Pendulum likely to swing towards bulls
The pendulum of the mind alternates between sense and nonsense, not between right and wrong.
As expected, it has been a see-saw session this shortened week. Can we see some resurrection after the correction? That's the big question on everybody's minds. Going by the firm trend in global markets coupled with encouraging comments on the US economy from Fed chief Ben Bernanke, the local bulls are all set for a comeback. Some of that resurgence was evident in mid-afternoon trades, when the key indices rose from the abyss to end only marginally down. The recovery effort by the bulls is likely to spillover into today's trade. Plus, the F&O cues are a little bit better with the Nifty February Futures trading at a premium to the Spot Nifty and Put-to-Call ratio falling slightly.
Having said that, with interest rates rising faster than earlier and inflation at two-year peak, we are in for a bumpy ride at least in the near term. Despite the sudden and sharp fall, valuations are still pretty high. Foreign capital inflows remain volatile. In fact, a Merrill Lynch report says that fund managers are cutting exposure to China and India, where monetary tightening concerns are rising, and are instead looking at Taiwan, Korea and Thailand. The budget won't have much of an impact on the market either. So, once should brace for a much tougher time after a nearly four-year bull run.
Shares of House of Pearl Fashions and Redington India will list today on BSE and NSE. The IPO of Idea Cellular has been subscribed over 7 times so far. The issue closes today. The MindTree Consulting issue has closed and has been subscribed by 103 times.
FIIs were net sellers to the tune of Rs1.65bn (provisional) in the cash segment yesterday. From the F&O segment, they pulled out Rs7.31bn. Foreign funds offloaded shares worth Rs2.4bn in the cash segment on Tuesday. On the other hand, Mutual Funds pumped in Rs248.7mn on the same day.
US stocks closed firm on Wednesday, pushing the Dow Jones Industrial Average to a new all-time record, as investors cheered soothing comments on inflation from Bernanke. The market also welcomed upbeat earnings from Applied Materials and growing talk of a restructuring at DaimlerChrysler.
Citigroup and JPMorgan led the rally, helping send the Dow to its highest close and the Standard & Poor's 500 Index to a six-year high. The Nasdaq Composite Index rose the most in a month after Applied Materials reported increasing orders.
The Dow average climbed 87.01, or 0.7 percent, to 12,741.86. The S&P 500 added 11.04, or 0.8 percent, to 1455.30, completing its best two-day advance since Sept. 26. The Nasdaq advanced 28.50, or 1.2 percent, to 2488.38.
US light crude oil for March delivery slumped $1.06 to $58 a barrel on the New York Mercantile Exchange after a mixed weekly inventory report.
Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.73 percent from 4.81 percent late Tuesday. In currency trading, the dollar fell versus the euro and yen.
In Asia this morning, most markets are on firm footing. Stocks climbed to a record after Japan's economy grew at the fastest pace in three years and Fed chairman doused concerns that interest rates will rise in the region's biggest export market.
Key European markets too finished higher. The FTSE 100 in London rose 39.4 points or 0.6% to 6,421.2. Germany's DAX advanced 65.84 points or 0.95% to 6,961.18. France's CAC climbed 43.15 points or 0.76% to 5,725.84.
Emerging markets like Brazil and Russia also gained overnight.