Hopes of an agreement to increase the US debt ceiling lifted markets across the world
Positive global cues are likely to see Indian stocks opening higher today. Wall Street closed with gains overnight on hopes of an increase in the US debt limit and good earnings reports. Markets in Asia were in the green in early trade on Wednesday on optimism in the US. The SGX Nifty was 38 points higher at 5,657 compared to its previous close of 5,619.
The domestic market, which opened flat yesterday, snapped a two-day losing streak to settle in the green on support from institutional buying. Global debt issues did not deter investors from pumping in funds into Indian stocks. Earlier, the market opened with marginal gains as investors resorted to bargain-hunting, finding stocks cheaper after two days of decline. The Nifty opened at 5,570, three points up from its previous close, and the Sensex took a 14-points step up at 18,521.
But the market soon pared its gains and dropped into negative territory in the late morning session, on a sell-off in auto and realty stocks. The indices slipped to the day’s lows, the Nifty down to 5,557 and the Sensex back to 18,482.
The indices fluctuated, moving in and out of the red. But buying support in consumer durables, IT and metals subsequently took the market to a higher trajectory. The market climbed to the day’s high in the post-noon session as the Nifty touched 5,628, up 71 points from the day’s low, and the Sensex hit 18,690, up 208 points. The market closed off the day’s high, with the Sensex gaining 147 points at 18,654 and the Nifty at 5,614, up 47 points from its previous close.
On Monday we had mentioned that the Nifty may suddenly fall to 5,400, unless it closes above 5,620. Although the market was able to end in the positive, it closed below 5,620. But the day was marked by a higher high, a higher low and a higher close from that on Monday. This is an indication that the market may rally today, in which case the resistance is 5,670.
Markets in the US closed higher on Tuesday on hopes that a deal will soon be reached to increase the debt ceiling, thus avoiding a debt default. Corporate earnings reports also added support.
Stocks extended gains as president Obama accepted a $3.7 trillion debt-cutting plan by a bipartisan group of senators that would combine tax increases and spending cuts. The development could end a congressional deadlock over raising the US borrowing limit.
Meanwhile, IBM jumped 5.7% in regular trading as the company reported sales that beat analysts’ estimates and lifted its profit forecast amid buoyant demand for software. Coca-Cola surged 3.3% as the world’s largest soft-drink maker posted second-quarter earnings and sales that exceeded the average analyst estimate, helped by sales in Latin America and Asia. On the other hand, Goldman Sachs Group fell 0.7% after earlier falling as much as 3%. The fifth-biggest U.S. bank by assets reported second-quarter profit that fell short of analysts’ estimates. Similarly, Bank of America declined 1.5% as it reported a quarterly loss of $8.83 billion, the biggest in its history. Apple Inc, after market hours, reported earnings above analysts’ expectations, boosting its stock 6.7%.
The Dow jumped 202.11 points (1.63%) at 12,587.27. The S&P 500 rose 21.27 points (1.63%) to 1,326.71 and the Nasdaq advanced 61.41 points (2.22%) at 2,826.52.
Markets in Asia were higher in early trade on Wednesday boosted by hopes of that US lawmakers will reach an agreement to cut the budget deficit. Gains were also supported by strong earning numbers from Apple Inc. Shares in Samsung Electronics jumped 3.4% on news that the firm plans to introduce an upgraded version of its Galaxy tablet in the lucrative home market segment.
The Shanghai Composite gained 0.25%, the Hang Seng rose 0.45%, the Jakarta Composite surged 0.70%, the KLSE Composite advanced 0.50%, the Nikkei 225 jumped 1.34%, the Straits Times rose 0.37%, the Seoul Composite climbed 1.20% and the Taiwan Weighted surged 1.48%.
Back home, listed companies making losses or earning inadequate profits will not have to seek government permission to pay high salaries to their managerial staff, the corporate affairs ministry said in a statement.
Earlier, such companies were required to obtain government's permission for paying remuneration in excess of Rs4 lakh per month.
The new norms, which have come into effect from 14 July 2011, will help in attracting right professionals, besides aligning the Indian corporate regulations with the global norms.