stocks in News:
Reliance Power is considering an IPO to raise Rs110bn for funding the ultra mega power projects in Sasan and Rosa
BHEL expects orders worth Rs350bn in the current financial year
Arvind Mills to raise Rs2.6bn through warrants issue to promoters; to use funds for
retail and brand expansions
Future Capital Holdings, the financial arm of Pantaloon to raise Rs3-3.5bn through an IPO
Wipro Tech is acquiring OkI Techno Centre, Singapore, a wireless design company with annual revenues of SG$8.8mn
BHEL is in talks with Siemens, Areva and GE to set up JV to manufacture nuclear power plant equipment
Cairn India has made a new oil find in one of its exploration wells in the Ravva field
of India’s east coast. Cairn India owns 22.5% stake in the block
Emaar MGF Land, a JV between Dubai’s largest real estate developer and Delhi-based
MGF Development has filed DRHP to raise Rs60bn
Jet Airways plans rights issue of $400mn by year in the next 3-4 months
NIIT Technologies is scouting to acquire IT and BPO companies in travel, transportation and logistics space
JSW Steel plans to seek licenses for all telecom circles in the
country
Ansal API forms joint venture with Malaysian firm UEM Builders,
to undertake building, construction and engineering activities
New Mobile licenses may come with lock-in clause, norms to weed out non-serious players
India has overtaken the US as the second-largest cotton producer in the world for the
2006-07 season
India’s mobile players not investing in infrastructure in pace with subscriber growth,
says CRISIL
Current account deficit widens marginally to US$4.7bn in April-June 2007 period
Fund Activity:
FIIs were net buyers of Rs22.76bn (provisional) in the cash segment on Friday and the local institutions pulled out Rs1bn. In the F&O segment, foreign funds were net buyers of Rs6.98bn.
On Thursday, FIIs were net buyers to the tune of Rs24.33bn in the cash segment. With this, their net investment in Indian shares in the past seven days has risen to US$2.77bn. Mutual Funds were net sellers of Rs5.17bn on Wednesday.
Major Bulk Deals:
Blackstone Asia has sold Ahmednagar Forgings; Morgan Stanley has bought Arvind Mills; Lotus Global has sold Escorts India; Deutsche Securities has picked up GTL while Deutsche Bank has sold the stock; Merrill Lynch has sold HFCL; DSP Merrill Lynch has purchased ITI; Lotus Global Investments has sold Kashyap Tech; Morgan Stanley has bought LIC Housing Finance; ICICI Pru Life Insurance has picked up NRB Bearings while SBI MF has sold SBI; Goldman Sachs has sold Ruchi Soya; SBI MF, HDFC MF, HSBC Global and ABN AMRO have bought Sintex; Kotak Mahindra UK has picked up Tera Software; Fidelity MF has bought Whirlpool India; JM MF has purchased XL Telecom.
Upper Circuit:
Atlanta, Bag Films, Deep Industries, RIIL, Ruby Mills, Swan Mills, Jai Corp, Marksans and Ion Exchange.
Lower Circuit:
IID Forgings.