Market Outlook for 7th Sep 2009

INTRADAY calls for 7th Oct 2009

BUY REL-1283 for 1325-1355+ with sl 1270

BUY ITC-247 for 253-257+ with sl 245

BUY IRB-226 for 241-252 with sl 222

 

NIFTY FUTURES LEVELS
RESISTANCE
5057
5075
5107
5123
5155
SUPPORT
5029
5005
4954
4922
4906
4874
Buy ROBINSON LEASE;Buy NOVOPAN INDS

 

stocks that are in news today:
-L&T may exit Satyam after lock in expires on October 14 – BS
-JSW Steel Q2 crude steel production up 54% at 15.39 lakh tonnes
-Govt to split Chiria mines, SAIL to get half – BS
-BSNL, MTNL offered majority in Zain SPV – Bs
-Sunil Mittal says Bharti Airtel may also bid for WiMax
-KS Oils buys 53,000 acres land in Indonesia to develop palm oil plantations – BS
-Renault Strongly denies asking Bajaj to pick M&M stake in JV
-Dr Reddy's launches aesthetics drugs Strea C10 & Strea A15 in India
-Gitanjali Gems acquires 100% stake in Alliance Jewelleries
-Pyramid Saimira denies reports RBD Group buys 40% stake in company and production arm

 

RIL files affidavit against RNRL SLP in SC
RIL affidavit:
-Family MoU not binding on corporate entity
-RNRL trying to corner gas & make undue profits
-No power plant in existence & in position to receive any gas
-No such power plant can come into existence within 3 years
-By its own admission RNRL will sell gas at market price
-Market price could exceed govt approved $4.2/mmBtu
-MoU was signed by Mukesh Ambani in personal capacity

RIL-RNRL case update: exclusive
-6 RIL directors file standalone affidavits
RIL directors say
-MoU never seen, read by RIL board
-RIL board never accepted, approved MoU

 

Strong & Weak  futures  
This is list of 10 strong futures:

IOB, Rolta, DCHL, KFA, Ranbaxy, ICICI Bank, Jindal Saw, Lupin, Orchid Chem & Aurobindo Pharma.

And this is list of 10 Weak futures:

Idea, Bharti Airtel, TV-18, MTNL, Rcom, Grasim, Finance Tech, Suzlon, TTML & Unitech.
Nifty is in Up trend
 

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	06-Oct-2009	4060.84	4217.81	-156.97

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	06-Oct-2009	1354.51	2122.08	-767.57

 

NIFTY FUTURES (F & O):

 Above 5057 level, rally may continue up to 5073-5075 zone and thereafter expect a jump up to 5105-5107 zone by non-stop.

 

Support at 5005 & 5029 levels. Below these levels, expect profit booking up to 4954-4956 zone and thereafter slide may continue up to 4906-4908 zone by non-stop.

 

 

Buy if touches 4922-4924 zone. Stop Loss at 4874-4876 zone.

 

 

On Positive Side, cross above 5121-5123 zone can take it up to 5153-5155 zone by non-stop. If crosses and sustains this zone then uptrend may continue.

 

Short-Term Investors:

Bullish Trend. 3 closes above 4790.00 level, it can zoom up to 5155.00 level by non-stop.  

 

BSE SENSEX:

 Higher opening expected. Uptrend should continue.  

 

Short-Term Investors:  

Short-Term trend is Bullish and target at around 17671.82 level on upper side.

Maintain a Stop Loss at 16613.22 level for your long positions too.

 

POSITIONAL BUY:

Buy ROBINSON LEASE (BSE Cash)  

Surprisingly gone up, and bulls may hold on gains today.

 

1 Week: Surprisingly going up, opposite to bearishness.

 

 

1 Month: Surprisingly going up, opposite to bearishness.

 

 

3 Months: Surprisingly going up, opposite to bearishness.

 

 

1 Year: Surprisingly coming down, opposite to bullishness.

 

Buy NOVOPAN INDS (BSE Cash)  

Surprisingly gone up, and bulls may hold on gains today.

 

1 Week: Bullish, as per current indications.

 

 

1 Month: Surprisingly going up, opposite to bearishness.

 

 

3 Months: Bullish, as per current indications.

 

 

1 Year: Bullish, as per current indications.

 

Global Cues & Rupee  

The Dow Jones Industrial Average closed at 9,731.25. Up by 131.50 points.

The Broader S&P 500 closed at 1,054.72. Up by 14.26 points.

 

The Nasdaq Composite Index closed at 2,103.57. Up by 35.42 points.

 

The partially convertible rupee ended at 46.89/90 per dollar on yesterday, above Monday's close of 47.525/535.

 

Interesting findings on web:

Wall Street rallied Tuesday, gaining for a second straight session as a weaker dollar boosted commodities and dollar-sensitive stocks, fostering a broad-based advance.

 

The runup had been stronger through midday, but lost some steam as the dollar cut losses and financial shares turned mixed to negative.

 

Higher commodity prices and indications that the global economic recovery might have arrived sent the Dow soaring again to a second day of triple-digit gains.

 

Gold closed at a record high and is in its ninth annual gain in a row since 2001 when it traded near $275.

 

"On the one hand, there's spending and stimulus to the economy," said Peter Jankovskis, who helps manage $1.4 billion at Oakbrook Investments in Lisle, Ill. "But any extra spending at this point is an additional contribution to the deficit."

 

Dow Jones Industrial Average increased 131.50 or 1.4% to a close of 9,731.25, S&P 500 Index added 14.26 or 1.4% to 1,054.72, and Nasdaq Composite Index added 35.42 or 1.7% to close at 2,103.57.

 

RUSSELL601.9810.87+1.84%

 

TRAN3779.6420.93+0.56%

 

UTIL374.793.23+0.87%

 

S&P 100488.236.48+1.35%

 

S&P 400686.989.54+1.41%

 

NYSE6899.68104.55+1.54%

 

NAS 1001705.2529.61

 

All 30 Dow stocks finished higher, led by Alcoa [AA  13.89    0.47  (+3.5%)   ], Intel [INTC  19.63    0.53  (+2.77%)   ] and JPMorgan [JPM  44.92    1.12  (+2.56%)   ].

 

"I think most people believe that stocks are going to generally keep drifting higher for the next few months," said Gary Webb, CEO at Webb Financial Group. "So while nothing fundamental has changed this week, investors are taking opportunities to buy on the lows."

 

"We've seen a lot of these elevator moments over the last month, these short, sharp pullbacks that ended up bringing people back in," said Fred Dickson, chief market strategist at D.A. Davidson & Co. "That's what we're seeing here."

 

Sustainable economic growth and low interest rates worldwide will spur a "multi-year" bull market in equities, led by developing nations, Fidelity International's Anthony Bolton said in an interview on Bloomberg Television in Hong Kong.

 

The economy is on the mend and housing is poised for a rebound, Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, told Bloomberg Radio. Economic growth will reach 3 percent next year, "maybe a little more," LaVorgna said. Economists surveyed by Bloomberg News last month projected the world's largest economy will expand 2.4 percent in 2010, according to the median estimate.

 

Nobel Prize-winning economist Joseph Stiglitz said U.S. unemployment will keep rising and should be the focus for policy makers, and gains in the stock market show investors have been "irrationally exuberant" about a recovery.

 

Investors also welcomed reports that Australia became the first major economy to lift interest rates since the start of the financial crisis.

 

Australia became the first of the major developed economies to raise interest rates, a move investors viewed as a further sign of global economic recovery.

 

The hike in a key lending rate by the Australian central bank "is a confirmation that things are picking up in my opinion," said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland. "It's a good barometer as to what is going on in that part of the world."

 

The weak U.S. currency was also good for the stocks of multi-national companies that benefit from a weaker dollar.

 

A weaker-than-expected response to a government debt auction dulled some of the shine on the rally.

 

The broad advance benefited a number of stocks and sectors.

 

Materials and commodities stocks surged, including Dow components Alcoa (AA, Fortune 500), DuPont (DD, Fortune 500), Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500).

 

The Dow's other biggest gainers were Caterpillar (CAT, Fortune 500), Hewlett-Packard (HPQ, Fortune 500), IBM (IBM, Fortune 500), JPMorgan Chase (JPM, Fortune 500) and United Technologies (UTX, Fortune 500).

 

The third-quarter earnings reporting period unofficially kicks off Wednesday with Dow compenent Alcoa, as is typical. The aluminum maker is expected to post a loss versus a profit a year ago, demonstrating the weak quarter expected for the materials sector.

 

General Electric Co. (NYSE: GE) and Intel Corp. (Nasdaq: INTC) are among the Dow and S&P 500 companies that will report in the next two weeks. Analysts' estimates compiled by Bloomberg predict companies will report a ninth straight quarter of declining profits before returning to growth in the final three months of the year.

 

While there's considerable optimism about upward earnings revisions, the market is at a particularly volatile point. Should earnings reveal the limits of cost cutting and reduced inventory without some pickup in sales growth, market sentiment could pivot sharply.

 

"I think expectations that we are in a recovery phase are running very, very high," said Curt Lyman, managing director at HighTower Advisors. "The focus is going to be on the quality of earnings. If that doesn't pan out, and there are downside surprises, the herd is skittish and they can turn on a dime. If that happens, the exits get very, very narrow."

 

"I think expectations going into the quarter are for a fairly positive earnings season. Last quarter about 70 percent of companies beat estimates on the heels of aggressive cost cutting and very weak consensus estimates," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

 

Since the economy has shown some signs of improvement since then, it's reasonable to think corporate results will do better, he said.

 

Third-quarter earnings for S&P 500 companies are still expected to have declined 24.8 percent from a year ago, according to data from Thomson Reuters.

 

Ahead of the first big batch of results, a few companies issued warnings about their just-completed quarter.

 

Dow component Boeing (BA, Fortune 500) said it will take a $1 billion charge in the third quarter because of higher costs to produce its 747-8 airplanes amid rough market conditions. The stock was little changed.

 

St. Jude Medical (STJ) warned Tuesday that third-quarter results would miss earlier forecasts because hospitals bought fewer of its medical devices. Shares fell nearly 13% in unusually active New York Stock Exchange trading.

 

Avocent Corp surged 20% after it agreed to be acquired by Emerson Electric for $25 a share or $1.2 billion. The Mosaic Co first quarter profit falls to $100.6 million. Pepsi Bottling quarterly net rises.

 

St Jude Medical led the decliners in the S&P 500 index with a loss of 12.7% followed by losses in Ciena Corporation of 7.9%, in Dynegy Inc of 4.8%, in Prologis of 3.2% and in Marshall & Ilsley of 1.2%.

 

Hartford Financial led gainers in the S&P 500 index with a rise of 7.9% followed by gains in Newmont Mining Corporation 7%, in Office Depot Inc of 6.6% and in Anadarko Petroleum of 6.1%.

 

Shares of industrial companies sensitive to the economy's cycles also rose. Shares of United Technologies Corp <UTX.N>, the world's largest maker of elevators and air conditioners, climbed 1.8 percent at $61.49.

 

On Nasdaq, Microsoft Corp <MSFT.O> increased 1.9 percent to $25.11 after introducing new software for mobile phones to compete with Apple Inc's <AAPL.O> iPhone. Apple shares rose 2.1 percent at $190.01.

 

Dow energy components ExxonMobil [XOM  68.66    1.08  (+1.6%)   ] and Chevron [CVX  70.56    1.17  (+1.69%)   ] gained 1.6 percent and 1.7 percent, respectively.

 

Newmont Mining (NYSE: NEM), the largest U.S. gold producer, surged 7 percent to $46.21. Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), the world's biggest publicly traded copper producer, gained 3.4 percent to $69.61. Exxon Mobil (NYSE: XOM), the largest U.S. oil company, rose 1.6 percent to $68.66.

 

Corning (NYSE: GLW) added 4.7 percent to $15.50 after being upgraded to "Buy" from "Neutral" by UBS (NYSE: UBS), which cited "more robust" sales in China and an eased glut of supply.

 

NutriSystem [NTRI  17.46    2.41  (+16.01%)   ] shares rallied 16 percent after the company announced that it will sell its 14-day Starter program at Wal-Mart, [WMT  49.45    0.39  (+0.79%)   ] the first time the company has sold its products in the retail channel.

 

Wal-Mart rival Target [TGT  48.14    1.21  (+2.58%)   ] gained 2.5 percent after the company announced that it will match Wal-Mart's price cuts on toys for the holiday season.

 

There are no major economic reports on the calendar today, and very few notable earnings reports. After the bell, investors will get quarterly numbers from Yum Brands, [YUM  34.88    0.03  (+0.09%)   ] the parent of the KFC, Taco Bell, and Pizza Hut chains.

 

S&P 500 - Risers

 

Hartford Fin Svc (HIG) $28.32 +7.89%

 

Newmont Min Corp. (NEM) $46.21 +6.97%

 

Office Depot Inc. (ODP) $6.89 +6.66%

 

Family Dollar Stores (FDO) $28.48 +5.72%  

 

 

S&P 500 - Fallers

 

St. Jude Medical (STJ) $33.45 -12.53%

 

Dynegy Inc. Holdings Co (DYN) $2.38 -4.80%

 

Sunoco Inc. (SUN) $27.06 -3.60%

 

Prologis Sbi (PLD) $11.18 -3.20%  

 

 

Dow Jones I.A - Risers

 

Alcoa Inc. (AA) $13.89 +3.50%

 

Intel Corp. (INTC) $19.66 +2.93%

 

JP Morgan Chase & Co. (JPM) $44.91 +2.53%

 

Merck & Co. Inc. (MRK) $32.51 +2.33

 

The market has gone up when it was supposed to go down and vice versa in 2009 -- a terrible omen for the rest of the year.

 

Historically, January is one of the market's strongest months. But in January 2009, the Dow Jones Industrial Average plummeted 9%. "Sell in May and stay away" would have been a terrible idea with the Dow tacking on 16% from May 1 to Aug. 31. And while everyone went into September on edge -- September being the market's worst month historically -- the Dow industrials rose 2.3% in September.

 

"November and December, you usually get this rip to the finish. Maybe you get the opposite this year," said Gary Flam, a portfolio manager with Bel Air Investment Advisors.

 

VIX25.7-1.14-4.25.

 

Oil,Gold & Currencies:

 

U.S. light crude oil for November delivery settled up 47 cents to $70.88 a barrel on the New York Mercantile Exchange.

 

COMEX gold for December delivery rose $21.90 to settle at a record $1,039.70 an ounce, after rising as high as $1,045, an intraday record.

 

The dollar tumbled versus the euro and the yen, resuming its recent plunge against a basket of currencies.

 

The dollar rose for a fifth day against the pound after a Federal Reserve official said the central bank should start raising interest rates "sooner rather than later," boosting demand for U.S. assets.

 

The dollar gained for the first time in four days against the euro as a technical indicator signaled the U.S. currency's decline was excessive. The yen fell versus the dollar as Asian stocks extended a global rally amid signs the worldwide economy is recovering, damping demand for Japan's currency as a refuge.

 

"The Fed is showing signs to exit, which is positive for the dollar," said Toshiya Yamauchi, a Tokyo-based manager of the foreign-exchange margin trading department at Ueda Harlow Ltd. "While U.S. economic data continue to show mixed results, it's clear the economy has reached the bottom and is beginning to rebound."

 

The dollar rose to $1.5882 per pound at 11:50 a.m. in Tokyo from $1.5922 in New York yesterday. The greenback gained to $1.4685 per euro from $1.4722 yesterday, when it reached $1.4762, the weakest level since Sept. 24. The U.S. currency strengthened to 88.96 yen from 88.82 yen. The euro was at 130.63 yen from 130.76 yen.

 

The dollar advanced against 14 of its 16 major counterparts after Kansas City Fed President Thomas Hoenig yesterday said raising interest rates wouldn't derail the U.S. economic recovery.

 

"Even if we were to start immediately, much time would pass before incremental increases could be considered tight or even neutral policy," Hoenig said in a speech in Denver. "I would not support a tight monetary policy in the current environment, but my experience tells me that we will need to remove our very accommodative policy sooner rather than later."

 

Fed Comments

 

Hoenig's comments came after Australia yesterday became the first among Group of 20 economies to raise borrowing costs since the start of the financial crisis. The comments echoed those by Fed Governor Kevin Warsh, who said on Sept. 25 the central bank may need to tighten "with greater force than is customary," and Richmond Fed President Jeffrey Lacker, who said on Oct. 1 that rates may need to be raised even with unemployment near 10 percent.

 

The euro weakened as the currency's 14-day stochastic oscillator versus the dollar rose to 66.5 yesterday from 45.9 on Oct. 5, nearing the 80 level some traders use as a signal that an asset has risen too quickly and is poised to decline.

 

Short-Covering

 

"The dollar is undergoing some short-covering as its losses may be overdone a bit," said Nobuaki Kubo, vice president of foreign exchange in Tokyo at BBH Investment Services Inc., a unit of New York-based Brown Brothers Harriman & Co. "However, the greenback's rebound is likely to be limited, given that Asian stocks are rising."

 

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in an asset's value. A short position is a bet an asset will decline.

 

The yen dropped as Japan's Nikkei 225 Stock Average rose 0.9 percent, and the MSCI Asia Pacific Index of regional shares advanced 1.1 percent. The Standard & Poor's 500 Index gained 1.4 percent in New York yesterday.

 

"Stock gains are weighing on the yen, encouraging investors to take risk," said Takashi Kudo, director of foreign-exchange sales at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp.

 

Bonds:

 

Treasury prices fell, raising the yield on the 10-year note to 3.25% from 3.22% late Monday. Treasury prices and yields move in opposite directions.

 

What to expect:

 

WEDNESDAY: Weekly mortgage applications; weekly crude inventories; consumer credit; Earnings from Costco, Family Dollar, Alcoa

 

THURSDAY: Chain-store sales; foreclosure report; BOE, ECB rate decisions; weekly jobless claims; wholesale trade; Fed's Hoenig speaks; Earnings from Pepsi, Marriott, Chevron (interim)

 

FRIDAY: Market peak 2-year anniversary (Dow at 14,164.53); international trade

 

Santander Raises $8.05 Billion in Record Brazil IPO

 

Banco Santander's Brazilian unit raised 14.1 billion reais ($8.05 billion) in a record initial public offering in Brazil and the largest IPO on a U.S. exchange in 18 months.

 

Gold Eases, But Hovers at Record High

 

Gold surged to a record high above $1,040 per ounce on Tuesday, as investors piled into the metal to preserve the value of their dollar-denominated assets against erosion by a weakening dollar and inflation.

 

Both spot gold prices and U.S. gold futures have benefited from a convergence of factors, including technical buying, a report that some oil producers could switch to other currencies to price their crude and worries about the potential inflation impact of unprecedented global fiscal stimulus.

 

"In an environment where interest rates are virtually zero, the incremental cost of moving into gold is nil. It stands to reason for investors that gold is more desirable," said Jack  Ablin, chief investment officer at Harris private bank in Chicago.

 

Spot gold hit a historic $1,043.45 per ounce, and was last up 1.9 percent at $1,036.10 at 2:36 p.m. EDT (1836 GMT), against $1,016.65 quoted late in New York on Monday.

 

Bullion surpassed its previous record $1,030.80 set in March 2008. Year to date, the metal has gained 18 percent.

 

However, Tuesday's all-time high was still sharply below the inflation-adjusted record pinpointed by analysts. Metals consultancy GFMS put that figure as high as $2,079 an ounce.

 

Most-active U.S. gold December futures hit an all-time high $1,045. December settled at $1,039.70 an ounce, up 2.2 percent or $21.90.

 

Bullion also hit six-month highs when priced in sterling and euros, breaking above 700 euros an ounce for the first time since early April.

 

The dollar slipped sharply after U.K. newspaper the Independent said Gulf Arab states were in secret discussions to end the use of dollars in oil trading. Big oil-producing countries later denied the report.

 

An interest rate hike in Australia also reinforced expectations the Federal Reserve will lag other central banks in ending its loose monetary policy.

 

Gold's rally was driven primarily by fears over currency depreciation. A weaker dollar, however, will eventually lead to import-led inflation down the road, analysts said.

 

"This is more a concern about the dollar than inflation so it has become very much more a dollar story. At the end of the day, everyone concludes all roads seem to lead to a weaker dollar at the moment," said Chris Turner, head of currency strategy at ING in London.

 

A weaker dollar makes gold and dollar-priced assets cheaper for holders of other currencies. Gold is also used as a hedge against inflation.

 

A positive technical picture for gold fueled buying on the fund side, traders said. However, the weight of near-record long positions in New York gold futures still leaves the market

 

vulnerable to a correction, analysts said.    

 

Physical Demand Rising

 

Physical demand for the metal was also rising. The largest gold exchange-traded fund, New York's SPDR Gold Trust, said its holdings rose for a second consecutive day and were up 1.5 tonnes as of Oct. 5.

 

Traders said they were also seeing rising demand in India, the largest consumer of gold last year, ahead of Diwali, a major gold-buying festival, on Oct. 19.

 

Mark Cutifani, chief executive of AngloGold Ashanti, the world's third largest and Africa's top gold producer, said he saw gold prices at $950 to $1,100 an ounce in the next 12 months, and they could break $1,100 if the U.S. economy continued to dip and investment demand rises.

 

The yellow metal's gains helped lift silver to a two-week high of $17.36 an ounce as investors bought it as a cheaper proxy for gold. It was last at $17.22 against $16.59.

 

Gold hits its highest since August last year at $308.50. It was last at $306.50 against $298.50.  

 

 

Two Front-Runners Emerging for BofA CEO Spot

 

Chief Risk Officer Greg Curl and Head of Retail Operations Brian Moynihan are the two most likely internal candidates to replace Bank of America CEO Ken Lewis, sources close to the situation told CNBC.

 

BofA: Won't Raise Card Rates Before Law Enforced

 

Bank of America on Tuesday pledged not to hike credit card interest rates or fees before a new law intended to reform industry practices takes effect in February.  

 

 

China: IMF Should Fix World's Monetary "Defects"

 

The IMF needs to fix "intrinsic defects" in the world's monetary system, China said on Tuesday as officials from around the globe wrestled with how best to ward off future financial crises.

 

Sluggish Growth, More Job Loss in 2010: El-Erian

 

The US economy could be facing more problems with job losses and slower growth in 2010, Pimco's Mohamed El-Erian told CNBC Tuesday.

 

Too Early to Pull US Economy Support: Fed Official

 

A U.S. Federal Reserve official said on Tuesday that while the U.S. economy is clearly rebounding, it is too soon to begin to withdraw the Federal Reserve's massive support.

 

"I see nothing that conflicts with the widely held opinion that we are in recovery," Kansas City Fed President Thomas Hoenig said at an economic conference.

 

"I would not support a tight monetary policy in the current environment," Hoenig said in his written remarks.

 

However, he warned that it will be important for the Fed to pull back from its ultra-low interest rates and withdraw the vast amounts of cash it has put into the financial system before igniting inflation.

 

"Monetary policy has to think ahead a year, or more," said. Hoenig cautioned that benchmark interest rates, which are now near zero, would be accommodative even at 1 percent or 2 percent.    

 

"My experience tells me that we will need to remove our very accommodative policy sooner rather than later."    

 

Besides cutting interest rates, the Fed has more than doubled the size of its balance sheet as it has sought to pull the United States out of its worst financial crisis since the Great Depression.    

 

The Fed noted in September that the economy may be picking up after a long contraction, but recent evidence of lingering weakness in the labor market raised questions about the pace of the recovery.    

 

Hoenig said government spending and tax relief programs should complement the Fed's efforts and prevent the economy from backsliding.    

 

"A vast amount of stimulus has been put in place to spark this recovery, and I believe it will prevent a double-dip recession."

 

Hoenig urged the U.S. Congress to quickly put in place a system of winding down failing major financial institutions.

 

Congressional efforts to cap executive compensation may not have the desired effect of controlling risk, he said. By ensuring that major firms could fail -- costing senior executives their jobs -regulators could do a far better job or ensuring the soundness of the financial system, he said.

 

Asia:

 

Asian stocks rose for a second day, led by mining companies and banks, as gold prices surged to a record and brokerages upgraded companies including Sumitomo Mitsui Financial Group.

 

BHP Billiton Ltd., the world's biggest mining company, gained 2.7 percent and Newcrest Mining Ltd., Australia's largest gold producer, surged 6.4 percent in Sydney. Sumitomo Mitsui Financial Group Inc., Japan's second-largest publicly traded bank by market value, jumped 6.3 percent in Tokyo after Nomura Holdings Inc. raised its share-price target.

 

The MSCI Asia Pacific Index gained 1.1 percent to 116.96 as of 12 p.m. in Tokyo, extending yesterday's 1.7 percent advance. The gauge has risen 63 percent in the past seven months on signs the global economy is emerging from its worst slowdown since World War II. Australia unexpectedly raised interest rates yesterday amid indications of economic growth.

 

"The improvement in Asian stocks can be attributed to further evidence the global economy is on the mend," said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. "Investors waiting for a pullback to increase equity exposure continue to be disappointed."

 

Australia's S&P/ASX 200 Index climbed 1.7 percent. Crane Group Ltd., the country's biggest distributor of plumbing supplies, was upgraded at Credit Suisse Group AG. In Tokyo, Hitachi Ltd., a nuclear reactor maker, added 8.1 percent as Mizuho Securities Co. raised its recommendation on the stock.

 

Japan's Nikkei 225 Stock Average increased 0.9 percent as Mitsui O.S.K. Lines Ltd. advanced 3.1 percent after a gauge of shipping fees increased the most since July. Hong Kong's Hang Seng Index rose 1.8 percent, while Taiwan's Taiex Index gained 0.7 percent.

 

U.S. Earnings

 

Futures on the U.S. Standard & Poor's 500 Index were little changed. The gauge added 1.4 percent yesterday on speculation third-quarter earnings will top estimates. Alcoa Inc. is scheduled to release third-quarter results later today, the first company in the Dow Jones Industrial Average to report.

 

Material stocks accounted for 22 percent of the MSCI Asia Pacific Index's advance today after gold futures climbed as much as 2.7 percent to a record $1,045 an ounce in New York, while copper increased for a second day with a 2.1 percent increase. Crude oil rose 0.7 percent.

 

BHP gained 2.7 percent to A$37.64, while Rio Tinto Group, the world's third-largest mining company, climbed 4.3 percent to A$60.20. Newcrest jumped 6.4 percent to A$35.02. Inpex Corp., Japan's largest oil explorer, rose 2.3 percent to 750,000 yen.

 

Dollar Decline

 

Raw-material prices climbed as the dollar's decline spurred demand for commodities as a hedge against inflation. The Dollar Index, which measures the U.S. currency against six major counterparts, traded near a two-week low as speculation the Federal Reserve will trail other central banks in raising interest rates made the greenback less attractive.

 

"Commodities are priced in dollars and a weak U.S. currency inevitably raises their prices," said Yoji Takeda, who manages the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. "Gains in commodities are generally positive for resource companies."

 

The dollar weakened to as much as 88.65 yen from 88.98 at the 3 p.m. close of Tokyo stock trading yesterday. The U.S. currency's decline came as Australia's surprise interest-rate hike yesterday boosted demand for higher-yielding assets.

 

The Reserve Bank of Australia's decision to lift the overnight cash rate target to 3.25 percent from a 49-year low of 3 percent followed the first expansion this year in U.S. service industries. Manufacturing in emerging markets increased the most in the past three months since the second quarter of 2008, according to the HSBC Emerging Markets Index of data from purchasing managers.

 

Rising Valuations

 

Speculation of a global recovery has driven the MSCI Asia Pacific Index up by 66 percent from a more than five-month low on March 9. That's lifted the average price of companies on the gauge to 23 times estimated earnings from 21 times at this year's trough.

 

"The weight of conviction is edging towards the recovery view," said Michael Auyeung, who manages about $500 million as chief investment officer at Pacific Mutual Fund Bhd. in Petaling Jaya, outside Kuala Lumpur. "The stop-start nature of some of the economic data flows should be expected, but the trends are discernibly more to the upside."

 

Sumitomo Mitsui jumped 6.3 percent to 3,360 yen, while market leader Mitsubishi UFJ Financial Group Inc. climbed 5.3 percent to 500 yen. Nomura raised its price estimate on Sumitomo Mitsui by 8.9 percent to 4,900 yen, saying the bank was starting to cut costs to boost profit.

 

Hitachi climbed 8.1 percent to 295 yen after Mizuho Securities raised its investment rating on the company to "strong buy" from "hold." Australia's Crane rose 2.3 percent to A$10.78 after Credit Suisse upgraded the stock to "neutral" from "underperform."  

 

 

Mitsui O.S.K., Japan's No. 2 shipping line, added 3.1 percent to 533 yen. Smaller rival Kawasaki Kisen Kaisha Ltd. gained 3 percent to 340 yen. The Baltic Dry Index, a measure of shipping costs for commodities, rose 3.3 percent yesterday in London, the steepest climb since July 16.

 

Nikkei 225 9,778.25     +86.45 ( +0.89%). (08.31 AM IST)

 

The Nikkei advanced 0.9 percent, buoyed by banks after U.S. corporate earnings boosted Wall Street.  

 

HSI 21178.85 +367.32 +1.76% (08.31 AM IST)

 

Hong Kong shares rallied for a third successive day Wednesday, cheering overnight gains on Wall Street and buoyant regional markets, with exporters, property developers and resource stocks leading an across-the-board rally. The Hang Seng Index rose 1.3% to 21,082.49 and the Hang Seng China Enterprises Index rose 1.7%, with Li & Fung /quotes/comstock/22h!e:494 (HK:494 31.20, +1.70, +5.79%) rising 4.3%, Hang Lung Properties /quotes/comstock/22h!e:101 (HK:101 29.60, +0.80, +2.78%) up 2.4% and PetroChina Co. /quotes/comstock/13*!ptr/quotes/nls/ptr (PTR 116.10, +3.15, +2.79%) /quotes/comstock/22h!e:857 (HK:857 9.17, +0.26, +2.92%) climbing 2.7%.

 

SHANGHAI STOCK EXCHANGE:

 

•The SSE will close from October 1 (Thursday) to October 8, 2009 (Thursday) and open for trading on October 9, 2009 (Friday).  

 

 

W Hotels cancels contract with Sun Hung Kai Properties: report.  

 

COFCO, Longfor, local firm buy land in Chengdu for RMB 4 bln.  

 

Shin Kong Life Insurance wins bid for commercial land in Taipei.  

 

Fabulous Group to boost capital for urban renewal projects.  

 

Huafa Industrial to issue RMB 1.8 bln in corporate bonds.  

 

IHG's Hotel Indigo Hong Kong QRE to open in 2012.

 

Boeing expects billion dollar charge.

 

U.S. government opens new defect probe into Toyota.  

 

Indonesia to focus on markets for post quake recovery.

 

Economists warn of hot money danger in Indonesia.  

 

 

INVESTMENT VIEW

 

Hindustan Dorr Oliver-Building Upon Orders  

 

Hindustan Dorr Oliver Ltd has bagged an order from BALCO (a Vedanta Group of Company) worth Rs. 130 Crores for Design, Engineering, procurement, manufacturing, supply, civil works, erection/ construction, testing & commissioning of Fume Treatment plant for their Smelter Expansion Project at Korba. Fives Solios, France a world class expert in this field is the Technology partner for this project.

 

 

The total order value along with Fives Solios, France is worth Rs. 276 Crores. Execution of the said Project shall be completed within a period of 20 months. The Company has already successfully completed similar project with Vedanta group for its existing smelter project at Jharsuguda, Orissa.

 

 

(Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.)

 

--

Arvind Parekh

+ 91 98432 32381