Romancing the street!
Romance should never begin with sentiment. It should begin with science and end with a settlement – Oscar Wilde.
More than romancing, the bulls have been flirting around a bit too long changing their preferences while keeping the overall sentiment positive. The market is a combination of sentiment, science (can be read as signs also), art, history, geography and what have you. It's settlement time and bulls and bears may decide to smoothly rollover after all, though the usual volatility associated with F&O expiry will be there.
Global cues are positive, barring a spike in oil prices. Markets in the US ended higher while in Asia too key stock indices in Tokyo and Hong Kong have opened on a firm footing. The only cause of worry could be the higher crude oil prices, which are now trading above the $62 per barrel mark.
The FII outflows in the past couple of days may also prompt investors to remain cautious. Yesterday, foreign funds pulled out Rs2.41bn from the cash segment while on Tuesday they were net sellers to the tune of Rs3.35bn in the cash segment. Mutual Funds were net sellers of Rs2.69bn on the same day. On the F&O side, FIIs were net sellers of Rs3.98bn yesterday.
The government will announce the GDP figure for the second quarter today. Asia's fourth-largest economy is estimated to have grown by 8.9% in the July to September quarter, matching the advance in the first quarter. If this turns out to be the case, the bulls may get fired up all over again.
The market has taken a breather in the past couple of days. There may be a fresh bout of buying once the derivative settlement is out of the way. But, if the slowdown in FII inflows continues we may see some meaningful correction. In short, the short-term direction hinges on the foreign capital flows.
For today, the immediate outlook is bright on the back of a rally in global markets. Still, we would continue to advise caution. Fresh buying should be avoided at this stage unless one is willing to wait for 2-3 years. Select stock specific approach is the order of the day.
Parsvnath Developers' shares will get listed on the bourses today. The IPO of Sobha Developers has been subscribed 108.51 times. Bids have been received across the price band of Rs 550-640 per share. The company has offered 88,93,332 equity shares.
LT Overseas has offered a Daawat to invest. The company is entering the capital market with an IPO of 7,035,714 shares of Rs10 each for cash at a premium to be decided through a 100% book-building process. The issue price has been fixed between Rs50 and Rs56 per share. The issue closes today. Read interview
ICSA (India), Lakshmi Energy and Foods, ANG Auto, CESC, CREW B.O.S. Products, AZTEC Software and Sujana Universal Industries could rise as the RBI has approved the plan to hike the investment limit for FIIs. Meanwhile, in DCB and K Sera Sera, the central bank has curbed immediate buying by FIIs, as their investment has reached the permissible limit.
US stocks had their biggest gain in three weeks on Wednesday after the world's largest economy expanded at a faster pace last quarter than initially estimated without stoking inflation.
Exxon Mobil and other energy producers advanced as crude rose to a two-month high, lifting the S&P 500 Energy Index to a record. Tiffany & Co. jumped after raising its full-year earnings forecast. AT&T led telephone companies higher as Fitch Ratings said they will gain Internet subscribers.
The S&P 500 climbed 12.76, or 0.9%, to 1399.48. The Dow Jones added 90.28, or 0.7%, to 12,226.73. For both measures, it was the largest rally since Nov. 6. The Nasdaq advanced 19.62, or 0.8%, at 2432.23.
GDP in the US grew at 2.2% annual rate in the third quarter versus an initial estimate of 1.6%. Economists had forecast a GDP growth of 1.8%.
A separate report showed that the pace of new home sales in the US slowed at a faster-than-expected rate in October. But the average price of a new home jumped.
US light crude oil for January delivery jumped $1.47 to settle at $62.46 a barrel on the New York Mercantile Exchange. Oil jumped after the weekly oil inventories report showed a surprise dip in crude, gas and distillate supplies. The front-month contract was quoting 17 cents higher at $62.29 a barrel in extended trading in Asia this morning.
Treasury bond prices fell, raising the yield on the 10-year note to 4.52% from 4.50% late on Tuesday. In currency trading, the dollar bounced back versus the euro and the yen after the GDP report. COMEX gold fell $1.90 to settle at $641.80 an ounce.
Among the Indian ADRs, Infy was up 1.6%, Satyam gained 1.8%, Dr. Reddy's jumped 2.5%, HDFC Bank advanced 2.2%, ICICI Bank rose 1.2% and MTNL was down 1.8%.
Asian stocks rose on Thursday morning, hitting a six-month high, after the US economy grew at a faster pace last quarter than an earlier estimate and South Korea's government increased its 2006 forecast for exports.
The Morgan Stanley Capital International Asia-Pacific Index gained 0.8% to 135.33 as of 12:05 p.m. in Tokyo, its highest since May 17.
Japan's Nikkei 225 Stock Average added 96 points to 16,173 while the Hang Seng in Hong Kong was up 193 points at 18,974. Markets around the region rose. Singapore's Straits Times Index climbed to a record.
European shares broke a five-session losing streak on Wednesday after comments from Federal Reserve Chairman Ben Bernanke supported the dollar and as drug stocks got a boost from cost cuts at Pfizer.
The pan-European Dow Jones Stoxx 600 index rose 1.3% to 354.19. The German DAX Xetra 30 closed up 1.3% at 6,363.80, the French CAC-40 increased 1.4% to 5,381.25 and the UK's FTSE 100 rose 1% to 6,084.40.
Emerging markets also closed sharply higher yesterday. Russia's RTS index was up 2% at 1765 while the Bovespa in Brazil surged by 2.26% to 41,970, and the IPC index in Mexico climbed 1.8% to 24,777.
Technical Breakout:
Maruti has given a break out after giving a close above Rs920. One can consider buying the scrip for short-term period for a price target of around Rs950-960 with an appropriate SL of Rs902. The scrip has given Rounded Bottom breakout, indicating a possible reversal of the current downtrend to a new uptrend.
Major Bulk Deals:
Templeton MF has sold Simplex Infra; Emerging Markets has sold Astra Microwave; Birla Sun Life MF has bought Gayatri Projects; Macquarie Bank and Morgan Stanley have picked up International Hometex; BNP Asset Management and HSBC Financial have sold Milkfood; UBS has bought Pioneer Embroideries; Reliance MF has purchased Raipur Alloy; Morgan Stanley has sold SREI Infra.
Insider Trades:
Matrix Laboratories Limited: Mr. K R V Subrahmanian, Director has sold in open market 12500 equity shares of Matrix Laboratories Limited on 23rd November, 2006.
Tech Mahindra Limited: Vineet Nayyar, Managing Director has sold in open market 5000 equity shares of Tech Mahindra Limited on 20th November, 2006.
IL&FS Investsmart Limited: Mr. Ramesh Bawa, Managing Director & CEO has sold in open market 7000 equity shares of IL&FS Investsmart Limited on 23rd November, 2006.
Market Volumes:
The turnover on NSE was down by 2.1% to Rs80.83bn.The BSE FMCG index was the major gainer and gained 1.47%. BSE Metal index (up 0.67%), BSE Auto index (up 0.60%), BSE Consumer Durable index (up 0.55%) and BSE Capital Good index (0.26%) were the other major gainers. However, BSE Oil & Gas index lost 0.74%.
Volume Toppers:
Lanco Infratech, Unitech, Torrent Power, Voltas, Gujarat Ambuja Cement, R Com, Hindalco, IVRCL Infra, ACE, Ashok Leyland, Info Edge, CEAT, ITC, Karnataka Bank and Jyoti Structures.
Delivery Delight:
Apollo Tyres, Assam Company, Bajaj Auto, BEML, Birla Corporation, CEAT, Cummins India, Dena Bank, Escorts, Gammon India, Gitanjali Gems, Gujarat Ambuja Cements, Havells India, Infotech Enterprises, IVRCL Infrastructures, J K Cements, Jyoti Structures, Maruti, Matrix, MRF, Nagarjuna Construction, Shaw Wallace, SBI, Unitech and Voltas.
Brokers Recommendations:
Reliance Industries – Accumulate at Edelweiss
Indotech Transformers – Buy from Sharekhan
Long Term Investment:
Voltamp Transformers
Major News Headlines:
TCS signs 7-year, $65mn deal with Somerfield
AIA Engineering to raise Rs1.25bn from select investors
Praj Industries secures contract from Belgium
Unitech to sell shares in unit in London: reports
Dr Reddy's, Torrent Pharma in accord for selling drugs in Russia
IOC to give 4 shares for every 37 shares of Bongaigaon
NIIT inks pact with Egypt Govt for building manpower
L&T JV wins Rs4.56bn order from NTPC
Abu Dhabi Energy to invest up to $1bn in power plants
Cummins India to invest $13mn in High Horse Power unit
Bajaj Hindusthan to consider fund raising plan on Dec 6