Book Profit what you’ve made!
The only thing wealth does for some people is to make them worry about losing it.
Booking some profits today may help you budget your Diwali well in advance. Why go through the anxiety of where the indices would be on Diwali and spoil your festive spirit. The finance minister has often expressed his worry about the skyrocketing market. He’s in Mumbai today and don’t be surprised if the frenzied media gets a byte from him which could bite off some points from the indices.
We’ve had enough fireworks on the bourses so far. With SEBI delivering its final verdict on P-Notes and global markets rallying across the board, the stage looks set for the bulls to lift the Sensex beyond 20k mark before Diwali. The Sensex needs 750-odd points to reach the new milestone. Going by the recent past, where it has scored 1,000 points in just four days 20k could well be conquered shortly. Come to think of it, this can even happen in a single day.
The bulls don't need to look too far. This morning, the Hang Seng in Hong Kong was up over 1,000 points before retracing a little. The rest of Asia is also in a buoyant mood, fired by Friday's rally in US stocks. All Indian ADRs rallied on Friday. So, we are in for a big-bang opening to the week, as bulls are likely to tighten their stranglehold on the market despite the P-Note scare. A good opening should give you better opportunities to take some profit home.
Among the major areas of concern are record high oil prices (above $92 per barrel), unwinding on the part of the FIIs to comply with new SEBI rules, slowdown in fresh overseas inflows, possibility of another CRR hike and the X factor like a major conflict in the Middle East.
The RBI's mid-term review tomorrow is a big event for the local market. Given the deluge of overseas capital flows and the unrelenting rise in the rupee, the central bank may go in for another tightening measure. Key interest rates will be left unchanged and the target for GDP growth and inflation will also be maintained. On Wednesday, the Fed will declare its decision on interest rates and give its assessment of the US economy, particularly the housing sector. Most experts and the market are predicting a 25 bps cut in the fed funds rate. Though unlikely, a wider cut may cheer up global markets.
Back home, results will continue to pour in and will be watched keenly, though most of the positives on this count are already in the price. As far as fund flows are concerned, there is no real threat to the long-term 'India Shining' story. As a result, foreign investors looking to maximise returns will find a way to meet the new regulations and invest in Indian stocks. Though we mentioned book profits at start, long term investors, who don’t need immediate cash for Diwali can stay invested and ride the bull market. A few hiccups are bound to take place along the way, but that’s just part of the game.
Key Results Today:
ABG Shipyard, Adani Enterprise, Adlabs Films, Akruti Nirman, Apar Industries, Aurionpro Solutions, BOI, BHEL, Century Bank of Punjab, CCCL, Fortis Healthcare, Genus Power, Gitanjali Gems, GMDC, Hanung Toys, HEG, Hinduja TMT, ICRA, Indiabulls Realty, Info Edge, IPCA, ISMT, Jet Airways, Jindal Steel, JP hydro, Kalpataru Power, Kirloskar Electric, LMW, MMTC, MICO, M&M, Maruti, Max India, Mid-Day, Monsanto India, MphasiS, Mukand, Nirma, Omax Auto, OBC, Praj Industries, PNB, PVR, Radha Madhav, Ramsarup, Sical Logistics, Simplex Infra, Sobha Developers, SREI Infra, Sterlite, Stone India, Sundram Fasteners, Tata Tea, Titan, Torrent Power, UB, United Phosphorus, VIP Industries, Vishal Retail and Zicom.
Technology led to a broader rally on Wall Street on Friday, as Microsoft's upbeat earnings and Countrywide's optimistic outlook overshadowed worries over a weakening dollar and surging commodity prices. Growing optimism that the Federal Reserve will probably cut interest rates next week added to the day's gains.
The Dow Jones Industrial Average rallied 134 points or 1% to 13,806 on Friday, taking its weekly advance to 2.1%. The S&P 500 index gained 20 points to 1,535 and rose 2.3% on the week. But most of the gains were seen in the tech-heavy Nasdaq Composite index, which rallied 1.9% to 2,804 Friday for a weekly gain of 2.9%.
Following further evidence of weakness in the housing sector, and after the warnings from multinationals and financials, the market is now pricing in 100% odds that the Fed will cut rates by a quarter-percentage point at the end of its two-day meeting on Wednesday. Odds that the central bank will announce a half a point cut, as it did on Sept.18, remained under 20%.
US light crude oil for December delivery rose $1.40 to $91.86 a barrel on the New York Mercantile Exchange. Crude reached a record $92.22 in Asia trading overnight. COMEX gold for December delivery rose $16.50 to settle at $787.50 an ounce.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 4.39% from 4.38% late on Thursday. In currency trading, the dollar fell versus the euro and the yen.
European stocks gained ground on Friday. The pan-European Dow Jones Stoxx 600 index rose 0.6% at 383.93. The commodity-heavy UK's FTSE 100 closed up 1.3% at 6,661.30, while the German DAX 30 increased 0.2% to 7,949.17 and the French CAC-40 advanced 0.6% to 5,794.87.
Brazilian equities hit a record high. Mexican stocks recovered from losses following the central bank's increase of its key interest rate. Argentina's Merval hit a record as well, rising 2% to 2,327.15 ahead of the country's presidential election on Sunday. Chilean stocks rose by 0.8% to 3,496.18. In Sao Paulo, the Bovespa closed up 3.1% at 64,275.58 while the Mexico's IPC erased an earlier decline to end up 0.8% at 32,136.76.
Asian stocks rallied this morning on the back of strong corporate earnings and higher commodity prices. BHP Billiton paced gains among mining stocks. Mitsubishi UFJ Financial Group led banks higher after a forecast from Countrywide Financial, the largest US mortgage lender, boosted speculation that the worst may be over from the subprime mortgage mess.
The Morgan Stanley Capital International Asia-Pacific Index gained 1.1% to 169.96 as of 9:35 a.m. in Tokyo, with all 10 of its industry groups advancing. The Nikkei 225 Stock Average rose 1% to 16,675.26. The Hang Seng in Hong Kong surged by 900 points to 31,306. South Korea's Kospi index gained 1.3%. Key stock indexes in all Asian markets open for trading in the region rose, except New Zealand, which was little changed.
MARKET...
Bulls eye 20k before Diwali
Markets ended with sharp gains as benchmark Sensex advanced over 450 points and Nifty index gained over 130 points. After a choppy start, key indices constantly gained momentum throughout the session as all round buying across the bourses lifted Sensex to cross its previous all time highs of 19,199.
Finally, Sensex closed at a new high of 19,243 surging 472 points and NSE Nifty rose 133 points to close at 5,702.
Tata Steel marginally slipped 0.2% to Rs987. The company announced its Q2 result with net profit at Rs11.91 (up 8.1%). The scrip has touched an intra-day high of Rs1048 and a low of Rs966 and has recorded volumes of over 56,00,000 shares on NSE.
I-Flex advanced 3.2% to Rs1586 after the company announced its Q2 result with net profit at Rs765.8mn and net sales at Rs4.35bn. The scrip has touched an intra-day high of Rs1640 and a low of Rs1550 and has recorded volumes of over 1,00,000 shares on NSE.
Kotak Bank surged by over 5% to Rs1027 after the company announced that their Q2 net profit rose 159% to Rs2.41bn. The scrip touched an intra-day high of Rs1052 and a low of Rs982 and recorded volumes of over 12,00,000 shares on NSE.
BHEL surged by over 6% to Rs2431 after the company announced that they have set up Thermal power project in Tamil Nadu. The scrip touched an intra-day high of Rs2448 and a low of Rs2290 and recorded volumes of over 14,00,000 shares on NSE.
Dr. Reddy’s Lab gained 1% to Rs617. The company announced that their performance in September 2007 quarter was affected due to a sharp decline in revenues from its German subsidiary Betapharm. The scrip touched an intra-day high of Rs625 and a low of Rs604 and recorded volumes of over 4,00,000 shares on NSE.
Gail India surged by over 3% to Rs407 after reports stated that the company is likely to partner with China Gas in developing coal bed methane in Mongolia. The scrip has touched an intra-day high of Rs420 and a low of Rs396 and recorded volumes of over 10,00,000 shares on NSE.
The fireworks continue on the bourses and looks like the 20K figure we expected by Diwali may happen a little sooner than later. In the coming week RBI and FOMC meet would act as a major trend setter providing future direction. Despite this we foresee volatility to persist in the markets and advise trades to be light on their positions.
