Search Now

Recommendations

Wednesday, December 23, 2009

No jingle on the street!


Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.

If only we knew the unexpected, Christmas season would have brought some cheer. With only five trading sessions to go in 2009, don’t get too perturbed by the market movement. Overall trend has been extremely lackluster and is unlikely to change dramatically anytime soon. Volume has also dipped as traders and investors alike take a pause after a stellar rally.

Today, we expect the market to open lower as global cues are pretty inconclusive. The Nifty will continue to trade in a range of 4900-5100. Some short covering is not ruled out in the run up to the F&O expiry. Support is expected to kick in at around 4900. Protecting the gains made so far in the year should be the aim instead of loading up more.

In the New Year, the market will have plenty to consider like fund flows, quarterly earnings, impending rate hike, reversal of fiscal stimulus, budget and global developments. Stay on the sidelines till then.

FIIs were net sellers in the cash segment on Tuesday at Rs1.1bn on a provisional basis. The local funds were net buyers of Rs5.1bn, according to figures published on the NSE's web site. In the F&O segment, the foreign funds were net buyers at Rs11.97bn. FIIs were net sellers of Rs2.58bn in the cash segment on Monday.

The US economy grew at a revised annual growth rate of 2.2% in the third quarter, much slower than initially reported, the Commerce Department said on Tuesday. Global stocks may make new 2009 highs before the year winds down. An upward revision to UK third-quarter GDP helps to improve the mood in the UK and Europe. A downgrade of Athens' government bond ratings by Moody’s caused little-disturbance. OPEC kept its oil production unchanged. US existing-home sales jump 7.4% in November on tax-credit rush.

On the fund flows side, global equity markets moved sideways in mid-December as investors began to close the book on 2009 and think about the prospects 2010, according to EPFR Global. The book on 2009 makes for generally good reading, with many fund groups posting good to excellent performance numbers and on course for record setting years in terms of attracting fresh money. But 2010 promises to be another testing year as fiscal and monetary stimulus in many of the world’s major economies begins to wane.

US stocks rose for a third day on Tuesday, with the Dow and S&P 500 ending just below 14-month highs, after two economic reports continued to fuel optimism about the economy in a thin trading session.

The Dow Jones Industrial Average gained 51 points, or 0.5%, at 10,464.93. The S&P 500 index rose 4 points, or 0.3%, to 1,118.02. Both the indices are near their highest levels since October 2008. The S&P 500 briefly traded above its 14-month high during the session.

The Nasdaq Composite index advanced 12 points, or 0.5%, to 2,252.67, closing at its highest level since September 2008.

US stocks opened on an upbeat note after a government report showed the economy grew in the third quarter, although at a more tepid pace than forecast. The advance gained steam after an industry report showed sales of existing homes rose in November to the highest level in three years. But stocks settled into a narrow range during the afternoon amid a lack of market moving news.

Wall Street has been listless of late as investors are reluctant to take any fresh bets with only a few days to go in the year. The market has rallied broadly since March as a flood of government stimulus has helped the US economy emerge from one of the deepest recessions on record.

For the year, the major US indexes are all on track to post double-digit percentage gains. The Dow has gained nearly 19% so far this year, while the S&P 500 is up about 23% year to date. The Nasdaq has been the best performer of the year, climbing about 42%.

The undertone should remain subdued for the rest of the holiday-shortened week. The US stock market will close early on Thursday and remain shut on Friday for the Christmas holiday. Lower volume could mean more volatility.

The Commerce Department released its final revision of third-quarter gross domestic product (GDP). The government said that GDP rose 2.2% in the three months ended in September. That was less than the 2.7% gain projected by economists.

The final GDP figure was also below the 3.5% growth rate the government first reported in October. Nonetheless, it was still a marked improvement over the previous four quarters in which economic activity shrank.

The National Association of Realtors said that sales of existing homes rose 7.4% in November to an annual rate of 6.54 million units, driven largely by government subsidies. Economists expected the annual sales rate to rise to 6.25 million units.

The data helped boost optimism that the economy is headed for a strong recovery. But analysts were quick to point out that sales have been supported by government subsidies, including an $8,000 tax credit and the Federal Reserve's $1.25 trillion mortgage asset purchasing program.

Boeing rose 1.5% after the plane maker increased its stake in Global Aeronautical LLC to bring more of the 787 Dreamliner's operations under its direct control.

Ford Motor announced on Monday that it is offering buyouts and early retirement to its 41,000 US factory workers. The carmaker is looking to cut payroll costs in its effort to return to profitability by 2011.

Treasury prices fell, with the yield on the benchmark 10-year note rising to 3.74%.

The dollar eased against the euro and the UK pound, but gained versus the yen.

Crude oil for February delivery rose 68 cents to settle at $74.40 a barrel. OPEC kept oil production unchanged, as expected.

Gold for February delivery dropped $9.30 to settle at $1,086.70 an ounce.

Shares in Europe rose for the second straight day, lifted by strong gains by oil majors and a big rebound by selected banks.

The pan-European Dow Jones Stoxx 600 index rose 0.6% to close at 251.15. That follows Monday's 1.6% jump, which was the biggest one-day rise since the start of December.

The UK's FTSE 100 index rose 0.7% to settle at 5,328.66, while Germany's DAX index climbed 0.3% to 5,945.69 and the French CAC-40 index advanced 0.7% to 3,898.38.

After sliding for three consecutive days, bulls staged a smart bounce as indices in the US and Europe started the week with decent gains. The banking and the realty stocks which were beaten down in the past two trading session were back in demand. Oil marketing stocks hogged the limelight on hopes that government would compensate them with cash.

On the other hand, the IT and the Pharma stocks were under pressure.

The BSE Sensex gained 91 points to end at 16,692 after touching a high of 16,738 and a low of 16,647. The NSE Nifty advanced 33 points to end at 4,986.

In Asia, the Nikkei in Japan was up 2%, while Australia's S&P/ASX ended higher by 1.5%. However, the Shanghai SE Composite fell 2.5% and Hang Seng index in Hong Kong was up 0.7%.

In Europe, stocks were trading in the green. The DAX in Germany was up 0.5% and the CAC 40 index in France was up 0.7%. The FTSE in the UK was up 1%.

Coming back to India, among the BSE sectoral indices, the Metal index was the top gainer, adding 3%, followed by the PSU index that was up 1.6% and the BSE Realty index was up 1.5%. Even the BSE Mid-Cap index gained 0.8% while the BSE Small-Cap index was up 1%.

Major losers were BSE IT index down 0.3% and BSE Pharma index down 0.2%.

Among the 30-components of Sensex, 17 stocks ended in the positive terrain and 13 ended in the red. Tata Steel, NTPC, Hindalco, Bharti Airtel and ICICI Bank were among the top gainers.

On the other hand, among the major losers were ACC, ONGC, Grasim and TCS.

Outside the frontline indices, the big gainers in the broader market were REI Agro, Hindustan Copper, Opto Circuits, Glenmark and Central Bank. On the other hand, losers included Piramal Health, Jain Irrigation, Apollo Hospital and Exide Ind.

Shares of Aban Offshore rallied by over 4% to end at Rs1210 after the company announced that Sinvest AS, a wholly owned subsidiary of the company, has redeemed the bonds having a principal amount aggregating to Norwegian Kroner(NOK) 1bn (equivalent to Rs8bn) alongwith accrued interest, on the due date (i.e.) December 22, 2009.

Reliance Industries announced its third successive gas discovery in the exploration block KG-DWN-2003/1 (KG-V-D3) of NELP-V. The deepwater block KG-DWN-2003/1 is located in the Krishna basin, about 45 kilometers off the coast in the Bay of Bengal. The block covers an area of 3288 square kilometers. RIL holds a 90% participating interest and Hardy Exploration and Production India Inc holds 10% of PI in the block.

The stock managed marginal gains and ended at Rs1018. The scrip opened at Rs1022 it touched an intra-day high of Rs1029 and a low of Rs1011 and recorded volumes of over 0.77mn shares on NSE.

Shares of BPCL gained by 2.7% to end at Rs610 after the company announced that it sold ~8.66bn of oil bonds to cut debt and to meet capital expenditure requirements, the company said.

The scrip opened at Rs592 it touched an intra-day high of Rs613 and a low of Rs592 and recorded volumes of over 45,000 shares on BSE.

Shares of Adani Power ended lower by 0.5% to end at Rs97. The company announced that Adani Power Rajasthan Ltd a 100% subsidiary of the company has been awarded Letter of Intent by Rajasthan Rajya Vidhyut Utpadan Nigam Ltd for purchase of upto 1,200 MW of power on long-term basis.

Shares of Kavveri Telecom gained 2% to end at Rs63.5 after the company’s subsidiary Kavveri Telecom Infrastructure Ltd. has signed a long term agreement for ten years on BOL (Build, own, operate and Lease) basis with fifth operator, who is one of the major pan-India cellular operators, for the INBUILDING WIRELESS solutions.

This agreement will contribute to substantial revenues of Kavveri Telecom Infrastructure Ltd.

Shares of Nava Bharat Ventures shot up to by 5% to end at Rs420 after Nava Bharat (Singapore) Pte Limited signed a Share Sale and Purchase Agreement for acquiring 65% equity stake in Maamba Collieries Limited with The Government of the Republic of Zambia holding the Golden Share, acting through the Minister of Finance and ZCCM-IH (ZCCM), holding 100% of the paid up equity capital of MCL.

Nava Bharat (Singapore) Pte Limited (NBS) is a subsidiary of Nava Bharat Ventures Limited (NBVL), a power centric diversified entity. A group of individuals (Zambian Consortium) joined NBS to form Nava Bharat Consortium (Nava Bharat).