We have learned that power is a positive force if it is used for positive purposes.
The contraction did take place in the market while the expansion in the cabinet is scheduled for tomorrow. The bulls are set for a powerful start with global cues to the rescue. On the local front, the govt appears to be sending out the right signals, except for the diktat to state-run banks on rate cuts and the ban on sugar futures. Big ticket disinvestment plans in power sector firms are grabbing headlines. Efforts are on to announce the budget in time as well. FBT may be given a burial too.
In the US, consumer confidence has shot up to the highest level since September. But, home prices fell 19% in the Jan-Mar quarter yoy. In Japan, exports tumbled again in April, but the slide seems to be abating a bit. The Hang Seng has crossed 17,500. The Nikkei ended the morning session up 1.5%. Meanwhile, crude oil has risen past $62 per barrel ahead of the OPEC meet on Thursday.
We expect a rebound in key indices. But, things could turn volatile as traders consider their moves before tomorrow’s F&O expiry. Stock specific and sector centric action will continue, especially in the broader market.
Key Results: Asahi India, BHEL, Britannia, Cairn India, Emco, Godrej Industries, Indraprastha Gas, Jindal Steel, MRPL, NIIT, Panacea Biotec and Tamil Nadu Newsprint & Paper.
FIIs were net sellers in the cash segment on Tuesday at Rs1.97bn while the local institutions too pulled out Rs1.38bn. In the F&O segment, the foreign funds were net sellers at Rs12.5bn. On Monday, FIIs were net buyers at Rs30.46bn in the cash segment. Mutual Funds were net buyers at Rs3.88bn on the same day.
US stocks climbed on Tuesday, with the Dow gaining nearly 200 points, spurred by a strong reading on consumer confidence.
The Dow Jones Industrial Average jumped 195 points, or 2.3%, 8,473.49. The S&P 500 index gained 23 points or 2.6%, to 910.33. The Nasdaq Composite index was surged 58 points or 3.4%, to 1,750.43. Tuesday marked the first time the Dow and S&P 500 closed in positive territory since May 18.
Eleven stocks gained for each that fell on the New York Stock Exchange, the broadest rally since May 18. The Russell 2000 Index of small companies rose 4.8% for the steepest advance since April 9.
US stocks opened lower on concerns about North Korea, which had test-fired missiles after conducting a nuclear test on Monday, along with worries over a report that showed a record plunge in US home prices. But a much stronger than expected consumer confidence index offset some of those concerns.
The rally was broad-based, with 28 of the 30 Dow components advancing. IBM, which jumped 3%, led the gainers. Shares of energy producers rose as the price of oil closed at a six-month high, above $62 a barrel. Consumer names, such as McDonalds and Wal-Mart also advanced.
The Conference Board's Consumer Confidence Index rose to 54.9 in May from 40.8 in April. Economists had expected the index to rise to 42. The index now stands at its highest level since September, when it reached 61.4. But that's still low by historical standards.
Home Depot rose 4.1% and helped lead an index of consumer discretionary stocks up 3.8% for the biggest advance among 10 S&P 500 groups after financials.
Separately, a closely watched index of home prices dropped a record 19.1% in the first quarter. The S&P/CaseShiller Home Price Index, which tracks 20 of the largest housing markets, has plummeted 32.2% from its July 2006 peak and has declined for 32 straight months. It fell 18.2% in the previous quarter.
The S&P/Case- Shiller home-price index decreased 18.7% from March 2008, matching the drop in the year ended in February. The measure declined 19% in January, the most since data began in 2001.
The fate of General Motors (GM) and Chrysler still hangs in balance. Tuesday was the last day for GM bondholders to accept an offer to swap $1,000 of the debt for 225 shares of the company. GM faces a June 1 deadline to produce a turnaround plan or file for bankruptcy.
Shares of Apple rose 6% after analysts at Morgan Stanley upgraded the iPhone maker's stock. Qualcomm shares rallied 4.8% after the world’s biggest maker of mobile-phone chips had its 2010 earnings estimates raised at Barclays.
JPMorgan Chase advanced 6.2% as the New York-based bank stands to reap a $29 billion windfall thanks to an accounting rule that lets the second-biggest US bank transform bad loans it purchased from Washington Mutual into income.
Treasury prices slipped, with the yield on the benchmark 10-year at 3.51%. The Treasury sold $40 billion in 2-year notes, kicking off a week packed with debt auctions. The 2-year note sale was strongly bid for, with $117.5 billion in bids coming in for $40 billion in debt.
The auction drew the most demand from a group of investors that includes foreign central banks since November 2006. The sale helped ease concern international investors will begin to shy away from US Treasuries.
Oil for July delivery rose 68 cents to settle at $62.45 a barrel ahead of an OPEC meeting on Thursday. Traders expect the cartel to leave output unchanged at the meeting. Oil prices have settled above the $60 mark for four straight sessions and are now at a more than 6-month high.
In currency trading, the dollar was mixed against its major trading partners. The greenback rose against the euro but fell against the pound and the yen. COMEX gold for June delivery fell $5.60 to settle at $953.30 an ounce.
A report on existing home sales is due shortly after the opening bell on Wednesday. Durable goods orders and a revision of the first-quarter gross domestic product (GDP) report are also on tap this week.
European shares reversed early losses to close higher, as positive consumer-confidence data out of the US raised hopes that the world's largest economy is starting to recover. The pan-European Dow Jones Stoxx 600 index, which was lower for most of the session, gained 0.8% to 208.96.
Germany's DAX 30 index was up 1.4% at 4,985.60 while the French CAC-40 index added 1.1% to 3,270.09. The UK's FTSE 100 index climbed 1.1% to 4,411.72.
Markets witnessed a sharp sell off on Tuesday ahead of the F&O expiry. Offloading in the heavyweights dragged the NSE Nifty to drop below the 4,100 levels in intra-day trades.
The BSE Mid-Cap and the Small-Cap stocks which outperformed the benchmark indices also witnessed some profit booking. Both the small-and the mid-cap indices ended lower by 3% each.
The Sensex slipped 324 points or 2.3% to close at 13,589 after touching a high of 13,991 and a low of 13,518. The index had opened at 13,929 against the previous close of 13,913.
The NSE Nifty fell 130 points or 3% to shut shop at 4,107.
Among the BSE Sectoral indices BSE Realty index was the top loser. The index lost 4%, followed by the BSE Capital Goods index down 3.2%, BSE Power index down 3.1%, BSE Consumer Durable index down 3.1% and BSE Oil & Gas index down 2.7%. Bucking the negative rend was the BSE IT index up 0.5%.
Shares of Parsvnath Developers’ surged by over 4.5% to Rs92 after the board of directors approved a proposal to raise up to Rs25bn by issuing fresh shares to institutional buyers. The scrip touched an intra-day high of Rs98 and a low of Rs90 and recorded volumes of over 2.3mn shares on BSE.
Dishman Pharma was locked at 20% upper circuit to Rs174 after the company’s full-year profit rose 55% from a year earlier. The scrip touched an intra-day high of Rs174 and a low of Rs150 and recorded volumes of over 0.5mn shares on BSE.
Shares of Bharti Airtel dropped by over 5% to Rs770. Reports stated that the company has reopened discussions to acquire a 49% stake in South Africa’s MTN for over US$23bn in a cash-cum-stock swap.
The deal will need the approval of the foreign investment promotion board, in the absence of a policy on share swaps.
The scrip touched an intra-day high of Rs858 and a low of Rs760 and recorded volumes of over 1.8mn shares on BSE.
Shares of L&T declined by over 4% to Rs1254 after reports stated that the Uttarakhand government asked the company to stop work on its 99MW Singoli-Bhatwari hydel project in the hilly Rudraprayag district of the state. The scrip touched an intra-day high of Rs1322 and a low of Rs1245 and recorded volumes of over 0.5mn shares on BSE.
The outlook continues to remain a bit cautious for the coming days as Tuesday saw a breather in the broader markets as well. In addition, the global economic slowdown, sluggish local economy, ballooning fiscal deficit continue to remain as headaches.
However, stock specific action cannot be ruled out, especially in the broader markets. A lot will also depend on the global cues.