Most of the so-called reasoning consists in finding arguments for going on believing as we already do.
As long as the liquidity tap is running, risky assets will be in demand. Don’t forget the risk part though. After a brief hiccup, the bulls seem to be in complete control again. The current momentum is likely to prevail in the near term.
Today, we expect another good start on the back of healthy global trend. F&O indicators have also turned bullish. Technically, there could be some resistance at 4950-5000 and beyond that at around 5150-5200. Better enjoy the ride as long as it lasts.
The dollar continues to slide amid growing talk of its fate as the world’s reserve currency. Not that it will lose the coveted position overnight, but the world is definitely preparing for it. And, when the dollar is dumped gold seems to benefit the most. The precious metal appears to be on a record-breaking spree. Other commodities too have gained, though concerns are mounting over asset bubbles.
The G20 has reiterated the pledge to keep emergency stimulus in place till recovery is fully secured. But, in India the RBI last month started withdrawing some of the accommodation. The PM says fiscal stimulus will also be withdrawn gradually. We have to see how the economy, India Inc., individuals and markets react when that actually happens.
FIIs were net buyers in the cash segment on Monday at Rs4.77bn on a provisional basis. The local funds were net sellers of Rs2.87bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs8bn. On Friday, the foreign funds were net buyers of Rs6.96bn in the cash segment. FIIs' net investments in Indian stocks this year is above $14.3bn. Mutual Funds were net buyers in the cash segment at Rs1.82bn on Friday.
US stocks rallied on Monday, with the Dow Jones Industrial Average surging to a 13-month high amid rising risk appetite. The gains were broad-based, with all but 1 of the 30 Dow components closing higher. Financial and commodity-related shares led the advance.
The Dow Jones Industrial Average soared 204 points, or 2%, to close at 10,226.94 - its highest level since Oct. 3, 2008. The S&P 500 gained 24 points, or 2.2%, to settle at 1,093.07 and the Nasdaq Composite index rose 42 points, or 2%, to close at 2,154.06.
US stocks had bounced back last week, with the Dow reclaiming the 10,000 mark. So far in 2009, the Dow is up about 15% and the Nasdaq has soared 35%.
Stocks started the day on a high after the Group of 20 (G20) reiterated their promise to keep economic stimulus in place for a while. Finance ministers of the G20 met over the weekend and pledged to continue government aid. The dollar fell sharply against the euro and British pound, while commodities and commodity-linked stocks rose.
With little news on tap for this week, psychological factors and technical levels are driving most of the market.
Investors focused on corporate news on Monday, particularly the renewed M&A talk. Kraft launched a $16.3 billion hostile takeover bid for British candy maker Cadbury after the deadline for the initial bid passed without a deal. Cadbury rejected Kraft's initial $16.7 billion offer in early September and again turned it down.
Comcast and GE have reportedly agreed on the worth of NBC Universal. The agreement is a major hurdle cleared for Comcast as it aims to gain control of NBC Universal.
Northrop Grumman has sold its consulting arm to two private equity firms. The $1.65 billion deal was announced Sunday.
With the dollar back at $1.50 against the euro for the first time in a few weeks, people are piling into gold. COMEX gold for December delivery rose to an intraday record of $1,109.90 Monday before it pared gains to settle up $5.70 at $1,101.40 per ounce.
US oil for December delivery rose $2 to settle at $79.43 a barrel, after sinking almost 3% on Friday's mostly negative labor market report.
Bond prices were mostly lower, with the 10-year note holding modest gains, as the government began selling $81 billion worth of debt this week in a quarterly refunding. Treasury auctioned $40 billion in 3-year notes, with $25 billion in 10-year notes and $16 billion in 30-year bonds being offered later in the week.
European shares also jumped, led by commodity-related stocks after the G20 announcement. The-pan European Dow Jones Stoxx 600 index climbed 1.9% to 245.62, up for the fourth straight session. The UK's FTSE 100 index rose 1.8% to 5,232.72, while Germany's DAX index advanced 2.4% to 5,619.72 and the French CAC-40 index added 2.1% to 3,785.49.
Indian markets extended winning streak to fourth straight trading session on Monday starting off the week on a high. The rally was fueled by strong global cues and more importantly on account of short covering towards the fag end.
Buying was seen in the Banking, Oil & Gas and the Metals stocks with the Mid-Cap and the Small-Caps also participating.
Technically, the NSE Nifty has managed to take out two hurdles, on the daily charts
1) the index has closed above the 50 Day Moving Average
2) and also managed to close above the medium term trend line, indicating that bulls are back with a vengeance.
Finally, the BSE Sensex surged 340 points to close at 16,498 after touching a high of 16,517 and a low of 16,147. The index opened at 16,190 against the previous close of 16,158. The NSENifty advanced 102 points to shut shop at 4,898.
In Asia, the Nikkei in Japan was up 0.2%, while Australia's S&P/ASX ended higher by 1.8% at 4,674. Shanghai SE Composite gained 0.3% and Hang Seng index in Hong Kong added 1.7%.
In Europe, stocks were trading with smart gains. The FTSE in the UK was up 1%, The DAX in Germany was up 1.3% and the CAC 40 index in France gained 1.2%.
Coming back to India, among the BSE sectoral indices, the Banking index was the top gainer, adding 5%, followed by the Consumer Durables index that was up 2.5% and the BSE Oil & Gas index was up 2.4%.
The BSE Mid-Cap index gained 2% and the BSE Small-Cap index was up 2.3%.
Among the 30-components of Sensex, 25 stocks ended in the green and 5 ended in the negative terrain. SBI, ICICI Bank, Tata Power, HDFC Bank and ITC were among the major gainers.
On the other hand, among the major losers were Bharti Airtel, RCom, Hindustan Unilever and Sun Pharma.
Outside the frontline indices, the big gainers in the broader market were Jai Corp, Central Bank, LIC Housing, Tech Mahindra and IRB Infra. On the other hand, losers included TTML, Bharat Forge, Tata Comm and Koutons Retail.
Shares of Reliance Industries advanced by 3.5% to Rs12024 after the company is reportedly close to announcing a major overseas acquisition. The company's likely target is a part of the assets owned by LyondellBasell, which is undergoing reorganisation under the protection of a US court.
The stock opened at Rs1959 and made an intra-day high of Rs2031 and a low of Rs1959. Total traded volumes stood at 0.76mn shares.
Shares of L&T gained by 1.5% to Rs1599 after the company received an order worth Rs16.35bn from Madhya Pradesh Power Generating Company Ltd (MPPGCL) for 2x 600 (1200) MW Balance of Plant Package (BoP) for Shree Singaji (MALWA) Thermal Power Plant.
This order was won against stiff competition against domestic BoP bidders. The contract will be executed on EPC basis and L&T’s scope will include design, detailed engineering, supply, installation and commissioning of BoP systems.
Shares of Rico Auto were frozen at 5% upper circuit to end at Rs23.95 after workers of the company ended their about 50-day strike following an agreement with the management on reinstating of some employees.
As per the agreement, out of the total 16 workers, who were suspended after the strike started, the management has agreed to revoke the suspension of eight, while one worker will be taken back after one month.
Shares of Ahluwalia Contracts gained by 1.2% to Rs167 after the company announced that it won contracts aggregating to Rs2.42bn.
- Construction of Metro Train Depot cum Workshop at Peenya for Bangalore Metro Rail Project -Phase-I, worth Rs1.16bn.
- Construction of LOTUS BOLEVARD Phase-2&3 Sector-100, Noida, U.P. for Structural and Civil Works project worth Rs656.7mn.
- Construction of Structural Civil Works (Shell & Core) for HDIL Metropolis Project, Andheri, Mumbai Project worth Rs259.1mn and miscellaneous Work order aggregating Rs340mn.
Shares of Jubilant Organosys advanced by 2% to Rs227 after reports stated that the company has earmarked Rs2.5bn for its capacity expansion plans in the current fiscal.
The Chairman and MD Shyam S Bhartia was quoted as saying, "We are going to spend Rs2.5bn for capacity expansion. A majority of it would be spent on de-bottlenecking activities while a small portion of it would go for the R&D activities,"
Shares of XL Telecom & Energy were locked at 5% upper circuit to close at Rs29.50 after the company announced that it has won an order worth Rs235mn for supply of Solar Photovoltaic Power Systems to Bharat Sand Nigam Limited (BSNL).
The stock opened at Rs28.35 and made an intra-day high of Rs29.5 and a low of Rs27.1. Total traded volumes stood at 0.28mn shares.
Gateway Distriparks announced that the boards of directors and its subsidiary, Gateway Rail Freight Ltd (GRFL) have approved the execution of a share subscription and shareholders agreement with Blackstone GPV Capital Partners (Mauritius) V-H Ltd pursuant to which GRFL will raise funds to the extent of Rs3bn by issue of Compulsorily Convertible Preference shares (CCPS) to Blackstone, which, on conversion, will entitle Blackstone to acquire between 37.27% and 49.90% of the share capital of GRFL.
The Agreement also includes a call option of GDL to acquire the CCPS at the end of 5 years from the date of the investment and a put option of Blackstone to sell the CCPS to GDL at the end of ten years.
Shares of Gateway Distriparks fell by 5% to end at Rs126. The stock opened at Rs135 and made an intra-day high of Rs141 and a low of Rs125. Total traded volumes stood at 0.5mn shares.