...when you see an elephant. carrying its great weight effortlessly along on cushioned feet, the only possible response is: ˜Of course. How could it be otherwise?"
The bulls are enjoying the GDP growth music as India does an elephant dance. Sure, the stimulus measures are showing the desired effect. When sentiment turns bad we will revisit the deficit figures. For now the question is when will the RBI step in to suck out surplus liquidity by tightening monetary policy? We reckon it would be in January.
The country's GDP expanded by 7.9% in Q2. The growth for the first six months now stands at an impressive 7%. Upward revision of GDP growth will be the order of the day now. Services grew by over 9%. Agriculture, showed some growth but next quarter is most certain to be negative.
The opening may be just about in the green. Thereafter, the indices are expected to weaken. Profit booking could be seen in counters which ran too fast on Monday. Global cues during the day will be watched closely for direction. For now, the global signals are mixed. Asian markets are weak.
Meanwhile, Bank of Japan is to hold an extraordinary policy meeting later today and some monetary easing steps are expected.
US markets ended positive after a tumultuous session thanks to a recovery in bank stocks. The belief on Wall Street was that the Dubai debt issue will not hurt the US institutions as much as expected earlier. The Dow added 35 points, the S&P 500 gained 4 points and the Nasdaq rose 6 points.
Reports say during the Thanksgiving holiday weekend more came shopping but the total amount spent averaged less than a year ago.
The Obama administration says it will increase efforts on mortgage companies that aren't doing enough to help borrowers who are at risk of foreclosure. The pressure tactics could include imposing fines and sanctions.
US light crude oil for January delivery rose $1.23 to close at $77.28 a barrel on the New York Mercantile Exchange.
In other news reported in the media:
RIL has toppled ONGC as largest gas producer in the country. (BS)
Tata Motors may launch Nano Hybrid cars. (BS)
HDFC hikes stake in HDFC Bank through warrant conversion. (BS)
SAIL to cut flat steel prices. (DNA)
JSW Group has decided to revive two projects estimated to over Rs20bn together. (ET)
Mahindra Group will restructure its top management by inducting several fresh faces into its key decision-making body. ET)
Essar Oil has extended its exclusive talks to acquire three European refineries of Royal Dutch Shell beyond end of November. (ET)
Glenmark Pharma is planning to repay its debt of around Rs3bn by end of this fiscal. (ET)
State run oil firms have cut jet fuel prices by little over 1%. (BS)
Past two trading sessions saw equity markets in India being badly beaten down as debt problems in Dubai took its toll on financial markets world over. The Nifty index fell over 160 points or 3.2% while the Sensex lost over 550 points or 3.2% in the past two trading session.
However, Monday saw the bulls back on Dalal Street recouping from previous weeks on hopes that situation in Dubai is not that bad after all for the time being.
The come back also could be attributed to firm cues from the Asian markets. Better than expected GDP numbers for the July-September quarter further provided a fillip to sentiment on Dalal Street.
The country’s Gross Domestic Products (GDP) grew at the fast pace in over 12 months. GDP grew 7.9% in the July-September quarter in the same period last year. The economy grew at 6.1% as compared to an estimated growth of 6.2% in the first quarter.
The index of mining, manufacturing and electricity, registered growth rates of 9.5%, 9.2% and 7.5%, respectively in Q2 of 2009-10, as compared to the growth rates of 3.8%, 4.9% and 3.2% in these industries in Q2 of 2008-09.
Buying was witnessed in the large caps which were randomly beaten down last week especially, the telecom heavyweights like Bharti and RCom were in demand. Even the Metals, IT and the Consumer Durable stocks were among the major gainers. The Mid-Cap and the Small-Cap stocks attracted buying interest.
The BSE Sensex surged 294 points to end at 16,926 after touching a high of 17,026 and a low of 16,739. The index opened at 16,655 against the previous close of 16,632. The NSE Nifty was up 91 points to shut shop at 5,033.
In Asia, the Nikkei in Japan was up 3%, while Australia's S&P/ASX ended higher by 2.8%. Shanghai SE Composite in China gained 3.2% and Hang Seng index in Hong Kong was up 3.2%.
In Europe, stocks were in the red. The FTSE in the UK was down 0.9%, The DAX in Germany was down 1% and the CAC 40 index in France fell 1.2%.
Coming back to India, among the BSE sectoral indices, the Metal index was the top gainer, adding 3.7%, followed by the Teck index that was up 2.5% and the BSE IT index was up 2.1%.
The BSE Mid-Cap index gained 1.6% and the BSE Small-Cap index was up 2%.
Among the 30-components of Sensex, 26 stocks ended in the green and only Hero Honda, SBI, Maruti and Sun Pharma ended in the negative terrain. Among the major gainers were Bharti Airtel, Tata Steel, JP Associates, Tata Motors and Hindalco.
Outside the frontline indices, the big gainers in the broader market were GMDC, Hindustan Zinc, CESC, Tulip Tele and JP Hydro. On the other hand, losers included Dabur India, Apollo Hosp, Allahabad Bank and Videocon Industries.
Shares of Suzlon surged by 6% to end at Rs78.45 after the company’s subsidiary REpower Systems received an order from Saint-Laurent Énergies, Canada, for supply of 954 MW of wind turbines. The deal size is estimated at about Rs48bn.
REpower signed a framework agreement with EDF Energies Nouvelles and RES Canada, the joint owners of Saint-Laurent Énergies for the turbines to be installed across five projects in Quebec.
Mr Tulsi Tanti, Chairman and Managing Director, Suzlon Energy, said it is one of the largest orders in the North American market.
Shares of ONGC gained by 2.5% to Rs1199 after reports stated that the company found traces of a new oil reserve in Gujarat.
The new hydrocarbon structure located at North Kadi in the Mehsana area is likely to produce at least 1 mmtpa of oil (about 20,000 barrels of oil per day). This is a little less than half the oil production from Mehsana, the company’s largest onshore field with a production of 2.2 mmtpa.
However, later the company denied reports on new oil discovery at Mehsana block in the western state of Gujarat and further said it plans to drill one new well in Mehsana area.
Suven Life Sciences surged over 4% to end at Rs25.85 after the company announced that the European Patent Office (EPO) Issued 3 new Patents: EP1537113, EP1704154 and EP1856132 corresponding to three New Chemical Entities (NCEs) for the treatment of disorders associated with Neurodegenerative diseases and these Patents are valid until 2022,23 and 24 respectively.
Shares of Wockhardt surged by over 2.5% to Rs175 after reports stated that the Pharma major and DBS Bank agreed to an out-of-court settlement of a dispute over loans Wockhardt had taken from the Singapore-based lender.
Both the concerned entities have approached the Bombay High Court with a consent decree, reports added.
In the previous month, DBS had filed a winding-up petition against Wockhardt in the Bombay HC, seeking liquidation of the company in order to pay off dues to its creditors.
Indiabulls Power and Morgan Stanley have extended the stabilisation period for six trading days (that is upto December 07, 2009) days or expiration of the Green Shoe Option quota of 50,900,000 Equity Shares, whichever is earlier.
Shares of Indiabulls Power gained by 1% to end at Rs33. The scrip opened at Rs32.50 it touched an intra-day high of Rs33.85 and a low of Rs31.90 and has recorded volumes of over 4.8mn shares on BSE.