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Thursday, March 22, 2007

STRATEGY INPUTS FOR THE DAY


Global strength may lift D-Street

Reason has always existed, but not always in a reasonable form.

Looks like Ben Bernanke & Co. has given the bulls another reason to feel good about. Markets in the US and Asia have rallied after the Federal Reserve left the key rates static and signaled that they may be ready in future to cut rates if the need arises. We expect the market here to follow in the footsteps of their Asian counterparts and extend yesterday's gains. Having said that, the market breadth was negative yesterday and so was the volume. Though, the Fed's decision and its remarks have lifted the spirits of the bulls, one should be cautious as the change in stance could mean more trouble for the US economy.

FII inflows have slowed down considerably compared to the same time last year. We have our own issues with inflation and possibility of some more tightening by the RBI next month. Also, the way the Government is going about fighting inflation has not gone down well with the market. If the ministers continue with their arm-twisting tactics, that could potentially do than good for the market. One also have to see how India Inc. performs not just in the latest quarter but over the next fiscal year amid rising cost pressures. In a nutshell, a good start may not always mean a strong finish. There may be fresh bumps ahead in the near term. All the more reason for one to remain highly alert even as the key indices move further up.

US stocks posted their biggest gain in eight months, wiping away most of the losses for the year, after the Fed indicated it was no longer biased toward higher interest rates.

Citigroup and JPMorgan sent the S&P 500 to its steepest three-day rally in four years on optimism that the Fed will lower borrowing costs. Morgan Stanley climbed the most since March 2003 after reporting first-quarter profit surged 70%.

The advance, one month after stocks recorded their biggest decline since 2003, pushed the S&P 500 up 1.2% for the year and pared the Dow Jones Industrial Average's 2007 drop to 0.1%. The Nasdaq Composite's third straight jump, bolstered by Oracle's better-than-expected profit, lifted it to a 1.7% rise this year.

The S&P 500 added 24.10, or 1.7%, to 1435.04, its best performance since July 19. The Dow increased 159.42, or 1.3%, to 12,447.52. The Nasdaq rose 47.71, or 2%, to 2455.92.

Treasury prices cut losses and turned higher after the Fed announcement. The advance sent the yield on the 10-year note down to about 4.54% from about 4.58% before the meeting and 4.55% late on Tuesday.

US light crude oil for May delivery rose 1 cent to settle at $59.61 a barrel on the New York Mercantile Exchange. Oil prices were volatile following the release of the weekly oil inventories report. The front-month contract was quoting 43 cents higher at $60.04 a barrel in extended trading in Asia.

COMEX gold for May delivery rose $1 to settle at $660 an ounce. In currency trading, the dollar declined versus the euro and trimmed gains versus the yen after the announcement.

European shares closed a touch higher. The pan-European Dow Jones Stoxx 600 index rose 0.3% at 368.31. The UK's FTSE 100 closed up 0.6% at 6,256.80. The German DAX Xetra 30 added 0.2% at 6,712.06, the French CAC-40 finished virtually flat at 5,502.18.

Latin American markets soared. In Mexico City, the benchmark IPC index of 35 most-traded issues jumped 3%, or 812 points, to 28,219.55. Brazil's benchmark Ibovespa stocks index closed 2.9% higher at 45,630.86.

Asian stocks climbed to the highest in three weeks. Sony and Samsung led gains among exporters. The Morgan Stanley Capital International Asia-Pacific Index gained 1.7% to 145.80 at 10:32 a.m. in Tokyo. It was set to close at the highest since Feb. 27. All of its 10 industry groups advanced.

Japan's Nikkei rose 292 points to 17,455 while the Hang Seng in Hong Kong was up 227 points at 19,743. Singapore's Straits Times Index jumped 65 points to 3220, the most in the region. Taiwan's Taiex Index gained 1.1%. All markets open for trading rose.

HOW MARKET FARED

All eyes on Fed

Bulls were back in charge as volatile session ends on a strong note. The large Cap stocks were impressive today as they rode the rally from front stocks like ONGC, ICICI Bank, HLL, Bharti Airtel and ITC were the star performers of the day. Although markets witnessed intra-day gyrations with Sensex swinging over 300 points and Nifty nearly 100 points throughout the session. All the key sectoral indexes ended in green with BSE Bank index leading the pack by gaining 4.04%. Others like FMCG, Technology and Metal index followed suit. The Mid-Cap and the small cap stocks were not that attractive as both the indices ended almost flat. Cement stocks sadly fizzled out towards the end as heavy selling pressure was witnessed.

Finally, the 30-share benchmark Sensex surged 239 points to close at 12945. NSE Nifty was up 67 points to close at 3764. ICICI Bank, HLL and Dabur were the major gainers. However, Gujarat Ambuja, BPCL and GAIL were the major losers among the 50-scrip’s of NSE Nifty.

Among the Telecom stocks Idea Cellular was the one that ended on the receiving end, the scrip fell 1% to Rs92. The company announced that they have a 10 year business transformation pact with & IBM. The scrip touched an intra-day high of Rs94 and a low of Rs92 and recorded volumes of over 61,00,000 shares on NSE.

Among the Power stocks REL was in action, the scrip gained by over 3% to Rs491 following reports that the company won road order worth Rs5.76bn. The scrip has touched an intra-day high of Rs496 and a low of Rs478 and recorded volumes of over 8,00,000 shares on NSE.

Great Offshore declined 1.4% to Rs572. The company declared that it would pay Rs8 per share as mid-year dividend. The scrip touched an intra-day high of Rs589 and a low of Rs570 and recorded volumes of over 70,000 shares on NSE.

Ashok Leyland paced ahead by 3% to Rs40 after the company announced that they would pay Rs1.5 per share as mid-year dividend. The scrip touched an intra-day high of Rs41 and a low of Rs39 and recorded volumes of over 31,00,000 shares on NSE.

Banking stocks were the star performers of the day, as the index was the top gainer by gaining 4.04%. Index heavy weights led from front; ICICI Bank spurred by over 5.5% to Rs870, SBI was up 3.2% to Rs982 and HDFC Bank gained 1.1% to Rs965. Bank of Baroda, Corp Bank and OBC were the major gainers among the Mid-Cap stocks.

FMCG stocks also ended on a firm note. Cigarette major ITC surged by over 2.7% to Rs144, HLL was up 3.8% to Rs191, Dabur gained 3.7% to Rs87, Colgate rose 0.8% to Rs315 and Marico added 0.6% to Rs55.

Broadcasting stocks also put on a good show today. Sun TV surged by 3% to Rs1546, NDTV was up by 1% to Rs310 and Zee Telefilms advanced by over 2.5% to Rs251.

Metal stocks also shined brightly again. SAIL surged by over 4.5% to Rs108, Tata Steel gained by 1.6% to Rs430, Sterlite industries gained 1% to Rs449 and Hindalco added 0.6% to Rs133.