Motivation is what gets you started. Habit is what keeps you going.
Global cues being positive, the bulls sure are motivated to start with a bang. For a change, they surely won’t miss the Monday blues of recent weeks. The carnage has shown that speculators could lose their capital while investors have every chance of making good their losses with a slight change in sentiment. Don’t be surprised if the blue-chips return to their past glory soon.
Friday’s post-lunch rally helped the Sensex and the Nifty surge by 3.3% and 3.5%, respectively. However, small-cap and mid-cap shares remained subdued. The market breadth was negative, calling into question the strength of the rally.
But, the blue chips could well lead the way as things could continue to improve this week and perhaps for the month, spurred by the Fed rate cuts, euphoria over Reliance Power's listing and general optimism ahead of the budget. IT stocks could see some short term buying. The reasons are many and there is buzz that some IT companies may consider a buyback. Remember, it’s just a buzz.
Of course all this could change soon if more bad news comes out of the US or other parts of the world. So, keep an eye on global factors that could derail the nascent recovery across international equity markets. A view is gaining increasing currency that Asia, and particularly India, will be relatively insulated from the impending recession in the US (back to decoupling!).
Europe and other parts of the world, including Japan and China, though will suffer from the US downturn. India stands to gain from the ongoing upheavals, though prolonged weakness across key global economies may continue to play havoc with sentiment. And, given last month's sharp and swift correction, it will take time for confidence and conviction to return on the street. It will be a slow process and laden with periodic bouts of volatility. One could look at selling into any rally if one is not patient enough to hold onto shares for minimum of two years.
Oil marketing companies could be in focus amid growing talk of a small hike in fuel prices. On the other hand, steel companies may see some pressure following Steel Ministry's threat that it will review the across the board price hike announced last week.
Asian markets are doing quite well this morning. The Nikkei in Tokyo was up 335 points at 13,832 while the Hang Seng in Hong Kong rallied 908 points to 25,024. The Kospi in Seoul gained 56 points to 1691 while the Straits Times in Singapore rose 73 points to 3081. The Shanghai Composite in China surged 237 points to 4557 and the Taiex in Taiwan advanced 152 points to 7673.
The MSCI Asia Pacific index climbed 1.5% to 147.30 at 10:07 a.m. in Tokyo, extending a two-day, 2.8% rally. All of the benchmark's 10 industry groups advanced. Benchmarks advanced in all other markets open for trading.
US stocks rallied on Friday, gaining for a second session, as investors welcomed Microsoft's bid for Yahoo and more talk of a bailout for the troubled bond insurer sector. The positive news helped temper worries about a recession following a surprisingly weak January jobs report. All three major stock indices posted gains of about 1% in the early morning trading, dipped into negative territory by mid-morning and then rebounded a bit in the afternoon.
US stock indices also rose on the week after the Fed's second interest rate cut in nine days boosted banks, homebuilders and retailers. The S&P 500 climbed 4.9% for the week, trimming its yearly loss to 5%. The benchmark for US equities has risen for two consecutive weeks after falling 9.8% through Jan. 18, its worst-ever start for a year. The Dow Jones Industrial Average added 4.4% and the Nasdaq Composite climbed 3.8%, boosted by Microsoft's bid for Yahoo!.
Washington Mutual, the largest savings and loan, Lennar Corp., the third-biggest homebuilder, and Wal-Mart helped lead gains. All 10 sectors and 461 stocks in the S&P 500 advanced after the half-point reduction in the Fed's target for overnight loans between banks bolstered speculation that a recession may be averted.
For the Dow and S&P 500 it was the second week in a row this year for posting weekly gains, while for the Nasdaq, it was the first week this year that the average posted a weekly gain.
The drop in interest rates to 3% overshadowed the first decrease in jobs since 2003, the biggest yearly drop in new-home sales on record and fourth-quarter economic growth that was half the rate economists forecast.
The government jobs report, showing that employers trimmed payrolls for the first time in four years set off alarm bells. But the report tells only part of the horror story about the underlying weakness in the US labor market. The number of Americans out of work for at least six months is rising.
And while some economists believe that the drop in jobs reported in January might later be revised to show a narrow gain, it's clear that the rise in long-term unemployment is a far more established trend and won't going away anytime soon.
Long-term unemployment is not just a problem for those struggling to find jobs, according to some economists. It poses a risk for the US economy as a whole and cuts into household earnings and economic output, they say.
Other US economic readings came in mixed. Construction spending dropped 1.1%. The January consumer sentiment index from the University of Michigan was revised down to 78.4 from an initial 79.
On the upside, the Jan. ISM manufacturing index climbed more than expected, rising to 50.7 in the month from 47.7 in the previous month.
Treasury prices gave up gains, with the yield on the 10-year note standing at 3.59%, little changed from where it stood late Thursday. In currency trading, the dollar gained versus the yen and the euro.
US light crude oil for March delivery fell $2.79 to settle at $88.96 a barrel on the New York Mercantile Exchange. COMEX gold for April delivery fell $14.50 to $913.50 an ounce.
European shares posted strong gains on Friday on the back of Microsoft's big takeover bid for rival Yahoo!. Rio Tinto led a rally among resources shares after Chinalco and Alcoa said they had picked up a 12% stake in the mining major.
The pan-European Dow Jones Stoxx 600 index rose 1.9% to 328.41, led by Rio Tinto which climbed 13%. It was a welcome reversal for the index from what was its worst January on record. The UK's FTSE 100 closed up 2.5% at 6,029.20, while the French CAC-40 advanced 2.2% to 4,978.06. The German DAX 30 rose 1.7% to 6,968.67.
In the emerging markets, the Bovespa in Brazil rose 2.7% to 61,079 while the IPC index in Mexico gained 2.2% at 29,429. The RTS index in Russia shot up by 3.25% to 1968 while the ISE National-30 index in Turkey jumped 4.3% to 55,729.
Bulls fly by 18k; IT stocks shine
A Strong show on Wall Street, the Asian markets and positive start in equity markets across Europe lifted the sentiment on Dalal Street on Friday. Although, after a strong start; markets turned choppy in the morning trades on back of profit booking. But this time bulls fought back staging a strong bounce back lifting the benchmark index above the 18k mark. It was the IT stocks that led the way with Metal, Auto and Oil & Gas stocks following suit.
Satyam Computers was the top gainer among index heavyweights, the scrip surged by over 8% to Rs421. Infosys rose 5.8% to Rs1,591, Wipro was up 5.7% to Rs437 and TCS advanced 6.1% to Rs992.
Among key secotral indices, The BSE IT index (up 6.2%), BSE Metal index (up 3.9%), BSE Auto index (up 3.4%), BSE Oil & Gas index (up 3%) and BSE FMCG index (up 2.9%).
Finally, the 30-share Sensex closed at 18,233, gaining 584 points or 3.3%. It touched an intra-day high of 18,312 and a low of 17,534. The NSE Nifty gained 179 points to close at 5,317 after hitting an intra-day high of 5,339 and a low of 5,090.
Overall about 1,130 stocks advanced, 1,619 stocks declined and 46 stocks remained unchanged. Among the BSE 30 index 27 stocks advanced and only 3 stocks declined.
Future Capital, promoted by Pantaloon Retail India, the flagship company of the Future Group got listed at Rs1,081 against issue price of Rs765. After hitting high of Rs1,100 in the opening trades the scrip immediately slipped to a low of Rs825 finally managing to close at Rs909 translating into a premium of 19% recording volumes of over 1,00,00,000 shares on BSE.
The IPO of Future Capital Holdings Ltd., the financial services arm of the Future Group, was subscribed by a whopping 133 times. The QIB portion was subscribed 180 times while the Non-Institutional portion was subscribed 84 times and the retail portion was subscribed 55 times.
Elecon Engineering dropped by over 9.7% to Rs200. The company announced that they secured contract worth Rs615mn. The scrip touched an intra-day high of Rs223 and a low of Rs194 and recorded volumes of over 60,000 shares on BSE.
Punj Lloyd dropped by over 9% to Rs401. The company posted a net profit of Rs391.60mn for the quarter ended December 31, 2007 as compared to Rs190.30mn for the quarter ended December 31, 2006. The total income has increased from Rs6694.10mn for the quarter ended December 31, 2006 to Rs12582.00mn for the quarter ended December 31, 2007. The scrip touched an intra-day high of Rs449 and a low of Rs390 and recorded volumes of over 74,00,000 shares on NSE.
BPCL surged by over 6.5% to Rs386. The company announced that it approved Rs19.96bn investment in venture. The scrip touched an intra-day high of Rs396 and a low of Rs356 and recorded volumes of over 2,00,000 shares on NSE.
Cranes Software slipped 2.5% to Rs142. The company announced their plans to raise its stake in Esqube Communication Solutions Pvt Ltd to 76% from 15%. Cranes Software International is a provider of enterprise analytics and engineering simulation software products and solutions across the globe. The scrip touched an intra-day high of Rs146 and a low of Rs140 and recorded volumes of over 6,000 shares on NSE.
TVS Motors gained 1.3% to Rs40. The company announced its January two-wheeler sales at 93,385 units down 23%. The scrip touched an intra-day high of Rs40 and a low of Rs39 and recorded volumes of over 22,00,000 shares on NSE.
Colgate Palmolive edged higher 0.2% to Rs420. The company posted a net profit of Rs604.70mn for the quarter ended December 31, 2007 as compared to Rs503.40mn for the quarter ended December 31, 2006. The total revenue has increased from Rs3389.40mn for the quarter ended December 31, 2006 to Rs3903.30mn for the quarter ended December 31, 2007. The scrip touched an intra-day high of Rs424 and a low of Rs412 and recorded volumes of over 59,000 shares on NSE.
FIIs were net sellers of Rs1.27bn (provisional) in the cash segment on Friday. Domestic Institutions were also net sellers of Rs1.15bn. In the F&O segment, foreign funds were net buyers of Rs17.46bn.
FIIs were net sellers of Rs6.11bn in the cash segment on Wednesday, taking their net outflows over the past 11 days to over US$4bn. Mutual Funds were net buyers of Rs4.16bn on the same day.
News Snippets:
British Gas to pick up a 30% stake in ONGC's KG basin block and 25% in Mahanadi basin block.(ET)
Spencer's Retail, an RPG group company plans to roll out 500 new retail outlets across the country within a year at an investment of Rs10bn.(BS)
Maruti Suzuki has raised prices of many of its models by Rs1,000-11,000, mostly due to higher raw material prices.(FE)
Reliance Telecom Infrastructure is planning to raise nearly Rs50-60bn through an IPO.(ET)
ICICI Venture has picked up New Vernon Bharat’s 40% stake in Chennai-based Updater Services, for ~Rs1bn.(ET)
ICICI Bank has shelved plans to divest stake in a holding company that was to be created for its insurance and mutual fund businesses, after failure to get the Reserve Bank nod for such a company.(BS)
Posco India chief Soung-sik Cho has said that the Indian project is not feasible without a mining lease.(FE)
Wipro will build electronic warfare systems, radars and flight simulators locally for US defence contractors.(Mint)
Jet Airways will be divesting 5% stake before 31st March, 2008.(BL)
Holcim will invest about Rs100bn in the next five years to set up plants and raise capacity by 25mn tons in the country.(BS)
The Aditya Birla Group is planning to invest $120mn in a carbon black plant in Sri Lanka.(BS)
Tata Motors has reported a 11.76% fall in its passenger car sales in the domestic market during January at 20,119 units.(BS)
IFCI allots equity worth Rs13.2bn to 30 public sector banks and financial institutions.(ET)
Hinduja Group is considering investments in a proposed chemical hub in West Bengal.(ET)
Purvankara Projects is in the final round of negotiations with PE firms to raise Rs20bn.(ET)
Ispat Industries proposes a 40mn tons capacity minor port at its existing facility.(ET)
BHEL has emerged as the sole bidder for a Rs26.4bn boiler order for stage II of NTPC’s 1,320MW Barh project.(Mint)
The country’s major oil & gas Companies, including ONGC, GAIL and BPCL, are set to invest over Rs400bn in gas supply chain by financial year 2012.(FE)
The Aditya Birla group will invest Rs80-100bn over the next three years to expand the More chain of supermarkets.(DNA)
MTNL has slashed international call rates to Re1 per minute for its VoIP customers to about 100 countries.(ET)
The cap on crude pricing from ONGC’s marginal fields may be removed.(BL)
ITC Welcome Group Hotel plans to foray into medical tourisim.(BL)
Tata Chemicals may get into the biofuel business on a large scale if its pilot project at Nanded, Maharashtra, is successful.(BS)
Kotak Mahindra Bank may get more than a 51% stake in the Ahmedabad Commodity Exchange (ACX).
Dishman Pharma is planning to acquire a company in Europe with a war chest of around Rs2bn.
TAJ GVK Hotels & Resorts will spend Rs4-5bn on increasing the room capacity to 2,000 from 1,200 by 2010.(BS)
Infrastructure developer Ashoka Buildcon has offloaded 15.62% stake to IDFC’s private equity fund for around Rs7bn.(BS)
Syndicate Bank plans to come out with its second follow-on public offer (FPO) in three-six months to fund its business growth and meet Basel-II norms.(BS)
Indian Overseas Bank (IOB) has set a revenue target of Rs100bn from its overseas expansion, slated to take place over the next year.(BS)
UCO Bank has decided to lower its benchmark PLR, thereby becoming the first bank to do so in three years.(BS)
The National Pharmaceutical Pricing Authority (NPPA) has announced a price cap on medicines sold in liquid form, bringing an additional 15% of the retail medicine market worth over Rs40bn under direct price control.(BS)
In a move to increase revenue for the Government, the DoT is planning to levy an upfront spectrum acquisition charge.(FE)
A host of public sector banks may cut lending rates following premier home loans lender HDFC slashing the rates by 0.25%.(FE)
The government is vetting a proposal put forward by SEBI to provide for a tax waiver on dividend income of Real Estate Investment Trust.(ET)
The government has allowed public sector banks to raise quick capital through QIP or preferential allotment of shares.(ET)
The EGoM will take up SEZ land cap issue today.(ET)
Assets under management of mutual funds have declined by Rs8.3 or 0.15% as on January 31, after a severe liquidity crunch in the markets forced banks and corporate bodies to withdraw money from liquid funds.(BS)
The Power ministry has blamed BHEL for the delay in setting up power projects in the country.(ET)
RBI has announced sale of bonds worth Rs165bn in next week.(ET)
The disbursal of interest-free loans to sugar mills against excise payments is getting delayed.(BS)
Chemicals and Fertilisers Minister Ram Vilas Paswan said that the proposed policies for the pharma and fertiliser sectors are likely to be cleared soon by the two Groups of Ministers (GoMs) that are looking into the issue.(BS)
The finance ministry has proposed raising the public shareholding limit for listed companies to at least 25% from the existing 10%.(BS)
The Centre’s proposed National Policy on Biofuels is expected to be ready by March’08.(BL)