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Thursday, October 15, 2009

Dhanteras…be dazzled!


If you can't dazzle them with brilliance, baffle them with bull.

There is dazzle on the Street. The Goddess of Wealth and Prosperity seems to be making a happy entry with most indicators pointing to a bright Diwali on the bourses. Investors are having the last laugh so far with cries of caution being blasted away. Spiraling prices and possibilities of rate hikes have so far not deterred the bulls.

The Dow crossed 10000 on Wednesday. The milestone was last seen in October 2008 and adds to the growing signs of recovery from the depths of the financial crisis. Most equity benchmarks have touched multi-month highs. The Sensex has overcome 17,000 and the Nifty has topped 5100.

Don’t be surprised to see the key indices shooting up further today. Although there are a few concerns on valuations and the pace of the economic rebound, it would not be wise to stay idle. Money makes more money goes an old adage. So, put your money to work this Diwali. May be you can lock in some gains after some time.

With a sea of cash sloshing around the globe, and persistent signs of improvement in economic and business conditions, nobody wants to miss the rally. Risk appetite is showing no sign of abating as of now. Every fall, irrespective of its intensity is likely to entice fresh buying. The downside appears to be limited unless something horribly goes wrong in some part of the world.

However, the stock market is supposed to be a leading indicator and the seven month rally has already discounted most good news. Also, the economic woes are not completely over for the advanced nations, especially with regard to unemployment and the housing market. Consumer spending too is pretty anemic and will take time to recover fully. In short, there could be a few hiccups as we traverse the road of recovery.

As far as India is concerned, it is in a much better situation than some of the matured economies. Domestic demand appears to be looking up, and India Inc. too seems to be much more confident if the fund raising binge is anything to go by. There are a few areas that could pose challenges going ahead such as rising inflation, hardening of interest rates and a ballooning fiscal deficit. But, in the near term there is hardly anything that could potentially trigger a big selloff.

Results Today: Aarvee Denim, Alembic, Bajaj Holdings, Bajaj Auto, Balaji Tele, CMC, Jindal Saw, JP Hydro, Kewal Kiran Clothing, KPIT Cummins, Merck and Wyeth.

FIIs were net buyers in the cash segment on Wednesday at Rs14.43bn on a provisional basis. The local funds were net sellers at Rs1.97bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs2.89bn. On Monday, the foreign funds were net buyers of Rs9.99bn in the cash segment. Their net investments in Indian stocks this year has crossed $13bn. Mutual Funds were net sellers at Rs30mbn on Monday.

On Wall Street, the Dow Jones Industrial Average closed above 10000 on Wednesday, ending at the key psychological milestone for the first time in more than a year, following upbeat profit reports from Intel and JPMorgan Chase.

The Dow rose 145 points or 1.5%, at 10,015.86, finishing at its highest point since Oct. 3, 2008, when it closed at 10,325.38. The S&P 500 index rose 19 points, or 1.8%, to 1,092.02 and the Nasdaq Composite index added 32 points, or 1.5%, to 2,172.23.

The advance was broad-based, with 25 of 30 Dow stocks rising.

The weak retail sales report indicates that the economic recovery is not going to be smooth. While 10,000 is significant on a psychological level, it is not especially meaningful on a technical level. The Dow isn't a benchmark for most portfolio managers.

Since bottoming at 12-year lows in March of this year, the S&P 500 has surged a little over 61% as of Wednesday's close, and the Dow has jumped 53%.

Two Dow stocks reported better-than-expected third-quarter results following component Alcoa's better-than-expected profit report last week.

JPMorgan Chase said it earned $3.6 billion in the quarter, as strength in its investment banking business tempered rising loan losses. The company said that consumer loan delinquencies are showing signs of stabilization, but that the trend may not continue.

JP Morgan reported higher quarterly sales and earnings that topped analysts' estimates. Shares gained 3.3%.

Late on Tuesday, chipmaker Intel said that quarterly sales and earnings fell from a year ago, but topped estimates. Intel also issued a bullish forecast, saying that it expects fourth-quarter revenue of between $9.7 billion and $10.5 billion versus the $9.51 billion consensus. Intel also said it expects gross margins, a key measure of profitability, in the 59% to 65% range versus the 56.7% consensus. Shares gained 1.7%.

Retail sales fell 1.5% in September, the Commerce Department said, surprising economists who were expecting sales to fall 2.1%. Sales rose 2.7% in August thanks partly to the impact of the government's Cash for Clunkers auto stimulus program. Sales excluding autos rose 0.5% in the month versus a rise of 1.1% in August. Sales were expected to rise 0.2%.

Import prices edged up 0.1% in September, the government said, after climbing 1.6% in August. Export prices fell 0.3% in September versus a revised 1.6% in August.

In the afternoon, the Fed released the minutes from the last interest-rate policy meeting. The bankers said that while the economic outlook has improved, activity is still weak. Additionally, most of the bankers raised their economic projections for the second half of the year and for the next two years.

Treasury prices tumbled, raising the yield on the 10-year note to 3.38% from 3.35% late on Tuesday.

The dollar fell versus the euro and the yen, extending its recent losses.

US light crude oil for November delivery rose $1.03 to settle at $75.18 a barrel on the New York Mercantile Exchange, the highest level in a year.

COMEX gold for December delivery fell 30 cents to $1,064.70 an ounce after ending the previous session at a record close of $1,065. Gold has been hitting record highs almost daily in response to a weak U.S. dollar and ongoing concerns about inflationary pressures.

European shares posted sharp gains, boosted by strong results from BASF, Intel and JP Morgan Chase. The pan-European Dow Jones Stoxx 600 Index rose 2.1% to close at 246.98, up for the second time in three sessions.

Germany's DAX index rose 2.4% to settle at 5,854.14, the French CAC-40 index gained 2.1% to end at 3,882.67 and the UK's FTSE 100 index climbed 2% to finish at 5,256.10.

Indian markets resumed the upswing after an election break. It was another noteworthy day as the NSE Nifty re-conquered the 5100 mark for the first time since May 2008. The rally was led by the Metals, Auto and the Capital Goods stocks. However, the telecom stocks continued to be under the bear attack.

The Nifty has advanced nearly 175 points while the BSE Sensex has added ~600 points in the last two trading sessions.

Technically, The Nifty has yet again managed to close above all the near term moving averages indicating the strength in the current up move. However, one has to keep an eye for the 5160-5170 levels which could turn out to be stiff resistance. Once the crucial resistance is taken out the index could further extend gains upto 5300 mark.

The BSE Sensex surged 204 points at 17,231 after touching a high of 17,274 and a low of 17,117. The index opened at 17,117 against the previous close of 17,026. The NSE Nifty advanced 64 points to shut shop at 5,118.

In Asia, the Nikkei in Japan was flat at 10,060, while Australia's S&P/ASX ended higher by 1% at 4,831. Shanghai SE Composite in China gained 1.5% and Hang Seng index in Hong Kong was up 2%.

In Europe, stocks were in the green. The FTSE in the UK gained 1.8%, The DAX in Germany was up 2% and the CAC 40 index in France added 2%.

Coming back to India, among the BSE sectoral indices, the Metal index was the top gainer, adding 5.5%, followed by the Auto index that was up 2.5% and the BSE Capital Goods index was up 2.4%.

Even the BSE Mid-Cap index advanced 2% and the BSE Small-Cap index was up 1.5%.

Among the 30-components of Sensex, 25 stocks ended in the green and only 5 ended in the negative terrain. Among the major gainers were, M&M, Hindalco, JP Associates, SBI, Sterlite and Tata Steel.

On the other hand, RCom, Bharti, Reliance Infra, ACC and ACC were among the major losers

Outside the frontline indices, the big gainers in the broader market were PTC India, GVK Power, Cadila, Essar Oil and Bank of India. On the other hand, losers included Jet Airways, Chennai Petro and TTML.

HDFC Bank announced its Q2 results with net profit at Rs6.88bn up 30.3% as against Rs5.28bn in the same period last year. The bank’s total income was at Rs50bn registering 8% increase YoY as against Rs46.3bn.

Shares of HDFC Bank slightly ended flat at Rs1702. The stock opened at Rs1719 and made an intra-day high of Rs1727 and a low of Rs1685. Total traded volumes stood at 0.19mn shares.

Suzlon Energy announced about the completion and commissioning of a 19.5 MW wind farm project for the Gujarat Mineral Development Corporation (GMDC) at the Maliya - Mivana site in Rajkot District of Gujarat.

The project comprises of 13 units of Suzlon's SS82-1.5 MW wind turbines and has been commissioned in record time, almost two months ahead of the contractual commissioning period.

Shares of Suzlon erased gains and ended lower by 1.4% to Rs85.4. The stock opened at Rs87.50 and made an intra-day high of Rs88 and a low of Rs85. Total traded volumes stood at 8.63mn shares.

Shares of Unitech advanced by 4.5% to Rs105 after the company announced that it sold property worth Rs40bn in the March to September period.

The company sold ~10.11mn square feet of space in the period. Out of 10.11mn sq ft, ~8.16mn sq ft was booked in the residential segment. It said these figures did not cover PLC, parking and club charges.

Larsen & Toubro's Metallurgical, Material Handling & Water Operating Company - a part of its Construction Division has secured Orders aggregating Rs9.66bn from Customers like Sterlite Industries India Ltd, Uttar Pradesh Jal Nigam & Gujarat Water Infrastructure Ltd. This includes Rs2.25bn order from the Metallurgical Sector and Rs7.41bn orders from the Water Sector.

Shares of L&T gained by 2% to Rs1689. The stock opened at Rs1665 and made an intra-day high of Rs1698 and a low of Rs1660. Total traded volumes stood at 0.25mn shares.

Cairn India rose over 6.5% to end at Rs280 after crude prices surged to a year’s high. The stocks also were in demand after it had won two exploration areas in India’s auction earlier this week.

Crude oil for November delivery rose as much as US$1, or 1.4%, to US$75.15 per barrel in electronic trading on the New York Mercantile Exchange today, the highest since October 21, 2008.

On the other hand, ONGC gained by 1% to Rs1258, while, Oil Indian was marginally down by 0.3% to Rs1189.

Suven Life Sciences announced that their clinical candidate SUVN-502 for Alzheimer's Disease secured several product patents granted at all the key market countries; India (218438), Mexico (257091), South Africa (2005/4043), Singapore (113104), New Zealand (540840), Korea (10-2005-7009512), Eurasia (011320), Australia (2003237599) and Europe (1581492).

The granted Product Patent for SUVN-502 in all the countries is valid until June 2023.

Shares of Suven Life Science were locked at 5% upper circuit at Rs29. The stock opened at Rs26.95 and made an intra-day high of Rs29 and a low of Rs27.3. Total traded volumes stood at 92,000 shares.

Shares of Bajaj Auto Finance surged by over 14% to Rs324 after the company announced its Q2 results with net profit of Rs216.9mn as against Rs45.7mn in the same period last year.

The stock opened at Rs288 and made an intra-day high of Rs334 and a low of Rs285. Total traded volumes stood at 0.68mn shares.