A pessimist is one who feels bad when he feels good for fear he'll feel worse when he feels better.
The bulls took a bit of a breather on Tuesday after last week’s gains. Most players are likely to play safe in the run up to the quarterly earnings. The bias remains positive though, given the firm global markets and some pick up in institutional investments. Investors are hoping that the aggressive monetary easing by the RBI and the fiscal stimulus will soon start bearing fruits. In the US too, there is growing hope that the new regime, led by president-elect Barack Obama will be able to engineer a swift turnaround.
The current rebound can be attributed to a growing belief that most bad news is reflected in stock prices. So, one has to look beyond the first few months of the New Year and build a base for the anticipated recovery in the second half. Having said that, the jury is still out on whether the market saw a bottom in October. Experts are divided over whether those lows will be hit again. As a result, the best strategy is to take each day as it comes rather than look too far ahead.
Today, we expect the market to open firm in line with the global trend. Thereafter, the key indices’ move will hinge on how the institutions behave. Indian markets will be shut on Thursday for Moharam. So, we do not rule out some softening later in the day. Satyam will continue to hog the limelight ahead of the company's Board meeting on January 10.
Foreign funds were net buyers in the cash segment on Tuesday at Rs3.74bn (provisional) while the local institutions pulled out a modest Rs118mn. In the F&O segment, FIIs were net buyers of Rs3.85bn. Foreign funds were net buyers of Rs3.16bn in the cash segment on Monday. Mutual Funds were net buyers of Rs1.86bn on the same day.
US stocks advanced on Tuesday on growing optimism that President-elect Barack Obama's new multi-billion-dollar stimulus package will revive the sagging fortunes of the world's largest economy. Investors chose to looked beyond the Federal Reserve's grim outlook on the economy and instead snapped up shares hit hard in last year's historic crash.
Financials, IT and energy shares fronted the market's gains, while health care, consumer staples and utilities proved the laggards.
Up more than 100 points shortly after the opening bell, the Dow Jones Industrial Average dipped briefly into the red and then resumed its climb in afternoon trade. At the close, the blue-chip index was up 62.21 points at 9,015.1, with 19 of its 30 components closing higher.
The Standard & Poor’s 500 Index rose 0.8% to 934.70, rebounding from Monday’s 0.5% drop and climbing to the highest since Nov. 5. The index is up 3.5% in 2009 after sliding 38% in 2008, its worst yearly loss since 1937. The S&P 500 now up over 8% in the last two weeks in a classic "Santa Claus" rally.
The Nasdaq Composite index rose 24.35 points or 1.5% to 1,652.38. IBM, Intel, Hewlett-Packard and Cisco Systems were the tech sector's big gainers.
The FOMC minutes for the Dec. 15-16 meeting showed that the monetary policymakers see increased risk of depression and deflation. The central bankers said GDP growth will decline in 2009, and that even by using non-traditional methods to try to help the economy stabilize, the outlook will remain weak for some time. The report also showed that Fed policymakers think unemployment will rise significantly into 2010.
Meanwhile, economic stimulus appeared to be the top priority as a new, more Democrat-heavy Congress was sworn in to office.
In the third trading session of 2009, trading remained light, topping 1.3 billion on the New York Stock Exchange, and 787 million shares on the Nasdaq. Market breadth was positive. Advancers overtook declines nearly 4 to 1 on the NYSE and by almost 3 to 1 on the Nasdaq.
The number of homes under contract to be sold fell 4% in November, according to the National Society of Realtors. Pending home sales index fell to 82.3 in November, worse than expected and the lowest level since the group began tracking the index in 2001.
The government's November factory orders report showed activity declined by 4.6% after dropping 6% in the previous month. Economists thought orders would drop 2.3%.
On the upside, the services sector of the economy showed some improvement in December, although activity remained weak. The Institute for Supply Management's services sector index rose to 40.6 from 37.3 in November. Economists had forecast a reading of 36.
On the corporate front, Dow Chemical Co. said that it would pursue legal action against Kuwait's Petrochemical Industries Inc. over the unraveling of a joint venture. Shares of Dow Chemical rose 6.6%.
Switzerland's Logitech International SA withdrew its financial targets for the year, and said it would cut its workforce by 15%. The maker of computer mice also warned of a worsening economic climate ahead.
Toyota Motor said it will halt production at its Japanese plants for 11 days in February and March in an effort to move inventory. On Monday, Toyota had reported a 37% year-over-year drop in December auto sales.
After the close, aluminum giant Alcoa said that it will cut at least 13,500 jobs, or 13% of the company's worldwide workforce by the end of the year, as a means of cutting costs. Alcoa stock was volatile in extended-hours trading.
Treasury prices rose, lowering the yield on the benchmark 10-year note to 2.45% from 2.48% late on Monday. Yields on the 2-year, 10-year and 30-year Treasurys all hit record lows last month.
Lending rates were mixed. The 3-month Libor rate slipped to 1.41% from 1.42% on Monday, a 4 1/2-year low. Overnight Libor edged up to 0.13% from 0.12% Monday. Libor is a key bank lending rate.
The dollar gained versus the euro and yen. COMEX gold for February delivery rose $8.20 to settle at $866 an ounce.
US light crude oil for February delivery fell 23 cents to settle at $48.58 a barrel on the New York Mercantile Exchange. Gasoline prices rose 1.6 cents to a national average of $1.688 a gallon.
European markets managed to keep the year's winning streak alive, led by gains in pharmaceuticals, auto and metal stocks. The pan-European Dow Jones Stoxx 600 index rose 2% to 212.87.
The UK's FTSE 100 index closed up 1.3% at 4,638.92, while Germany's DAX 30 index rose 0.9% to 5,026.31 and the French CAC-40 index climbed 1.1% to 3,396.22.
Northward journey may continue
Indian markets rose for fourth straight trading session on Tuesday. After starting off the day on a subdued note, key indices turned highly volatile which saw the BSE benchmark Sensex hitting an intra-day low of 10,150 in the mid-afternoon trades.
However, from there on markets sharply bounced back led by gains in the metals’, banking and auto stocks. Finally, the BSE benchmark Sensex ended at 10,335 surging 60 points and the NSE Nifty index ended flat at 3,112.
Among the BSE Sectoral indices BSE Metal index (up 2%), BSE Bankex index (up 1.6%) and BSE Auto index (up 1.5%). On the other hand BSE Realty index slipped 4% and the BSE Teck index dropped 1.5%.
Market breath was positive, 1,252 stocks advanced against 1,262 declines, while, 91 stocks remained unchanged.
Dewan Housing declined by 2% to Rs86, the company announced that the board of directors of the company would meet on January 8, 2009 to consider acquisition. The scrip touched an intra-day high of Rs91 and a low of Rs84 and recorded volumes of over 33,000 shares on BSE.
Shares of Nagarjuna Construction stood firm throughout the trading session. The stock was up by over 6% to Rs91 touching an intra-day high of Rs95 and a low of Rs84 recording volumes of over 8,00,000 shares on BSE.
Shares of BGR Energy rallied by over 10% to Rs182 after the company announced that it raised Rs21.05bn for working capital expenses from a consortium led by SBI, stated reports. The scrip touched an intra-day high of Rs185 and a low of Rs165 and recorded volumes of over 7,00,000 shares on BSE.
Shares of L&T bounced back sharply and ended flat at Rs848 after the company announced that it won order worth Rs11bn in the building & factories segment. The scrip touched an intra-day high of Rs867 and a low of Rs832 and recorded volumes of over 11,00,000 shares on BSE.
Shares of IVRCL Infra advanced by over 3% to Rs167 after the company yesterday announced that it has bagged orders worth Rs2.6bn from Bangalore Metro Rail Corporation, IOC and Karnataka water supply board.
The scrip touched an intra-day high of Rs169 and a low of Rs159 and recorded volumes of over 11,00,000 shares on BSE.
Shares of Tech Mahindra rallied by over 4% to Rs295 after reports stated that M&M Group of companies has approached Satyam for an all-share merger.
However, media reports stated that Tech Mahindra denied, saying that it isn’t looking at bid for Satyam unit Satyam’s board meeting on January 10, 2009.
Tech Mahindra hit an intra-day high of Rs325 and a low of Rs287 and recorded volumes of over 5,00,000 shares on BSE.
Satyam also ended higher by over 7% at Rs179 and recorded volumes of over 93,00,000 shares on BSE.