Thursday Thanksgiving…For bulls or bears?

If the only prayer you said in your whole life was, "thank you," that would suffice.

Just like we had fireworks before Diwali, the US seems to have celebrated its Black Friday before Thanksgiving. Black Friday is the day after Thanksgiving in the United States , where it is the beginning of the traditional Christmas shopping season. It’s called Black Friday because it’s considered the beginning of the period when retailers turn into black (profit). Back to markets, the bears, which were hibernating for quite a while, will have reasons to give thanks.

Today, we expect a cautious to slightly higher opening. A technical bounce back is likely following the selloff of the past few days. Intra-day fluctuations are a given. Investors should not risk aggressive buying and stick to a stock specific strategy. Trading for the rest of the day will hinge on the movements in Asian and European markets, and the trend in FII investment.

There has been no dearth of bad news over the past few weeks, especially from the US . Sub-prime contagion, multi-billion dollars of write-downs, High-flying Wall Street CEOs forced to resign, Goldman Sachs’ warning and the Federal Reserve’s scale down of outlook are among news which gave the bears company. The dollar has been on a downward spiral versus its main rivals. The yen, the world's favorite currency for carry trade, is trading near a two-year peak versus the dollar. Crude oil came very close to breaching the $100 per barrel mark. It is likely to cross the milestone sooner rather than later. Risk aversion is on the rise again across the world.

In summary, this is not a good time for the bulls whether they are on Wall Street, Dalal Street or any other street. What's worse, the scenario is unlikely to improve anytime soon, unless the Fed comes to the world's rescue yet again on Dec. 11. But, even so, the US economy may slip into recession next year. This will impact global growth, though India may not be hit all that much. Still, sentimentally the impending recession in the US will have some bearing on the Indian economy and the stock market here. Ideally, India should benefit as it is less dependent on the US economy and its economy is more driven by local factors.

Export-centric sectors like IT, Textiles, etc. will be affected. Whether or not foreign capital inflows into India accelerate is a million-dollar question given the recent curbs imposed on P-Notes. In the last couple of days FIIs have been big sellers in the cash as well as F&O segments. If this trend continues, the market will find it tough to rise. FII inflows are the critical factor for our market. If the main indices are to resume their upward march, FIIs should turn buyers again.

Purvankara Projects and Ranbaxy could do well on positive news flow.

US stocks ended sharply lower on Wednesday, as worries about the sub-prime mess, a weakening dollar and oil near $100 a barrel prompted investors to rush for cover ahead of the Thanksgiving holiday. The fall wiped out this year's gain for the Standard & Poor's 500 Index.

The S&P 500 lost 23 points, or 1.6%, to 1,416.77, leaving it with a 0.1% loss on the year. The Dow Jones Industrial Average declined 211 points, or 1.6%, to 12,799.04 as 29 of its 30 members retreated. The Nasdaq Composite Index dropped 35 points, or 1.3%, to 2,562.15.

Market breadth was negative. Almost four stocks fell for every one that rose on the New York Stock Exchange.

US financial markets are closed on Thursday for Thanksgiving and Friday they are open for half day. Attendance on Friday is expected to be low and trading volume light.

Ten-year Treasury yields fell below 4% for the first time in more than two years as investors sought the safety of US government debt.

The Dow Jones Transportation Average declined for a sixth day to the lowest level since September 2006 as the Dow dropped to the lowest since April. This signals the start of a bear market to investors who follow the so-called "Dow Theory."

The index of leading US economic indicators fell more than forecast in October. The report added to concern that the world's biggest economy is slowing after the Federal Reserve cut its forecast for 2008 growth yesterday.

The November consumer sentiment index from the University of Michigan rose to 76.1 from an initial reading of 75.0, but was down from last month's 80.9. Economists had forecast no change. The number of Americans filing new claims for unemployment last week fell by 11,000, as expected.

Treasury Secretary Henry Paulson said that lenders should move aggressively to offer new mortgage terms as defaults increase, according to the Wall Street Journal. Former Fed Chairman Alan Greenspan said recent signs that a collapse in credit tied to subprime-mortgage lending was ending have proven wrong.

Crude closed down 74 cents, or 0.8%, at $97.29 a barrel on the New York Mercantile Exchange, after earlier rising as high as $99.29. But the pullback only offered a brief respite for stocks. Oil prices were volatile after the release of the weekly oil inventories report, which showed a surprise drop in crude supplies.

COMEX gold for December delivery rose $7.20 to settle at $798.60 an ounce. In currency trading, the dollar fell versus the yen and the euro.

European shares lost ground for the fourth time in five sessions. The pan-European Dow Jones Stoxx 600 index lost 2.6% to 349.18. The German DAX 30 closed down 1.5% at 7,5184.42, the French CAC-40 sank 2.3% to 5,381.30 and the UK's FTSE 100 shed 2.5% to 6,070.90.

Latin American stocks dropped sharply. The Bovespa, Brazil's benchmark equity index, finished 2.8% lower at 60,581.54. Stocks were closed for holiday on Tuesday. In Mexico City, the IPC fell 2.1% to 28,446.45. Argentina's Merval ended down 1.3% at 2,216.45.

Asian stocks extended their losses, sending a regional index to a two-month low, after home prices fell in a third of US cities, adding to concern that mortgage losses will spread and slow global growth.

National Australia Bank led a drop by financial companies on speculation that falling markets globally will spark losses on investments. Japanese exporters such as Toyota declined after the yen strengthened to the highest in more than two years against the dollar, reducing the value of overseas sales.

The MSCI Asia Pacific Index lost 0.7% to 153.58 at 10:00 a.m. in Tokyo, set for its lowest close since Sept. 18.

Japan's Nikkei 225 Stock Average lost 0.2% to 14,801.74, while the broader Topix index slid 0.2%. The Topix is down 21% since a February peak, signaling Japan is the first among the world's 10 biggest markets technically to enter a bear market.

However, the Hang Seng in Hong Kong held firm, and was up 174 points at 26,793.

Global cues, FII selling to call shots

Markets extended their losses to fifth straight trading session posting its biggest drop since October 18. It was bears dominating right from first minute. Markets opened in red after reports stated that the Finance Ministry is contemplating hiking the rate at which the Securities Transaction Tax (STT) is being levied coupled with selling pressure and weak cues from the Asian and European markets dragged the benchmark Sensex further.

However, bulls attempted a recovery but after managing to hit a high of 19,218 Sensex further lost ground finally losing 678 points to close at 18,602. NSE Nifty closed 219 points to close at 5,561.

M&M was down 4.4% to Rs698. The company’s component division Mahindra Systems and Automotive Technology is in talks with S P Metal Forgings, South Africa, for an equity buyout. The scrip touched an intra-day high of Rs739 and a low of Rs684 and recorded volumes of over 5,00,000 shares on NSE.

Fortis Financial surged by 2.8% to Rs102 after the company announced that it purchased 76% stake of UK’s Capital Market Solution. The scrip touched an intra-day high of Rs109 and a low of Rs101 and recorded volumes of over 19,000 shares on NSE.

Reliance Industries declined 2.8% to Rs2709. The company announced that it signed a production sharing agreement for two exploration blocks in Yemen. The scrip has touched an intra-day high of Rs2797 and a low of Rs2690 and has recorded volumes of over 45,00,000 shares on NSE.

Ranbaxy Laboratories was down 4% to Rs397. The company announced that it received approval to sell a generic version of Boehringer Ingelheim's Flomax capsules. The scrip touched an intra-day high of Rs420 and a low of Rs393 and recorded volumes of over 7,00,000 shares on NSE.

In a falling markets Religare Enterprise a financial services provider led by promoters of Ranbaxy Laboratories had a blockbuster listing on the bourses on 21^st November, the stock sky rocketed over 200% hitting an intra-day high of Rs601 and finally closed at Rs522 up 182%. The company had fixed the price band of Rs160 to Rs185 for the issue.

Core Projects slipped 1% to Rs261. The company said that it is co-sponsoring the "International Conference on Universal Quality School Education: Challenge of the 21st Century" along with IBM and IL&FS Ltd to be held at New Delhi from November 21, 2007.

The Company also said that it is planning to sign an MOU at this conference with the Indira Gandhi National Open University to set up visualization Laboratories using CAVE 3D Interactive Technology at all IGNOU Centers. The scrip touched an intra-day high of Rs281 and a low of Rs255 and recorded volumes of over 6,00,000 shares on NSE.

Orient Info surged by over 19% to Rs19.4 after the company announced its plans merger with IT People India. The scrip touched an intra-day high of Rs19.6 and a low of Rs15.3 and recorded volumes of over 8,00,000 shares on NSE.

Stocks in News:

Godrej Industries has raised Rs6bn through the allotment of over 279mn equity shares to various domestic and foreign investors.

Hindalco plans to raise its capacity to about 1.5-1.6mn tons per annum by 2011.

Patni plans to double sales in Europe to counter rising Rupee.

Reliance Life to infuse Rs15bn as capital over the next three years.

Puravankara wins 30-acre Hyderabad land deal for Rs7bn.

Wipro has joined hands with GE Fanuc Technologies to work together globally to provide solutions for consumer packaged goods and pharmaceutical industry.

Oil marketing companies to hedge on Nymex on rising crude oil prices.

Gap and Wal-Mart may scale down sourcing from India.

Sasken Communication has set up a wholly-owned subsidiary in Japan.

Ranbaxy has reached an out-of-court settlement to market an innovator drug worth over US$1bn in the US.

Bhilwara Energy to raise equity worth US$200-250mn over the next 6-10 months.

Tata Chemicals to invest in biotech and nanotech R&D.

Tata Chemical has signed an agreement with ICRISAT for enhancing the commercialization of sweet sorghum for bioethanol product.

Kingfisher has asked Airbus for an early delivery for its five A380 aircraft.

Hindujas in talks with Networth to push IndusInd bank business.

PNB gilts gets an approval to work out a merger with Punjab National Bank.

Foreign inflows may be tightened further; the policy change may include cap on ECBs.

India to allow duty free imports of over 4,500 items from South Asian LDCs.

Companies mining bauxite in tribal areas may have to share 20% of their profits with tribals displaced by the mining project.

New derivative offerings are at least two years away.

Spectrum deadlock continues after yesterday’s meeting between the DoT and the country’s top mobile service providers.

Sebi mulls introduction of real estate investment trusts.

Certificates of deposit (CDs) rates have risen by 75-80 basis points on account of liquidity squeeze.

FII Investment Trend:

FIIs were net sellers of Rs20bn (provisional) in the cash segment on Wednesday while the local institutions pumped in Rs6.3bn.

In the F&O segment, FIIs were net sellers of Rs21.87bn yesterday.

Foreign funds were net sellers of Rs10.7bn in the cash segment on Tuesday. Mutual Funds were net buyers of Rs1.38bn.