No great improvements in the lot of mankind are possible until a great change takes place in the fundamental constitution of their modes of thought.
Investors seem happy with the small changes in economy and great changes in the market. After Thursday’s pullback, bulls are all set to rule again. We expect the Indian market to open higher and stay firm. IIP data for April will be out today. Expectations are of continued improvement. Besides, March’s dismal figure (-2.3%) may also be revised upwards. What’s more, inflows from both, foreign and local funds have been pretty strong despite a choppy week.
Global cues are encouraging, barring the surge in oil prices. Key global markets in the US and Asia have hit multi-month highs. Stocks in Europe ended up for a third successive day. The advance is largely on belief that the worst of the global recession is history. Economic reports from across the globe show that the severity of economic slump is easing. Unless we are hit by any nasty surprises, the positive trend in equity markets is likely to hold, though the speed of the rise may slow a bit.
The immediate issues confronting this rally are: rising bond yields, spike in commodity prices, a possible weak monsoon, budget disappointments, policy delays and corporate earnings missing estimates. Meanwhile, the WHO has declared swine flu a global pandemic.
Watch out for Sesa Goa as the iron ore exporter has bought mining assets of the Dempo group for Rs17.5bn.
Gail India and Indian Hotels will announce their results today.
FIIs were net buyers in the cash segment on Thursday at Rs7.86bn while the local institutions pumped in Rs5.58bn. In the F&O segment, the foreign funds were net sellers at Rs7.98bn. On Wednesday, FIIs were net buyers at Rs7.17bn in the cash segment. Mutual funds were net buyers at Rs9.49bn on the same day.
US stocks ended modestly higher on Thursday, with all three major benchmarks closing at multi-month highs, spurred by the day's positive economic reports. The Standard & Poor’s 500 Index ended at a seven-month high.
The Dow Jones Industrial Average gained nearly 32 points, or 0.4%, to 8,770.92. Despite falling short of its 2008 finish, the index ended at its highest level since Jan. 6. The S&P 500 index added over 5 points, or 0.6% to 944.89, its highest close since Nov. 5.
The Nasdaq Composite index climbed 9 points, or 0.5%, to 1,853.40, ending at its best point since Oct. 6.
US stocks have been on the rise since bottoming March 9, with the Dow up 34%, the S&P 500 up 40% and the Nasdaq up 47%, as of Thursday's close. But they have fluctuated this week as rising Treasury yields and higher commodity prices sparked worries about inflation hampering the economic recovery.
A rise in retail sales and a bigger-than-expected dip in jobless claims raised hopes that the pace of the recession is slowing. But the early advance lost momentum; the S&P 500 failed to hold on after briefly hitting a key level that traders and other market pros watch.
A comparatively strong 30-year bond auction helped temper worries about pricing pressures, at least in the short term. Treasury prices jumped, lowering the corresponding yields. The benchmark 10-year note yield fell to 3.85%, down from 4% early Thursday morning. The yield touched 4% during Wednesday's session for the first time since last October.
Retail sales climbed 0.5% in May, the Commerce Department reported. The report was in line with forecasts and showed an improvement from April, when sales fell a revised 0.2%.
Sales excluding autos rose a bigger-than-expected 0.5%. Economists had forecast that sales without volatile autos would rise 0.2% after falling a revised 0.2% in April. But the report mostly reflects the recent rise in gas prices, rather than any new direction for the consumer.
A Federal Reserve report showed Americans saw $1.3 trillion in wealth disappear in the first quarter of this year, as home values declined and the stock market tanked. But the rate of decline was slower than last year. In the fourth quarter alone, $5.1 trillion in wealth disappeared, the biggest quarterly plunge since the Fed started tracking data in 1951.
Another report showed that foreclosure filings fell 6% in May from April, but still saw the third-worst month on record. The report showed that one of every 398 households received some kind of filing in the month, including notices of default, scheduled auctions or bank repossession.
The number of Americans filing new claims for unemployment fell 24,000 to 601,000 last week, according to a Labor Department report released Thursday morning. Economists though claims would dip to 615,000. However, continuing claims, the number of Americans who have been receiving benefits for a week or more, rose to 6,816,000 from a revised 6,757,000 in the previous week.
Bank of America CEO Ken Lewis stressed that pressure from the government played a key role in the company's decision to complete its purchase of Merrill Lynch last year. He said the federal government threatened to remove management or board members if the company went back on its promise to buy Merrill, even though Merrill's financial state was deteriorating.
In currency trading, the dollar fell versus the euro and the yen.
US light crude oil for July delivery rose $1.35 to settle at $72.68 a barrel on the New York Mercantile Exchange, the highest close since October.
COMEX gold for August delivery rose $7.30 to settle at $962 an ounce.
European shares rose, owing to strength in drugmakers and banks. The pan-European Dow Jones Stoxx 600 index advanced 1% to close at 214.80, up for a third straight session.
Germany's DAX 30 index climbed 1.1% to 5,107.26, while the French CAC-40 index rose 0.6% to finish at 3,334.94 and the UK's FTSE 100 index was up 0.6% to end at 4,461.87.
Indian markets ended with marginal losses on Thursday ending a two day 5% rally. Weak cues from the US coupled with mixed cues from the Asian markets prompted the traders and investors to book some profits at higher levels. Inflation numbers which fell to 30-year low had a minimal impact on sentiment. India’s Inflation fell to 0.13% for the week ended May 30 as against 0.48% in the previous week.
The Sensex slipped 55 points or 0.36% to end at 15,411 after touching a high of 15,517 and a low of 15,240. The index had opened at 15,517 against the previous close of 15,466. The NSE Nifty slipped 18 points or 0.4% to shut shop at 4,637.
Shares of UltraTech Cement declined by over 4% to Rs735 after Larsen & Toubro Limited sold its complete stake of 11.49% in the company in the open market.
The sale was carried out at an average price of around Rs725 per share. L&T had exited its cement business through a demerger and sale to Grasim in 2004, and had retained 11.49% stake in Ultratech with a commitment to sell the stake on or before 31st Dec,
2009
The sale of its complete stake in Ultratech Cement Limited is in accordance with L&T’s obligations under its agreement with Grasim, and is also in line with L&T’s strategy of focusing on its core business. In its efforts to get the best value for its shareholders, the company decided that the present market conditions were correct for disinvestment of its stake.
Shares of L&T also ended lower by 0.5% to Rs1624 after hitting an intra-day low of Rs1669 and Rs1586 recording volumes of over 0.9mn shares on BSE.
Shares of Mahindra & Mahindra Financial advanced by 2.5% to Rs285 after ~6.81mn shares or 7% of its equity changed hands in three transactions. The scrip touched an intra-day high of Rs293 and a low of Rs263 and recorded volumes of over 7mn shares on NSE.
Shares of EKC gained by over 5% to Rs226 after ~4.7% equity shares of the company changed hands in a single transaction. The scrip touched an intra-day high of Rs234 and a low of Rs209 and recorded volumes of over 0.8mn shares on BSE.
Shares of GTL Infrastructure gained 1.6% to Rs46 after the Board of directors of the company would meet on June 11, 2009, to consider allotment of equity shares consequent to Conversion Notice(s) received for conversion of FCCBs at a conversion price of Rs53.04 per share. The scrip touched an intra-day high of Rs47.4 and a low of Rs44 and recorded volumes of over 4.6mn shares on BSE.
Shares of Shiv Vani Oil advanced by 2.7% to Rs318 after the board of directors of the company approved to raise funds through issue of equity shares / GDRs / ADRs / FCCBs/ securities for an amount not exceeding Rs6bn or its equivalent in any foreign currency, either through preferential issue and / or qualified institutional placement (QIP) and / or private placement or otherwise.
Shares of GMR Infra ended lower by 3% to Rs157. GMR Energy Ltd (GEL), the 100% subsidiary company along with other group company owns 33.34% of the issued and outstanding capital of Homeland Energy Group Ltd (HEG), Canada, listed on Toronto Stock Exchange.
HEG, Canada, through its subsidiaries has major interest in coal projects in South Africa including an operating mine and also other investment in uranium exploration Company etc. GEL has nominated three directors, Mr. B V Nageswara Rao, Mr. Raaj Kumar and Mr. Ashis Basu on the Board of HEG, representing 50% of the Board."
Shares of DS Kulkarni slipped by 3.2% to Rs55.9 after the company announced that it has terminated an agreement with GTC Cyprus Holding. GTC agreement was for joint venture development of SEZ said the company. The scrip touched an intra-day high of Rs60 and a low of Rs55 and recorded volumes of over 0.15mn shares on BSE.
Looking at the choppy trades on Thursday, markets would continue to struggle for direction in the coming days. The 4,650 levels for Nifty would continue to be crucial, a break out above or below the vital mark on either side would be the trend decider. Market players would also be awaiting the release of the industrial production numbers to be released on Friday noon. The consensus forecast is for a flat IIP as against a drop of 2.3% in March.