Market Outlook 23rd Oct 2009

INTRADAY calls for 23rd Oct 2009
+ve Script & Sector : Bombaydye
BUY AxisBank-966 for 982-997+ with sl 953
BUY BhartiArtl-337 for 347-355+ with sl 332
BUY Biocon-272 for 282-287+ with sl 268

Positional
BUY Cipla-284 for 306+ with sl 277
BUY Goldtech-31 for 36-39+ with sl 29
BUY ArvindMill-29 for 36-39+ with sl 26

 

NIFTY FUTURE LEVELS
RESISTANCE
5030
5068
5104
5175
SUPPORT
4987
4984
4949
4913
Buy TRANSPEK FINANCE;LANCO INDS

 

KM Birla says no plan to merge Century Cement operations with UltraTech
-DEN Network prices IPO between Rs 195-205/share: Sources
-IOC, HPCL, BPCL recover Rs 3,400 crore losses from upstream companies with ONGC contributing Rs 2,600 crore by way of discount on crude: BL
-Service tax department serves Rs 325 crore notice to Tata Motors for 5 years between FY05-FY09: Mint
-UP sugar millers to approach court for restraining crushers from operating in cane areas: FE ((Will help in increasing sugar production as these crushers divert material to illicit liquor industry))

 

-Everonn Education board approves increasing FII investment limit to 100%
-Birla Cotsyn board meeting on October 27 on ADR / GDR issue
-Aban comes into NSE F&O curb, Kingfisher still in curb
-Galleon fund almost halves stake in Shriram EPC, sells 9.5 lakh shares
-Tata Steel forms JV with MMTC for exploration and development of minerals

 

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

Yes Bank, Bajaj Hind, Indusind Bank, Polaris, Andhra Bank, Jindal Steel, Dena Bank, Allahabad Bank, Canara Bank & Bank Of India. 

And this is list of 10 Weak futures:

Idea, Grasim, RCom,TV-18, Bharti Airtel, GTL Infra, India Cement, MTNL, JP Hydro & Ambuja Cement.
 Nifty is in Up trend
 

NIFTY FUTURES (F & O):  
Above 5030 level, expect short covering up to 5066-5068 zone and thereafter expect a jump up to 5102-5104 zone by non-stop.

Support at 4987 level. Below this level, selling may continue up to 4984-4986 zone by non-stop.

Below 4949-4951 zone, expect panic up to 4913-4915 zone by non-stop.

On Positive Side, cross above 5138-5140 zone can take it up to 5173-5175 zone by non-stop. Supply expected at around this zone and have caution.
 
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. Recovery should happen. 

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.

SL Triggered.

 

POSITIONAL BUY:
Buy TRANSPEK FINANCE (BSE Cash & BSE Code:531254)  
Buy with a Stop Loss of 9.39. Above 12.29, it will zoom.
 

Today: May hold on gains.

1 Week: Bullish, surprisingly falling.

1 Month: Bullish, as per current market conditions.

3 Months: Bullish, as per current market conditions.

1 Year: Bullish, surprisingly falling.
 
Buy LANCO INDS (BSE Cash & BSE Code:513605) 
Buy with a Stop Loss of 42.00. Above 47.00, it will zoom.
 

Today: May hold on gains.

1 Week: Bullish, as per current market conditions.

1 Month: Bullish, as per current market conditions.

3 Months: Bullish, as per current market conditions.

1 Year: Bullish, as per current market conditions.
 

Global Cues & Rupee  
The Dow Jones Industrial Average closed at 10,081.31. Up by 131.95 points.
The Broader S&P 500 closed at 1,092.91. Up by 11.51 points.

The Nasdaq Composite Index closed at 2,165.29. Up by 14.56 points.

The partially convertible rupee INR=IN ended at 46.7350/7450 per dollar on yesterday, below its previous close of 46.485/495.
 

FUNDS DATA

FII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
FII	22-Oct-2009	2540.07	3039.35	-499.28

DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores)
Category	Date	Buy Value	Sell Value	Net Value
DII	22-Oct-2009	1665.04	1683.11	-18.07

SPOT LEVELS

	4988.60	( -1.48 %)	-75.00
		1	2	3
Resistance		5045.75	5102.90	5141.55
Support		4949.95	4911.30	4854.15

	16789.74		( -1.29 %)	-219.43
			1	2	3
Resistance			16973.77	17157.79	17284.05
Support			16663.49	16537.23	16353.21

Interesting findings on web:
U.S. stocks advanced for the first time in three days as better-than-estimated earnings at companies from Travelers Cos. to McDonald's Corp. boosted speculation that the worst recession since the 1930s is over.

The Dow rallied 131.95 points, or 1.3 percent, to 10,081.31.

The S&P 500 increased 1.1 percent to 1,092.91.

The Nasdaq Composite Index rose 0.7 percent to 2,165.29.

RUSSELL613.388.27+1.37%

TRAN3942.681.75+0.04%

UTIL383.681.25+0.33%

S&P 100504.844.60+0.92%

S&P 400710.89.37+1.34%

NYSE7182.9175.70+1.07%

NAS 1001763.159.59

Blue chips led a bigger stock market rally Thursday, as better-than-expected results from four components pushed the Dow industrials above 10,000 again and reassured investors about the ongoing corporate reporting period.

Better-than-expected results from Travelers, AT&T, McDonald's and 3M push the Dow past 10,000 again, sparking a bigger rally.

Stocks rebounded strongly from Wednesday's sell-off thanks to better-than-expected earnings from a number of key stocks and a big rally in financial stocks.

The market may get a boost from Amazon.com (AMZN) and American Express (AXP). Third-quarter earnings were better than expected, especially the results from Amazon.com.

Investors took in stride announcements from the Federal Reserve and the Obama administration's pay czar regarding curbing executive pay.

"I do feel optimistic that profit growth is real and will spur a broader recovery," said Jeffrey Davis, who oversees $4.6 billion as chief investment officer at Lee Munder Capital Group in Boston. "You have a ton of liquidity, economic fundamentals are in place and that should be supportive for stocks."

"We're setting up for a really good market in November and December, a year-end rally where you're getting a forced move into the market by those that have lagged behind," Steve Leuthold, whose Leuthold Core Investment Fund beat 95 percent of rivals in the past five years, told Bloomberg Television. Stocks will benefit from "capitulation on the part of people who have been cautious," he said.

Leuthold, who manages $4 billion, reiterated his prediction from an October 1 interview that the S&P 500 will gain through year-end and may rise to 1,350 in 2010 as profits improve.

Financial shares extended gains after Treasury Secretary Timothy Geithner said in a statement that his goal is for bailed-out firms to repay the government "as soon as possible."

"We're on the road to repair," said Art Hogan, the New York-based chief market analyst at Jefferies & Co. "Geithner's comments are very positive for the perception of investors about the financial industry. That's giving support for banks and the overall market rally."

Stocks dipped in the early going, before managing a blue-chip led charge starting in late morning. Gains were broad based, with 26 of 30 Dow stocks rising, including 3M, McDonald's, AT&T and Travelers, all of which reported better-than-expected results.

Travelers jumped almost 8% and was one of many financial stocks that gained on the day. The KBW Bank (BKX) index rose 3.4%.

Additionally, the declines have been met with a rash of buyers eager to return. For now, those trends are still in place, said Kenny Landgraf, principal and founder at Kenjol Capital Management.

"There are still a lot of people who missed the move who are now looking to increase their risk exposure," he said. "That impact, combined with improving fundamentals, is going to keep the positive trends intact."

Obama administration "pay czar" Kenneth Feinberg called for the seven biggest federal bailout recipients to cut in half total compensation for their top executives.

Additionally, the Federal Reserve proposed a broad overhaul of pay policies at 28 of the largest U.S. banks. The review is part of its effort to temper some of the triggers to the risk taking that exacerbated the credit crisis.

The two announcements had almost no impact on the market, perhaps because an overhaul had been in discussion for months.

An index of leading economic indicators rose 1 percent in September, a two-year high and more than the 0.8-percent expected. And jobless claims rose 11,000 to a seasonally adjusted 531,000 last week, more than expected. And the previous week was also revised higher by 6,000.

"These numbers strongly suggest that a recovery is developing," said Ken Goldstein, an economist for the research organization. "However, the intensity of that recovery will depend on how much, and how soon, demand picks up."

The U.S. pay czar announced that executives at 7 bailed-out firms would have their pay cut by as much as 90 percent. The companies are: AIG, Bank of America, Citigroup, General Motors, Chrysler, GMAC and Chrysler Financial.

Dow component Travelers (TRV, Fortune 500) said its quarterly profit more than tripled, easily topping analysts' estimates. The insurer also lifted its full-year forecast to a profit of between $5.30 and $5.50 per share. Shares jumped 7.7%.

Travelers reported lower losses related to severe weather and said a rebound in its investment portfolio contributed to a jump in the insurer's profit for the third quarter.

Traveler's earned $1.61 a share on revenue of $5.42 billion, compared with 55 cents a share and revenue of $5.45 billion a year ago.

Wall Street had estimated $1.31 a share on $6 billion in revenue.

Travelers also boosted its quarterly dividend 10% and authorized an additional $6 billion share repurchase program, citing improved stability in capital markets.

Fellow Dow component AT&T (T, Fortune 500) reported a better-than-expected third quarter profit thanks to the impact of Apple's iPhone, for which it has been the exclusive carrier. Wireless revenue jumped 10% in the quarter. Shares gained 0.6%.

Dow component McDonald's (MCD, Fortune 500) reported higher third-quarter earnings that topped estimates on weaker third-quarter revenue that missed estimates. Shares rose 2%.

McDonald's said third-quarter earnings were $1.26 billion, or $1.15 per share, up from $1.19 billion, or $1.05 per share, in the same period a year ago, topping expectations by 4 cents.

Revenue fell 4% to $6.05 billion, in line with expectations.

Shares were up 2% to $59.50.

3M (MMM, Fortune 500), also a Dow component, said third-quarter earnings and revenue fell from a year ago, but both were above analysts' estimates. Shares gained 3.2%.

3M said third-quarter net income was $957 million, or $1.35 per share, which topped analysts' expectations of $1.17 per share. In the same quarter last year, 3M earned $991 million, or $1.41 per share.

Revenue fell to $6.19 billion from $6.56 billion, but that also beat the Street's estimate of $5.77 billion.

3M also raised its full-year profit outlook to between $4.50 and $4.55 a share, up from the prior range of $4.10 to $4.30 a share, which sent the stock up 3.2% to $78.79.

Amazon.com shares, meanwhile, jumped 14.5% to $107 after hours after handily beating analyst estimates. If that price holds on Friday, it will be an all-time high. As important, the stock price will have more than doubled on the year.

The company earned $199 million, or 45 cents a share, on revenue of $5.45 billion in the third quarter. Earnings were up 68%; revenue was up 28%.

Analysts had expected 33 cents a share in earnings on revenue of 5.03 billion.

American Express shares slipped 0.5% to $36.25 after hours after rising 3.8% to $36.44 in regular trading.

The credit card company reported a 21% profit decline. But results beat analyst estimates. The stock had risen 3.8% to $36.44 in regular trading.

American Express reported earnings of $640 million, or 53 cents a share, down from $815 million, or 70 cents a share, a year earlier.

Earnings from continuing operations excluding a 10-cent accounting benefit fell to 44 cents from 74 cents.

Revenue, net of interest expense, dropped 16% to $6.02 billion.

Analysts had expected earnings of 38 cents on revenue of $5.92 billion.

Results that also beat estimates came from the Cheesecake Factory (CAKE), railroad Burlington Northern (BNI), insurance company Chubb (CB) and networking manufacturer Juniper Networks (JNPR).

Burlington Northern shares were alone among these four to fall in regular trading and after hours. It was off to $84.62 in regular trading and fell 4.3% to $81 after hours.

Cheesecake Factory rose 1.5% to $18.14 and an additional 2.5% to $18.60 after hours. Chubb was up 5.2% to $53.79 in regular trading and slipped after hours to $52.77. Juniper, up 1.4% to $28.22 in regular trading, rose an additional 3.8% to $29.40 after hours.

Other big stocks boosting the Dow included Boeing (BA, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Exxon Mobil (XOM, Fortune 500), Procter & Gamble (PG, Fortune 500) and IBM (IBM, Fortune 500).

Merck (MRK, Fortune 500), the fifth Dow component to report Thursday morning, said its earnings and revenue rose from a year ago and topped estimates. Shares of the drugmaker were barely higher.

Pharmaceutical giant Merck, meanwhile, earned $3.42 billion, or $1.61 a share, in the third quarter, more than triple the $1.09 billion, or 51 cents a share, it earned in the same quarter last year.

The jump in profit was mostly due to the sale of its interest in the animal health care unit Merial.

Excluding items, Merck earned 90 cents per share, beating expectations by a dime. Revenue rose 2% to $6 billion, ahead of the $5.97 billion estimate.

Merck said it now sees 2009 earnings per share coming in between $3.69 and $3.89 and adjusted earnings per share of $3.20 to $3.30.

Merck shares were up 0.6% to $32.87.

So far, 167 companies, or 33% of the S&P 500, have reported results. Profits are currently on track to have fallen 19.2% versus a year earlier, according to the latest from Thomson Reuters. Revenue is expected to have dropped over 10% from a year ago.

Microsoft (MSFT, Fortune 500) launched the newest version of its operating system, Windows 7. The tech behemoth, a Dow component, is hoping that users who have been running XP for years will switch to the new system -- and forgive it for the disappointing performance of Windows Vista in 2007.

Microsoft reports quarterly results Friday.

After the bell today, we'll get reports from Amazon, American Express, Broadcom and Capital One, among others.

Friday continues the big week of earnings. Among the biggest reports due before the market open are Microsoft (MSFT), Honeywell (HON), Whirlpool (WHR) and Schlumberger (SLB).

Five stocks -- Travelers, 3M, McDonald's, American Express and IBM (IBM) -- contributed 80 points of the Dow's gain.

PNC Financial [PNC  50.69    5.73  (+12.74%)   ] rallied 13 percent after the regional bank beat expectations.

McDonald's [MCD  59.52    1.19  (+2.04%)   ] gained 2 percent after the fast-food giant topped forecasts and said it expects same-store sales to remain positive in October.

AT&T [T  26.10    0.16  (+0.62%)   ] rose 0.6 percent after the telecom beat expectations, helped by the iPhone, but revenue slipped from a year earlier.

AT&T (T) earned $3.19 billion, or 54 cents per share, down slightly from $3.23 billion, or 55 cents a share, a year earlier. The consensus estimate was for 50 cents per share on revenue of $30.89 billion. AT&T said operating revenue fell 1.6% to $30.86 billion.

AT&T reported a 2 million increase in total wireless subscribers -- its best third quarter yet.

AT&T shares were 0.6% higher to $26.10.

"The iPhone has been a share shifter in the U.S.," Chris Larsen, a Piper Jaffray analyst, told Bloomberg News. "Consumers can see a handset. They can't see a network, so I'm going to buy what I can see."

AT&T has been the exclusive carrier for the iPhone in the U.S. since its debut in 2007.

Merck [MRK  32.83    0.15  (+0.46%)   ] added 0.6 percent after the drug maker said its net tripled in the quarter, helped by stronger sales and the sale of its animal-health business, which was required for its purchase of Schering-Plough. That acquisition is going to catapult Merck from the No. 8 drugmaker to No. 2.

More upbeat earnings reports after the bell late Wednesday from eBay [EBAY  23.97    -1.06  (-4.23%)   ] and Amgen, [AMGN  56.84    -2.56  (-4.31%)   ] both of which saw earnings beat Wall Street estimates.

Other factors are waylaying the stock market's recent advances—ranging from Walmart's [WMT  50.45    -0.18  (-0.36%)   ] price cuts to analyst Richard Bove's downgrade of Wells Fargo [WFC  30.17    1.27  (+4.39%)   ] to rising oil prices.

J.Crew (JCG), the retailer best known because Michelle Obama is a fan, was up 15.2% to $43.49 after boosting third-quarter guidance.

New York Times Co. had the biggest gain in the S&P 500, surging 23 percent to a one-year high of $10.72.

Fifth Third added 6.8 percent to $10.80, while SunTrust advanced 5.3 percent to $21.85.

VIX20.69-1.53-6.

Oil,Gold & Currencies:

U.S. light crude oil for December delivery fell 18 cents to settle at $81.19 a barrel on the New York Mercantile Exchange, edging off a one-year high.

COMEX gold for December delivery fell $5.90 to settle at $1,058.60 an ounce.

The dollar fell against the euro, weakening again after it fell to a 14-month low Wednesday. The dollar gained versus the yen.

The dollar traded near a 14-month low against the euro as a recovery in corporate earnings and improved prospects for the global economy revived demand for riskier assets.

The greenback is set for a third-weekly drop against the 16-nation currency before reports today forecast to show improvements in German business confidence and U.S. home sales. The pound rose to a five-week high against the dollar on speculation a U.K. report today will show the British economy grew for the first time since March 2008.

"Risk appetite is strong, buoyed by a series of better- than-expected profit reports and a brighter outlook for the global economy," said Masahide Tanaka, senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan's second- largest bank. "Money will continue to shift away from the dollar, now the most-favored funding currency, and flood into higher-yielding assets."

The dollar traded at $1.5033 per euro at 10:22 a.m. in Tokyo, unchanged from yesterday in New York. It earlier reached $1.5060, the weakest since August 2008. The greenback rose to 91.54 yen from 91.30 yen. The euro was at 137.61 yen from 137.24 yen.

The U.S. currency was at 1.0051 Swiss francs from 1.0045 yesterday after earlier touching 1.0034, the lowest since July 2008.

The pound rose to $1.6658 from $1.6624, after earlier hitting $1.6678, the highest since Sept. 14. It was at 152.49 yen from 151.76 after earlier rising to as high as 152.57 yen, the strongest level since Sept. 11.

Home Sales

The greenback weakened beyond $1.50 versus the euro for the first time in February 2008 and stayed there until August 2008 after reaching $1.6038 that July. The dollar strengthened as investors sought the safety of U.S. government debt after the Sept. 15, 2008, bankruptcy of Lehman Brothers Holdings Inc. froze credit markets, with the U.S. currency reaching a 2 1/2- year high of $1.2330 on Oct. 28, 2008.

The euro headed for a third weekly gain against the yen on optimism that the 16-nation economy is on the mend.

The Munich-based Ifo institute's business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 in the previous month, according to a Bloomberg News survey before the data release today.

European Central Bank council member Erkki Liikanen said this week on Finland's YLE Radio Suomi that the euro area's economy is no longer weakening.

Sales of existing homes in the U.S. rose in September to an annual rate of 5.35 million, a two-year high, from 5.1 million in the previous month, according to the median forecast of 76 economists in a Bloomberg survey. The report from the National Association of Realtors is due at 10 a.m. in Washington.

Pound's Rally

The pound is for a second weekly gain versus the dollar as the Office for National Statistics will say today that the U.K. economy expanded 0.2 percent in the third quarter from the previous period, according to a Bloomberg survey of economists.

The Bank of England should pause its 175 billion-pound ($292 billion) bond-purchase program as the U.K. exits its economic recession, the National Institute for Economic and Social Research said on Oct. 21. Gross domestic product will probably expand 0.7 percent in the fourth quarter, the London- based institute said.

"There is a perception among some in the market that the U.K. economy is recovering," said Shinichi Hayashi, a Tokyo- based dealer at Shinkin Central Bank, the central institution for Japan's financial cooperatives. "There's talk that the pound is being bought on this view."

U.K. policy makers will reassess the scale of their asset- purchase program at their Nov. 5 decision, minutes of the October meeting showed this week.

Stocks Advance

The dollar is poised for a third weekly decline against the currencies of Australia and New Zealand as regional equities extended an earnings-sparked rally in U.S. shares.

The MSCI Asia Pacific Index of regional shares rose 0.5 percent today. The Standard & Poor's 500 Index increased 1.1 percent yesterday. Profits have topped estimates at 79 percent of the companies in the S&P 500 that have released results, according to Bloomberg data. That would mark the highest proportion in data going back to 1993.

Benchmark interest rates are 3.25 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations' higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

Australia's dollar was at 92.71 U.S. cents from 92.69 cents yesterday, heading for a 1.1 percent gain this week. It climbed to 93.29 cents on Oct. 21, the highest level since August 2008.

New Zealand's dollar was at 75.70 cents, from 75.78 cents yesterday and set for a 2.1 percent surge for the week. It advanced to 76.35 cents on Oct. 21, the strongest since July 2008.

Bonds:

Treasury prices tumbled, raising the yield on the 10-year note to 3.42% from 3.38% late Wednesday. Treasury prices and yields move in opposite directions.

What to expect:

FRIDAY: Fed chief Bernanke speaks; existing-home sales; Fed's Kohn speaks; Earnings from Microsoft, Honeywell and Ingersoll-Rand

Amazon.com's Profit Soars as Kindle Outsells Rivals

Yuan Pegged Spurs China Exports Luring Pimco as Dollar Weakens

Amazon Beats Profit Forecast; Shares Soar on Sales Outlook

American Express Profit, Sales Beat Expectations

Galleon Insider-Trading Informant Roomy Khan Said to Have Worked at Intel

BNP Paribas Said to Weigh Management Changes, Salary Cuts in Japanese Unit

Blackstone Is Said to Back Asia's Biggest Hedge Fund Startup Since 2007

Hynix Reports First Profit in Two Years on Increased Memory-Chip Prices

Obama Says Wall Street Pay Curbs `Step Forward' at Taxpayer-Funded Firms

Pakistan Must Spend Military Aid on Fighting Taliban, U.S. Congress Says

Treasuries Fall a Third Day as Asia Stocks Gain, U.S. Homes Sales to Rise

Netflix 3Q earnings rise 48 pct, but stock falls

Omnicell 3Q profit falls as sales slide

Hynix records first net profit in 2 years on chips

$ PepsiCo Exec's $2.4 Million Sale

SunPower: Q3 Tops Ests; Tightens '09 Outlook; Stock Tumbles

Broadcom Slumps As Q3 EPS Whiffs On Higher Compensation Costs

CA FY Q2 EPS Edges Estimates

Verizon To Unveil Droid Oct. 28; Ships Nov. 9

Network Equipment Technologies Sharply Lower On Gloomy FY Q3

LPS earnings up 39%

MEMC swings to loss, buys SunEdison for $200M

Wal-Mart Forecasts Modest Sales Gain

Nokia Sues Apple Over iPhone

Xerox Earnings Fall 52% as Outlook Remains Soft

Friday Look Ahead: All eyes on MSFT, Bernanke

Tail winds from Thursday's rally and some after hours earnings could help stocks Friday.

But ahead of the opening bell, there are some key events that could affect trading. Microsoft [MSFT  26.59    0.01  (+0.04%)   ]reports its earnings and Fed Chairman Ben Bernanke speaks at the Boston Fed's annual conference. Bernanke starts speaking on financial regulation and supervision at 8:30 a.m. and takes questions after his speech. Existing home sales for September, released at 10 a.m., will also be important.

Stocks Thursday started off mixed before staging a mid-afternoon rally that took the Dow [.DJI  10081.31    131.95  (+1.33%)   ]back above 10,000. The Dow finished at 10,008, a 1.3 percent gain. The S&P 500 rose 11, or 1 percent to 1092.

The dollar was mixed against major currencies, and the dollar index was slightly firmer. But much of the dollar's gains evaporated as stocks rose. The euro continued to dance around the psychologically important $1.50 level.

Oil gave up some of its gains, with NYMEX crude [US@CL.1  81.14    -0.05  (-0.06%)   ] finishing at $80.63, off 0.8 percent. Metals and other commodities though mostly traded higher.

Thursday's market was also driven by better earnings reports from major companies and several Dow components - McDonald's[MCD  59.52    1.19  (+2.04%)   ], 3M[MMM  78.79    2.46  (+3.22%)   ], AT&T [T  26.10    0.16  (+0.62%)   ]and Merck[MRK  32.83    0.15  (+0.46%)   ] -- among them. After the closing bell, shares in online retailer Amazon.com[AMZN  93.45    0.03  (+0.03%)   ] jumped sharply after the company reported a 68 percent increase in profits to $199 million, or $0.45 per share, on sales of $5.45 billion, well above estimates.

American Express[AXP  36.44    1.34  (+3.82%)   ], also reporting after the bell, saw its shares rise on stronger-than-expected profits. Its net fell though, coming in at $640 million or $0.53 per share, from $815 million, or $0.70 per share last year.

Other companies reporting earnings Friday include Schlumberger[SLB  68.52    0.51  (+0.75%)   ], Honeywell[HON  38.53    1.57  (+4.25%)   ], Whirlpool[WHR  73.55    1.72  (+2.39%)   ], Fortune Brands[FO  43.09    0.94  (+2.23%)   ] and Ingersoll-Rand[IR  35.35    0.69  (+1.99%)   ].

In addition to Bernanke's speech, Fed Vice Chairman Donald Kohn speaks at the Boston Fed conference at 11:30 a.m.

Treasurys lost some steam Thursday as stocks moved higher. The market also focused on the Treasury's announcement of record new issuance at next week's auction of 2-, 5- and 7-year notes. A total $123 billion will be auctioned next week, topping the previous record of $115 billion in July.

"It was a pretty big increase in supply, and a little counterintuitive that the big supply issues are trading well on the curve, on the day," Cantor Fitzgerald's Brian Edmonds said.

Dollar Bottoming?

Market guru Laszlo Birinyi appeared on "Squawk on the Street" Thursday and said the dollar at $1.50 per euro may be about the bottom for now.

"If you look at the ETFs that trade against foreign exchange, these things are starting to show a little bit of relative strength," he said. Birinyi also said the quickness and aggressiveness of the dollar's move has been "throwing the market for a loop."

But he did say he thinks the move against the euro is about over for now. "If only for technical reasons, this is going to be about it," he said.

Birinyi also said he thought oil, moving higher as the dollar weakens, is getting overpriced. He said he has sold some oil ETFs and cut back on energy stocks.

For US and Others, How Much Is Too Much Government Debt?

When it comes to borrowing trillions of dollars, it helps to have a golden reputation, a steady income stream, and plenty of rich, trusting friends.

As the world's wealthiest nations pile on debt at a pace that in less developed countries would alarm investors, they appear to have ample supplies of all three—for now.

That helps explain why a $1.4 trillion U.S. budget deficit announced last week drew gasps from politicians but didn't rattle investors who remain willing to loan money to the U.S. government at low interest rates.

It also explains why Japan and Italy can carry debt that exceeds their annual output, while emerging market economies such as Argentina in the past crumbled under such burdens.

Across all the Group of Seven rich nations, debt as a percentage of gross domestic product will rise in 2009, and probably stay elevated at least through 2012, according to International Monetary Fund data.

Some of that is a consequence of the global recession. Government spending soared to bail out banks and resuscitate economies, while tax revenues fell.

Governments are trying to strike a delicate balance between doing enough to end the crisis without digging an inescapable debt hole. "It is the central economic choice of our time," U.S. Treasury Secretary Timothy Geithner told Reuters Tuesday.

Geithner, speaking at the Reuters Washington Summit, said it was imperative to do whatever it takes to restore economic growth and stop a recession from becoming a depression. "For that to work over time, people need to understand and be confident that you will have the will and the ability to get back to living within your means when you have growth established," he said.

Confidence comes from decades of fiscal responsibility, but it can vanish almost overnight.

While financial markets show little sign of losing faith in the United States right now, concerns about inflation are on the rise.

That suggests some degree of discomfort about whether Geithner, President Barack Obama, and Federal Reserve Chairman Ben Bernanke can safely navigate the economic and political obstacles to corralling rising deficits in the coming years.

"As long as there is confidence, things can be just rolling along," said Kenneth Rogoff, a Harvard University economist and former chief economist for the International Monetary Fund. "If confidence evaporates, for whatever reason, you're dead meat."

What Kills Confidence?

If the rich world mismanages its debt position, the consequences will be severe and widespread. For the United States, the early signs of trouble would probably come in the form of a sharp decline of the U.S. dollar, a steep rise in inflation, and a spike in Treasury debt yields.

Investors appear willing to give the United States and other major economies the benefit of the doubt as long as the global economy remains weak and unemployment elevated.

With the exception of gold, which is considered an inflation safe haven and recently jumped to more than $1,000 per ounce, the traditional inflation gauges look tame.

The U.S. dollar, while weakening, has not suffered an unnervingly swift decline. Yields on 10-year U.S. Treasury notes are still well below 4.0 percent, suggesting investors see little risk of runaway inflation in the next decade.

Polls such as the Reuters/University of Michigan survey of consumers show households expect modest price increases in the coming years.  The major credit ratings agencies have maintained their top-tier "AAA" sovereign debt rating on the United States.

Still, Moody's lead U.S. analyst warned that the top-notch rating "is not guaranteed" and the government must reduce its budget gap in the next three to four years. And Japan lost its last remaining "AAA" rating in May.

What causes investor confidence to evaporate is not fully understood. Economists have sought to establish early warning systems, but most studies have focused on emerging markets, which have been the primary source of sovereign debt crises.

Paolo Manasse, an economics professor at the University of Bologna who co-authored a paper with New York University's Nouriel Roubini on rules of thumb for predicting debt crises, said reputation and confidence go hand in hand.

Italy has a debt-to-GDP ratio slightly above 100 percent, yet its borrowing costs are manageable, in part because the country hasn't defaulted since the Benito Mussolini era. That history, plus the perceived protection that comes from being part of the euro zone, helps Italy sustain its debt burden.

Manasse said reputation was also working in the United States' favor, although he stressed that Obama's administration would soon need to detail how it plans to shore up finances.

"If the United States can announce credibly a plan for fiscal retrenchment and commit to it, then a temporary jump in the budget deficit and debt wouldn't scare anybody off," he said in a telephone interview.

Keeping Friends Happy

Mario Blejer, who was governor of Argentina's central bank in 2002, knows first-hand how difficult it is to restore investor confidence once it is blown. Argentina defaulted on its debt eight years ago, and is only now trying to return to global debt markets.

Blejer, who is now an economic consultant, said that at the height of the debt crisis, his central bank initially had to offer interest rates of 130 percent to entice investors to extend seven-day loans. "We needed to do things that would create a situation where greed would exceed panic," Blejer said in an interview.

Argentina's experience shows that debt-to-GDP ratios alone don't always provide an early warning signal of impending default— something Manasse's research shows as well.

The United States has the advantage of being the world's safe haven in times of panic, and as long as it retains that reputation, its debt sustainability won't be in doubt. U.S. debt held by the public stood at $7.53 trillion as of Oct. 19, amounting to 53 percent of total output and up by about $1.5 trillion from one year ago.

Recent debt auctions have generally been well-received, and major foreign investors including China and Japan have maintained their purchases. Those two countries together held $1.53 trillion in U.S. Treasury debt as of August, up from $1.13 trillion a year earlier, according to Treasury data.

Geithner has taken pains to ensure that China in particular understands the U.S. commitment to bringing down future deficits —and is comfortable investing a large chunk of its $2 trillion in reserves in dollar-denominated assets.

U.S. Recovery in 2010 to be Weak: Fed's Evans

The U.S. Federal Reserve is concentrating on keeping the economic recovery on track and is in no rush to pull back its extensive life support measures, senior Fed officials said on Thursday.

"We have to think about our exit policy and are looking at it very carefully, but at the moment, that's not our first order concern, at the moment, it's policy accommodation," Chicago Fed President Charles Evans said while speaking on a panel at the University of Michigan's Ford School of Public Policy.

"I think that the recovery is going to be very unsatisfactory in 2010," he said.

His colleague, Boston Fed President Eric Rosengren, voiced a similar view.

"We need to wait for more progress (on the economy) before we take some stimulus away," Rosengren told CNBC in an interview on the sidelines of the Boston Fed's annual conference on Cape Cod.

Evans's and Rosengren's comments are in line with other Fed officials who view the recovery as tepid despite signs growth resumed in the third quarter and worry that a high and rising unemployment rate will sap spending and confidence.

Evans, who will vote on the Fed's policy-setting panel in 2010, said he expects unemployment to rise above ten percent.

Rosengren, also a Fed voter in 2010, said policy-makers would need to see private consumption, including housing, pick up before the Fed can remove monetary stimulus.

The Fed has cut rates to near zero and pledged to hold rates ultra-low for an extended period to support the recovery. Its next policy-setting meeting is Nov. 3-4 and it is not expected to signal any movement toward an exit then.

High unemployment and low inflation rates both indicate that policy accommodation is in order, Evans said.

The unemployment rate, which touched a 26-year high of 9.8 percent in September, is likely to retreat only slowly, Evans said.     

"It is not going to feel like a recovery for some time," he said.

With modest economic growth, household spending will be restrained and businesses will face weaker demand for their goods and services, Evans said.

Some on the Fed worry that a long period of very low interest rates, coupled with the massive expansion of cash available to the economy, pose dangerous risks of igniting inflation when the recovery gets firmly going.

But Evans said that with weak labor markets and ample idle factory capacity, there is a sufficient slack in the economy to set aside inflation fears.

If anything, low levels of inflation are a concern, he said. He said inflation is expected to remain below his preferred level of around 2 percent for some time.

However, Evans said recent volatility in the dollar -- which recently fell to 14-month lows against a basket of currencies amid concerns about the ballooning U.S. federal budget deficit and exploding debt -- would not have much impact on inflation in the current environment.

"At the moment inflationary pressures are pretty muted so I am not especially concerned about whatever implications those movements (in the dollar) might have for inflationary pressures," he said.

Still, he said the Fed is monitoring swings in the U.S. currency.

New York Fed President William Dudley said on Thursday the U.S. central bank may not lose money on the emergency programs it put in place to fight the crisis while Fed Vice Chairman Donald Kohn said many of the emergency facilities were winding down. Both officials took part in the Boston Fed's Cape Cod meeting.

Asia:

Asian stocks advanced as earnings reports from Australia to South Korea to Japan boosted speculation the global economy is exiting recession.

Wesfarmers Ltd., Australia's second-largest retailer, surged 7.2 percent after first-quarter sales of food and liquor climbed. Kia Motors Corp., South Korea's No. 2 automaker, gained 3.5 percent after posting a record quarterly profit. Daiwa House Industry Co. and Tokyu Land Corp. climbed at least 4 percent in Tokyo after reporting higher-than-forecast earnings.

The MSCI Asia Pacific Index rose 0.6 percent to 119.89 as of 11:03 a.m. in Tokyo, with more than twice as many shares advancing as retreating. The gauge has climbed 70 percent from a five-year low on March 9 on signs the global economy is recovering from the worst slump since World War II.

"First-half profits look likely to exceed expectations, however I'm not confident that demand is there to support earnings in the second half," Hiroyasu Ito, a Tokyo-based fund manager at Dai-Ichi Mutual Life Insurance Co., which holds $296 billion of assets. "The momentum behind stocks is still good, even though shares aren't really cheap."

Japan's Nikkei 225 Stock Average advanced 0.6 percent, with Kirin Holdings Co. adding 3.9 percent after Morgan Stanley boosted the stock to "overweight." Australia's S&P/ASX 200 Index gained 0.9 percent. Benchmark indexes rose in all Asian markets open for trading.

U.S. Stocks Rise

Futures on the Standard & Poor's 500 Index advanced 0.2 percent. The U.S. benchmark gauge jumped 1.1 percent in New York yesterday, led by insurers and banks as quarterly profit at insurer Travelers Cos. quadrupled and banks including PNC Financial Services and Fifth Third Bancorp said lending was becoming more profitable as they paid less on deposits.

In the past five days, the MSCI Asia Pacific Index has advanced 0.1 percent, set for a third weekly gain. Signs corporate earnings were improving prompted investors to shift to higher-yielding assets, spurring Treasuries to fall. The yield on the benchmark 10-year note rose two basis points to 3.43 percent, according to data compiled by Bloomberg.

The MSCI Asia Pacific Index has climbed 33 percent this year, headed for its biggest annual increase since 2003. Stocks in the gauge are valued at 1.6 times book value, compared with 2.3 times for the S&P 500 and 1.7 times for Europe's Dow Jones Stoxx 600 Index.

Wesfarmers surged 7.2 percent to A$28.33. Food and liquor sales rose 7.3 percent in the three months through Sept. 27 as the company attracted customers to redesigned fresh-produce sections at its Coles supermarkets, Wesfarmers said.

Property, Drinks

Kia jumped 3.5 percent to 17,750 won. Net income totaled 402 billion won ($340 million) in the three months to Sept. 30, compared with a loss a year earlier, the company said today.

Daiwa House gained 4.3 percent to 1,010 yen, and Tokyu Land, which develops houses and condominiums, added 4.1 percent to 408 yen. First-half profit was probably more than twice its forecast, Daiwa House said in a preliminary earnings report yesterday. Tokyu Land probably produced net income that's 31 percent more than its target, according to the company's preliminary report.

Kirin, Japan's largest beverage maker, rose 3.9 percent to 1,456 yen. Morgan Stanley boosted its investment rating on the stock from "equal weight," citing "solid" sales.

Nikkei 225 10,330.43     +63.26 ( +0.62%). (08.48 AM IST)

The Nikkei average rose 0.6 percent on Friday, with a rebound on Wall Street helping to boost investor confidence, while some exporters received additional support from a weaker yen.

Nippon Yusen KK (9101.T: Quote, Profile, Research) and other shipping firms rose after the Baltic Exchange's main sea freight index .BADI, which tracks rates to ship dry commodities, rose above 3,000 points for the first time since August.

Elpida Memory (6665.T: Quote, Profile, Research) gained after its bigger South Korean rival Hynix Semiconductor Inc (000660.KS: Quote, Profile, Research) said it expected a shortage in dynamic random access memory chips in 2010, but Canon (7751.T: Quote, Profile, Research) fell following a report its quarterly operating profit likely halved from the previous year.

Trade lacked direction on the whole, however, as investors waited to see how Japanese earnings announcements would pan out, market players said.

"Investors are holding back as Japan's earnings season hits its peak next week and there's the weekend," said Tsuyoshi Segawa, an equity strategist at Mizuho Securities.

In light trade, the benchmark Nikkei .N225 gained 63.26 points to 10,330.43, after ending down 0.6 percent the previous day.

The broader Topix .TOPX was flat at 909.46.

"Investors will be looking at whether Japanese companies' earnings forecasts for the second half will be revised up and if that would lead to better earnings prospects for the next business year," said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC.

U.S. stocks rose on Thursday after quarterly results from insurer Travelers Cos Inc (TRV.N: Quote, Profile, Research) and regional bank PNC Financial Services Group Inc (PNC.N: Quote, Profile, Research) gave a boost to financial stocks. [.N]

SHIPPERS GAIN

The dollar edged up to trade around 91.60 yen JPY= in Asian trade. Many Japanese exporters have set their currency rate assumptions at 90-95 yen for the year to March.

Sony Corp (6758.T: Quote, Profile, Research) rose 1.3 percent to 2,685 yen and Olympus Corp (7733.T: Quote, Profile, Research) gained 1.7 percent to 2,780 yen. Industrial robot maker Fanuc Ltd (6954.T: Quote, Profile, Research) added 1.1 percent to 8,110 yen.

Nippon Yusen rose 0.8 percent to 362 yen, Mitsui O.S.K. Lines (9104.T: Quote, Profile, Research) gained 1.8 percent to 575 yen and Kawasaki Kisen Kaisha (9107.T: Quote, Profile, Research) added 1.3 percent to 380 yen.

Elpida advanced 1.2 percent to 1,398 yen after the comments by Hynix Semiconductor.

Mitsui Engineering & Shipbuilding Co (7003.T: Quote, Profile, Research) jumped 4.8 percent to 241 yen after the shipbuilder raised its group recurring profit forecast for the April-September first half to 19 billion yen ($208 million) from 10 billion yen, citing an increase in sales.

But Canon slipped 0.6 percent to 3,630 yen after the Nikkei business daily said a stronger yen and sluggish sales of copiers and laser printers likely weighed on its earnings.

Some 872 million shares changed hands on the Tokyo exchange's first section, below last week's morning average of 956 million.

Advancing stocks outnumbered declining ones, 824 to 676.

HSI 22515.59 +305.07 +1.37%.(08.51 AM IST).

Hang Seng Index opens 228 points higher on Fri

Hong Kong stocks rose on Friday morning, with the benchmark Hang Seng Index opening 228 points higher at 22,438.90.

The Hang Seng China Enterprise Index, which tracks the overall performance of 43 mainland Chinese state-owned enterprises on the Hong Kong Stock Exchange, opened 136 points higher at 13,096. 34.

China Mobile<0941><CHL> increased 1.18% from the previous closing to HK$77.2. China Unicom (Hong Kong) Ltd<600050><0762><CHU> rose 1.51% and opened at HK$10.76.

Chinese stocks open 0.2% higher on Fri

Chinese stocks opened higher on Friday morning.

The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 3,057.39 points, up 0.2% or 5.98 points from the previous closing.

The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.25% or 31.64 points higher at 12,656.32 points.

Xinjiang oil field targets 3.6 bln cu m of gas output this year (23 Oct) 

BYD cars now available in Qatar (23 Oct) 

China Unicom, Telefonica complete US$1 bln share swap (23 Oct) 

Hang Seng Index opens 228 points higher on Fri (23 Oct) 

CBA increases shareholding in China's CCS to 13.17% (23 Oct) 

Vice Chairman Owen Hegarty raises stake in G-Resources to 1.51% (23 Oct) 

T. Rowe Price Associates cuts stake in Guangshen Railway (23 Oct) 

Barclays raises shareholding in BYD to 5.41% (23 Oct) 

Chinese stocks open 0.2% higher on Fri (23 Oct) 

AU Optronics' net profit hits NT$7.42 bln in Q3 (23 Oct) 

China Minmetals to start construction of Galeno mine in 2010 (23 Oct) 

China Shipping Dev't posts 81% decline in Q3 net profit (23 Oct) 

China Overseas Land's revenue hits HK$21.05 bln in 1st 9 months (23 Oct) 

CNPC to issue RMB 20 bln in 6-month bills on Thu (23 Oct) 

Asus aims for 3rd place among top global notebook PC makers (23 Oct) 

Sichuan Hydropower Investment & Management to issue bills (23 Oct) 

Huadian Power Int'l to raise up to RMB 3.5 bln (23 Oct) 

CIRC relaxes rules on corporate bond investment (23 Oct)

Chinese home appliance giant Haier net profit up 49% in 3Q
 
INVESTMENT VIEW
Dhampur Sugar-Wildcard

BSE 500119
 
 
-Late rains in the Gangetic belt have bettered prospects for cane supply.

-High Retail price of Rs 40 per kg is leading to a paradigm shift in Sugar Industry profits.

-Even if SMP for Cane is fixed at Rs 200 per quintal, there will be a margin of Rs 8-10 per kg between input cost and wholesale selling price, which should sustain for atleast 2 years.

-Dhampur carries a debt of Rs 600 crore, but improved cash flows will allow the corporate to pay-off the same, making it debt free. 

Financials 

Dhampur Sugar reported robust numbers for the nine months ending April 2009, results with a massive increase in net profit to Rs 42.3 crore (Loss of Rs 3.9 crore) led by an improvement in average sugar realisations to Rs 20.5 per kg, thereby offsetting lower sales volumes. The company should have done exceedingly well in the Q4 to June 2009, as Retail prices first rose to Rs 30 per kg and now range between Rs 35 and Rs 40 per kg.  

Inspite of tinkering by the Centre and the State Government in Cane pricing as also fixing a higher levy quota based on FRP, the corporate should report bumper profits due to sizeable gains on inventory. 

Dhampur held a sugar inventory of 2.3 lakh tonnes valued at Rs 18.9 per kg as of March 2009. This will enable it to benefit from the rising sugar price scenario.  

In Q2SY09, the company altered its depreciation policy wherein depreciation charges for the full year were allocated during periods in which the co-generation plants were expected to operate, thereby increasing depreciation provisioning. 

Valuations 

At the current price of Rs 107.10, the stock is trading at 8x its SY09E EPS of Rs 14 and 5x its SY10E EPS of Rs 21.1. Given the company's large inventory holding and recent decision to import raw sugar we believe the company is well set to benefit from the rising sugar prices.
 

(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