Get out of shock!

Stock market is a voting machine in the short term and weighing machine in the long term.

The double freeze at the circuit breaker may be a pleasant shock for sentimental purpose. The bulls may have enjoyed a pleasant day in the woods. But the fact remains we are not out of the woods as yet and never know which beast could cause trouble.

Plug into reality and you will realize this overdone ovation is a hope that the best brains would get their act together to decouple India from the myriad of woes plaguing the global economy. Clearly the exuberance has been overdone. Clearly there are several headwinds still to be tackled, both local and foreign.

The fact of the matter is the new Government would not like to rush into doing things that all of us want it to. It will indeed undertake reforms but gradually. So, one has to temper one's expectations and not get carried away.

Another circuit may not be on the cards and the paper gains could soon tear away. Don’t forget to book profits. You will get opportunities later to ride the momentum.

Key Results Today: Grasim, Indian Bank, Indo Rama Synthetics, Mercator Lines, Mirc Electronics, Mount Everest Mineral, Texmaco, Thermax and TRF.

FIIs were net buyers in the cash segment on Monday at Rs446.4mn while the local institutions pulled out Rs84.1mn. In the F&O segment, the foreign funds were net buyers at Rs5.12bn. On Friday, FIIs were net buyers at Rs10bn in the cash segment. Mutual Funds were net buyers at Rs3.93bn on the same day.

US stocks surged on Monday, buoyed by a positive report on the battered housing market and upbeat earnings from home improvement retailer Lowe's. An upgrade of Bank of America too encouraged investors to resume their shopping spree after last week's selloff.

The Dow Jones Industrial Average gained 235 points, or nearly 2.8%, to 8,504.08. The S&P 500 index rose 27 points or 3% to close at 909.71, bringing the broader market index back into positive territory for the year. The Nasdaq Composite index advanced 52 points or 3.1%, to 1,732.36.

US stocks slumped last week after worse-than-expected reports on retail sales, housing and weekly jobless claims put investors on the defensive. But a big rally in Indian markets helped set the bullish tone early on. The buying gained momentum in afternoon trading with retail and banking shares gaining ground.

Monday’s advance restored the S&P 500’s yearly gain, leaving it up 0.7% in 2009. The benchmark index for US stocks slid 5% last week after it reached the most expensive level relative to earnings in seven months. Between March 9 and May 8, the S&P 500 surged 37% in the steepest two-month advance since the 1930s on signs the global recession is easing.

The benchmark index for US stock options fell to the lowest level since before Lehman Brothers' September bankruptcy. The VIX, as the Chicago Board Options Exchange Volatility Index is known, slid 8.7% to 30.24. The index, which measures the cost of using options as insurance against declines in the S&P 500, is down from a record 80.86 in November.

Lowe's, the No. 2 home-improvement retailer, projected a higher fiscal second-quarter profit after posting a 22% decline in the first quarter that still managed to top analysts' forecasts. Shares rose 8%.

Two private reports helped bolster confidence in the housing market.

Confidence among US homebuilders in May increased to the highest level since September, providing further evidence the housing slump that started in 2006 may be closer to a bottom.

The National Association of Home Builders/Wells Fargo index of builder confidence rose to 16 from 14 the prior month, capping the first back-to-back gain since February 2008. This was the second successive month of gains for the homebuilders index.

Separately, the NAHB said home prices are at their most affordable in nearly two decades.

Treasury Secretary Timothy Geithner said that the US economy has stabilized, even though many people may not feel a turnaround immediately.

"Unemployment is going to keep increasing for a while," Geithner said in an appearance at the National Press Club in Washington. "It's not going to feel better for a long time for millions of Americans."

Shares of financial services companies got a boost after Bank of America was upgraded to "buy" by Goldman Sachs. Analysts said that the bank will be able to raise needed capital thanks to gains in mortgage and capital markets activity. BofA gained 10%.

Financial holding company State Street announced a $1.45 billion stock offering and said that it would also offer non-guaranteed senior notes. The company said it plans to repay its government bailout funds.

Macy’s advanced 7.2%. The second-biggest US department store chain was added to the conviction buy list at Goldman Sachs, which cited the retailer’s $400 million cost savings plan and prospects for improvement in sales as the economy recovers.

Lennar Corp. surged 14%. The fourth-biggest US homebuilder by revenue was raised to “buy” from “hold” at Citigroup. KB Home added 8.2%.

Treasury prices slumped, raising the yield on the benchmark 10-year note to 3.21% from 3.13% on Friday.

In currency trading, the dollar rose versus the yen, but fell sharply against the euro and British pound.

US light crude oil for June delivery rose $2.69 to settle at $59.03 a barrel on the New York Mercantile Exchange.

Gains in energy prices came after a Nigerian military group threatened to block waterways used for energy exports and an explosion at a Sunoco Inc. refinery affected operations in the Northeast US.

COMEX gold for June delivery fell $9.60 to settle at $921.70 an ounce.

The national average price of a gallon of unleaded gasoline rose to $2.31, its 20th consecutive increase, according to a daily reading released by the motorist group AAA. The price of gas has increased by about 25 cents a gallon in the last three weeks, according to the Lundberg Survey.

Tuesday brings readings on new home construction and building permits in April. Companies reporting quarterly results include Dow components Home Depot and Hewlett-Packard.

Financial shares rose after the London interbank offered rate, or Libor, for three-month loans in dollars fell 4 basis points to 79 basis points, the biggest decline since March 19, according to British Bankers’ Association data.

European shares advanced, led by sharp gains for banks such as HSBC and Standard Chartered. The pan-European Dow Jones Stoxx 600 index rose 2.4% to 207.83. It was the third straight winning session for the index.

The UK's FTSE 100 index rallied 2.3% to 4,446.45, in Monday's action, while the German DAX 30 index climbed 2.4% to 4,851.96 and the French CAC-40 index added 2.4% to 3,245.39.

If the outcome of the Lok Sabha elections was unbelievable and stunning, then what has happened today on the Indian bourses was even better. Today is a momentous occasion in the history of India, both in terms of politics and markets.

While the decisive verdict that the Indian voters delivered in the just concluded polls was the best that Indian parliamentary democracy has got in a long, long time, then the reaction of the stock market is unimaginable. It may not be repeated ever again.

For the first time ever, the key Indian stock indices hit an upper circuit - not once, but twice. Trading was first halted for a couple of hours within just a few seconds of opening bell, when the Nifty hit 15% upper circuit. When trading resumed at 11:55 am, it took just a few seconds for the market to freeze again. There was some buzz that the largest life insurance company may step in with basket selling, which could have kept the trading going. However, that was not to be.

The BSE Sensex soared by 2,110 points or 17.24 % to 14,284 while the NSE Nifty zoomed 651 points or 17.35% to 4,323. Total trade turnover in the markets was Rs3,103 crores Cash + F&O. Only 842 stocks were traded on the BSE while 202 stocks witnessed action on the NSE.

Shares of insurance companies rallied on Tuesday on hopes that the government may raise the FDI limit in the sector.

The government is likely to increase the FDI cap in the insurance sector to 49% from 26%. And with no resistance from the Left Parties, reforms may come faster.

Shares of ICICI Bank shot up over 25% followed by SBI (up 21%), Max India (up 20%), and Reliance Capital (up 26.95%).

Shares of PSU companies were also on a roll on hopes of recommencement of the PSU disinvestment programme after the Congress-led UPA government.

Shares of Neyveli Lignite surged over 15% followed by SCI (up 13.56%), MMTC (up 10%) and PFC (up 14%).

Infrastructure shares soared on expectations that the UPA government may boost spending on infrastructure sector.

L&T surged 20%, JP Associates advanced 18%, BHEL (up 17%), Gammon India (up 19%), Punj Lloyd (up 20%), GMR Infra (up 20%) and IVRCL Infra (up 18%).

After a magnificent Monday, Indian markets would look to extend its dream run post the Congress led UPA win. Should the NSE Nifty index hit 4,608 on Tuesday, markets would once again stop trading. However, one cannot rule out profit booking after a stupendous rally.