People don't notice whether it's winter or summer when they're happy.”
The winds blowing from Wall Street have brought joy to markets across Asia and when it hits the Indian markets, bears will need to hide, at least for a day or two. After yo-yoing for most part of this month, the bulls will look to end the month (in the F&O segment) on a promising note. Their task today will be made easier by the overnight rally in the US and other global markets. Asian markets are up smartly already. All Indian ADRs finished sharply higher. In addition, crude oil prices tumbled and are now hovering at $91.56 per barrel mark in extended trading in Asia. There is hardly any bad news except for the persistent selling by the FIIs. But, even that may not be able to prevent the bulls from propelling the key indices higher by 2-4%.
An anticipated short-covering could be the icing on the cake. With Federal Reserve Vice Chairman Kohn pointing out the Fed can take action to offset what is happening in the financial markets expectations are high that the Fed may cut rates after all in December. You may lighten some positions which you are uncomfortable with. For taking a fresh plunge, play the waiting game for some time. Wait for more signals from the global markets, especially the US, for clarity on further Fed rate cuts. Bear in mind that FIIs have been net sellers this month and till the time they resume their shopping spree the market may find it difficult to hit new peaks.
The 15 new scripts to be added in the F&O segment did particularly well yesterday. They are: HOEC, KPIT Cummins, DCB, Hindustan Zinc, MICO, Info Edge, NIIT, Great Offshore, Wire and Wireless, Redington, Network 18, Global Broadcast News, Ispat Industries and Gitanjali Gems.
Lehman Brothers has bought Indo Asian Fusegear; Fidelity has picked up Sarda Energy & Minerals while Morgan Stanley has sold the stock; CLSA has purchased more of Vakrangee Software; Deutsche Bank has bought Videocon Industries and Lotus Global has sold it.
Sterlite Industries plans to sell up to 15% stake worth as much as $2bn in its energy unit to build power plants, according to a foreign newswire agency. Jubilant Organosys and S. Kumars Nationwide could see some action amid reports that the companies are planning fresh acquisitions. Tricom India may see some spurt in the next few weeks as the Mumbai-based non-voice BPO firm is scouting for buy outs.
US shares extended their rally on Wednesday, with the Dow Jones Industrial Average registering its largest percentage gain so far this year. Financial stocks led the advance after a Federal Reserve official bolstered hopes for additional interest-rate cuts.
Federal Reserve Vice Chairman Donald Kohn said market turbulence may reduce credit to businesses and consumers, fueling fresh optimism that the American central bank will cut interest rates again next month.
"The degree of deterioration that has happened over the last couple of weeks is not something that I personally anticipated," Kohn said. "We are going to have to take a look at the stress in credit markets when we meet in a couple of weeks," he said.
Traders and investors seemed to interpret Kohn's remarks as an indication that the Fed plans to cut its key short-term interest rate at the Dec. 11 meeting. Investors will be looking to see if Fed Chairman Ben Bernanke reaffirms this viewpoint when he speaks on Thursday.
The S&P 500 Index added 41 points, or 2.9%, to 1,469.02, bringing its two-day gain to 4.4%, the most since October 2002. The Dow surged 331 points, or 2.6%, to 13,289.45, its best daily advance since April 2003. The Nasdaq gained 82 points or 3.2% to 2,662.91.
Market breadth was positive. More than 13 stocks rose for every one that fell on the New York Stock Exchange.
A steep decline in oil prices gave a boost to companies that directly depend on fuel, such as airlines, railroads and truckers. The Dow Jones Transportation average gained 3.6%.
Oil prices fell sharply for the second straight day on a smaller-than-expected dip in crude oil and distillate supplies. Light, sweet crude for January delivery tumbled $3.80 to settle at $90.62 per barrel on the New York Mercantile Exchange.
Treasury prices tumbled as investors pulled money out of bonds for a second straight session. Corresponding yields headed higher, lifting the yield on the 10-year note to 4.03% from 3.94% late on Tuesday.
In currency trading, the dollar gained versus the euro and yen. COMEX gold for February delivery tumbled $14 to settle at $807.20 an ounce, falling along with other dollar-traded commodities.
European shares put in the second-best session of the year. The pan-European Dow Jones Stoxx 600 index rose 2.8% to 364.09 to break a two-session losing run. The UK's FTSE 100 advanced 2.7% to 6,306.20, while the German DAX 30 climbed 2.6% to 7,723.66 and the French CAC-40 jumped 2.3% to 5,561.21.
Latin American stocks also rallied. Mexico's IPC climbed 1,152 points, or 4.1%, to close at 29,276.39. Brazil's Bovespa jumped 2,283 points, or 3.8%, to 61,714.64. Argentina's Merval advanced 2.8% to 2,230.83 and Chile's IPSA gained 3.4% to end at 3,160.23.
Asian stock benchmarks were up sharply this morning. Samsung Electronics paced gains among the regional exporters. Mitsubishi UFJ Financial, Japan's largest bank by market value, rose on speculation that increased fund flows will offset investment losses.
The MSCI Asia Pacific Index climbed 1.7% to 159.36 at 10:05 a.m. in Tokyo, with nine of its 10 industry groups advancing. Japan's Nikkei jumped 2.3% to 15,494.64, while South Korea's Kospi rose 2.4%. All markets open for trading gained except New Zealand.
Short covering may cheer the bulls
It was the second consecutive day of losses for bulls as markets ended in negative terrain. The fall was led by cues from the regional markets and selling pressure which emerged in the second half of the trading session. Finally, 30-share Sensex dropped 188 points to close at 18,938 and Nifty closed 80 points lower at 5,617.
BHEL gained advanced by 2% to Rs2725 after
Parsvnath Developers gained 1.5% to Rs354 after reports stated that the Indian real estate company is in talks with Carrefour SA, the world's second largest retailer, for opening hypermarkets in
RPL further slipped 3% to Rs192 after reports stated that
PSTL was down 2.5% to Rs357. The company declared that they acquired 51% stake in Dimples Cine. The scrip touched an intra-day high of Rs374 and a low of Rs352 and recorded volumes of over 3,00,000 shares on NSE.
Punj Lloyd lost 1.7% to Rs456. Reports that the company and a US-based PE, Global Technology Investments have bought 33% stake each in a domestic aircraft maintenance firm Airwoks
Asian Oilfield locked at 5% upper circuit to Rs224.8 after the company declared that they would consider selling shares/warrants to founders. The scrip touched an intra-day high of Rs224.8 and a low of Rs216 and recorded volumes of over 34,000 shares on NSE.
Steel Stripes was up by over 3% to Rs168 after the company announced that it received Rs80mn order from
GDL gained 1% to Rs146 on reports that promoters may sell stake. The scrip touched an intra-day high of Rs153 and a low of Rs144 and recorded volumes of over 31,00,000 shares on NSE.
What the FIIs are doing
FIIs were net sellers of Rs9.79bn (provisional) in the cash segment on Wednesday while the local institutions pumped in Rs3.32bn.
In the F&O segment, foreign funds were net buyers of Rs6bn yesterday.
On Tuesday, FIIs were net sellers to the tune of Rs2.64bn.
Stocks in News:
ONGC’s foreign arm ONGC Videsh has bagged two exploration blocks in Brazil.
ONGC’s subsidy burden has rose to Rs74.5bn in first half of the current fiscal year.
ONGC is in the midst of hiring Hercules 260 rig on nomination basis.
DLF is in talks with Escorts to acquire its surplus land at Faridabad.
Tata Steel forms a new organization structure to integrate Corus.
Infosys to team up with Wipro and HP for local contracts.
Kingfisher Airlines and Air Deccan to fly abroad from next year.
Indian Oil may raise US$3bn foreign currency loan to meet increased working capital needs.
The first lot of Tata Motors Rs1-lakh car may not be rolled out from Singur plant, which is running late by 3 months.
The Bandra-Worli sea link built by HCC will meet its deadline of Dec’08.
Parsvnath is in talks with Bharti Enterprises to provide real estate space for the latter's retail venture.
TCS plans to sell its minority stake in Jataayu Software.
RIL denies talks of acquiring RNRL.
SICAL Logistics arm gets FIPB nod for Old Lane investment.
Cabinet to take up SBI’s rights issue proposal at today’s meeting.
DS Kulkarni has formed a JV with Netherlands based Kadaran to develop its 250 acre SEZ.
IndiaStar has made an open offer to acquire 20% stake in Garware Offshore.
RCOM has conveyed willingness to surrender the extra 1.8 MHz spectrum in its Bihar circle.
Binani Cement plans Rs18bn capex to increase capacity to 12mtpa by FY11.
The Government is likely to raise sugar loan subsidy.
The Madras High Court has stayed an order to pull out fixed-dose combination drugs from the market.
The Government is likely to allow PE and VC to be part of the consortia bidding for infra projects.
TRAI suggests Rs1bn net worth for ISPs to offer IPTV services.
The Government has earmarked Rs558bn capex to increase the capacity of major ports.
The Centre has decided that all imported defence equipment should have at least 30% local component.
The Government is examining a proposal to relax buy back norms for promoters of large infra projects.
Textile exports fall 14% in April-June due to sharp rise in Rupee against the Dollar.