Democracy is the only system that persists in asking the powers that be whether they are the powers that ought to be.
Even as the dream run of the bulls continues, the question of power at the Center is an issue the markets will have to pay close attention. The Sensex looks set to flirt and probably breach the 18,000 mark today itself. However, Congress president Sonia Gandhi’s tough words against the Left parties for attacking the Indo-US nuclear deal could give the market jitters going ahead. At a speech made in Haryana over the weekend, the Congress president more or less hinted at the end of the association with the Left. In short, if things do not smoothen, the country will face an early election. That makes it even more vital to ensure that your selection of stocks can withstand the political drama coming up.
Today, we see a strong opening following a firm trend in Asian markets. However, we do not rule out some cooling at higher levels. DLF, Kotak Bank, RCOM, Peninsula Land, Shree Ram Mills and Bharti Airtel are the stocks that could see some positive action. Buzz of a stock-split in Reliance will also keep this counter in action.
Global equity markets have received another shot in the arm with the threat of a recession in the US receding a little on the back of the latest jobs report. There is no dearth of liquidity and a slew of key global indices are scaling new peaks now. The yen has fallen to the lowest in two months against the euro as gains in global stocks have restored confidence among global investors. As a result, the risk appetite is once again going up, which in turn helps emerging markets such as India a great deal. Global investors have stepped up the so-called carry trades whereby they invest in high-yielding assets funded with money borrowed in Japanese yen. The Australian dollar today rose to the strongest in 23 years and New Zealand's gained against the US currency, fueled by the spurt in carry trades.
Overseas investors have pumped in more than US$5bn (only cash market) inflows into Indian equities over the past 11 trading sessions. The unprecedented foreign capital inflows have pushed the benchmark BSE Sensex and the NSE Nifty to new all-time highs. Given the ongoing momentum, the bulls may just be able to lift the Sensex above the 18,000 mark today itself. The benchmark BSE index needs some 220-odd points to reach the new milestone. The rival Nifty is already over 5000. Having said that, much will depend on the foreign capital inflows. Any slowdown on this front will have a direct bearing on the market.
That in turn will hinge on the upcoming results, especially that of the IT companies. Infosys will announce its Q2 results on Oct. 11. Though most of the bad news is already in the price, any fresh bad news will lead to further sell-off in software firms. But, the market is not just about IT companies and results from the old economy companies will also be crucial. Expect the intra-day gyrations to continue though the bias remains positive.
US stocks rallied on Friday, with the Standard & Poor's 500 index touching a new lifetime high, as investors took heart from better-than-expected job additions in September, and a surprise upward revision in August data.
Bond prices fell, raising the corresponding yield, amid speculation that if the world's biggest economy manages to avert a recession, then the Federal Reserve will not have to cut rates further.
Nevertheless, the S&P 500 rose 14.75 points, or 1%, to 1,557.59, above its July 19 closing high of 1,553.08. The Dow Jones Industrial Average gained 91.70 points, or 0.7%, to 14,066.01. The 30-stock blue chip index climbed to as high as 14,124.54, above its previous intra-day record. The Nasdaq Composite Index added 46.75 points, or 1.7%, to 2,780.32.
The S&P 500 gained 2% on the week; the Dow, which closed at a record on Oct. 1, gained 1.2%. The Nasdaq advanced 2.9% for its biggest weekly increase since March.
Treasury prices slumped. The weakness lifted the yield on the 10-year note to 4.63% from 4.51% late on Thursday. In currency trading, the dollar slipped versus the euro and gained versus the yen. COMEX gold for December delivery rose US$3.40 to US$747.20 an ounce.
US light crude for November delivery fell 22 cents to settle at US$81.22 a barrel on the New York Mercantile Exchange.
European shares closed higher on Friday after a stronger than expected jobs data from the US. The UK's FTSE 100 rose 0.73% to 6,595.80, while the German DAX 30 advanced 0.72% to 8,002.18 and the French CAC-40 increased 0.67% to 5,843.24.
Emerging markets closed sharply up on Friday. The Bovespa in Brazil was up 3.2% at 62,319 while the IPC index in Mexico gained 1.5% at 31,504. The RTS index in Russia rose 1.2% to 2115 and the ISE National 30 index in Turkey rose 3.8% to 72,261.
Most Asian markets have rallied this morning. The Hang Seng in Hong Kong surged by 480 points to 28,291 while the Kospi in Seoul was up 22 points at 2018 and the Straits Times in Singapore advanced 45 points to 3867. Japan is closed for a holiday today.
The Morgan Stanley Capital International Asia-Pacific excluding Japan Index rose 0.8% to 552.29 as of 10:05 a.m. in Tokyo, exceeding its record close of 549.66 set Oct. 2. All of the measure's 10 industry groups advanced.
Australia's S&P/ASX 200 Index climbed 1% to a record, while the Straits Times was headed for a new high. Benchmarks rose in all other markets open for trading.
All eyes on results
After coming within striking distance of the 18k mark, bulls once again failed to breach the psychological hurdle as traders preferred to book profits ahead of the week-end. Volatility was the order of the day as key indices often stepped in to positive and negative territory. The benchmark index swung almost 270 points from its days high of 17,979 and a low of 17,708.
Finally, BSE 30-share benchmark Sensex ended flat to close at 17,773. NSE Nifty slipped 23 points to close at 5,185.
Among the BSE sectoral indices only the Capital Good index was in the limelight gaining over 3%. However, BSE Bankex index (down 2.02%), BSE PSU index (down 2%) and BSE Metal index (down 1.82%)
Markets breath was also in red with 1,825 stocks declining as compared to 940 stocks which advanced on BSE. Among the Sensex pack only 7 stocks managed to end in positive terrain while, 23 stocks were on the receiving end.
Power Grid Corp
The company raised 29.8 billion rupees. The company sold 573.9 million shares at Rs52 per piece, the upper end of the range offered to investors.
Bombay Dyeing dropped 4% to Rs657. According to reports the Indian textile maker tied up with
Lanco Infratech declined 3.4% to Rs390. The company won Rs 730mn order to build university in the southern Indian town of
Ashok Leyland plunged 5% to Rs42. The company’s September sales fell 11% to 7,263 units. The scrip touched an intra-day high of Rs44 and a low of Rs41 and recorded volumes of over 33,00,000 shares on NSE.
Capital Good stocks were among the major gainers. BHEL surged by over 3% to Rs2154, L&T spurred by over 6% to Rs3089, Siemens edged higher 0.6% to Rs1424 and Punj Lloyd added 1% to Rs324.
IT stock continued to be under pressure after rupee rose for a seventh week. Index heavyweight Infosys slipped 1% to Rs1982, Satyam Computer lost 1.6% to Rs444 and TCS slipped 0.8% to Rs1072. Polaris, Moser Baer and NIIT Ltd were the major losers among the mid-Cap stocks.
Stocks in News:
Bharti Airtel may divest 10% in its tower arm to PE company for $1.1bn
Powergrid Corporation to invest Rs20bn to boost its existing telecom network in the next two years
Wockhardt may buy US Pharma company Morton Grove, a company focused on niche area of oral liquid medicines and topical liquid products
JSW Steel reports 21% rise in crude steel production for September quarter at 0.78mn tonnes
MRF lines up Rs6bn investment in 500-acre greenfield plant near Trichy; Rs1.5bn plant for aircraft tyres for defence is also under consideration
Jet Airways to buy 20 aircrafts from Boeing with option to buy ten more to augment its fleet
Bharti Airtel, Vodafone Essar and Idea Cellular may merge their combined 70,000 towers to form a separate company
National Aviation Company of India, the Air India and Indian combine, to offload 15% equity through an IPO
Cairn India may have to pay US$9/barrel as cess for shifting delivery point from Rajasthan to coast
Kotak Mahindra Bank to raise around US$400mn through QIBs; to issue 17mn equity shares
The Cabinet may clear Rs240bn worth of oil bonds to be issued to oil marketing companies
The Government may announce auction of 85 oil and gas blocks under NELP VII in the first week of November
Excise duty on big cars may be cut to 16% to bring it on par with that on small cars
Fund Activity:
FIIs were net buyers of Rs9.48bn (provisional) in the cash segment on Friday while the local institutions pulled out Rs2.01bn. In the F&O segment, foreign funds were net buyers at Rs104mn.
On Thursday, FIIs were net buyers to the tune of Rs5.75bn in the cash segment. With this, the net investment by overseas investors in the past 11 days has crossed the US$5bn mark.
Mutual Funds were net sellers of Rs5.33bn on Thursday.
Major Bulk Deals:
Upper Circuit:
RIIL, Bag Films, Usher Agro, Victoria Mills, Goldstone Tele and Jai Corp.
Lower Circuit:
Tourism Finance and Jain Studious.