Living well is the best revenge.
The bulls roared on Tuesday as if the world’s woes have suddenly come to an end. So, are the bulls firmly back in control or will the resurgence in sentiment prove to be short-lived? Tuesday’s rally - whatever the reason(s) - may give some confidence to the bulls. While we continue to advocate caution, the F&O segment is throwing up some positive signals. But if investors have to live well, forget leverage for some time at least. Don’t attempt to cover up your losses (if any) in a hurry, lest you lose even more.
The Nifty futures for April series have added a good chunk of shares in open interest and are trading at a premium to the spot Nifty. The put-call ratio seems to have improved in favour of the bulls with strong build up in 4800 puts and 5000 calls.
Another big positive is that FIIs were big-time buyers yesterday. Also, global markets have staged a smart comeback, led by US stocks. No major bad news has hit the Wall Street this week so far. Commodity prices have cooled down a bit as well, though inflation is still a big worry across the globe. Currency fluctuations have ebbed. All these factors have contributed to the recent pullback in world equity markets.
Still, it remains to be seen how long and strong is this rally given the uncertainty surrounding the US and its impact on the global economy. For the time being though, we see the market rangebound with a positive bias. But, the key indices have to cross some crucial technical levels and stay there for a while to signal a revival of the forgotten bull phase.
Stock specific action is expected in counters like Gitanjali Gems which will announce yet another acquisition today. Maruti may attract some attention as it will launch a new sedan, called Swift DZire. STC, MMTC, SCI and Concor could gain amid news that the Government may sell 5% stake through follow-on public issues. Steel companies may come under some pressure after agreeing to halt exports to boost local supply. Dish TV may rise amid news that the Government is in favour of 74% FDI in DTH.
FIIs were net buyers of Rs12.46bn (provisional) in the cash segment yesterday while the local institutions pumped in nearly Rs4bn. In the F&O segment, foreign funds were net buyers of Rs20bn yesterday. The final tally for Monday's session is not available.
Asian markets are trading mixed this morning. The Nikkei in Tokyo was down 112 points or 0.9% to 12,632.80, following a 2.1% rally yesterday. The Hang Seng in Hong Kong rose 262 points or 1.2% to 22,727.
The Kospi in Seoul was flat at 1676 and the Straits Times in Singapore too was almost unchanged at 3002. The Shanghai Composite index in China gained 55 points or 1.5% at 3685 and the Taiex in Taiwan added 19 points at 8814.
About five stocks fell for every three that gained on the MSCI Asia Pacific Index, which lost 0.3% to 140.19 as of 11:07 a.m. in Tokyo. The benchmark is up 4.7% in the last three days on speculation that the US will contain credit- market losses. The index is still down 11% this year.
US stocks closed mixed on Tuesday after a tough day as Monsanto's improved forecast was offset by downbeat data on housing and consumer sentiment. Also, investors turned cautious as the Dow is up almost 7% in just over a week.
Stocks struggled for direction through the morning as investors held back after Monday's rally. However, stocks were mostly higher by the afternoon. Weakness in select financial and oil services stocks dragged the Dow into the negative zone.
A rally in commodity producers helped the US market overcome a grim report on consumer confidence and a record drop in home prices.
Freeport-McMoRan Copper & Gold, Newmont Mining and Alcoa carried the S &P 500 Index to its first three-day advance in a month after metal prices increased.
The Dow Jones Industrial Average ended lower as Bank of America and Home Depot retreated. Monsanto, the largest seed producer, rallied the most in seven years after boosting its earnings forecast.
The S&P 500 added 3.11 points, or 0.2%, to 1,352.99. It is now up 4.2% over the past three days. The Dow dropped 16 points, or 0.1%, to 12,532.6. The Nasdaq Composite Index rose 14 points, or 0.6%, to 2,341.05.
Market breadth was positive. Two stocks gained for every one that fell on the New York Stock Exchange.
The S&P/Case-Shiller index showed that home prices in 20 key markets in the US dropped 10.7% in January, the biggest drop on record.
Another report showed that consumer confidence slumped to 64.5 in March, from 75 in the previous month, a five-year low. Economists had forecast a smaller fall to 73.4. Consumer confidence slipped amid a struggling stock market, surging commodity prices, a weak dollar and the ongoing logjam in credit markets.
Yahoo was among the session's big technology gainers, after Citigroup upgraded it to "buy" from "hold" on bets that Microsoft will raise its bid for the search engine to $34 a share from $31 a share.
Shares of Thornburg Mortgage rallied 36% in active trading after the company said it will raise $1.35bn through a private placement of bonds in a bid to avoid bankruptcy. But a number of other financial stocks declined on heavy trading volume.
US light, crude oil for May delivery rose 36 cents to settle at $101.22 a barrel in New York. Oil prices hit a record $111.80 in electronic trading last week. COMEX gold for April delivery rose $16.30 to settle at $935 an ounce. Gold hit an all-time trading high of $1,033.90 a week ago.
The dollar gained versus the euro and fell versus the yen. The greenback hit an all-time low versus the euro and a 13-year low versus the yen last week, but has since recovered a bit. Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.5% from 3.55%.
Across the Atlantic, markets in Europe finished sharply higher. The FTSE 100 in London surged 3.5% to 5,689 while the DAX in Frankfurt climbed 3.2% to 6,524 and the CAC 40 in Paris advanced 3.4% to 4,692.
Cia. Vale do Rio Doce, the world's biggest iron-ore producer, has dropped a plan to acquire rival Xstrata, blaming opposition from the Swiss company's largest shareholder.
"We can resume negotiations at any moment," Roger Agnelli, CEO of Rio de Janeiro-based Vale, told reporters in Sao Paulo yesterday. Vale had boosted its offer for the world's biggest exporter of power-station coal to $90bn from $78bn.
In the emerging markets, the Bovespa in Brazil was up 2.4% at 61,234 while the IPC index in Mexico gained 1.2% at 29,981. The RTS index in Russia shed 0.35% to 1993 and the ISE National 30 index in Turkey dipped 0.2% to 51,098.
Will the momentum continue?
Markets extended their gains to fourth straight trading session as firm cues from the international equity markets coupled with buying momentum in the index heavyweights like Reliance Industries, ONGC, DLF and ICICI Bank lifted the markets to surge higher. The benchmark Sensex posted its second biggest single day points gain simultaneously its biggest single day points rally since January 25, 2008. The rally could be attributed to buying momentum in scrip across the sectors. All the Sectoral indices on BSE ended in green.
Finally, the BSE benchmark Sensex added 928 points to 16,217 and the Nifty index added 267 points to close at 4,877. Overall about 2,076 stocks advanced; 639 stocks declined while 47 stocks remained unchanged. Among the 50 Nifty 48 stocks ended in positive territory. On the other hand, only 1 stock ended in red.
BSE Realty index (up 9.5%), BSE Bankex index (up 8.1%), BSE IT index (up 7.7%), BSE Power index (up 6.5%) and BSE Metal index (up 6.4%). BSE Mid-Cap index (up 6.3%) and Small-Cap index (up 4.8%).
Jet Airways surged by over 7% to Rs548. Reports stated that the company would sell 10% stake to FIIs before rights offer. The scrip touched an intra-day high of Rs558 and a low of Rs512 and recorded volumes of over 32,000 shares on BSE.
Aurobindo Pharma further gained by over 4% to Rs258 after the company on Monday announced that they acquired TAD Italy, a generic company with 70 ready-to-market products, for an undisclosed amount. The scrip touched an intra-day high of Rs261 and a low of Rs250 and recorded volumes of over 37,000 shares on BSE.
Sun Pharma slipped by 2.1% to Rs1252. According to reports, the USFDA has asked the US subsidiary of Sun Pharmaceuticals to withdraw many batches of its generic Metformin Hydrochloride tablets used for treating diabetes, citing efficacy and quality issues. The scrip touched an intra-day high of Rs1300 and a low of Rs1240 and recorded volumes of over 4,00,000 shares on BSE.
JP Associates rallied by over 16% to Rs233 after the company announced that they would sell 1% stake in unit to ICICI Bank. The scrip touched an intra-day high of Rs236 and a low of Rs207 and recorded volumes of over shares 78,00,000 on BSE.
Jyoti Structures surged by over 4% to Rs162 after the company said that they secured order worth US$39.64mn from Uganda Electricity. The scrip touched an intra-day high of Rs170 and a low of Rs157 and recorded volumes of over 25,000 shares on BSE.
Reliance Industries, manufacturers of petrochemicals, synthetic fibers and textile, plans to close down all the petroleum retail outlets owned by it directly, according to reports. The rising crude prices and the absence of government subsidies have made operations unviable, the report stated. The scrip ended at Rs2314 gaining by 5.1% after hitting an intra-day high of Rs2325 and a low of Rs2220 and recorded volumes of over 8,00,000 shares on BSE.
Four Soft was up by 1% to Rs23 after the company declared that they secured software contract from IAL Group. The scrip touched an intra-day high of Rs24 and a low of Rs22 and recorded volumes of over 2,00,000 shares on BSE.
One ought to keep one's antennas on high alert to gauge any incidents. The immediate event to watch is the upcoming F&O expiry on Thursday. The market may witness some extra volatility. So traders are advised to protect their profitsCorporate Front Page
SBI secures full bank license from the Monetary Authority of Singapore to establish up to 25 outlets. (ET)
L&T wins US$240mn deal for building four ships. (Mint)
Phoenix Mills buys 25 acres land in Bangalore from GKW for Rs3.2bn. (Mint)
IOC expects to save Rs10mn a day on transportation once its proposed 15mtpa refinery and petrochem complex starts operations in 2011. (Mint)
The Government has stayed plan to reduce assured return on equity on negotiated power projects on opposition by NTPC. (Mint)
Strides Arcolab gets first US approval for HIV drug. (Mint)
HSBC Financial's stake in Yes Bank up at 4.88%. (Mint)
Kotak Mahindra Bank plans to lend 30% more in the next 12 months. (Mint)
Nortel wins US$100mn GSM deal from BSNL. (BL)
Jet Airways plans to dilute stake by 10%. (BS)
Reliance Power to spend Rs30bn for mines to fuel Sasan project. (BS)
Voltas not to hike prices of air-conditioners despite rising input costs. (BL)
ONGC targets 29.04MT crude production in 2008-09. (BL)
Gail sets gas transmission target of around 81.5mmscmd in 2008-09. (BL)
Nilkamal to invest Rs1.5bn by 2011 to expand its furniture retail chain. (BL)
Union Bank likely to post lower credit growth this fiscal at around 20% against projected 23-25%. (BL)
Federal Bank to open 26 branches across 11 states today. (BL)
SBI to raise Rs62.7bn through foreign currency bond issue. (ET)
The Government plans to divest 5% stake through follow-on public offers in companies including MMTC, STC, Concor and SCI. (ET)
GTL promoters increase stake from 34.36% to 37.05%. (ET)
Aurobindo Pharma looking for strategic overseas buy-outs to double revenues. (ET)
PFC ties-up with Indian Renewable Energy Development Agency to fund renewable projects. (ET)
Bombay Dyeing, L&T JV to jointly bid for development projects in Mumbai and other cities. (ET)
Eicher Motors to mull major capacity expansion plan ahead of JV for trucks with Volvo. (ET)
Corporation Bank to raise Rs5bn through bonds to meet capital requirements. (ET)
Religare to acquire UK broking firm Hichens, Harrison & Co for US$100mn. (ET)
REL buys back 250,000 shares through open market purchases on first day of share buyback programme. (FE)
Tata Chemicals to raise US$850mn to part fund its US$1bn acquisition of US-based General Chemicals Industries Products. (FE)
Ministry of Commerce to consider waiving off 26.33% duty levied on coal exported by Coal India. (FE)
Economic Front Page
Car manufacturers consider price hikes on input cost pressures. (BS)
FDI cap in DTH to go up to 74%. (BS)
ECB policy likely to be relaxed; cap for current financial year may go up to US$28-30bn. (BS)
Cement, power companies to buy ships to cut costs. (BL)
RBI grants license to Singapore banks, DBS and United Overseas Bank. (ET)
Steel makers agree to stop exports, forego DEPB benefits and supported reducing import duty on the alloy. (ET)
CPI wants to prevent the Government from acquiring lands and enforce trade union laws in SEZs. (FE)
Indian companies witnessed a slowdown in ECB and FCCB mop-up in November-January, says RBI. (FE)
I&B Ministry gives approval to hike FDI to 24% from 20% in FM radio operations. (FE)