The upward momentum is strong and FIIs are pouring in money but they have a habit of being very bullish near market tops
On Friday, the indices put on a massive rally after two days of weakness. Markets open strongly and sustained the upward trend, stabilized mid-session rallying again towards the close. The S&P BSE Sensex opened at 20,487 to touch intraday high of 20,932 before closing at 20,883 (up 467 points or 2.29%). Similarly, Nifty opened at 6,071 hit a high of 6,201 before closing at 6,189 (up 144 points or 2.37%). The National Stock Exchange (NSE) recorded a higher volume of 64.90 crore shares.
We expect this fresh rally that has started today to last for a couple of days more, at least.
The number of advances outpaced the number of declines by nearly 2:1. Out of 1,229 stocks, 727 were up, 437 were down and 65 were unchanged.
All the sectoral indices finished in the green. The strongest movers were CNX Finance (3.54%), CNX Metal (3.34%), Bank Nifty (3.95%) and CNX Realty (3.04%).
Of the 50 stocks in the Nifty, only Bajaj Auto finished in the red (down 0.02%); rest finished in the green. The top five gainers were IndusInd Bank (6.39%); Tata Steel (6.09%); Sesa Sterlite (5.97%); Axis Bank (5.55%) and Jaiprakash Associates (5.14%).
In the other interesting bit of news, SpiceJet shot up over 6% on rumours that Qatar Airways has evinced interest in the company. However, the company issued a press release stating that it was just “speculation”.
The positive sentiment was driven by good economic growth in China and the record set by the US markets. The S&P 500 hit its intraday record of 1733 and closed at the same level, an all-time high. Indian markets were also buoyed by positive sentiment in the US post-shutdown, better data from China and a sense that taper is a long way off, meaning that is this a risk-on period for the emerging markets.
The Chinese government reported robust economic growth, with gross domestic product (GDP) growing at 7.8%, its quickest this year, when compared to the June-September quarter last year. However, analysts have predicted that despite the positive data, they expect the Chinese economy to slow down in the months ahead. They expect inflation to go up and exports to soften.
Meanwhile, as the meeting of Federal Open Market Committee (FOMC) nears, the pushback on the consensus of the debt ceiling to February only strengthened the case for no ‘tapering’ by the US Federal Reserve. This expectation has a positive effect on emerging markets.
Asian markets were all up as well, except for Japan and New Zealand, which were down 0.17% and 0.36% respectively. Hong Kong markets moved up strongly by 1.06%.
At the time of writing this piece, almost all European indices were trading in the green. The US Stock Futures were marginally up.
Owing to the volatility of the rupee and the global trend of high crude oil and base oil prices, Castrol India reports a sluggish growth in net profit and predicts a negative impact on short term growth and margins
Castrol India, India’s second largest manufacture of automotive and industrial lubricants, delivered a decent profit growth for the September quarter, with profit after tax growing by 22% at Rs104.5 crore as against Rs85.7 crore during the same period in the previous year. The improved result was on account of higher sales realisation, lower base oil price and prudent cost management.
The net income stood at Rs2370.1 crore for the quarter ending on 30 September 2013 compared to the Rs2360 crore last quarter ending at 30 September 2012.
Commenting on the third quarter results, Ravi Kirpalani, managing director, Castrol India Limited, said “Despite the unfavourable economic scenario, including significant rupee depreciation, the third quarter results show improved gross margin on account of higher sales realisation, lower base oil prices and effective cost management strategy.”
“Continued economic headwinds, rupee volatility and high crude and base oil prices are likely to impact the growth and margins in the short term”, said the company in a press release. The company remained positive about future growth opportunities given its strong brand, strong relationships with key stakeholders, and commitment of its employees.
During the quarter, the company re-launched Castrol Power1, a premium two wheeler engine oil in collaboration with its key partner, Tata Motors.
The company share price has gone up by 0.24% at Rs 308.30 while the BSE stock exchange stood at 20,570.18.
Nifty has closed below the crucial level of 6,060 for a few days of decline.
The indices on Thursday opened slightly up at the start of the session but immediately went into the red. It then corrected again and stabilised around the previous day’s close for a while. However, post-lunch, the markets dipped and closed in the negative.
The Sensex opened at 20,580 before hitting an intra-day high of 20,630. It corrected and hit an intra-day low of 20,375 before closing at 20,416 (down 132 points or 0.64%). The Nifty opened at 6,099 and moved from the level of 6,111 to 6033 and closed at 6,046 (down 63 points or 0.71%). The National Stock Exchange (NSE) recorded a higher volume of 63.09 crore shares.
Today’s decline may be the downmove in a long time. The bulls are on the back foot. However, we feel that the market will try to rally after a few days of decline. The fall thereafter, may be a bigger one.
Overall, broad market suffered more declines than advances. Out of 1,221 stocks, 626 were in the red, 537 ended up in the green and 58 remained unchanged.
With the exception of auto, information technology and service indices which were down 1.20%, 3.54% and 1.54%, most indices were flat. The CNX Media index was up 1.51%.
Of the 50 stocks in the Nifty, 18 ended in the green. The top five gainers were Jaiprakash Associates (6.11%); Bharti Airtel (2.92%); ONGC (2.27%); ITC (1.76%) and BPCL (1.49%). While the top five losers were HCL Tech (7.09%); TCS (5.25%); IndusInd Bank (4.66%); L&T (4.11%) and Tata Motors (3.82%).
The US government shutdown impasse has been broken and US government services are expected to resume. Both the Republicans (led by John Boehner) and Democrats (led by President Barrack Obama) came to an agreement to raise the debt ceiling. However, this comes with strings attached. The US government would be given borrowing authority only till February 2014. Therefore, it is possible that another US shutdown could be imminent within the next four months, should the present US government breach the debt limit within the timeframe. The shutdown reportedly cost the US economy $24 billion.
Gold went up 1.87% during the initial hours of the trade in COMEX. Many investors also expressed concerns over the strength of the US dollar. In the currency markets the EUR/USD went up 0.69% at 1.36 per USD during early morning trade.
Asian markets were mixed, indicating lack of conviction. With the exception of Shanghai, Hong Kong and India, most Asian indices ended in the green (albeit barely). None of the markets exhibited any strength. Shanghai Composite was down 0.21%, Hang Seng was down 0.57%.
At the time of writing this piece, European indices were mostly in the red. The US Stock Futures were down too.