Keep your face to the sunshine and you will never see the shadow.
The local bulls are set to bask in the sunshine with global cues appearing fine for the moment. Investors abroad are betting that the Federal Reserve will effect a rate cut. Bank of Japan has kept its key rate steady at 0.5%.
But, the euphoria over the Fed rate cut may prove to be short lived. The American central bank will hold its next scheduled meeting on Sept. 18. That's too long a time period for the stock markets. In the interim, there could be more blood letting in the US subprime mortgage market or in other parts of the globe. Keep abreast of the developments in the global markets to gauge the impact on the local sentiment.
Investment guru Warren Buffett was quoted as saying "worsening credit and housing markets may provide some real investment opportunities." READ the article below
Today, thankfully things are looking up for the bulls, with markets across the world rising sharply. We expect a gap-up opening and a fine day for the bulls. Make hay but remain cautious as it will take time for things to stabilize completely.
Remember, locally we have an over-heated political situation to take care of as well. There has been no change in the stance taken by either the Prime Minister or the Left parties on the Indo-US nuclear deal. The communists are bent on having the deal scrapped/renegotiated while the PM is not willing to back down either.
Cement shares might come under some pressure amid reports that two Pakistani firms have received BIS certification to export cement to India. A third Pakistani cement manufacturer is likely to get the clearance shortly. Pharma companies could be in action as a McKinsey report says the Indian pharma industry could hit the $20bn mark by 2015.
VSNL could face fury of investors, as the Income-Tax Appellate Tribunal (ITAT) has ruled that the company is liable to pay tax on an income of Rs20.9bn earned between 1995 and 2006. ORG Informatics is likely to gain amid reports that it has bought the TV and telecom teleport assets of Belgium's national telecom operator, Belgacom.
US stocks rallied on Wednesday on the back of a string of M&A news. Investors were also betting that the Fed will cut its more widely tracked fed funds rate next month in a bid to quell the current turbulence in the credit markets.
The Standard & Poor's 500 Index rose 16.95 points, or 1.2%, to 1,464.07. The Dow Jones Industrial Average jumped 145.27 points, or 1.1%, to 13,236.13. The Nasdaq Composite Index advanced 31.50 points, or 1.3%, to 2,552.80.
Tuesday's meeting between Fed Chairman Ben Bernanke, Senator Dodd and Treasury Secretary Henry Paulson has raised hopes that the Fed will cut the fed funds rate next month. Although economists believe that the central bank is unlikely to make a cut ahead of the next policy meeting, according to a recent survey.
Treasury prices fell, raising the benchmark 10-year note yield to 4.63% from 4.59% late on Tuesday. In currency trading, the dollar slipped versus the euro and rose versus the yen. COMEX gold for December delivery rose $2.50 to settle at $668.70 an ounce. US light crude oil for October delivery fell 31 cents to settle at $69.26 a barrel on the New York Mercantile Exchange, erasing early gains after the government reported a surprise increase in crude oil supplies.
Dubai World, the investing arm of the Dubai government, will buy a 9.5% stake in MGM Mirage in a deal worth more than $5bn. NYMEX Holdings confirmed it has discussed selling itself with potential suitors, Reuters reported. NYMEX is the parent company of the New York Mercantile Exchange. And reports surfaced that brokerages TD Ameritrade and E*Trade are in merger talks.
Lehman Brothers said it is shuttering its subprime mortgage lending unit, which will result in 1,200 layoffs and a $25mn charge. HSBC said it is closing its Indiana mortgage unit, which will result in it cutting 600 jobs. Accredited Home Lenders said it won't take any more loan applications and that it will cut 1,600 jobs, due to the problems in the subprime mortgage lending market. Toll Brothers reported slumping earnings and warned about its outlook. However, the luxury homebuilder's earnings were nonetheless stronger than expected.
European shares advanced for a fourth straight session. The pan-European Dow Jones Stoxx 600 index rose 1.7% to 368.62, with miners leading the rally following BHP Billiton's robust annual results. The German DAX 30 rose 1% to 7,500.48, the French CAC-40 advanced 1.8% to 5,518.17 and the UK's FTSE 100 gained 1.8% at 6,196.00.
Latin American markets closed higher. Brazil's Bovespa jumped 3.9% to 51,744.56 for a fourth day of advances. The benchmark IPC in Mexico City ended 2.5% higher at 29,269.34. Argentina's Merval closed up 2.3% at 2.008.50 and Chile's IPSA added 2.4% to 3,210.71.
In other emerging markets, the RTS index in Russia was up 1.8% at 1853 while the ISE National 30 index in Turkey surged 3.9% to 58,632.
Asian markets were up sharply this morning. The Nikkei in Tokyo rallied 392 points to 16,293 while the Hang Seng in Hong Kong was up 563 points at 22,910. The Kospi in Seoul gained 47 points at 1807 and the Straits Times in Singapore rose 83 points to 3405.
The Morgan Stanley Capital International Asia Pacific Index added 2.3% to 148.20 as of 10:33 a.m. in Tokyo, extending a three-day, 5.7% rally. All 10 of the benchmark's industry groups advanced. An index of raw-material producers that includes BHP posted the biggest gains.
Honda Motor paced gains among Japanese exporters after the yen weakened against the dollar. Australia's S&P/ASX 200 Index rose 2.6%, recouping all of this month's losses. Benchmarks advanced in all markets open for trading.
Benchmark Sensex once again ended above the 14200 mark as value buying coupled with strong cues from the Asian and the European markets lifted the key indices higher. However, the broader market was not all that lucky, with the BSE Small-Cap index losing 0.3% and BSE Mid-Cap index rising just 0.4%.
Fertilizer stocks had an impressive session led by Chambal Fertilizer and Nagarjuna Fertilizer. On the other hand Sugar stocks had a bitter session as scrip's like Bajaj Hindustan and Balrampur Chini lost nearly 3% each. Realty stocks also were on the receiving end however, managed to close off their days low. Finally, the Sensex closed at 14,280, up 291 points. The NSE Nifty gained 78 points to finish at 4153.
ICICI Bank advanced by 2% to Rs846 after the Government approved a plan by the nation's most valuable lender to sell shares in an insurance and funds unit. The bank plans to sell a 24 percent stake in the unit for Rs2.14bn. The scrip touched an intra-day high of Rs852 and a low of Rs811 and recorded volumes of over 30,00,000 shares on NSE.
Siemens rallied by over 9% to Rs1229 as its German parent has announced its plans to double the size of Indian operations in the next three years. The scrip touched an intra-day high of Rs1238 and a low of Rs1127 and recorded volumes of over 2,00,000 shares on NSE.
Infosys advanced by 1.5% to Rs1788 after India's second-largest computer-services provider expanded into Latin America, setting up a software-development and sales unit in Monterrey, Mexico. The scrip touched an intra-day high of Rs1808 and a low of Rs1750 and recorded volumes of over 11,00,000 shares on NSE.
Reliance Industries advanced by 1.1% to Rs1766 after, Chairman Mukesh Ambani said the nation's most valuable company expects higher profit from processing crude oil into fuels. The scrip touched an intra-day high of Rs1793 and a low of Rs1715 and recorded volumes of over 43,00,000 shares on NSE.
Sterlite Optical gained by 1.5% to Rs209 after the company announced that they have started production of power transmission at new unit. The scrip touched an intra-day high of Rs211 and a low of Rs203 and recorded volumes of over 1,00,000 shares on NSE.
Diamond cable edged higher by 0.3% to Rs286 after the company announced that they have received Rs520mn transformer order. The scrip touched an intra-day high of Rs295 and a low of Rs285 and recorded volumes of over 14,000 shares on NSE.
Pharma stocks were in poor health. Cipla slipped by 1.1% to Rs175, Glaxo was down by 1.7% to Rs1118, Cadila declined by 2.3% to Rs302. However, Ranbaxy gained by 0.6% to Rs353.
Realty shares ended in the red, with the BSE Realty index down 0.55%. Parsvnath declined by 1.5% to Rs276, Sobha slipped by 0.2% to Rs740. However, Akruti Nirman was up 1% at Rs481.
Airline stocks were back in action after being on the sidelines. Air Deccan surged by over 6% to Rs141, operator of
Beaten out Metal stocks also were back with Sterlite Industries leading the pull back, the scrip was up by over 4% to Rs566, Tata Steel rose over 4% to Rs569, National Aluminum gained 1.5% to Rs252 and Hindustan Zinc added 3% to Rs694.
Fund Activity:
FIIs were net sellers of Rs6.36bn (provisional) in the cash segment on Wednesday while the local institutions pumped in Rs5.47bn. In the F&O segment, FIIs were net buyers at Rs11.48bn. On Tuesday, foreign funds pulled out Rs98mn from the cash segment. Mutual Funds were net sellers at Rs165mn on the same day.
Major Bulk Deals:
Principal India MF has bought Bosch Chassis while Sundaram MF has sold it; Deutsche Securities has picked up Geodesic Info; Merrill Lynch has purchased Prakash Industries.
Insider Trades:
GVK Power & Infrastructure Limited: HSBC investment (Singapore) Limited has sold in open market 90235 equity shares of the company on 16th August, 2007.
Nagarjuna Construction Co. Ltd: SBI Mutual fund under its various schemes has purchased from open market 200000 equity shares of the company on 16th August, 2007.
Lower Circuit:
LML, ETC Networks, Hindustan Oil Exploration, Jai Corp, Atlanta, Ganesh Forgings, IOL Broadband, Flawless Diamond, Era Construction, IID Forgings and Bag Films.
Upper Circuit:
Sujana Tower, XL Telecom, Yashraj Securities and Prakash Industries.
Delivery Delight (Rising Price & Rising Delivery):
ABB, Deccan Chronicle, Geodesic Info, Indian Hotels and Marico.
Abnormal Delivery:
Jet, Patni, Cranes Software, Bharat Electronics and Amtek Auto.
Major News & Announcements:
GAIL to invest Rs4.75bn equity in Dabhol Power project – Reports
Himatsingka Seide to sell 5.8mn shares to promoters
Indian oil to shut Barauni Refinery in October for maintenance
DLF wins order to develop township in West Bengal
Diamond Cables receives Rs520mn transformer order
Sterlite Optical starts production of power transmission in Uttarakhand.
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