Mediocre idea that generates enthusiasm will go further than a great idea that inspires no one.
Bulls seem to get inspired by even mediocre ideas these days. After three days of healthy gains, the enthusiasm could be met with some resistance. We expect a circumspect start and a volatile day ahead. Firstly, global trend is not all that supportive. US stocks could not extend the global momentum. Asian markets are mixed. Most gains in global markets lately have come on the back of strength in commodity-related shares. The broader markets look exhausted after a six-month advance.
Same holds true for India too. The Sensex and the Nifty have doubled since early March and valuations are not fundamentally compelling. Yes, the slump in economic activity has been arrested. Q1 results turned out to be better than anticipated. Risk appetite is on the way up. Fund flows have improved. But the much-awaited rebound continues to be elusive.
Green shoots have been restricted to a few pockets. To add to the woes, rain Gods have not been too kind. Inflation remains a concern. Government’s balance sheet is highly leveraged. Exports continue to bleed. Tax collections and credit growth remain subdued.
FIIs were net buyers of Rs9.9bn in the cash segment on Tuesday on a provisional basis while the local funds pumped in Rs2.06bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs11.33bn. On Monday, FIIs were net buyers of Rs10.5bn in the cash segment. With this, their net investments in Indian stocks this year have crossed $8.3bn.
US stocks rose on Tuesday as trading resumed after the Labour Day weekend, with the Nasdaq Composite index hitting a year's peak and the Dow Jones Industrial Average and S&P 500 index also climbed. Commodity shares rallied and General Electric was upgraded.
The Dow gained 56 points, or 0.6%, at 9,497.34, ending close to 10-month highs. The S&P 500 added 9 points, or 0.9%, at 1,025.39, ending close to 11-month highs. The Nasdaq advanced 19 points, or 0.9%, at 2,037.77, ending at the highest point since Oct. 1, 2008.
Last week, Wall Street ended a choppy week lower as investors turned a bit cautious after a strong August and ahead of the extended weekend. US financial markets were closed on Monday for Labor Day.
A more than 4% spike in oil prices and gold prices that briefly topped $1,000 gave a lift to the influential commodities sector. A rally in metals stocks lifted the Gold Bugs index by 1%. Tempering the advance was a selloff in some of the financial shares that rallied late in the summer.
All three major markets rose between 11% and 13% over the summer. September is typically a tough month for Wall Street as market players return from their summer vacations. It is the worst month on Wall Street in terms of percentage losses for the Dow, S&P 500 and Nasdaq, according to Stock Trader's Almanac.
Over the last few weeks, the S&P 500 seesawed across 1000, a key psychological level that traders watch. Those gyrations may continue for the next few weeks. US stocks may not move much until at least the middle of October, when the third-quarter profit reports start to pour in.
Kraft Foods shares slumped almost 6% after British candy maker Cadbury spurned its $16.7 billion takeover offer. However, the company, a Dow component, said it would continue to pursue a merger. Cadbury shares jumped 38%.
GE shares rallied 4.5% after JPMorgan upgraded the stock to "overweight" from "neutral."
Among other movers, Opexa Therapeutics surged 270% after a mid-stage study showed that at least 83% of patients taking its multiple sclerosis drug had not relapsed one year later.
Leaders from the world's 20 biggest economies, meeting over the weekend, agreed to continue to provide stimulus to support the global recovery.
Consumers cut their borrowing in July by $21.6 billion, the most on records dating back to 1943. Economists thought credit would fall by $4 billion. Credit fell by a revised $15.5 billion in June.
US light crude oil for October delivery rose $3.08 to settle at $71.10 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $3.10 to settle at $999.80 an ounce after surpassing $1,000 earlier in the session.
Treasury prices fell, raising the yield on the benchmark 10-year note to 3.46%, from 3.44% late on Friday.
In currency trading, the dollar fell versus the euro and the Japanese yen.
European shares rose for a fourth straight session, paced by gains in miners and renewed M&A news. The pan-European Dow Jones Stoxx 600 index rose 0.2% to 237.75, with miners in the lead as gold futures reclaimed the $1,000-an-ounce level in electronic trading for the first time in more than six months.
The UK's FTSE 100 index closed up 0.3% at 4,947.34, while Germany's DAX index added 0.3% to 5,481.73 and the French CAC-40 index moved up 0.2% to 3,660.96.
Indian markets extended its winning streak for third straight trading session with the NSE Nifty ending above the 4,800 levels. Even the BSE Sensex ended above the 16,100 levels.
The rally was led by the metals stocks, heavyweights like Tata Steel, Sterlite Industries and Hindalco. Even the Banking stocks like ICICI Bank and SBI were in demand. Technically, the BSE Bankex index has broken above its trading range after consolidating for almost four months. The index has gained ~300 points or 3.5% in the last couple of days.
Cues from the international markets were also positive. The Hang Seng and the Shanghai Composite ended with smart gains even the European markets were trading with healthy gains.
Finally, the BSE Sensex surged 107 points or 0.7% at 16,123 after touching a high of 16,232 and a low of 16,030. The index opened at 16,030 against the previous close of 16,016. The NSE Nifty surged 22 points to shut shop at 4,805.
In Asia, the Nikkei in Japan gained by 0.7% at 10,393 while Australia's S&P/ASX ended higher by 1.5% at 4,523. The Hang Seng index in Hong Kong surged 2.1% at 21,069. Shanghai index in China was up by 1.7% at 2,930.
In Europe, stocks were in the green. The FTSE in the UK was up 0.7%, The DAX in Germany was up 0.6% and the CAC 40 index in France was up 0.5%.
Coming back to India, among the BSE sectoral indices, the Metal index was the top gainer, surging 2.5%, followed by the Oil & Gas index that was up 2%. The BSE Capital Goods index up 0.7% and the BSE Bankex index was up 0.5%.
However, BSE FMCG index was down 1.1% and BSE Auto index was down 1%. The BSE Mid-Cap index fell 0.4% and the BSE Small-Cap index fell by 0.3%.
Among the 30-components of Sensex, 15 stocks ended in the green and 15 ended in the negative terrain. Among the major gainers were Reliance Industries, SBI, L&T, Sterlite, Tata Steel and Hindalco.
On the other hand, Infosys, HUL, ITC, Tata Power and HDFC were among the major laggards.
Outside the frontline indices, the big gainers in the broader market were Spice Tele, BEML, Allahabad Bank, Century Textile and Godrej Consumer. On the other hand, losers included GMDC, Mundra Port, GVK Power, CESC and Renuka Sugar.
B K Modi acquired 51% stake in the forex and money transfer firm Wall Street Finance. ADAG Group's Reliance Money exited from the company by selling its entire 36.8% holding in the previous week for over Rs220mn.
BK Modi announced an open offer for another 20% stake in the company. The entire deal of acquiring 71% stake would be worth about Rs1bn, reports added.
In a market transaction, Modi-promoted Spice Investments & Finance Advisors purchased over 1.66mn equity shares representing 14.32% stake in Wall Street Finance at a price of Rs55 per share, in a bulk deal on the BSE.
On the other hand, Patel Holding Ltd sold 1.24mn and Arif Asgar Patel offloaded 0.42mn at an average price of Rs55.
Shares of Wall Street Finance shot up by over 5% to Rs60.80. The stock opened at Rs60 and made an intra-day high of Rs68 and a low of Rs60. Total traded volumes stood at 0.52mn shares.
Shares of Gujarat NRE Coke gained by 3.6% to Rs58. 5 after the company announced that the board of directors will meet on September 19, 2009, to consider the proposal for issue of "B" Equity Shares of Rs10/- each as bonus shares.
The stock opened at Rs59 and made an intra-day high of Rs60 and a low of Rs57.8. Total traded volumes stood at 6mn shares.
Shares of Gail India erased early gains and ended in the red, the stock was down 1% to Rs358. The stock opened at Rs365 and made an intra-day high of Rs372 and a low of Rs356. Total traded volumes stood at 0.39mn shares.
Gail India aims to cross revenue of Rs500bn in the next few years, Chairman B.C. Tripathi told shareholders at a meeting in New Delhi today.
The company has approved Rs300bn of spending on new projects and seeks to double its gas transportation capacity to 300mn cubic meters a day, he added.
The company also plans to raise capacity at Pata Chemical plant to 1mn tons and plans to invest Rs35bn in city gas by 2012-13.
Shares of Suven Life Science were locked at 5% upper circuit at Rs30.50 after the company on Monday announced that its drug discovery collaboration in central nervous system (CNS) disroder with Eli Lilly has yielded a positive outcome with lead declaration leading to a milestone payment to the company from the US drug major.
The milestone was achieved with the identification and selection of a first lead compound to be advanced into Lead Optimization Phase of preclinical development.
Shares of Jet Airways staged a smart come back and ended with smart gains. The stock was up 2.6% at Rs262.
Jet Airways fell sharply in the early trades to a low of Rs221 after the airline announced that it would cancel 115 flights due to a strike by pilots. As many as 400 pilots went on sick leave late last night, stated reports. The group is demanding that the company reinstate two pilots whose jobs were terminated without reason, report added.