[R]11:30AM Market rallied on strong factory data. Wal-Mart, Home Depot boosted Dow.[/R]
U.S. stocks rallied in the first session of 2007 on optimism about the economy, following a stronger-than-expected report on December manufacturing from the Institute for Supply Management. The index came in at 51.4%, stronger than the expected reading of 50%. A decline in oil prices also helped generate positive sentiment. Light, sweet crude dropped to $59.62 a barrel. The Dow surged to a triple-digit advance and a new high, with shares of Wal-Mart and Home Depot leading gainers. Wal-Mart (WMT: chart) rose 3.5% after December same-store sales rose more than expected. The world’s biggest retailer said same-store sales rose 1.6%, exceeding the company's forecast of flat growth up to 1%. Home Depot (HD: chart) advanced 3.4% after news that chairman and CEO Bob Nardelli resigned from the world's largest home improvement chain.

Shares of copper producers fell sharply in early Wednesday trading after a 6% drop in copper prices. Copper for March delivery fell 17.6 cents to $2.695 a pound. Freeport McMoRan Copper & Gold (FCX: chart) dropped 6.8%, while Phelps Dodge Corp. (PD: chart), which agreed to be taken over by Freeport, fell 2.3%. Southern Copper Corp. (PCU: chart) lost 3.4%% and shares of Ivanhoe Mines (IVN: chart) slipped 4.8%%.

Among stocks, driven by analyst comments, Amazon.com (AMZN: chart) fell 1.5% after Citigroup downgraded its rating on the online retailer to sell from hold, citing concerns about the stock's valuation. At the same time, shares of Baidu.com (BIDU: chart), Chinese internet search engine, climbed 8.3% after CIBC World Markets upgraded its rating on the company's stock to sector perform from sector underperform, citing strong positions of the company on the Chinese market.

In corporate news, Cytokinetics Inc. (CYTK: chart) surged 13.6% on news it would work in cooperation with Amgen Inc. to develop drugs fighting against heart failure. Sirius Satellite Radio Inc. (SIRI: chart) climbed 7.6% after the radio service said its subscriber base jumped 82% in 2006. In late morning trading, the Dow surged 108.39, or 0.87%, to 12,571.54 after surging to a new trading high of 12,580.35. The Standard & Poor's 500 index was up 9.10, or 0.64%, at 1,427.40, and the tech-laden Nasdaq rose 36.37, or 1.51%, to 2,451.66. Bonds rose, with the yield on the benchmark 10-year Treasury note falling to 4.68% from 4.71%late Friday.


[R]ISM index bounced back 51.4% in December.[/R]
The Institute for Supply Management released its report on business activity in the manufacturing sector in the month of December on Wednesday, showing that activity in the sector expanded after contracting in the previous month. The report showed that the purchasing managers'' index rose to 51.4 in December from 49.5 in November, with a reading above 50 indicating growth in the sector. Economists had expected a more modest increase by the index to 50.0. The increase by the index was partly due to an expansion in new orders and production, with the new orders index rising to 52.1 in December from 48.7 in November while the production index rose to 51.8 from 48.5. At the same time, the report showed continued contraction in employment, although the employment index edged up to 49.7 in December from 49.2 in November. The report also showed that the prices index fell to 47.5 in December from 53.5 in November, indicating a reduction in prices.

[R]Construction spending fell 0.2% in November.[/R]
Wednesday morning, the Department of Commerce released its report on construction spending in the month of November. The report showed that construction spending fell less than economists had been expecting. The report showed that construction spending fell 0.2 percent to an annual rate of $1,184.1 billion in November from the revised October estimate of $1,186.7 billion. Economists had been expecting spending to fall 0.6 percent. Despite the modest decrease in November, the Commerce Department noted that construction spending for the month is 0.1 percent above the November 2005 estimate of $1,183.1 billion. The modest decrease in November came as a decrease in spending on private construction more than offset an increase in spending on public construction. The report showed that private construction spending fell 0.6 percent in November, as spending on residential construction fell 1.6 percent. At the same time, public construction rose 1.0 percent in November, reflecting a 2.3 percent increase in spending on educational construction.


[R]10:30AM NY - 9:00PM Mumbai - The Sensex advanced 0.5% to an all-time high on large-cap rally.[/R]
The Sensex on BSE finished 72.68 points, or 0.52% higher at 14,024.49. The market-breadth was strong with 1,695 shares that advanced on BSE, and 933 that declined. Only 64 shares were unchanged. Of the 30 stocks in the Sensex, 20 advanced while the rest declined. The turnover on BSE was Rs 4,286 crore higher than Rs 3,381 crore on Tuesday while the turnover on NSE was Rs 8,154.36 crore, much higher than Rs 5,938.27 crore on Tuesday.

Economic news

India is highly likely to buy 2.5 million tons a year of liquefied natural gas from Australia in a deal of $12.5 billion over the next 25 years in an effort to secure supplies as demand in Asia grows, government and company officials announced on Wednesday.

Hutch Essar may become the target of a third bidder, Verizon Communications from the U.S. joining the list of potential buyers including Vodafone Group of UK and Reliance Communications of India and telecom operators from Egypt, Qatar and Malaysia. Private sources have indicated that the company prefers to buy out its current majority partner. The Essar Group has increased its stake from 18% to 33% in the last two years and is rumored to work on bank loans of between $10 billion and $12 billion. Chinese billionaire Li Ka Shing own 67% of the company and values the company higher than $20 billion.

Real estate developer, DLF has started the procedure for filing an initial public offering after pulling a planned issue last year. The sale of 10.2% of the company could raise more than $2 billion.

In trade today

Unitech was the most-active stock with a turnover of Rs 149 crore followed by Satyam and Development Corporation Bank.

Advancers

Bajaj Auto led the advancers, gaining 3.85% to Rs 2,844. The company had posted 24% increase in sales for December 2006 on Monday. Tata Motors gained 1.22% to Rs 941.25, as its vehicle sales advanced 37% in December 2006.

Ranbaxy Laboratories advanced 3.80% to Rs 413.50 on the its alliance with Ipca Laboratories which received US Food and Drug Administration approval to sell atenolol tablets in the United States.

IT stocks drew a lot of attention, as third-quarter results are expected to be strong. Infosys gained 1.85% to Rs 2,315, TCS was 2.30% higher to Rs 1,277.25 and Wipro added 1.06% to Rs 618. Infosys is the first to announce its earnings report on January 11 2007. Satyam Computers also gained 1.31% to Rs 515.25, as a block deal of 14.30 lakh shares was made on BSE in early trade, at Rs 512.50 per share.

Gujarat Ambuja Cements advanced 0.52% to Rs 144.95. On Tuesday the company announced that cement shipments for the year ending December 2006 advanced 11.3%. Engineering and construction firm L&T also gained 1.10% to Rs 1,475, on order valued at Rs 418 crore from the Abu Dhabi Water & Electricity Authority for the construction of six major electrical substations in Abu Dhabi. Index heavy Reliance Industries edged 0.34% higher to Rs 1,286 on 4.86 lakh shares.