NIFTY FUTURE LEVELS
RESISTANCE
5138
5159
5177
5125
5207
5226
SUPPORT
5123
5116
5104
5086
Buy SHR GANAPATH;CATVISON PRODUCT
INTRADAY calls for 20th Oct 2009
+ve Script & Sector : BATA, Bharti, Escorts, FedBank
BUY AxisBank-1011 for 1135-1156+ with sl 1000
BUY Bajajhind-217 for 218-220+ with sl 215
BUY Bhusanstel-1404 for 1465-1485+ with sl 1390
Positional
BUY Tataelxsi-184 for 195-199+ with sl 179
BUY Ballarpur-23 for 26+ with sl 22.25
BUY CenturyTex-537 for 565+ with sl 529
BUY GujAlkalia-134 for 155-169+ with sl 127
Expected Breakout
BUY Jindalsaw-797 above 801 for 854+ with sl 790
BUY LicHousing-798 above 807 for 827+ with sl 797
Breakout
BUY DLF-461 for 511-529+ with sl 448
BUY Educomp-4819 for 5300+ with sl 4770
Strong & Weak futures
This is list of 10 strong futures:
Sesa Goa, Dena Bank, Indusind Bank, LITL, Yes Bank, State Bank Of India, Orient Bank, Canara Bank, UCO Bank & HDIL.
And this is list of 10 Weak futures:
Bharti Airtel, RCom, Idea, Grasim, Ambuja Cement, Hind Petro, MTNL, BPCL TV-18 & India Cement.
Nifty is in Up trend
NIFTY FUTURES (F & O):
Above 5138 level, expect short covering up to 5157-5159 zone and thereafter expect a jump up to 5175-5177 zone by non-stop.
Support at 5123-5125 zone. Below this zone, selling may continue up to 5116 level and thereafter slide may continue up to 5104-5106 zone by non-stop.
Buy if touches 5086-5088 zone. Stop Loss at 5068-5070 zone.
On Positive Side, cross above 5205-5207 zone can take it up to 5224-5226 zone by non-stop. If crosses & 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.
3 closes above 5155.00 level, it can zoom up to 5520.00 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.
SL Triggered.
POSITIONAL BUY:
Buy SHR GANAPATH (BSE Cash)
Rally is surprising, bulls may hold on gains today.
1 Week: Surprisingly going down, opposite to bullishness.
1 Month: Bullish, as per current indications.
3 Months: Bullish, as per current indications.
1 Year: Bearish, as per current indications.
Buy CATVISON PRODUCT (BSE Cash)
Rally is surprising, bulls may hold on gains today.
1 Week: Bearish, as per current indications.
1 Month: Surprisingly going down, opposite to bullishness.
3 Months: Surprisingly going down, opposite to bullishness.
1 Year: Bullish, as per current indications.
Global Cues & Rupee
The Dow Jones Industrial Average closed at 10,092.19. Up by 96.28 points.
The Broader S&P 500 closed at 1,097.91. Up by 10.23 points.
The Nasdaq Composite Index closed at 2,176.32. Up by 19.52 points.
The partially convertible rupee INR=IN ended at 46.29/30 per dollar on Friday, weaker than its previous close of 46.225/235.
FUNDS DATA
SPOT LEVELS
Interesting findings on web:
The Dow reclaimed 10,000 on Monday, hitting its highest point in over a year, as a weak dollar, higher commodity prices and some earnings optimism fired up a broad market advance.
Caterpillar, American Express and several others due to post third-quarter reports this week paced U.S. stocks higher Monday, sending the Dow Jones Industrial Average to another closing high for the year.
As earnings expectations have skyrocketed in the past week, so has the market. Last week, the Dow closed above 10000 for the first time in a year on reports from large banks and technology firms. This week, financials are again in the spotlight, joined by a slate of large industrials.
For Monday, the Dow closed up 96.28 points, or 0.96%, to 10092.19, marking its highest close since Oct. 3, 2008.
The Standard & Poor's 500 increased 10.23, or 0.94%, to 1097.91, also marking its highest close since Oct. 3, 2008.
The Nasdaq composite tacked on 19.52, or 0.91%, to 2176.32, ending at its highest close since Sept. 26, 2008.
RUSSELL622.346.16+1%
TRAN4037.7414.59+0.36%
UTIL387.75.67+1.48%
S&P 100506.753.86+0.77%
S&P 400715.67.73+1.09%
NYSE7222.2188.25+1.24%
NAS 1001756.6817.36+1%
Today's rally was a stark contrast to this day 22 years ago, when it was the infamous crash of 1987. If the Dow were to have that big of a crash in today's market, it would shave 2,200 points off the index.
Investors are seeing the kind of earnings numbers that make them feel confident about stocks.
The stock market stepped to new highs for the year Monday after a handful of earnings reports bolstered hopes that the economy is coming back sooner than many analysts had thought.
That is helping some investors move past a bout of nerves about whether expectations for the economy are stretched too far.
"This is a liquidity driven rally and the market is probably going to keep moving higher over the next few weeks," said Tyler Vernon, chief investment officer at Biltmore Capital.
"People are feeling optimistic," he said. "They're getting sick of getting zero percent returns on money market accounts and are wanting to take on more risk."
Earnings have been beating forecasts around 79% of the time, while revenues have been topping expectations around 61% of the time, according to Thomson Reuters.
S&P 500 earnings are expected to have fallen around 23% in the third quarter from a year ago, according to the latest from earnings tracker Thomson Reuters.
That would make the third quarter the ninth consecutive loser for the S&P 500, the worst streak since Thomson began tracking results a decade ago.
Burt White, chief investment officer at LPL Financial in Boston, noted that three of every four companies have topped analysts' expectations for earnings in the July-September quarter. While most have yet to report, the early results are a sign that companies are holding up better than many had predicted.
"The recovery is moving faster than analysts can sharpen their pencils and revise their estimates upward," he said.
Bob Jergovic, chief investment officer at CLS Investments in Omaha, Neb., said investors are now trying to determine whether a recovery in corporate profits will continue and, if so, whether that will help the overall economy if companies are more willing to hire and make investments.
"We're in that phase where the market has really got to sort it out," he said. "Can we make that handoff from a profit recovery to an economic recovery?"
"The stock market wants to move higher," said Michael Levine, a money manager at New York-based OppenheimerFunds Inc., which oversees about $165 billion. "Corporate earnings have been in line or better-than-expected. I see a positive tone through the end of the year."
"No one would have guessed a year ago that we'd be in this position," said Matthew P. Kaufler, a portfolio manager at Federated Clover Investment Advisors. "A lot of the bellwethers have reported, and I think that's what's injecting some enthusiasm into the market."
On the earnings front, Eaton's third-quarter profit plunged 39%, but the earnings handily topped the company's target, with the electrical system and hydraulics maker boosting its full-year earnings view. Eaton closed up 3.47, or 5.7%, at 63.89.
Wall Street recharges the rally as investors gear up for a big week for corporate results. Apple delivers strong results after the close.
After the close Apple (AAPL, Fortune 500) reported fiscal fourth-quarter revenue and earnings that easily beat Wall Street analysts' estimates, thanks to strong sales of Macintosh computers and iPhones. Shares surged as much as 9% in extended-hours trading, hitting an all-time high of $204 per share, before pulling back to trade at $202.19.
Apple's forecast for the current quarter sets revenue in a range between $11.3 billion to $11.6 billion, encompassing the $11.4 billion analysts are predicting. Apple also predicted earnings per share of between $1.70 and $1.78 versus the $1.91 analysts' predict.
Texas Instruments (TXN, Fortune 500) also reported results after the close. The chipmaker reported weaker quarterly earnings and revenue that topped estimates. Shares gained 3% in after-hours trading.
Stocks have been essentially on the rise for more than seven months. Since closing at a more than 12-year low on March 9, the S&P 500 has gained 62.3% as of Monday's close.
About 135 companies, or 27% of the S&P 500, will report results this week, including 13 Dow components. The standouts are: American Express, 3M, Microsoft (MSFT, Fortune 500), Merck (MRK, Fortune 500), Pfizer (PFE, Fortune 500), and Coca-Cola (KO, Fortune 500). Other big names due to report include: Yahoo (YHOO, Fortune 500), Wells Fargo (WFC, Fortune 500), Amazon.com (AMZN, Fortune 500) and eBay (EBAY, Fortune 500).
"We'll have lots of earnings reports this week," said Tom Wirth, senior investment officer at Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. "The trend so far has been positive and there's expectation that will continue. That's positive for stocks. It's very possible that we near 1,200 on the S&P 500 by the end of the year."
Investors grew hopeful that Federal Reserve policymakers would be able to withdraw some of the money supporting the economy as conditions improved. That could help prevent inflation, which is a worry for investors because of the huge amounts of money the government has pumped into the financial system.
The New York Federal Reserve, which carries out the central bank's market operations, said it has been preparing plans for how it could begin weaning the economy from monetary stimulus.
The Fed Bank of New York said that over the past year, it has been working with market participants on operational aspects of reverse repos to ensure the tool will be ready when and if the Federal Open Market Committee decides to use it.
"It's very bullish for stocks," said David Lutz, managing director of equity trading at Stifel Nicolaus & Co. in Baltimore. "A reverse repo is actually a way of tightening. It means the economy is functioning well enough, stimulus has worked, and rates need to go higher. That will be positive overall for U.S. investment flows."
Gains were broad-based Monday, with 25 of 30 Dow issues rising, led by 3M (MMM, Fortune 500), American Express (AXP, Fortune 500), Chevron (CVX, Fortune 500), Caterpillar (CAT, Fortune 500), United Technologies (UTX, Fortune 500), Wal-Mart Stores (WMT, Fortune 500), Exxon Mobil (XOM, Fortune 500) and IBM (IBM, Fortune 500).
The Dow's run today was led by Caterpillar [CAT 57.85 3.28 (+6.01%) ] and American Express [AXP 35.77 0.82 (+2.35%) ], both of which report earnings later this week.
Gains were led by Caterpillar, up 3.28, or 6%, to 57.85, ahead of its third-quarter report Tuesday. Ahead of that report, RBC Capital Markets started the machinery maker at outperform, saying the company was among the best-positioned companies to benefit from improving global growth and spending on construction, infrastructure and commodities. Also helping the Dow, American Express rose 79 cents, or 2.3%, to 3.74, ahead of its third-quarter report Thursday.
"We're still not seeing a lot of top-line revenue growth coming in," said John Buckingham, chief investment officer of Al Frank Asset Management. "But [Caterpillar] was able to put in a price increase even when the conventional wisdom is there is no pricing power. Maybe that means you start to see some revenue growth."
Notably, in the first week of October, Caterpillar disclosed it will raise prices on most of its construction machinery by as much as 2% beginning in January.
The Standard & Poor's 500 index was paced by Gannett, up 1.06, or 8.2%, to 14.06, after the newspaper publisher's third-quarter profit tumbled 53% but beat depressed Wall Street expectations. Overall, consumer discretionaries in the S&P 500 gained 1.4%.
Technology could get a further boost on Tuesday after Apple posted a fiscal fourth-quarter profit increase of 47% after the bell. The company sold more Macintosh computers and iPhones than in any previous quarter, which helped drive revenue. Apple shares closed the regular session up 1.81, or 1%, at 189.86, adding another 6.6% in after-hours activity.
Verizon Wireless, up 6 cents, or 0.2%, to 28.96, and Motorola, up 62 cents, or 7.9%, to 8.47, pleased investors with a new TV ad attacking Apple's iPhone and saying Motorola's Droid phone is coming in November. RBC Capital Markets analyst Mark Sue said investors are relieved Motorola phones should be ready in time for the holiday selling season.
Bucking the trend of positive earnings-related sentiment, BB&T slid 1.22, or 4.3%, to 27.03. The company's third-quarter earnings fell 58% on an increase to its credit-loss provisions as the Mid-Atlantic and Southeast regional bank took over a failed rival.
Toy maker Hasbro's third-quarter profit climbed a bigger-than-expected 8.8%, but shares fell 1.10, or 3.7%, to 28.42, on concerns about inventory and whether the recent momentum can continue.
Weatherford International slid 66 cents, or 3.2%, to 19.92, as its third-quarter earnings slumped 79% amid weak demand for the oilfield-service company, primarily in North America.
German auto maker Daimler surged 3.41, or 6.5%, to 55.95, after saying its third-quarter cash flow and earnings will exceed market expectations.
DTE Energy boosted its 2009 earnings outlook with the Detroit-area energy provider crediting cost cutting, its non-utility operations and tax benefits. DTE closed up 1.37, or 3.8%, at 37.90.
Technology products supplier ITT rose 2.17, or 4%, to 56.63, after it was awarded contracts of $72 million and $19.3 million to provide night-vision goggles and parts for the various branches of the military.
The market was buzzing about news that billionaire investor Carl Icahn has offered to underwrite a $6 billion loan to commercial lender CIT Group [CIT 1.21 0.09 (+8.04%) ]. In a letter to CIT's board, Icahn complained that negotiations between the company and its largest creditors have become too expensive and damaging to other bondholders. CIT shares gained 8 percent to $1.21.
Plus, news that a well-known hedge-fund manager was arrested for insider trading sent a ripple up and down Wall Street.
Amgen [AMGN 60.24 -1.08 (-1.76%) ] was one of the biggest percentage decliners in the Nasdaq 100, down 1.8 percent, after the drug maker said regulators have delayed approval of its new osteoporosis medication, denosumab.
General Electric shares [GE 15.84 -0.24 (-1.49%) ] fell 1.5 percent as the fate of the company's NBC Universal unit hung in the balance. The conglomerate and Vivendi are still $500 million apart on what Vivendi should be paid for NBC Universal, the Wall Street Journal reported this weekend. NBC Universal is the parent company of CNBC.
Some big bank stocks retreated, with Bank of America [BAC 17.16 -0.10 (-0.58%) ], Citigroup [C 18.60 14.01 (+305.23%) ] and JPMorgan [JPM 46.04 -0.02 (-0.04%) ] all lower.
Google [GOOG 552.09 2.24 (+0.41%) ] and Motorola [MOT 8.49 0.64 (+8.15%) ] rose after an offensive line drive of ads for their Droid phone during Sunday football. Verizon Wireless [VZ 28.96 0.06 (+0.21%) ] will begin selling the phone Oct. 30.
The phone has gotten some rave reviews about its speed, among other things, and one analyst said "Android adoption is about to explode." But analysts said Apple has already sold so many phones, it won't be easy to pry market share away from the iPhone titan.
Texas Instruments [TXN 23.50 0.75 (+3.3%) ] also blew past expectations — even on revenue — sending shares higher after-hours.
This will be a crucial week for earnings — and the market. Strong results from companies including Alcoa [AA 14.07 0.03 (+0.21%) ] and JPMorgan [JPM 46.04 -0.02 (-0.04%) ] gave investors cause for optimism this quarter, but if companies start missing the hyped-up whisper numbers, it could derail the market rally.
"As we get further through the earnings season, you're seeing whisper numbers rise," Bruce Zaro, chief technical strategist at Delta Global Advisors, told Reuters. "So, if companies don't blow out earnings, their stocks are going to see a selloff."
That's exactly what happened to Goldman Sachs [GS 185.51 1.14 (+0.62%) ] last week: After JPMorgan's stellar report, the whisper numbers crept higher. Then, when Goldman delivered a solid, but not blockbuster, report, the stock — and other financials — sold off.
So far, 79 percent of companies that have reported earnings have beat analyst estimates, according to Thomson Reuters.
At least a dozen banks report this week, including Morgan Stanley [MS 33.13 0.14 (+0.42%) ], Wells Fargo [WFC 30.07 0.05 (+0.17%) ] and Regions Financial [RF 5.71 -0.12 (-2.06%) ].
Nordstrom added 4.2 percent to $35.85. The department store chain had its share-price estimate increased to $40 from $25 at Barclays Plc, which said earnings will continue to improve for the rest of the year because of recovering sales and low inventories.
Ford Motor Co. rose 2 percent to $7.57. The only U.S. automaker to decline a federal bailout may report "major upside" to third-quarter profit projections, according to analysts at JPMorgan who estimate earnings of 16 cents a share. Analysts on average estimate a loss of 23 cents.
Freeport-McMoRan Copper & Gold Inc., the largest publicly traded copper producer, added 4.3 percent to $79 as copper rose to a five-week high. Gold futures for December delivery added $6.60, or 0.6 percent, to $1,058.10 an ounce in New York as the weakening dollar boosted the appeal of precious metals as an alternative investment.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against those of six major U.S. trading partners, dropped 0.3 percent to 75.363. The U.S. dollar will extend declines as the global economy's recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management.
Fundamental forces are set to put pressure on the dollar as the recovery gathers momentum, Pimco's strategic adviser Richard Clarida wrote on the company's Web site. Those forces include massive budget deficits, bets the Fed will keep borrowing costs near zero for an extended period, and prospects for a double-dip recession in the U.S., he said.
"An orderly decline in the dollar may help to rebalance global investment portfolios if, as expected, global investment flows -- both official and private -- continue to diversify away from U.S. assets," Clarida said.
In a speech today, Fed Chairman Ben Bernanke warned that moves by Asian nations to promote exports could skew trade balances. He urged the U.S. to work on cutting its record budget deficit and encouraged China to get its citizens to spend more.
The Chicago Board Options Exchange's S&P 100 Volatility Index dropped below 20 on an intraday basis for the first time since June 2008 as the rally in stocks prompted investors to pay less for protection from declines in equity prices.
The measure, a precursor to the so-called VIX that tracks options prices on the S&P 500, lost as much as 6.6 percent to 19.81 before ending the day at 20.25. The VXO, as the S&P 100 gauge is known, has fallen from a peak of 87.24 in November after U.S. stocks posted the steepest rally since the 1930s. The VIX added 0.3 percent to 21.49.
Oil,Gold & Currencies:
U.S. light crude oil for November delivery rose $1.08 to settle at $79.61 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $6.50 to settle at $1,058.10 an ounce.
The dollar tumbled versus the euro and the yen, resuming its recent slide versus a basket of currencies.
The dollar weakened to the lowest level in 14 months against the euro as signs the global economy is recovering boosted demand for higher-yielding assets.
Australia's dollar climbed to the strongest since August 2008 after its central bank said keeping borrowing costs low was no longer necessary. The euro advanced for a ninth day against the yen as Asian stocks extended a global rally before reports this week that economists said will show the U.S. housing market and German business confidence improved, damping demand for Japan's currency as a shelter from the recession.
"A mood of euphoria is at work as prospects improve for corporate profits and the economy," said Mitsuru Saito, Tokyo- based chief economist at Tokai Tokyo Securities Co. "Given also the likelihood that the Federal Reserve will maintain its accommodative monetary stance, riskier assets will continue to fare well at the expense of funding currencies."
The dollar dropped to $1.4986 per euro as of 10:48 a.m. in Tokyo from $1.4965 in New York yesterday. It earlier declined to $1.4989, the weakest since August 2008. The U.S. currency bought 90.39 yen from 90.55. The euro was at 135.47 yen from 135.51 yen.
Australia's currency was at 92.93 U.S. cents from 92.92 cents yesterday, after climbing to 93.11 cents, the highest since August 2008. New Zealand's dollar was at 75.49 U.S. cents after touching 75.76 cents, the strongest since July 2008.
'Expansionary Setting'
A "very expansionary setting of policy was no longer necessary, and possibly imprudent," Australian policy makers said in minutes of their Oct. 6 meeting released today in Sydney. The risks in waiting to raise borrowing costs "had increased," they said.
Central bank Governor Glenn Stevens and his board raised the benchmark rate by a quarter percentage point to 3.25 percent at the meeting and signaled that a further increase make take place soon as next month.
Benchmark interest rates of 0.1 percent in Japan and as low as zero in the U.S. make the yen and dollar favorite funding currencies for so-called carry trades, in which investors borrow where interest rates are relatively low and buy assets in nations where returns are higher. The risk in such trades is that currency-market moves can erase profits.
The MSCI Asia Pacific Index of regional shares gained 1 percent and the Nikkei 225 Stock Average rose 1 percent. The Dow Jones Industrial Average climbed 1 percent yesterday.
Corporate Earnings
Analysts surveyed by Bloomberg estimate profits for companies in the Standard & Poor's 500 Index will rise 65 percent in the last three months of the year after falling for nine quarters, the longest streak since the Great Depression.
Earnings at U.S. companies will probably exceed analysts' third-quarter estimates, extending a rally in stocks to year- end, Nomura Holdings Inc. wrote in a note dated Oct. 16. Thirty- four of the 41 companies in the S&P 500 that reported since Oct. 7 surpassed analysts' projections, according to Bloomberg data.
U.S. housing starts rose to an annual rate of 610,000 in September from 598,000 in August, according to a Bloomberg News survey of economists before the Commerce Department report today. The Ifo institute's business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 the previous month, according to a separate survey. The Munich-based institute will release the report Oct. 23.
Fed Signals
Demand for the dollar also weakened after the Federal Reserve signaled in a statement yesterday that it will keep borrowing costs down while assessing ways to drain money from the banking system.
The Fed said it's working with market participants to assess the use of reverse repurchase agreements to withdraw some of the record amounts of cash it added to the financial system.
"This work is a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary-policy tightening," the statement said.
Losses in the U.S. currency were tempered after French Finance Minister Christine Lagarde repeated calls by France and other euro-area countries for a strong dollar, saying ministers agreed to take a common position at meetings in Luxembourg.
"We want a strong dollar, we need a strong dollar," Lagarde told journalists after the meeting. "We must remain disciplined" on our message, she said.
Lagarde also said that euro-area countries agreed to begin ending their economic stimulus programs in 2011, provided "conditions stabilize."
Gains in the euro were limited on speculation the 16- nation region's finance ministers will reiterate concern over the European currency's recent gains at a two-day meeting that ends today.
Euro 'Problem'
Luxembourg Treasury Minister Jean-Claude Juncker, who is leading the meeting of euro-area finance chiefs, said yesterday the ministers "discussed exchange rates extensively," adding that "it's a problem which worries us." Juncker and European Central Bank President Jean-Claude Trichet will travel to China with European Union Monetary Affairs Commissioner Joaquin Almunia before the end of the year to discuss currencies, Juncker said.
"Policy makers may express worries that the euro is too strong, especially against China's renminbi," said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo. "Further euro appreciation will likely hurt the euro- zone's exports more."
The euro has gained 16 percent against the dollar and the renminbi in the past six months, making the region's exports more expensive to overseas buyers and threatening the recovery from the worst recession since World War II.
Bonds:
Treasury prices gained, lowering the yield on the 10-year note to 3.38% from 3.41% late Friday. Treasury prices and yields move in opposite directions.
What to expect:
TUESDAY: Housing starts; producer prices; Madoff sons hearing; report on college pricing; Fed's Plosser speaks; Earnings from Caterpillar, Coca-Cola, DuPont, Pfizer, United Technologies, Lockheed Martin, Regions Financial, SanDisk, Seagate, Yahoo
WEDNESDAY: Weekly mortgage apps; weekly crude inventories; Fed's beige book; Fed's Rosengren speaks; Earnings from Boeing, Eli Lilly, Wells Fargo, Altria, AMR, Continental, Morgan Stanley, USBancorp and eBay
THURSDAY: Weekly jobless claims; leading indicators; Fed's Rosengren, Lockhart and Dudley speak; Earnings from AT&T, Bristol-Myers, McDonald's, Merck, MMM, Travelers, UPS, Schering-Plough, Xerox, Amazon, AmEx, Braodcom and Capital One
FRIDAY: Fed chief Bernanke speaks; existing-home sales; Fed's Kohn speaks; Earnings from Microsoft, Honeywell and Ingersoll-Rand
Invesco Pays $1.5 Billion for Morgan Stanley Unit
Morgan Stanley [MS 33.13 0.14 (+0.42%) ]agreed on Monday to sell its mutual fund business to Invesco [IVZ 23.15 0.40 (+1.76%) ] for $1.5 billion, as the Wall Street bank restructures its money-losing asset management division.
Apple Earnings, Revenue Crush Forecasts; Shares Jump
Apple shares leaped to an all-time high in late trading Monday as the company reported a profit and sales that rose from last year and blew past analysts' forecasts.
TI Shares Rise as Results Top Expectations
Texas Instruments beat earnings forecasts Monday and posted better-than-expected revenue, sending shares higher in afteroon trading.
IMF Says Too Early to Withdraw Stimulus Measures
The International Monetary Fund warned countries on Monday not to scale back stimulus measures used to fight the global recession, saying that could jeopardize a return to weak growth next year.
Anxiety Grows Over Giving Traders 'Naked Access'
The practice of brokers giving high-frequency traders unfettered access to the U.S. stock markets is raising anxiety among industry players who fear the risks it poses and the damage that could be done to their own reputations.
Dollar Drops Versus Euro as Fed Signals Rates Will Stay Low
The dollar dropped to almost a 14- month low versus the euro as the Federal Reserve signaled it will keep borrowing costs at record lows as it assesses a means of draining cash from the U.S. financial system.
Australia's currency rallied to the highest level in 14 months against the dollar after a Reserve Bank of Australia official indicated a move to "more normal" borrowing costs. Canada's dollar rose against the U.S. currency for the first time in three days, climbing to almost the highest level since July 2008 on a rally in crude oil.
"The Fed needs to drain liquidity, but not particularly soon," said Alan Ruskin, head of international currency strategy in North America at RBS Securities Inc. in Stamford, Connecticut. "It lays the groundwork, but they are not clear about the timing. The most important thing is that the Fed funds rate isn't going to move any time soon."
The dollar slid 0.3 percent to $1.4942 per euro at 4:19 p.m. in New York, from $1.4905 at the end of last week. It touched a 14-month low of $1.4968 on Oct. 15. The yen advanced 0.3 percent to 90.63 per dollar, from 90.89, and was little changed at 135.44 versus the euro, compared with 135.48.
The New York Fed said it's working with market participants to assess the use of reverse repurchase agreements to drain the record amount of cash it added to the financial system.
At the same time, the central bank is considering expanding the counterparties for reverse repo operations beyond the 18 primary dealers that trade with it, according to a statement today from the New York Fed. In a reverse repo, the Fed sells securities for a set period, temporarily decreasing the amount of money available in the banking system.
'No Inference'
"No inference should be drawn" as to policy tightening, the New York Fed said in a statement. Fed Vice Chairman Donald Kohn said last week that slow growth warrants very low interest rates for an "extended period." The central bank kept its overnight lending rate in a range of zero to 0.25 percent at its September meeting.
"They were pretty clear that this doesn't signal they are going to tighten sooner," said Fabian Eliasson, head of U.S. currency sales at Mizuho Corporate Bank Ltd. in New York. The dollar weakness is "a continuation of the interest-rate view," he said.
Australia's currency advanced as much as 1.3 percent to 92.86 U.S. cents, the highest level since August 2008. New Zealand's dollar appreciated as much as 1.9 percent to 75.52 U.S. cents, the strongest since July 2008.
Australian View
Philip Lowe, assistant governor of Australia's central bank, said today in Sydney it's "appropriate" to remove stimulus as the economy improves. The central bank's Governor Glenn Stevens unexpectedly increased the nation's cash target to 3.25 percent on Oct. 6. The target rate in New Zealand is 2.5 percent, compared with 1 percent in the 16-nation euro zone.
Canada's currency appreciated as much as 0.8 percent to C$1.0282 per U.S. dollar. It touched C$1.0207 on Oct. 15, the strongest level since July 2008.
Crude oil rose to a one-year high above $79 a barrel as advancing global equities bolstered confidence that an economic recovery will lift fuel consumption. The Standard & Poor's 500 Index increased 0.9 percent, contributing to an equity advance from Shanghai to London. Crude is Canada's biggest export.
The U.S. dollar declined against 13 of the 16 most-traded currencies tracked by Bloomberg News as the gain in stocks encouraged demand for higher-yielding assets.
Borrowing Costs
Benchmark interest rates of 0.1 percent in Japan and as low as zero in the U.S. make the yen and dollar favorite funding currencies for carry trades, in which investors borrow where interest rates are relatively low and buy assets in nations where returns are higher. The risk in such trades is that currency-market moves can erase profits.
Asian central banks are running out of ammunition to fight their currencies' biggest rally since 1998, paving the way for South Korea, Taiwan, Indonesia, Thailand and India to help lead foreign-exchange performance next year.
JPMorgan Chase & Co.'s index of Asian currencies has risen 5.6 percent since its strongest two quarters in 11 years began March 31. Of 34 currencies ranked by Bloomberg forecast surveys, the won, Taiwan dollar, rupiah, baht and rupee will be among next year's dozen strongest, median estimates show. The won has the best prospects and is the second-most-undervalued of 16 major currencies as measured by purchasing power.
The dollar will extend declines versus major rivals as the global economy's recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management Co., which runs the world's biggest bond fund.
Fundamental forces are set to put downward pressure on the dollar as the recovery gathers momentum, Pimco's strategic adviser Richard Clarida wrote on the company's Web site. Those forces include massive budget deficits, bets the Fed will keep borrowing costs near zero for an extended period and prospects for a double-dip recession in the U.S., he said.
Asia:
Asian stocks rose, driving the MSCI Asia Pacific Index to the highest level in more than a year, as earnings reports boosted confidence in the global recovery.
Komatsu Ltd., the world's second-largest maker of construction machinery, jumped 2.5 percent in Tokyo on a Nikkei newspaper report the company will report a quarterly profit. Murata Manufacturing Co., the world's largest capacitor maker, rose 1.8 percent in Osaka after Texas Instruments Inc. and Apple Inc. posted better-than-expected earnings. BHP Billiton Ltd. added 1.7 percent in Sydney after oil climbed to a one-year high.
"We're likely to see companies beat forecasts as they report in coming weeks,'' said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo, which oversees the equivalent of $4 billion. "The question remains though whether they will lift full-year projections."
The MSCI Asia Pacific Index added 0.8 percent to 121.32 as of 9:59 a.m. Tokyo time, set for the highest close since Sept. 8, 2008. The gauge has surged 72 percent from a five-year low on March 9 amid signs the global economy is rebounding from the worst slowdown since World War II.
Japan's Nikkei 225 Stock Average added 1.2 percent, while South Korea's Kospi Index advanced 0.5 percent. Australia's S&P/ASX 200 Index gained 1.4 percent as the country's central bank said low interest rates were no longer needed.
Futures on the Standard & Poor's 500 Index rose 0.4 percent. The gauge advanced 0.9 percent yesterday to the highest close since Oct. 3, 2008. Caterpillar Inc., Komatsu's largest rival, surged 6 percent after RBC Capital Markets recommended the stock.
Treasuries, Dollar
Treasuries fell and the dollar traded near a 14-month low against the euro amid rising demand for higher-yielding assets. Yields on two-year Treasury notes rose two basis points to 0.98 percent, according to data compiled by Bloomberg. The dollar was at $1.4973 per euro from $1.4965 in New York yesterday after earlier declining to $1.4981, the weakest since August 2008.
Komatsu advanced 2.5 percent to 1,841 yen, while closest rival Hitachi Construction Machinery Co. gained 2.3 percent to 2,275 yen. Komatsu likely had an operating profit of 10 billion yen ($110 million) in the three months through September, buoyed by demand in China, the Nikkei newspaper reported.
The company, due to report results next week, posted operating income of 8.27 billion yen in the April-June period and a 48.2 billion operating loss in the previous quarter.
Murata gained 2.5 percent to 4,510 yen. Advantest Corp., the world's biggest maker of equipment used to test computer memory chips, added 1.4 percent to 2,500 yen after the Nikkei newspaper said orders for the company's products rose about 21 percent in the three months to September.
'Turned The Corner'
After the close of U.S. trading, Texas Instruments forecast fourth-quarter profit and sales that exceeded analysts' estimates, and Apple's fourth-quarter profit soared 47 percent.
"The U.S. economy has clearly turned the corner," said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. "Market gains are likely to be led by high-tech shares today, based on the strength of U.S. earnings reports."
The MSCI Asia Pacific Index has rallied 35 percent this year, set for its biggest annual increase since 2003, amid better-than-estimated earnings and economic reports. Shares in the gauge are priced at an average 23.4 times estimated earnings, compared with the three-year average of 18 times.
BHP, the world's largest mining company, added 1.7 percent to A$39.75, and rival Rio Tinto Group rose 2.1 percent to A$65.99. Crude oil rose 1.4 percent to $79.61 a barrel in New York yesterday, the highest level since Oct. 13, 2008. The London Metals Index, a measure of six metals including copper and zinc, jumped 3.2 percent yesterday.
Nikkei 225 10,347.58 +111.07 ( +1.09%). (08.26 AM IST)
Japan's Nikkei average rose 1.1 percent on Tuesday, buoyed by tech shares such as Kyocera Corp (6971.T) after a wave of solid earnings helped underscore that the U.S. economy is on the mend and pushed Wall Street to a 12-month high.
Shares in companies with strong reliance on the Chinese market, such as Hitachi Construction (6305.T), gained on expectations of strong economic growth ahead of the release of key data later this week. The benchmark Nikkei .N225 rose 111.07 points to 10,347.58 by the end of morning trade, while the broader Topix gained 1 percent to 914.68.
HSI 22344.21 +143.75 +0.65% .(08.28 AM IST)
Hong Kong's stock market posted gains in early trading Tuesday, with the Hang Seng Index rising 0.6% to 22,329.4 and the mainland-China-focused Hang Seng China Enterprises Index gaining 1.1%. China Merchants Bank Co. /quotes/comstock/22h!e:3968 (HK:3968 19.34, +0.54, +2.87%) /quotes/comstock/11i!cihhf (CIHHF 2.36, -0.01, -0.42%) was among the leading advancers, up 2.9%, after shareholders signed off on a plan to raise up to 22 billion yuan ($3.2 billion) in a rights issue to replenish capital levels, according to Dow Jones Newswires. Rising commodity prices also helped mainland resource plays, with Aluminum Corp. of China /quotes/comstock/22h!e:2600 (HK:2600 9.29, +0.11, +1.20%) /quotes/comstock/11i!almmf (ALMMF 1.14, -0.06, -5.00%) gaining 1.2%, Angang Steel Co. /quotes/comstock/22h!e:347 (HK:347 16.26, +0.02, +0.12%) /quotes/comstock/11i!anggf (ANGGF 1.95, -0.05, -2.50%) up 1% and Jiangxi Copper Co. /quotes/comstock/22h!e:358 (HK:358 19.06, +0.06, +0.32%) /quotes/comstock/11i!jiaxf (JIAXF 2.35, +0.06, +2.62%) gaining 1.1%. Over in mainland China, the Shanghai Composite was 1% higher in early morning action.
Chinese stocks open 0.8% higher on Tue
Chinese stocks opened higher on Tuesday morning, tracking gains from the previous closing.
The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 3,062.55 points, up 0.8% or 24.28 points from the previous closing.
The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.67% or 83.21 points higher at 12,566.47 points.
Lotte Shopping agrees to buy 72.3% stake in Times (20 Oct)
Hang Seng Index opens 59 points higher on Tue (20 Oct)
1st Wanda Plaza in Mianyang to start construction (20 Oct)
Chinese stocks open 0.8% higher on Tue (20 Oct)
World Bank to buy 15% stake in Deyang City Commercial Bank (20 Oct)
JPMorgan raises stake in Ausnutria Dairy to 6.29% (20 Oct)
China's aviation industry gains RMB 9.1 bln in Jan-Sep (20 Oct)
Bank of East Asia to raise up to US$600 bln via hybrid issue (20 Oct)
Bank of Jiangsu to issue RMB 2 bln in subordinated bonds (20 Oct)
Longyuan Power plans to raise up to US$1 bln from HK IPO (20 Oct)
Changhong, AUO's JV launches production of LCDs (20 Oct)
Hanlong Mining Inv't becomes controlling shareholder of Moly Mines (20 Oct)
Great Wall AMC, Nippon Life set up JV in Shanghai (20 Oct)
U.S. announces new aid to home market
China's cell phone use surges to high
MARKET BUZZ:
(May not be useful for day-traders.)
Asian Paints-The Colour Is Back
A very significant pointer that Bombay is in the midst of a roaring bull market becomes apparent when the market is prepared to give peak PE multiples to the stocks that are outperforming. While those risk-averse would disagree and sell the market, this infact would further fuel up buying.
A case in point is Asian Paints (ASPN)-at 30 times FY10 earnings estimate it is one of the most expensive stocks being traded in Bombay..and yet it continues to rise.
Volume growth evidenced a sharp rebound in the core domestic decorative paint from 4QFY09 onwards –indicating that the business is gradually recovering. After the 13% volume growth last fiscal, Asian Paints expects volumes to exhibit steady growth.
Demand in the key decorative paints business continues to remain firm (except in cities like Mumbai and Bangalore).
Improving market share, mix —ASPN has increased market share, gained from both the organised and unorganized players. Mix improvement continues with good growth in emulsions category.
Cost pressures abating — ASPN's input cost index has declined Q/Q from peak levels of 125 (base of 100 in FY08) to around 113 in 4QFY09 and is expected to remain benign in 1HFY10; thus margins are expected to improve going forward - gross margins to expand 70bps in FY10E.
The trend of sharp INR appreciation vs. the US$ should beneficially impact EBITDA margins.
International business steady, although macro concerns persist —
International revenue growth remained steady, driven by both volumes and pricing action in various markets driven by Middle East & South Asia markets. The currency movement impact on the international business revenues and profits was about 5-6% in 2008. And yet despite some slowdown in Dubai, most of the Middle East market (Egypt, Oman, etc) continues to grow.
(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
RESISTANCE
5138
5159
5177
5125
5207
5226
SUPPORT
5123
5116
5104
5086
Buy SHR GANAPATH;CATVISON PRODUCT
INTRADAY calls for 20th Oct 2009
+ve Script & Sector : BATA, Bharti, Escorts, FedBank
BUY AxisBank-1011 for 1135-1156+ with sl 1000
BUY Bajajhind-217 for 218-220+ with sl 215
BUY Bhusanstel-1404 for 1465-1485+ with sl 1390
Positional
BUY Tataelxsi-184 for 195-199+ with sl 179
BUY Ballarpur-23 for 26+ with sl 22.25
BUY CenturyTex-537 for 565+ with sl 529
BUY GujAlkalia-134 for 155-169+ with sl 127
Expected Breakout
BUY Jindalsaw-797 above 801 for 854+ with sl 790
BUY LicHousing-798 above 807 for 827+ with sl 797
Breakout
BUY DLF-461 for 511-529+ with sl 448
BUY Educomp-4819 for 5300+ with sl 4770
Strong & Weak futures
This is list of 10 strong futures:
Sesa Goa, Dena Bank, Indusind Bank, LITL, Yes Bank, State Bank Of India, Orient Bank, Canara Bank, UCO Bank & HDIL.
And this is list of 10 Weak futures:
Bharti Airtel, RCom, Idea, Grasim, Ambuja Cement, Hind Petro, MTNL, BPCL TV-18 & India Cement.
Nifty is in Up trend
NIFTY FUTURES (F & O):
Above 5138 level, expect short covering up to 5157-5159 zone and thereafter expect a jump up to 5175-5177 zone by non-stop.
Support at 5123-5125 zone. Below this zone, selling may continue up to 5116 level and thereafter slide may continue up to 5104-5106 zone by non-stop.
Buy if touches 5086-5088 zone. Stop Loss at 5068-5070 zone.
On Positive Side, cross above 5205-5207 zone can take it up to 5224-5226 zone by non-stop. If crosses & 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.
3 closes above 5155.00 level, it can zoom up to 5520.00 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.
SL Triggered.
POSITIONAL BUY:
Buy SHR GANAPATH (BSE Cash)
Rally is surprising, bulls may hold on gains today.
1 Week: Surprisingly going down, opposite to bullishness.
1 Month: Bullish, as per current indications.
3 Months: Bullish, as per current indications.
1 Year: Bearish, as per current indications.
Buy CATVISON PRODUCT (BSE Cash)
Rally is surprising, bulls may hold on gains today.
1 Week: Bearish, as per current indications.
1 Month: Surprisingly going down, opposite to bullishness.
3 Months: Surprisingly going down, opposite to bullishness.
1 Year: Bullish, as per current indications.
Global Cues & Rupee
The Dow Jones Industrial Average closed at 10,092.19. Up by 96.28 points.
The Broader S&P 500 closed at 1,097.91. Up by 10.23 points.
The Nasdaq Composite Index closed at 2,176.32. Up by 19.52 points.
The partially convertible rupee INR=IN ended at 46.29/30 per dollar on Friday, weaker than its previous close of 46.225/235.
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 | 17-Oct-2009 | 41.82 | 41.53 | 0.29 |
| DII trading activity on NSE and BSE in Capital Market Segment(In Rs. Crores) | ||||
| Category | Date | Buy Value | Sell Value | Net Value |
| DII | 17-Oct-2009 | 70.98 | 26.65 | 44.33 |
SPOT LEVELS
 | 5141.80 | ( -0.01 %) | -0.35 |  |
| 1 | 2 | 3 | ||
| Resistance | 5163.47 | 5184.78 | 5219.92 | |
| Support | 5107.02 | 5071.88 | 5050.57 | |
 | 17266.63 | ( -0.32 %) | -56.19 | | |
| 1 | 2 | 3 | |||
| Resistance | 17404.93 | 17487.04 | 17626.23 | ||
| Support | 17183.63 | 17044.44 | 16962.33 | ||
Interesting findings on web:
The Dow reclaimed 10,000 on Monday, hitting its highest point in over a year, as a weak dollar, higher commodity prices and some earnings optimism fired up a broad market advance.
Caterpillar, American Express and several others due to post third-quarter reports this week paced U.S. stocks higher Monday, sending the Dow Jones Industrial Average to another closing high for the year.
As earnings expectations have skyrocketed in the past week, so has the market. Last week, the Dow closed above 10000 for the first time in a year on reports from large banks and technology firms. This week, financials are again in the spotlight, joined by a slate of large industrials.
For Monday, the Dow closed up 96.28 points, or 0.96%, to 10092.19, marking its highest close since Oct. 3, 2008.
The Standard & Poor's 500 increased 10.23, or 0.94%, to 1097.91, also marking its highest close since Oct. 3, 2008.
The Nasdaq composite tacked on 19.52, or 0.91%, to 2176.32, ending at its highest close since Sept. 26, 2008.
RUSSELL622.346.16+1%
TRAN4037.7414.59+0.36%
UTIL387.75.67+1.48%
S&P 100506.753.86+0.77%
S&P 400715.67.73+1.09%
NYSE7222.2188.25+1.24%
NAS 1001756.6817.36+1%
Today's rally was a stark contrast to this day 22 years ago, when it was the infamous crash of 1987. If the Dow were to have that big of a crash in today's market, it would shave 2,200 points off the index.
Investors are seeing the kind of earnings numbers that make them feel confident about stocks.
The stock market stepped to new highs for the year Monday after a handful of earnings reports bolstered hopes that the economy is coming back sooner than many analysts had thought.
That is helping some investors move past a bout of nerves about whether expectations for the economy are stretched too far.
"This is a liquidity driven rally and the market is probably going to keep moving higher over the next few weeks," said Tyler Vernon, chief investment officer at Biltmore Capital.
"People are feeling optimistic," he said. "They're getting sick of getting zero percent returns on money market accounts and are wanting to take on more risk."
Earnings have been beating forecasts around 79% of the time, while revenues have been topping expectations around 61% of the time, according to Thomson Reuters.
S&P 500 earnings are expected to have fallen around 23% in the third quarter from a year ago, according to the latest from earnings tracker Thomson Reuters.
That would make the third quarter the ninth consecutive loser for the S&P 500, the worst streak since Thomson began tracking results a decade ago.
Burt White, chief investment officer at LPL Financial in Boston, noted that three of every four companies have topped analysts' expectations for earnings in the July-September quarter. While most have yet to report, the early results are a sign that companies are holding up better than many had predicted.
"The recovery is moving faster than analysts can sharpen their pencils and revise their estimates upward," he said.
Bob Jergovic, chief investment officer at CLS Investments in Omaha, Neb., said investors are now trying to determine whether a recovery in corporate profits will continue and, if so, whether that will help the overall economy if companies are more willing to hire and make investments.
"We're in that phase where the market has really got to sort it out," he said. "Can we make that handoff from a profit recovery to an economic recovery?"
"The stock market wants to move higher," said Michael Levine, a money manager at New York-based OppenheimerFunds Inc., which oversees about $165 billion. "Corporate earnings have been in line or better-than-expected. I see a positive tone through the end of the year."
"No one would have guessed a year ago that we'd be in this position," said Matthew P. Kaufler, a portfolio manager at Federated Clover Investment Advisors. "A lot of the bellwethers have reported, and I think that's what's injecting some enthusiasm into the market."
On the earnings front, Eaton's third-quarter profit plunged 39%, but the earnings handily topped the company's target, with the electrical system and hydraulics maker boosting its full-year earnings view. Eaton closed up 3.47, or 5.7%, at 63.89.
Wall Street recharges the rally as investors gear up for a big week for corporate results. Apple delivers strong results after the close.
After the close Apple (AAPL, Fortune 500) reported fiscal fourth-quarter revenue and earnings that easily beat Wall Street analysts' estimates, thanks to strong sales of Macintosh computers and iPhones. Shares surged as much as 9% in extended-hours trading, hitting an all-time high of $204 per share, before pulling back to trade at $202.19.
Apple's forecast for the current quarter sets revenue in a range between $11.3 billion to $11.6 billion, encompassing the $11.4 billion analysts are predicting. Apple also predicted earnings per share of between $1.70 and $1.78 versus the $1.91 analysts' predict.
Texas Instruments (TXN, Fortune 500) also reported results after the close. The chipmaker reported weaker quarterly earnings and revenue that topped estimates. Shares gained 3% in after-hours trading.
Stocks have been essentially on the rise for more than seven months. Since closing at a more than 12-year low on March 9, the S&P 500 has gained 62.3% as of Monday's close.
About 135 companies, or 27% of the S&P 500, will report results this week, including 13 Dow components. The standouts are: American Express, 3M, Microsoft (MSFT, Fortune 500), Merck (MRK, Fortune 500), Pfizer (PFE, Fortune 500), and Coca-Cola (KO, Fortune 500). Other big names due to report include: Yahoo (YHOO, Fortune 500), Wells Fargo (WFC, Fortune 500), Amazon.com (AMZN, Fortune 500) and eBay (EBAY, Fortune 500).
"We'll have lots of earnings reports this week," said Tom Wirth, senior investment officer at Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. "The trend so far has been positive and there's expectation that will continue. That's positive for stocks. It's very possible that we near 1,200 on the S&P 500 by the end of the year."
Investors grew hopeful that Federal Reserve policymakers would be able to withdraw some of the money supporting the economy as conditions improved. That could help prevent inflation, which is a worry for investors because of the huge amounts of money the government has pumped into the financial system.
The New York Federal Reserve, which carries out the central bank's market operations, said it has been preparing plans for how it could begin weaning the economy from monetary stimulus.
The Fed Bank of New York said that over the past year, it has been working with market participants on operational aspects of reverse repos to ensure the tool will be ready when and if the Federal Open Market Committee decides to use it.
"It's very bullish for stocks," said David Lutz, managing director of equity trading at Stifel Nicolaus & Co. in Baltimore. "A reverse repo is actually a way of tightening. It means the economy is functioning well enough, stimulus has worked, and rates need to go higher. That will be positive overall for U.S. investment flows."
Gains were broad-based Monday, with 25 of 30 Dow issues rising, led by 3M (MMM, Fortune 500), American Express (AXP, Fortune 500), Chevron (CVX, Fortune 500), Caterpillar (CAT, Fortune 500), United Technologies (UTX, Fortune 500), Wal-Mart Stores (WMT, Fortune 500), Exxon Mobil (XOM, Fortune 500) and IBM (IBM, Fortune 500).
The Dow's run today was led by Caterpillar [CAT 57.85 3.28 (+6.01%) ] and American Express [AXP 35.77 0.82 (+2.35%) ], both of which report earnings later this week.
Gains were led by Caterpillar, up 3.28, or 6%, to 57.85, ahead of its third-quarter report Tuesday. Ahead of that report, RBC Capital Markets started the machinery maker at outperform, saying the company was among the best-positioned companies to benefit from improving global growth and spending on construction, infrastructure and commodities. Also helping the Dow, American Express rose 79 cents, or 2.3%, to 3.74, ahead of its third-quarter report Thursday.
"We're still not seeing a lot of top-line revenue growth coming in," said John Buckingham, chief investment officer of Al Frank Asset Management. "But [Caterpillar] was able to put in a price increase even when the conventional wisdom is there is no pricing power. Maybe that means you start to see some revenue growth."
Notably, in the first week of October, Caterpillar disclosed it will raise prices on most of its construction machinery by as much as 2% beginning in January.
The Standard & Poor's 500 index was paced by Gannett, up 1.06, or 8.2%, to 14.06, after the newspaper publisher's third-quarter profit tumbled 53% but beat depressed Wall Street expectations. Overall, consumer discretionaries in the S&P 500 gained 1.4%.
Technology could get a further boost on Tuesday after Apple posted a fiscal fourth-quarter profit increase of 47% after the bell. The company sold more Macintosh computers and iPhones than in any previous quarter, which helped drive revenue. Apple shares closed the regular session up 1.81, or 1%, at 189.86, adding another 6.6% in after-hours activity.
Verizon Wireless, up 6 cents, or 0.2%, to 28.96, and Motorola, up 62 cents, or 7.9%, to 8.47, pleased investors with a new TV ad attacking Apple's iPhone and saying Motorola's Droid phone is coming in November. RBC Capital Markets analyst Mark Sue said investors are relieved Motorola phones should be ready in time for the holiday selling season.
Bucking the trend of positive earnings-related sentiment, BB&T slid 1.22, or 4.3%, to 27.03. The company's third-quarter earnings fell 58% on an increase to its credit-loss provisions as the Mid-Atlantic and Southeast regional bank took over a failed rival.
Toy maker Hasbro's third-quarter profit climbed a bigger-than-expected 8.8%, but shares fell 1.10, or 3.7%, to 28.42, on concerns about inventory and whether the recent momentum can continue.
Weatherford International slid 66 cents, or 3.2%, to 19.92, as its third-quarter earnings slumped 79% amid weak demand for the oilfield-service company, primarily in North America.
German auto maker Daimler surged 3.41, or 6.5%, to 55.95, after saying its third-quarter cash flow and earnings will exceed market expectations.
DTE Energy boosted its 2009 earnings outlook with the Detroit-area energy provider crediting cost cutting, its non-utility operations and tax benefits. DTE closed up 1.37, or 3.8%, at 37.90.
Technology products supplier ITT rose 2.17, or 4%, to 56.63, after it was awarded contracts of $72 million and $19.3 million to provide night-vision goggles and parts for the various branches of the military.
The market was buzzing about news that billionaire investor Carl Icahn has offered to underwrite a $6 billion loan to commercial lender CIT Group [CIT 1.21 0.09 (+8.04%) ]. In a letter to CIT's board, Icahn complained that negotiations between the company and its largest creditors have become too expensive and damaging to other bondholders. CIT shares gained 8 percent to $1.21.
Plus, news that a well-known hedge-fund manager was arrested for insider trading sent a ripple up and down Wall Street.
Amgen [AMGN 60.24 -1.08 (-1.76%) ] was one of the biggest percentage decliners in the Nasdaq 100, down 1.8 percent, after the drug maker said regulators have delayed approval of its new osteoporosis medication, denosumab.
General Electric shares [GE 15.84 -0.24 (-1.49%) ] fell 1.5 percent as the fate of the company's NBC Universal unit hung in the balance. The conglomerate and Vivendi are still $500 million apart on what Vivendi should be paid for NBC Universal, the Wall Street Journal reported this weekend. NBC Universal is the parent company of CNBC.
Some big bank stocks retreated, with Bank of America [BAC 17.16 -0.10 (-0.58%) ], Citigroup [C 18.60 14.01 (+305.23%) ] and JPMorgan [JPM 46.04 -0.02 (-0.04%) ] all lower.
Google [GOOG 552.09 2.24 (+0.41%) ] and Motorola [MOT 8.49 0.64 (+8.15%) ] rose after an offensive line drive of ads for their Droid phone during Sunday football. Verizon Wireless [VZ 28.96 0.06 (+0.21%) ] will begin selling the phone Oct. 30.
The phone has gotten some rave reviews about its speed, among other things, and one analyst said "Android adoption is about to explode." But analysts said Apple has already sold so many phones, it won't be easy to pry market share away from the iPhone titan.
Texas Instruments [TXN 23.50 0.75 (+3.3%) ] also blew past expectations — even on revenue — sending shares higher after-hours.
This will be a crucial week for earnings — and the market. Strong results from companies including Alcoa [AA 14.07 0.03 (+0.21%) ] and JPMorgan [JPM 46.04 -0.02 (-0.04%) ] gave investors cause for optimism this quarter, but if companies start missing the hyped-up whisper numbers, it could derail the market rally.
"As we get further through the earnings season, you're seeing whisper numbers rise," Bruce Zaro, chief technical strategist at Delta Global Advisors, told Reuters. "So, if companies don't blow out earnings, their stocks are going to see a selloff."
That's exactly what happened to Goldman Sachs [GS 185.51 1.14 (+0.62%) ] last week: After JPMorgan's stellar report, the whisper numbers crept higher. Then, when Goldman delivered a solid, but not blockbuster, report, the stock — and other financials — sold off.
So far, 79 percent of companies that have reported earnings have beat analyst estimates, according to Thomson Reuters.
At least a dozen banks report this week, including Morgan Stanley [MS 33.13 0.14 (+0.42%) ], Wells Fargo [WFC 30.07 0.05 (+0.17%) ] and Regions Financial [RF 5.71 -0.12 (-2.06%) ].
Nordstrom added 4.2 percent to $35.85. The department store chain had its share-price estimate increased to $40 from $25 at Barclays Plc, which said earnings will continue to improve for the rest of the year because of recovering sales and low inventories.
Ford Motor Co. rose 2 percent to $7.57. The only U.S. automaker to decline a federal bailout may report "major upside" to third-quarter profit projections, according to analysts at JPMorgan who estimate earnings of 16 cents a share. Analysts on average estimate a loss of 23 cents.
Freeport-McMoRan Copper & Gold Inc., the largest publicly traded copper producer, added 4.3 percent to $79 as copper rose to a five-week high. Gold futures for December delivery added $6.60, or 0.6 percent, to $1,058.10 an ounce in New York as the weakening dollar boosted the appeal of precious metals as an alternative investment.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the currency against those of six major U.S. trading partners, dropped 0.3 percent to 75.363. The U.S. dollar will extend declines as the global economy's recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management.
Fundamental forces are set to put pressure on the dollar as the recovery gathers momentum, Pimco's strategic adviser Richard Clarida wrote on the company's Web site. Those forces include massive budget deficits, bets the Fed will keep borrowing costs near zero for an extended period, and prospects for a double-dip recession in the U.S., he said.
"An orderly decline in the dollar may help to rebalance global investment portfolios if, as expected, global investment flows -- both official and private -- continue to diversify away from U.S. assets," Clarida said.
In a speech today, Fed Chairman Ben Bernanke warned that moves by Asian nations to promote exports could skew trade balances. He urged the U.S. to work on cutting its record budget deficit and encouraged China to get its citizens to spend more.
The Chicago Board Options Exchange's S&P 100 Volatility Index dropped below 20 on an intraday basis for the first time since June 2008 as the rally in stocks prompted investors to pay less for protection from declines in equity prices.
The measure, a precursor to the so-called VIX that tracks options prices on the S&P 500, lost as much as 6.6 percent to 19.81 before ending the day at 20.25. The VXO, as the S&P 100 gauge is known, has fallen from a peak of 87.24 in November after U.S. stocks posted the steepest rally since the 1930s. The VIX added 0.3 percent to 21.49.
Oil,Gold & Currencies:
U.S. light crude oil for November delivery rose $1.08 to settle at $79.61 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery rose $6.50 to settle at $1,058.10 an ounce.
The dollar tumbled versus the euro and the yen, resuming its recent slide versus a basket of currencies.
The dollar weakened to the lowest level in 14 months against the euro as signs the global economy is recovering boosted demand for higher-yielding assets.
Australia's dollar climbed to the strongest since August 2008 after its central bank said keeping borrowing costs low was no longer necessary. The euro advanced for a ninth day against the yen as Asian stocks extended a global rally before reports this week that economists said will show the U.S. housing market and German business confidence improved, damping demand for Japan's currency as a shelter from the recession.
"A mood of euphoria is at work as prospects improve for corporate profits and the economy," said Mitsuru Saito, Tokyo- based chief economist at Tokai Tokyo Securities Co. "Given also the likelihood that the Federal Reserve will maintain its accommodative monetary stance, riskier assets will continue to fare well at the expense of funding currencies."
The dollar dropped to $1.4986 per euro as of 10:48 a.m. in Tokyo from $1.4965 in New York yesterday. It earlier declined to $1.4989, the weakest since August 2008. The U.S. currency bought 90.39 yen from 90.55. The euro was at 135.47 yen from 135.51 yen.
Australia's currency was at 92.93 U.S. cents from 92.92 cents yesterday, after climbing to 93.11 cents, the highest since August 2008. New Zealand's dollar was at 75.49 U.S. cents after touching 75.76 cents, the strongest since July 2008.
'Expansionary Setting'
A "very expansionary setting of policy was no longer necessary, and possibly imprudent," Australian policy makers said in minutes of their Oct. 6 meeting released today in Sydney. The risks in waiting to raise borrowing costs "had increased," they said.
Central bank Governor Glenn Stevens and his board raised the benchmark rate by a quarter percentage point to 3.25 percent at the meeting and signaled that a further increase make take place soon as next month.
Benchmark interest rates of 0.1 percent in Japan and as low as zero in the U.S. make the yen and dollar favorite funding currencies for so-called carry trades, in which investors borrow where interest rates are relatively low and buy assets in nations where returns are higher. The risk in such trades is that currency-market moves can erase profits.
The MSCI Asia Pacific Index of regional shares gained 1 percent and the Nikkei 225 Stock Average rose 1 percent. The Dow Jones Industrial Average climbed 1 percent yesterday.
Corporate Earnings
Analysts surveyed by Bloomberg estimate profits for companies in the Standard & Poor's 500 Index will rise 65 percent in the last three months of the year after falling for nine quarters, the longest streak since the Great Depression.
Earnings at U.S. companies will probably exceed analysts' third-quarter estimates, extending a rally in stocks to year- end, Nomura Holdings Inc. wrote in a note dated Oct. 16. Thirty- four of the 41 companies in the S&P 500 that reported since Oct. 7 surpassed analysts' projections, according to Bloomberg data.
U.S. housing starts rose to an annual rate of 610,000 in September from 598,000 in August, according to a Bloomberg News survey of economists before the Commerce Department report today. The Ifo institute's business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 the previous month, according to a separate survey. The Munich-based institute will release the report Oct. 23.
Fed Signals
Demand for the dollar also weakened after the Federal Reserve signaled in a statement yesterday that it will keep borrowing costs down while assessing ways to drain money from the banking system.
The Fed said it's working with market participants to assess the use of reverse repurchase agreements to withdraw some of the record amounts of cash it added to the financial system.
"This work is a matter of prudent advance planning by the Federal Reserve, and no inference should be drawn about the timing of monetary-policy tightening," the statement said.
Losses in the U.S. currency were tempered after French Finance Minister Christine Lagarde repeated calls by France and other euro-area countries for a strong dollar, saying ministers agreed to take a common position at meetings in Luxembourg.
"We want a strong dollar, we need a strong dollar," Lagarde told journalists after the meeting. "We must remain disciplined" on our message, she said.
Lagarde also said that euro-area countries agreed to begin ending their economic stimulus programs in 2011, provided "conditions stabilize."
Gains in the euro were limited on speculation the 16- nation region's finance ministers will reiterate concern over the European currency's recent gains at a two-day meeting that ends today.
Euro 'Problem'
Luxembourg Treasury Minister Jean-Claude Juncker, who is leading the meeting of euro-area finance chiefs, said yesterday the ministers "discussed exchange rates extensively," adding that "it's a problem which worries us." Juncker and European Central Bank President Jean-Claude Trichet will travel to China with European Union Monetary Affairs Commissioner Joaquin Almunia before the end of the year to discuss currencies, Juncker said.
"Policy makers may express worries that the euro is too strong, especially against China's renminbi," said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. Ltd. in Tokyo. "Further euro appreciation will likely hurt the euro- zone's exports more."
The euro has gained 16 percent against the dollar and the renminbi in the past six months, making the region's exports more expensive to overseas buyers and threatening the recovery from the worst recession since World War II.
Bonds:
Treasury prices gained, lowering the yield on the 10-year note to 3.38% from 3.41% late Friday. Treasury prices and yields move in opposite directions.
What to expect:
TUESDAY: Housing starts; producer prices; Madoff sons hearing; report on college pricing; Fed's Plosser speaks; Earnings from Caterpillar, Coca-Cola, DuPont, Pfizer, United Technologies, Lockheed Martin, Regions Financial, SanDisk, Seagate, Yahoo
WEDNESDAY: Weekly mortgage apps; weekly crude inventories; Fed's beige book; Fed's Rosengren speaks; Earnings from Boeing, Eli Lilly, Wells Fargo, Altria, AMR, Continental, Morgan Stanley, USBancorp and eBay
THURSDAY: Weekly jobless claims; leading indicators; Fed's Rosengren, Lockhart and Dudley speak; Earnings from AT&T, Bristol-Myers, McDonald's, Merck, MMM, Travelers, UPS, Schering-Plough, Xerox, Amazon, AmEx, Braodcom and Capital One
FRIDAY: Fed chief Bernanke speaks; existing-home sales; Fed's Kohn speaks; Earnings from Microsoft, Honeywell and Ingersoll-Rand
Invesco Pays $1.5 Billion for Morgan Stanley Unit
Morgan Stanley [MS 33.13 0.14 (+0.42%) ]agreed on Monday to sell its mutual fund business to Invesco [IVZ 23.15 0.40 (+1.76%) ] for $1.5 billion, as the Wall Street bank restructures its money-losing asset management division.
Apple Earnings, Revenue Crush Forecasts; Shares Jump
Apple shares leaped to an all-time high in late trading Monday as the company reported a profit and sales that rose from last year and blew past analysts' forecasts.
TI Shares Rise as Results Top Expectations
Texas Instruments beat earnings forecasts Monday and posted better-than-expected revenue, sending shares higher in afteroon trading.
IMF Says Too Early to Withdraw Stimulus Measures
The International Monetary Fund warned countries on Monday not to scale back stimulus measures used to fight the global recession, saying that could jeopardize a return to weak growth next year.
Anxiety Grows Over Giving Traders 'Naked Access'
The practice of brokers giving high-frequency traders unfettered access to the U.S. stock markets is raising anxiety among industry players who fear the risks it poses and the damage that could be done to their own reputations.
Dollar Drops Versus Euro as Fed Signals Rates Will Stay Low
The dollar dropped to almost a 14- month low versus the euro as the Federal Reserve signaled it will keep borrowing costs at record lows as it assesses a means of draining cash from the U.S. financial system.
Australia's currency rallied to the highest level in 14 months against the dollar after a Reserve Bank of Australia official indicated a move to "more normal" borrowing costs. Canada's dollar rose against the U.S. currency for the first time in three days, climbing to almost the highest level since July 2008 on a rally in crude oil.
"The Fed needs to drain liquidity, but not particularly soon," said Alan Ruskin, head of international currency strategy in North America at RBS Securities Inc. in Stamford, Connecticut. "It lays the groundwork, but they are not clear about the timing. The most important thing is that the Fed funds rate isn't going to move any time soon."
The dollar slid 0.3 percent to $1.4942 per euro at 4:19 p.m. in New York, from $1.4905 at the end of last week. It touched a 14-month low of $1.4968 on Oct. 15. The yen advanced 0.3 percent to 90.63 per dollar, from 90.89, and was little changed at 135.44 versus the euro, compared with 135.48.
The New York Fed said it's working with market participants to assess the use of reverse repurchase agreements to drain the record amount of cash it added to the financial system.
At the same time, the central bank is considering expanding the counterparties for reverse repo operations beyond the 18 primary dealers that trade with it, according to a statement today from the New York Fed. In a reverse repo, the Fed sells securities for a set period, temporarily decreasing the amount of money available in the banking system.
'No Inference'
"No inference should be drawn" as to policy tightening, the New York Fed said in a statement. Fed Vice Chairman Donald Kohn said last week that slow growth warrants very low interest rates for an "extended period." The central bank kept its overnight lending rate in a range of zero to 0.25 percent at its September meeting.
"They were pretty clear that this doesn't signal they are going to tighten sooner," said Fabian Eliasson, head of U.S. currency sales at Mizuho Corporate Bank Ltd. in New York. The dollar weakness is "a continuation of the interest-rate view," he said.
Australia's currency advanced as much as 1.3 percent to 92.86 U.S. cents, the highest level since August 2008. New Zealand's dollar appreciated as much as 1.9 percent to 75.52 U.S. cents, the strongest since July 2008.
Australian View
Philip Lowe, assistant governor of Australia's central bank, said today in Sydney it's "appropriate" to remove stimulus as the economy improves. The central bank's Governor Glenn Stevens unexpectedly increased the nation's cash target to 3.25 percent on Oct. 6. The target rate in New Zealand is 2.5 percent, compared with 1 percent in the 16-nation euro zone.
Canada's currency appreciated as much as 0.8 percent to C$1.0282 per U.S. dollar. It touched C$1.0207 on Oct. 15, the strongest level since July 2008.
Crude oil rose to a one-year high above $79 a barrel as advancing global equities bolstered confidence that an economic recovery will lift fuel consumption. The Standard & Poor's 500 Index increased 0.9 percent, contributing to an equity advance from Shanghai to London. Crude is Canada's biggest export.
The U.S. dollar declined against 13 of the 16 most-traded currencies tracked by Bloomberg News as the gain in stocks encouraged demand for higher-yielding assets.
Borrowing Costs
Benchmark interest rates of 0.1 percent in Japan and as low as zero in the U.S. make the yen and dollar favorite funding currencies for carry trades, in which investors borrow where interest rates are relatively low and buy assets in nations where returns are higher. The risk in such trades is that currency-market moves can erase profits.
Asian central banks are running out of ammunition to fight their currencies' biggest rally since 1998, paving the way for South Korea, Taiwan, Indonesia, Thailand and India to help lead foreign-exchange performance next year.
JPMorgan Chase & Co.'s index of Asian currencies has risen 5.6 percent since its strongest two quarters in 11 years began March 31. Of 34 currencies ranked by Bloomberg forecast surveys, the won, Taiwan dollar, rupiah, baht and rupee will be among next year's dozen strongest, median estimates show. The won has the best prospects and is the second-most-undervalued of 16 major currencies as measured by purchasing power.
The dollar will extend declines versus major rivals as the global economy's recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management Co., which runs the world's biggest bond fund.
Fundamental forces are set to put downward pressure on the dollar as the recovery gathers momentum, Pimco's strategic adviser Richard Clarida wrote on the company's Web site. Those forces include massive budget deficits, bets the Fed will keep borrowing costs near zero for an extended period and prospects for a double-dip recession in the U.S., he said.
Asia:
Asian stocks rose, driving the MSCI Asia Pacific Index to the highest level in more than a year, as earnings reports boosted confidence in the global recovery.
Komatsu Ltd., the world's second-largest maker of construction machinery, jumped 2.5 percent in Tokyo on a Nikkei newspaper report the company will report a quarterly profit. Murata Manufacturing Co., the world's largest capacitor maker, rose 1.8 percent in Osaka after Texas Instruments Inc. and Apple Inc. posted better-than-expected earnings. BHP Billiton Ltd. added 1.7 percent in Sydney after oil climbed to a one-year high.
"We're likely to see companies beat forecasts as they report in coming weeks,'' said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo, which oversees the equivalent of $4 billion. "The question remains though whether they will lift full-year projections."
The MSCI Asia Pacific Index added 0.8 percent to 121.32 as of 9:59 a.m. Tokyo time, set for the highest close since Sept. 8, 2008. The gauge has surged 72 percent from a five-year low on March 9 amid signs the global economy is rebounding from the worst slowdown since World War II.
Japan's Nikkei 225 Stock Average added 1.2 percent, while South Korea's Kospi Index advanced 0.5 percent. Australia's S&P/ASX 200 Index gained 1.4 percent as the country's central bank said low interest rates were no longer needed.
Futures on the Standard & Poor's 500 Index rose 0.4 percent. The gauge advanced 0.9 percent yesterday to the highest close since Oct. 3, 2008. Caterpillar Inc., Komatsu's largest rival, surged 6 percent after RBC Capital Markets recommended the stock.
Treasuries, Dollar
Treasuries fell and the dollar traded near a 14-month low against the euro amid rising demand for higher-yielding assets. Yields on two-year Treasury notes rose two basis points to 0.98 percent, according to data compiled by Bloomberg. The dollar was at $1.4973 per euro from $1.4965 in New York yesterday after earlier declining to $1.4981, the weakest since August 2008.
Komatsu advanced 2.5 percent to 1,841 yen, while closest rival Hitachi Construction Machinery Co. gained 2.3 percent to 2,275 yen. Komatsu likely had an operating profit of 10 billion yen ($110 million) in the three months through September, buoyed by demand in China, the Nikkei newspaper reported.
The company, due to report results next week, posted operating income of 8.27 billion yen in the April-June period and a 48.2 billion operating loss in the previous quarter.
Murata gained 2.5 percent to 4,510 yen. Advantest Corp., the world's biggest maker of equipment used to test computer memory chips, added 1.4 percent to 2,500 yen after the Nikkei newspaper said orders for the company's products rose about 21 percent in the three months to September.
'Turned The Corner'
After the close of U.S. trading, Texas Instruments forecast fourth-quarter profit and sales that exceeded analysts' estimates, and Apple's fourth-quarter profit soared 47 percent.
"The U.S. economy has clearly turned the corner," said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co. "Market gains are likely to be led by high-tech shares today, based on the strength of U.S. earnings reports."
The MSCI Asia Pacific Index has rallied 35 percent this year, set for its biggest annual increase since 2003, amid better-than-estimated earnings and economic reports. Shares in the gauge are priced at an average 23.4 times estimated earnings, compared with the three-year average of 18 times.
BHP, the world's largest mining company, added 1.7 percent to A$39.75, and rival Rio Tinto Group rose 2.1 percent to A$65.99. Crude oil rose 1.4 percent to $79.61 a barrel in New York yesterday, the highest level since Oct. 13, 2008. The London Metals Index, a measure of six metals including copper and zinc, jumped 3.2 percent yesterday.
Nikkei 225 10,347.58 +111.07 ( +1.09%). (08.26 AM IST)
Japan's Nikkei average rose 1.1 percent on Tuesday, buoyed by tech shares such as Kyocera Corp (6971.T) after a wave of solid earnings helped underscore that the U.S. economy is on the mend and pushed Wall Street to a 12-month high.
Shares in companies with strong reliance on the Chinese market, such as Hitachi Construction (6305.T), gained on expectations of strong economic growth ahead of the release of key data later this week. The benchmark Nikkei .N225 rose 111.07 points to 10,347.58 by the end of morning trade, while the broader Topix gained 1 percent to 914.68.
HSI 22344.21 +143.75 +0.65% .(08.28 AM IST)
Hong Kong's stock market posted gains in early trading Tuesday, with the Hang Seng Index rising 0.6% to 22,329.4 and the mainland-China-focused Hang Seng China Enterprises Index gaining 1.1%. China Merchants Bank Co. /quotes/comstock/22h!e:3968 (HK:3968 19.34, +0.54, +2.87%) /quotes/comstock/11i!cihhf (CIHHF 2.36, -0.01, -0.42%) was among the leading advancers, up 2.9%, after shareholders signed off on a plan to raise up to 22 billion yuan ($3.2 billion) in a rights issue to replenish capital levels, according to Dow Jones Newswires. Rising commodity prices also helped mainland resource plays, with Aluminum Corp. of China /quotes/comstock/22h!e:2600 (HK:2600 9.29, +0.11, +1.20%) /quotes/comstock/11i!almmf (ALMMF 1.14, -0.06, -5.00%) gaining 1.2%, Angang Steel Co. /quotes/comstock/22h!e:347 (HK:347 16.26, +0.02, +0.12%) /quotes/comstock/11i!anggf (ANGGF 1.95, -0.05, -2.50%) up 1% and Jiangxi Copper Co. /quotes/comstock/22h!e:358 (HK:358 19.06, +0.06, +0.32%) /quotes/comstock/11i!jiaxf (JIAXF 2.35, +0.06, +2.62%) gaining 1.1%. Over in mainland China, the Shanghai Composite was 1% higher in early morning action.
Chinese stocks open 0.8% higher on Tue
Chinese stocks opened higher on Tuesday morning, tracking gains from the previous closing.
The benchmark Shanghai Composite Index, which covers both A shares and B shares on the Shanghai Stock Exchange, opened at 3,062.55 points, up 0.8% or 24.28 points from the previous closing.
The Shenzhen Component Index on the smaller Shenzhen Stock Exchange opened 0.67% or 83.21 points higher at 12,566.47 points.
Lotte Shopping agrees to buy 72.3% stake in Times (20 Oct)
Hang Seng Index opens 59 points higher on Tue (20 Oct)
1st Wanda Plaza in Mianyang to start construction (20 Oct)
Chinese stocks open 0.8% higher on Tue (20 Oct)
World Bank to buy 15% stake in Deyang City Commercial Bank (20 Oct)
JPMorgan raises stake in Ausnutria Dairy to 6.29% (20 Oct)
China's aviation industry gains RMB 9.1 bln in Jan-Sep (20 Oct)
Bank of East Asia to raise up to US$600 bln via hybrid issue (20 Oct)
Bank of Jiangsu to issue RMB 2 bln in subordinated bonds (20 Oct)
Longyuan Power plans to raise up to US$1 bln from HK IPO (20 Oct)
Changhong, AUO's JV launches production of LCDs (20 Oct)
Hanlong Mining Inv't becomes controlling shareholder of Moly Mines (20 Oct)
Great Wall AMC, Nippon Life set up JV in Shanghai (20 Oct)
U.S. announces new aid to home market
China's cell phone use surges to high
MARKET BUZZ:
(May not be useful for day-traders.)
Asian Paints-The Colour Is Back
A very significant pointer that Bombay is in the midst of a roaring bull market becomes apparent when the market is prepared to give peak PE multiples to the stocks that are outperforming. While those risk-averse would disagree and sell the market, this infact would further fuel up buying.
A case in point is Asian Paints (ASPN)-at 30 times FY10 earnings estimate it is one of the most expensive stocks being traded in Bombay..and yet it continues to rise.
Volume growth evidenced a sharp rebound in the core domestic decorative paint from 4QFY09 onwards –indicating that the business is gradually recovering. After the 13% volume growth last fiscal, Asian Paints expects volumes to exhibit steady growth.
Demand in the key decorative paints business continues to remain firm (except in cities like Mumbai and Bangalore).
Improving market share, mix —ASPN has increased market share, gained from both the organised and unorganized players. Mix improvement continues with good growth in emulsions category.
Cost pressures abating — ASPN's input cost index has declined Q/Q from peak levels of 125 (base of 100 in FY08) to around 113 in 4QFY09 and is expected to remain benign in 1HFY10; thus margins are expected to improve going forward - gross margins to expand 70bps in FY10E.
The trend of sharp INR appreciation vs. the US$ should beneficially impact EBITDA margins.
International business steady, although macro concerns persist —
International revenue growth remained steady, driven by both volumes and pricing action in various markets driven by Middle East & South Asia markets. The currency movement impact on the international business revenues and profits was about 5-6% in 2008. And yet despite some slowdown in Dubai, most of the Middle East market (Egypt, Oman, etc) continues to grow.
(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
